Austerity: A Brief Introduction
Reprinted from Internationalist Dispatch
https://internationalistdispatch.wordpress.com/
In the present moment of deepening economic crisis of the capitalist system, it is essential to define the term austerity. What is austerity, in a political, economic and social sense? While the anti-austerity movement has strong roots around the world and is more or less a household term in many of the countries most affected by these developments, such as Greece, Spain, and South Africa, the US anti-austerity movement is still relatively underdeveloped. The purpose of this brief article is to provide a historical context for deteriorating social and economic conditions among the working class globally and to provide a framework for waging a struggle against austerity among the working class across the world in general and in the United States in particular.
The Path to Austerity: A Historical Perspective on Imperialism and Austerity
In the broadest sense, austerity is defined in the London Financial Times as “official actions taken by the government, during a period of adverse economic conditions, to reduce its budget deficit using a combination of spending cuts or tax rises.” Any reasonably minded liberal economist would tell you that this is plain good sense. How could you refute that a city or country must cut expenses from the budget to balance the books? As we will see, this definition of austerity, akin to budgeting for grocery shopping, is a dangerous decoy that hides the active plunder of working class wealth. First, it will be useful to focus on our theoretical perspective on the development of class relations that have led to our current situation.
Ever since the end of the 19th and the beginning of the 20th century, capitalism has existed in its highest form, a system of global economic and financial domination. There is no more insightful analysis of this than V.I. Lenin’s 1917 work Imperialism, the Highest Stage of Capitalism. Under imperialism, one of the primary mechanisms for exploiting workers and oppressed countries is finance capital. By the beginning of the twentieth century, the bourgeoisie (the capitalist) class had developed into a monopoly form in which fewer and fewer capitalists owned the means of production. This is effective, from the point of view of the capitalists, and possible due to the influence of finance capital, where a few primary banks in the imperialist countries like the United States, England, France, and Germany issue the vast majority of loans to all industrial enterprises.
Lenin wrote his analysis at the onset of the imperialist system, and the concentration of finance capital has since risen to extraordinary degrees of centralization and monopolization in the intervening century. Following the World War II, a system of international finance called the Bretton-Woods system was instituted with the International Monetary Fund and the World Bank at the helm to ensure the continued financial and economic dominance of the colonial and post-colonial world. Kwane Nkrumah, Ghanian revolutionary and the first head of state of the independent Republic of Ghana in 1957, famously analyzed this system of dominance, aptly calling it neo-colonialism.
In this way, the imperial powers of North America and Europe were able to continue their plunder of the Global South unabated. As Nkrumah states, “The result of neo-colonialism is that foreign capital is used for the exploitation rather than the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world.” In this highly salient statement, Nkrumah describes how capitalism and imperialism have adopted financial means as part of the primary mode of exploiting oppressed countries and communities. This model has become the modus operandi of capturing ever greater portions of wealth from the working class in the late 20th and early 21st centuries all across the world, not only between exploiter and exploited countries but within single countries, such as the United States. The rise of neocolonialism around the world has coincided with the application and development austerity policies within the exploiting countries. The redlining, segregation, and historical impoverishment of Black people in the United States, for instance, is the domestic history of colonialism. In no less stark a fashion, austerity has represented the domestic front of neocolonialism within the imperialist center.
What Austerity Looks Like: Finance Capital, Debt, and the Plunder of the Working Class
In the broadest terms, austerity is theft. It is a program from the plunder of public resources to enrich the heads of the capitalist system in the banks and corporations. While working people and the oppressed are having their homes foreclosed, their water shut-off, their pensions cut, dying prematurely from preventable illness due to a lack of healthcare, or commiting suicide due to their own debt and deteriorating life conditions, the capitalists pocket these monumental sums to exploit and steal anew.
As a writer working out of Detroit, I have a particular focus on the absolutely devastating impacts of austerity in this city. While I will draw upon the extensive literature on the corporate plunder of Detroit, I also aim to make clear that this is a global struggle of the working class. In 2013, by corporate design, Detroit entered the largest municipal bankruptcy in US (and as far as I can tell, world) history. What has followed in this most recent episode of the ruling class’s brutal assault on the City of Detroit has entailed the theft of billions of dollars in public assets and new, nationally leading levels of poverty and immiseration as well as one of the worst housing crises in human history. Indeed, the forcible removal of Detroiters from their homes exceeds the level of displacement that occurred in New Orleans following Hurricane Katrina.
In the mass buying up of formerly Black-owned homes in Detroit (once the city with the highest rate of African-American homeownership), we see a sinister round of pillage. The years of the Obama administration, representing the fallout of the financial crisis and this renewed round of theft by the ruling class, saw a historical decline in Black wealth and Black homeownership. In addition, this article (published in the Workers World paper, but written by one of the members of the former Detroit branch and a retiree in the struggle) details the struggle over pension cuts in the city, a struggle that unites all workers and retirees across the world whose livelihoods have been stolen in imposed “economic restructuring.”
Empty lots in Detroit. (Source: mlive.com)
Skyline of Downtown Detroit, center of finance capital in the city. (Source: mlive.com)
If you read and believed only ruling class media, you would believe that this pillaging of Detroit’s public resources was was the fault of no one but Detroiters. Be it corrupt, incompetent city leadership or lazy, greedy pensioners, the scions of austerity policies work to hide the truth that it is the financial institutions and corporations that are despoiling the people of their lives’ work. In a city that is 80% African-American, these propaganda points are rooted in racism and demonstrate that austerity enforces and justifies itself on the basis of racism and class oppression. (While black mayor Kwame Kilpatrick was pilloried in the media and sentenced to prison for various charges, the genocidaire state administration of Rick Snyder and the city administration of Mike Duggan, Dan Gilbert, & Co. walk free to poison another city).
In the same year as Detroit’s bankruptcy, the ninth austerity package in 4 years was forced down the throat of Greek workers and pensioners, freezing wages, pensions, and public spending. What do these twin developments tell us about austerity across all reaches of the globe? Similar images were deployed: the lazy, swarthy Greeks wanted to soak up pension money and high-paying public salaries by the largesse of German and French taxpayers. In reality, the the austerity packages imposed on the Greek working class by the IMF and the European Central Bank represent a recolonization of Greece by Europe, much as austerity in Detroit is enabling mass displacement and recolonization by the white ruling class.
Using the racist justification that Black people, or Greek people, or African people, are unable of governing their own affairs, austerity usurps popular power to impose the direct dictatorship of finance capital. In Detroit and other cities in the Midwest, this has taken the form of “emergency management.” These unelected bureaucrats, lawyers, and financiers take control of the financial affairs of the body in question to facilitate their theft. In Puerto Rico, the Financial Oversight and Management Board has similarly taken control of fiscal policy in Puerto Rico to aggrandize the already $73 billion debt. This comprehensive report given by the former head of the Electrical Industry and Irrigation Workers Union of Puerto Rico summarizes the most recent developments of the ruling class assault on the people of Puerto Rico.
In Detroit, as elsewhere, crooked and predatory financial means were employed to gut public wealth. On the individual level, the banks issued subprime loans to low-income people, assuring that in the coming crisis vast swathes of the population would be called upon to pay back their exorbitant interest rates. On the municipal level, the banks floated loans to the city through deals called interest rate swaps, locking the city into a fixed interest rate for a definite period of time, termination before which would mean massive termination fees. Again, this is precisely what happened, with the city being forced to pay hundreds of millions of dollars back in termination fees and debt services.
In the aftermath of this financial bloodletting, the ruling classes have enriched themselves at the expense of deteriorating life conditions for the Black, working class majority. There are many issues to go into but among the victims of the bankruptcy are Detroit’s pensions, housing, and water system. The ruling class has resorted to extorting extremely high water bills from the impoverished people of Detroit primarily to pay back debt services and as their resources are strained because of the demographic collapse. The results are the inhumane illustrations of the agenda of finance capital. Detroit suffers an outbreak of Hepatitis A while Child Protective Services are kidnapping the children of any house to have had its water shut off, even for the most paltry delinquencies.
Austerity is the general impoverishment of the working class through financial means and its effects are economic murder. The devastation that austerity visits upon working people is psychological, social, and economic. In many places, such as India and Greece, where austerity measures are introduced, suicide skyrockets due to the general hopelessness and isolation of life conditions under this form of impoverishment. It is one of the tasks of the communist movement in the 21st century to expose as widely as possible the workings of finance capital. Because it is the same bankers robbing workers in the imperial center (the US, the EU, Canada, and other imperialist countries) as it is all across the world, the fight against finance capital is the cornerstone of worker and oppressed solidarity in the age of imperialism.
https://internationalistdispatch.wordpress.com/
In the present moment of deepening economic crisis of the capitalist system, it is essential to define the term austerity. What is austerity, in a political, economic and social sense? While the anti-austerity movement has strong roots around the world and is more or less a household term in many of the countries most affected by these developments, such as Greece, Spain, and South Africa, the US anti-austerity movement is still relatively underdeveloped. The purpose of this brief article is to provide a historical context for deteriorating social and economic conditions among the working class globally and to provide a framework for waging a struggle against austerity among the working class across the world in general and in the United States in particular.
The Path to Austerity: A Historical Perspective on Imperialism and Austerity
In the broadest sense, austerity is defined in the London Financial Times as “official actions taken by the government, during a period of adverse economic conditions, to reduce its budget deficit using a combination of spending cuts or tax rises.” Any reasonably minded liberal economist would tell you that this is plain good sense. How could you refute that a city or country must cut expenses from the budget to balance the books? As we will see, this definition of austerity, akin to budgeting for grocery shopping, is a dangerous decoy that hides the active plunder of working class wealth. First, it will be useful to focus on our theoretical perspective on the development of class relations that have led to our current situation.
Ever since the end of the 19th and the beginning of the 20th century, capitalism has existed in its highest form, a system of global economic and financial domination. There is no more insightful analysis of this than V.I. Lenin’s 1917 work Imperialism, the Highest Stage of Capitalism. Under imperialism, one of the primary mechanisms for exploiting workers and oppressed countries is finance capital. By the beginning of the twentieth century, the bourgeoisie (the capitalist) class had developed into a monopoly form in which fewer and fewer capitalists owned the means of production. This is effective, from the point of view of the capitalists, and possible due to the influence of finance capital, where a few primary banks in the imperialist countries like the United States, England, France, and Germany issue the vast majority of loans to all industrial enterprises.
Lenin wrote his analysis at the onset of the imperialist system, and the concentration of finance capital has since risen to extraordinary degrees of centralization and monopolization in the intervening century. Following the World War II, a system of international finance called the Bretton-Woods system was instituted with the International Monetary Fund and the World Bank at the helm to ensure the continued financial and economic dominance of the colonial and post-colonial world. Kwane Nkrumah, Ghanian revolutionary and the first head of state of the independent Republic of Ghana in 1957, famously analyzed this system of dominance, aptly calling it neo-colonialism.
In this way, the imperial powers of North America and Europe were able to continue their plunder of the Global South unabated. As Nkrumah states, “The result of neo-colonialism is that foreign capital is used for the exploitation rather than the development of the less developed parts of the world. Investment under neo-colonialism increases rather than decreases the gap between the rich and the poor countries of the world.” In this highly salient statement, Nkrumah describes how capitalism and imperialism have adopted financial means as part of the primary mode of exploiting oppressed countries and communities. This model has become the modus operandi of capturing ever greater portions of wealth from the working class in the late 20th and early 21st centuries all across the world, not only between exploiter and exploited countries but within single countries, such as the United States. The rise of neocolonialism around the world has coincided with the application and development austerity policies within the exploiting countries. The redlining, segregation, and historical impoverishment of Black people in the United States, for instance, is the domestic history of colonialism. In no less stark a fashion, austerity has represented the domestic front of neocolonialism within the imperialist center.
What Austerity Looks Like: Finance Capital, Debt, and the Plunder of the Working Class
In the broadest terms, austerity is theft. It is a program from the plunder of public resources to enrich the heads of the capitalist system in the banks and corporations. While working people and the oppressed are having their homes foreclosed, their water shut-off, their pensions cut, dying prematurely from preventable illness due to a lack of healthcare, or commiting suicide due to their own debt and deteriorating life conditions, the capitalists pocket these monumental sums to exploit and steal anew.
As a writer working out of Detroit, I have a particular focus on the absolutely devastating impacts of austerity in this city. While I will draw upon the extensive literature on the corporate plunder of Detroit, I also aim to make clear that this is a global struggle of the working class. In 2013, by corporate design, Detroit entered the largest municipal bankruptcy in US (and as far as I can tell, world) history. What has followed in this most recent episode of the ruling class’s brutal assault on the City of Detroit has entailed the theft of billions of dollars in public assets and new, nationally leading levels of poverty and immiseration as well as one of the worst housing crises in human history. Indeed, the forcible removal of Detroiters from their homes exceeds the level of displacement that occurred in New Orleans following Hurricane Katrina.
In the mass buying up of formerly Black-owned homes in Detroit (once the city with the highest rate of African-American homeownership), we see a sinister round of pillage. The years of the Obama administration, representing the fallout of the financial crisis and this renewed round of theft by the ruling class, saw a historical decline in Black wealth and Black homeownership. In addition, this article (published in the Workers World paper, but written by one of the members of the former Detroit branch and a retiree in the struggle) details the struggle over pension cuts in the city, a struggle that unites all workers and retirees across the world whose livelihoods have been stolen in imposed “economic restructuring.”
If you read and believed only ruling class media, you would believe that this pillaging of Detroit’s public resources was was the fault of no one but Detroiters. Be it corrupt, incompetent city leadership or lazy, greedy pensioners, the scions of austerity policies work to hide the truth that it is the financial institutions and corporations that are despoiling the people of their lives’ work. In a city that is 80% African-American, these propaganda points are rooted in racism and demonstrate that austerity enforces and justifies itself on the basis of racism and class oppression. (While black mayor Kwame Kilpatrick was pilloried in the media and sentenced to prison for various charges, the genocidaire state administration of Rick Snyder and the city administration of Mike Duggan, Dan Gilbert, & Co. walk free to poison another city).
In the same year as Detroit’s bankruptcy, the ninth austerity package in 4 years was forced down the throat of Greek workers and pensioners, freezing wages, pensions, and public spending. What do these twin developments tell us about austerity across all reaches of the globe? Similar images were deployed: the lazy, swarthy Greeks wanted to soak up pension money and high-paying public salaries by the largesse of German and French taxpayers. In reality, the the austerity packages imposed on the Greek working class by the IMF and the European Central Bank represent a recolonization of Greece by Europe, much as austerity in Detroit is enabling mass displacement and recolonization by the white ruling class.
Using the racist justification that Black people, or Greek people, or African people, are unable of governing their own affairs, austerity usurps popular power to impose the direct dictatorship of finance capital. In Detroit and other cities in the Midwest, this has taken the form of “emergency management.” These unelected bureaucrats, lawyers, and financiers take control of the financial affairs of the body in question to facilitate their theft. In Puerto Rico, the Financial Oversight and Management Board has similarly taken control of fiscal policy in Puerto Rico to aggrandize the already $73 billion debt. This comprehensive report given by the former head of the Electrical Industry and Irrigation Workers Union of Puerto Rico summarizes the most recent developments of the ruling class assault on the people of Puerto Rico.
In Detroit, as elsewhere, crooked and predatory financial means were employed to gut public wealth. On the individual level, the banks issued subprime loans to low-income people, assuring that in the coming crisis vast swathes of the population would be called upon to pay back their exorbitant interest rates. On the municipal level, the banks floated loans to the city through deals called interest rate swaps, locking the city into a fixed interest rate for a definite period of time, termination before which would mean massive termination fees. Again, this is precisely what happened, with the city being forced to pay hundreds of millions of dollars back in termination fees and debt services.
In the aftermath of this financial bloodletting, the ruling classes have enriched themselves at the expense of deteriorating life conditions for the Black, working class majority. There are many issues to go into but among the victims of the bankruptcy are Detroit’s pensions, housing, and water system. The ruling class has resorted to extorting extremely high water bills from the impoverished people of Detroit primarily to pay back debt services and as their resources are strained because of the demographic collapse. The results are the inhumane illustrations of the agenda of finance capital. Detroit suffers an outbreak of Hepatitis A while Child Protective Services are kidnapping the children of any house to have had its water shut off, even for the most paltry delinquencies.
Austerity is the general impoverishment of the working class through financial means and its effects are economic murder. The devastation that austerity visits upon working people is psychological, social, and economic. In many places, such as India and Greece, where austerity measures are introduced, suicide skyrockets due to the general hopelessness and isolation of life conditions under this form of impoverishment. It is one of the tasks of the communist movement in the 21st century to expose as widely as possible the workings of finance capital. Because it is the same bankers robbing workers in the imperial center (the US, the EU, Canada, and other imperialist countries) as it is all across the world, the fight against finance capital is the cornerstone of worker and oppressed solidarity in the age of imperialism.
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