Text of a speech delivered at the national conference of the Cadres, Engineer and Services Workers Union, affiliated to the Belgian socialist confederation of trade unions, on October 21, 2010 at Blankenberge, by Stephen Bouquin, Professor of Sociology at the University of Evry in France and a leading activist of Sp.a Rood the left tendency of the Flemish Socialist Party.
Dear comrades, dear friends,
We are currently facing a difficult and complex situation. Many trade union and leftist militants are puzzled and some get discouraged. We feel that our certainties are not worth much anymore. We feel confused and that we no longer have a hold on events. In these tumultuous times it is important to stay on track and especially in the right direction. A conference is a great opportunity to do that. It allows us to examine the situation in which we find ourselves. A conference allows us to outline future perspectives, to agree on objectives and on the actions to be taken. I am very pleased to be able to make a contribution to your conference. It is truly a pleasure and an honor.
The crises are multiplying … what should we think of it?
For three years now, crises succeed one another: in 2007, during the food crisis, prices of food like rice and wheat were soaring and the oil prices skyrocketed. In 2008 it was the turn of a global financial crisis, the biggest since the Crash of 1929. In 2009, the economic recession began, followed in 2010 by the public finance crisis and later by the debt crisis too. We are currently living the beginning of a monetary crisis. To this, can be added the community crisis on a local level in Belgium, while we cannot of course forget on a global scale the environmental crisis…
In Greek the word “krisis” means “crossroad”. Edgar Morin, a French sociologist, suggests that the crisis should be approached based on this definition: not as a transition, but as a crossroad. For him every crisis goes through three phases, namely eruption, disruption and a crossroad.
The first phase initiates a state of emergency that exceeds the usual processing capabilities of the system; the system’s general regulations are shut down. The system then becomes so disrupted that the operating methods no longer run. The measures which are taken to stabilize the situation and the response mechanisms lock up hence the crisis becomes more severe; partly because the adverse effects neutralize the initiated action.
Then follows the second phase, disruption. Antagonisms become evident, tensions increase. Concretely, demands that must be met simultaneously multiply and become contradictory, which triggers the third phase, the so called phase of divergence or of the crossroad.
This third phase is characterized by collapsing structures. This phase often evokes salvation characters and miracle solutions. The first two phases – eruption and disruption – lead to destabilization and impotence. But this situation of divergence is characterized by a fundamental reassessment that destabilizes the system and opens up perspectives of systemic bifurcation.
I think Edgar Morin helps us gain insight into the crisis. During a crisis, everything is in motion and we have to get off the beaten paths, revise our views and our practices. In short, the routines are worthless and returning to the status quo ante is as vain as unrealistic. A radical reassessment is therefore necessary and we must be ready for that.
The crises in the last two years prove that everything is connected …
In 2008 the U.S. property market collapsed. The financial giants went bankrupt. They were short of cash and turned out to be insolvent. Households can no longer repay their mortgages and families are either forced to sell or expelled from their houses. Houses lost their value and investors got left with portfolios that proved to be full of rotten assets (“toxic assets”). Rotten for being overvalued, rotten for being unsecured.
The crisis spread around the world: the U.S. mortgage funds went bankrupt one after the other. The U.S. government intervened to help but it was too late. Then the turn of Icelandic, Spanish, Dutch, British and Belgian banks came to be carried in the storm. Faced with the risk of a general collapse, the governments proceeded to inject staggering sums into the banking system: in a few months, nearly four trillion U.S. dollars were put at the disposal of financial capitalism in the form of loans, guarantees, equity purchases, acquisition of assets or partial nationalization. Where did this money come from? Did it come from the sales of gold reserves or from money printing? No. The governments actually put on the market government bonds, obligations and other securities valid for 3, 5 or 10 years. Rapidly these bonds became the safest investment, since which state would go bankrupt? Moreover, central banks dropped their interest rates, which made the money borrowed by these central banks cheaper than tap water. Were these large sums of money invested back in the economy? Were they used to support the SMEs activity? No, because in the meantime a recession supplanted the financial crisis. Indeed, why would companies invest when the economic activity halts?
From late 2008, the world economy enters in a phase of recession, the worst after World War II: minus 4% for OECD countries and a decline of 2% to 3% in emerging economies. At that time, some maintained that the crisis also has good sides, that the crisis is always an opportunity for changes. Many saw in the government intervention signs of the State’s re-emergence. We heard the swan song of neo-liberalism and that economic intervention would return along with Keynesianism. They were talking of a sustainable economy recovery plan.
No. The awakening is rude as by the end of 2009 the debt crisis began. It started with Dubai, this emirate where a tower over 800 meters high and an artificial beach have been built. But there is trouble brewing as the emirate fails to repay its creditors. In order to avoid contagion risks (“domino-effect”), the neighboring countries in the Persian Gulf saved the day by buying Dubai’s debt. Then the turn of Greece comes. At that time we came across a strange acronym PIIGS (Portugal, Italy, Ireland, Greece and Spain). The markets speculate against these states: the investment funds buy debt securities massively in order to sell them in whole packages, thus decreasing the value of these securities and increasing their interest rate. Bonds are securities with a limited life which means that the buyer must be repaid after 3, 5 or 7 years. Thus states must borrow again and quickly. But meanwhile, interest rates have increased up to 8% or 10% so these states find themselves financially strangled. Behind this, lies a perverse mechanism where those whose debt was repaid are the same as those who were saved with public money and those to whom money had been lent at zero interest rate.
Public Debt in the main countries of the euro-zone (% of the GDP) – source Eurostat.
|2007||2008||2009||2010||Evolution depuis 2007|
|The Netherlands||45,6%||58,2%||57,0%||63,1%||+ 38,4%|
The table above shows the extent to which the debts of all the euro-zone countries have been rapidly rising since the end of 2008. The slump in tax revenues because of the recession on one hand, and the increase of financing needs on the other hand resulted in a kind of scissors crisis. The debt crisis is really about the non-payment danger which threatens again the whole of the financial system. For who retains the state’s obligations? Who bought these bonds? Well, they are exactly the same banks that two years ago were rescued with public money. The states therefore need to repay…and in order to repay they must borrow. But beware, they may only do so provided that satisfactory assurances are given, i.e. a consolidation of public finances. And for this to happen austerity measures are needed, enormous ones. Otherwise the states are losing their AAA rating which in the short term provokes increased interest terms. The states are therefore virtually strangled to later be siphoned by financial capitalism.
According to many analysts, the fiscal consolidation would, firstly, allow the continuity of the loans and therefore of the financing, notably financing from the EU, since it is necessary. Secondly, the consolidation would guarantee the survival of the euro which is a strong currency because Germany wants it to. It takes therefore twice as high budgetary discipline and all the countries, regardless of their socio-productive characteristics, have to level their indicators: it’s the religion of the stability pact, the cult of the 3% deficit…
Faced with the non-payment threat by the “PIIGS”, a solution was found in May 2010: 750 billion from the EU Guarantee Fund, which is partially financed by the IMF and the ECB. This fund is only accessible on condition that the deficit is reduced to 3% in four years time. It is not really a help but merely a way to subordinate the states and their democratic sovereignty – or what is left of it. This support is conditional, similar to what the IMF did in Latin America in the 1990s: “we can help you provided you proceed to privatizations etc…”. In Europe’s case, the strategic priorities are not so different: on the funding level tax burdens on capital have to be reduced and it is up to the state – i.e. the taxpayers – to clear capital’s debt, or even to bail it out with some additional profits. Therefore, states do not only seek to reassure markets, but also to reduce social spending and transfer the costs of the crisis on the working people. As a result, the same measures are encountered everywhere: reduction of wages, increased retirement age, non-replacement of retired officials, reduction of the supply of public service…
Greece underwent four austerity programs in less than a year’s time and it is still not over. All European countries are currently applying similar austerity policies. But these austerity measures might relaunch a recession… Paul Krugman, former Nobel economics laureate, and J. Stiglitz, former director of the World Bank, are asking the EU to not halt the programs of economic assistance too suddenly and to go neither too far nor too fast in its financial consolidation policy. They believe so because they know that the risk of an economic depression is not remote. In short, from the financial crisis we passed into the socio-economic crisis (which still persists) and then to the public finances crisis. Tomorrow there will most likely be a monetary crisis as well…
How do we get out from these successive crises? It is like squaring a circle. Either you drastically reduce expenses and you choke the economic recovery; or you increase the revenues of the state, but if you do that on the back of the population, you reduce households’ purchasing power and smother again the economic activity. Thus, actually, there is only one approach: namely, rapidly adopt a reform of the taxation system, abolish tax havens and the rebate system, i.e. the loopholes available to companies (notional interests) and to the wealthier, and introduce a tax on financial transactions. Instead of letting the European Commission play the role of the members states’ budget police, the left should demand a real European budget which would immediately raise the question of a move towards fiscal and social harmonization, at least for the euro zone. All these are emergency solutions: rational, efficient and, moreover, fair because they would make those responsible for the crisis pay for it. In the medium term, we’ll definitely need to go quite further, notably nationalizing the financial sector because it has become today as rapacious as harmful.
What lessons can we draw from these successive crises?
Firstly, it is a systemic crisis. Everything is interconnected. It is not just a transient crisis, a recession with a financial crisis on top. No, it is something much deeper. We are actually witnessing the crisis of neo-liberal deregulation. What is the rationale behind this speculative madness which is far from being over? The answer is simple: the stock market brings more money than investments in the real economy. And so does credit! On one hand, we have seen real wages stagnate, the share of wages in added value undergo serious decrease for about fifteen years now (around -10 points), but since this evolution also reduces demand – purchasing power – then credit has to take over. Thus, credit becomes one of the crutches that maintains demand, while also supporting very high profit yields, like Middle Ages usury. In the end, billions and billions are generated in the stock markets. It is believed that money can be made out of money. That is wrong, the stock market does not create wealth and that is why we have so many speculative bubbles that burst sooner or later.
We have an enormous debt rate. This is clearly the evidence of how irrational this economic system is. When we add to the public debt, households’ debt, companies’ debt and financial institutions’ debt, we reach 400% of the GDP for the United Kingdom, 350% for Japan and 320% for the United States.
This means that three or four years of wealth have been spent before even being produced. Admittedly this is not new, but the last time was just after World War II when everything had to be rebuilt and the growth was strong. Today we will face 10 years of slow economic growth, ranging from 1.5 to 2.5% maximum. In short, the Western economies float on an ocean of debt and it will be very hard to repay them. That leaves only about two solutions: the first is through inflation, as the debt is monetized (at 5% inflation, 100 million are only worth 95 million the following year). But inflation will cause an impoverishment of the employees, without a real wage indexation… it is therefore a risky solution. The second option is via a tax on capital, that is without affecting the purchasing power of the working population. However, this requires some degree of political courage and above all a rebalance of powers that would have to be rapidly rebuilt. Nevertheless, these solutions are only temporary. It helps while facing an emergency, but we will soon have to look further and act in a structural manner.
We must not be mistaken: we are engaged in a system that has taken a kind of leap forward. Paradoxically, we see at the root of this crisis, a crisis of overproduction. Today in the OECD countries, only 70% of production’s capacity is used. In the capitalist system we only produce what will be sold at a profit; we produce according to the exchange value and not according to the use value. The economic rationality is not based on social needs but on solvent needs, especially those that can yield profits and wealth. This blind logic does not acknowledge needs such as healthcare, education, housing unless they can lead to profit making. Hence the ‘marketing’ of these sectors is creeping in.
The whole of world production is organized according to the rationale of valorization: the pharmaceutical industry will not do research for diseases prevailing in the developing world because they don’t have social security and these drugs will not even be sold. Car manufacturers will continue to build cars even if the highways and the streets are jammed. If they don’t, the competition will do anyway and steal their market share. Wholesale will continue to push for floor prices since otherwise consumers will no longer be able to purchase because of their stagnating wages. Thus, the prices of the suppliers must be brought down – who thus have to find cheap labor for fruits and vegetables picking, i.e. establish factories in foreign countries where wages do not exceed 100 Euros per month. That’s capitalism: it’s always more for less and less money, in order to gain more and more profits out of human labor. It is a blind and irrational system, at least on a macro-economic level. The hellish competition creates overcapacity in production while in the same time that system is not able to satisfy essential social needs. So, in the slums there are televisions but there is no potable water and there is an acute lack of food.
From one crisis to the other, capitalism will continue to cut off the branch on which it sits, namely destruct its own foundations… Marx had already understood it: the limit of capitalism is capital itself, he was essentially saying. I think that this somehow reflects nowadays capitalism’s decadent nature. While it has always been destructive, now it is regressive and decadent, economically, socially and morally. This is the first big lesson I draw from the crisis. There must be a different economic system, social, sustainable and democratic. What it should look like? I cannot myself get into the details, but I think we should look towards an economic democracy and a participatory economy, where the dictatorship of the shareholders will be replaced by a debate between citizens-producers-consumers in order to set in motion an ecological and democratic planning.
I think we can also draw political lessons from this systemic crisis. Although we can talk about financial markets, financial capitalism, all this has something anonymous, something impersonal. It is no longer the big bourgeois with his cigar and top hat. But at the same time there is still a ruling class. This is the second lesson we can draw from this crisis.
This ruling class still exists and it’s a very exclusive one. Indeed, during this crisis, the myth of popular capitalism, of the small shareholders, broke into a thousand pieces. Those with their small savings are left with nothing. The others, the millionaires and billionaires, they also lost but they have already recovered their losses… This class is a ruling class because of the economic power it holds, from the wealth it owns and from the weapon of economic blackmail that it uses if not from the corruption that it exerts on the democratically elected power spheres. This class defends its interests tooth and nail, it recoils at nothing. This class, this oligarchy, will not pay for the crisis, which it will make us pay and it will all it can to achieve that goal. This is the elite’s own class struggle, the one that is led from above. And whether we like it or not, we will quickly realize it.
That brings me to the third lesson which is one of an ideological nature. I think we can say that with this crisis we are living the end of “the end of history”. Remember 20 years ago when the Berlin Wall came down. Some proclaimed that the end of history had come because capitalism had won. Mankind had reached its highest stage; economy had found again its “natural” state. In short, there was no system anymore, only a market economy that the state didn’t even have to frame, but only support it and, facilitate it. We could no longer talk about capitalism, but only about a market economy.
This crisis forces us to realize that we live indeed in a system and that this system is dysfunctional. This awareness actualizes the idea that we should intervene, act, regulate (this is rather modest, but it’s better than nothing). Ultimately, capitalism does not keep its promises of universal enrichment, it betrays the hope that “everyone wins.” More fundamentally speaking, the crisis of capitalism feeds the idea that we must take back our destiny in our own hand. And so the train of history can leave again. Objectively, history never really stops. But subjectively we often feel that things will never change. That belief is wrong, completely wrong. If we allow capitalism to continue, we will pay the price and moreover it will lead humanity right into a wall. In particular because there is another crisis that I still haven’t talked about and I won’t, that of the ecosystem including the climatic and the ocean’s acidification.
Why has the right so much wind in its sails?
There were the election results in Sweden and the Netherlands, in Austria and in Flanders of course …We hear it and we read it often: a new right has the wind in its sails while the left stays behind … Many of the left wonder “why aren’t we the most popular? The crisis proved us right! “… Indeed, why the reactionary right scores points? My answer is clear: their progress is a direct consequence of our decline. In other words, the strength of the right is a barometer of the left’s weaknesses.
Everywhere, or almost everywhere, the left has trouble forming governmental majorities and stays in minority in the electorate, even when it slides to the centre. Remember in the 1990s and 2000s, social democracy sold whatever it had left of its ideology. It was the time of the ‘third way’ with Anthony Giddens as its main theorist. The market economy represented the point we could not go beyond. Tony Blair was the example not only for Gerhard Schröder (SPD German) but also for Frank Vandenbroucke, ideologist from the Flemish socio-democrats. Let’s not forget he imported from Great Britain the “active welfare state”, justifying Workfare because there shouldn’t be social rights without obligations. But while this idea makes sense, it overlooks the fact that they are more people looking for work than vacant work positions. Thus, the causes of unemployment move from the socio-economic structure towards individuals and their attitudes. Meanwhile, further economic deregulation was taking place, notably on the stock-market level. It’s no coincidence that the City of London became the biggest stock market in the world: 70% of derivatives, CDOs and other financial investment products were traded on the London stock market, thanks to the deregulations implemented by New Labour and Gordon Brown.
In a refocusing process, with speeches and relevant policies, the social-democracy disarmed its own base in respect of the dominant ideology, making of us supposedly “capitalists”, “holders of human capital”. For the defenders of neo-liberalism, we only have to sell ourselves on the labour market: employability, adaptability with greater flexibility constantly. The public authorities? They are inefficient and costly! Long live liberalization, competition and privatizations we were told! The public authorities must, above all, not intervene otherwise the competition would no longer be “free and undistorted”. In the end, the traditional left drifted towards the centre and made itself invisible.
It is within this ideological context that the economic crisis occurred. And what happened for a moment? The government was back and many of us were pleased! But this didn’t last…Today we are told we were living beyond our means and they try to convince us that the public debt is the result of an overly generous welfare state. In the absence of a clear counter-offensive ideology, people will increasingly fight among themselves, instead of against the spheres of power and the truly responsible ones. The populist right that collects a great number of votes in the Netherlands and elsewhere, associates social fraud, profiteering, parasitism with some population groups. The reason is simple: they divert the resentment to scapegoats. And thus we see that despite the numerous social struggles, the resistance to austerity, the ideological pendulum doesn’t return automatically. Indeed, nothing is obvious…
Nevertheless I believe defeatism and demoralization must be avoided. Look at France: all the generations were together in the streets against the raising of the retirement age. Young people understood very well that this measure would reduce the number of jobs and that they would have to work longer in precarious situations. Until the end of the movement, two thirds of public opinion was against the pension reform. Sarkozy is only popular with less than one third of the population. The reasons are obvious: everyone has seen how Sarkozy served the rich with preferential tax regimes (“fiscal shield”), how he finances his party by the multimillionaire Lilliane Bettancourt in exchange for a preferential tax rate. Faced with his party’s fall, Sarkozy launched the counter-offensive. In August, he violently attacked the Roma and expelled them (actually “deported” them since collective expulsions were carried out). He also claimed that new French nationality should be taken away. He advocated the “deprivation of nationality” and in September, the paratroopers were patrolling the streets on the basis of a so-called terrorist threat. Since Machiavelli we know that fear has always been beneficial to those in power. The media and the right are constructive allies in a kind of “political economy of fear”. Sparking collective fears increases the viewing rates and pushes the frightened ones into the arms of a Big Brother state that will control and film everything.
But France shows that this does not always work. The manipulation of public opinion has its limits. On one condition, namely that people are willing to hear something different, a counter-discourse. And if you can recognize one thing in the French left, it is exactly that: it certainly had ideological drifts but it has always addressed them. A large part of the left remained critical towards the European Union; it opposed the security doctrine and the zero tolerance, and with a few exceptions it didn’t run with the pack regarding terrorism and insecurity. All this allowed the left electorate to be fairly immune against various reactionary viruses.
In this respect, I believe it is essential that the left makes no mistakes about the target. The whole right is now starting a smear campaign about multiculturalism, emphasizing that migrants constitute a major problem, that migration is putting pressure on our social system… The media amplify a number of events and reset the way an issue is approached. Concretely: the issue is not “the others” but social inequality. And above all, our social system is under pressure because the capital is taxed less and less.
The more concessions the left makes to the right on a political and ideological level, the harder it will be for the left to win back public opinion. In other words, all concessions are billed twice. In the present and in the future. This also means that any concessions made to Flemish nationalism will lead to an easier takeover of the SP.a. electorate. Defending the labour world – not only the workers and the employees, but also engineers and self-employed – is something other than defend the “Flemish people”. In the notion of ‘people’ (volk), the conflict of interests between the capital and labor disappears, to leave its place to a fake opposition between the French-speaking and the Flemish.
Within the Flemish socialist party, we often hear the same old tired drum, namely that our potential electorate can be found in the centre of our political chessboard and therefore a positioning on the left would be suicidal. I reject this statement. I believe that, at least half the population still votes without knowing what is really the left, the right or the centre. But let’s suppose that they consciously consider themselves as center electorate…the question arises whether we should run after them? Why not convince them that there a better offer can be found on the left?
Well, to accomplish this, deep reform of the left would be needed. At this point, I would like to highlight a few essential elements:
This left must gain once again offer a vision on the world, on what is going wrong and on ways to bring solutions. It must once again draw a critique of capitalism as an inhuman, anti- social and harmful economic system.
People need to clearly know what the left really stands for, whether it is in public spaces, in the media, in pubs or canteens. It is therefore not enough to say “we are here for you”. It is largely ineffective and it still leaves all the latitude needed by the others, notably the right wing populists. Indeed, what politician would say “I am not here for you but for my own interests and I am a demagogue”…
This left should once again defy the established order; and therefore be led by individuals who are consequential/sound, selfless and do not accept compromises.
The left should again dare to be ambitious: the feasibility of the world is not a 19th old century novel, quite the opposite. Politics have nothing to do with a career punctuated by the mandates of any management board. For the left, politics have to be something else: a mandate of engagement with an exemplary function.
The left will only be relevant/ if it can clearly determine concrete targets and to realize them: we want a public bank, we want to decrease the gap between the rich and the poor, we will make the wealthy and the bankers pay for the crisis…
The recently deceased British historian Tony Judt in his book “Ill fares the land” (2010), argued that social democracy must urgently find its fundamental values again. According to him, social democracy abjured itself when it presented privatizations as progressive. At the same time, Tony Judt also affirmed that the term socialism has become unusable. For him socialism is a 19th century idea with a history in the 20th century but without any future in the 21st century and the concept of socialism has become a useless burden.
I think that Tony Judt is mistaken. The country is not tired but Judt was, and he was also demoralized, as we can all be. But one shouldn’t project one’s own feelings onto reality. Is socialism an insult? No! A recent poll in the U.S. interviewed more than 1,500 randomly selected Americans to describe their reactions to terms like ‘capitalism’ and ‘socialism’.
They published the results of the survey with the tile “Socialism is not so negative, capitalism is not so positive.” Only a narrow majority of 52 percent still responds positively to “capitalism”. Nearly 40 percent of respondents conceive “socialism” as positive, and that in the U.S.!
Many, situate socialism in a distant future. A kind of pledged country, another end of history. And of course, if we assume the current balance of power, well, there is not much hope. But this is also a misconception. ‘Socialism’ in K. Marx always had a double meaning. Socialism was for him first and foremost the “real movement of concrete emancipation”. This means that it consists above all in a concrete battle: any improvement of the conditions of existence, each reform is a step forward. Thanks to this conception, socialism has transcended the19th century utopian thought. Instead of being abstract or imaginary, socialism has become concrete: 8 hours work-day, universal suffrage, prohibition of child labor, social security, work contract etc.
But the daily struggle is effective only if it’s oriented in a precise direction. Where there is a perspective of an improvement for all of us. And that is why socialism also embodies the idea of another world, of a social alternative with key ideas like the abolition of exploitation, of oppression and the free association of producers.
In the 19th century, people quickly understood that as long as capital has supremacy, any progress would be fragile and reversible. This is the reason why the socialist movement had also set itself the target to structurally change the social order: we’re done with those up above/with the privileged, we are over with inequality in terms of power, possession and status. And this is still valid today. We must put an end with a society of classes – so that every person can enjoy the same liberty. The second definition is one in which socialism embodies “another world” or another social order.
I don’t need to tell you the usefulness of a flag. No battle is possible without a flag, without a collective “I”, a “we”, a feeling of “companions in misfortune”.
Today, in these times of crisis, the system shows its true ruthless face: nothing for others, all for us, the owning class. We must not be afraid to target the enemy: those who want us to pay the costs of their crisis; who want to steal away social rights, further undermine social security. Why should we accept this? Because supposedly there’s not enough wealth? This is nonsense, Europe is rich: in 25 years time most Western European countries’ GDP doubled, while the population didn’t double. Thus we must ask ourselves what is precisely the problem: not the scarcity of financial resources but the distribution and the purpose of the wealth produced.
In 150 years, the labor movement has achieved a lot. The socialism of the 20th century is something we need to look at with a critical eye. Mistakes were made and not small ones. But many things were achieved and not only in Europe. Daily trade union action is an essential link of solidarity. What we have achieved on the “micro social” scale, we seek to realize on a macro level scale. Locally and globally.
Latin America has put socialism back on the agenda. So will we. And in the 21st century, socialism will be ecological or it won’t be, it will be internationalist or it will not be. Socialism will defend both equality and liberty. Socialism has often been buried but it has always recovered. The system’s crisis pushes towards a social alternative. The preservation of our social achievements requires that we leave the trenches for a battle that is being imposed upon us. I would therefore like to conclude with the words of the 19th century British poet Percy Shelley in his Call for Freedom: “We are many – They are few”….