You and others on this list may be interested in two articles on Greece in the current issue of Dollars & Sense: Greece as a Demonstration Project<http://dollarsandsense.org/archives/2010/0510epitropoulos.html>, by Mike-Frank Epitropoulos, and "Pressure from the Bond Market"<http://dollarsandsense.org/archives/2010/0510macewan.html>, by Arthur MacEwan. (I am not sure the hyperlinks I have inserted will survive my posting this; anyone who's interested can find these two articles at the D&S website, dollarsandsense.org.
--Chris Sturr
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>
> Message: 5
> Date: Fri, 7 May 2010 13:37:29 -0400
> From: Julio Huato <juliohuato at gmail.com>
> Subject: [lbo-talk] Quick thoughts on public debt
> To: Marxist Debate <marxist-debate at googlegroups.com>, scisoc
> <scisoc at googlegroups.com>, Lbo Talk Lbo Talk <
> lbo-talk at lbo-talk.org>,
> pen-l at lists.csuchico.edu
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> <r2m995cfd591005071037w6138f87bq4946293614da9e35 at mail.gmail.com>
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>
> (My stupid blog is not working well. But here's a few and rushed
> thoughts on the public debt.)
>
> Media pundits, economists, and politicians claim that the current
> level of public indebtedness in the U.S. and its further expansion are
> "unsustainable."
>
> Seemingly, "our" profligacy is catching up with us. The day of
> reckoning approaches. We should either prepare for a drastic decline
> in social welfare tomorrow or accept a worsening of the economic
> situation today -- e.g. the government should limit its meager
> "stimulus" spending and allow the economy to slip into greater
> joblessness to prevent the looming catastrophe. The crisis in Greece,
> that many commentators attribute to a borrowing binge by the Greek
> government, is now being alluded as exhibit 1. (Let alone the fact
> that the sudden increase in Greek public debt may have resulted from
> the financial crisis and the attempt of the Greek government to
> salvage banks that are now downgrading its debt, as Costas Lapavitsas
> claims here: http://bit.ly/cMQeMn.) One of the latest additions to
> this parade of nonsense is Arianna Huffington's "Life in the Age of
> "Much Worse Than We Thought It Would Be"" (http://huff.to/bu0txF).
>
> Economists, of course, will pretend that fundamental scarcity -- i.e.
> the fact that society's total labor time and its productive force are
> never infinite -- is at the root of the dilemma. Society's cake is
> finite, and one cannot eat it and have it at once. Except that this
> is a false premise. The public debt (or the private debt, for that
> matter) has absolutely nothing to do with the finiteness of society's
> resources and productive possibilities. It's not nature but social
> convention or, more precisely put, social structure.
>
> Public debt is not about the limited production possibilities of our
> society. Public debt is about how the wealth that exists (or will be
> produced) is (or will be) held -- by whom and at whose exclusion. In
> other words, it is about how the ownership over existing wealth is
> distributed. It's about who owns today's wealth and, hence, holds the
> enforceable claims over future production flows. It is not about how
> large these flows can be with existing resources and productivity.
> Wealth distribution is a social condition, not a fact of nature. It
> is entirely within the reach of human capabilities to alter the form
> in which wealth ownership is distributed.
>
> Of course, the smuggled pretension here is that the only conceivable
> or legitimate way in which wealth ownership can be reshuffled in our
> society is via the market mechanism: that private ownership is sacred.
> But, any thought about it shows that the pretension is exactly
> contrary to the very (contradictory) institutional framework and modus
> operandi of modern capitalist societies. No modern capitalist society
> would last long without a massive state -- tasked with enforcing and
> protecting ownership rights, disciplining labor, undertaking social
> programs to preempt unrest, waging wars, regulating commerce, and
> plain taking from the poor (and the out-of-favor rich) to give to the
> rich (and better connected). A massive state requires taxation and
> the allocation of expenditures outside of the market mechanism.
>
> Furthermore, historically, under capitalism, high levels of public (or
> private) indebtedness have always been resolved, partially or
> entirely, through politically-sanctioned or politically-induced
> processes of wealth redistribution -- from land reforms and outright
> expropriation to price management to relatively benign inflationary
> processes.
>
> The McKinsey Global Institute (http://bit.ly/8bQV8z) estimates that
> adjusting the imbalances that led to the ongoing crisis will require a
> (on average) 6-7 year long process of "deleveraging," which should
> wind up reducing the ratio of debt to GDP by 25%! How can such a
> massive transfer of wealth ownership ever happen anywhere without a
> politically sanctioned process or carnage? Can any society today
> accomplish this feat by heeding Andrew Mellon's dictum alone --
> liquidate, liquidate, liquidate? At what human cost. (Isn't the
> point of an economy supposed to be "human welfare"?)
>
> Again, unless they are willing to see themselves reduced to chop
> liver, working people are going to have to take matters on their own
> hand. The Greek people are showing the way. And this is not an
> endorsement of the methods of small groups of anarchists or
> professional provocateurs. It's simply the notion that working people
> will need to take action, rather than wait for the powers to decide
> how to allocate the cost of the "adjustment."
>
> Just like the spike in public indebtedness in Greece followed the
> financial panic and the government's effort to prop up its banks,
> public indebtedness in the U.S. has next-to-zero to do with welfare
> queens on Cadillacs or poor people getting over their heads with
> subprime mortgage borrowing. It has mostly to do with war making, tax
> cuts for the rich, the secular decline in the real income and economic
> security of working people since the 1970s, the financial blowout, all
> rooted in traits inherent to capitalism.
>
> There's nothing inevitable here, but the struggle. It is a class struggle.
>
> [Note to economic theorists: I am not claiming that distribution and
> efficiency are independent variables under an abstract, pure, and
> functional capitalist economy. Those theoretical constructs assume
> that capitalism functions smoothly. In other words, they assume that
> working people are reduced to perpetual political submission. I'm
> referring to the fact that things do not have to be that way.]
>
>
>
-- -- Chris Sturr Co-editor, Dollars & Sense 29 Winter St. Boston, Mass. 02108 phone: 617-447-2177, ext. 205 fax: 617-447-2179 email: sturr at dollarsandsense.org