Written by Hilary Barnes
Should one expect that a brilliant pamphleteer, or, these days, probably a blogger, will change European politics by opening a soon-to-be-famous essay : “Workers of the world unite. You’ve only your governments to lose!“? It is not as ridiculous as it sounds.
In the early days of the capitalism it was found that economies were prone to serious periodic downturns originating in the instability of the financial system. These crises caused huge surges in unemployment which lead to large shortfalls in demand for goods and services, further exacerbating such downturns. This can become a vicious circle that becomes worse and worse as the financial system implodes and households and businesses become increasingly mired in debt.
In the early days of capitalism, when governments usually accounted for much less than 10 % of the nation’s expenditure, it was held that the capitalists were to blame. When a crisis struck and profits fell, they withdrew to their services, with a view to driving down wages to the point at which businesses might once again become profitable, when the capitalists unbuttoned their purses once more – but in the meantime millions of people became impoverished by unemployment. The poor were not to blame, but, as usual, they were the ones to suffer most. And a famous couple of pamphleteers opened an essay written in 1848 with the words “Workers of the world unite. You’ve nothing to lose but your chains!“
As capitalism matured, ways and means of moderating these effects were found, among them a much larger role for governments, which now in Europe usually account for up to 56 % of a nation’s expenditure, much of it typically financed by borrowing. The system was not perfect, but from the post war years until 2008, with some ups and down, it worked pretty well.
Now, however, Europe is stuck in recession in the wake of another one of those periodic financial crises and does not seem to be able to find the way out, partly because the governments were so heavily indebted when the crisis broke, and became rapidly more heavily indebted as a result of the crisis, that they face problems financing an ever-larger debt.
What is so extraordinary is that in the Euro zone today the part played by the wicked capitalists of yore is being played by governments, or more exactly by the governments and institutions of the Euro zone, including the European Commission.
In an entirely rational but insane fashion, governments set up a treaty-based monetary union which, when a slump caused by a financial crisis causes demand to slump and government debt to soar, leaves the politicians and officials in charge of with no alternative.
They have to force countries like Greece, Portugal, Spain, Italy and Ireland to drive down wages to a level at which the enterprise sectors of the economies in question will one again become profitable and a cycle of increasing export- driven production, profits, and demand can begin once more, but in the meantime millions have been impoverished by unemployment.
Workers of the Euro zone unite! You’ve only your governments to lose! The slogan has not yet spread, but the attitude that it projects is already deeply embedded in popular opinion. It is probably only a matter of time before the people of one or another of the suffering countries make a break for liberty by leaving the single monetary system.