Is the G20 the Austerity Summit? No actually…..

austerity

Is the G20 the Austerity Summit? No actually…..

Recently the following press release was put out by the BrisCAN (BrisCAN being one of the spaces organising against the G20). This press release framed the problems of the G20 as follows:

“G20 is austerity summit” claims protest organiser

BrisCAN spokesperson, Adrian Skerritt said: “The G20 meeting will disrupt the lives of Brisbane residents from November 8 to November 16. But it won’t end there. G20 policies will continue to disrupt our lives long after the meeting is over.”

The G20 forum is committed to shifting wealth from the majority of citizens to the incredibly rich. They will do globally what Newman and Abbott are doing locally – sell public assets, outsource and cuts to social services.”

“The G20 is the Austerity Summit” claimed Mr Skerritt.

“What they can’t achieve through their budgets and trade deals they will attempt to resolve through war. Look at Obama and Abbott’s new war in Iraq and Putin’s use of military force in the Ukraine.”

The rally and march on November 15 will condemn G20 policies that create poverty and inequality. The march will also champion the values that should drive economic and political decisions – justice, sustainability, indigenous sovereignty and democracy.

“BrisCAN is demanding a world with an economy that works for people and the planet, a world safe from the ravages of climate change and war, a world with good jobs, clean air and water and healthy communities” said Mr Skerritt.

The rally will assemble at 11am November 15 2014 at Emma Miller Place (Roma St) and subsequently march past the G20 summit to Musgrave Park.

What’s wrong with this? Two problems:

  1. Austerity is no longer the central plank of the strategy of multilateral organisations like the G20.
  2. It is wrong to conceive of the G20 as some nefarious exterior force set to fuck up our lives. Rather the G20 attempts to coordinate capital accumulation on a global level; the social relations of capitalist society already constitute our lives.[i]

So what is austerity? Austerity is a set of policies that aims to radically cut state expenditure for two reasons:

  1. Large state debts are seen as perilous to growth ( Reinhart and Rogoff 2010)
  2. Reduced state expenditure is seen as a good in itself as it is meant to free up capital through reduced taxation; and the market itself is seen as a superior organiser of human affairs.

Linked to this is often a cache of moral arguments: debt itself being immoral, that state expenditure especially on welfare reduces personal resilience and responsibility and that the growth of state expenditure is a threat to human liberty. For example see Treasurer Hockey’s arguments for a ‘new age of responsibility’(2014).

(I think we can also argue there is a narrow and broad definition of austerity. The narrow relates to state expenditure; the other relates to a broader suite of policies including wage cuts).

Austerity was often a key part of the IMF and World Bank conditionality that accompanied the various loans giving to states of the Global South since the end of the 1970s. Austerity then returned to the North in the wake of the 2008 – especially to states like Portugal and Greece (Lapavitsas et al. 2010).

A few points

  • Since the end of the 1970s both debt and finance grew in total size and as proportionally (Marazzi 2011).
    • This is crucial. From the 1970s states and consumers increasingly funded their consumption via debt; more and more profits arose from financial investments
  • In 2007/8 the financial system went into cardiac arrest
  • To save capitalism states bailed out the financial system, purchasing a lot of toxic financial assets to keep all the balls in the air
  • This vastly increased state debt even more

We can certainly say that the original response to this shifting of debt from corporate to state accounts was the imposition of austerity. However this strategy failed: it both tended to shrink the economy and intensify social conflict.

Austerity whilst working to ensure the value of the financial assets shrunk demand. This has forced a profound rethinking of policy amongst many of capital’s thinkers: including those in the IMF/WB and amongst the G20.

Thus now the primary strategy seems to be an attempt to both stimulate demand through vast expenditure on infrastructure and unorthodox monetary policy and to slow down the pace of the reduction of debt. Whilst they are still committed to paying down debt this has to happen at a slower pace and in relation to the levels of growth.

The current attitudes and arguments of many (but not all!) of capital’s global thinkers as increasing postneoliberal (see for example when Christine Lagarde Managing Director of the IMF goes off-script and name drops ‘Keynesians’ and argues for both supply and demand side policy measures). We don’t know the detail of the 900 or so policies that will be announced at the G20 Leader’s Meeting but based on the statements the G20 has already released this year I think we can expect: coordinated unorthodox monetary policy, careful fiscal consolidation, various ‘structural reforms’ and infrastructure expenditure(G20 2014a, b, c, d).

Part of this will mean the reduction of state expenditure (‘cuts’) and the increasing transfer of the costs of social reproduction from the state onto our pockets, wages and credit cards and much of this work will be shifted back into the doors of our home. But the rate and form of this increasing burden no longer corresponds to the rhythms and rationales of ‘austerity’.

Unlike the neoliberal heyday of the Washington Consensus these cuts are not proposed uniformly. Rather I think we will see that both between nations and within them some will cut, some will spend, some will borrow, and some will lend.

Does this matter? Well yes actually. Trying to understand what is actually happening is key to trying to develop emancipatory anticapitalist politics; also how can we claim any credibility if we are fundamentally wrong about reality?

I think it is important to point out that this new approach will probably not work. Debt has continued to grow (Buttiglione et al. 2014); the IMF have downgraded growth predictions again(2014). To keep capital going states are trying to simultaneously spend more and spend less! If anything the structural tensions of global capitalism are starting to creak louder. Don’t be surprised if the shit all goes down – what would we do then? (Spoiler: tired social democratic solutions will be no help.) Plan C anybody?

I do understand that what I am saying here may work to deflate some on the Left. This is due to their politics being antineoliberal, not anticapitalist. Since various factions of capital, due to a new set of issues and problems capitalism faces, are dropping neoliberalism; this renders key elements of the Left’s critique ineffective.

However to be anticapitalist, to be communist, is to oppose capitalism in all weathers and in all its varieties. Social democracy, the Keynesian period of the post-Second World War was no more or less capitalist than the neo-liberal period that followed it. (The compositions of capital and class and thus the forms of politics do however differ radically). Capitalism in times of growth and recession is built on a set of exploitative relationships that dominates our lives, constitutes the very social air we breathe, and does this through and for the endless accumulation of capital, the transformations of value into more value ad infinitum.

The G20 then is not the source of our ills, nor necessarily the cause of things getting worse. It is merely part of an apparatus of power, what we may call empire(Hardt and Negri 2000), which works to ensure the accumulation of capital. Our opposition to it may be more effective, or at least make more sense, if we understand it as just an element of the complex system that works to prevent our lives being lived with dignity, justice and autonomy.

Buttiglione, Luigi, Philip R. Lane, Lucrezia Reichlin, and Vincent Reinhart. 2014. Deleveraging? What Deleveraging? Geneva Reports on the World Economy 16. Geneva: International Center for Monetary and Banking Studies (ICMB).

G20. 2014. Communiqué Meeting of Finance Ministers and Central Bank Governors Sydney, 22-23 February 2014 2014a [cited 24th February 2014]. Available from http://www.g20.org/sites/default/files/g20_resources/library/Communique Meeting of G20 Finance Ministers and Central Bank Governors Sydney 22-23 February 2014_0.pdf.

G20. 2014. Communiqué Meeting of G20 Finance Ministers and Central Bank Governors

Cairns, 20-21 September 2014 2014b [cited 23rd September 2014]. Available from https://http://www.g20.org/sites/default/files/g20_resources/library/September 2014 communique – FINAL_0.pdf.

G20. 2014. Communiqué Meeting of G20 Finance Ministers and Central Bank Governors Washington D.C., 10-11 April 2014 2014c [cited 23rd September 2014]. Available from https://http://www.g20.org/sites/default/files/g20_resources/library/Communique Meeting of G20 Finance Ministers and Central Bank Governors Washington DC 10-11 April 2014_0.pdf.

G20. G20 Labour and Employment Ministerial Declaration Melbourne, 10-11 September 2014

Preventing Structural Unemployment, Creating Better Jobs and Boosting Participation

2014d [cited 2014. Available from https://http://www.g20.org/sites/default/files/g20_resources/library/2014 LEMM Declaration.pdf.

Hardt, Michael, and Antonio Negri. 2000. Empire. Cambridge, Massachusetts & London, England Harvard University Press.

Hockey, Joe. 2014. “The Case for Change”. http://www.liberal.org.au 2014 [cited 4th September 2014]. Available from http://www.liberal.org.au/latest-news/2014/04/23/case-change-address-hon-joe-hockey-mp-treasurer.

International monetary Fund. 2014. World Economic Outlook October: Legacies, Clouds, Uncertainties. Washington (October).

Lapavitsas, Costas, Annina Kaltenbrunner, Duncan Lindo, J. Michell, Juan Pablo Painceira, Eugenia Pires, Jeff Powell, Alexis Stenfors, and Nuno Teles. 2010. “Eurozone Crisis: Beggar Thyself and Thy Neighbour.” Journal of Balkan and Near Eastern Studies no. 12 (4):321-373. doi: 10.1080/19448953.2010.510012.

Marazzi, Christian. 2011. The Violence of Financial Capitalism. New ed. Los Angeles: Semiotext(e).

Reinhart, Carmen M., and Kenneth S. Rogoff. 2010. “Growth in a Time of Debt ” American Economic Review no. 100 (2):573–78.

[i] This isn’t a pessimistic point. The social relations of capitalist society are internally antagonistic, thus struggle and the possibility for different societies exist internal to everyday existence too.

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13 thoughts on “Is the G20 the Austerity Summit? No actually…..

  1. I think we can expect: coordinated unorthodox monetary policy, careful fiscal consolidation, various ‘structural reforms’ and infrastructure expenditure.

    What do you mean by coordinated unorthodox monetary policy?

    Do you mean (for example) that the US federal reserve will continue to print money to stimulate growth (quantitative easing)? If so, is there any evidence that this is working even in capitalist terms i.e. put crudely has Obama or any of the G20 leaders have solutions to the current global economic crisis?

    The BrisCAN press release about the G20 being the Austerity Summit press says that ‘They will do globally what Newman and Abbott are doing locally – sell public assets, outsource and cuts to social services.’
    However at a local level, aren’t regional centres (country towns) dying because of lack of capital? For example, instead of two supermarkets in town there is only one. Retail businesses are closing, buildings are empty or being rented to second-hand businesses, unemployment is rising, local government amalgamations have taken important wages from previously thriving towns. Where is the objective evidence that what Newman and Abbott are doing is providing solutions in their own heartland? Aren’t they likely to be gone sooner than later? Why look at the problem from a top-down perspective at all?

  2. Dave,

    I have refined my questions which I term ‘failure in the market’:

    1) What do you mean by ‘coordinated unorthodox monetary policy‘?

    2) At the global level are you saying that public spending (on infrastructure) is propping up failure in the market?

    3) At a local level, aren’t regional centres (country towns) dying because of lack of capital?

    Ian

    PS You still haven’t produced an explanation of the GFC in less than 3 minutes (length of a rock song), as promised 😉

  3. Hi Ian
    1) In practice it means that the ECB, the US Fed and the Bank of Japan are working to make interest rates functionally zero. Its clear to all that this can’t go on forever so as the US winds back Quantitative Easing the others will take up the slack. Also they are engaging in forward guidance which means they are announcing planned interest rates months in advance.
    2) Not, but its planned to. I’ll be writing about this more in weeks to come. You should look at chapter 3 of the latest IMF WEO. Also I deal with this question in detail in relation to Australia here: http://withsobersenses.wordpress.com/2014/09/20/building-the-infrastructure-state-plans-anti-politics-and-sullen-refusal/
    and here: http://withsobersenses.wordpress.com/2014/03/04/roads-to-nowhere-capitals-plan-a/
    3) I have no idea. I have done no research on this question. No investigation, no right to speak after all. But I’m unsure why you think this is related to the G20.

    I wouldn’t use the language of ‘failure in the market’ as I think the term ‘market’ is a fundamentally neoclassical term which comes with a host of assumption ( including the idea that its opposite is the ‘state’.) I prefer the Marxian notion of capital accumulation.

    I’m pretty confident I could do that 3 minute summary now. Maybe bring your stop watch next time we meet?
    cheers
    Dave

  4. Regional centres (country towns) dying because of lack of capital
    I have no idea. I have done no research on this question. No investigation, no right to speak after all.

    My observations are that capital is being concentrated into the south-east corner of Queensland and in digging up and bring minerals to the eastern seaboard. Meanwhile country towns are dying.

    FIFO mining and lack of investment in regional Queensland is crippling the very centres that form the political base of successive governments.

    Take a drive to the country town of Boonah, one hour west of Brisbane, a once rich and thriving town, now half the shops are empty, the shire offices are empty, the hospital and school are under resourced, the town is dying.

    Go to the granite belt and see the once prosperous shire of Stanthorpe in decline, its rail line defunct, its wealth sucked dry to prop up the less prosperous district of Warwick, with jobs and infrastructure lost after the 2008 shire amalgamations by the Bligh Labor government.

    But I’m unsure why you think this is related to the G20.
    Successive Queensland government have endorsed economic policies (or lack thereof ) that have given us the global financial crisis.

    The concentration of capital in one region over another is producing inequality.

    Surely it is the task of the radical to organise for greater equality in the world.

    1. 1) Was the economic crisis caused by government policy? Is that policy related to the policy of the G20 in 2014?
      2) You are probably right about geographic concentration of capital. But these developed during the boom right?

      1. 1) No, the economic crisis is a financial crisis caused by the market. Governments attempted to re-regulate the market (by printing money, by underwriting bank deposits, by propping-up failed companies). They failed so the crisis continues.

        G20 leaders have no answers to the failure of the market and so I can’t understand why the anti-globalisation movement makes such a big deal of the G20? – it is a charade, a fiction, a failure. Isn’t it?

        And who are we to oppose the G20? What organisation do we have? Where is our power? In protest? We can’t even stop an insane war in Iraq.

        Where are we? On so called ‘social media’ which is really corporate media. Just to have a discussion with our friends and comrades we have to pay them money.

        2) If you are saying that G20 leaders want to spend big on infrastructure and u accept there is global recession … then they intend to concentrate capital regardless of whether there is a boom or a bust.

      2. I can’t see how this is in disagreement with the arguments broadly made on this blog. What is the point of disagreement as you see it?
        Plus your objections keep shifting from comment to comment. I cant follow what you are trying to say….

  5. Would be super interested in discussing to what extent the shift in rhetoric from the likes of Lagarde at the IMF to what she terms “inclusive capitalism” (a sinister phrase if ever there was one) signals a break with austerity, or more a loosening of it’s most prescriptive dictates, for a bit of ‘room to move’ – to allow scope for “austerity with a human face” (shudder). For eg, I’m not aware of whether and how much the prescriptions for states like Greece and elsewhere have shifted.

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