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GOODBYE TO SOCIAL DEMOCRACY?
The chief goal of the $1 trillion rescue package recently agreed upon by European finance ministers, with support from the IMF and the US, is not to protect Euro-zone bankers from taking a haircut on their bonds but to dismantle the European welfare states and rebuild them on the neo-con American model. The rescue package represents the most sweeping capitalist offensive against the European working class since 1945.
There were other options available. The finance ministers could have restructured the debt of Greece and other vulnerable PIIGS, accepting less than full payment on their bonds. But rather than restructure the debt they want to restructure society. Was it Rahm Emanuel who said that "a good crisis should never be wasted?" The ministers do not intend to waste this one. As they impose austerity on the working classes of their respective societies, European governments will claim that the gigantic debt was necessary to solve the crisis and that it cannot be repaid without jettisoning social democracy.
European elites have been trying for some years now, but with only limited success, to accomplish what America's rulers have largely achieved; that is, to take away the social programs instituted during the twentieth century that offered workers a certain level of social welfare and some protection from unrestrained capitalism. US and world ruling elites have been on the counteroffensive against the "revolution of rising expectations" of the 1960s and early '70s since 1972. The decades-long effort of US elites to lower Americans' expectations has taken many forms--slashing welfare and unemployment programs, undermining pensions, pricing health care out of reach, shipping jobs to low-wage area overseas or automating them out of existence, cutting wages and benefits, waging the War on Terror, and a multitude of other forms--all intended to make ordinary Americans frightened and insecure. America's rulers have met with a great deal of success: witness the savage inequality of American society and the demoralized, defeated air of its people, compared with Americans of years past and the still combative Europeans.
The efforts of European elites to dismantle post-WWII social democracy have met with massive resistance in France and Germany and general strikes in Italy, Greece, and Spain in the past decade. With years of chipping away at social democracy, European rulers apparently feel now that they have prepared the ground for a successful offensive against the working class, to change the way European states are governed.
The ministers’ trillion dollar decision is clearly about much more than making the banks whole. Greece’s huge debt stems from a notoriously unfair and inefficient tax system inherited from the ruling Greek military junta of the 1970s. The only people in Greece who pay income taxes are the workers. For professionals and the wealthy, tax evasion is the national pastime, but income taxes are withheld from workers’ wages. Last week the Greek legislature proposed a law, strictly consistent with EU codes, to make taxes more collectable and thereby strengthen its ability to manage its debt. The European Central Bank condemned the legislation. The measure would have cost the European banks nothing--nothing, that is, except an opportunity to impose draconian austerity measures on EU member societies.
The real goal of European elites is to change how European societies are governed. The emergency law, the German Greek Bailout bill, approved May 7 by the German Parliament, grants the government extraordinary and largely undefined power. The act, only two pages long, is so sweeping and vague that analyst John Ryskamp compares it with Hitler’s Enabling Act of 1933 and Hank Paulson’s TARP 1.0.
The enabling act changes the nature of the political system which puts it into effect,” writes Ryskamp. Enabling acts are intentionally vague, yet they establish a unitary power, not subject to review or containment by constitutional processes or by other means. While enabling acts seem to deal with only specified problems, by setting various traps along the way, the powers abrogated under the enabling acts “lead to unitary power and the discarding of government. A closer look reveals that the intention of enabling acts is to entirely displace the previous political system as they proceed.” (John Ryskamp, "German Greek Bailout Legislation, TARP 1.0, and Hitler’s Enabling Act," posted in “naked capitalism,” 5/10/10.)
The social democracy that has existed in Europe since WWII and the New Deal and Great Society programs that have been largely dismantled in the US constitute an exceptional period in the history of capitalism. The decision taken by Europe's finance ministers amounts to a full-scale attack on the working class of Europe, intended to ratchet down the ability of workers to resist capitalist power and enable the rulers to govern with new-found power in a new way, a way that harkens back to the bad old days of untrammeled elite power.
The decision marks a turning point in the class war towards a yet-unknown future. Will European society return to its pre-WWII conditions, with vast inequalities and ubiquitous police power? Or will workers pass from resistance to the offensive, to build a new world? The fate of Europe is hanging in the balance.
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