Friday, May 31, 2013

Joshua Sperber — Krugman’s Austerity Blinders

Yet what is critical here is Krugman and other liberals’ understanding of precisely what “work” in fact means. 
Liberals are of course correct that European austerity, as well as the US version, has not generated an immediate economic expansion. But to get a clearer idea of the actual purpose of austerity, it is far more useful to listen not to liberal economists but to the politicians who actually decide to implement it. Greek European Commissioner Maria Damanaki recently noted, “‘The strategy of the European Commission over the past year and a half or two has been to reduce the labour costs in all European countries in order to improve the competitiveness of European companies over the rivals from Eastern Europe and Asia.’”
Similarly, in her recent keynote speech at the World Economic Forum, Angela Merkel was admirably frank in asserting that high unemployment is, according to the Guardian, the “price Europe had to pay to become more competitive.” Merkel’s statement that austerity is intended to “ensure the prosperity of our people” is an oxymoron only to those liberal economists who do not see capitalism as a class-based system. For, Krugman’s contention that recessions are merely “technical malfunctions” ignores what both politicians and capitalists have long asserted: recessions are “correctives” that reduce the cost of the one commodity that is more adjustable and often more expensive than any other: labor. 
Austerity, via slashing social spending and expanding a surplus labor pool that is ever more desperate, achieves its aim via making labor cheap enough so that it can again be profitably exploited by capitalists. That is, our recession will come to an end, and the standard of living will be ever-lower, once business can again make a profit off of an ample number of workers, which of course is wage labor’s raison d’etre in capitalism in the first place. While the consequences of further impoverishing millions of people in order to more effectively profit off of them might engender political instability, this is not part of the economic equation. After all, political instability is what police states are for.
Krugman’s Austerity Blinders
Joshua Sperber
(h/t Kevin Fathi via email

Austerity was never about "fixing the debt" or reducing the deficit. Just another tool for wage suppression and reduction of worker benefits and protections in a race to the bottom with emerging markets and the undeveloped world. This race will occupy the better part of this century unless something intervenes.


Unknown said...

This is what happens when jobs (pathetically), instead of justice is the goal.

"Thou shalt not steal",
a simple rule.
Much too simple
for complex fools?

Unknown said...


if the price of a chocolate bar goes up in your local shop, has the shopkeeper stolen your purchasing power?

Unknown said...

It's the banks that lend new purchasing power into existence in a government enforced/backed monopoly money supply for private debts that are the thieves.

Let the banks inflate their OWN money supplies, not the one we're all forced into using.

But at the very least, ALL government privileges for the banks should be abolished and the laws against insolvency enforced with zeal.

Want endogenous money? Then let the banks dilute their OWN equity (by issuing their own common stock) not everyone elses.

Unknown said...

check this out, it's actually quite funny:

Ralph Musgrave said...

Utterly appalling drivel from Maria Damanaki and Angela Merkel. A monetarily sovereign AREA (e.g. the EZ or USA) can gain competitiveness simply by devaluing. There is absolutely NO NEED for high unemployment in order attain competitiveness.

In stark contrast there is the problem of making the Euro periphery competitive with the core. That can only be done by excess inflation in the core or excess deflation (and unemployment) in the periphery.

It’s scarcely believable these people are so ignorant.