“Systems often hold longer than we think, but they end up by collapsing much faster than we imagine.” In those few words, the former chief economist of the IMF International, Kenneth Rogoff , sums up the situation of the global economy. As the Governor of the Bank of England, he asserts that “the next crisis may be worse than 1930” . . .
The euro area is not well, but the United States and China, often presented as the twin engines of the global economy, are actually two ticking bombs: the total debt of the United States reached 358% of gross product (GDP), the Chinese housing bubble, almost three times larger than it was in the U.S. before the subprime crisis, is beginning to explode.
Given the international context, how can the PS (Socialist Party) and the UMP (Union pour un Mouvement Populaire, the totally misleading acronym for Sarkozy’s party, which will now most likely disintegrate after the election debacle) continue any bet on the return to growth? There is one chance in a thousand that this dream can possibly become a reality. “It will be terrible, a socialist leader recently told me. There will be no leeway. Starting in June, the government will freeze expenditures. In a few months the country will be paralyzed by mass demonstrations and, in 2014, we will take a historic beating in the election.”
Is austerity the only solution? Is the Left if it’s in power doomed to disappoint? No. History shows it is possible to get out of the “death spiral” in which our countries are now locked.
In 1933
In 1933, when Roosevelt came to power , the United States had 14 million unemployed, industrial production decreased by 45% in three years.
He acted with a determination and speed that revived people’s confidence: some laws were presented, discussed, passed and promulgated on the same day. The objective was not at all to “reassure financial markets “, but to tame them.
Its purpose is not to “make sense of austerity,” but to rebuild social justice. Shareholders are angry and oppose with all their might the law between deposit banks and investment banks, taxes on the highest incomes or the creation of a federal tax on profits (capital gains).
But Roosevelt stands firm and has fifteen fundamental reforms voted in three months. The catastrophes predicted by the financiers do not occur. Better yet! The U.S. economy has lived very well with these rules for half a century.
What Roosevelt achieved on economic matters was probably not enough (if it had not been for the war economy, the U.S. would have fallen into recession), but the reforms he imposed on banking and taxes have fully achieved their goals.
Until the arrival of Ronald Reagan in 1981, the U.S. economy was operating without having any need of either private debt or public debt.
While, for thirty years, Fordism [1] rules had assured an equitable share of added value between employees and shareholders, deregulation policies have, in thirty years, made the wage share pass from 67% to 57% of the GDP in the OECD countries (Organization for Economic Cooperation and Development), which led to an increase in the public debt—because consumption and income taxes are the primary financial resources in all countries—as well as in the private debt, since employees had to borrow to maintain their standard of living.
It is because of unemployment and job insecurity that the wage share has fallen so much in all our countries: unemployment is not only a consequence of the crisis we have been experiencing for five years, it is one of the fundamental causes. We can not get out of the crisis without dramatically attacking unemployment and job insecurity. (emphasis added)
No offense to the neoliberals, we are not facing a crisis of the welfare state [2], but we are facing a crisis of capitalism whose extreme gravity makes the traditional arguments for the welfare state insufficient. Social justice is not a luxury that we should have to give up on because of the crisis, rebuilding social justice is the only way out of the crisis! (emphasis added)
Two possible strategies for the next president
Two strategies are possible for the next president of the Republic: either he believes the crisis is almost over and it only takes some good public financial management to get us through the few difficult months that separate us from the upturn.
Or he thinks on the contrary that there is only a limited period of time before a possible collapse of the economic system, and he must “do the Roosevelt act” organize a new Bretton Woods in July 2012, put an end to the incredible privileges of private banks in financing the public debt, fight frontally against tax havens and act forcefully against unemployment and job insecurity by launching as early as in May the ‘états généraux’ [3] of employment—involving three months of working with all concerned parties to create a new social contract, the way the Dutch did in 1982 with the Wassenaar Arrangement.
What is the historical role of the European left? Overseeing the collapse of the neoliberal model, even at the cost of dying in the rubble, or giving birth to a new society before the crisis leads to total barbarism, the way it happened in the 1930s?
In order to encourage the next president to show boldness, we have created the ‘Roosevelt collective of 2012’: Stephane Hessel, Edgar Morin, Susan George, Michel Rocard, Passet, Dominique Meda, Lilian Thuram, Robert Castel, Gaccio Bruno, Roland Gori, Gael Giraud, the Abbé Pierre Foundation, the Danielle Mitterrand Foundation, the League of Teaching, ‘the Job Insecurity Generation’ (‘la Génération précaire’) and many others, our goal is simple: provoke an awakening, push people into action!
If you share this desire, join the group by signing the manifesto and fifteen proposals for reforms.
Excerpt from the Roosevelt 2012 manifesto:
WE HAVE DECIDED TO ACT
“Each of us can change the world. Even though we have no power, even though we do not have the slightest importance, each one of us can change the world” [Václav] Havel [4] wrote a few weeks after the fall of the Berlin Wall.“In 1989, it was women and men “without the slightest importance” who changed the course of history. Twenty years later, the neoliberal system is collapsing in its turn. It is our responsibility, we the citizens of the world, to say in what kind of society we want to live. A society of injustice and chaos or a balanced society with social interaction? The choice is ours. It is up to us to act.”
Notes:
[1] Fordism—A manufacturing philosophy that aims to achieve higher productivity by standardizing the output, using conveyor assembly lines, and breaking the work into small deskilled tasks.
[2] Why on earth ‘No offense to the neoliberals’ ??? Of course we are facing a crisis of the welfare state because of neoliberalism—SON )
[3] ‘Les états généraux de l’emploi et de l’écologie’ is a national movement to create another world for workers. It first saw the day in 1990 under the rubric of ‘États généraux du chômage et de l’emploi’ (extraordinary measures taken to protect the unemployed and to create job security)
[4] Václav Havel—Czech poet, dissident and politician, and the first president of the Czech Republic (1993–2003)
Pierre Larrouturou, Member of the organization Roosevelt 2012
Article from Le Monde—Translation by Siv O’Neall
This translation is published with the full permission of the author, Pierre Larrouturou.
