Why austerity makes sense for capitalism – an excellent video

In several previous posts I’ve noted that much of the Irish left favour some kind of left-Keynesian ‘solutions’ to the crisis, even groups that would identify as Marxist.  In addition, the most progressive union, the Independent Workers Union, while identifying the long-term need for anti-capitalist politics, simultaneously advances the idea that in the short-term Keynesian pump-priming can improve things for workers.  I’ve promised to put up stuff explaining that this is simply not the case – indeed, Keynesian pump-priming would have the absolute opposite effect at present.

My long piece on how capitalism works and why, ultimately, it doesn’t, provides some refutation of the idea that there is an ‘alternative’ set of capitalist policies in a crisis that can improve things for workers.  Also Tony Norfield’s piece about Keynesian delusions is very useful.

Additionally, today I discovered a really good video presentation (see bottom of this article) on why austerity policies are not some kind of mad, ideological path taken by capitalists but are actually implemented by capitalist governments and employers for the completely rational reason that they are the way out of the crisis, at least initially, from the standpoint of the interests of capital.

It’s a talk by Charlie Post of the American socialist group Solidarity.  It’s about 37 minutes long and well worth watching.  One additional point that I’d make, and I’ll try to post more about this next week, is the role of state spending in relation to surplus-value and profitability.  Charlie Post touches on it but only briefly; it’s only a 37-minute talk and so it doesn’t cover everything.

But state spending is a deduction from surplus-value.  The higher state spending is the more it eats away at capitalist profitability.  OK, that’s not a bad thing, you’ll say.  But this deepens the crisis.  Again, not a bad thing you might say.  But the problem is that the left doesn’t run round telling people that state spending should be increased in order to deepen the crisis – it tells them the opposite, that more state spending will alleviate the crisis!

So, what happens is that the left tells people one thing, they see the opposite happen.  Why would they ever believe the left again, let alone take up left-wing politics?  It makes the left look silly, if not worse.

Keynesianism didn’t get discredited because the Chicago School outmanoeuvred them and/or did sneaky conspiratorial things – Keynesianism became discredited because in practice it not only didn’t solve the crisis that emerged in the early 1970s – it worsened it!  More capitalist state intervention and more public spending intensified the profitability crisis and led to stagflation (general stagnation of the economy coupled with major inflation) – something that according to Keynesian theory was not possible.  The Keynesians could not explain how their policies promoted stagflation rather than improving things – that’s the main reason Keynesianism lost out to the alternative provided by the Chicago School and others.  It was Keynesianism, in the 1970s, that was irrational.

Next week I’ll also get up a short piece on Marx’s crisis theory and why it’s essential not only for understanding the current crisis in Ireland (and other parts of Europe) but for formulating a response that advances workers’ interests.

Anyway, as Mick Jagger put it on Get Yer Ya Yas Out, “Charlie’s good tonight, isn’t he?”  So, here’s Charlie:

Posted on April 27, 2012, in 21st century republicanism and socialism, Economy and workers' resistance, Independent Workers Union, Irish politics today, Political education and theory, Trade unions. Bookmark the permalink. Comments Off on Why austerity makes sense for capitalism – an excellent video.

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