In the latest print issue of CHARTIST, Manuel Cortes tells us why Europeans urgently need an alternative to austerity
European economies are in a perilous state. We were told that a bout of sharp austerity would be followed by strong growth. The search party is still out there looking for this illusive creature as it is nowhere to be seen. Greeks were told that deep cuts would see their country’s debt fall. Shock therapy would bring the patient back to full health. Sadly, a humanitarian tragedy was unleashed but debt rose from 120% of GDP to 175%. Thankfully the people of Greece used their votes to reject the austerity folly. Across Europe, organised labour is fighting this mind-blowing madness.
Our continent has been failed by this ideological dogma. It is no coincidence that the industrialised country which applied austerity in its lightest form, the US, is the one enjoying the most sustained growth. Back in May 2010, Osborne inherited a growing economy which seemed be on the path to recovery, albeit a fragile one. The patient was on life support and great care and attention were needed to get it back to full fitness. Yet, from day one, the Tory-led government decided that cutting the deficit was its overriding priority. Like the Greeks, the Irish, the Spanish and the Portuguese, we were told that painful cuts were absolutely necessary but that they would lead to sustained growth. Well for sure, they have really hurt. Yet, our economy is failing to work for the majority who are in the midst of a cost-of-living crisis.
Unions are leading the charge against neo-liberal insanity. Countless strikes and protests plagued Europe as our political class became completely seduced by the idea that there was no alternative. In many countries, deep austerity led to a social and political crisis with general strikes becoming the order of the day. Captured by failed neo-liberal dogma, the bulk of European Socialist and Social Democratic parties appeared unable, perhaps even unwilling, to break out from its cells. Unions, who had historically provided these parties with a conveyor belt of voters, were now plunged into bitter skirmishes with their erstwhile allies. In many instances, organised labour simply reminded these parties for what they once stood. As its ideological crisis deepened, European Social Democracy started to be seriously challenged from its left flank, with unions playing an instrumental role within this. Look no further than at the rapid demise of PASOK to understand that the once dominant parties of the European left are heading towards quicksand unless they move on from failed neoliberalism.
A right devious lot
At home, the TUC organised marches and protests across our country, which saw hundreds of thousands demanding an immediate end to crude and damaging cuts. The need for a change of course, has if anything, become even more acute with the passage of time. The European TUC and its affiliates rightly argue that to restore strong growth we need an investment-led recovery. We are giving a strong voice to millions upon millions of Europeans who are clamouring for a new economic settlement. You know, politicians can be a right devious lot. They compared sovereign debt with you or me overspending on our credit card and having to cut back to make repayments. Now, anyone with the faintest knowledge of how European economies work knows that this analogy is completely wrong. To function, they are heavily reliant on a complex web of transactions. So when governments make thousands of public sector workers redundant, their tax take falls and the benefit bill increases. In our neoliberal world, this inevitably leads to a combination of deeper cuts, tax increases and greater borrowing. Of course, then this becomes a vicious downward spiral in which ordinary people simply take further hits.
That is why unions have consistently argued that when it comes to eradicating deficits and debt, growth is the only show in town. As economies get bigger, tax receipts increase, the benefit bill reduces as people get back to work and budget surpluses occur – hardly rocket science! Perhaps more importantly, growth sees total debt as a percentage of GDP shrink. Greece clearly shows that the politics of hope, which unions have consistently championed, can beat fear. Austerity must be challenged – and it can be defeated. If the new Greek government can take back the sacked cleaners who became a potent symbol of organised labour’s struggle against failed austerity – not to mention reinstating thousands of illegally dismissed public servants – then so can others including what we hope will be an incoming Labour government in May. Austerity failed in the 1930s and for decades thereafter, it was largely ignored. Like then, it is now time to end the failed experiment. Marx astutely observed that history repeats itself, first as tragedy, then as farce. That is why we must confine austerity to where it belongs – the dustbin of history!
This article appears in the latest issue of CHARTIST.