From Socialist Voice, March 2011

Repudiate the debt: For a better future

This is a synopsis, rather than a critical review, of the recently launched pamphlet Repudiate the Debt: For a Better Future. We welcome critical reviews of the pamphlet with a view to publishing them in future issues.
This pamphlet is a contribution to the debate that is urgently needed in relation to what our establishment calls Ireland’s “sovereign debt.” The pamphlet, complementing the CPI’s earlier publication An Economy for the Common Good, seeks to place the attack on public services, and those who provide them, in the context of a sovereign debt crisis that is very much a part of the current Great Financial Crisis—a cyclical crisis whose root causes lie in the logic of capitalism in its current “financialised” phase.
     Missing from the debate on this subject as presented and controlled by the media has been any analysis of the economic system in which this sovereign debt crisis is taking place. While opinion pieces abound on public-sector pay, the role of “partnership” and even the growth of the property bubble, very few accurately place these developments within the context of the socio-economic system in which they exist: capitalism.
     The pamphlet is not an exhaustive analysis but aims to show the historical causes of the debt crisis and the structural developments within capitalism that brought us to this point. But, importantly, it also points to a political and economic way out that benefits the majority of people in this country, which must start with repudiating the illegitimate debt that has been loaded on people and on future generations.
     There are no easy, “neutral” economic solutions to this crisis: there are only political solutions; and these require a political understanding, political campaigning, and political choices. Who will pay for this crisis, and who will benefit from the recovery?
     The pamphlet aims to show that, as manufacturing stagnated globally because of the limitations of capitalist production—despite post-war reconstruction and increased military spending—the mass of capital accumulated in the system required a new area of investment. Finance provided that opportunity, firstly in stocks and shares and later in the highly complex “financial products” that exist today. Finance has become the dominant source of profit and growth for the capitalist system, replacing what is often described as the “real economy.”
     With this financialisation came increasing instability and speculative bubbles. Debt became a tool, used to fund consumption, as wages declined both in real terms (purchasing power) and in relation to profits. For governments also debt became a tool to cover for the declining tax revenue that resulted from declining wages and from tax cuts in favour of big business and capital and the privatisation of profitable state enterprises.
     As the system has come to rely on finance to absorb accumulated capital and facilitate its reproduction, finance has also greatly increased its political importance, to the point where today, to save the economic system, states have had to intervene to bail out and support finance. Only with this understanding do the bail-outs make sense; and it is these bail-outs and currency stabilisation (in the case of the euro) that are causing the sovereign debt crisis that now exists.
     The bank guarantee that served as a socialisation of private and corporate debt, and the consequent recapitalisations and the establishment of NAMA, constitute the biggest transfer of wealth ever from working people in Ireland to finance and to foreign banks in Germany, France and Britain in order to save the euro and the EU political project.
     As a consequence, our country is now dictated to and controlled by the European Union and the International Monetary Fund, not in the interests of our people but in the service of global finance houses. Our children and future generations have become virtual indentured labour for as long as it takes to pay off these debts.
     More and more public companies and assets, including our rich natural resources, will be sold off in the efforts to pay back money owed to these bankers. The Programme for Government, with its declaration of dependence, exists very clearly in the EU-IMF Memorandum of Understanding, and it should be read by all who are concerned with our country’s future.
     Instead of merely accepting this as a situation outside our control, the pamphlet is calling on people to demand a repudiation of this illegitimate, perpetual and unpayable debt.
     Working people have a choice to make. Do we sacrifice all we have struggled for over many generations, or do we join the campaign to repudiate this debt and demand a referendum, so that the people can vote on this debt placed on their backs?
     Beginning by outlining the nature of crisis in the system—in particular the recurring crisis of over-production—the pamphlet sets out to explain how we got to the current “financialised” phase of capitalism, what exactly it is, and what are its trends.
     Following this, but inextricably tied to it, is the role of debt. From the record level of household debt in Ireland to the imposition of tens of billions in debt on the economy from the EU and IMF and the finance houses, on top of the socialised debt of private banks, there is no question but that for meaningful economic development to occur the debt question needs to be solved.
     This pamphlet believes it can, should and must be done, but that political choices need to be made in favour of working people.

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