En Passant

The recent swings in world financial markets and the growing international effects of an economic slowdown in China have raised fears in the U.S. that the economic recovery could be on its last legs–even before working people felt like they had escaped the last crisis. And what will come next? In the first instalment of a three-part series, Lee Sustar in Socialist Worker US answers questions about the underlying causes of the instability in the markets–and explains how the troubles in the world economy today are tied to the same problems that led to the Great Recession of 2007-09.

THERE IS little doubt that freakish and unnaturally assembled storms are a taste of what the future holds under an economic system that has “interfered with the tranquility of domestic affections” and galvanized the forces of nature into a fury of clashing dislocations as we pump ever-more heat-trapping gases into our atmosphere and industrial filth into our lungs.

Given the severity of the European crisis and intensity of the austerity drive, the level of working class struggle will have to be even higher in order to prevail. Independent left politics will be crucial, too, since labor and social democratic parties have used their ties to the labor movement to push austerity and contain the struggle.

The euro crisis has highlighted the ideological crisis of the system. The happy talk about a world economic recovery that would solve the debt problem has been replaced with nervous chatter about the future of the world economy. At the IMF meeting in Washington, U.S. Treasury Secretary Tim Geithner said, “The threat of cascading default, bank runs and catastrophic risk must be taken off the table, as otherwise, it will undermine all other efforts, both within Europe and globally.”

There hasn’t been so much fear, doubt and confusion in the mainstream media about the economy since the financial crash of 2008. For example, a BBC business program recently ran a weeklong series under the heading, “Has Western Capitalism Failed?”.

In this context of crisis and resistance, the potential is there to rebuild the socialist left internationally. The ominous economic developments in Europe and beyond make that task an urgent one.

The cracks at the top have implications for the consciousness of those at the bottom. Crisis can push the masses into action—but equally it can paralyse them.

So far we in Australia have escaped the worst of the crisis but if the local economy does continue to falter, Australian bosses will be just as ruthless in their determination to make the rest of us pay.

Stock markets are both the casinos of capitalism and its canaries. At the moment the punters aren’t gambling and the birds are gasping. Across the world stock markets have begun falling and some economists are predicting this is just the beginning of a sustained decline. The bourgeois euphoria over the US debt ceiling spending cuts settlement has given way to deep concerns about Italy’s solvency and the seemingly permanently stalled American economy.

This is a mutating economic crisis. This is a crisis whose weak link keeps shifting, and as a result, we need to see it in all its dynamism–the way in which it keeps mutating and generating new kinds of illnesses within the system, so while it looks like the last one has been cured, in fact, all they’ve done is move the damage somewhere else.

While the GFC created uncertainty, it did not create mass unemployment in Australia. It did however make Australian workers even more defensive.

A defensive and uncertain workforce accepts the dictatorship of capital unquestioningly.

I think I get it. The banks were in crisis so various states spent lots and lots and lots of money to save them. Now the banks won’t lend to those states that saved them because their debts are too big – from saving the banks.

For many workers in Australia times will be tougher than in the midst of the crisis. Rising interest rates, the end of the cash handouts and government cuts to rein in debt will hurt.