Bar-Yuchnei: Two Aspects of Austerity

These two pressures—to spend in order to stave off deflation and to cut spending in order to stave off default—are equally implacable. Indeed, it is here, on the balance sheet of innumerable governments, that the crisis is now playing itself out. If in 2008, the solvency of the private economy was preserved by shifting its liabilities onto the public books, then today state action to protect its own solvency threatens to endanger the private sector once again. To paraphrase Marx, all this juggling of debt only serves to shift the crisis of insolvency to a broader sphere, and give it a wider orbit.

Nevertheless, we must guard against the tendency to mistake this weakness of the capitalist mode of production for a weakness of capital in its struggle with labor. Crises have always tended to strengthen capital’s hand in the class struggle—and the Keynesian notion that the state could convince capital not to press this advantage is nothing more than a technocratic fantasy. In a crisis, the demand for labor falls at the same time as, due to mass layoffs, its supply rises. That alone weakens the bargaining position of workers. Moreover, while it is true that capital suffers losses in the course of a downturn, individual capitalists rarely find themselves in the sort of existential danger that workers face when they lose their jobs. Capitalists have much larger reserves than working people, so they can usually wait out a crisis, especially when demand for what they produce is depressed. For all these reasons, we have to recognize that the crisis has weakened the position of workers with respect to capital. It is thus no surprise that the latter’s representatives are using the crisis to their advantage by claiming that this or that measure is necessary to restore the rate of profit. Restoring the profit rate really is the only way to create jobs. And in the absence of a massive, working-class assault on the very existence of class society, workers have no other interest than to find jobs or try to keep them. These are the conceptual difficulties presented by the capitalist crisis. The weakness of the system as a whole is at the same time the weakness of workers in their everyday struggle with capital—and not, as we might expect, their strength. If we don’t separate these two moments, we are liable to misunderstand the contradictory nature of austerity in the current crisis.

via endnotes.org.uk

Comments

[Alain]

Hi Jodi

Thank you for posting this. I have read this sort of argument before - that austerity is the result of capital realizing its advantage over labor during the crisis. This seems to assume a certain inevitability of the contradiction playing itself out this way. And I think the author dismisses Keynesian solutions because Government cannot "convince" capital not to use its advantage is a mistake - a robust Keynesian solution may not have solved all of our problems but it would have alleviated much human suffering and may have provided a chance at recovery - even one that is still largely dictated by neoliberal rules and arrangements. Just a thought. Take Care.