Instead of calling the recent G-20's brutal austerity declaration (issued at the conclusion of its annual summit in Toronto last month) an orchestrated declaration of class war on the people, many progressive/Keynesian economists and other liberal commentators simply call it "bad policy." While it is true that, as these commentators point out, the Hooverian message of the declaration is bound to worsen the recession, it is nonetheless not a matter of "bad" policy; it is a matter of class policy.
"Bad" policy for whom?
For the powerful international financial gamblers the declaration is a good, not bad, policy. Indeed, it represents a monumental victory for these gamblers--an economic coup--as it converts tens of trillions of their gambling losses into gains by virtue of having their bought-and-paid-for governments force the people to cut on their bread and butter in order to pay for the fraudulent credit claims of the financial moguls. What is bad for the people is, therefore, a boon for the captains of high finance, who are the main architects of the G-20's austerity policies.
Viewing the savage class war of the ruling kleptocracy on the people's living and working conditions simply as "bad" policy, and hoping to somehow--presumably through smart arguments and sage advice--replace it with the "good" Keynesian policy of deficit spending without a fight, without grassroots' involvement and/or pressure, stems from the rather naïve supposition that policy making is a simple matter of technical expertise or the benevolence of policy makers, that is, a matter of choice. The presumed choice is said to be between only two alternatives: between the stimulus or Keynesian deficit spending, on the one hand, and the Neoliberal austerity of cutting social spending, on the other.
Experience shows, however, that economic policy-making is not independent of politics and policy-makers who are, in turn, not independent of the financial interests they are supposed to discipline or regulate. Economic policies are often subtle products of the balance of social forces, or outcome of the class struggle.
Keynesian economists seem to be unmindful of this fundamental relationship between economics and politics. Instead, they view economic policies as the outcome of the battle of ideas, not of class forces or interests. And herein lies one of the principal weaknesses of their argument: viewing the Keynesian/New Deal/Social Democratic reforms of the 1930s through the 1960s as the product of the Keynes' or F.D.R.'s genius, or the goodness of their hearts; not of the compelling pressure exerted by the revolutionary movements of that period on the national policy makers to "implement reform in order to prevent revolution," as F.D.R. famously put it. This explains why economic policy makers of today are not listening to Keynesian arguments--powerful and elegant as they are--because there would be no Keynesian, New Deal, or Social-Democratic economics without revolutionary pressure from the people.
A closely related flaw of the liberal/Keynesian "bad policy" argument against the Neoliberal austerity strategy stems from the optimistic perception of the State that views its power as above economic or class interests; a perception that fails to see the fact that the national policy-making apparatus is largely dominated by a kleptocratic elite that is guided by the imperatives of big capital, especially finance capital.
Liberal critics of the vicious austerity policies passionately argue against such policies as "bad," "misguided," or "unwise" as if the governments that make such policies do not know what they are doing. Accordingly, these critics offer all kinds of elegant Keynesian arguments in favor of stimulus deficit spending that could lead to improved economic conditions, increased tax revenues, and decreased debt and deficit. What these critics tend to overlook, however, is the fact that the governments that impose austerity policies are serving as bailiffs or debt-collecting agencies on behalf of their corporate/financial masters.
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