We reproduce this, from today’s (London) Times, because it seems to be well-informed, and it’s only otherwise available from behind Murdoch’s pay-wall. We do not know whom the “senior German conservative” is, but it might well be finance minister Wolfgang Schaeubl
‘No new bailout unless Tsipras goes’
Greece will not get a cent in new euro-zone bailout loans while Alexis Tsipras and Yanis Varoukaris remain in power, because Germany will block any such deal, one of Europe’s most influential politicians has told The Times.
“Today there is the question of do we trust Tsipras and Varoufakis? The answer is clear to all parties, no,” the senior German conservative said.
He also lifted the mild on a European Union attempt to push Mr Tsipras’s left-wing Syriza out of power regardless of the vote on July 5.
If Greece’s prime minister and finance minister remained in office, even after a “yes” vote in Sunday’s referendum, then Athens would stand no chance of a new bailout, he indicated.
Under the rules of the European Stability Mechanism, the euro’s bailout fund, the German parliament, or Bundestag, has a veto or blocking vote over any new programme such as that requested by Greece at the 11th hour.
The senior German conservative said that Angela Merkel’s ruling Christian Democrat Union (CDU) and its Baverian allies the Christian Social Union (CSU) would block any request made while the pair, described as “communists” remained in power.
“In my party the CDU/CSU there would be a lot of colleagues who would vote ‘no’ if Varoufakis and Tsipras are asking. For sure. Because there is simply no trust any more. They say, I am not going to give taxpayers’ money to Greece without a reliable partner,” he said. Referring to Syrezia, he added: “We need a reliable partner who wants to do the job.”
The EU’s plan is to back a “yes” vote strongly by posing it as an in/out question on membership of the euro rather than austerity measures and then, in the event of a victory, to oust Syriza after the expected resignation of Mr Tsipras. “We will do anything to get a ‘yes’. Then we will need a new government, then we have to implement measures” he said.
The politician revealed that the socialist Martin Schulz, the president of the European parliament, was involved in secret talks, possibly involving Mr Tsipras -m whom he sees as a moderate – to “split the Syriza movement” as a precondition for a new EU bailout, incorporating moderate MPs in Syriza to avoid new elections.
In the event of a “no” vote and Syriza continuing to hold the reigns of power, the German conservative said, “It’s over” and Greece would have to leave the euro after defaulting on ECB loans on July 20. “We will talk about a humanitarian rescue programme but not an additional [bailout],” he said.
Leave a Comment
From Social Europe:
Governments sometimes need to restructure their debts. Otherwise, a country’s economic and political stability may be threatened. But, in the absence of an international rule of law for resolving sovereign defaults, the world pays a higher price than it should for such restructurings. The result is a poorly functioning sovereign-debt market, marked by unnecessary strife and costly delays in addressing problems when they arise.
We are reminded of this time and again. In Argentina, the authorities’ battles with a small number of “investors” (so-called vulture funds) jeopardized an entire debt restructuring agreed to – voluntarily – by an overwhelming majority of the country’s creditors. In Greece, most of the “rescue” funds in the temporary “assistance” programs are allocated for payments to existing creditors, while the country is forced into austerity policies that have contributed mightily to a 25% decline in GDP and have left its population worse off. In Ukraine, the potential political ramifications of sovereign-debt distress are enormous.
So the question of how to manage sovereign-debt restructuring – to reduce debt to levels that are sustainable – is more pressing than ever. The current system puts excessive faith in the “virtues” of markets. Disputes are generally resolved not on the basis of rules that ensure fair resolution, but by bargaining among unequals, with the rich and powerful usually imposing their will on others. The resulting outcomes are generally not only inequitable, but also inefficient.
Those who claim that the system works well frame cases like Argentina as exceptions. Most of the time, they claim, the system does a good job. What they mean, of course, is that weak countries usually knuckle under. But at what cost to their citizens? How well do the restructurings work? Has the country been put on a sustainable debt path? Too often, because the defenders of the status quo do not ask these questions, one debt crisis is followed by another.
Greece’s debt restructuring in 2012 is a case in point. The country played according to the “rules” of financial markets and managed to finalize the restructuring rapidly; but the agreement was a bad one and did not help the economy recover. Three years later, Greece is in desperate need of a new restructuring.
Distressed debtors need a fresh start. Excessive penalties lead to negative-sum games, in which the debtor cannot recover and creditors do not benefit from the larger repayment capacity that recovery would entail.
The absence of a rule of law for debt restructuring delays fresh starts and can lead to chaos. That is why no government leaves it to market forces to restructure domestic debts. All have concluded that “contractual remedies” simply do not suffice. Instead, they enact bankruptcy laws to provide the ground rules for creditor-debtor bargaining, thereby promoting efficiency and fairness.
Sovereign-debt restructurings are even more complicated than domestic bankruptcy, plagued as they are by problems of multiple jurisdictions, implicit as well as explicit claimants, and ill-defined assets upon which claimants can draw. That is why we find the claim by some – including the US Treasury – that there is no need for an international rule of law so incredible.
To be sure, it may not be possible to establish a full international bankruptcy code; but a consensus could be reached on many issues. For example, a new framework should include clauses providing for stays of litigation while the restructuring is being carried out, thus limiting the scope for disruptive behavior by vulture funds.
It should also contain provisions for lending into arrears: lenders willing to provide credit to a country going through a restructuring would receive priority treatment. Such lenders would thus have an incentive to provide fresh resources to countries when they need them the most.
There should be agreement, too, that no country can sign away its basic rights. There can be no voluntary renunciation of sovereign immunity, just as no person can sell himself into slavery. There also should be limits on the extent to which one democratic government can bind its successors.
This is particularly important because of the tendency of financial markets to induce short-sighted politicians to loosen today’s budget constraints, or to lend to flagrantly corrupt governments such as the fallen Yanukovych regime in Ukraine, at the expense of future generations. Such a constraint would improve the functioning of sovereign-debt markets by inducing greater due diligence in lending.
A “soft law” framework containing these features, implemented through an oversight commission that acted as a mediator and supervisor of the restructuring process, could resolve some of today’s inefficiencies and inequities. But, if the framework is to be consensual, its implementation should not be based at an institution that is too closely associated with one side of the market or the other.
This means that regulation of sovereign-debt restructuring cannot be based at the International Monetary Fund, which is too closely affiliated with creditors (and is a creditor itself). To minimize the potential for conflicts of interest, the framework could be implemented by the United Nations, a more representative institution that is taking the lead on the matter, or by a new global institution, as already suggested in the 2009 Stiglitz Report on reforming the international monetary and financial system.
The crisis in Europe is just the latest example of the high costs – for creditors and debtors alike – entailed by the absence of an international rule of law for resolving sovereign-debt crises. Such crises will continue to occur. If globalization is to work for all countries, the rules of sovereign lending must change. The modest reforms we propose are the right place to start.
© Project Syndicate
About Joseph E. Stiglitz and Martin Guzman
Leave a Comment
Between now and June 20th you have the opportunity to see ‘The Big No’, an exhibition of work of one by the greatest left-wing satirical artists of the 20th century: George Grosz. It’s at the London Print Studio (W10) and admission is free of charge.
Grosz was a founder of the Berlin Dadaist movement who created hundreds of drawings that savagely depicted the corruption, injustice and decadence of the Weimar republic. Along with Helmut Herzfeld (who became John Heartfield) he introduced photomontage to the mainstream. Many of his his drawings are composed like photomontages.
The drawings use superb fine-pen draftsmanship while the paintings are composed of bold brush-stokes, to convey shocking images of extremes of wealth and poverty, sexual exploitation and the broken survivors of WWI.
The Big No (named after Grosz’s autobiography A Little Yes and a Big No) features two portfolios of his drawings: Ecce Homo (Behold The Man), published in 1923 and Hintergrund (Background) from 1928. Ecce Homo was the subject of a four year legal case, with Grosz and his publisher accused of both pornography and bringing the German military into disrepute. They were acquitted, but in 1933 the Nazis had all the plates destroyed and the drawings publicly burned. We are able to see the work now because in 1959, after Grosz’s death, his widow and sons licenced a facsimile edition of the portfolio.
The Nazis denounced Grosz as a “cultural Bolshevik” and his work (together with that of fellow modernists, Jews and leftists like Kandinsky, Kokoschka, Ernst Ludwig Kirchner and Otto Dix) featured in the notorious 1937 “degenerate art” exhibition organised by the Nazis. By then Grosz had fled with his family to the US, where he remained for the rest of his life and where his son Marty became a well-known jazz guitarist.
Grosz wrote, ‘In 1916 I was discharged from military service. The Berlin to which I returned was a cold and grey city. What I saw made me loathe most of my fellow men; everything I could say has been recorded in my drawings. The busy cafés and wine-cellars merely accentuated the gloom of the dark, unheated residential districts. I drew drunkards; puking men; men with clenched fists cursing at the moon; men playing cards on the coffins of the women they had murdered. I drew a man, face filled with fright, washing blood from his hands… I was each one of the characters I drew, the champagne-swilling glutton favoured by fate no less than the poor beggar standing with outstretched hands in the rain. I was split in two, just like society at large…’
This exhibition is simply unmissable. I don’t know whether or not it’s going to appear anywhere outside London, so even if you don’t live in capital, I’d recommend a special visit. And how appropriate that it’s appearing in one of the less affluent parts of London, at studio whose stated mission is to “empower people and communities through practical engagement with the visual and graphic arts.”
Leave a Comment
This is where you will get the best information and analysis (from a social democratic angle):
Leave a Comment
Make no mistake: Syriza’s victory is an inspiring moment for the working class of Greece and the left throughout Europe and beyond. Shiraz Socialist is not about to join the bleating chorus of sectarians, Stalinists and other defeatists who have already begun predicting a sell-out by the new government. Some of these people on the UK left are well described here by Comrade Coatesy.
However, it has to be admitted that Syriza’s coalition deal with the far right wing anti-immigrant (and on occasion, antisemitic) Independent Greeks party (ANEL) is disappointing and worrying. The following disturbing article from Anton Shekhovtsov’s blog, offers a possible explanation for this unlikely alliance. We cannot vouch for the accuracy of what the author claims, but his theory certainly makes sense and is at least worthy of serious attention:
Greek left-wing SYRIZA forms a coalition with the pro-Kremlin far right
After a landslide victory in the early parliamentary elections held on 25 January 2015, the Greek Coalition of the Radical Left (SYRIZA) that secured 149 seats in the new parliament has surprised the left-wing voters and sympathisers by agreeing to form, already on 26 January, a coalition government with the far right Independent Greeks party (ANEL) that now has 13 seats. Popular support for the neo-Nazi Golden Dawn led by currently imprisoned Nikolaos Michaloliakos has slightly decreased: the neo-Nazis have secured 17 seats (one seat less than in 2012), but the Golden Dawn is still the third largest party in Greece.
Both SYRIZA and ANEL are so-called “anti-austerity parties” implying that they oppose reducing budget deficits as a response to the Greek financial crisis, as well as rejecting the austerity package put forth by the EU and the IMF. The “anti-austerity” platform may seem the only agenda that has drawn the two parties they share, but they also share a similar approach to foreign policy issues – an approach that may undermine the EU unity over the Russian threat.
Both parties are overtly pro-Russian, and SYRIZA’s leader Alexis Tsipras denounced the sanctions against Russia imposed by the EU for Russia’s annexation of Crimea and its invasion of Ukraine that has already cost Ukrainians thousands of lives. In May 2014, i.e. already after Russia had started its invasion of Ukraine, Tsipras travelled to Moscow to meet Vladimir Putin’s major allies such as Valentina Matviyenko, chairman of Federation Council of the Russian Federation, and Aleksey Pushkov, chairman of the Russian parliament’s foreign affairs committee. Both Matviyenko and Pushkov are sanctioned by the US, while Matviyenko is also sanctioned by the EU. This did not prevent Tsipras from holding a meeting with her.
|Valentina Matviyenko and Alexis Tsipras at a meeting in Moscow, May 2014
According to Russian fascist Aleksandr Dugin, writing in 2013,
In Greece, our [i.e. Russia’s] partners could eventually be Leftists from SYRIZA, which refuses Atlanticism, liberalism and the domination of the forces of global finance. As far as I know, SYRIZA is anti-capitalist and it is critical of the global oligarchy that has victimized Greece and Cyprus. The case of SYRIZA is interesting because of its far-Left attitude toward the liberal global system. It is a good sign that such non-conformist forces have appeared on the scene.
The pro-Russian sentiments of SYRIZA were manifested, in particular, in its voting behaviour in the European parliament. For example, on 16 September 2014, when the European Parliament ratified the EU-Ukraine Association agreement – an agreement that was one of the reasons of the Russian invasion of Ukraine – all six MEPs of SYRIZA voted against the ratification of this agreement.
If SYRIZA is Russia’s “Trojan horse” in the EU, then ANEL led by Panos Kammenos may be even worse.
ANEL (founded in February 2012) is a far right party that Daphne Halikiopoulou and Sofia Vasilopoulou describe as “highly conservative and nationalistic right-wing”. In its opposition to immigration and multiculturalism, ANEL is similar to, yet is more moderate than, the neo-Nazi Golden Dawn. ANEL is also prone to conspiracy theories. For example, as argued by Pavlos Zafiropoulos, ANEL and its supporters believe that the Greek government “is spraying the populace from airplanes with mind-controlling substances”. Anti-Semitism is not alien to ANEL either: “Panos Kammenos, speaking on a TV program made the baseless claim that Jewish people in Greece are not taxed in contrast to Christian Orthodox Greeks”.
The driving force behind the pro-Russian approach of ANEL seems to be Gavriil Avramidis, who was elected MP with ANEL in Thessaloniki in 2012. He is also head of the Patriotic Social Movement “Greek-Russian Alliance” founded in 2001 and aimed at widening co-operation between Greece and Russia.
Yet Avramidis may be not the only politician in ANEL who is lobbying Russian interests in Greece. Kammenos visited Moscow in the first half of January 2015. Moreover, an article titled “An Attempt at Reviving the Russian Party” that was published on 22 January in the Greek Russian-language newspaper Afinskiy Kur‘er (Athens Courier) discussed the pro-Russian approach of ANEL in general.
|An article titled “An Attempt at Reviving the Russian Party” published in Afinskiy Kur’er (Athens Courier). Gavriil Avramidis is featured on the central photo
Several questions remain, however. Are pro-Russian sentiments indeed important for ANEL? Will ANEL contribute to the strengthening of SYRIZA’s pro-Russian positions? Will the new coalition government push for lifting the EU sanctions against Russia that is escalating its invasion of Ukraine?
Doubtlessly, Russia will try to capitalise both on the victory of SYRIZA and the formation of the SYRIZA/ANEL coalition government. Putin has already congratulated Tsipras on his party’s victory saying that he is “confident that Russia and Greece will continue to develop their traditionally constructive cooperation in all areas and will work together effectively to resolve current European and global problems”. BBC correspondent Gabriel Gatehouse, currently in Athens, reports that he has seen the Russian ambassador Andrey Maslov entering the SYRIZA main office.
Kammenos’ visit to Moscow was most likely connected to the possibility of the formation of the SYRIZA/ANEL coalition government. At the same time, Avramidis visited the General Consulate of Russia in Thessaloniki on 23 January 2015, i.e. just a few days before the parliamentary elections, to discuss, with Consul General Aleksey Popov, the renewal of the cooperation between Greece and Russia, as well as lifting the sanctions against Russia.
|(left to right) Russian Consul General in Thessaloniki Aleksey Popov and MP Gavriil Avramidis, 23 January 2015, Thessaloniki
Since the EU is a consensus-based organisation, imposing or tightening sanctions against Russia requires all the Member States to agree to such moves. Hence, the issue of sanctions may become a negotiating point for the new Greek authorities when they meet with more influential EU players to renegotiate the terms of the bailout programme for Greece. SYRIZA and ANEL are “anti-austerity” parties in the first place, so their pro-Russian sentiments may increase the cost, rather than contribute to lifting or blocking, of the EU sanctions against Russia.
Ioanna Gaitani is a supporter of the Greek socialist group Internationalist Workers’ Left (DEA) and a Syriza member of the Greek parliament spoke to the AWL’s paper Solidarity:
The people tried to overthrow the memoranda between 2010-13, but they couldn’t overcome the state’s reaction, the brutality of the police and legal system, the betrayals or lack of planning from their own trade union leaders. It was natural that they started moving away from their political and trade union leaders (from the neo-liberal parties) and place their hopes on Syriza. Their interest was elevated towards the question of power, even in a “distorted” parliamentary way, as a next means of tackling the crisis.
Increasingly, since 2012, it has been up to Syriza to direct the people’s attention towards a reconstruction of the movement on a higher basis, with a friendly government on its side. A Syriza victory and the implementation of some of its urgent measures, could encourage the workers to fight for all they have been deprived of.
There are struggles still going on, such as the laid-off public servants (teachers, janitors, school guardians [caretakers]). Nevertheless demonstrations and strikes have weakened and people in struggle are also are waiting for the elections, at least temporarily. Yet all these struggles (and the recent victorious one, against the lay-offs in the public sector, against the “redeployment” process) have created a mood of public exasperation. That hindered the next memorandum planned by the former government and forced them to resign in the hope that a “left-break” would be short-lived.
If Syriza wins the urgent measures for the first 100 days will, as set out in the Thessaloniki declaration, consist of some measures that we, as DEA, find useful or critical to give confidence to the labour movement. These are:
• Restoration of the minimum wage (up to 751 euros, a 30% raise),
• Restorarion of all the labour laws and the collective labour contracts
• A €12, 000 tax-threshold
• Free health care for all the uninsured
• Abolition of socially unjust taxing
• Free electricity for 300,000 households
• A programme for 300,000 new jobs in the public and private sector.
Not every issue is fully addressed. The question of unemployment and even more urgently that of the evaporated pension funds need more immediate and determined attention. We hope that the movement will push for the most radical solutions, the ones Syriza’s majority faction try to overlook or postpone. But the overall programme of priorities is very promising. Many people hope for half of it to be realised as fast as is being promised. Read the rest of this entry »
Above: Prime Minister Samaras and Syriza leader Tsipras
According to protothema news.com the main Greek opposition Radical Left Coalition (SYRIZA) party continues to be ahead in the opinion polls following an opinion poll by Rass polling agency for last Sunday’s issue of Eleftheros Typos: SYRIZA would gather 30.4% of the votes if elections were held now, followed by the conservative New Democracy (ND) leadership that would gather 27.3% of the votes. This puts SYRIZA 3.1 points ahead, down from 3.4 units that had been shown in the previous poll.
The Greek Communist Party (KKE) follows in third place, gathering 4.8% of the votes, marginally ahead of To Potami with 4.7%. Ultra-nationalist Golden Dawn follows with 3.8%, socialist PASOK with 3.5%, rightist anti-austerity Independent Greeks (ANEL) with 2.5% and ANDARSYA with 1.4%. Democratic Left (DIMAR) is not recorded.
3.8% of respondents said they would vote for another party whereas 2.6% would cast an invalid ballot and the undecided vote gathers 15.2%.
Greek Prime Minister Antonis Samaras has the highest approval rating with 7.6% ahead of SYRIZA leader Alexis Tsipras when respondents were asked about who would be a better prime minister. Mr. Samaras gathered 41% and Mr. Tsipras gathered 33.4% approval.
A majority of people (74.2%) believe that Greece should remain within the euro area at whatever cost. 41% fear the prospect of Mr. Tsipras being elected Prime Minister and 38.1% says it gives them hope.
Only 6.1% said they trust former prime minister George Papandreou and his plan to form a new party.
On Monday 29 December, the Greek parliament failed to elect a new President for the third time. The result is parliamentary elections at the end of January, elections which it looks probable that SYRIZA will win. Shortly before the vote, Workers’ Liberty member Theodora Polenta – who is based in Greece – wrote this:
Where is Greece going?
This Christmas story does not have a beginning and we do not know the end yet. Will we get the present the majority of the combat working class movement and all progressive/libertarian forces are long awaiting for: a government of the Left, not as the final aim and not as an end in itself, but as a starting point towards another route and another narrative that we are going to be the protagonists and the story-makers of our own destiny?
My story, although it covers a very short period (shorter than the British extended celebration Christmas period) has it all: the heroes and the villains, the omnipotent external forces, bribery, corruption, blackmailing, backstabbing … as well as bravery, dignity and resilience. It is not an ‘objective story’. The heroes and the villains are interchangeable, dependent upon which side of the fence one is sitting. I am going to attempt to tell this story from a very class biased way, from the perspective of the working class interest.
However, paraphrasing Orwell, within the context of capitalism in crisis describing reality is a revolutionary act of itself and I will commence by stating the facts.
Resurgence of the class struggle and the combat working class movement with sectoral strikes and occupations with the public sector workers in “reserve employment” in the vanguard, increased militancy of the student/university students movement with on-going occupations and demonstrations resisting the further business orientation of the education and the government’s vision of an education that fits the needs of the Greece under continuing austerity and memoranda.
The uncompromised hunger strike of the anarchist Nikos Romanos defending his self-evident right to life and education and the enormousness of the erupted movement that encompassed not only the usual suspects but broader layers of the Greek society.
The spread of the Greek virus to the very epicentre of the EU/Eurozone with militant protests and strikes in Belgium and Italy.
The disclosing of the farce of the Government’s “success story” and the balanced budgets, and the end of the memorandum and austerity…
The total mismatch between the Greek population’s wishes and political beliefs, and the existing balance of forces within the parliament. The continuing fragmentation of the two party coalition government of Samaras Venizelos and the decimation of the once all powerful two party political system.
The grim future of another memorandum and Troika’s pressure to the Government to speed up the austerity reforms, with the banks confiscating “bad/debtors” (i.e. working class people that have become unemployed and/or their income is diminishing) people’s homes.
The Presidential election
Panicked and deadlocked, the government rushed, hurriedly, to announce the launch, conduct and completion of the procedures for electing the President of the Republic in December, before the end of the year (which were previously scheduled to take place in February). Three elections were to take place for the parliament to elect the President of the Republic: 17th of December, 23rd of December and 29th of December. Read the rest of this entry »
Reviewed by Hans G. Despain in Marx & Philosophy Review of Books
Capital in the Twenty-First Century
The Belknap Press of Harvard University Press, Cambridge MA, 2014. 696pp., $39.95 / £29.95 hb
About the reviewer
Hans G Despain
Hans G Despain is Professor of Economics and Department Chair at Nichols College, Massachusetts. He encourages your correspondence: email@example.com
Capital in the Twenty-First Century is a most impressive book that deserves great attention. Piketty insists that social scientists generally, and economists in particular, must confront and examine “facts” (574-5). This is what he sets out to do in his momentous nearly 700 page text.
The title suggests the book may be offering homage to Marx’s nineteenth-century Capital. Let us be clear from the beginning it is not. Nonetheless, this book will be appreciated by Marxian political economists, while at the same time a frustratingly theoretical disappointment.
Piketty’s book is nothing short of revolutionary in establishing flows of income over time. He establishes that there is a tendency toward the hyperconcentration of wealth, and the rise of a new “supermanagerial” class (315-21). Piketty leaves no doubt that it is class that matters and structural “class warfare” predominates in twenty-first century capitalism (246). Crucial to Piketty’s studies of capitalism is that there exist no economic laws determining distribution of income and wealth (274, 292-4, 361-4). This is an enormously important point, and a return to classical political economy with a vengeance, especially to Marx whereby distribution is a function of series of institutional power relations, rooted in production relations. These summaries will surely, and should, excite Marxian social theorists. However, Piketty’s definition of capital as a financial measure of physical equipment, money, financial assets, land, and other valuables will discourage Marxian social theorists. I will come back to these crucial points.
The primary problem with the book is an underdeveloped social theory and normative philosophy. Consequently, Piketty’s policy recommendations are impressively anemic and aimed at perpetuating exploitation of the economically vulnerable populations. In the end Piketty wants to take the ‘hyper’ out of hyperexploitation and reestablish good old-fashion exploitation with higher minimum wages, taxes on capital, progressive income tax, and limits on inheritance.
With emphasis, Piketty defends the strengthening of the “social state” or the historical development of public education, healthcare, social security, unemployment compensation, and income support for the poor (471-92). Moreover, he maintains that deficits are not bad in-and-of-themselves, but must be spent wisely and should not be paid for with fiscal “austerity” but by means of central-bank-generated-inflation and/or a tax on capital (540-70). This defense of the “social state” and federal deficit pushs Piketty into the area of (political) philosophy, social ethics, and morality. Piketty is well-aware of this (479-81). He recognizes that the so-called “science of economics” is more accurately political economy that generates enormous normative philosophical implications (574).
This gets well ahead of our story and the details of Piketty’s book. The essence of the book is remarkably straight forward and is intended for a popular audience. Piketty brilliantly succeeds on this account and should be duly praised. The essential argument is that capitalistic economic growth inevitably slows. As the rate of economic growth diminishes, the past accumulated “capital”/wealth gains in importance (233), and indeed allows past wealth “to devour the future” (378). Piketty calls this a “fundamental law of capitalism” (166).
This fundamental law of capitalism means that the “return on capital” (r) is greater than the economic growth (g): r > g. As a prosperous and industrialized capitalist economy begins to stagnate, past wealth becomes more important and powerful and inequality begins to increase rapidly (572). Thus, one of Piketty’s main goals “is to understand the conditions under which such concentrated wealth can emerge, persist, vanish, and perhaps reappear” (262).
According to Piketty, the primary mechanism (25) causing inequality is the fact that the rate of return on capital is 3 to 5 times greater than the rate of growth (233). Thus, the structural tendency of capitalism toward stagnation and 4-5% rate of return on capital means that markets and competition do not reduce inequality (370). It is in this sense that there is a “logic of accumulation,” based on the divergence between the rate of return on capital and economic growth (22-7), that accounts for the very high concentration of wealth throughout capitalist history (377).
Read the rest of this entry »
Following Michael Gove’s bizarre article in the Mail, attacking ‘Blackadder’ and ‘Oh What A Lovely War’ (and then fellow Tory Max Hastings’ equally fatuous follow-up), I thought it might be an idea to check up on what a proper historian has to say about the First World War. Here’s the late James Joll (Emeritus Professor of the University of London and a Fellow of the British Academy), in his 1973 book Europe Since 1870:
Any single explanation for the outbreak of war is likely to be too simple. While in the final crisis of July 1914 the German government acted in a way that made war more likely, the enthusiasm with which war was greeted by large sections of opinion in all the belligerent countries and the assumption by each of the governments concerned that their vital national interests were at stake were the result of an accumulation of factors — intellectual, social, economic, and even psychological, as well as political and diplomatic — which all contributed to the situation in 1914 and which can be illustrated in the events of the last weeks before the outbreak of war.
While some people have argued — and it was a popular view in the period between the wars — that the war was the result of the ‘old diplomacy’ and of an alliance system based on secret agreements, others, and especially some of the leading German historians since the Second World War, have seen in the war a half-conscious or in some cases deliberate attempt by governments to distract attention from insoluble domestic problems by means of an active foreign policy and an appeal to national solidarity at a time of war. For Marxists the war was inherent in the nature of capitalism; the forces which drove states to expand overseas were in this view leading inevitably to a clash in which the great international cartels would no longer be able to agree on a peaceful division of the under-developed world and would force governments into war for their own economic interests. Other writers have concentrated attention on the implications of strategic decisions and on the influence of for example the naval rivalry between Germany and Britain in creating international tension, or on the effects of the German decision finally taken in 1907 that, in order to defeat the French army before turning to fight the Russians on the Eastern Front, it would be necessary to violate the neutrality of Belgium, and thus run the risk of bringing Britain into the war as a guarantor of Belgian neutrality under the treaty of 1839
If we try to account for the widespread optimism and enthusiasm with which the war was initially greeted by many people in all the belligerent countries, we have to look at many of the factors described in the preceding chapters — the belief that the doctrine of the survival of the fittest could be applied to international relations, so that war seemed to be the supreme test of a nation’s right to survive; the belief, stemming from Nietzsche, that only by a supreme shock and effort could the limitations of bourgeois life be transcended and its essence transmuted into something nobler. Or again, even if the governments of Europe did not deliberately envisage war as a way out of their internal political difficulties, the fact remains that war briefly produced a sense of national solidarity in which bitter political quarrels were forgotten: Irish Catholics and Ulster Protestants could agree to shelve their differences ‘for the duration’, as the phrase went; right-wing Catholics and socialist free-thinkers who had not spoken for years shook hands with each other in the French Chamber of Deputies, and the Kaiser gave a warm greeting to a gentleman whom he mistakenly supposed to be the Social Democratic leader Scheidemann. In Germany in particular the war seemed to create a new sense of solidarity, of belonging to a Volsgemeinschaft such as a generation of social critics had been longing for, a national community in which class antagonisms were transcended and in which the Germans felt rightly or wrongly a sense of mission and of purpose which had been lacking since the 1860s and early 1870s.
But perhaps in addition to the illusion that the war would be a short one, the illusion which received the most bitter blow, even though it was to be revived hopefully by President Wilson in 1918, was the belief that international relations could be conducted on a rational basis in which the interests of the various nations could be made to harmonise with each other without the need for armed conflict. It was this illusion that had governed Grey’s diplomacy and his attempt to mediate between the continental powers in the last days of July 1914; and it was a similar belief that inspired the leaders of the Second International when they came to Brussels in the hope of finding a way to demonstrate that the international solidarity of the European working class was stronger than the division between their capitalist rulers. The ideological assumptions on which European liberalism had rested were already breaking down before 1914. The war was going to hasten this process in the field of practical politics and everyday social and economic life. The war destroyed the political, economic, social and territorial structure of the old Europe and neither conservatism nor liberalism nor even socialism were ever going to be the same again. From the standpoint of sixty years later there is all too much truth in the prophesy made by Jean Jaures in 1905: ‘From a European war a revolution may spring up and the ruling classes would do well to think of this. But it may also result, over a long period, in crises of counter-revolution, of furious reaction, of exasperated nationalism, of stifling dictatorships, of monstrous militarism, a long chain of retrograde violence.’
I have little doubt that I shall be returning to James Joll from time to time throughout the coming year: in the meanwhile I recommend Europe Since 1870 (from which the excerpts quoted above were taken) and his The Origins of the First World War (1984, with Gordon Martel). I doubt that Michael Gove will want to read anything so objective, scholarly and challenging.
Comrade Coatesy: ‘Daily Mail Attacks My Granddad.’
Next page »