Home > political-economy > How quantitative easing works — or doesn’t (Part Six: Austerity)

How quantitative easing works — or doesn’t (Part Six: Austerity)

A Typical Day in an English Workhouse

The loss of sovereign control over the national economy is experienced by every nation once the production process becomes globalized. While the United States experiences this as a relative loss of policy independence — it can no longer exercise control over its national economy without exercising control over monetary policy within the world market as a whole — for every nation other than the United States this loss is absolute.

Those who mourn this loss on the part of Brazil, Greece, Ireland, China, etc. are fools, who no more understand the nature of sovereign economic policy than they do capital in general. For these progressive simpletons, national economic policy exists in some sterile vacuum where there is no conflict between working people and a class of parasitic blood-sucking vermin who wage war against them with every tool at its disposal.

Sovereign national economic policy has never been anything more than a weapon employed by national capitals to bludgeon the working classes of every country into submission. It has always been a weapon by which these national capitals have sought to increase the extraction of unpaid labor from working people, as well as from the working classes of their trading partners.

What is it exactly that you are mourning?

The wanton brutality and naked economic violence with which the Argentine national capital, in collusion with Washington and the IMF, plunged the working people of that nation into abject poverty — and left them turning over garbage for something they could sell to recyclers?

The vicious and unconscionable assault on the working people of the Soviet Union as the elite managers purloined the national infrastructure and turned over the population to the tender embrace of KGB thugs, and, US and European finance capital?

As that failed Tea Party hopeful Christine O’donnell might say: “You muthafuckin’ leftists had better put your man-pants on!”

All that has occurred here is that the collusion between national capitals — as, for instance, in the case of Chinese state capital — and Washington, that marked the long period of economic expansion prior to this crisis, has, with this crisis, broken down as former partners now seek to minimize their share of the losses created by it.

This battle, as in every battle of this sordid kind, is decided by the advantage of position and historical circumstance — which advantage lies with Washington owing to the fact that the previous period of collusion (in which Chinese manufacturers fed the hungry maw of American consumption) was made possible by the dollar’s role as world reserve currency. So long as the United States owned the world reserve currency it could run unlimited trade deficits and, thus, act as consumer of last resort for ill-made, defective, and dangerous Chinese output.

The entire history of the previous expansion consists of the transfer of worthless American debt assets to nations that, in turn, transferred their badly made manufactured products to the US in return. This expansion was only a veil behind which these nations concealed their actual loss of sovereign economic policy with a flood of worthless dollar denominated dancing electrons.

The predatory, vile, and despicable nature of this collusion is only gradually being uncovered when, as in the case of Greece, billions in now worthless public debt is being used to extract a still greater magnitude of unpaid labor from the European working classes, and as working people, so deeply damaged by the meat-grinder of endless sweatshop labor, would rather throw themselves from the rooftops of Chinese factories than endure one more minute of this relentless torture.

The unconscionable press of globalization has broken the bodies of millions of working people, left them destitute and mired in poverty, and rendered them depraved of both moral shame and social empathy — it has turned Eastern Europe into the brothel of Germany, France and Britain, promoted the sale of Southeast Asian children to sexual predators, and given birth to Africa’s latest contribution to the lexicon of inhumanity: the blood diamond. A year after Haiti was demolished by an earthquake her working people remain in tent cities surrounded by human waste and cholera infested waters.

Is there any wonder that after the collapse of global production we now find this little snippet from today’s Financial Times in which London, in a fit of Tea Party-inspired austerity, proposes to press the unemployed into work gangs:

Unemployed face compulsory labour

By Jim Pickard, Political Correspondent

The long-term unemployed could be forced to carry out manual work to retain their benefits under plans to be announced within days.

Iain Duncan Smith, work and pensions secretary, will announce the plan as part of his welfare shake-up to be set out in a white paper on Thursday.

Under his idea, those who have been out of work for a certain time may have to take up four-week placements – at 30 hours a week – to get them used to having a full-time job. If they refuse to take the programme, or fail to complete it, their jobseekers’ allowance of £64.30 a week would be stopped for three months or more. The jobs are likely to be provided by a mix of private companies, councils, charities and other voluntary groups.

However, it is not clear yet whether officials have worked out the potential cost of the scheme, which will inevitably involve a high level of bureaucracy and administration.

The US-inspired idea is part of major reforms by Mr Duncan Smith to reduce the welfare bill and cut a “culture of dependency” in some parts of the country.

”The message will go across; play ball or it’s going to be difficult,” Duncan Smith told the Telegraph newspaper. “One thing we can do is pull people in to do one or two weeks’ manual work — turn up at 9am and leave at 5pm to give people a sense of work, but also when we think they’re doing other work.”

However, the minister will stop short of the American system where benefits are withdrawn entirely after a certain period.

The plan is part of a wider scheme to simplify the complex web of benefits available, to reduce errors and inefficiencies.

His new “universal credit” will roll benefits such as housing, income support and incapacity into a single welfare payment. Key to this is a desire to prevent a “dependency trap” whereby it is more lucrative for some to stay out of work.

Mr Duncan Smith has said the existing system was regressive and not giving people the right incentive to work.

”We will shortly be bringing forward further proposals on how to break the cycle of dependency blighting many of our communities and make sure work always pays,” a spokeswoman for the Department for Work and Pensions said.

With France and Greece extending the working lifetime, with Spain and Portugal introducing “flexibility” in work rules, and government around the world selling public assets to balance their budgets, how soon will a proposal surface for a return to the virtuous manners of the Victorian Age, and the resurrection of the workhouse.

Here is the future of national economic policy — here is the future of progressive economic thought: the unyielding press to reduce consumption to the narrowest possible confines in order to fill the coffers of a bankster mafia cartel headquartered in Washington.

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