When the global economy collapsed a few years ago, it seemed to many of us that the neoliberal era would finally meet its inevitable and well deserved demise. What we’re seeing instead though is the rise of a much more powerful neoliberalism, call it a version 2.0, that is attempting to go much further than what was possible pre-crisis.
In the US, republicans and many democrats openly seek to end or slash medicare, medicaid, and social security – the key remnants of that bygone era in which the working class had a bit of power. The neoliberal vision for today’s powerless 21st century worker is “flexibility”, competition, lower wages and benefits, delayed retirement, and ever rising insecurity. The vision for those with wealth, the “job creators” as they’re called by the right in the US, is one of ever lower taxes and complete freedom to play in the expanding global casino. The mythical “American Dream”, the very basis of American cultural hegemony in the 20th century, is being replaced with the nightmare of Darwinian global struggle.
But if we want to see the most amazingly blatant and undemocratic attacks on domestic populations, we need to cross the Atlantic and look to the European Union. This body, having its constitution rejected in every referendum it was subjected to save one, has absolutely no democratic legitimacy. The only positive popular vote was in Ireland which rejected it the first time but was then bullied into a forced re-vote. The EU is an undemocratic neoliberal body in the very same mode as the IMF.
European workers, like errant school children, are now being subjected to expanded economic oversight by the European Commission in what’s officially being called the “European Semester”. Per the EC, if its “recommendations… are not followed, or if national policy goes in the wrong direction, the Commission will use its new powers under the Lisbon treaty (its undemocratic constitution) and issue policy warnings and, as a last resort, impose penalties.” (Bold in original.)
What are its “recommendations”? “However much austerity has been imposed by EU member states, it is simply not enough” is how the EU Observer characterizes them.
It goes further than fresh call for austerity: it is a recipe for much deeper liberalisation of the European economy than has yet been seen. From intervening in collective bargaining to cut wages, to making it easier to fire workers, to a shift away from progressive taxation, through the new system, the EU hopes to utterly transform its member-state economies to be more competitive with the likes of the US, China and emerging economies.
“We are now implementing the new system of European governance,” commission chief Jose Manuel Barroso said in the European Parliament in Strasbourg, heralding the unveiling of 27 detailed – or ‘granular’, to use the adjective EU officials use – national prescriptions, telling member states what they are getting right and wrong with their fiscal policies and what they must do to ‘fix’ their economies.
Spain, with over 20% unemployment, is in a depression and massive numbers are on the street. Taking us back to Hooverian times, here are the “recommendations” for Spain:
- Deeper budget cuts if revenues prove worse than projected
- Introduce ‘debt brake’ for both national and regional governments
- Warns against the parliament introducing changes to law raising retirement age
- Further measures to raise the effective retirement age
- Warns over role of local authorities in governance of savings banks
- Overhaul the “unwieldy” collective bargaining system, going beyond the current labour market reforms
- Move away from sectoral bargaining to firm-by-firm bargaining
- End automatic extension of collective agreements
- End wage indexation
- Deliver greater wage flexibility
- Reduce employer social security contributions and replace lost revenues with increased or broadened VAT and increased energy taxes, especially fuel taxes
The recommendations for the other countries are similar and they amount to an incredibly naked attack on workers. Completely absent, of course, is any call for greater taxes on wealth or income or a recognition that the European Central Bank could permit economic expansion through monetary creation. Social Europe is a distant memory.
The rulers of Europe are implementing policies to reduce wage costs in order to compete against China, the US, and the rest of the world. And, of course, the rulers of China, the US, and the rest of the world are playing the same game. It’s a stacked deck worthy of any casino and the losers will be workers everywhere. Global capitalism as envisioned in the neoliberal creed cannot possibly bring about widespread prosperity. Its absurd Orwellian logic equating austerity with prosperity can only be imposed by manipulation, it’s a direct threat to democracy, and it must be fought.