Opinion Sur
‘Adjustment’ is associated to a socioeconomic policy that faces crisis by focusing on public expenditure and public and private over-indebtedness reduction. Leveling public accounts would reinstate ´normal’ economic functioning, although at an immense social cost: growth would return and markets would regain their role as organizers of millions of decisions that are made daily worldwide. The purpose is to avoid the collapse of a certain way of functioning and preserving the interests that have sustained and powered it. They do not question that the economic dynamic has generated a tremendous concentration of wealth and, therefore, an equally enormous inequity. ‘Adjustment’ has implications regarding social justice and income distribution but also about the role financial capital plays in imposing where savings are channeled (to speculate or to fund production) as well as about ‘externalities’ such as environmental destruction, irresponsible consumerism outburst, damage to social cohesion, threats to effective democratic governability and loss of sustainability of economic growth itself.
On its part, ‘transformation’ is associated to a different socioeconomic policy that seeks to change the course and the prevailing way of functioning. It implies moving forward towards a sustainable development that knows how to combine equity with organic growth, respecting modalities specific to each country and adjusting to the changing circumstances that characterize every reality. This other perspective accepts fiscal responsibility but based on distributive justice and an equitable sharing of burdens, efforts and results. Economy’s steering wheel is not handed over to markets; instead public power is used to orient them in a new direction that does not reproduce the disastrous ‘externalities’ (truly inevitable and foreseeable consequences) of the current way of functioning.
Transformation also implies promoting very different values than the unbridled greed of great part of the financial world and not considering the most vulnerable segments of society that constitute our majorities. This perspective prioritizes strengthening social cohesion that provides the foundations for a fuller political, social and economic democracy.
Driving ideas
• With a few honorable exceptions, the world is at the mercy of investment, sovereign, pension and hedge funds managers guided by the desire to attain profits but without obligation to consider the consequences their actions have on society as a whole nor on the system that privileges them. We are in the presence of bureaucracies trained and encouraged to speculate; rewarded depending on their financial accomplishments, usually short-term, that do not measure or consider the collateral effects of their decisions.
• Neither panic nor an astonished gaze help. It is in the stir of a crisis that crucial decisions are made. Solutions are mostly aimed to ‘bail’ those who have been helmsmen of the disaster, unloading on the weakest the burden of restoring a dynamic similar to the ones that generated the crisis. Today the alternative is to transform, not to restore.
• A more or less aggressive, more or less regulated capitalism prevails in the western world, which functions associated to democratic regimes all imperfect though perfectible, limited by a diversity of democratic traps that vary from country to country in terms of its nature and severity.
• ‘Emergency’ solutions that, with suspicious haste, propose rebuilding what existed before the crisis blew up constitute one of the possible alternatives: they represent a complex web of interests, some legitimate but others illegitimate, structured to disguise what cannot be openly defended. If the option is reinstating the preexisting dynamic, the most beaten by the crisis will also be the most affected throughout the reconstruction.
• While it is essential to strengthen the level of demand, to avoid the destruction of corporate assets and to reinstate the capital formation process, this does not at all imply that the structure of demand has to be rebuilt just as it used to be in the pre-crisis, nor that it is advisable to restore the same capital formation process whose dynamic lead to the crisis and, much less, that the bail-out should be financed by the most vulnerable.
• Transformational adjustment must aim to increasing equity and socioeconomic productivity of public expenditure and debt; replacing ineffective expenditure for growth promoting expenditure.
• It is inevitable to reflect upon the fact that a scam performed by an individual is penalized as it should and, instead, the scam that is structured as an economic policy with even more devastating effects receives very different treatment.
• Once the financial veil was dislodged, the rupture in organic growth was exposed.
• The crisis allows to tame unions and reinforces the role of financial creditors: they ensure ways of collecting credits and obtaining greater compensations since, with other sources of resources drained, speculators have their last victory refinancing debt at higher rates and acquiring the assets in trouble at a vile price.
• A fundamentalism is not overcome with another one.
• In the pre-crisis trajectory, thoughts were inclined to accompanying the apparent systemic stability with a dangerous tendency towards the homogenization of approaches and interpretations which slanted perceptions and silenced alarms.
• Segregating the poor and small producers does not help transform their reality but instead tends to reproduce the conditions in which they operate.
• Inequity inflames and leads to instability; it mines social cohesion and affects democratic governability. It is extremely difficult to bear the irritating overabundance of some while others are being left behind; painful to accept the squandering of superfluous consumption while poverty asphyxiates half the planet and causes more casualties than any known disease.
• Inequity, poverty, a fair and sustainable economic system, must be faced from and through the main variables and not with a specific action that complements the central strategies.
• Along with the crisis xenophobia reemerges in Europe and the United States. Immigrants are rejected ignoring their contribution to development and without considering that wealthy countries are the foremost responsible for generating backwardness and poverty in African and Latin-American migrant-sending countries.
• Capital flight by the wealthy is two times larger than the amount politicians and organized crime leak combined.
• Every accumulation process tends almost naturally to concentration unless decisions that are exogenous to the economic system intervene to compensate that tendency.
• An international system where some countries are rich and others miserable is not sustainable, nor are the countries where privileged minorities concentrate the national income while huge underdeveloped or excluded sectors endure; and a planet where the excess of some (around 20% of mankind) and the unsatisfied needs of the rest produce an environmental deterioration of eventually catastrophic proportions is not sustainable either.
• We need to confront the hypocrisy of those who impose decisions that lead to protecting sordid interests of absolutely minority sectors.
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Opinión Sur is completing the edition of the fifth title of its Book Collection ‘Global Crisis: adjustment or transformation´. This article presents the book’s introduction and lists some of its driving ideas.
