A political movement has been created to support a number of axioms which have little or no basis on the economic science but must be accepted as a sort of fundamental tenets of modern society.
When considering the recent developments of the world economy, a question comes to the mind. Is there a pattern, some kind of strategy somewhere? Are we witnessing movements which are not connected to each other, or can we detect some kind of strategy? Could we think of the movements of the international economy as being well defined trends, which may be called structural, that is, elements durable in time? Perhaps we have a situation in which a series of different events seem to be pointing to a sort of common set of goals.
This economic strategy, so to speak, is accompanied and sustained by a strong political movement, which has been moving in the same direction since a few years to influence the public opinion, and to convince people on the two shores of the Atlantic of the importance of the objectives pursued by the capital. A political movement has been created to support and reinforce the movements of capital. The pressure is on anybody having a say on economic and financial matters to embrace a number of axioms which have little or no basis on the economic science but must be accepted as a sort of fundamental tenets of modern society. T
he application everywhere of the axioms called “Washington Consensus”, notwithstanding the fact that the present inhabitant of the White House does not seem to share such a view at all, has been encouraged in order to obtain the right to treat the labour market -and the employment- on the basis of the principle that absolute freedom of “hiring and firing” is the best way to guarantee the optimum level of employment. As there is no way in which the economic science, or common sense, may support such a hypothesis, it is necessary to create an extreme right-wing grass-roots movement like the Tea Party, and to push the whole U.S. Republican Party towards the extreme right.
In Europe there is no strong Extreme Right , and therefore the Washington Consensus is proposed and forced on the Debtor Countries, creating an environment in which left wing governments (Greece , Spain ) have been victims of the financial crisis, and have been substituted by right wing ones, which promise to follow the Consensus. Moreover, the European structure , which does not responds to the electors, is totally sold on the such a Consensus , and its main points are presented to debtor countries as a way to get them out of their difficulties, which of course come from a completely different problem. So, the Debtor countries have to gather the money to pay the growing interest rate on their debts , at the same time reducing their consumer’s demand, and therefore the ability of the country to pay the debt.
Let’s see the overall strategic framework.
The first element to be considered is financialization of the economy, which has created opportunities of profit out of almost nothing, and has made the price of a basic material, crude oil; depend from speculation in the “futures” market. Such a price has been growing quite rapidly in the last years, irrespective of the declining demand in the mature countries, like Europe; but it has been sustained by the growing demand from the emerging countries, like China and India. Higher profits are obtained in the growing countries, not in the mature ones.
Second, a huge amount of money flows to Emerging Countries from “Mature” ones. The figures for the overall capital flows have been confirmed, and, actually, slightly increased by the Institute of International Finance in the September 25, 2011 in respect to that of June 1, 2011: it’s about a trillion dollars. In fact such capital flows have been slightly on the increase, which may mean that massive capital movements are becoming a stable factor in the international economy.
These gigantic movements have a simple objective, to maximise its income. The Emerging Countries have higher interest rates than the Matures ones, and higher rate of profit. Part of this capital flowing away from the USA must be made up of capital obtained from the US Treasury in its attempt to restart the USA economy by offering cheap money in the hope of seeing it invested in the country.
At the same time, we have seen a strong attempt to increase the rate of interest paid by some European Countries’ bonds. The financial crisis of Europe originates from this attempt, justified with a lack of confidence on some European economies , and perhaps, also by the desire to lower the level of the Euro vis a vis the dollar. The capital exports, and the pressure to increase the yields of European Bonds come both from a lack of confidence in both the American and the European economy. Investment does not seem to be paying enough in the US and in Europe, and the investment capital is therefore looking somewhere else for a higher remuneration. In Europe, this has taken the form of an aggression on the weaker areas of the Euro. The common objective of a higher yield from capital is also pursued with different instruments, with a political platform.
Can we consider this situation as coming from a strategy, of the groups that control the capital, and have the instruments to increase the income it produces? There is, clearly, a strategy on both level, that of the international economy, and that of politics. These groups have no general recipe to run the economies of US or of Europe.
They have, however, a recipe to make the money give a higher interest to those that control it. There is, of course, no secret caucus, where the rich and the powerful decide what to do, and how to explain it to the rest of the world. There is, certainly, a strong tie among the rich, the desire to make more money to day that was done yesterday, without any consideration to the fact that distribution of income seems to move backwards to a set up, say, at the heights of the Nineteenth century, when all the money was in the hands of a single class of persons, who considered totally irrelevant anybody not belonging to their class.