World economic crisis: BRICS don’t float

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World economic crisis: BRICS don’t float
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The discussion that follows was prompted by the article: World economic crisis: BRICS don’t float. The discussion was initiated by Fred.
Below is the discussion so far. Feel free to add your own comments!

" After reading this article,

" After reading this article, can anyone continue to want to hope and believe that an "economic miracle" is still possible? If you are one of these people ... please note that the budget of the Vatican is in the red."

Are you suggesting that the power of prayer is losing its....well, its power? Surely not! And I find the suggestion that the Vatican, where the prayer wheels are perpetually turning, could possibly be bankrupt impossible to accept, and a little impertinent. After all, the Vatican has its own Bank, and we know what banks can do with delicate adjustments to the books; and then there's the Vatican Museum, chock full of priceless art works the sale of which would do away with the need for any economic "miracle" - which you so shamelessly mock, as if the age of miracles is over, when we've just had the marvelous Olympics with Britain doing so well, and we should all be so proud- at least till Christmas.

Apart from that I enjoyed reading your article very much, and thought you made excellent points about the overall world-wide bankruptcy of the capitalist system - so you see, it's not just the Vatican having a momentary problem with solvency at all! - but just wish you could've indicated some light at the end of the tunnel, or at least hinted at the possibility of any alternative solution to the crisis - if there is one? - and perhaps refrained from quips at the expense of the Holy See. Yours, A. Sympathizer.

write off debt?

Olympified right off, I watched the entire press conference and questions afterwards of the governor of the Bank of England, Mervyn King, last week.

King is a master of saying nothing very much, despite being on record with wildly over-optimistic growth forecasts in the past couple of years and totally complicit in the dodgy aspects and criminal activity of British banking (even if the latter is being raised somewhat from the US with its own economic and imperialist interests in mind - as the ICC has already said, every major bank in a money launderer for criminal activity).

Throughout the entire conference and the questions from the supine journalists present, King said, in so many words, he had no idea when the recovery was coming or where it was coming from. He used the Osborne/Cameron position of the British bourgeoisie that it was all the fault of the eurozone and mentioned the phrase "global economic crisis" once. The only "analysis" that King offered as a basis for coming out of the crisis was that the world did so in the 30s (but he didn't mention the war).

The one point that was of interest was that King refused to rule out writing off Britain's debt. I've just had a bit of a hammering on libcom for suggesting that capitalism's economic crisis is terminal, from those that see capitalism as an eternal system that always been crisis-ridden and will always get out of it. This is best summed up in Augheben's position that we are now in a situation of economic "upswing" (god help us when the downswing comes). So, my question is this: can Britain for example, write off its debt? What would this mean - would it be a declaration of economic war? Why doesn't everyone do it, why hasn't it been thought of before? I can't see it being possible to cheat the law of value this much. Any thoughts anyone?


Good question Baboon. In

Good question Baboon. In captialism, individuals and corporations--even units like municipal governments--write off (or reorganize) their debts everyday. Its called Bankruptcy protection. Historically, the U.S. has had some of the most liberal bankruptcy laws, which perhaps in some ways accounts for its economic dynamism and entrepreneurial spirit (said in best Dubya imitation). However, I think the problem with a sovereign state declaring bankruptcy is that it poses the question of "systemic risk." Certainly, this would be the case if a nation the size of the UK renounced its debts. Even one as small and marginal as Greece seems to pose that risk.

I think perhaps this has something to do with why captialism cannot achieve a level of political unity greater than the nation state. If one state gets in trouble to such an extent that it poses a systemic threat, the other states are supposed to step in and save it. Too great a level of political centralization would pose a dangerous level of potential systemic meltdown, as there would be no "outside" to step in and bail out the state if it gets in trouble. Of course, we have seen how difficult it is now for states to act collectively in their own best interests vis a vis a troubled rival in the Eurozone crisis.

The big question is what would happen if the U.S. renounced its debt. There is an organized and insurgent political movement in the US that seems prepared to do just that if it doesn't get its way. Now that would pose a very real and very immediate threat of civilization distress. Of course, the US is in reality completely fing broke already. Last summer's debt ceiling crisis --which may or may not be revisited in a few months--showed that the US is only able to function through the willingness of everyone else to buy its debt. Of course, it remains in the interests of it creditors to make sure the mirage does not collapse as long as they can keep it up.

This begs the question, how long CAN they keep it up?

I did want to point out that

I did want to point out that the article possibly underestimates the student loan debt problem in the US. Some estimates say the true default rate on federally guaranteed student loans is closer to one in three. The government plays major games with these statistics.

The real problem with the student loan debt is that unlike the US's otherwise fairly liberal bankruptcy laws, you basically have to be brain dead to get a student loan discharged in bankruptcy. Student loan debt has become a lifelong noose around the younger generation's neck. Obama just started a new income contigent repayment plan, where student loan debtors pay 10 to 15 percent of their (pre-tax) income, but there is no escape from this debt at all short of total incapacity and the federal government has almost absolute power to enage in any number of draconian collection techniques. This creates a somewhat novel situation in regards to the younger generation's relationship to the state and the labor process--in some ways they are no longer completely "free proletarians" and more more resemble state debt peons. I think we need to think a little more about what the implications are of this are and the relationship of this situation to the forms the social movements in the US have taken recently.

I have another point to make about the article on the question of scale and evidence, but its late and I will need to come back to it.

Peter Pan
numbers and references

Nice article. No time to read all comments and follow all the economic development. That's why we need a revolutionary organisation, isn't it? (This is not meant ironically.) But even if I would follow and understand all the developments of the crisis, isn't the most important in the end that the working class recognizes that capitalism can offer nothing more than destruction of humanity and the planet on which it lives? I agree that to do this, we need strong arguments, based on empirical data, framed in an overall political analysis (theory of decadence). I agree that we need to understand the developments in order to predict (for the best we can) economic and social tensions and prepare ourselves for future open struggles. But this thougth about the working class passed my mind. When the revolution is there (won't be tomorrow, but still), will we still follow all these crisis developments? Or will we just try to rearrange society towards a society for the satisfaction of human needs, without the intervention of money?

Sorry, I realise that this small brainstorm is more about the period of transition than about the BRICS and the US crisis developments, but still want to share these questions.

Peter Pan
I forgot...

I actually wanted to say something about all the numbers: empirical data is necessary, but please mention the data sources. Why should an interested reader, who doesn't know the ICC, believe all these numbers, in a context where there is manipulation of economic data everywhere?

Hi Peter Pan. Just want to

Hi Peter Pan. Just want to say I understand some of the sentiments expressed in your "small brainstorm" above, cos I too sometimes wonder about the extent to which the revolutionary organization's constant analysis of all the details of the crisis furthers the proletarian struggle, though I appreciate that it gives the organization something to do while waiting for the struggle to re-emerge. In it's youth the ICC paid a lot of attention to eg the period of transition, and more theoretical things, but maybe that's because it thought the revolution was nearer than it was. But it must be nearer now than it was then - if it's coming at all that is! Maybe its easier to analyze the economy (though not necessarily easy to read!) than it is to analyze and find much to say about very tentative emerging social movements that are indicating growing discontent with capitalism. If that's what they are doing? That's why I was interested in the idea of the reappropriation of the street as a political arena, as discussed a bit in the article about Japan and elsewhere. But it must be difficult to talk about the working class, and what it's doing, and how we can move forward, when in fact we don't appear to be doing anything. And the bourgeoisie's blackout on any news of proletarian protest doesn't help. If it wasn't for the ICC, libcom and others we wouldn't know anything much about developing proletarian protests round the globe. So that's something the revolutionary organization does that's very useful: the dissemination of news of proletarian struggle. But should the revolution ever come, it'll have an even more important job of course, as we "just try to rearrange society towards a society for the satisfaction of human needs, without intervention of money.". Let's discuss that again, in this new context. And thanks for your post P.P