World financial crisis - where to from here?

As we have seen, many in advanced capitalist economies have responded to this crisis with a turn to credit. Credit can expand a market beyond its usual confines. And debt finance can be well justified when leading to increased production over the long term, and the sustainable provision for human need. But beyond sustainable means, reliance on debt cannot be depended upon forever. Indeed, it can provide a “financial prison” for the needy: a vicious cycle of indebtedness.

Welfare and social programs, including public housing, education and health, and also progressive taxation and labour market regulation must free people from the desperate circumstances that lead to the unsustainable, downward spiral of credit-dependence.

And over the long term, through democratic and industrial struggle, citizens and workers must achieve a much more even spread of wealth and economic power. Lifting incomes and living standards at the lower end of the spectrum, here, can assist the broader economy: boosting consumer confidence while providing social justice at the same time.

Within the confines of capitalism, though, the falling rate of profit continues to erode the wage share of the economy, and also the social wage: as hyper-exploitation is entrenched. Even as real wages fall in relative terms, though, improved productivity can lower the cost of consumables; while new technology can greatly improve the quality of human life.

And in cases of overproduction, surely it is not impossible for government to intervene to redistribute goods not traded through “the market”.

Take, for instance, the provision of free information technology goods from the developed to the under-developed world. Or consider the free provision of pharmaceutical technology to under-developed countries.

Further, unoccupied housing could be nationalised to provide for the poor and homeless. As Ken Davidson writes: “about 11 to 12 million houses throughout the US are empty and about 20 per cent of people live in streets where houses are simply boarded up.”

Even in a social democratic society there must be a role for innovative and responsive markets that can provide qualitative improvements in material living standards. Any alternative economic model must be both mixed and democratic.

But in response to hyper-exploitation it is also reasonable for workers to fight for “a greater share” of the economic pie. Even while maintaining profitability, this could be achieved through subsidy and support of co-operatives, and winning of collective capital share through pension funds, wage-earner funds, or other such vehicles.

And until workers and citizens are so organised as to make a greater process of redistribution viable, then wealthier workers ought stand in solidarity with the most poor and vulnerable. (Again - through the tax transfer system, and social wage.)

In the wake of the current disaster, we are not “locked into” the neo-liberal model ever more. Assuming civic mobilisation, and the alignment of organised labour with social movements - including environmental movements - we have the potential to win real change.