To bail out finance capitalism, the state taxed the middle class and workers, and diluted the social welfare state, as we once knew it. Ironically, the US and EU, with most of the G-20 following suit, are continuing the same neo-liberal policies that led to the current global recession, a recession that came very close to becoming a depression if it were not for the safety net that the social welfare state provides!
Servants to international finance capital, the US, EU, Japan and most of the G-20 are determined to proceed with neo-liberal policies and with the dismantling of the social welfare state as a way to strengthen corporate welfare. This course may continue until there are mass uprisings that force political elites to change course. On a global scale, we currently see the proletarization of the bourgeoisie, widening gap between rich and poor, and Third-World-type conditions prevailing among the bottom 20% of the First World’s population.
Does all this mean the repeat of another global recession in 15 to 30 years?
Another global recession is inevitable, given that capitalism expands and contracts owing to the perpetual process of capital accumulation. But it may take place against the background of a lingering recession from which the world economy, at least most of the countries, may not recover from the current recession sufficiently to avoid fiscal bankruptcy and depression-like conditions in the next cyclical downturn.
The blatant contradiction is that Wall Street firms, giant international banks, and the World Bank agree that as the 21st century unfolds the countries pursuing statism or quasi-statist policies will dominated in the world economy. China, followed by Russia, India, and Brazil are included in the “statist” group that plays by the rules of international finance capitalism abroad, but follows national capitalism at home. The strong fiscal structure becoming stronger in these countries is in direct contradiction with the neo-liberal policies that US and EU through IFS’s like IMF and European Central Bank are imposing on full and associate members.
On the once hand, therefore, there is general acknowledgment in the West by neo-liberal advocates and institutions that global economic hegemony in the 21st century will be exercised by the countries pursuing statism. On the other hand, the same advocates and institutions remain faithful to neo-liberalism that was the cause for the current recession and a prescription to the next one.
I can only explain this contradiction by concluding the immediate pocketbook interests of the neo-liberal advocates are with the ideology they embrace, while intellectually they see long-term the demise of their own ideology. If this were not the case, how can we explain Goldman-Sachs, a Wall Street firm well-known for its corrupt practices at home and abroad stating that China and statist countries will lead the world economy, yet, Goldman is vigorously pursuing neo-liberal policies and practices?