Economics: IMF and EU/US Unemployment (Jon Kofas, Greece)

Posted on September 16th, 2010 
On 13 September 2010, at a meeting that the International Labor Organization (ILO) co-sponsored, IMF managing director Dominique Strauss-Khan warned that the global recession since 2008 has created “a wasteland of unemployment that is likely to leave scars on society for years to come, unless action is taken to address the jobs crisis.” Spanish Premier Zapatero added that “The crisis of unemployment is the worst one facing the world right now.” Given that the US and EU are facing “official unemployment” of 10%, the heads of state gathered in Oslo agreed with IMF and ILO leaders about the problem.
Absent from the Olso meeting was self-criticism. For its part, the IMF failed to mention that the monetarist policy recommendations the Fund has been making to all its members, whether they are receiving stabilization loans like Greece and other Eastern European countries or not, have exacerbated unemployment, shrunk the middle class, and made upward mobility a dream for the new generation of college graduates. Nor was there shortage of hypocritical rhetoric by heads of state like Greece’s Papandreou, who said: “We need to humanize this global economy”–this comment from a politician who has done everything the IMF, EU central bank and finance capital demanded to accommodate and strengthen finance capital that caused the crisis while dehumanizing the economy and creating much higher unemployment as a result.
On 11 January 2010, I wrote a piece for WAIS predicting that the world economy will actually perform much better than the IMF was claiming in December 2009. I added, such growth will be limited to corporate profits amid a jobless-growth economy that will not recover until 2011. I further noted that rising unemployment, wage stagnation, cuts in social benefits and social security will undermine the middle class and workers. The consequences will indeed be intense labor (urban and rural) and student unrest in 2010, as it becomes clear that governments will demand that the lower classes will pay for the banks’ bailout.
In January 2010 when I was making these predictions, I never imagined that the IMF, whose policies are designed to strengthen finance capital and the core within the capitalist world system, would participate in a conference where it is sounding the alarm about a lost generation of unemployed folks, a generation that includes not just unskilled workers but highly educated people with several degrees and no job prospects. Guardian of capital, the IMF realizes that the strength of a pluralistic society on which capitalism rests for the Western World must have a strong middle class. On several occasions I have written that the global recession will seriously undermine the middle class and consequently the liberal bourgeois social order. The Oslo meeting took place to send a message both to governments and private sector about that specter hanging over the capitalist Western World today. “If you lose your job,” Strauss-Kahn added, “you are more likely to suffer from health problems, or even die younger. If you lose your job, your children are likely to do worse in school. If you lose your job, you are less likely to have faith in public institutions and democracy.”
Considering that the IMF, central banks, private banks, and multinational corporations have demanded that governments force workers and the middle class to pay for the crisis of 2008-2010, and considering that more squeezing of labor the middle class is coming this fall and winter in most advanced capitalist countries and especially in less developed, the IMF is doing the right thing both from a PR and symbolic perspectives to warn markets and states that something must be done. But what is this panacea? The ILO and IMF will work together, and with them member governments, to promote “employment-creating growth,” no matter how wonderful yet nebulous that sounds.
The reality is that the financial and political elites are in panic mode because of what is coming ahead not just in “basket-case” countries like Greece (leader of the PIGS and remaining on the list of most corrupt countries on the planet), but in the UK, France, and US. Of course, there is always the possibility that “employment-creating growth” could come out of more defense spending that has not suffered cuts amid major trimming of the welfare state and downward pressures on wages and salaries. The US hopes to sell $60 billion worth of arms to the Saudis. I have no clue why the Saudis need to make such a monumental weapons purchase, unless it is to help the US economy for it will mean jobs for US arms manufacturers. After all, Kissinger made such deals with the Shah of Iran, arguing that Iran had made billions selling oil and it was time to pay something back!
France and Germany are no different from the US, and Russia and China of course are on the same road. A member of the EU parliament recently exposed the hypocrisy of EU politicians, who on the one hand insisted that Greece adopt austerity measures last winter, but this past August, the negotiations for major weapons sales by France and Germany to Greece went ahead. Those of us who have researched stabilization and development loans know that such loans are linked to contracts from creditor countries, and that includes weapons purchases.
The sad reality about all of this is that intelligent people who should know better shrug their shoulders and ask: what choice does government have but to make cuts in the bloated social welfare state and get rid of surplus public employees; what choice but to strengthen finance capital and weaken the bloated public sector; what choice but to agree to IMF-style austerity measures–whether it is receiving stabilization loans or not–and agree to link major contracts for arms purchases? What choice indeed but to remain apathetic in the face of adversity that even the IMF acknowledges undermines the bourgeois social order?