Greek debt is but one black hole among many in the eurozone crisis which threatens to tip the world into a ‘1930’s moment’ according to IMF managing director Christine Lagarde. But the problems facing global capitalism are far deeper.
Even Lagarde had to acknowledge that there is “little margin for manoeuvre” and that the real problem is "America's debt and deficit - the lack of a medium-term plan to reduce it”. Even that doesn’t begin to get to the heart of the matter.
Only yesterday the worst-case expectation was that the UK’s Gross Domestic Product – the key measure of growth - fell by 0.1% between October and December. But today’s official figure from the Office for National Statistics reveals that the UK economy actually shrank by 0.2% in the last quarter of 2011, and is heading for recession.
Accumulated UK government debt broke through the £1 trillion mark as a dual consequence of falling tax revenues, continued support for the financial sector and higher welfare bills as a result of soaring unemployment.
Despite the ConDem’s stated intention to reduce the country’s dependence on debt, its combined corporate, public and household debt has increased to 507% of GDP and the country remains where it was in the league table of the richer nations when the crisis broke in 2007/8 – right at the top.
Despite all the evidence, there are some like governor of the Bank of England Mervyn King, who try to present even the darkest of messages in a glowing halo of hope for the future of the capitalist society.
He said: “All crises come to an end, and businesses will find ways to trade with each other and meet the needs of consumers whatever the transitional problems posed by deleveraging.” Of how and why this might happen he gave no sign, making his message rather mystical in content.
Oliver Blanchard, the International Monetary Fund’s chief economist also tried to package his warning that Europe's debt crisis could tip the world economy into recession with the faintest hint of a rosy future "With the right set of measures, the worst can definitively be avoided and the recovery can be put back on track," he said. "These measures can be taken, need to be taken, and need to be taken urgently."
Only the first indications of the impact of these ‘measures’ have been seen so far in the millions of dispossessed American families, and hundreds of millions thrown out of their jobs worldwide.
But there are some who are, however reluctantly, coming to the conclusion that the game is up. In a wide-ranging article inspired by the Financial Times ‘capitalism in crisis’ series, its senior commentator Martin Wolf reviews the defining characteristics of civilisation.
Taking in the insolubility of the crisis of extreme financial instability, the prospect of a global economic collapse, the impact of humanity on the planet, and the role of leadership, he observes that states alone are now unable to supply the ‘public goods’ of education, health, control of crime and pollution.
“Ours is an ever more global civilisation that demands the provision of a wide range of public goods. The states on which humanity depends to provide these goods, from security to management of climate, are unpopular, overstretched and at odds. We need to think about how to manage such a world. It is going to take extraordinary creativity.”
Wolf doesn’t offer a solution, because the only ones available within the framework of capitalist civilisation are too brutal and unacceptable to liberal thinkers like him.
It is time to open a new era, based upon co-operation in a democratically-controlled, ecologically restorative system of production and distribution designed to satisfy the needs of the 99%.