Recent defeats of Dutch, Greek and French governing parties show rising opposition to their austerity policies. Across Europe and North America, similar oppositions mount. Bailing out large financial and other corporations with borrowed money has been the almost universal government plan for coping with global capitalist crisis. The result - rising government deficits and debts - was followed by "austerity policies" to reduce those deficits and debts. After suffering a crisis and then bailouts that bypassed them to favor major corporations, people now face austerity cutbacks of government jobs and services to offset the bailouts' costs. As opposition mounts, will it seek Keynesian "growth" or go beyond capitalism to economic democracy?
Keynesianism (expansionary state economic intervention) never was capitalists' preferred policy for capitalism's recurring recessions and depressions. Their Plan A was government borrowing to bail out major financial and other corporations followed by "austerity policies." Austerity repays the costs of bailouts by siphoning money away from (cutting) government jobs and services. Only when anti-capitalist movements threaten from below, as in the 1930s, do anxious capitalists abandon Plan A and shift to Plan B - eventually formalized as Keynesianism. Via government spending, Keynesian policies claim credit for jobs and income "growth" and aim to keep political control away from anti-capitalist forces. Keynesianism's dependence on radicals' pressure from below explains its strength in the 1930s versus its weakness today.
Capitalists prefer austerity for many reasons. Because universal suffrage allows politics to undo capitalism's consequences such as unequal wealth, income and power distributions, capitalists worry about how far universal suffrage will go. Majorities may, during crises, reject bailouts and austerity. The Greek and French just did. They may then demand Keynesian "growth" via government jobs and income and wealth redistribution. Or they may demand transition beyond capitalism to democratize their economies by socializing means of production, planning the economy and transforming enterprises into self-directed worker collectives. No wonder that conservative mainstream economics (so-called "neoclassical economics") celebrates capitalism as a self-healing system requiring no government intervention.
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