Tuesday, August 14, 2012

Stiglitz and Fernández: Europe has not learned from Argentina

Nobel Prize economist Joseph Stiglitz declared at a conference in Buenos Aires that Europe has not learned from Argentina, applying instead a policy set that has only worsened things very quickly.

The Neo-Keynesian (= state-controlled Capitalism) economist criticized the Washington Consensus (Neoliberalism) as holding ideas that have been once and again demonstrated as false, causing a debt crisis after another, because they only criticize the borrower while the lender is at least equally responsible and should be hold to at least the same standards if not higher (because it is the lender who willingly assumes the risk and the one who is supposed to know best about who can pay back and who cannot).

Stiglitz explained that there was an international project to forge a consensual frame for ordered sovereign bankruptcies but that it was vetoed by George Bush Jr. 

For Stiglitz the problems of the weakest European economies are similar to those of Argentina in 2001-02. Not just, like "dollarized" Argentina, these European states have lost the ability to play with the exchange rate and the creation of money out of the blue, but also they have in some cases (Spain, Ireland) assumed the debts of broken private banks.

Exactly the same leaders who blamed governments were the ones who demanded that the State took charge of the problems of the private sector.

He criticized these bail-outs of the USA and Europe as anti-Capitalist (i.e. as a sabotage of free markets), allowing a form he calls "bad Capitalism" to continue thriving.

The Argentine President Cristina Fernández shared this idea arguing that people not having enough for the refrigerator, the car or the home is not Capitalism.

Stiglitz praised the Argentine model as the correct way to manage Capitalism, that an economy can go ahead if the crisis is managed properly. 

Source: Página 12[es].


The Argentine (or Brazilian) success, the same as the Chinese or Indian ones can well be largely a mirage. While obviously draining the people dry to pay the debts to the banksters is unjust, inefficient and a clear sign of  the parasitic decadence of the late Capitalist regime, the growth of these developing economies is driven by other factors, mostly globalization and exports.

This implies displacement of at least part of the productive economy from the former Center (1st World) to the former Periphery (3rd World) because of much reduced labor and environmental (= exploitation) costs. This process has been ongoing for decades now, although these four economies (and some others) only clearly benefited since the 1990s and very specially in this last decade. 

But lacking for the most part solid internal markets (which imply higher exploitation costs), these economies are almost totally oriented to exports. And for that they depend on affluent (and decadent) import markets like the USA and Europe. As these are becoming less and less affluent because of the crisis and, at least in the case of Europe, the rigid "importist" hyper-strong euro only serves to aggravate the whole process, retaining the markets a little more but devastating the economy forever, the economic engine that drives the peripheral growth is surely faltering and no doubt these should at the very least stagnate soon. 

In fact there are signs that this is already happening. 

There is a key problem in the predatory, exploitative and destructive hidden nature of the concept growth that is not coming to light with this dialectic farce of Keynsians vs. Friedmanites. Both are wrong because Capitalism itself is wrong, not accounting for human and very specially environmental costs. 

These costs must be accounted for and that implies that only zero growth (plus solar energy input) exists and that we can only grow as much as we can use solar energy efficiently. So far we are using it very inefficiently (fossil reserves, massive environmental devastation) and that is not viable. 

Only Eco-Communism can work in this century: low, zero or even willing negative growth, widespread equality, both political and economic democracy, respect for the planet we live in and no private property anymore. Meanwhile, here or in Argentina, we are bound to pay the hidden costs with our lives.

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