Introduction
The basic thesis of this book is that the Greek crisis is not to be disconnected from the international financial crisis. In the first chapter, we propose to deal with the causes and the form of the global crisis that started in the United States due to the so-called real estate bubble and then expanded into Europe and the rest of the world. As we shall see at the end of this chapter and in the second chapter, the way the crisis was dealt with by the European economic elites was to afflict Greece in particular, this country for a number of internal reasons being destined to become the weak link of the European and the international economy.
Failure to Overcome the Crisis of 1973
The 2007â2008 housing bubble in the United States and its effects on the financial sphere are symptomatic of the fact that it was never possible completely to contain the consequences of the global economic crisis of 1973. This is shown by the steady decline in a series of indicators. As showing in the following two tables are characteristic (Tables 1.1 and 1.2):
Table 1.1
Rates of change of GDP per capita, developed economies, 1970â2011
1970â1980 | 1980â1990 | 1990â2000 | 2001â2011 | 2005â2011 | |
---|---|---|---|---|---|
United States | 2.35 | 2.66 | 2.48 | 0.63 | â0.40 |
Japan | 2.82 | 3.89 | 0.76 | 0.64 | â0.41 |
United Kingdom | 1.92 | 3.14 | 2.60 | 0.80 | â0.51 |
France | 2.98 | 1.65 | 1.45 | 0.52 | â0.09 |
Germany | 2.82 | 2.00 | 1.22 | 1.14 | 1.11 |
Italy | 3.28 | 2.42 | 1.51 | â0.52 | â1.27 |
Greece | 3.42 | 0.25 | 1.37 | 1.20 | â1.36 |
Europe | 2.66 | 2.15 | 1.85 | 0.96 | 0.11 |
Developed economies | 2.58 | 2.61 | 1.97 | 0.83 | â0.07 |
Table 1.2
Rates of change in private real nonresidential capital stock and in total economy labour productivity
Private real nonresidential capital stock (plant and equipment) | |||||
United States | 3.9 | 3.7 | 3.0 | 2.9 | 1.8 |
Japan | 12.5a | 9.4 | 6.1 | 2.9 | 1.1b |
Germany | 6.7 | 5.2 | 3.3 | 2.4 | 1.2 |
Industrial | 5.0 | 4.2 | 3.1 | 3.3 | 2.1 |
Total economy labour productivity (GDP/worker) | |||||
United States | 2.3 | 1.2 | 1.3 | 1.7 | 1.7 |
Japan | 8.6 | 3.7 | 3.0 | 1.1 | 1.8 |
Germany | 4.2 | 2.5 | 1.3 | 2.5 | 1.5 |
Euro12 | 5.1 | 2.9 | 1.8 | 1.9 | 0.9 |
G7 | 4.8 (60â73) | 2.8 (73â79) | 2.6 | 1.9 | 1.0 |
It is observed that in all three variables (gross domestic product [GDP] change, capital stock, productivity), the trajectory is one of steady decline in all countries, leading to the conclusion that a major problem is emerging in the modern capitalist organization of production. This problem does not seem to be solvable, either, by adoption of low wages or curbs on private consumption, as shown in Tables 1.3 and 1.4.
Table 1.3
Annual, per capita income growth rate, 1960â2004
Countries | Annual growth rate (%) | ||||
---|---|---|---|---|---|
1960â1979 | 1979â2004 | 1979â1989 | 1989â2000 | 2000â2004 | |
United States | 2.2 | 1.9 | 2.1 | 1.9 | 1.3 |
Japan | 6.6 | 2.0 | 3.1 | 1.5 | 0.8 |
Germanya | 3.3 | 1.7 | 1.8 | 2.0 | 0.6 |
France | 3.4 | 1.6 | 1.9 | 1.7 | 1.0 |
Italy | 5.0 | 1.7 | 2.3 | 1.5 | 0.7 |
United Kingdom | 1.7 | 2.1 | 2.2 | 2.0 | 2.1 |
Canada | 3.0 | 1.6 | 1.7 | 1.6 | 1.4 |
Table 1.4
Real personal consumption expenditure
1960â1969 | 1969â1979 | 1979â1990 | 1990â2000 | 2000â2007 | |
---|---|---|---|---|---|
United States | 4.4 | 3.2 | 3.5 | 3.5 | 2.9 |
Japan | 9.0 | 4.7 | 3.7 | 1.6 | 1.4 |
Germany | 5.1 | 3.4 | 2.1 | 2.2 | 0.3 |
EU-12 | 5.6 | 3.7 | 2.3 | 2.1 | 1.6 |
The figures in Tables 1.3 and 1.4 show that wages and private consumption are indeed steadily declining. This indicates that the problem of profitability that has created the crisis is not a matter of high wages, and if it continues to exist this is due to the fact that all the policies pursued in recent decades have failed to restore the profitability of strong capitalist formations to pre-1973 levels.
In particular, there have been a number of guidelines that have ultimately proven to be ineffective in solving the problem: (a) real wage increase at rates below the corresponding increase in labour productivity (intensification of exploitation), (b) liquidation of less competitive capitals, (c) increase of chronic and mass unemployment to reduce the bargaining power of labour, (d) increasing rates of concentration and centralization of capital, (e) a broad change in labour relations (part-time employment, flexible work relationships, fixed-term contracts, hiring out of workers) and (f) development of a parallel labour market (including mainly women, young people, immigrants) thus circumventing labour legislation (INEG SEE 2009: 100). The problem was not soluble either by reducing the cost of mechanical production systems, raw materials and energy, or by introducing so-called new technologies into the production process. All of the above is indicated in Table 1.5.
Table 1.5
Profit rates and the growth of compensation: United States, Germany, Japan (business cycle averages)
1960â1969 | 1970â1979 | 1980â1990 | 1991â2000 | 2001â2007a | |
---|---|---|---|---|---|
Private business sector | |||||
US-non-financial corporate profit rate | 0.146 | 0.105 | 0.098 | 0.108 | 0.100 |
Germany profit rate | 0.177 | 0.132 | 0.128 | 0.094 | 0.095 |
Japan profit rate | 0.190 | 0.126 | 0.119 | 0.035 | 0.086 |
Manufacturing sector | |||||
US profit rate | 0.245 | 0.134 | 0.118 | 0.164 | 0.141 |
Germany profit rate | 0.189 | 0.124 | 0.104 | 0.052 | 0.122 |
Japan profit rate | 0.364 | 0.297 | 0.198 | 0.103 | 0.083 |
It is observed that in all three major capitalist countries in both sectors, profitability rates never reach the levels of the 1960s. A recovery is of course observable for some periods as...