Reporting on the second round of Cyprus’s presidential election, the Wall Street Journal highlights the “headache for European and international policy makers” occasioned by the island nation’s domestic financial crisis (“Cyprus’s New Leader Will Pursue Aid Deal,” February 24).
The sordid world of bank bailouts and staggering government debt is by now nothing new to the front page. Since 2008, we’ve grown accustomed to the idea of bank execs, politicians and international bureaucrats sitting around tables, ostensibly navigating whole economies between Scylla and Charybdis.
The relationship between ever-burgeoning government debt and corporate plutocracy is misunderstood by most mainstream observers, their misapprehension tracking very closely to their acceptance of the myth that the state and big business work at cross purposes. A central piece of that myth is the general assumption that while government is benevolent, but clumsy and inefficient, powerful corporations are methodically streamlined and cost-effective, yet rapacious.
Among the failings of this view is that it abstracts the state away from its own basic, motivating influences, contra the analysis regarding self-interested behavior to which we subject other individuals and institutions. As a result, most of our politicians, bureaucrats, and public intellectuals — in both the “public” and “private” sectors, consciously or unconsciously — have the wrong idea about the role that government debt plays in economic class systems.
In Cyprus, as everywhere else around the world, government debt attributable to actual social welfare programs for the indigent, elderly, unable to work, etc. is dwarfed by debt racked up on military spending, and subsidies, bailouts, and stimulus plans for favored big business players with close ties to government.
The assets of Cyprus’s banks, which would now require almost $20 billion to save, equal more than 800% of the country’s GDP. Further demonstrating the perverse and incestuous character of the relationship between the Cypriot state and its banks, the latter hold almost nine-tenths of government’s outstanding debt.
Should Cyprus’s politicians borrow the required money from the International Monetary Fund and the EU bailout reserve, its debt will surpass 140% of GDP. Given the concrete ties between the commercial banks and the formal state, it’s reasonable to regard the former as a de facto extension of the latter, and correspondingly regard the latter as the handmaiden of the ruling class. The substance of the arrangement is the same regardless of how we choose to characterize it.
When harsh austerity is imposed as a result of the government’s debt woes, its impacts fall heaviest on the shoulders of ordinary people — not of the actual welfare-siphoning parasites, the big banks.
Policymakers, held on the strings of influential, rich plutocrats, decide how to spend the state’s booty — all of which is ultimately pillaged from working people — and when things seem to be going well, they take the credit, trumpeting the genius of their spending bacchanalia.
But when crisis and disaster inevitably befall their doctored, corporatist economy, it is the whole populace which is expected to bail out the policymakers and their corporate masters. As always, the benefits of corporate-state skullduggery conduce to the benefit of a few, while the costs are dispersed over the whole society.
Free and open competition is the only sound alternative to the capitalist system of privilege that is leaving the world’s economies desolate. The situation in Cyprus represents that system. Only by freeing ourselves and our economic relationships from the clutches of political authority — in other words, from the state itself — can we have the stability and equity that politicians and corporate “leaders” promise, but never deliver.
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