End-of-Growth Uprising Goes Global

October 17, 2011 8 Comments

It began in Tunisia and Egypt, then spread throughout the Middle East and North Africa. It spilled into Spain, Greece, and Ireland. It leapfrogged to Wall Street. And this past weekend it erupted in London, Rome, Paris, Tokyo, Taipei, and Sydney. In hundreds of towns and cities around the world the uprising’s refrain is similar: economic misery resulting from fizzling economic growth is leading protesters to question corruption both in governments and in financial institutions, and to demand an end to extreme economic inequality.

As long as economies grew, inequality was tolerable. And if the rabble demanded perks, governments could simply borrow money to fund social programs. Corruption could fester unnoticed. But now the economic tide is no longer lifting all boats. Bursting financial bubbles have led economies to contract. That has in turn led to falling tax revenues, which have made existing government debts in several key countries unrepayable. Therefore government bonds held by banks as assets suddenly have little value. Which causes the economy to teeter further. The system is broken.

The universal solution: austerity—a strategy of cutting government spending, government jobs, and government services to the poor and middle classes. Suddenly social safety nets are being withdrawn, and extreme economic inequality is no longer socially tolerable.

The only thing that could stop the uprising is a return to growth—which would generate new jobs, higher tax revenues, and solvency in the financial industry. But instead the world economy seems poised on a precipice perhaps more dangerous than the one it faced in 2008. This means the protesters likely aren’t going home anytime soon. For governments, there are only two realistic responses: repression or major reform

Brutal police and military repression of the protests could buy time for politicians, but it would solve nothing. The unrest would go underground and tear at the social fabric, leading eventually to revolution or societal breakdown.

Reform, if it is to make a difference, must be fundamental. It must start by addressing issues of economic inequality, but then must eliminate the massive debt overhang that plagues not just governments but households and the entire financial sector. In essence, policy makers must cobble together a new economic model that meets human needs in the absence of economic growth.

Politicians take note: Forces are being unleashed that cannot be tamed. So far, crisis has been dealt with by a combination of denial and delay. Those tactics no longer work. Extraordinary times call for extraordinary measures.

Photo credit: AP Photo/Gregorio Borgia

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  • Pangolin

    I’m working with Occupy Chico in a northern California college town. I talk to students, former students and prospective students all day that I’m there. The Occupations will continue into the foreseeable future for a specific reason.

    Without job security people in their 20′s cannot advance their lives. They can’t maintain relationships. They certainly can’t get married. Children are being raised by two single, separated parents who also move in and out of insecure housing and job status. Buying homes is completely out of the question which further downgrades the real estate market and local tax revenues.

    Our economies are futile cycling in their present state. There will increasingly be little of value to do other than revolt since they control no resources.

  • Stephen

    Austerity is not the solution to this. We need to INCREASE the social net, not decrease it. I think we need to redistribute wealth so things are more equal and build a social safety net that doesn’t depend on endless growth, reduces dependence on foreign oil and coal, and provides a better quality of life for the average person. We need to give wall street CEOs less control and allow the other 99% of the public to have a big say in how the economy is run. We also need to make things like housing, food, education, medical care etc be able to survive a job loss or recession. We need to end the casino type economy by freeing it of Credit default swaps, derivatives, and exotic bets on things.

  • ceti

    Repression or reform. Muddling through is increasingly becoming untenable, although resource rich countries can do so for a little longer than others.

    Basically, the occupy movement is showing that we need to have a fundamental rethink about our society, that might only be possible with a revolution. It seems that all politicians are becoming increasingly irrelevant. The Republicans are a cruel joke, while Obama is launching more wars for resources in yet another scramble for Africa.

    It’s either that, or these temporary autonomous zones might transform into permanent ones, where the ideals of community are restored and where people can live together for survival and sustenance.

  • http://peakoilsurvivalists.blogspot.com/ Veegs

    Austerity doesn’t seem likely to result in enough surplus cash to deal with mounting debt. In response to Stephen, adding social programs is a direct route to a Greek-type failure, but on a global scale. We had a super-spender here in Ontario in the 90′s (Bob Rae) and for some time, Ontario was the Greece of Canada. Forcing people to make do with much, much less is not favorable, but a required attitudinal change for austerity to be successful.

  • Ritxard el Vasco

    Richard, I would love to hear your opinion on how this current uprising relates and compares to the ones which occurred at the time of the last populist movement against robber barons — just about a hundred years ago. Will this one be put down as brutally as the previous ones? How do we prevent that?

  • PhilT

    “In essence, policy makers must cobble together a new economic model that meets human needs in the absence of economic growth.”

    I would like to think that there is now an inevitability to the development and implementation of such a model. But the elite vested interests who have shaped economic policy to their advantage over the last 30 years will no doubt use all means at their disposal to resist such a change to the status quo. As noted above, repression is ultimately one of the means through which change could be resisted by teh elite. Less brutal, but no less effective, methods include lobbying, corporate media control, political funding, sponsoring of organisations promoting economic “freedom” from regulation etc.

    It would be better if the “occupy” protests were portrayed as something other than simply “anti-capitalist” (as the mainstream media have largely done so far). A more positive message would be something like “pro-fairness/pro-sustainabilty”. This would make more explicit the link between the social unrest we are witnessing and the harm that our prevailing economic model is causing to society, the environment and our future prospects. A focus on “anti-capitalist” grievances detracts from the sustainability message and can only serve to alienate those who are easily convinced that the protesters are all socialist/Marxists with a class war agenda.

    The challenge then is to achieve a “re-branding” of the protests from a negative critique of capitalism itself to a positive focus on reshaping the current system towards a fair and sustainable future for the 100%.

  • Mark N.

    E. F. Schumacher, would be a good place to start. If we would look to a good model, Economics as if people mattered would be a good start.

  • CG

    Ah, the uprisings in Egypt are fundamentally different from our own Occuoy movement.

    While we recognise that things can’t go on like this anymore, in Egypt (and all other places) they are still aspiring to a western lifestyle. All hell will break lose when they realise that this dream is over. For them just as much as for us.