Everywhere, austerity is the demand of the day. To be sure, there are seeming exceptions for the moment in a few countries - China, Brazil, the Gulf states, and possibly a few others. But these are exceptions to a demand that pervades the world-system today. In part, this demand is absolutely phony. In part, it reflects a real economic problem. What are the issues?
On the one hand, the incredible wastefulness of a capitalist system has indeed led to a situation in which the world-system is threatened by its real inability to continue to consume globally at the level at which the world has been doing it, especially since the absolute level of consumption is constantly increasing. We are indeed exhausting basic elements for human survival, given the consumerism that has been the basis of our productive and speculative activities.
On the other hand, we know that global consumption has been highly unequal, both among countries and within countries. Furthermore, the gap between the current beneficiaries and the current losers has been persistently growing. These divergences constitute the fundamental polarization of our world-system, not only economically, but politically and culturally.
This is no longer much of a secret to the world's populations. Climate change and its consequences, food and water shortages and their consequences are visible to more and more people, many of whom are beginning to call for a shift in civilizational values - away from consumerism.
The political consequences are indeed quite worrisome to some of the biggest capitalist producers, who are realizing that they no longer have a tenable political position, and therefore they face the inevitable shutdown of their ability to command resources and wealth. The current demand for austerity is a sort of last-ditch effort to hold back the tide of the structural crisis of the world-system.
The austerity that is being practiced is an austerity imposed on the economically weaker parts of the world populations. Governments are seeking to save themselves from the prospect of bankruptcies and to shield mega-corporations (especially but not only mega-banks) from paying the price (lost revenue) of their egregious follies and self-inflicted wounds. The way they are trying to do this is essentially by cutting back (if not eliminating altogether) the safety nets that were historically erected to save individuals from the consequences of unemployment, serious illness, housing foreclosures, and all the other concrete problems that people and their families regularly face.
Those who seek short-term advantage continue to play the stock market in constant and fast trading. But this is a game that is dependent in the middle run upon the ability to find purchasers for the products on sale. And effective demand is steadily disappearing, both precisely because of these cutbacks in safety nets and because of the massive fear that there are still more cutbacks coming.
The proponents of austerity have been regularly assuring us that we are turning the corner or will soon do so, and that a revived general prosperity will return. However, we have not in fact been turning this mythical corner, and the promises of revival are becoming ever more modest and projected to take ever longer.
There are also those who think that a social-democratic solution is available. Instead of austerity, we should augment government spending and tax the wealthier segments of the population. Even if this were politically realizable, would it do the trick? The proponents of austerity have one plausible argument. There aren't enough world resources to sustain the level of consumption everyone wants as more and more individuals demand politically to be among the higher consumers.
This is where the exceptions to which I referred come in. They are at the moment expanding the numbers of high consumers, not merely shifting the geographic location of high consumers. The countries that have been "exceptions" are thereby increasing the economic dilemmas, not resolving them. There are only two ways out of the real dilemma involved in this structural crisis. One is to establish a non-capitalist authoritarian world-system which will use force and deception rather than the "market" to permit and augment the inegalitarian world distribution of basic consumption. The other is to change our civilizational values.
In order to realize a relatively democratic and relatively egalitarian historical system in which to live, we do not need "growth" but what is being called in Latin America buen vivir. What this means is engaging in continued rational discussion about how the whole world can allocate the world's resources such that we all not only have what we really need to survive but also preserve the possibility for future generations to do the same.
For some parts of the world's populations, it means their children will "consume" less; for others, they will "consume" more. But in such a system, we can all have the "safety net" of a life guaranteed by the social solidarity that such a system makes possible.
The next twenty to forty years will see an enormous political battle, not about the survival of capitalism (which has exhausted its possibilities as a system) but about what kind of system we shall collectively "choose" to replace it - an authoritarian model that imposes continued (and expanded) polarization or one that is relatively democratic and relatively egalitarian.