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Austerity, Capitalism, Crisis, Dr. Richard D Wolff, European Union, Global Capitalism, Globalisation, Lisbon Treaty, Neoliberalism, Recovery is option

The Crisis-generating Austerity-Debt vicious cycle and the EU as catalyst of the cycle

If you find that your government strikes your country with Austerity, Debt, Cuts and Reforms, when you are told these measures are “necessary” to treat the Crisis and Deficit, and if you believe these assertions, then this article might help you to realise how profoundly you are deceived.

  • “120 million Europeans face the risk of poverty and many continue to suffer in countries that are in the process of recovering financially.”
    “People’s lives have been thrown into turmoil and there seems to be a gradual degradation, with millions existing on a day-to-day basis, with no savings and no buffer to withstand any unforeseen expenses”
    “Europe is facing its worst humanitarian crisis in six decades.”
    “The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered massive demonstrations in many European countries.”

The last part of above quote is a prime example of the countless media utterances trying to convince their audience: if we add more Austerity to the extant amount of Austerity, it will somehow cure the effects of Austerity. One can’t help remembering Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results.”

The shocking truth about the origin of public Debts and the “need” for Austerity

Contrary to the “justification” upon which the EU-authorities impose Austerity policies, spending cuts and economic reforms onto Europe [2], these measures actually reinforce the very factors that triggered the Crisis in the first place, due to the fact that Global Capitalism and overall market-deregulations gave rise to global financial speculations and multinational monopolies, which then, by moving astronomical funds out of the local production spheres, suppressed national economies, caused unprecedented high unemployment rates and medieval lows of poverty and hunger, in short, the deepest Crisis since the 30’s Great Depression. [6]

As it has been explained by acknowledged experts of economics [3], the Austerity policies and related structural reforms, rather than providing the Recovery-route from the Crisis, yield a vicious cycle [12] that forever keeps deepening the Crisis.

The shocking truth about the origin of individual Debts and the “need” for Austerity

Contrary to the popular myth maintained by the establishment-serving manipulative mass-media, individual Debts are NOT caused by the deceasing productivity of the Western society. On the contrary, it is our hard work and our sky-rocketing productivity that is backfiring at the 99%. It is our enhanced productivity that enabled the richest 1% to replace human workers with super-productive robots. It is our productive yet underpaid jobs that drive us to work overtime, and/or take 2-3 jobs, hence the more we work the more unemployment we induce for our fellow-citizens. And the rest of us remain unemployed because, forced by Global Capitalism into a profit-based global competition, the employers, to stay in business on the global marketplace, ought to seek higher profits by targeting the cheapest labour on the planet, so they give our jobs to the most underpaid, in fact slave-workers on the emerging markets.

Global Capitalism, which outsources labor to emerging markets, invites immigration across the globe, creates an economic environment for the majority in which we need to face an ever increasing unemployment and an ever increasing exploitation in grossly underpaid jobs. This is why a growing number within the 99% are left with only one option: to borrow. Hence the Debt our societies are burdened with is caused by Global Capitalism [11], which however emerged from our increased efficiency.

  • Punch-line: Since Austerity and Cuts are commonly justified as the “only remedy” for our Debt-ridden economies, it turns out: Austerity and Cuts, and the Crisis these induce, are actually the capitalists’ punishment of the 99% for our productivity and diligence!

The EU, as the enforcer of Austerity and Cuts

Despite the factual evidence that the Austerity-measures have caused a deepening economic catastrophe in Europe, they are imposed onto the EU-member countries by a core group of EU-officials [2, 4, 7], who, in their unelected, unaccountable and non-transparent position created a USE-empire out of the unsuspecting EU-countries without the knowledge and consent of the affected 500 million citizens.

These unelected EU-authorities dictating the terms for the EU countries upon the federal EU-laws they arbitrarily introduced via the Lisbon treaty [4], demand Austerity and Cuts because this way they can avoid the necessity of taxing the richest individuals and global corporations. Since it is the EU that forces the governments of each member state to borrow from the rich rather than tax them, it is the EU that deepens the Crisis, Debt and Deficit in the EU-countries [3]. Meanwhile the EU-subservient mass-media maintain the popular myth that the Debt-issue is due to a “Greek ethnic feature inherent in the Southern lazy genes”. Thereafter the same media-rhetoric gradually slipped into the allegation that the national Debts and the “consequent” Austerity-penalties are specific to the so-called PIGS countries, whereby we could already witness the miraculous geographical shift of Ireland down to the South. Later on, the once leading European economies such as Italy, UK, Netherlands and Belgium, also joined the Debt-stricken rear-end of Europe: a most curious economic phenomenon that remains unexplained by same all-knowing media channels. Whenever it comes to the Debt-Austerity topic, it is conveniently omitted from the narrative that the individual and public Debt is a number-one concern even in the economic superpower, the United States, despite the fact, that it is in not uncommon for the super-diligent hard working average American to hold 2-3 jobs simultaneously.

Why is it a fatal error to wait for a ‘promised’ EU-referendum

But there is much more to the persistent Deficit and Austerity-hysteria in Europe. The truth behind the monumental Deficit-myth “justifying” the Austerity-policies in the EU also tells us that the EU-leaders will NOT let go of their occupied countries, and reveals the deepest reason why it is idle to wait for any EU-referenda to be granted in any of the EU-states:

  • First of all, because the disguised constitution of the EU, the Lisbon Treaty, [4] was designed for the ONE and ONLY purpose: to avoid referenda in all member states, and the EU, with reference to its very own constitution, which stipulates the precedence of EU-laws over national laws, will prevent all countries to exit the EU upon its very own laws.
  • Because the very purpose of the EU’s existence IS to make sure that the global financial and business oligarchy will get richer by their avoidance of paying taxes at the price of depriving the poor and the unemployed of their benefits and by increasing the exploitation-level in the EU-superstate governed countries, and this is possible only if the EU holds on to its enclosed territories, as all empires hold on to their colonies. [8]
  • The EU-leaders are fully aware: if the EU-countries would regain their national sovereignty and their democratic self-governance, they would reinstate welfare-polices on a country-level and would introduce measures such as nationalisation of financial and natural resources, which would effectively serve the whole of the citizenry rather than only the top 1%. The EU-leaders are also aware that once these countries are independent again they would opt to protect their own local economies from the detrimental effects of global capitalism, which would altogether lead to national laws to ban or severely tax and restrict the global banks and corporations.

In order to avoid above, the EU-leaders resorted to the most scandalous act of two centuries: to the European federalisation-scheme referred to as “Lisbon process” or “EU-enlargement” [4]. For the same reason they use pejorative labels such as “nationalism”, “racism”, “xenophobia”, etc; in order to discredit every attempt of a member state to restore democracy-based national independence and to prevent any country’s separation from the European pillar of the neoliberal global empire [8].

The only way out of the crisis is via taxing the rich

Both theoretical considerations of macroeconomics and the historical proof given by the political-economic remedy of the Great Depression in the US, provide unquestionable evidence that the way towards recovery from the current world-Crisis is possible only by taxing the richest participants of the affected economies and by providing more welfare, rather than less, in support of those who are most gravely affected by the Crisis: the workers and the unemployed. This is the minimum requirement for economic expansion onto a society-wide basis. Evidently, contrary to the Austerity-policies imposed by the current political lead of numerous countries, the ONLY way to exit this cycle is via the exact opposite measures as per the Recovery-cycle [12], including the following:

  • reintroduce socially just taxation, including high taxation for the corporations and richest individuals
  • stop and prevent tax-evasions of the rich
  • cancel the odious national debts accumulated upon the tax-evasion of the rich
  • stop austerity, instead start to reinstate and increase welfare benefits for the majority
  • reintroduce free education and healthcare systems
  • (re)introduce affordable, public provision of all natural resources and essential goods / services
  • stop privatisiation of and (re)nationalise the publicly owned, shared resources, lands, organisations, companies and all assets
  • stop cuts in government spending, instead stimulate expansion by creating jobs and opportunities
  • introduce regulations protecting and encouraging domestic production
  • introduce measures against investors transferring funds from domestic production
  • introduce measures banning the global businesses, banks and corporations
  • (re)introduce national democratic control over the money supply
  • cut ties from the centralised, dictatorial, global controllers of the money system (EU, ECB, IMF, WB)
  • for EU-countries: secede from EU, regain national sovereignty from the EU’s dictatorial fiscal and monetary control
  • (Also, see the Addendum / Petition posted at the end)

Unemployed, impoverished working class, endangered middle class

Even though Austerity is most often mentioned in the context of the working class, it needs to be emphasised that the necessity of opposing Austerity, Cuts and Privatisations concerns a much wider sphere than the working class, unless the 99% of us are to be classified as such.

This is a gradual, though progressively intensifying process, therefore our consistent resistance against the anti-democratic and economy-destroying Austerity-measures means to be wise enough to think ahead, since the nature of all vicious cycles is that they never end, therefore the grave effects of Austerity would eventually reach the still economically viable middle class as well, and will manifest on a society-wide scale.

If this cycle continues and further deepens, the small and medium size business owners will soon lose their markets upon their customers losing purchasing power, thus will go bankrupt, leaving their owners and employees in a job-seeking position, however for the same reason, they will not find jobs offered by the others either.

Since this process will affect the majority WITHIN the capitalist class as well, the need for a U-turn on the Western and global political-economic landscape is NOT subject to a debate over the different economic systems or between the so-called “right” and “left”; at first what needs to be achieved is an effective recovery from the current Crisis, which, as we have seen plenty evidence for, requires the exact opposite of the measure known as “Austerity”.

Our demand that governments would drop their Austerity-based “solution” to the Crisis is therefore a basic necessity for economic recovery in general and the prerequisite for restoring democratic conditions that would put into place genuine pro-recovery policies. In such regard the issue discussed here has become a life-or-death question: if we shape our future towards a peaceful, democratic and prosperous human society or an impoverished, chaotic, post-capitalist, anarchy-stricken, militarised, neo-feudalist war-zone, owned, ruled and controlled by one global oligarchy of the super-rich.

The issue is economic by nature but the solution is political

It is essential to keep emphasizing this fact: the fundamental reasons of the Crisis and its consequences is that the political elites keep evading taxing the richest business elites and individuals. The policies targeting Austerity which inevitably reduce the economic viability of the 99% are “needed” by the richest 1% in order to retain their monopoly position in the global business arena, and to eliminate the threat of losing their global power and wealth by eliminating any renewed competition that might emerge on a national level in the welfare-based economies.

We have historical evidence provided by the post-Great Depression era, when the Crisis of the 30’s was resolved by TAXING THE RICH under the Roosevelt New Deal administration, and when the US Welfare System, including the US Social Security system itself and unemployment benefits to help the vast majority out of poverty, was introduced. These social-democratic policies not only resulted in economic recovery in the US, but the recovery was followed by the strongest, longest and steadiest economic boom in American history, until our hard work enabled the richest 1% to use the capital we created for them to undo the achievements of New Deal and to destroy all labour organisations.

The vital implications of above relevant to the present Crisis: it is the exact opposite of Austerity, Cuts and Privatisations that would lead us to economic recovery, that is, what governments should pursue is a social democratic approach, such as increased government spending, extensive welfare benefits and nationalisations, not merely because this would be the ethical solution but for economic reasons as well.

Yet, at present the exact opposite of the effective economy-reviving policies are imposed by the Western Governments, which, quite expectedly, only keep deepening the Crisis.

Both the revolutionary mass-movements in the 30’s during the Great Depression and the recent anti-establishment U-turn in Iceland give us the evidence – as top economist, Harvard, Stanford, Yale-trained economics professor and thinker Dr Richard D Wolff often points out [5]

  • that the ONLY possible way to move our governments to act as a democratic government, that is to act as the agent of the voters, and accordingly introduce democratic policies towards a society-wide economic recovery, is by mass movements and by the 99% persistent and well organised opposition.

At present Iceland [9], a small country in Europe, which followed the social democratic Recovery route, could achieve effective economic recovery since 2008, despite the fact it suffered  first wave of the crisis and was stricken by natural catastrophes. Iceland is one of the few European countries that despite the overwhelming pressure, remained outside EU [10], a country which penalises fraudulent banking activities, where human rights are observed, and accordingly, the country’s leaders refrained from applying the elsewhere prevalent neoliberal Cuts and Austerity policies.

Another curious fact: Germany, whose Angela Merkel is the loudest when it comes to force Austerity and Cuts onto other EU-states, is a country whose citizens enjoy a generous welfare system, secure pension and affordable social health-care services of the highest quality (!)

Those who agree that the current global trend marked by the Crisis-Debt-Austerity vicious cycle [12] should be stopped, are encouraged to spread the word on the real reasons of Austerity, to join an organisation/party opposing these policies, and to help reorganising Unions and local grass-root movements, strikes, demonstrations, petitions such as the one posted at the end as Addendum.


[1] PressTV: 43 million people lack food in Europe: Red Cross

[2] Global Research: German Grand Coalition to Intensify Austerity Policies in Europe

[3] Economics professor on the reasons of Austerity, Crisis and Deficit
Part from “Dr. Richard D Wolff: Global Capitalism: November 2013 Monthly Update“:

[4] A historical fact buried by the mass media: the EU has been USE since the end of 2007

[5] Economics professor on effective recovery from the Crisis
Part from “Dr. Richard D Wolff: Global Capitalism: November 2013 Monthly Update

[6] Corrupt Capitalism: the Destruction of Lives

[7] War over Europe’s economic future heats up

[8] Barroso hails the European ’empire’

[9] How to start a revolution: Learn from Iceland!
Iceland’s President Explains Why The World Needs To Rethink Its Addiction To Finance

[10] Iceland no longer willing to join EU, referendum canceled – Icelandic MPs

[11] The Costs of Capitalism’s Crisis: Who Will Pay?

[12] The Crisis-Debt-Deficit-Austerity-Crisis vicious cycle versus the potential Recover-Cycle, as evidenced by Roosevelt’s New Deal in the past of US and Iceland in the present:

Crisis vs Recovery charts

The Crisis-cycle in detail:

1) Since the 70’s the unregulated free markets realised upon the neoliberal principles, resulted in the Global Capitalism and a shift towards financial speculations from value-production, which has been beneficial only to the richest 1% of society, while triggered and maintains economic and financial Crisis, mass-unemployment, poverty for the “rest” 99% – a tendency that is progressively worsening in the once highly developed Western societies.

2) Due to above, in all affected countries the continuing Crisis needs to be treated by massive Government-funding.

3) When facing the requirement to finance the Crisis, the Governments of the affected countries had/have to choose between two alternatives: either to employ a fair taxation, including heavily taxing the richest corporations and individuals – which would provide the funds necessary to boost the economy as a whole – or borrow the same funds from them.

4) Since the Governments, observing the interest of the 1%, choose to borrow from the rich rather than taxing them, their undemocratic decision dramatically increases the public Debt and Deficit in the affected countries.

5) Then again, the Governments, rather than taxing the rich 1%, choose Austerity against the 99% to finance the Deficit that the Governments created, and these Austerity measures are further deepening the Crisis by reducing the purchasing power and aggregate demand. (In Europe these Crisis-inflicting policies are arbitrarily and unjustifiably imposed by EU officials in their unelected supranational positions and by several key EU-serving undemocratic politicians, like Angela Merkel.)

6) Therefore these Austerity-measures consistently enforced in the Western world, generate a vicious cycle: a self-reinforcing process continuously deepening the Crisis, triggering an ever increasing need for government funding, which then results in increasing Debt and Deficit.

People’s Petition Against Austerity

Our governments should:

  • Stop cuts to peaceful programs and halt privatization, while massively cutting war spending;
  • Tax billionaires and millionaires and big business;
  • Radically restructure public debt, especially at the expense of the private banking giants, and regain control of the banks, as well as the financing of the economy;
  • Ban uncontrolled derivatives altogether, and create real economic development instead of speculative profits;
  • Invest in jobs, homes, public services, and the environment, and in a program of conversion from war industries to sustainable civilian jobs;
  • Return to stimulating demand through new investment programs, new regulations, taxation and control of the flow of international capital and goods — a new form of protectionism in a reasonable and prudent United States which will be a protagonist in the fight for a multipolar, democratic, demilitarized, and ecological society.

Related posts:

Facts versus Myths – Profits, Debt, Taxation, Welfare and Capitalism

Reblog: Why EU exit Is the key to combating austerity


About Sky Wanderer

Global Political Analysis, Research & Commentary. Multidisciplinary research and analysis revealing the big picture of the global status quo versus the mainstream myths. Searching the way out of the global financial tyranny and slavery, before the system ends up in a full-blown version of global fascism.


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