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Frédéric Boccara, Economist: These are the Real Measures that Need to be Taken Urgently

Translated Friday 27 March 2020, by Stephen Chalk

L’Humanité, Friday 27th March 2020

Frédéric Boccara, Economist: These are the Real Measures that Need to be Taken Urgently

Bruno Odent

The economist and member of the executive of the PCF shows how the health crisis linked to the coronavirus epidemic has accelerated the onset of a crash, a product of the financialization of recent years. This brings out the urgency of a change of approach that is as revolutionary as it is beneficial. To overcome the pandemic and break free from the domination of the financial markets. Frédéric Boccara sets out some possible ways of initiating this policy of rupture.

What is the nature of the current crisis?

Frédéric Boccara.

There are two crises, a health crisis and an economic crisis, inseparably bound together. And a crisis of civilisation.

The virus is a catalyst for an economic crisis that had begun before the outbreak of the epidemic. A slowdown had already been underway since the beginning of 2019. On 7th February, my report to the International Meetings for Another Globalisation [organised by the PCF] publicly sounded the alert about this crisis. Financial over-accumulation is breaking out. The dual crisis expresses the domination of capital, with its logic, its powers and its cost. The reason why the pandemic is having such an impact on the economy is that, compared to the value of the wealth created, the mass of accumulated financial capital is enormous (see graph) and a collapse was imminent.

Base 100 in 1980

Market capitalization --------- GDP (constant dollars)

The domination of capital largely explains the delay in adopting adequate public health measures, or even their irresponsible inadequacy. The experience of China, which seems to have been able to choose to stop a large proportion of its production without worrying about profits, should have enlightened us. But our rulers were obsessed with not giving any cause for worry... to the financial markets! And they remain focused on the idea of making people work, because you have to produce profit! At any price.

For years, this obsession of finance capital with its rate of return and profit has been at odds with social expenditure and the development of public services. This has totally undermined our healthcare system, the deterioration and failures of which are so obvious.

Is the French emergency plan up to scratch?

Frederic Boccara
No, the budget “extension”, unfortunately voted unanimously a week ago by French MPs at first reading, is essentially aimed at supporting capital and profits. There is almost nothing for hospitals: 2 billion euros, whereas it would probably need 10, and health workers engaged in industrial action were already demanding 4 before the coronavirus crisis; nothing for the healthcare industrial sector (respirators, masks, medicines, reagents for tests, etc.). It contains a few concessions to the need to make incomes secure and preserve work collectives, with partial unemployment measures, but in a far too limited manner (85% of the wage) and, above all, on a temporary basis. It is not therefore an emergency health budget plan.

Austerity continues to kill. And social inequalities are wreaking havoc. In the evening at 8 p.m., at the same time as French people are applauding the health workers, shouldn’t we be shouting “Money for hospitals, not for capital”? [In recent weeks French people have applauded, from their windows and balconies, the workers who continue to provide essential services despite the lockdown.]

We must reject any “sacred union” and not separate these economic issues from the question of democracy and freedoms, with the state of emergency. [In reference to the “union sacrée” political truce in France, which brought much of the labour movement into an alliance with the government in support of the First World War.] These are two sides of the same coin.

At the European level, however, we are witnessing a massive injection of liquidities by the ECB?

Frédéric Boccara Yes, but without any change in the criteria for the purchase of securities and the granting of loans. The basic rules of financial capitalism are maintained. Events are being left to take their course. This money should immediately go to hospitals, medical research, public services (with an emergency fund) and the healthcare industrial sector.

However, these liquidities will mainly be absorbed by operations designed to re-inflate the value of stock market securities.

Recovery plans on a scale never before seen are, however, also underway in America and Germany?

Frédéric Boccara . The scale of these plans shows the violence of the coming crisis. This may support demand a little. But investing more to do the same thing is no solution. There is a question of content: capital or public services? The value of stock market securities or employment, wages, production, research and investment?

In France, the Minister of Finance, Bruno Le Maire, says “no selectivity” for subsidies. What ethical madness! The use of the money must be subject to conditions, there must be a follow-up. The crisis imposes a new democracy.

Bruno Le Maire has announced tenfold austerity tomorrow to repay the debt, and that the State should waive corporate tax revenues. An open bar for capital? There must be debt conversions, non-payment of dividends, very negative rates, with other obligations. In short, lowering the cost of capital in proportion to (large) firms’ contribution to public services, employment and useful, effective investment.

What could be the consequences of the stock market crash?

Frédéric Boccara. The increase in financial capital is even greater than in 2007. Stock market crashes have a terrible real effect. The bosses are going to lay people off to preserve their profits. It is very violent.

The measures, as in the previous crash, are above all aimed at reflating capital. Observing this headlong rush, Paul Boccara had anticipated that there would probably be a new crash about ten years later. It has now happened. It will be much more serious, he said...

Are nationalisations being considered in France, Germany or even the United States? Is this the beginning of a retreat from liberal dogma?

Frédéric Boccara. It is a real necessity. But we are being cheated with temporary nationalisations once again, without changing the logic of these companies. Temporary nationalisations and obedience to the dictatorship of profit in order to privatise tomorrow and allow the market free rein resolves absolutely nothing!

Then what is to be done?

Frédéric Boccara. On the nationalizations front, management criteria other than financial profitability must be imposed on the rescued firms. We also need public institutions for strategic planning, with quantified commitments, instead of demagogic phrases about sovereignty.

Similarly, another kind of selectivity for the granting of credit and democracy are decisive. A European emergency fund for the health sector and public services, financed by the ECB, could be set up quickly. Its mission: to provide resources for the different health systems in solidarity with each State. The fund would be managed democratically. France can create one without delay, supported by the Caisse des Dépôts [French public sector financial institution, a long-term investment fund serving the public interest] refinanced by the ECB.

As far as banking is concerned, rates are certainly low, but remain high for the cash flow of SMEs/VSEs, and many projects are not supported. We need selectively subsidized low rates for investments that create jobs and real wealth. And, conversely, we need to apply very high rates for predatory corporate behaviour, speculative investments and those that relocate industry to cheaper labour markets or cut jobs. Economic reality would then be oriented differently, with the support of new democratic institutions controlling the use of these credits.

Finally, for a common humanity, global public and common goods (health, climate, energy, etc.) and employment must be financed. And in order to do so, we must free ourselves from the domination of the dollar. The urgency of a common global currency, on the basis of the IMF’s special drawing rights (i.e. a basket of currencies from a whole series of countries) needs to be put on the table.

Should we proclaim that the time has come for de-globalization?

Frédéric Boccara. Macron talks about a “rupture”, which could mean anything to anybody. It is a smokescreen, in preparation for the worst in the service of big capital.

We need a different kind of globalization, of sharing and cooperation. De-globalization would be madness, at a time when there is visibly an absolute need for international cooperation, and military tensions are looming everywhere. The issue, as always, is content, control.

Take the multinational pharmaceutical companies: workers there co-invent and co-produce medicines between several countries. In this sense, they fulfil a necessary function: the sharing of financial and informational resources for the purpose of co-production. But they do so in a perverse manner: in the service of capital, which dominates them, aiming above all at profit, by monopolizing wealth and knowledge and the use thereof, instead of sharing them. This function must not be destroyed, but its content must be radically changed. This can be done by developing non-capitalistic co-production and research networks, or international co-nationalisations. We need entirely different international investment and trade treaties, and new international public institutions.

What could real emergency measures look like in France?

Frédéric Boccara. An emergency plan must immediately begin to break with the domination of capital. There is no question of waiting for the “day after” for a change of logic. This is both revolutionary and realistic.

It would be elaborated and put forward in the face of the measures imposed by Macron-Philippe. It could include the following elements, with coherence between objectives, resources and powers.

Objectives for screening, supporting hospitals (recruitment, emergency construction, training, etc.), supporting research (vaccines and treatments), mobilizing production (respirators, reagents for tests, medical clothing, gloves, masks, medicines, etc.).

Resources for stopping non-essential production and work and maintaining democratic rights and institutions protecting workers, withdrawing regressive amendments to the Labour Code, supporting purchasing power (100% for short-time working, suspension of pre-committed expenditure for households and SMEs/VSEs: rents, loan repayments, etc.); moving towards a general system for making employment, training and income secure; creating a fund allocated 50 billion euros (initially) in order to finance these actions with a monetary contribution (ECB and Caisse des Dépôts) and solidarity taxes on big capital; and the ending of the restrictions on municipal expenditure.

Finally, powers to set up regional democratic bodies to monitor and control the implementation of the plan and the use of this money, with the elected representatives of employees and citizens.

Does this mean causing the emergence of another model of society in order to get out of the crisis?

Frédéric Boccara. Our societies are undermined by the capitalist economy and an anthroponomy of liberalism, imposed on the planet by Western Europe and the United States. Our world is dying from the split between money and the target of its use. The latter is subordinated to the search for maximum financial profitability. That is what capital is: everything is reduced to a mass of value seeking to increase its value, “money for money”.

Our civilization is threatened in its very foundations by the intensification of this split between money and public services, money and production, money and democracy, money and human and ecological needs. Money should be seen as a political lever. We need to begin changing the whole system of powers and values.

Interview by Bruno Odent

Original French article: https://www.humanite.fr/frederic-boccara-economiste-voila-les-vraies-mesures-prendre-en-urgence-686932?fbclid=IwAR1xGSPEJ2tfvPxR4MoE26lJh25OTwyQdL3dn_udvusspvhMHy-ZyEzVDOE

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