The Left and the Election of Syriza

It was always going to be messy—and it has gotten so remarkably quickly. The decision by the Syriza leadership to form a coalition government with the anti-immigrant ANEL party has rightly shaken progressives who hoped that the Greek elections would rapidly transform politics to the left. Instead, we have been harshly reminded that the logic of electoral politics can be dangerously compromising for the left.

For anyone who thought the election itself would transform the landscape, this can only be a bitter disappointment. But Sunday’s stunning electoral defeat for Greek’s governing parties of austerity was not the product of the great minds of the Syriza leadership. It came about primarily due to six years of grassroots struggle—two dozen general strikes, anti-racist mobilizations against the fascist Golden Dawn, solidarity work in neighbourhoods to feed the hungry, protests by migrant workers, student rebellions, campaigns by healthcare workers, and much more. These struggles built the culture of solidarity and resistance upon which Syriza has drawn. And only if there is a deepening of all these forms of struggle in the months ahead will we be able to say that the electoral victory opened a road to real social and political conquests for the left.

There is little doubt that the Syriza leadership desperately wants to compromise with the dominant institutions, particularly the EU. This was to be expected. Moreover, the institutional power of capital is enormous. But, Syriza’s leaders are also under pressure from their party’s largely working-class base, which wants an end to austerity and a real campaign against poverty and social inequality.

In these circumstances, the Syriza leadership can be expected to tack and turn, cozying up to the forces of capital on the one hand, making concessions to the demands and expectations of its working class electorate on the other. So, it does a deal with ANEL at the same time that Syriza’s new Prime Minister, Alexis Tsipras, announces that his government will end its military cooperation with Israel and cancel its membership in the EU Free Trade Agreement if the blockade of Gaza is not lifted.

These contradictions will not be wished away. They will not vanish because leftist critics declare that they should. They will be resolved—one way or the other—through sustained social struggle. It will not be easy—and we were hopelessly naïve if we expected it to be so.

But Syriza’s victory and the defeat of the parties of austerity has galvanized the forces of resistance, filled them with energy and hope, and created a more favourable terrain for social struggles. And it is there, in struggles from below, not the arena of parliament, that the decisive battles will be fought.

In this context the March 21 international day of action against racism and fascism and for migrant and Muslim rights—a campaign which originated in Greece—now becomes an urgent rallying point for “Street Syriza, ” as it has been called, to set the tone and the direction of events.

January 26, 2015

Unforgotten Wounds: Remembering Ali Mustafa

Toward the end of his review of the moving film, 5 Broken Cameras, came words that stayed with me. Celebrating this documentary of one Palestinian village’s resistance to colonization, Ali Mustafa quotes its cameraman and co-director, Emad Burnat: “Forgotten wounds cannot be healed. So I film to heal.”[1]

So it was with Ali himself. To be sure, he was one of the great photojournalists and videographers of the Egyptian Revolution. But, equally, Ali was a warrior against the forgetting of wounds. And that, at least in part, is what drew him back earlier this year to Syria. Camera in hand, he would show the world why it could never – should never – forget both the suffering and the courage of the Syrian people.

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Anti-Capitalist Politics in the Canadian State

The following article is part of a four-person symposium hosted by New Socialist webzine. You can find the full forum here:

Anyone looking for easy answers to the challenges of radical politics today is sure to be disappointed. The terrain on which the left operates at the moment is messy, complicated and full of contradictions. On the one hand, the traditional institutions of the left are in severe decline. On the other hand, new left movements with genuine social weight have yet to emerge.

We confront circumstances of the sort described by Antonio Gramsci in the 1930s when he observed, “The old is dying and the new cannot be born.” In such situations, he continued, “there arises a great diversity of morbid symptoms.”

We can see those morbid symptoms all around us. Trade unions are faltering, particularly in the private sector, and are less and less able to protect the wages, benefits and job security of their members. Just as troubling, the union movement is aging, growing increasingly disconnected from young workers. Meanwhile, the traditional electoral party of the left, the NDP, continues its gallop to the right, abandoning even the timid politics of reform it preached in the past. The recent decision by delegates to the federal NDP’s convention to remove a commitment to “social ownership” from the party’s constitution is yet one more symptom of the NDP’s transition from a social-democratic labour party into a social liberal party.

What complicates the story, however, is that the transformation of the NDP is only partial and incomplete. There are still places – mining and industrial communities, long-standing union towns – where local NDP organizations retain something of their working class roots. In addition, one still finds handfuls of NDP candidates at municipal, provincial and federal levels who are prepared to align themselves with progressive social movements. So, while it is no longer true that a vote for the NDP represents a vote for a party based on the labour movement, a case can be made for offering support to certain NDP campaigns and candidates.

At the same time, it is obvious that anti-capitalists desperately need to build new social institutions –coalitions, unions, associations, and party-type formations. While there are many dedicated activists doing vital work organizing movements against poverty, racism and much more, the capacity of the left to project socialist politics beyond small circles remains quite limited. Without enhancing that capacity, the number of people committed to systemic change will shrink, weakening all struggles for social justice, as well as the influence of anti-capitalist politics more generally.

This is one reason why it is important for radicals to engage the terrain of electoral politics. True, elections alone cannot change the world. But election campaigns represent a moment in which, as millions of people consider politics, parties and the debates among them, socialists need to be part of the public conversation about the direction of society and the need for radical change.

If we look at the severe crisis sweeping Greece at the moment, we can see why this matters. As unemployment mounts – now over 25 per cent and more than twice that level for young people – the traditional parties of the center-right are disintegrating. Voters are searching for more radical alternatives. Unfortunately, one of those is on the far right, in the shape of the neo-Nazi Golden Dawn, which now has elected members in both municipal government and the national parliament. Golden Dawn is also stepping up its activities in neighbourhoods, schools and on the streets, including violent attacks on migrants, queers and people of colour.

Fortunately, significant forces of the left have rallied to contest the sphere of electoral politics that Golden Dawn is trying to exploit. The Coalition of the Radical Left (SYRIZA), an alliance of left-wing groups and parties, is a credible and growing force, having most recently taken 27 per cent of the national vote. In so doing, SYRIZA has been able to reach millions of people with a left-wing program for resolving the social and economic crisis in Greece. Their work is crucial to building an anti-capitalist project.

Throughout the Canadian state, with the partial exception Québec, where Québec solidaire has established a small (and insufficiently radical) presence, the left has nothing similar. Yet if a new left is to be born, anti-capitalists urgently need to begin digging a meaningful foothold in political life. That will require years of work to build active solidarities and new forms of organization. But it needs to be a central part of our political strategy today. Without that, we will fail to build the wider socialist presence that is a prerequisite to any and all radical change.

Addressing Inequality by Rebuilding the Labour Movement

My contribution to the “inequality debate” hosted by the Broadbent Institute. Written December 2012; posted January 23, 2013:

While growing social inequality is the product of a multi-pronged economic, political and cultural offensive by corporate power across the neoliberal era, the systematic weakening of trade unions looms especially large in the story.

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Toronto Launch and Celebration for Monsters of the Market

On December 3, 2012, nearly 200 people crammed the Ballroom at the Gladstone Hotel in Toronto to celebrate the launch (in paperback) of Monsters of the Market: Zombies, Vampires and Global Capitalism, and the book’s receipt of the 2012 Deutscher Memorial Award. MCed by Faria Kamal and Alan Sears, the event heard brief remarks from Himani Bannerji as well as remarks and a brief reading by author David McNally.



The Continuing Global Slump

By David McNally

This article will be the afterword to the forthcoming Danish translation of the author’s book Global Slump: The Economics and Politics of Crisis and Resistance — NSW.

Since the outbreak of the global slump in 2008 we have been treated to an incessant stream of predictions that “the crisis is over,” that we have “turned a corner,” and that “the recovery is now underway.” Each time the cheerleaders have been proved wrong. To the dismay of apologists for the system, the slump has now stretched on for more than five years. And there is no obvious end in sight.

World-wide, there has been no recovery in employment. There are now 50 million fewer people in paid work than when the crisis started. Not only is the Eurozone now officially back in recession, but a number of its economies are in outright depressions. Spain and Greece are each struggling with unemployment rates above 25 percent – and over 50 percent for youth. Even the U.S. economy, notwithstanding a big rebound in corporate profits, is plagued by a jobs deficit of ten million (5.2 million that have not been recovered since 2008 and another 4.8 million required just to keep pace with population growth). The real rate of unemployment in the U.S. – including discouraged workers who have stopped looking for a job and those working part-time who seek full-time employment – hovers around 15 per cent. For racially oppressed groups, jobless rates are at depression levels, well above 20 percent for both African-Americans and Latinos.[1]

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Greek Lessons: Democracy versus Debt-Bondage

It is a truism to say that democracy began with the Greeks – less so to say that it originated in popular rebellion against debt and debt-bondage. Yet, with the Greek people ensnared once more in the vice-grip of rich debt-holders, it may be useful to recall that fact. For the only hope today of reclaiming democracy in Greece (and elsewhere) resides in the prospect of a mass uprising against modern debt-bondage that extends the rule of the people into the economic sphere.

Across virtually all the ancient world, to fall into irretrievable debt was to enter into bondage to the rich. For millennia, the poor typically had no collateral for loans beyond their bodies and their labour. The result in ancient Greece, as Aristotle acknowledged, was that “the poor . . . were enslaved by the rich.”[1]

Beginning more than 2,600 years ago, a succession of upheavals by the Athenian poor – or the demos – broke the power of the aristocracy and began a drawn out democratic revolution. Squeezed by debts and the spread of debt-bondage the common people rendered their aristocratic society effectively ungovernable. In 594 BC, in an effort to restore stability, huge concessions were made to the demos: all debts were cancelled and debt-bondage abolished. For the first time, poor men acquired meaningful rights to political participation. And they used those rights to systematically curtail the unaccountable power of aristocrats, accomplished by elevating the popular Assembly and its direct democracy above all other institutions.[2] So interconnected were the principles of democracy and economic justice for the demos that Aristotle identified “the rule of the poor” as the essence of a democratic state. “In democracies,” he explained, “the poor have more sovereign power than the rich.”[3] For this reason, struggles by the rich to increase their social and economic power invariably took the form of struggles against democracy.

Notwithstanding enormous differences in social and historical context, a similar battle is wracking Greece today. To be sure, the ancient landed aristocracy has been replaced by a capitalist “financial aristocracy.”[4] Yet, war between the modern aristocracy of debt-holders and the forces of democracy once again grips Greek society.

From the earliest days of the recent “debt crisis” – caused, let us recall, by the global bank bailouts and the recessions that followed the financial crash of 2008 – international financial institutions have been on a collision course with democracy. Time and time again, the interests of global banks have over-ridden the will of the people. Consider just the following events of early November:

  • On November 3rd of last year European Union leaders browbeat and humiliated Greek Prime Minister George Papandreou for having pledged to hold a popular referendum on a proposed austerity deal. The confidence of financial markets being unable to abide consultation of the Greek people, Papandreou was quickly forced from office.[5]
  • One week later, the former head of the Bank of Greece and former vice-president of the European Central Bank, Lucas Papedemos, never having been elected to any public office, was installed as Greek PM.
  • Two days after that, a non-elected prime minister was appointed in Italy, in the form of  former Goldman Sachs executive, Mario Monti. Defending this end-run around basic liberal-democratic procedure, the country’s president explained that “Italy could not afford elections at a time of market crisis.”[6]

Speaking of elections, the people of Spain found themselves in the midst of one at the very time Greece and Italy were receiving non-elected prime ministers. Yet, as one perceptive journalist reported, the public displayed a distinct lack of interest. “If scarcely anyone is taking any interest in the election,” he noted, “it’s because the result is seen as largely irrelevant: it’s the markets that rule.”[7]

Since then, the recognition that “it’s the markets that rule” has grown, and with it the decline of even the most elementary forms of democracy. Nowhere has the assault on democracy been more brazen than in the negotiations leading to the most recent “bailout” of Greece – which, of course, is really just another bailout of Europe’s banks.[8] As the price of paying back the banks while impoverishing its people, the Greek government has been forced to accept nothing less than outright colonization by the European Central Bank and the International Monetary Fund. In fact, the “bailout” agreement states that:

  • Greece is required to rewrite its constitution to give priority to debt repayment. A political document meant to enshrine the rights of the people will now be amended to give priority to the rights of banks.
  • The “loans” bestowed on Greece will be placed in a special escrow account which can release funds only for the purpose of payments to banks. Spending these funds on pensions or healthcare is explicitly forbidden.
  • Foreign lenders will have the right to seize the gold reserves of the national Bank of Greece.
  • A task force created by the European Union will be given an “enhanced and permanent” presence in Athens, where it will monitor all financial and social policy activity of the Greek government.

Whatever semblance of democracy is possible in a capitalist society has now been shunted aside in Greece. The country’s elected institutions now function as little more than fig leafs for the power of global capital. And its people are being subjected to modern forms of debt-bondage in which the bodies of poor and working class people are sacrificed to debt payment.

Under the bailout package, for instance, the Greek minimum wage will be slashed by 22 per cent (and more for young workers); 150,000 public services jobs will be eliminated; pensions will be savaged. Living standards, which had already contracted on average by 30 per cent, will be pushed down a further 15 per cent. An economy that has been in recession for five years (and has shrunk by more than one-fifth) will be pushed into a further downward spiral. More than 60,000 small and medium-sized businesses will collapse, and a quarter of a million private sector jobs will evaporate. Youth unemployment will soar above 50 percent.[9] Homelessness and street begging, already rising alarmingly, will worsen.

How long this can continue is anyone’s guess. Since the economic crisis emerged in 2008-9, Greece has seen waves of general strikes, mass demonstrations, and fighting with riot police. Anger and frustration may well boil over. In the view of one trade unionist, “People are literally hungry and the number of homeless is growing every day . . . soon they won’t take anymore. There’ll be a popular revolt.” [10]

If it is to have any chance of success, such a revolt will have to reclaim the ancient connection between democracy and economic justice. It will have to revive the meaning of democracy as “the rule of the poor” – all of the poor exercising real sovereign power in popular assemblies. And such a project of radical democracy will have to break decisively with liberalism through the deepening and extension of popular power and control into the economic sphere.

Liberal-capitalist democracy, observes Ellen Meiksins Wood, “leaves untouched vast areas of our daily lives – in the workplace, in the distribution of labour and resources – which are not subject to democratic accountability but are governed by the powers of property and the laws of the market.”[11] Those powers of property and the market have now shown their utter incompatibility with any kind of genuine democracy.

It thus falls to the radical Left to reclaim the project of democracy and to once again link it to popular struggles against new forms of debt-bondage. Not only does this mean learning from the ancient example of “the great democracy of Athens,” as C.L.R. James urged.[12] It also requires attending to the new practices of assembly-style democracy that have emerged at the highest moments of recent struggles from Tahrir Square to Occupy Wall Street.[13] All of this means building a radical Left uncompromisingly committed to deepening the project of direct democracy as an indispensable part of all popular movements against austerity and injustice.

[1] Aristotle, The Constitution of Athens, Ch. 2. Scholars are uncertain as to whether this text was written by Aristotle or by one of his students.

[2] See W. G. Forrest, The Emergence of Greek Democracy, Ch. 6, and the monumental study by G.E.M. de Ste. Croix, The Class Struggle in the Ancient Greek World. It is true, of course, that the participatory democracy they created was profoundly limited by the exclusion of women and slaves. Yet, as C.L.R. James, one of the great advocates of ancient democracy, declared, typically “those who are prone to attack Greek Democracy on behalf of slavery are not so much interested in defending the slaves as they are in attacking the democracy.” See James, Every Cook Can Govern: A Study of Democracy in Ancient Greece (section, “Slavery and Women”) available at:

[3] Aristotle, The Politics, Book VI, Ch. 2.

[4] For the idea of a “financial aristocracy” in a capitalist society, see Karl Marx, “The Class Struggles in France, 1848 to 1850” in Marx, Surveys from Exile, pp. 36-38.

[5] Not that Papandreou was any friend of Greek workers. He was utterly committed to the austerity agenda, but concerned to preserve some public legitimacy.

[6] “Italy races to install Monti,” Financial Times, November 14, 2011.

[7] Stephen Burgen, “Protests pointed to new way forward,” Guardian, November 12, 2011.

[8] See my blog, “Follow the Money: Behind the European Debt Crisis Lie More Bank Bailouts,” available at:

[9] Eric Reguly, “Second bailout hasn’t stopped the Greek time bomb,” Globe and Mail, February 25, 2012.

[10] Ilias Iliopoulis, quoted by Helena Smith, “Greece lies bankrupt, humiliated and ablaze: is cradle of democracy finished?” Guardian, February 13, 2012.

[11] Ellen Meiksins Wood, Democracy Against Capitalism, p. 234.

[12] C.L.R. James, as in note 2 above.

[13] See my lecture, “Radical Democracy and Popular Power: Thinking About New Socialisms for the 21st Century,” available at:

Follow the Money: Behind the European Debt Crisis Lie More Bank Bailouts

While I was cursing the inane mainstream commentary on the global economy recently, I was reminded of a pivotal scene in the 1976 movie, All the President’s Men. As two young reporters investigate the burglary of Democratic Party offices in the Watergate Hotel, a disgruntled, high-ranking FBI agent, code-named Deep Throat, advises, “Follow the money. Always follow the money.”

They did. And, in the process, the real-life journalists, Bob Woodward and Carl Bernstein, blew the lid off one of the great scandals of 20th century politics. Since then, investigative reporting in the mainstream has gone the way of the dodo. As Bernstein noted twenty years after Watergate, “the media — weekly, daily, hourly — break new ground in getting it wrong.”

And nowhere are they getting it more wrong than in their coverage of the debt crises in Europe. Over and over again, we are treated to the most vacant banalities. “Greece lived beyond its means,” pundits intone, “and now it must pay its bills.” So too for Ireland, Portugal, Spain, Italy. . . all of which are said to be cases of out-of-control people who now must get their houses in order – by way of huge cuts to government programs.

Yet these cuts, known in the jargon as austerity measures, represent political crimes of equal if not greater magnitude to that burglary at the Watergate – though you would never know it by consulting the mainstream press, which long ago lost any inclination to follow the money.


But were journalists to heed Deep Throat’s counsel, they would be forced to draw an inescapable conclusion: The multi-trillion dollar rescue of the banks that started in 2008 has not ended. It continues today under the guise of sovereign debt bailouts. And the cutbacks – to pensions, education, welfare, and public sector jobs – that wreak havoc on the lives of millions are all about funnelling public wealth to banks, pure and simple.

Consider this. As of the middle of 2011, German banks had loaned out about 170 percent of their total equity capital to governments in Greece, Ireland, Portugal and Spain. French banks had about a 100 percent capital exposure to the same governments.[1] The number shoots significantly higher when Italy is added to the equation. U.S. banks meanwhile, hold about $700 billion of government debt from the five shakiest Eurozone economies.

While a virtually inevitable Greek default is unlikely to topple banks – outside of Greece, that is – it could well set off a series of debt crises and further defaults that will bring some down. . As sovereign debt defaults appear increasingly unavoidable, so do multi-billion dollar bank losses. That’s why the stock of French banks like BNP Paribas and Société Générale has been in freefall in recent months. It’s why large firms, banks, and hedge funds have been pulling their money out of Euro banks.

We are, in short, very close to seeing “World Financial Crisis: The Sequel,” a disaster with enormous implications. Yet, where is the investigative reporting about the underlying causes of this? Where are the stories explaining how it is that three years after the collapse of Lehman Brothers investment bank triggered an acute financial meltdown in 2008, so little has changed?

In the absence of serious analysis, we are repeatedly subject to thoroughly moronic reports blaming the people of indebted nations for the mess. Remember the scapegoating of poor people in the U.S. who took out subprime mortgages? It was all the fault of the poor, you see, rather than the banks that wheeled, dealed and conned them into borrowing – all in an effort to create toxic but highly profitable mortgage-backed securities that could be sold to investors. It was, in short, predatory lending to boost financial profits. Pretty much the same thing happened in Ireland, Spain and Britain. At the same time, banks in Germany and France sent their salespeople to sell loans to governments and banks in other parts of Europe. Now, those same banks are watching in horror as their loans turn sour, just as real estate loans did in the U.S. a few years earlier, and they too are blaming the borrowers.

Worse, just as they did in 2008-9, governments are rushing to rescue rickety banks with public funds. That’s why the European Central Bank, the IMF and Europe’s leading powers keep bailing out ailing states like Greece, Ireland and Portugal. Again: follow the money. When debt-strapped governments receive hundreds of billions in new loans, that money is immediately sent into the coffers of private banks as payments on past loans.  The whole situation, observes one writer in the Financial Times, “resembles a pyramid or Ponzi scheme” in which original lenders are paid back with new loans.[2] The difference is that the new loans are coming from public funds, which is another way of saying that private banks are being rescued once more by the people. Just as in the global bank crisis of 2008-9, bank profits are private, but their losses are public. Not exactly the free market. But it’s a nice deal for profligate bankers.

And the scale of this cozy deal is breathtaking. In July, the U.S. Government Accountability Office published a document detailing the the bank bailouts. Between December 2007 and July 2010, it shows, more than $16 trillion was channelled by the American government into U.S. and European banks.[3] Trillions more were spent to bail out U.S.-based auto corporations and to fund stimulus programs.  Additional trillions were dished out in bank rescues and stimulus programs in China, Latin America, Europe, and beyond.

At the time I released Global Slump (December 2010), my estimate for the combined global bank bailout and stimulus spending was in the range of $21 trillion, or more than one and one-half times U.S. gross domestic product.[4] It is now clear that my estimate, among the largest (and arguably most accurate) at the time, was many trillions shy of the real total.

That astounding bailout of global capital drove a massive build-up of government debt. Engaged in a world-wide intervention without precedent, states borrowed in debt markets (by selling government bonds). Now, in light of the scale of the accumulated debt, some lenders have grown gun shy. They doubt the capacity of many governments to repay. As a consequence, lending rates have soared: Italy and Spain can only borrow (for ten year bonds) at rates in excess of five percent. For Ireland, the rate is pushing toward nine percent; for Portugal it already exceeds 11 per cent; and for Greece it has hit a nightmarish 23 per cent. And when it comes to short-term borrowing, Greece has already been shut out of money markets, which are demanding an interest rate of 80 percent on its two-year bonds. In sum, Greece is broke and a default is almost certainly just a matter of time.

Extortionate borrowing rates on this scale mean that the debt crises just get worse. Barring a miracle – or our preferred option, default – each of these countries will be more indebted next year, and the year after that, notwithstanding slash-and-burn austerity programs. Meanwhile, those programs, with their massive cuts to government spending and huge public sector layoffs, invariably deepen the economic crisis. Already, the official unemployment rate in Ireland has catapulted above 14 percent (27 percent for youth), while in Spain it tops 21 percent (45 percent for youth). Greece, meanwhile, is in a full-fledged depression, its economy contracting by 5.5 percent this year with no sign of recovery for years to come.


And yet, as debt mounts, the cuts keep coming. Greece’s latest austerity package includes a two billion euro cut to healthcare spending and elimination of 30,000 more public sector jobs. On the heels of earlier measures, Ireland has slashed 20 per cent from the salaries of nurses and other public employees, while also reducing child and social welfare benefits. Everywhere, the most vulnerable are being sacrificed so that banks may prosper.

Even the odd central banker has been compelled to acknowledge that truth. Speaking to British Members of Parliament in May, Mervyn King, governor of the Bank of England, observed, “The price of this financial crisis is being paid by people who absolutely did not cause it.” Furthermore, he continued, “Now is the period when the cost is being paid, I’m surprised that the degree of public anger has not been greater than it has.”

Of course, there has been massive resistance: general strikes, youth occupations of city squares in Greece and Spain, popular uprisings in Tunisia, Egypt and beyond, a student-led upheaval in Chile.[5] But in much of the world, the degree of public anger has been surprisingly low – at least thus far. And part of the responsibility for that lies with a media culture that blames the victims and refuses to follow the money.

That is one reason we need radical political economy now more than ever. One of the secrets of capitalism, after all, is the way in which it obscures and conceals processes of economic exploitation. Wealth moves and accumulates along hidden circuits that tend to elude us. Serious economic analysis thus requires real detective work, investigative acts that uncover capitalism’s dirty secrets – sweatshops, child labour, migrants toiling in fields and on construction sites, and the fantastic wealth all of this makes possible for a few.

We need the same critical sensibilities when it comes to the debt crises that are rocking parts of Europe at the moment. In the face of the banal mainstream discourse of undisciplined borrowers, we need to demonstrate that, as one senior economic advisor at UBS bank puts it, we are dealing with “a once-in-a-generation crisis of capitalism.”[6] That crisis has ratcheted up the system’s crimes against the innocent. And there is a powerful way to expose that: Follow the money. Always follow the money.

David McNally teaches political science at York University, Toronto and blogs at His recent book on the world economy is Global Slump: The Economics and Politics of Crisis and Resistance.


[1] See the charts assembled by Martin Wolf, “The Eurozone after Strauss-Kahn,” Financial Times, May 17, 2011.

[2] Mario Blejer, “Europe is Running a Giant Ponzi Scheme,” Financial Times, May 5, 2011.

[3] United States Government Accountability Office, Federal Reserve System: Opportunities Exist to Strengthen Policies and Processes for Managing Emergency Assistance, (July 2011)., Table 8, p. 131. Important analysis of this report is provided by Petrino Dileo, “The $16 Trillion Bailout,”, September 7, 2011.

[4] David McNally, Global Slump: The Economics and Politics of Crisis and Resistance (Oakland: PM Press, 2011), pp. 2-3, 197n4.

[5] See my previous blogs, “Night in Tunisia: Riots, Strikes and a Spreading Insurgency,” January 18, 2011, available at:; and “Mubarak’s Folly: The Rising of Egypt’s Workers,” February 11, 2011, available at: On the student protests in Chile, see Manuel Larrabure and Carlos Torchia, “’Our future is not for sale’: The Chilean Student Movement Against Neoliberalism,” The Bullet, n. 542, September 6, 2011, available at:

[6] George Magnus, “Markets are Reacting to Crisis of Capitalism,” Financial Times, September 12, 2011.

And They Call This a Recovery?


By David McNally

The strut of confidence is gone and the jitters are back. A flurry of dreadful statistics at the end of April made sure of that.

On April 26 came the news that the British economy grew a mere 0.5 per cent in the first quarter of 2011. Coming on the heels of a contraction by that amount in the previous quarter, one commentator was prompted to declare that “the UK is teetering on the brink of a double dip recession.”[1] Forty-eight hours later the Commerce Department revealed that the U.S. economy had slowed to a crawl, recording a meagre 1.8 per cent growth rate in the first quarter, down from over three percent at the close of 2010.

A day later word arrived that the Canadian economy had shrunk in February, and that the official rate of unemployment in Spain had jumped to 21.3 percent – and the youth jobless rate to a staggering 40 percent.

Oh, and did I mention Greece? That country’s government, having imposed draconian cuts to public spending only to watch the economy shrivel by nearly five percent last year, discovered that it would have to offer a 23.5 per cent rate of interest on its two year bonds if it wanted to raise funds in money markets. Bond yields at such extraordinary rates can only mean that the financial sharks smell a Greek debt default coming, which seems an inescapable conclusion.

All of which returns us to an obvious deduction, even if it is resisted by most mainstream economists: this is no more a normal economic recovery than the Great Recession of 2008-9 was an ordinary downturn. Instead, we are in the midst of a much more complex period – one of deep recessions, shallow upturns, high unemployment, government debt crises, renewed recessions, and an ongoing era of austerity – which I have characterized as a global slump.[2]

Of course, there was no reason to expect a normal recovery in light of what preceded it. The Great Recession of 2008-9, after all, was the deepest and longest downturn experienced by global capitalism since the catastrophic slump of 1929-32. The 30 large economies that comprise the Organization for Economic Cooperation and Development (OECD) underwent a six percent contraction in Gross Domestic Product (GDP) with jobless rates jumping two-thirds higher on average. World industrial output fell 13 per cent; international trade dropped by 20 per cent; and global stock markets plunged 50 per cent. The largest wave of bank failures in 80 years shook the financial system. All of this should have indicated that, rather than an ordinary recession, we were dealing with a systemic crisis, one that announced the end of the neoliberal phase of capitalist expansion. And recovering from such an event will be very difficult indeed.

As of mid-2011, for instance, well into the “recovery,” annual economic growth in the U.S. and the more robust parts of Europe was in the 2.5 to three percent range – about half the rate we would expect based on past business cycles. Even during the revival in the middle of the Great Depression, the U.S. economy grew much more dramatically: by almost eight percent in both 1934 and 1935 and by a stunning 14 percent in 1936. Yet, so low are rates of expansion today that they are barely making a dent in unemployment. In fact in some part of Europe, like Ireland, Greece and Spain, joblessness is on the rise. In the United States, as the graph below shows, employment is still more than five percent short of its pre-recession level. Across the entire period since the Great Depression there has never been a “recovery” that produced jobs at so anaemic a rate as what we are seeing at the moment.


U.S. Job Growth After Recessions, 1974-2011

Source: Bureau of Labor Statistics. Chart by Amanda Cox, New York Times, April 1, 2011.


The big reason for the failure of jobs to return is that, while profits have recovered, business investment has not. In one major economy after another, corporations are hoarding cash rather than investing it. This is obviously true in European centers, like Germany and Britain, as it is in the U.S. But it is also the case in states like Canada, which escaped the worst effects of the financial crisis and whose economy has been buoyed by rising prices (and export demand) for raw materials. Business investment in new equipment and machinery in Canada was at just 5.5 per cent of GDP in early 2011, compared to 7.7 percent in 2000, or to just under seven percent in 2005.[3] As for the United States, business fixed investment remained about 15 per cent below pre-recession levels in late 2010, more than a year into “recovery.”[4] Put simply, the rise in profits is not translating into new capital accumulation on any meaningful scale. Instead, corporations in the U.S. and elsewhere are simply hoarding cash, holding on to it in larger amounts than at any time in the last 60 years. By the beginning of 2011, in fact, non-financial firms in the U.S. had at least $2 trillion in cash and checking deposits, an extremely sharp increase in their holdings of liquid assets, as the next figure illustrates.[5]

It does not take rocket science to discern why investment is so lacklustre. First, capacity utilization – the share of existing productive capacity used by business – remains well below historic averages. Secondly, businesses know that with depressed consumer spending, the withdrawal of stimulus, and the turn to austerity (deep cuts in public spending), economic demand will take big hits. Consumers and governments will be spending less, not more, in the months and years ahead. And so, rather than invest, businesses are holding on to their profits, or engaging in speculative activity (in oil, gold, food futures, etc.) unable to see what in the economic picture would justify large expenditures on new plants and equipment. Even in China, where some manufacturers are building plants, the economy is slowing down as the government there tries to deflate asset bubbles and bring down inflation.


Meanwhile, austerity measures – deep cuts to public spending and layoffs of public sector workers in order to rein in government debt – are driving a number of major economies back into recession or, what is effectively the same thing, into zero-growth scenarios. After having been hit by multi-billion dollar cuts, for instance, Ireland’s Department of Finance now estimates its economy will expand by a miniscule 0.75 percent this year, less than half the rate predicted only a few months ago. Unemployment, at just 4.4 percent prior to the crisis, continues to soar, having hit an official rate of 14.7 percent. The British economy, as we have seen, is limping along at a worse pace than Ireland.

Then there is ailing Greece, where unemployment figures have risen for seven straight months, topping 15 per cent officially, a huge jump from just a year ago. Big surprise that Greek retail sales have plummeted 10 per cent in the past year – during the “recovery” phase of the business cycle, let us recall. Meanwhile, Spain, also frantically implementing austerity, has seen the biggest drop in retail sales in two years, while four out of every ten young people cannot find work, according to official data that seriously understate the real scale of the jobs crisis.[6] In short, austerity is kicking the feet out from under an already feeble recovery.

This has prompted a variety of Keynesians to claim that austerity and the removal of stimulus are simply products of the delusional outlook of crazed right-wingers. To be sure, there is something crazed about the deficit-cutters. But, from a capitalist standpoint, they are not entirely wrong. Having to finance deficits by raising cash in financial markets, governments must pay a rate of interest determined by calculations as to the probability that they might default on their payments. That’s why Greece is paying nearly 25 percent on its two-year bonds. And that is something very real, a genuine financial reality, not just the ideological madness of right-wing nuts. Of course, the Right will attempt to exploit such moments to pursue an aggressive political program of attacks on unions and public spending, something I’ll return to in a future blog.

Very real pressure from global markets compels governments to implement austerity even though this is damaging to the economy.  Here we are reminded that capital’s primary concern is not, and has never been, with the “economy,” but with profits and the stability of the system. If those are best achieved in ways that damage jobs and incomes for the majority, so be it. This is why austerity fits the logic of capital even if it means economic stagnation and mounting unemployment. In addition to serving as a reminder that the interests of capital have nothing to do with economic growth and well-being, it also underlines why the only economics and politics capable of effectively resisting are anti-capitalist ones. Only sustained processes of political education, mobilization and resistance will determine whether this insight will become widespread in a context of austerity and global slump.

Meanwhile, in downtown Athens these days, as darkness descends, buses full of riot police take up positions near the city center. Knowing that austerity means suffering for the majority, our rulers rightly fear that this majority might at any time pour into the streets. Whether the mass protest they fear will reach the scale required to defeat the austerity agenda is the burning political question of our moment.

[1] Business economist John Hawksworth, quoted by Philip Aldrick, “Britain ‘on the edge of a double dip recession’,” Telegraph, April 27, 2011, available here.

[2] See my Global Slump: The Economics and Politics of Crisis and Resistance (Oakland: PM Press, 2011), available here.

[3] Karen Howlett, “Corporate Tax Cuts Don’t Spur Growth,” Globe and Mail, 6 April 2011.

[4] Robert Sadowski, “A Cash Buildup and Business Investment,” Federal Reserve Bank of Cleveland, January 10, 2011, available here.

[5] This figure is taken from Sadowski. See also Justin Lahart, “U.S. Companies Hoarding Cash,” Wall Street Journal, December 10, 2010.

[6] On Greece and Spain see Phillip Inman, “Greek and Spanish Economies Falter Ahead of Expected Rise in Interest Rates,” Guardian, April 29, 2011, available here.