Decades of bitter experience of financial crises have produced several lessons, argues economist Costas Lapavitsas. One is that engagement with multilateral organisations, principally the IMF, is to be avoided.
Public debt has become a focal point of the current economic crisis, serving to justify policies that cut public expenditure, push wages downwards and raise unemployment. But public debt also poses fundamental issues of democracy. What do working people – the “hard-working families” who are the favourite of UK politicians – know about its causes and composition? The answer is probably next to nothing. On what grounds are they then called upon to make severe sacrifices presumably to put public debt under control?
Social and political conditions are different in developed compared with developing countries, needless to say. But the democratic right independently to examine public debt with the aim of advocating radical policies for its management, including cancellation, is the same. There are signs that this lesson from developing countries is increasingly appreciated across Europe, starting in Greece but also in Ireland, Portugal, France and elsewhere. Let us hope that working people in developed countries will find the strength to deploy the weapon of democratic audit commissions in confronting public debt.