There seems to be no way out of the crisis in sight. Official statistics are dire and unemployment is close to an all-time high. The Spanish government and the European Union are suggesting a Keynesian way out through recovery funds, digitalization and, above all, the Green Deal. Could it work?
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Companies see no way out of the crisis
The Purchasing Managers Index is based on a survey in which managers in thousands of companies are asked about immediate purchasing forecasts. When the index is above 50, the economy is expected to grow. That represents the expected normality. When it falls below 50, a recession is on the way. Today the European PMI is at 48.8. A second recession within the crisis is just around the corner. In Spain the services sector PMI is at 43. Far from seeing a way out of the crisis. Especially considering that the tourism sector is in the doldrums and each new figure is worse than the previous one.
What financial analysts are saying is that over 453,000 businesses are going to experience solvency problems because of the crisis caused by the pandemic and 1,360,000 will need to carry out a restructuring of their debt terms. The government, to cope with this, wants to make bank write-offs mandatory for SMEs but the banks are reluctant because they fear for their own solvency.
We workers are being impoverished en masse
Official employment figures already show 4 million unemployed. Just the official ones. Because in reality there are 1 million more hidden under temporary layoffs that will surface within 3 months. The media speak of 700,000 people without hope of finding work. There may be more. What is certain is that the shredder has turned on the turbo and suicide attempts are tripling. For those keeping their jobs the outlook is no better: the average Spanish wage is suffering the worst drop in 50 years.
Workers, far from being able to see a single glimmer of hope or a way out of the crisis, are facing an even darker horizon than the current one.
The EU and the recovery funds
At this point the EU has gone from exceptionally allowing deficit limits to be exceeded to preparing the way to do so for another year. The bet is peddled as a sort of new Keynesianism: massive public spending plus expansionary monetary policy.
The truth is that the famous funds and credits of the recovery program only cover a minor part of the disaster suffered by Spanish capital, forcing the state and companies into massive indebtedness. In fact, although negative rates temporarily contain the problem of accumulating public debt, the state is already preparing a fiscal adjustment path... i.e., today's Keynesianism is tomorrow's austerity.
That's why both the government and the EU are pinning the way out of the crisis on the magic of direct aid. They hope that by devoting them massively to the Green Deal they will serve to attract new capital (the Foreign Minister is going to sell projects to the Emirates and Qatar) and, above all, to facilitate a massive transfer of income from labor to capital through technological change.
Leaving aside the fact that developing incompetence at all levels of the state seems to be jeopardizing the capacity to absorb European subsidies, it is worth keeping an eye on the big beneficiaries of the so-called green transition: the energy and automotive companies.
Both are delivering spectacular results: Fiat and PSA will distribute 1 billion in dividends. Iberdrola reports a net profit of 3,610.7 million euros with a growth of 4.2%. Endesa 2,132 million net profit. Enagás 444 million, up 5.1% on 2019. And we could go on. The companies of the Green Deal have already found their way out of the crisis.
But alongside these figures, inside his own house, the CEO of Fiat-PSA declares without hesitation that his success model involves continuing to lay off workers until at least 2030 and charging more and more for cars. In the energy sector the situation is similar. Ibex-listed energy companies, despite the investment boom and the bubble of new wind farms and supply agreements with large companies, have reduced their combined workforce by almost 1,500 workers.
Keynesianism as a way out of the crisis
The citation of Keynesian theory and its association with the 1929 crash often forgets the fundamental point about the British liberal: his General Theory was published in 1936. It served then to argue that in 1929 the still young state capitalism born of World War I could have reduced the duration of the crisis and restarted the engine of accumulation earlier.
The General Theory was followed by the famous Keynes plan: guidelines for wartime economics that the British government imposed from 1940 onwards in order to prop up the greatest slaughter in history so far.
And, in fact, Keynesianism was the application of all of the above to render permanent during the postwar period the tools and centralization of wartime economics. Its aim was to set in motion accumulation... after a gigantic bulk of the world's capital had been destroyed during the imperialist slaughter.
That is to say, Keynesianism is an ideological apparatus which recommends a series of emergency measures (concentration of consumption in the state and intervention of interest rates) as a way of restarting the cycle of capital - that is to say, of overcoming the crisis - after a massive destruction of productive capacities. Either after a crisis that rapidly and massively devalues capital, or after a war.
In both cases, Keynesianism makes no secret whatsoever of its aim: adjusting wages to the prior devaluation of capital while guaranteeing firms a market for production through credit and public spending. In other words, by tossing the ball of the absence of demand - heightened by lower wages - forward.
It is true that this is precisely what capital aims at today as a way out of the crisis. The originality consists in the fact that they do not intend to do it after a devastating war or a massive devaluation of investments like that of 1929, but to avoid these scenarios. That is why they cannot reach their goals only with the mass of funds mobilized by the EU. That is why the adjustment on wages, general operating costs (basic public services) and employment at which it aims is necessarily greater. The more capital to be saved, the more income transfers from workers to be forced.