Government Debt and Class Struggle

Vanguard February 2013
Max O.

Debt held by governments around Australia is becoming a chronic problem which will ignite class struggle even further. The current European political conflicts and street battles forecast what is about to happen to other countries, Australia included! These conflicts are essentially over what governments spend on and who pays the taxes.

With the present economic crisis, governments in capitalist countries will firstly cut back on social spending and increase the sell-off of state owned assets to pay down their growing debt. Taxing their way out of their debt is usually a last resort and it is always the working class who pays.

Debt crisis of South Australia

All state and federal governments in Australia are carrying out this economic strategy. For example in South Australia, the government wants to sell more than 20 key public buildings. This is on top of the recent sale of other assets including forest harvesting rights and the Lotteries SA operation.

The Government in the 2008-09 mid-year budget floated plans to sell public buildings, hoping to raise $400 million to cover a revenue collapse.

South Australian debt has blown out to $5.1 billion and is forecast to reach $9.7 billion by 2015-16.

Banksters are the creators and winners of the crisis

Banks being the biggest lenders to governments are the major beneficiaries from state debts. The present eruption of government debts is a bonanza for the world's banks. This cedit/debt crisis created by the banks induces governments to temporarily borrow their way of their debt problems.

When the government net debt-to-revenue ratio is seen as getting too big and becoming a risk, at the instigation of the IMF and credit ratings agencies, lenders demand higher interest payments or refuse to lend more.

The cheaper option of taxing the capitalists and banks rather than borrow from them, with the accompanying interest, is never considered! Lenders demand that capitalist governments cut social spending, sell off state assets or tax workers to service their national debts.

Consequently the state debt which in the past forestalled class struggle has built up to such an extent it now intensifies the class struggle.

Government borrowing is capitalism’s attempt at escaping a political bind. It is a gift to bankers, however it only works for a while. Capitalists who shun taxes and alternatively lend to governments are eventually confronted with the risk of default by over-indebted governments.

Their only panacea - cut backs on social spending, sell off/privatisation of state assets and finally raising taxes on the working class - instead exacerbates the economic crisis they brought about in the first place.

Australian workers will confront the similar economic crossroads that European workers have experienced as a result of capitalism's crisis of over production and the Australian government’s growing national debt. This will ensure that class struggles between workers and capitalists/imperialists will grow and deepen.