Class Struggles and National Debts
By Rick Wolff Friday, May 07, 2010The political conflicts and street battles in Greece today foretell what is coming to many countries includingthe US. The struggles are basically over what the government spends on and who pays the taxes. In today'sclass-divided societies, classes differ over what governments should do and who should pay the taxes.Governments in such societies often turn to borrowing -- which produces national debts -- as ways to deferand postpone the political problems of resolving class struggles focused on the state. By borrowing,governments can immediately accommodate -- at least partly -- the different class demands for governmentspending while postponing the raising of taxes into the future (when they will need to be raised more, of course, to repay the amount borrowed plus interest).Problems arise when lenders to such governments demand much higher interest payments or refuse to lendmore. Then rising national debts can no longer postpone resolution of the underlying class struggles. Thosedebts react back upon and intensify those struggles. So it is in Greece today, and so it will be elsewhere in themonths and years to come wherever governments cope with their societies' class divisions by borrowing.Class struggles deferred often become class struggles sharpened.Employers and employees struggle everywhere over what activities the government should and should notperform. Employers want governments to support and enhance the profits they seek (build and secure thetransportation and communication infrastructures they want, educate their workers, protect their markets,enforce their contracts in courts, etc.). Employees, in contrast, want the government to support their incomes,families, and standards of living (provide unemployment insurance, social security, medical insurance, publicparks, subsidized housing and public education, etc.).At the same time, employees and employers struggle over who is to pay the costs of government expenditures.Employers seek to burden employees by shifting income taxes onto middle and lower income earners, byimposing sales and property taxes that fall disproportionally on those earners, and so on. Employees seek topush tax burdens in the opposite direction (more progressive income taxes, capital-gains and dividends taxes,etc.).The two sides' relative strengths -- their organizations and resources -- usually determine the patterns of government expenditures and what portion of the tax bill each side pays. Rarely employers and employeesagree on these contentious issues. Mostly, conflicts and struggles between the two sides pressuregovernments.Governments fear the political costs of going so far in placating one side that they risk being ousted frompower by the other side. Borrowing thus eases their problems at least temporarily. Moreover, politiciansborrow because the eventual costs of accumulating national debts fall upon their successors.Of course, lenders to governments come chiefly from employers, not employees. Lenders are, of course,complicit in building up national debts because they collect most of the interest payments from the borrowinggovernments. From the employers' perspective, the national debt often looks like an attractive lesser evil.