A-Infos (en) France, OCL CA #354 - Freeing Public Debt from the Grip of Capitalism (ca, de, fr, it, pt, tr)[machine translation]

Below, we present an article written by an economist who does not take a 
radical stance on the state, as this article provides interesting 
information and allows us, even from a reformist perspective, to 
understand that capitalism is a class struggle. ---- Every year at this 
time, the public debate crystallizes around questions of the state 
budget. This is an opportunity for the capital camp to reaffirm its 
determination to crush the labor camp.
Thus, from François Fillon at the "head of a bankrupt state" to Emmanuel 
Macron, who is worried about the inequalities passed on to future 
generations, and including the short-lived Prime Minister François 
Bayrou, who urged us to find "40 billion"-inevitably through social 
cuts-autumn reminds us that the class struggle is not dead.

It is therefore a well-oiled machine: with public debt relentlessly 
increasing, the working class is forced to accept "efforts" commensurate 
with the situation. The rhetoric is sometimes alarmist, sometimes 
anxiety-inducing, but always aggressive towards social gains, which are 
seen as evidence of France's propensity to live "beyond its means."

Certainly, the public debt figures brandished by the capitalist camp are 
enough to frighten the uninitiated. In 2024, the public debt of all 
French public administrations amounted to EUR3,228.4 billion and 
represented 112% of GDP. But a close examination of the mechanisms of 
French public debt allows us to easily counter the neoliberal offensive.

Indeed, two conclusions emerge from this analysis. Public debt is the 
result of neoliberal policies. Above all, it constitutes an engine of 
financialized capitalism. Furthermore, crystallizing fears around the 
issue of public debt allows the capitalist camp to justify its policies 
of destruction and subjugation of workers.

Debt: A Necessity of Capitalism
Capitalism needs public debt. The increase in public debt since the 
2000s is explained by three phenomena. First, economic crises: 
capitalism, being a factor of instability, regularly gives rise to 
economic or financial crises that weigh on public finances. These crises 
always provide the state with an opportunity to bail out (without any 
compensation) the capitalist camp through massive public spending that 
increases the public debt. Second, part of the current debt results from 
the pressure exerted by financial markets on our borrowing conditions. 
Since states have decided to finance themselves through financial 
markets, a "snowball effect" results: financial markets impose interest 
rates higher than the states' repayment capacity. Finally, the policy of 
reducing taxes for the wealthiest individuals and largest corporations 
is also generating an increasingly heavy public debt.

If we do the math, in 2012, 59% of the public debt was a consequence of 
these three factors. In other words, the public debt, which represented 
91% of GDP in 2012, would have stood at 43% without the crises, the 
snowball effect, or fiscal policy.

And Emmanuel Macron's policies are pushing this logic to its extreme. 
The "whatever it takes" approach has increased the debt by EUR353 
billion. According to the OFCE (French Economic Observatory), 48% of 
this increase stems from political (and fiscal) decisions unrelated to 
the crisis. Worse still, President Macron's tax policy since 2017 has 
led to an increase in public debt of between EUR110 and EUR170 billion, 
and has deprived the state budget of nearly EUR64 billion per year in 
tax breaks.

Debt: A Necessity for the Transition? The working class is thus faced 
with a dilemma. Public debt is necessary to achieve the ecological and 
social transition, but this transition must be beneficial. The current 
debt is "bad debt" because it is the result of a failing economic system 
and tax measures that only serve to increase inequality and crush 
workers. How then can we envision "good" debt? First, let's consider the 
facts. The objective of a climate-neutral economy would require a 
budgetary effort of between EUR25 and EUR34 billion per year and an 
annual investment surplus of EUR70 billion. This can only be achieved 
through additional borrowing. Several avenues are conceivable and 
desirable for this purpose.

Firstly, it is necessary to restore a fair and progressive tax system. 
The state spends lavishly to support private enterprise: public aid to 
businesses (the largest ones, of course) amounts to nearly EUR210 
billion per year, without any conditions attached and with no economic 
benefit whatsoever. Tax loopholes, which cost the state over EUR90 
billion in revenue each year, are also among the wasteful expenditures. 
According to the Court of Auditors, 37% of these loopholes are 
"inefficient" and 29% "inefficient." On the revenue side, there is also 
enough to finance this shift if we are willing to commit the necessary 
resources. As we have said, President Macron's tax policy costs us 
nearly EUR64 billion in lost tax revenue each year, in addition to tax 
evasion (estimated at between EUR80 and EUR112 billion per year).

Secondly, it is essential to seriously reduce our reliance on financial 
markets for financing our public debt. As a reminder, it was a political 
decision, made around the turn of the 1960s and 70s, that forced the 
state to finance itself through the financial markets. Capital thus 
replaced state-mandated financing with loans whose terms are dictated by 
the financial markets and rating agencies. Regaining democratic control 
over our financing is essential. Not only will the ecological and social 
transition not occur if markets remain free, but, more importantly, the 
system has already placed far too much of a burden on labor, which must 
no longer accept the additional sacrifices demanded of it. The class 
struggle has a bright future ahead; it is up to us to (re)conquer our 
future.

Joan Agliyer, economist

http://oclibertaire.lautre.net/spip.php?article4569
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