Last week, Democratic Governors in New York and Connecticut repeated the austerity politics of Greece's Prime Minister Papandreou and Portugal's Socrates. In doing so, they likewise imitated the austerity politics of their Republican and Democratic counterparts across virtually all 50 states. Austerity for labor and the public is everywhere capitalism's Plan B. After all, even capitalists now see that capitalism's Plan A failed.
You will recall that Plan A entailed a crisis-response program of bailing out the banks, insurance companies, large corporations, and stock markets to achieve "recovery." The theory behind Plan A — we used to call it "trickle down economics" — was that recovery would spread from financial markets and financiers to everyone else. It never did. So now the same servants of capitalism who brought us Plan A are dishing out Plan B.
Governors Cuomo in New York and Malloy in Connecticut had very similar Plan B's. They threatened the public employee unions and the people of their states in nearly identical ways. Either the unions accept new contracts with wage freezes and raised contributions to their health insurance plans (and other declines in their basic remuneration) or the governors would fire tens of thousands of unionized state workers. In Connecticut the state workers first voted to reject and then re-voted to accept that contract. In New York the state workers accepted on the first vote.
Let's be really clear on what the two governors were doing. They were forcing a very painful either/or onto the mass of people who elected them. Each governor said: I will either fire many thousands of state workers and thereby impose drastic cuts in public services on the entire citizenry or I will subject tens of thousands of state employees to significant cuts in their wages and benefits.
Each Governor spoke and acted as if those were the only two choices even though that is blatantly untrue. Each Governor refused to even consider an obvious alternative Plan C: increasing taxes on corporations and the rich. Instead each governor snubbed his nose at the public by forcing unions to choose between two awful options.
The public employees unions voted to accept serious cuts in pay. The latest government figures show a consumer price inflation now running at between 3.5 and 4 % per year. The contracts that state employees accepted in New York and Connecticut give them 0% wage increases in the first two years and less than 2 % per year increases in the last years of their contracts. In addition, New York workers accepted unpaid furlough days while both states' contracts involved higher health insurance premiums and copays for state workers. These are serious reductions in state workers' standards of living. They will have to reduce their expenditures, thereby hurting communities, businesses, and other workers across their states. The states will thus learn the same lessons learned in Greece and Portugal and wherever austerities are governments' Plan B's. Austerities make already difficult and painful capitalist crises more so.
Corporations and the rich bankroll the parties and governors who design and impose Plans A and B while avoiding Plan C.
And so matters will remain unless and until corporations' profits are no longer available to their boards of directors to make themselves and major shareholders rich and to buy politicians' servitude. The best response to capitalism's crisis, to its failed Plan A and to its unjust Plan B, would be Plan D: to change how we organize productive enterprises in our society. Their profits should be distributed by the democratic decision-making of all those who produce and depend on them, the workers and affected communities.
The twists and turns of this global capitalism system, painful as they are to endure, nonetheless also move it toward a confrontation with alternative D. The real question is whether the advocates and supporters of Plan D can be organized, mobilized and focused on achieving their goals in that confrontation.
Richard D. Wolff is Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York. He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications. Check out Richard D. Wolff’s documentary film on the current economic crisis,Capitalism Hits the Fan, at www.capitalismhitsthefan.com. Visit Wolff's Web site at www.rdwolff.com, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It. His weekly radio program, "Economic Update," broadcasts on WBAI, 99.5 FM in New York City every Saturday at noon for an hour; it can also be heard live and in podcast archive on wbai.org.