YESTERDAY official statistics for France show that core inflation had actually fallen into negative figures, – 0.2%, for the first time in recorded history as manufacturers cut prices to the bone in order to keep selling their produce.
France, the Eurozone’s second largest economy, is not alone with prices on manufacturing goods being slashed in Germany, Italy, Spain, Holland, Belgium, Portugal, Greece as well as those European countries outside the zone including Britain.
This deflationary crisis is causing panic within the capitalist class – for while falling prices may appear to be good for consumers, it represents economic disaster for capitalism.
The overriding reason for such dramatic falls is that wages have been cut so deeply across Europe through a whole series of vicious austerity measures that workers simply cannot afford to spend.
With unemployment across Europe running at 11.5% (nearly 24.5 million) workers are in no position to buy anything but the bare necessities of life.
The collapse of industry is in turn wreaking havoc in the financial markets, with the Bank of Italy’s governor warning that if prices continue to fall it will have ‘extremely grave consequences for economies with very high public debt levels, such as Italy’.
In Italy the Gross Domestic Product (GDP) of the country, i.e. the total wealth produced, is falling faster than its borrowing costs.
In short Italy – along with France, Greece, Portugal, Spain and Britain amongst others – is forced to borrow more and more at ever increasing rates of repayments, just to keep going.
State bankruptcy is no longer something facing weak economies in the south, it is a reality for the whole of Europe.
This is the debt spiral that is engulfing capitalism internationally – collapsing economies that can only survive through running up trillions of pounds of national debt – and which is increasing daily.
In turn, this economic crisis is fuelling into the huge political crisis that is ripping Europe apart as the bourgeoisie struggle to impose this catastrophe firmly on the backs of the working class.
Yesterday, Italian trade unions came out in a general strike to defend workers and public services from government policies, demanded by the European Commission, designed to deregulate the labour market and smash up public services.
In France, the socialist government of Hollande, which came to power two years ago on a wave of general strike action against austerity by promising an end to the previous cuts, is in crisis as he is forced by the EC to attempt to impose ‘structural reforms’ – privatisation and wage cutting – on a working class determined to fight them, as witnessed by the recent strike action by airline pilots.
Greece, which has been at the forefront of the most brutal attacks on workers demanded by the Troika as the price for bailing-out its bankrupt capitalist system, is continuously in a state of revolutionary upheaval with workers, youth and students fighting every day against the right-wing coalition government.
The crisis in Greece has reached a new turning point as the government is on the brink of calling a snap general election in a desperate attempt to cling on.
All the signs are that the government will lose and be replaced by a Syriza (coalition of the radical left) administration, a left reformist party that stands on a platform of re-negotiating the austerity terms inflicted on Greece.
With the European bourgeoisie in a vice-like grip of economic and political collapse and a working class that is being revolutionised by this crisis, it is clear that the European socialist revolution is not something for the future but a burning necessity today.
The common feature of all these struggles that are erupting, is the failure of the Stalinist and reformist leadership of the working class to do anything more than protest.
This fast developing revolutionary situation demands a new revolutionary leadership be built urgently to take this uprising of workers and youth to overthrowing this bankrupt capitalist system and advancing to a socialist united states of Europe – it demands the building of parties of the Fourth International in every country.
