It is inevitable that the eurozone will collapse under the pressure of neoliberal economic policies being imposed upon it to attempt to replicate the export-led mercantilism of East Asia, which will drag the Third World, dependant upon remittances sent home from cheap immigrant labour, and the heavily export-dependant East Asia, and its trading partners, into a global recession, thereby straining their abilities to finance U.S. foreign debts and deficits, leading to a sharp weakening of the dollar and rising import prices, with a corresponding collapse in general demand. Considering the U.S. is deindustrialized, the production capacity is minimal.
That is when the American populace will be driven into extreme, neo-poverty, as a relatively high standard of living has been maintained over these past decades, despite stagnant real wages as a result of the destructive competition brought about with neoliberal globalization, through working harder and longer hours, both partners working, a reliance on cheap imports and the creation of debt-based economies with a dependance upon credit and property-based consumption in order to maintain stagnant general demand. The only solution the desperate States will see at that point in order to maintain their authority and control over society will be protectionism, where each nation strives to rebuild and shield its domestic industrial base, resulting in trade wars, with devaluations and a surge in Beggar thy neighbor-policies, similar to those applied by Germany in the eurozone, whereby real wages have been suppressed and exports subsidized so as to attract capital flows and be able to flood Southern markets with cheap, massproduced goods which have ruined local competition, with widespread misery in its wake, and that is when the current, loosely organized expressions of discontent in the shape of protests, riots and demonstrations will mushroom into greater activities under the sway of demagogues, as social unrest, political instability, economic turmoil, ethnic conflicts and class struggle continue to spread.
What is needed in order to prevent the above scenario and put an end to the current economic crisis and the equilibrium of stagnation of the past decades is a controlled dismantling of the eurozone, built upon mercantilism, and a replacement of it with an international system similar to Bretton Woods of the Postwar-era, which aims to make possible and incentivize domestic demand-led socioeconomic development and fair international trade, through regulation of currencies, exchange rates and capital flows, implementation of economic regulations and taxes on a global basis and the creation of an international minimum level with regards to wages, conditions, compensation, safety and influence, so as to move power over policymaking back into the hands of national governments and ensure progressive global competition based upon knowledge, competence, skill and innovation, rather than lower wages, lower taxes, worse conditions and insecurity.
This needs to be combined on a national level across the world, in particular in export-dependant nations such as Germany, Brazil, Russia and China, with a Green New Deal, of massive jobs programs, public investment and societal initiaitves in all economic areas, ranging from construction of infrastructure and affordable housing, generous, robust social insurance aswell as strong labour rights and trade unions to research and development, strict regulation of natural monopolies and public services and rising real wages in line with productivity growth, financed through progressive taxation, which is made possible through the aforementioned international system which prevents nations who attempt to pursue long-term policies such as these from being punished through capital flight, offshoring of production, tax evasion and speculative attacks, and all of this combined, both directly, through employment of construction workers, industrial workers, architects, engineers etc. for infrastructural projects, and indirectly, through higher disposable incomes as expenses decline when profit-motives are removed from e.g. electricity, railroads and mass transportation, leads to increased purchasing power and consumer confidence, leading to rising general demand and thereby increased profits and income to private and public sectors, resulting in investments in hiring and expanding production, which in turn leads to rising economic activity and falling unemployment, with increased revenue from taxation and trade which can be utilized to promote further socioeconomic development and pay down on debts and deficits.
The outlook is grim, I only hope that mass movements of the people, such as Occupy in the U.S and Indignados in Spain, will be able to force through change from below, as happened in the 1930s, which culminated in the New Deal and the Postwar-Golden Age, before we descend into a Great Depression.
