Economy

1. The state of the global economy

The global economy has emerged from an unprecedented in scope crisis of the capitalist system by implementing austerity policies and shifting its burden on to working people’s backs. Austerity was presented as a necessary adjustment to address the economic crisis. However, it continues to be the dominant policy even after the economic crisis. It is the mechanism through which wages are driven downwards and working people’s aspirations are being attacked to serve neoliberal policies. This is a specific class policy that is presented as something natural and unavoidable.

Austerity policies have been institutionalised, adopted and enforced in the European Union as well by the ruling circles. These policies focus on the curbing of the public sector, the dismantling of the welfare state and sustained attacks on working people’s rights and gains. A more extreme expression of these policies is the Memoranda that were imposed on countries in southern Europe, including Cyprus too, which have led to the increase in social inequality. Such is the depth and impact of these austerity policies that the young generation today is the first after a century to live worse than their parents.

The policies pursued to address the crisis have put the burden on the most vulnerable groups of the population, resulting in wealth being concentrated in the hands of a select few, while more people are becoming poorer. Social inequalities have risen sharply. Characteristically we note that just 0.9% of the world’s adult population owns 44% of the world’s wealth. On the “opposite pole”, about three billion people, or over 55% of the world’s adult population, own 6.3 trillion dollars – that is to say, just 1.8% of world’s total wealth. About half of them live on less than $5.5 a day (October 2019 data).

At the same time, public debt has not only fallen, but in most countries it has actually increased, recalling Karl Marx’s remark that “the only piece of so-called national wealth, which in modern peoples truly belongs to the whole people, is their public debt.”

In addition, there are indications that the global economy is on a recession course with the danger of a new economic crisis breaking out visible. In the face of this danger, the various capitalist alliances and major economic powers are resorting to protectionism which they themselves have been demonizing for decades in the name of globalization and free trade or resorting to regulating the terms of trade of groups of states to the detriment of others.

As exploitation and imperialist wars, interventions and military conflicts are increasing, so have migration and the flow of refugees intensified.
Another characteristic of our era is the intensity of extreme weather phenomena stemming from the climate crisis. These are phenomena which are to a large extent related to the capitalist exploitation of the planet’s productive resources, without any concern and obligation to protect the environment. The changes that are demanded cannot be made by a system that puts profits above human life on the planet.

Another characteristic of our times is the pronounced development of technological capabilities. Technological progress, however, is controlled by a small number of technology giant companies, who are making billions in profits and controlling the flow of information and data for each and every one of us.

2. The Cyprus economy today

After the period of the systemic crisis and imposition of the haircut on bank deposits that devastated the economy and drastically transferred wealth from the many to the few, as well as the Memoranda policies, the Cyprus economy is in a period of recovery.

Although economic activity is on the recovery, total production output is at an all-time high, unemployment is falling, and public finances are recording a surplus, nevertheless these developments aren’t having a significant positive impact on society and its prosperity. This is because the government remains dogmatically devoted to neoliberal policies, with their main features being the reduction of public investment, the deregulation of labour, the sale of public wealth and property and the dismantling of the welfare state.

The path the Cyprus economy is on cannot meet the needs of society and is creating significant dangers for the future. The growth being recorded directed towards serving big private interests, the structural deterioration in labour and disposable income of households together with the redistribution of wealth and income to the benefit of the privileged few, and the absence of an overall social policy, have loaded the brunt of the crisis on the people and continue to hold society down.

Since the previous Congress up to today the selling off of the Cyprus Cooperative Bank by the N. Anastasiades-DISY government has dealt a major economic and social blow, a fact which has fueled the immunity of the banks and exacerbated the difficulties Small and Medium-size Businesses (SME’s) and households are facing.

The majority of society continues to face significant difficulties, uncertainty and social insecurity. Income and social inequalities remain high, especially in comparison with the rest of the EU countries and a quarter of the population is on the brink of poverty and social exclusion. The cost of living has increased sharply, particularly with regards housing, while essential items and goods (electricity, bread, milk, etc.) are among the most expensive across the EU, also due to the direction the government has given to the developmental model.

In these conditions, the Cyprus economy needs a new vision that should aim at ensuring the fairer distribution of wealth, reducing social inequalities and improving the people’s living standards by creating conditions for bigger production, increased incomes and dignified work.