Public debt is used by developing countries to enable growth. Public debt can be internal (borrowing through government securities, mainly bonds) or external, which the decision-makers often prefer. Usually, there is no discussion on the issue of public debt and other dogmatized topics (economic growth, GDP growth and foreign direct investment) – they just happen.
On the other hand, the severity of problems brought about by the increase of public debt and dangers of becoming dependent on the sources of funding can be seen from the example of the Greek crisis and the issues their Syriza Government was faced with. Public debt, which has never been as big as now, on the global level, is one of the instruments for enabling growth. It helps maintain a “mythological” idea of infinite growth, which, in turn, serves as an excuse for the consequent infinite growth of public debt.
The debt system is incorporated into every segment of society. It is supported by the banking system, which drives and enables individuals and families to spend more than they can earn. How and why are we faced with this absurd situation? Productivism and consumerism are in a state of a strange equilibrium. Overproduction results in a surplus of supplies, which in turn leads to a supply crisis. This crisis can ruin the entire system due to insufficient sales. Excessive unsold products are then bought on debt. The banking system serves as a creditor or financial intermediary for the stimulation of growth and an increase in GDP through a system of consumption reliefs in the areas in need of support (e.g. car industry, construction, etc.). Also, the state uses fiscal and monetary instruments to influence economic circumstances. Tax reliefs or incentives for certain branches and topics (for instance, renewable energy sources (RES) and feed-in tariffs) often only benefit investors, while simultaneously harming society, environment and economy.
The austerity system is expensive and useless. An increase in public debt, and even public consumption, does not necessarily stimulate growth or decrease unemployment (on the contrary, strict privatization and investment rules accompanying public debt policy often lead to employee dismissal (Troika rules – IMF, EC, EB). To sum up, public debt only means an increase in debt through expenditure and nothing more. As the debt increases, there is more room for indecent negotiations. Consequently, stimulating any form of recovery through an increase in consumption will not bring about the desired results. Therefore, the abovementioned only happens due to the fact that technological development in industrialized and developed countries resulted in an enormous production capacity, which still continually increases. As a result of advanced technology, the number of human employees per product continually declines. Therefore, unemployment rates are directly related to technological development. Those trends call for continuous adjustments, which are very expensive. All the products made must be sold, even if they are unnecessary. That is the GDP growth principle. To achieve this, various marketing channels must be used, as well as other means of manipulation. Technology and marketing increase the offer of goods, which results in higher consumption, but also lower employment rates, which, in the long run, decreases consumption again. As a result, marketing tricks have to be employed once again to stimulate demands. Contracts concerning public debt define the time and structure of repayment. Once the rules change, which is not uncommon, the over-indebted state goes bankrupt, and creditors then target natural resources ( water sources, islands and land), public and common goods and vital strategic infrastructure, because they are great investment opportunities and can be bought at very advantageous prices.
Revolutionary solutions lie in overcoming current practices. An alternative to buying can be found in borrowing or joint purchases. Economic growth is problematic in that public debt growth leads to other profound issues related to the fact that consumerism and productivism do not reflect the actual needs but are rather a result of efforts to revive the economy (by imposing non-existent measures).
The so-called projects of "national importance" very often have a devastating impact on the environment, society, culture and even economy. They are a strategic alliance between state officials and suitable private entrepreneurs, backed by a certain political agenda. These projects are so important that they can erase fundamental and ideological boundaries between diametrically opposed political options (left, right and center), causing the alternative to become disintegrated, pointless and culturally and politically irrelevant.
Three key strategic instruments can be applied to boost the economy:
- Decreasing public debt for large public and infrastructure projects;
- Greatly decreasing military consumption wherever it is huge;
- Greatly decreasing the expenses and power of party politics and the public sector – precisely a part of it that is involved in party politics.
These expenses and instruments must be deconstructed and critically analyzed to be able to form a new approach. For starters, all political and bureaucratic barriers must be annulled. True and uninhibited decentralization is necessary to enable inter-sectoral partnerships, civic initiatives and cooperation on the local level. Stimulating the economy that relies on limited production extent and partnerships between a large number of small enterprises can ultimately strengthen their approach in current market logic.
It makes sense to divide the economy into priority areas (rings), which must be developed according to certain dynamics, structure and priority levels. All factors that can contribute to the wellbeing of the major part of the society, nature, culture, as well as the minorities in this area, must be considered a priority and thus focused on. All forms of production and consumption with a negative impact on the ecosystems should be reduced to a minimum, and critical analyses should be applied to come to new solutions in respect of:
- Excessive and asymmetrical use of resources and their transformation into final products;
- Reducing the amount of waste with effective and efficient use and recycling;
- Minimizing the use of new raw materials and harmful substances, decreasing waste production and the negative impact on biological and natural cycles;
- Minimizing the losses in electric power transmission and water supply networks, renewal of rainwater harvesting systems, maintenance of existing anti-flood infrastructure, conversion, renewal and recycling of everything; focusing on shortening distribution chains wherever possible and establishing direct contact during exchanges; implementing the “zero miles” principle, according to which the place of production, processing and sale is the same and local production and supply systems are preferred, which decreases the cost of transportation, packaging and pollution;
- Ultimately, continually working on the preservation of natural and cultural heritage and landscapes by means of revitalizing, converting and reusing abandoned public buildings and focusing on culture and art that integrate identity narratives.
Legal forms and experiments (cooperatives, small and medium enterprises, craft production, joint work) within knowledge laboratories in the local context, crossed with both conventional and unconventional field insights, can improve the system through positive practical changes and new knowledge sources.
Milica Kočović De Santo,
Research associate and social activist