We would like to inform you regarding the recent developments in relation to the collective labor dispute launched by the Metropolitan Independent Trade Union, which continues to this day, to the extent that the metro workers do not enjoy their right to strike, as provided by the law.
This is the tragedy of our economic development in Georgia. Through free trade agreements, FDI, and idiotic like embracement of every new technological innovation by the government, the actual people in Georgia are unemployed or working poor, in debt and trying to leave the country as soon as they can. In Agara, the employees are staying to fight for a chance to work.
The sugar factory closed down, throwing hundreds of workers out claiming they aren’t making profits to keep producing sugar since the foreign competition is too much though there is profit just not enough for these greedy capitalists. Instead, they are turning to using the factory to mine bitcoins. The workers blocked the entrance this morning to not let anyone in the factory.
No one cares about all these unemployed people and their families. The workers say, there aren’t any other places to work, while the factory owners don’t feel they are culpable. The government doesn’t feel culpable.
Bitcoin mining employs very little people and places hope in a speculative investment while using up tons of energy. We don’t produce anything anymore.
Maybe we should all just leave Georgia and move away to other countries, so we can lend our entire country to cryptocurrency mining. We don’t want the people to interfere with the economy.
Author: Sopo Japaridze
Author: Revaz Karanadze
The 2007–2008 US mortgage crisis soon became contagious for the US financial speculatory markets that plunged the Wall Street into the panic. The panic caused the plummet of the credibility of the whole American banking sector that was echoed in almost all of the global financial centres. As the crisis went the private financial institutions were constantly losing their power to liquefy the assets. Henceforth, the leading hegemonic paradigms were set to be adjusted to the solution of the crisis.
Ironically, the neoliberal deregulatory mechanisms that have always been pushed for more “free market” came under harsh scrutiny and the lobbyists commenced to compete in asking for governments to get bailouts. The ideology of “too big to fail” was generally implied for manipulating the discourse that if these “huge” financial speculators would not be bailed out when the whole system would collapse. Consequently, the banks and other financial institutions were to be “rescued” by accumulating money from the citizens (who are mostly never spared when it comes to their private individual debts).
Nevertheless, it is worth to highlight that some incremental neo-Keynesian regulatory measures were put in place between 2010 and 2014. These seemingly alternative regulations would have some power to halt the further downfall of the banks and would to some extent alleviate the burden from the ordinary taxpayers, as they would not have to pay for the crimes of the financial sector. With the introduction of Volcker Rule in the United States, the commercial banks were separated or in some cases even restricted to have an access to deposit banking (the 1999 repeal of the Glass-Steagall Act gave too much freedom to the banks). The almost identical regulatory measures were adopted in the United Kingdom — the Vickers’ proposal of ring-fencing and regulating the LIBOR (The London Interbank Offered Rate). Withal, after these regulatory mechanisms were put in place this was the first time in history when hedge funds fell under a regulatory oversight (Langley, 2015).
Unlike, the United States and the United Kingdom, in the European Union, the story unveiled with a different scenario. Although like in the US and in the UK the blame was redirected from capital to labour, the EU scenario varies for the following reasons: The EU is not a country, but a single market of unequally developed sovereign economies with multi-layered bureaucratic apparatus lacking the democratic and political credibility (although there is the Lisbon agreement which never fully gave political power to European Central Bank to overrun the national policies) of pushing for applicable solutions to each member state, where every country has its own vision.
The burst of financial bubbles in Greece paved the way to unleashing the fear for the European single market to collapse. The French president Nicola Sarkozy fearful that the other EU countries would follow the Greeks to become incapable of avoiding further monetary value deterioration of the stocks of the Southern Eurozone countries offered solutions that would involve all the EU countries to pool their strength together in order to address the crisis with solidarily. He also shifted his fiscal conservatism to more neo-Keynesian views. However, Germany was reluctant to help, but instead, Germany played the derogatory discourse of the “Lazy Greeks” and “PIIGS” (Portugal, Ireland, Italy, Greece, Spain). This German discourse was administered to held accountable the South European countries and these countries needed to be punished (Crespy & Schmidt, 2012).
Though, after the further pressure from the EU and even the US the German Chancellor Angela Merkel and the German Finance Wolfgang Schäuble caved in. The German policymakers realised the deepening of the crisis would affect the single market and would hit German private entrepreneurship power as well. Therefore, as the strongest EU economy, Germany, pushed for extreme conditionality by imposing harsh austerity measures on the “PIIGS” countries, while being committed to the discourse created for the German electorate and the German taxpayers. After several rounds of belated talks, Germany persuaded France on the effectiveness of ordoliberalism that would require the whole EU to follow.
The South European countries and Ireland were expected to recover their economy through strict austerity, although it is to be highlighted that the IMF was less enthusiastic of the EU, ECB and European council to push for the policies that had not worked well in South American countries several decades earlier.
The push for the austerity policies proved to be a social disaster for crisis-affected countries. The forced massive budget cuts caused the deceleration of wages and the deprivation of welfare from the people, while German capital grew. Nonetheless, the austerity politics failed to find legitimation in Portugal.
The Portuguese case bares unique characteristics. Firstly, unlike Greece, Portuguese economy was generally weak and there were almost no financial bubble speculations there. Thus the German wrath was less felt in Lisbon, but the austerity conditionality was still applied by the right-wing Social Democratic Party of Portugal. The logic behind this action was to prove that Portuguese economy could soon be capable of increasing GDP growth through public spending and budgetary cuts and alleviating the labour regulations would bring in more foreign investments to the country. The flashpoint was that Troika was afraid that the Portuguese public debt would take its toll if the recovery would not come sooner through the positive GDP growth. By 2012 Portugal had one of the highest public debts in the EU accounting for 112% of the GDP.
“The austerity caused the unemployment to skyrocket to 17.3% by 2013. Utilities were privatised, VAT raised, a surtax imposed on incomes, public sector pay and pensions slashed and benefits cut, a number of public holidays were revoked and the working day was extended. In a two-year period, education spending suffered a devastating 23% cut” (Jones, 2017).
Budget cuts were also applied to the healthcare and social security. Moreover, from the macroeconomic standpoint of the purchasing power of the population was damaged, hence decreasing the demand on the market affecting the growth of the GDP (OXFAM, 2013).
The public was outraged. The workers’ unions, student groups, and academics were capable of organising and massively delegitimizing the government’s discourse, thus constructing a counter-discourse led by the Socialist Party of Portugal that was capable of creating a coalition with Communist Party, Left Bloc, and the Greens. The new coalition was capable of unseating the Social Democrats after the 2015 elections, by promising to pursue the abandonment of austerity politics in Portugal.
The new government led by the prime minister António Costa, was successful in resisting to the pressure of troika. Unlike the Greek SYRIZA government, he kept his promised and reinstated all the pre-austerity politics, but with a progressive twist, by enabling the increase of public investments, increasing the minimum wage and pensions. The sceptics of this measure considering Socialist policies to fail or even to bring a bigger catastrophe.
“The promised disaster did not materialise. By the autumn of 2016 — a year after taking power — the government could boast of sustained economic growth and a 13% jump in corporate investment. And this year, figures showed the deficit had more than halved to 2.1% — lower than at any time since the return of democracy four decades ago. Indeed, this is the first time Portugal has ever met eurozone fiscal rules. Meanwhile, the economy has now grown for13 successive quarters” (Jones, 2017).
In addition, in order to avoid further political speculation that the Troika would portray him as a radical, Costa made a smart move endorsing the right-wing Marcelo Rebelo de Sousa for a rather symbolic post of the president in the parliamentary democracy system of the Portuguese Republic (Ames, 2016)
Consequently, Portugal was the only example in the post-crisis Global North to avoid the full social devastation of the austerity neoliberalism by doing the contrary to the economic conditionality through the implementation of heterodox economic measures. This is a precedent of the political judgment of the government being congruent with the democratic will of the people, a dissimilar plotline from Greece. The capability, the audacity and the willingness of the Portuguese government to put the welfare of the populations as its policy objective rather than the directives of Troika is what real democracy is about. As the Portuguese government was successful by legitimising the voice of the people engraved in the anti-austerity policies, Troika has little to no say in the Portuguese affairs now.
We must understand and learn from Portugal that democracy is real when it really reflects the social and economic needs of the populations, and not to pursue the directives of the agents of international finance and capital that have no other interest but to design Georgia for the international business to exploit it. Since the dismantlement of the Soviet Union, Georgia has fallen under experimental economic policies that have hollowed out the social dimension of the politics in the country. These neoliberal experiments of financialisation have cost the ordinary Georgians a severe price.
According to the 2017 IMF data, outstanding loans with the commercial banks consist 59.01% of the total GDP in Georgia. Whereas, 717,48 people per 1000 adults are borrowers of the commercial banks . The decline of wages, high unemployment, lack of jobs and the plummeting of purchasing power per capita, underpaid, irregular, and unstable jobs, these are the main reasons for people to undertake the risky endeavor of taking loans. Withal, the number of suicides committed because of indebtedness is growing every year and the number of fatalities in the workplace is still high (there is a lack of health and safety regulations and the labour inspection does not function properly).
Unfortunately, the Georgian government along with the dominant economic scholars push for economic policies that free finance from almost all the social responsibilities. The state constitution of the country limits budget expenditures to 30% of the national GDP, which already makes austerity constitutionally guaranteed. This happened after the 2010 constitutional amendments of the so-called “Liberty Act” that also limits the state’s sovereignty to manage fiscal politics and for parliament to have the power to determine taxation (Parliament of Georgia, 2010). However, the new government yielded to the pressure of the business association and their lobbyist organisations (e.g., Transparency International representation in Georgia had been vehemently campaigning to endorse this bill and portray the amendment of the taxation as a referendum issue to be a democratic matter). This has stripped the ordinary taxpayer the prospects of decent work, universal healthcare, free education, and universal social support programmes. This constitutional austerity limits the parliamentary power over the fiscal policies (e.g. parliament lacks the power to issue taxation policies that are against flat taxation) (Japaridze, 2017).
The low wages guarantee the impoverishment of the population, thus lowering consumption capacity. Thereby, the socioeconomic situation in the country is abysmal and hinders the political participation of most people in the political process. The only solution is a shift in the ideological and logical framework of the economic politics. Portuguese anti-austerity policies are an exemplary case of going against all odds of the hegemonic economic and political pressure to assure the triumph of democracy. Georgia needs to break with the vicious cycle–in many cases adopting policies that are even more radical than the requirements by the international financial institutions–of neoliberal austerity and instead place human welfare and development as the locomotive of the economic growth and progress.
And yes, a democratic alternative is possible, we can learn it from Portugal!
Ames, P. (2016, January 12). Why Portugal has become an oasis of stability. Portugal bucks Europe’s populist trend, but financial fragility remains a threat. Politico. Retrieved from https://www.politico.eu/article/why-portugal-has-become-europes-oasis-of-stability-antonio-costa-prime-minister/
Crespy, A., & Schmidt, V. (2012). The Discursive Double Game of EMU Reform: The Clash of Titans between French White Knight and German Iron Lady. Paper for the 9th Biennal Conference, (pp. 350–368). Ottawa.
IMF. (2017). Financial Access Survey: Georgia. Retrieved from http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C&sId=1460043522778
Japaridze, S. (2017). The Oligarchs’ Constitution. Jacobin Magazine. Retrieved September 21, 2017, from https://www.jacobinmag.com/2017/06/georgia-constitution-georgian-dream-taxes-article-94
Jones, O. (2017, August 24). No alternative to austerity? That lie has now been nailed. The Guardian. Retrieved from https://www.theguardian.com/commentisfree/2017/aug/24/austerity-lie-deep-cuts-economy-portugal-socialist
Langley, P. (2015). In Liquidity Lost (pp. 124–145). Oxford University Press.
OXFAM. (2013, September). Portugal Case Study. THE TRUE COST OF AUSTERITY. Retrieved from https://www.oxfam.org/sites/www.oxfam.org/files/cs-true-cost-austerity-inequality-portugal-120913-en.pdf
Parliament of Georgia. (2010). Constitution of Georgia: Article 94. Tbilisi. Tbilisi. Retrieved from http://www.parliament.ge/uploads/other/28/28803.pdf
Author: Revaz Karanadze
Meanwhile, the government along with the dominant economic scholars push for economic logic that frees the finance from almost all the social responsibilities. Moreover, the complete deindustrialisation and focus on the foreign investments of the service economy are not delivering stable jobs. On the contrary the jobs are few, low-skilled and low-paid. Ergo, employees work over 60 hours and get paid, for example, ₾400 or €141,5 per month, which was supposed to be for 40-hour work week per month. According to the labour code of conduct in Georgia, the employer must pay overtime for work over 40 hours at a higher wage than the regular compensation (Parliament of Georgia, 2010). For a salary of ₾400 a month, a 60-hour work week schedule should have the respective salary of no less than additional ₾200 which would be equivalent of no less than ₾600 a month. Thus, formal sector produces what can be certainly called an unpaid overtime work as “Wage Theft”.
The low wages invoke the low consumption. This is an underpinning for the diminished production that itself would guarantee the dormancy of the state economy.
In addition to these all, the abandonment of the safety regulations in the labour code of Georgia, the number of dead and has dramatically exacerbated since 2006. For instance, the number of dead and injured on industrial sites by 2011-2015 constitute 285 and 691 respectively.
For decades the Georgian governments have been pushing for the deregulated profit-based economic operations in the transnational trade and finance. These policies have taken their toll on local labour, decimated the middle class and established the monopoly of the banks. Evidently, the mode of the ineffective government policies affected the macroeconomic growth, the political power of the state, the foreign and domestic indebtedness of the state, the wages, the employment and the industrial relations.
The deficiencies of this logistics can be depicted in the upsurge of the free trade agreements and unregulated finance that limit the social market, thereby stipulating the plummet of the welfare and the curbing of the bargaining power for the working class. Consequently, these value-loaded policies result in the greater inequality with GINI coefficient as high as 41 by 2014.
This absurdity is to be halted!
Author: Sopo Japaridze
I remember the film by Ioseliani “Giorgobistve” made in 1966 which begins by showing the traditional– timeless–wine harvesting done in the village only to contrast the rest of the film that occurs in a Soviet wine factory where standards are lower and mechanized. The winemaking process in the vineyard shows the agency and dignity of the winemaker, whilst the factory is reduced to workers lazily shirking their duties as the management is politicking to meet quotas and please upper management for further promotions.
The protagonist of the story becomes a hero when he disregards all the politics and follows his conscience. He saves one barrel of wine by dumping gelatin and forcing it to not be bottled for a few weeks giving it time to mature thus hindering the possibility of bottling an inferior version of Saperavi. It’s a very small act but nevertheless heroic. These heroic acts and consciousness was the moral justification of the demand for self-determination that took off in the 1980s.
No matter the pitfalls of the national liberation project, nor the incorrectly perceived origins of these Georgian values, the moral of the story is correct or shall I say, the moral of our story, our Georgianess, is correct. For me, the Georgian claim to self-determination is the need for respect to our farmers and our environment that can yield immense economic, social and food security benefits while also fighting climate change and restoring soils, self-sufficiency and the environment.
Today we are living in a Georgia which has politicians, political parties and media “experts” who convince us that the free market is good; Georgian traditions either should be marketed well to sell a product in an efficient manner or fall by the wayside. The recent debate on the land paragraph in the constitution highlights the anti-Georgianess of the most fundamental free-market fanatics like GIRCHI and European Georgia who want to introduce unrestrained selling of land in their mistaken belief that large-scale industry in private hands is.. the most efficient way to reform agriculture which to them is the most backwards. Some of them espouse even more radical development plans in which Georgia should just import all of our food products which today’s reality is close to that since we import 50-80% of our staple foods.
These politicians who claim the sacredness of private property are the first advocates of dispossessing the poorest of private property as shown by their uncritical support for selling off the land. The reveal themselves as not protectors of private property for all, but the protectors of the rich and powerful using private property to exploit the poorest.
Georgian Dream has halted the land sale to foreigners for now in the constitution not because they agree to the paragraph but they are afraid how “emotional” Georgians are about land. Since coming to power Georgian Dream has taken steps to revitalize agriculture and have shown improvements though the policies are still too new to judge them accurately. The fundamental problem remains with these programs from the onset, is that it is oriented towards export especially to the EU market. They miss the most important part of the agricultural development which is to provide food security and respect to farmers who continue Georgian traditions. The objective of agricultural reform is not to increase export sales for the few better off farmers but to substitute our imported staple foods. It is to give the countryside the respect that it deserves, it is to make every farmer’s life dignified and restore our land.
Being dependent on imports for main staple foods is especially dangerous in our vulnerable country where the lari is constantly devaluing in relation to the dollar thus increasing food prices. Most people also have cars, loans and mortgages in dollars through a new law of “larization” is supposed to bring some relief, families have been squeezed every month to pay for their increasing loan payments from the non-increasing household income thus leaving even less for subsistence while at the same time mostly imported food is increasing in price. In effect, Georgians are being squeezed from both sides thus engendering insecurity and food quality intake decline thus increasing vulnerability. This drives families to take out even more loans.
We can not only save Georgian agriculture thus Georgia, but we can make it thrive. Restoration of food security and farmer dignity is possible through small-scale farming combined with agroecology. Agroecology is knowledge-intensive. It is not “wide” like industrial farming but “deep.” It encompasses a wide variety of practices, which are coherent with key principles of environmental preservation, social fairness, and economic viability. Agroecology combines parameters of sound ecological management, like minimizing the use of toxins by using on-farm renewable resources and privileging endogenous solutions to manage pests and disease, with an approach that upholds and secures farmers’ livelihoods.
It may be in many countries, agricultural resources for becoming self-sufficient with a well-fed population is objectively lacking but in Georgia, food insecurity is man-made and it can be unmade. The problem is the political will and not as they would have you believe economic. We will never be independent, we will never have self-determination if we cannot control our own environment, our food supply, and respect our farmers. I will repeat again, just as the dream before the breakdown of the USSR was strengthening and protecting our values, land and people, this dream is even more danger now than it ever has been. Georgian quest for self-determination cannot be realized unless we respect our farmers and our environment that will, in return, yield immense economic, social and food security benefits while also fighting climate change and restoring soils, self-sufficiency, our environment and most of all, our dignity.