Predictions are often problematic. The complexity of the issues, the variety of important factors, and the unpredictability of social subjects forbid such attempts, and usually discredit those who make them. This realization, however, has ended up opening a space in which people feel free to say anything at all, with few consequences. This is what happened lately with Syriza: the left found a long awaited rallying-point to proclaim the “last chance to end austerity,” while the right warned against irresponsible “radicalism.” Both were, once again, wrong.
It was remarkable, though not really surprising, that hardly any of the willing supporters of Syriza took the time to examine its expressed economic program. Repeating a few key phrases was enough to render Syriza the hope for the future of Greece (and Europe, for that matter), while any detailed analysis of Syriza’s proposed remedies was postponed to an indefinite moment in the future.1 It was as if the left thought it impolite to present Syriza as a social-democratic party with progressive sensitivities, treating a close look at its expressed program as unnecessary—if not intrusive.
The present age prefers the appearance to the essence, as was said a long time ago, and the greatest illusion is defended as vigorously as possible. Syriza came to represent something almost sacred for today’s disoriented left, and the rules for talking about Syriza’s past, present, and future were set from the beginning: it is a sympathetic and small Marxist party, far from the dogmatism of the Stalinist KKE; a bearer of the hopes of the tormented Greek people to catch a breath outside of the suffocating grasp of austerity; an honest fighter which will do its best to alleviate the worst effects of the crisis. If anyone criticized Syriza, they were surely ultra-left inhabitants of the ivory tower. Evoking the need to be “painfully realistic” and down to earth, Syriza’s supporters paradoxically scorned any actual attempt to be realistic. It seems as if no contradiction was allowed to spoil this common-sensical approach. Apart from the actual facts, that is.
In essence, and taking the best-case scenario, Syriza was merely proposing a Keynesian model of dealing with the crisis. For people like Paul Krugman or Joseph Stiglitz, this is as radical as it gets. Building a straw man of German-led invariance, Keynesian policies came to represent an oasis in the desert of neoliberalism. But what gives credit to all these pro-Keynesian writers (i.e. their hostility towards neoliberalism) masks certain easily-forgotten historical realities about social-democracy: its starting point is to urge capital to understand labor both as a cost and an investment; it prefers to see workers as both consumers and partners; it rejects the necessity of confronting the totality of social relations, insisting instead that the solution for the problems that capitalist social relations create lies within capitalism itself. On the bottom line, its goal is to liberate the potentials which neoliberal hard-headedness has undermined, promising that it is in a better position to manage capital. What it fails to realize is a very simple fact: Keynesianism already tried to save capitalism, and it ended in failure. Why this is considered such an offensive thing to say, is hard to understand.
One More Effort if You
Want to be Social-Democrats
In my article in the February 2015 issue of the Rail I tried to explain that beyond the enthusiasm and the wishful-thinking, a Syriza government would be forced from day one to at least secure the funds to implement its program (however minimal it was). Given that the Greek economy has been under the close scrutiny of the Troika (EU, ECB, IMF) for the last five years, the choices with respect to debt repayment and public spending are limited. International lenders, who seek to ensure their money and to enforce austerity, have spelled out a set of rules. Of course these rules are subject to change, and would definitely be hard to apply if and when an insubordinate population decided (unilaterally, to use a catch phrase of late) to proceed with a non-payment campaign at all levels that would disrupt any possible negotiation. But no such movement has emerged, and Syriza had made it clear that it is not interested in defying these rules. As a result, the development of recent negotiations was not so hard to predict.
The main argument in the previous article was that Syriza did not have any serious bargaining cards. It wished to remain within the Eurozone, it needed the money of the EU (both to keep making interest payments, as well as to finance its own program), and it was not willing to take any unilateral actions. At the same time, Syriza was hoping for an easing of the terms and a chance to effect certain changes (such as “dealing with the humanitarian crisis”) that would have no immediate fiscal costs and would thus be irrelevant to the Troika.2 The only possible card that Syriza had to play was the fact that nobody wanted to even consider a Grexit (a Greek exit from the Eurozone), as the consequences of this remain entirely unpredictable and most likely catastrophic for the Eurozone as a whole. If there was any question during the last few weeks, it was whether Syriza was prepared to play this card to the end.3
The choice of Yanis Varoufakis as finance minister added a lot of suspense to the upcoming negotiations, giving the opportunity for a number of reports to create an atmosphere of upcoming conflict. The main reason for this was Varoufakis’s chosen form of diplomacy: instead of deliberating behind closed doors and following the approach of the previous government (signing “agreements” with their eyes closed), he decided to bring Syriza’s agenda out in the open: the repayment of Greece’s debt was proclaimed an obvious impossibility for a country that has a debt ratio of 175 percent of GDP and is in its sixth year of recession. Consequently, another way had to be found and if a debt haircut was out of the question, a debt extension would have to be agreed upon. At the same time, the Troika would have to be abolished as an institution and austerity would have to be re-examined. In only a few days, Varoufakis emerged as a veritable celebrity whose wardrobe choices received as many comments as his economic proposals, both described as radical and uncompromising. Once again, neither of the two are true.
Varoufakis was simply smart enough to realize that the only chance to get any leeway was to force European leaders to publicly oppose his commonsensical approach, risking in this way to present themselves as complete idiots (no one in their right mind could possibly claim that Greece’s debt is viable). His second provocative claim, the abolition of the Troika, was a non-threat: it was already suggested a day before Varoufakis’s infamous press conference by Pierre Moscovici of the European Commission. And as far as a debt extension was concerned, it was seen as a reasonable demand, supported even by Finland—whose opposition to bailing out Greece has been even stronger than Germany’s.
Until Monday the 16th of February, and despite the various war cries from left and right, anyone interested could see a lot of signs to verify the almost general acceptance of the above script. Syriza had already watered down its pre-election “Thessaloniki” program,4 any discussion of the debt was framed around a possible extension, and Varoufakis openly said that 60 to 70 percent of the previous memorandum agreements were acceptable to Syriza, as they contained measures they were happy to implement themselves. The stage was set for a deal that would allow everyone to walk away a winner.
Inadequate Critique of an Inadequate Program
As if wishing to prove that politicians still have a role to play, the Monday meeting of the Eurogroup suddenly and unexpectedly turned into a complete flop. Instead of reaching an agreement based on a text that more or less reflected the above-mentioned consensus, Greece was suddenly presented with a text that even the Samaras government would have had difficulty in accepting. It not only rejected all of Syriza’s compromises, but it essentially demanded that Syriza would have to pretend that it was never elected. This development was indeed quite a shock. Not because it ridiculed democratic procedures and elections, as some commentators argued, or because it demonstrated Germany’s will to humiliate its opponents and supporters (one should not forget that the rest of Europe had also agreed to follow the script). The main reason was that this sudden change of heart was entirely unnecessary.
Leaving aside the spectacular presentation of Syriza as the enemy par excellence of austerity and the incarnation of hope in Europe, the details of the original and rejected agreement draft were more than enough to give all players the chance to present themselves as winners—while continuing pre-existing policies. Syriza could pretend to have negotiated hard (winning what it could in the process), Germany could present itself as invariant as before, and Europe as a whole could continue its favorite game of “kicking the can down the road.”
One could speculate endlessly about the possible reasons behind this diplomatic breakdown. Nonetheless, it makes no difference. For after a week of suspense, orchestrated panic, and secret documents, a final agreement was reached that was, well, more or less the same as the one rejected on Monday. Once again, in this endless saga of the Euro crisis, Grexit was avoided in the eleventh hour, the markets were relieved, and life could go on as before.
Unity and Division Within Appearance
On the part of Syriza, the main aim of the negotiations was to achieve some kind of extension, meaning a period of grace which would officially allow them to work out the best way out of recession (or the best way to present their departure from their program). Furthermore, for reasons unknown, the abolition of the Troika was deemed crucial, and Greece was only to negotiate with “the institutions.”5 Varoufakis was also insisting that no further checks and controls would be accepted, in order to evaluate the effectiveness of the reforms. Last, but not least, it was hoped that the negotiation would achieve a reduction of the surplus budget expectation (3 percent this year, 4.5 percent next year) to a level which reflects the actual potential of the economy.
On the other hand, the Europeans (assigning Germany the role of the bad cop, while the rest pretended to be good cops) wanted some written confirmation that Greece would honor its obligations (i.e. ensure that it will do its best to repay its debts and continue some form of austerity), that it would not start to implement its (minimal) program in a way that runs counter to these obligations, and that it would refrain from unilateral actions.
Looking at the final signed document, as it came out on Friday, the 20th of February, one would have a hard time convincing any reasonable person that one side of the “conflict” lost. Greece is allowed to draw up its own program of reforms, but they need to be accepted by the “institutions.” The Troika’s bureaucrats are deprived of their frequent visits to Athens to evaluate the implementation of the program, only because Greece will send the results on its own. The money that Greece was receiving will keep coming—in order to be used to pay back interest—but only after the evaluation is complete. Finally, the plus-three percent surplus budget goal is replaced by one which is considered “appropriate” for 2015, whatever that means. Syriza agreed not to make any unilateral decisions, and it has earned a four-month extension during which it will not be “bothered” by Europe. Ah, and the word “bridge” was added to signify the transition from the one situation to the next.
Make no mistake: this is a rather embarrassing deal for Syriza (and even more so for its supporters), and one which may in time threaten the coherence and popular support that its government enjoys at the moment. But this much was clear long before the agreement was signed. If one had bothered to read the initial document that Varoufakis was prepared to sign on Monday, it was obvious that much of what had excited the left (for no clear reason, by the way) was already out of the equation.
Notes to Serve as a History of Our Future
Most analyses after the past weeks’ suspense tried to make sense of what happened by evoking a number of narratives. The more simplified ones would point at Germany’s reluctance to accept any kind of deviation from its program, as well as its capacity to enforce its will on the whole of Europe. Syriza was seen as a threat to Germany’s pro-austerity ideology, and this was an attitude that could only be dealt with by humiliation. On a slightly more sophisticated level than this (borderline psychotic) explanation, is the argument that Greece’s insubordination would trigger more significant players in Europe6 to bet against austerity, possibly with better chances to win.
In any case, the explanations claimed that Syriza’s compromise was founded on its inability to withstand pressure from the key players in Europe, while the much-advertised early signs of a bank run were eventually identified as the main reason behind Syriza’s capitulation. All narratives concluded in the same way: Syriza’s bluff was not credible enough for the experienced German economic advisors, the economic situation of Greece was too weak to demand any kind of changes, Germany’s superiority too strong to allow any deviations. Syriza must now try to justify the agreement to its voters, and it must also prepare them for the worst.7
None of the above explanations are in themselves entirely wrong, but they all share a common fallacy. They explain recent developments by, paradoxically, ignoring the fundamental background upon which all these discussions and negotiations are based: the continued economic crisis in the Eurozone.
What About the Crisis?
The ability to struggle against the devaluation and immiseration caused by capitalist crisis (and its management) is not determined by high-profile Eurogroup meetings, ECB decisions, and good (or bad) diplomatic exchanges. At best, when these meetings do not simply represent an attempt to reinforce the necessity and legitimacy of the political class, they come to reflect existing dynamics and contradictions of existing struggles. When there is an absence of struggles that would otherwise force politicians to mediate and manage conflicting interests, these encounters are merely useful in maintaining politics as a separate sphere, left to the devices of experts.
There is no upsurge of struggles in Greece. Perhaps more important, there are no struggles in other parts of Europe that could potentially link up with each other and render the Eurogroup and other gangs obsolete. This crucial realization means that negotiations at a European level reflect a discourse which is centered around different approaches on how to manage capitalism, and more especially, how to manage the continuing economic crisis.
It is at this level that one should understand the “failure” of the recent negotiations. Explaining the results by pointing at Germany’s arrogance or Greece’s weakness only serves to mystify the fact that it is not national pride which is in conflict but opposing strategies of crisis management.
What Varoufakis clarified at every opportunity was that his proposals are not merely proposals which would get Greece out of the gridlock it was in, but solutions for the Eurozone crisis as a whole. Austerity was under attack not merely for destroying the Greek economy but because it was, according to Varoufakis, destructive for the Eurozone as a whole. Instead, what was proposed was a Keynesian model of a “surplus recycling mechanism” which would correct structural fault lines, and would allow for the transfer of surplus profits from surplus nations (like Germany) to depreciated ones (like Greece).8
Among other things, this approach indicates a very particular understanding of European integration (albeit different from the dominant one), a proposed change in its structural setup, and an aggressive way of dealing with the crisis at the moment. It also claims to call into question the priority of short-term economic hegemony over long-term capitalist sustainability.9
It was therefore as an alternative capitalist strategy for the crisis that Syriza’s suggestions were rejected, indicating that the current form of crisis management, though it might create some “statistical anomalies” in the South,10 remains dominant and uncontested. And while it is well outside the scope of this article to elaborate on the Keynesian “solution” to the crisis, or to deliberate on different strategies as to how to save capitalism from its internal contradictions, suffice to say that the Keynesian model refuses to recognize that its form of capitalist management has already failed and it is in part responsible for the prolonged deterioration of capitalist profits which led to the crisis.11
The Bitter Victory
Occasionally, in the streets and barricades of Athens in 2010 and 2011, a complaint would be voiced: Why are we Greeks so divided? (This approach was directed to the cops as well: “We are also struggling for you,” some used to shout at them.) Syriza’s rise to power has in fact managed to give strength to this ridiculous idea, rather than defeat it. As a result, and rallying behind the specter of national unity and a “national liberation” struggle against Germany, the crisis and its solution can be portrayed as a matter of national dignity. For anyone who retains any common sense, an appeal to patriotism is the exact opposite of a strong social movement capable of defeating capital’s imperatives, for there is historically no bigger obstacle to the development of class struggle than national identification. But this is exactly what Syriza has achieved, possibly more than anything else.12
However, this development is not merely an ideological victory of left patriotism. It accurately reflects a material reality, which seems to be the predominant result of the trajectory of the European Union. For while it took centuries of trade, political unification, cultural exchange, and wars to form the European nations, the economic development of the EU and its crisis seem to point towards the reappearance of archaisms that had supposedly been eradicated. There is no deviation here. As Dauve argues, “[o]ne of the objectives of liberalization, after 1980, was to do away with this protective national framework: the strongest English union will always be less influential in Brussels than in London.” In response, as soon as the crisis shook the foundations and expectations that a near-decade of stability and growth had created, centrifugal dynamics have been busy dismantling the European dream. Some of the oldest European nations see the emergence of local separatist movements (Spain, Brussels), while others mobilize their populations by appealing to national fronts (France, Greece) against EU directives. All in all, and faced with the abstract influence of the “global market,” European countries attempt to protect themselves from the crisis by reverting to protectionism and/or xenophobia,13 and even though this might allow for a temporary truce from social antagonisms, it is hard not to recognize that these are clear signs of deterioration.
No matter what last week’s developments will mean for Greece, Germany, or the Eurozone, the dynamic that has been unleashed by the crisis and its management points towards a dissolution of this monetary union. The strategy of kicking the can down the road will reach its limits, and the ability to “pretend and extend” cannot go on indefinitely. Instead, no matter how many extensions are given, and no matter how these will be digested by the populations that have already lost too much, it should not come as a surprise if an economically more significant country of the Eurozone (Italy would be the prime example) decided that its chances as a pole of value creation are better outside the euro. Irrespective of how successful European leaders feel the latest agreement with Greece has been, and how Syriza will be able (or not) to sustain itself within this compromise, no one should ignore the unavoidable conclusion: the only thing that was achieved in the end was to convince a country with the highest rate of approval for the EU to accept a fragile extension, while continuing an already devastating deterioration of their conditions. With or without the threat of Keynesianism, it is nonetheless clear that the continuation of the existing strategy for dealing with the crisis, if implemented in Italy or France, will have an outcome that will not allow everyone to keep grinning like idiots.
- One should also note that a similar reluctance was found in many radical critiques of Syriza. It seemed enough to express Syriza’s acceptance of parliamentary politics, the State, or other unacceptable concepts, to evoke a Pavlovian rejection. Though its heart might be in the right place, this approach tends to overlook significant aspects of social-democracy (above all, its rejuvenated ability to get electoral support) and ends up describing itself rather than its object of critique.
- The whole discussion of the debt extension had this aim: to spread out repayments and thus make the burden less harsh. On the other hand, non-fiscal measures would include things like granting citizenship to second generation immigrants, refrain from opening up new types of prisons (C-type), or rehiring 3,000 – 4,000 sacked public employees. To the extent that such measures were not driving the Greek budget away from its obligations, the Troika had no reason to disagree.
- The fact that Syriza was not willing to play this card meant that its strongest bargaining position (the Grexit and its unimaginable consequences) could actually be used against it during the negotiations.
- For example, the increase of the minimum wage was moved to 2016, as businesses would be “shocked” if it was introduced suddenly, as Minister of Economy Giorges Stathakis claimed. Moreover, opposition to privatizations was replaced by promises of a “review” of specific projects, while certain private interventions could “make use of public assets … to the extent that there exist guarantees of the respect of labor and environmental regulations, as well as a business plan that proves that the investment is in favor and not against public interest” (Tsipras’s programmatic statement of the government, February 7th, 2015). All in all, the measures that were designed to deal with the immediate threat of the “humanitarian crisis” were also postponed.
- Don’t try to look for the difference between the two, there is none.
- Spain’s Podemos party is steadily increasing its percentages in view of the December national elections, while France’s Le Pen is already considered a veritable threat. Italy is also a key player in these narratives, as it is one of the strongest economies in the Eurozone and one with little reason to remain within it.
- The recent agreement concerns, as mentioned, a four-month period. When this period is over, a new financial loan agreement will have to be drawn up, as debt obligations will actually increase come July and August, thus making it clear that not only is the memorandum saga not over, it has just received a generous upgrade.
- The “surplus recycling mechanism” is a notion devised by Keynes in the 1940s, which was meant to force creditor nations to increase domestic prices and reinvest their surpluses. By applying equal pressure on creditor and debtor nations to adjust trade imbalances, debtor nations would have their debt burdens eased. The problem, however, is that surplus nations have little reason to accept such mechanisms, their benefits being only long-term (by investing in depreciated areas, they support the creation of markets for future exports) and conditional. And it implies a penalty mechanism for countries which chose to allow their trade surplus to exceed their trade volume.
- If there is one element of truth in the accusations about Varoufakis’s arrogance, this has nothing to do with his wardrobe selections. It has to do with a common feature of contemporary Keynesians, which is the notion that they know best how to save capitalism.
- “Just as money is crystalized labor and not a mere entry on a screen, credit has meaning only because it is supported by future gains, by possible value creation, therefore by profitable work: if that support is lacking or insufficient, credit loses its reality. Some countries deeply in debt (Russia, Algeria) have managed to pay back their creditors, thanks to a rentier position because of their having gas and oil in their soil. Most other debtors have to cut back their budget, or to privatize. Minimizing social services reduces public debt but ultimately weakens productive potential. Selling key sectors to private business brings in quick money, but here again there is no guarantee that these activities will be run more efficiently in the interest of capitalism as a whole.” (Gilles Dauve, In for a Storm: Crisis on the Way.)
- On this topic, I would suggest Andrew Kliman’s excellent work A Failure of Capitalist Production: Underlying Causes of the Great Recession (2012 Pluto Press).
- For some commentators, the degree of national unity that has been expressed in the last few weeks surpasses that achieved during the Olympic Games of 2004. Contrary to various falsifications, and in line with Syriza’s choice of the Independent Greeks party as their coalition partner, the patriotism of Syriza (and the left in general) is not a strategic, lesser-evil choice. It is part and parcel of the foundational myths of the left in Greece.
- Belgium and Germany recently passed laws to deter migration from other European countries. At face value, these are just attempts to “protect” their welfare systems from being “abused” from (primarily) southern Europeans who are forced to abandon the economic devastation of their countries. But in essence, such measures are de facto cancelling the foundational structure of the EU.