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Editor’s Note

No doubt it was not by accident that the above-the-fold story in the June 28th issue of the New York Times, about the latest twist in the Greek debt drama, was accompanied below the fold (along with a photo of a smiling García Padilla) by “Puerto Rico’s Governor Says Island’s Debts Are ‘Not Payable.’” Whatever the workings of Jungian simultaneity (and whatever the wit of the paper’s layout people) further discussion of both stories proceeded as though these were entirely unrelated events. While the holders of Greek government debt insisted on better economic behavior on the part of the debtor nation—i.e., a willingness to extract even more money from the already well-beaten hides of the Greek working class—benevolent economists like Joseph Stiglitz and Paul Krugman insisted that, as the Times editorial board was to put it on August 18th, it was “years of misguided economic policies sought by Germany and other creditors” that “have helped to push Greece into a depression [. . .] and saddled it with a debt it cannot repay.” Similarly, Puerto Rico’s troubles are held to have their origin in local conditions and mistaken decisions.

Greece was not, however, pushed into recession by the mean Germans or economists acting on mistaken theories. Had the Greek economy been capable of prosperity, the ever-increasing loans would not have been needed. The Greek economy has its specificities—for instance, a high number of small enterprises that have not yet been destroyed by the multinational concerns eager to make use of the current crisis to supplant local businesses in this country as elsewhere. But basically Greece is simply a small and economically weak link in an international economy which as a whole has not recovered from the crisis that set in in 2008.

The Great Recession was proclaimed over in 2009 by the official statisticians of the National Bureau of Economic Research. In the next few years, it was confidently asserted by economists, politicians, and financial pundits that an upturn, despite its apparent “fragility,” was well underway. A few months before the end of 2011, however, to select only a few phrases from articles in the New York Times, “economists were stunned” by the failure of the economy to expand, and zero job growth in the United States was “a signal that the economy is stalled and that inaction by policymakers carries substantial risk.” Meanwhile, American cities and states anticipated Puerto Rico’s future troubles when they threatened and even declared bankruptcy, canceled pension plans, cut unemployment benefits, and laid off public workers in droves for lack of funds. By September 19th of that year, the Times was forecasting “slower economic growth throughout Europe, and probably in the United States. Huge losses by major European banks. Declining stock markets worldwide. A tightening of credit, making it harder for many borrowers to get loans.” The eurozone staggered from one moment of sovereign debt crisis to another, weekly threatening the health of the global financial system.

Just as the Great Recession was originally taken to be a product of American financial excess that then affected other countries, now the European sovereign debt crises were seen as troubles local to Greece or Portugal that threatened to spread to larger economies like Spain and Italy by way of “contagion,” thus posing a threat to the eurozone as a whole and even to the progress of the supposed recovery in the United States. For local difficulties, local explanations were sought. In Greece, for instance, the roots of the problem were found in political corruption and chicanery, the refusal of the Greeks to pay the taxes they owe, and the unfair advantage taken of the welfare state by lazy workers eager to skimp on working time while lining up for early retirement and over-generous pensions.

All this is about on the same level of analytical sophistication as the chant German soccer enthusiasts directed at Greek fans during the quarterfinal match in June 2012—“Without Angie, you wouldn’t be here”—taunting them with Greece’s economic dependence on the bailouts for whose harsh conditions Angela Merkel had become the leading symbol. (The Greek counter-chant was more realistic: “We’ll never pay you back!”) What it leaves out is the complex political and economic history of the integration of Greece into the eurozone, with European big-power motives ranging from the desire for a buffer-state to the east to the opportunity to sell German and French military equipment, while euros flooded into the country financing massive infrastucture construction along with real-estate speculation. Like other debt-based economic success stories of the end of the 20th century, however, this one could not last. Greek businesses, without the option of currency devaluation, could not compete effectively either with the great European concerns or with the rising industry of the global periphery, based on ultra-cheap labor in combination with the advanced technology made possible by foreign investment. By the early 2000s, domestic and foreign deficits were rising and the world crisis of 2008 demolished the apparent prosperity of the preceding twenty-odd years.1 Thus the ongoing collapse of the Greek economy, far from being a cause of a “stalled recovery,” is an effect of a deep-rooted disturbance of the global economic system. Similarly, the response of the economic and political authorities, despite its local peculiarities, echoes the austerity program savagely applied in Ireland and ongoing in most other nations, including the U.S., with whatever hesitations from those in charge.

Even in Germany, the strongest of the European economies, official statistics show “negative net investment in seven of the eight largest manufacturing industries since 2000,” and the Merkel government’s success in budget-balancing has come at the cost of a serious failure of infrastructure maintenance.2 Growth throughout the eurozone has been slowing (actually, the Greek growth rate is up this year, but it accounts for so little European GDP that this makes little difference). “The big question is when the Chinese slowdown will start to hit the German economy,” as Commerzbank economist Jörg Krämer observed.3 After all, the $2.7 trillion in value that evaporated from Chinese stocks between June 12 and July 6 was “six times Greece’s entire foreign debt, or eleven years of Greece’s economic output.”4

That Chinese slowdown itself testifies to the inability of government money-printing to solve the underlying difficulty of the global economy. The post-2009 recovery in all the countries in which any improvement is visible, is due both to the profitability-raising effects of business bankruptcies and investment losses, along with the success of businesses and governments around the world in cutting wages, benefits, and social programs, and to the steady pumping of government credit money into the world’s banking systems, directly reflected primarily in inflated stock and real estate prices. In fact, due to the central role of government credit in the global system, it is impossible to say how much of the feeble recovery is “real,” i.e. reflects the actual production of value by workers, and how much is merely smoke to be blown away by the next financial crisis. But such a crisis, in the context of ongoing near-stagnation, is at least as certain as the tsunami seismologists confidently expect to sweep away much of the west coast of the U.S. sometime soon (at least, geologically soon).

The antics of the political buffoons and scoundrels currently competing for the American presidency (even the striking image of the American split unconscious afforded by the public’s fascination with the demented nastiness of Donald Trump and the social-democratic nuttiness of Bernie Sanders) can only provide momentary relief from considering the multitude of disasters currently in play: from the horrors perpetuated, to take only the recently most striking examples, by the Syrian and Saudi governments and their Islamic State adversary, to the drought, wildfires, unbreathable air, and floods unleashed by global capitalist industry. Misguided policies, economic or political, did not produce the nonstop multifaceted crisis we are living. Better policies will not end it, but only, as Anselm Jappe observes in the interview featured in this issue of Field Notes, our willingness to put an end to the whole form of society whose deepest nature this crisis reveals.


  1. For an excellent survey, see Karl Heinz Roth, “Griechenland und die Euro-Krise,” Sozial Geschichte Online 6 (2011),  156-176 (
  2. “As Cracks in its economy widen, is Germany’s miracle about to fade?”, The Guardian, October 19, 2014.
  3. “Europe is Caught in a Hesitant, Plodding Recovery,” New York Times, August 2015, 2015.
  4. “China’s Stock Drop, Felt by Average People, May Shake Leadership,” New York Times, July 6, 2015.


Paul Mattick

Paul Mattick is the Field Notes Editor.


The Brooklyn Rail

SEPT 2015

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