Radical Socialist
Eric Toussaint[1] (CADTM)
From 1980 to 2004 joining the European Union was quite popular among large sections of the populations in concerned countries. Portuguese, Greek and Spanish citizens regarded their countries’ participation in the European integration both as a guarantee of democratic stability (indeed all three of them were emerging from a period of dictatorship[2]) and as a real opportunity to improve living conditions (there were significant transfers from richer countries in the EU towards the new members from the Mediterranean region during the first years of their adhesion[3]). Their joining the euro zone during the 2000s was also well received since it went together with increased consumption levels, albeit financed on credit. Something similar occurred among countries of the former Eastern bloc: there too, people saw joining the EU as a guarantee of democratic stability, a perspective of transfers, the possibility to move around within the Union, perhaps even of finding a better paid job in the West, and access to credit to finance consumption. However, very soon, the transferred amounts were drastically reduced and some productive sectors, particularly farming, were badly affected by competition with much more industrialized and competitive West European agrobusiness.
The years 2008-2010 marked a turning point in the perception European peoples have of the EU. Many became quite critical, which was largely a result of the European Commission accumulating neoliberal measures while claiming to promote the notorious ‘free and undistorted competition’, to which were added from 2009-2010 the crisis of the euro and the deep impact of the economic crisis.
Core and Periphery within the EU
The hierarchical relationship at global level with a ‘Core’ consisting of the US, the EU andJapan (the Triad) and a Periphery consisting of so-called ‘developing’ countries is reproduced within the 27 member states of the EU. The Core consists here of the most powerful countries among which Germany and France, but also the UK, Italy and the former Benelux (the Netherlands, Belgium and Luxembourg). The Periphery is subjected to decisions made by this hegemonic Core and mainly consists of countries lying to the south and east of the EU, not forgetting Ireland to the West. At the more limited level of the euro zone (16 countries),[4] the same distinction resulted in the acronym PIGS (Portugal, Ireland, Greece and Spain), that has prompted outragously racist puns.
The EU’s refusal to develop genuinely common policies to help new members reduce their economic drawbacks compared with the Core is largely responsible for structural discrepancies that work against the process of European integration.
Over the last ten years Germany (as well as the Netherlands and Austria) has developed a neo-mercantilist policy: it has increased its exports particularly within the EU and the euro zone by reducing workers’ wages. In September 2010 in Germany 7.3 million wage earners only had a small part-time job paid 400 (four hundred) euros a month.[5] So its competitiveness has clearly increased compared with its partners, particularly countries such as Greece, Spain, Portugal, but also Romania, Bulgaria or Hungary (which do not belong to the euro zone). Those other countries had to face a growing trade deficit towards Germany and other countries of the Core. Their current balance-of-payment deficits reflect surpluses in countries of the Core, especially Germany. Such financial deficits, which can be either private or public, have to be compensated for by external contributions: foreign investments or debts, i.e. loans. The current balance deficit can be traced for the most part to private deficits, a majority of which were financed by loans from banks of the Core, for investments were relatively limited (except in the case of Spain) or were neutralized by significant capital outflow in the guise of TNCs taking their profits home. In some Eastern European countries (Hungary, Slovakia and the Czech Republic) such profit repatriation (capital outflow) have been definitely more significant than investments (capital inflow).[6]
It can thus be argued that the debts to be paid by countries of the Periphery are essentially due to the behaviour of the private sector within the EU. Unable to compete with the Core, companies of the private sectors have contracted debts with banks of the Core but also with internal agents as the economy of these countries is increasingly controled by the financial sector since they joined the euro zone. Consumption boomed in those countries and in some of them (Spain, Ireland, Hungary, Romania, Bulgaria) a real estate bubble finally burst.
Higher and higher interest rates paid by countries of the Periphery for new loans contracted since the crisis started will further drain capital from the Periphery to the Core (to the private financial institutions that buy debt securities issued by countries of the Periphery orgovernments of the Core that are involved in ‘aid plans’ by lending money at 5.2% interest rate in the case of Greece). Germany, France and Austria, for instance, borrow at 2% and lend at 5.2%. This is a highly profitable move. Financial markets demand double or triple interest rates compared with 2007-2008 and the borrowed amounts are impressive. The money lent by countries of the Core to Greece, Ireland or Portugal is paid back to private banks in countries of the Core, and interest rates with these banks are 10% or more. There is indeed a drain on resources from the Periphery to the Core.
On the other hand, given the productivity edge of Germany and of other countries of the Periphery, financial drain also occurs through trade exchanges according the mechanism of unequal exchange Marx describes in Das Kapital: Capitals invested in foreign trade can yield a higher rate of profit, because, in the first place, there is competition with commodities produced in other countries with inferior production facilities, so that the more advanced country sells its goods above their value even though cheaper than the competing countries. [. . . ] The same may obtain in relation to the country, to which commodities are exported and to that from which commodities are imported; namely, the latter may offer more materialised labour in kind than it receives, and yet thereby receive commodities cheaper than it could produce them.[7]
Democratic foundation of another European Union based on solidarity
Several provisions in the treaties that preside over the EU, the euro zone and the ECB have to be cancelled. For instance, we must do away with articles 63 and 125 of the Lisbon Treaty that prohibit any move of capitals as well as any aid to a state in difficult circumstances. We should also do away with the Stability and Growth Pact. And replace the current treaties with new ones in the context of a genuinely democratic constituent process so as to achieve a pact of solidarity among peoples that is mindful of both employment and the environment.
We must thoroughly revise the monetary policy as well as the status and practice of the ECB. The inability of the political power to force the ECB to create money is a heavy handicap. When it set the ECB above governments and thus above the peoples, the EU made a disastrous choice: it subjected man to money instead of the other way round.
A Europe based on solidarity and cooperation must allow us to turn away from competition, which draws all standards down. The neoliberal logic has resulted in the crisis and proved a failure. It pushed social indicators down: less social protection, fewer jobs, less public services. The minority that benefited from the crisis did so by tramping on the rights of others. Those who are guilty are rewarded while victims have to pay! We must change this untenable logic, on which all founding texts of the EU are based, with the Stability and Growth Pact in the lead. More than ever, we must strive toward another Europe, based on cooperation among states and solidarity among peoples.
This new democratized Europe must strive to establish non negotiable principles. It must uphold and improve social and fiscal justice, make choices that will raise the standard of living of its inhabitants, engage in arms reduction and a radical decrease in military spending (including withdrawing European troops from Afghanistan and leaving NATO), choose sustainable energies so as to avoid nuclear power, and refuse genetically modified organisms (GMO). Furthermore, Europe must resolutely put an end to its "besieged fortress" policy regarding candidates for immigration, so that it can become a partner trusted for its fairness and true solidarity towards the peoples of the South.
Translated by Christine Pagnoulle.
[1] Éric Toussaint, doctor in political sciences (universities of Liège and Paris VIII), president of CADTM Belgium, member of the President’s Commission for a full audit of Ecuador’s debt (CAIC), member of ATTAC France’s scientific council, author or co-author of several booksDebt, the IMF, and the World Bank: Sixty Questions, Sixty Answers (Monthly Review Press, New York, 2010, with Damien Millet), Your Money or Your Life!: The Tyranny of Global Finance(Haymarket Press, Chicago, 2005), The World Bank: A Critical Primer (Pluto Press, London, 2007). Most recent book (June 2011): La Dette ou la Vie, Aden-CADTM, 2011 (collection of essays edited by Damien Millet and Eric Toussaint, not yet published in English).
[2] Salazar’s and Caetano’s regimes in Portugal (1933-1974), Franco’s dictatorship in Spain (1939-1975), military junta in Greece (1967-1974).
[3] Belonging to the EU was definitely less popular in rich countries of the north of Europe (UK, Scandinavian countries).
[4] In 1999 the euro zone included eleven countries: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. They were joined by Greece in 2001, Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009, and Estonia in 2011.
[5] Frédéric Lemaître in Le Monde, 17 May 2011
[6] Ozlem Onaran, “Fiscal Crisis in Europe or a Crisis of Distribution?”, Department of Economics, SOAS
Discussion Paper n°18, 2010.
[7] Karl Marx, Vol. III, Part III, Chapter V, Foreign Trade
http://www.marxists.org/archive/marx/works/download/pdf/Capital-Volume-III.pdf
A tribute to Late Bijan Sharangi, a brave soldier of People's Science Movement of West Bengal and founder editor of 'TOP QUARK' a popular Bengali science magazine.
By Savas Michael-Matsas
As the preparations for the celebrations of Christmas were well under way, in December 2008, in Syntagma (Constitution) Square, at the center of Athens, in front of the National Parliament, the huge Christmas Tree erected by the right wing Mayor of Athens Nikitas Kaklamanis- who boasted that this monument of kitsch was the tallest Christmas Tree in Europe- was “burning bright in the forest of the night”, put in fire by the young rebels during the mass upsurge of that unforgettable month. It was one of the most spectacular and emblematic actions of the Greek December Revolt.
In May 2011, another unexpected event erupts in the same place: from May 25 onwards, every day, tens of thousands and, latter on, over a hundred thousands of people, assemble in Syntagma( as well as in most central squares of the cities all over the country) against the new wave of measures of social cannibalism that the EU, the European Central Bank and the IMF, the infamous “troika”, want to impose through the PASOK government on the Greek people; the May 2010 bail out of Greece totally has failed to prevent a default, despite the extremely savage cuts imposed on wages, pensions, jobs and living conditions of the vast majority, and the specter of a catastrophe is hovering not solely over Greece but also all over Europe and beyond…
The Greek “movement of the squares” or Movement for “ Direct Democracy Now” was inspired by the Spanish indignados, the M15 (May 15) Movement demanding “real democracy now” against the existing political system and its anti-popular measures, and occupying the Puerta del Sol, the central square in Madrid, as well as the squares in Barcelona and other major cities in Spain. The Spanish (and Greek) mobilizations followed the example and the organizational methods of Tahrir Square in Cairo, the center of the Egyptian Revolution that has overthrown the dictatorship of |Mubarak. The worst fears of the ruling classes in Europe, and the predictions of revolutionary Marxists, including of the EEK, start to materialize: the revolution is moving from the Southern coast of the Mediterranean to its Northern coast.
From bankruptcy...
When the tallest “Christmas Tree in Europe” was burning in Syntagma Square during the December 2008 Revolt, the writing in the wall of the Athens university appeared with the season greetings of the revolutionary youth to the ruling classes of the world: Merry Crisis and a Happy New Fear!
The December Revolt in Greece, in the aftermath of the Lehman Brothers collapse and the meltdown of the global financial system, was rightly characterized by the head of the IMF at that time (and now ingloriously fallen)Dominique Strauss-Kahn as “the first political explosion of the current world economic crisis”.
The international finance capital, and particularly the capitalist leadership of the core countries of the European Union, knew very well that Greece’s economy was the “weakest link” in the chain of the Euro-zone, and its darkened future threatened, in conditions of the global crisis, the future of the entire European capitalism, first of all of the over-exposed German and French banks in the hard core of the EU. The evidence that EU authorities knew already the real situation many months, if not years, before the newly elected “socialist” Papandreou government announced late in 2009 the “creative accounting” of the previous right wing Karamanlis government and the danger of a default of the country’s economy. When the December Revolt was ending, in February 2009, the German Finance Minister, at that time, and SPD member Steinbrück had communicated all the evidence of the dire condition of the Greek economy to his “comrade” George Papandreou, then leader of the Official Opposition party, PASOK. As this secret discussion took place as the last battles of the December Revolt were ending, it is obvious that the German and EU leaders, as the total inability of the Karamanlis government to control an emergency situation has been proved in action, were worrying about the dangers from a new explosion, produced by an imminent Greek financial disaster; so, they had to prepare an alternative government, more acceptable to the people to manage the coming crisis, and the best available candidate was Papandreou’s PASOK.
In July 2009, EU’s Almunia and EU Commissioner Olli Ren, in September 2009, on the eve of the October parliamentary elections in Greece, they had discussions with Papandreou warning about the huge deficit and debt problems of the country. Papandreou knew well the real situation when he pretended, during the electoral campaign that brought him to power that “there is a lot of money” to finance Keynesian type of measures in favor of the popular strata. He continued this secret diplomacy with his masters in the EU and the IMF to implement their orders, while lying to the people, before and after the eruption of the debt crisis, up to now.
In May 2010, it was introduced the 110 billions Euros bail-out of Greece by the European Commission, the European Central Bank and the IMF, sealed by the infamous “Memorandum” with the Papandreou government with draconian measures against the wages, pensions, jobs, social services labor conditions. The Memorandum spread misery to the people but failed itself miserably to its pretended goal, the rescue of |Greece from State bankruptcy. Anyway, the architects of this monstrosity knew very well that the Greek debt is unsustainable, and the deep recession produced in this economy tied with the euro by the forced “internal devaluation” would make far worse an already desperate situation.
The May 2010 bail-out had as aim not to avoid the Greek default as such but to save the European banking system, in the first place, the French and German banks overexposed to Greek debt, and to create a “fire zone” protecting from contagion the European periphery and the entire Euro-zone. When in November 2010, Ireland had to ask urgently for a bail-out, it was already obvious (and our analysis, at that time, in the EEK spelled it out loud and clear) that the preventing operation with the Greek bail-out had failed, and the Euro-zone debt crisis re-emerged more vigorous than ever. Portugal’s bail-out followed, and Greece insolvency came again to the center.
“In May 2010” Aline van Duyn writes in the Financial Times “the euro-zone debt crisis exploded and markets plunged. A default by Greece, Portugal, Ireland and even Spain on their government bonds was feared […] indeed the impact on the post-2008 recovery was so severe and global that the Federal Reserve decided to spend an extra $600 billion to prop up the US economy. Is this happening again in May 2011?”(FT 25 May 2011, p.16)
What is happening is the failure of the unprecedented interventions by governments and central banks, after the Lehman Brothers collapse and the global financial meltdown, injecting trillion of dollars, a flood of liquidity with “stimulus packages”, “rescue packages”, “quantitative easing” etc to stop and reverse the fall of the system to the abyss. All the attempts were not only futile but they turned into boomerangs.
The holding operation by transforming private debt to public debt produced gigantic deficits and an unprecedented sovereign debt crisis both in Europe and America. Greece is the microcosm of what happens to global capitalism. The flood of liquidity failed to produce any sustainable recovery of the US and world economy. On the contrary, the latest evidence shows that unemployment continues to grow in the US and Europe, a slowdown of the American economy is under way while China intensifies fiscal tightening to fight inflation and a hard landing of its growth.
The massive State intervention were ineffective to re-invigorate a capitalist economy in an over-accumulation crisis; it has mainly produced more speculative bubbles both in the North and especially in the global South, where inflationary pressures exacerbated the social contradictions leading to the explosion of social revolution in North Africa and the Middle East- a new phase of the world revolution, which already changes dramatically the geopolitics of the most strategic region in the planet, and it reaches now the northern, European shores of the Mediterranean .
\ Greece became again the starting point of a new phase of the European and global crisis, raising the specter of a new Lehman Brothers world-wide financial catastrophe. A year after the first Greek bail-out, all the fiscal targets of the Memorandum had failed to be met, the debt to GDP ratio jumped from 110 percent into near 160 percent, the economy, plunged in a deep recession, dying from asphyxia, and the Greek government had to ask for a new bail-out to avoid an imminent forced default. A sum of 60-70 billion (according to Fitch about 100 billion) euros is needed until the end of 2013, half of it to be collected by a vast privatization program of the state assets and half from the EU and the IMF.
The renewed and aggravated Greek and Euro-zone debt crisis revealed both the global dimensions of the problem as well as the deep divisions existing between the EU and the IMF, between the European Central Bank and the European political leaders, particularly of Germany, among the EU ruling classes and within the Greek bourgeoisie itself. One section of the capitalist class in the EU, in the Anglo-Saxon countries among those who betted on Greece’s default, and in Greece is demanding a restructuring, an orderly default combined with a break from the Euro and a return to the drachma, apparently with the aim to break the vicious circle of debt and deficit by raising Greek competitiveness and exports- a rather dubious aim in today’s bleak conditions of falling demand in the world market. Another section headed by the ECB opposes any idea of restructuring fearing that any form of default will spill over into a contagion in the other bail-outed countries, Portugal and Ireland, but above all in Spain, the fourth biggest economy in the EU and even Italy, the third biggest economy, recently downgraded from AAA into “negative outlook” by Standards & Poors, giving a tremendous blow to the fragile European banking system and to the core countries, Germany and France.
Lorenzo Bini Smaghi, ECB board member and its future President warned: “a debt restructuring or exiting the euro would be like the death penalty […] the destabilizing effect could be dramatic. Economists who imagine the impact would be containable are like those who in mid-September 2008 were saying the markets had been fully prepared for the failure of Lehman Brothers.” (FT 30 May, 2011, p.3)
It is undoubtedly the EU that faces most dramatic consequences of the renewed debt crisis. “Events in Greece have brought the euro area to a crossroads” Jens Weidmann, Bundesbank president and European Central Bank governing council member, said in Hamburg on May 20 ( Financial Times, May 25, 2011 p. 9) “the future character of European monetary union will be determined by the way in which this situation is handled”.
The choices are “intolerable” as Martin Wolf wrote: “The euro-zone confronts a choice between two intolerable options: either default and partial dissolution or open ended official support [of Greece and other defaulting Euro-zone members]” (FT June 1, 2011 p.9).
Wolfgang Münchau put it bluntly: “Either the EU/IMF continues to bankroll Greece for as long as it takes, or Greece will be forced into a hard default. […] The price for continued support from the EU and the IMF is quasi loss of economic sovereignty on the part of Greece […] The real choice boils down to a reduction of the eurozone to its Germanic core or a political union” (FT May 30, 2011 p.9) The first option is suicidal, not solely for the entire EU project, but also for Germany itself, which will lose its export advantage; the second has been proven, during all the post-2008 crisis, as a reactionary Utopia.
A Vienna-style agreement (as it was earlier the agreement reached in the Austrian capital for the Eastern European debt crisis) to rollover the Greek debt, replacing maturing securities without reneging on commitments to investors, is apparently the compromise to be taken for the time being to avoid a Greek default next July.
But the new “rescue package” is accompanied with “an unprecedented outside intervention in the Greek economy, including international involvement in tax collection and privatization of state assets” (FT 30 May, 2011 p.1). Any kind of sovereignty becomes a mockery and Greece is downgraded openly into the position of a protectorate under the direct rule of the EU and the IMF, in conditions far worst than what happened under the hated troika so far.
But this easier to say than to materialize: the most important factor is the intervention of the masses in the arena determining their fate.
… to the upsurge of the masses
The December 2008 Revolt was just the prelude. Before and during a year of implementation of the IMF/ECB/European Commission Memorandum with the PASOK government in 2010-2011 the combativity of the working class was demonstrated – but also restrained – by a dozen of 24 hours protest General Strikes organized by the trade union bureaucracies of the PASOK-led GSEE and ADEDY. Frustration was increasing among the people as illusions faded that a simple demonstration of strength could be victorious as in previous times, for example with the one day General Strike of 2001 that defeated the previous attempted attack on pension rights. The separate, sectarian, bureaucratically controlled but fruitless mobilizations by PAME, the trade union faction of the Stalinist KKE (the Communist Party of Greece) added to the popular frustration, and the Stalinist public rallies started to be depleted, as it became very apparent in March 2011. Blind violence by isolated elements, as in the tragic events of the May 5, 2010 General Striker when three employees were suffocated in the Marfin Bank after a cocktail Molotov was thrown or in the attack on popular market in Kallidromiou Street, in Exarchia, early May, led the anarchist movement to paralysis.
State repression escalated from General Strike to General Strike reaching its climax in the orgy of the riot police violence on May 11, 2011, when a young man was nearly killed, dozens were sent to hospitals with serious injuries, and the center of Athens was transformed again into a gas chamber by the massive use by the police of huge quantities of tear gas. At the same time, the neo-Nazi group of “Golden Dawn”, under police protection, launched a real Kristallnacht on May 12, attacking the immigrant communities and their shops, killing a Bangladeshi immigrant worker and lynching many other immigrants, especially “colored” or “black”, in Omonia Square, at the center of Athens.
The first two weeks of May 2011, State terror and State protected fascist gangs dominated the scene, while most of the people remained plunged in a deep social despair and anger.
Suddenly, unpredictably, as in the Arab countries or in Spain, the entire political landscape dramatically changed in the last weeks of May and early June, with the powerful emergence of the “movement of the squares”, following the example of the May 15 movement in Puerta del Sol and other Spanish squares.
Tens and later hundreds of thousands of people assembled, many of them for the first time in their life, in Syntagma and the other central squares of the main Greek cities, in Thessalonica, Patras, Volos, Khalkis, Lamia, Preveza, the Cretan cities and all over the country. For the first time from December 2008 such a mass movement- but with very different characteristics from the previous youth revolt- emerged on a national scale.
In December 2008 it was a young generation without future, working in precarious labor or unemployed and under constant police harassment that revolted. It was a revolt of those pushed to the margins of social life by a social system in decline and crisis, the rebellion of “outsiders”- not of an isolated minority: without mass popular support by a majority in growing social economic difficulties and increasing conflict with the right wing government’s policies, the rebelled youth could not continue its revolt for many weeks, even months, all over Greece, attacking policed stations and banks.
But in May 2011, it is not the “outsiders” of the ruling social order who rebel but the so-called “mainstream”, most of them from the middle classes that mobilize en masse, peacefully, independently or even in open hostility to all political or trade union organizations, using the Internet, the Facebook and other means of social networking to assemble in squares, following the examples of the Puerta del Sol in Madrid and of the Arab Spring.
The bourgeois mass media, the right wing Opposition, the ultra-conservative and chauvinistic Church, various nationalist groups in the area of the far right, even the PASOK government itself initially tried to highjack this movement by praising its “national”, “non violent”, and above all anti-Party and anti-trade union stand: the first day of the mobilization, on May 25, when the workers strikers of DEH, the national company of electricity now under privatization, came to Syntagma, the assembled “|Indignant Citizens” , shouting against the “new arrivals”, they repelled them from the square).
The ruling circles and their media deliberate tried to counter-pose the peaceful May 2011 to the “violent December 2008”, in the same way as the French bourgeoisie had counter-posed the “ugly revolution” of the Paris proletariat in June 1848 to the “nice revolution” of February 1848, when all the classes, the bourgeois and petty bourgeois democrats and the working class were united against the old regime.
But the “nice” May 2011 turns more and more to become “uglier” according to bourgeois standards. As more and more people have started to join the Indignant Citizens, and the rally in Syntagma became permanent day and night, the on-going radicalization of the entire movement became more and more pronounced. It was expressed particularly in the self-organization of the people in the Syntagma Square as well as in the proceedings of the open and massive General Assembly that takes place from 9 pm to 2 am in early morning with thousands of participants.
The anti-trade union slogans were dropped, actions of solidarity to workers in strike ( for ex. for the Dockers in the harbor of Piraeus under privatization) or in occupations( for ex. in the Post bank) are decided by an overwhelming majority, racist anti-immigrant or far right elements are booed and rejected by the assembled Indignant Citizens. The slogan and banner for an indefinite General Political Strike to overthrow the government and kick out the “troika” of the IMF/ECB/EU was voted by a vast majority in the General Assembly.
The repudiation of all the foreign debt as central objective of the movement of the Indignant was accepted by an overwhelming majority, defeating the proposal by the reformist “left economists” for a repudiation only of the so-called “illegal” part of the debt, following the Ecuadorian example.
A crucial vote was taken to have as a main slogan “Real Democracy Now”, as in Puerta del Sol, or ‘Direct Democracy, now”. The majority voted for Direct Democracy, and even a non negligible minority (not only the EEK supporters) demanded “workers power”.
Despite the fact that Party banners or press are still banned from Syntagma, it is ludicrous to call this mass movement “non political” as the Stalinist KKE claims. The most politicized people assemble in the lower level of Syntagma, in front of the exit of the metro, in the space of the permanent General Assembly while the less directly political section and the nationalists with Greek flags and slogans are assembled on the higher level of the square, in front of the Parliament. There is a contrast and osmosis, in other words a dialectic between people in the two levels, a process of common radicalization and unification, particularly in direct actions (when, for ex. the exit of the Parliament was blocked and the MPs had to escape from another door through the National Garden!)
It has to not be forgotten that in every genuine popular movement, the masses enter the battlefield with all their prejudices and superstitions. Not everyone with a Greek flag in his or her hands is a nationalist right winger. Without capitulating to obscurantism and reactionary chauvinistic prejudices, we have to grasp the contradictions driving this unprecedented mass movement. International finance capital and its institutions (IMF, ECB, and EU) are turning the country into a subservient protectorate and they debase the Greek people into a nation of destitutes. There is a difference between a nationalist, anti-immigrant pogromist of the far right with a Greek flag, and a pauperized petty bourgeois or worker raising the same flag while seeing that his personal disaster is combined with the loss of any dignity for the Greek people imposed by the foreign usurers and their local collaborators as during the Nazi Occupation of the country in the 1940s.
The “anti-Party” stand is not solely “conservative and a-political”, as Papariga, the general secretary of the KKE said in an interview. We have to grasp the contradiction in it. From the one side, there is no politics, of course, without the open debate and conflict between various political programs, different political perspectives, and inescapably between opposed or allied political collectivities, organizations, parties, including the revolutionary party regrouping the most combative and conscious elements of the vanguard of the proletariat. From the other side, “parties” in mass social consciousness today are identified with the corrupt party political system responsible for the destruction of their lives as well as the political failure of the official bureaucratic Left, tied to the parliamentary system and responsible for many tragic defeats in the past, to present a plausible alternative. A real workers revolutionary Party is not a self-appointed leadership of the class, worst imposed on the class, but a party which, as Trotsky had said in his articles on Germany, fights among the masses, not to substitute them in their historical emancipatory role, but to prove in practice every moment and convince the masses for its right to lead them in a revolutionary road.
The measures of social cannibalism introduced by the ‘Socialist” government with the open support of the far right LAOS, and, despite the populist demagogy, with the support by the right wing New Democracy of Samaras, destroy the jobs and the lives of millions, both in the middle classes and in the working class. The generalized destruction of the vast majority of the people, with the open complicity of the corrupt bourgeois parliamentary system, of the bourgeois parties alternating in power for decades, with the complicity of the trade union bureaucracy, with a reformist and/or a Stalinist Left alienated from the majority of the people appearing rightly as a part of the problem, not its solution, creates the conditions for the present Great Refusal.
The nature of the global crisis, the impasse and bankruptcy of capitalism is the source of this generalized attack of “those above” and of the generalized mass refusal of “those below”, both petty bourgeois and proletarians. This prevents the rulers to find a mass basis in the middle classes against the proletariat, as it was the case with Thatcher or initially with Pinochet. Not only this PASOK government but any bourgeois government like those that the ruling class discuss as alternatives (a national unity government, a coalition PASOK-New Democracy government, a government of technocrats, even a “government of popular unity” that remains on a capitalist basis) cannot be a stable government, precisely because of the capitalist bankruptcy preventing to make any substantial concession to a sizeable section of the population.
This weakness of bourgeois rule is paradoxically but dialectically its strong point too. The heterogeneous popular mass revolting against the rulers cannot open a socialist way out from the current impasse without working class hegemony, armed with a transitional program and an internationalist communist perspective. It would be disastrous if the proletariat and its vanguard dismiss the petty bourgeois masses, their social demands and democratic sensitivities; the working, unemployed and precarious proletariat as a “universal class” raising itself above all sectional limitations has to become the political leadership of the nation of destitutes fighting for social justice, freedom and dignity, putting “universal human emancipation as precondition for any partial emancipation” according to the immortal first definition of the Permanent Revolution by Karl Marx.
To achieve this workers hegemony, we cannot bypass party politics and the struggle to clarify the political objectives of the mass movement. Despite the legitimate anger of the Indignant Citizens against the existing party system, a Party of the Permanent revolution is needed not as a self-appointed “savior” and future dictator but as an instrument of the socialist revolution, an ideological laboratory of the liberating movement. Direct democracy has a future only through social revolution. It needs as its instrument a combat Party of world permanent revolution built among the masses, by the masses, for the self-emancipation of the masses. This is the goal and raison d’ être of the Trotskyist EEK and of the Fourth International.
There is no electoral solution to the current crisis as the reformist SYN/SYRIZA of Tsipras demands. Even the insistence on the demand for direct democracy reveals the exhaustion of bourgeois parliamentarianism. The perspective of the seizure of power by the working class supported by the pauperized masses of the cities and the countryside cannot be postponed to the indefinite future, to the Greek Calendae, as the Stalinist KKE does. Both parties of the official left but also the centrist coalition of ANTARSYA is tied to electoralist perspectives, considering elections as “the central political scene”.
As these lines are written, news coming from Athens say that today, May 6, more than 200 thousand people converges in Syntagma Square probably in the biggest demonstration after the fall of the military dictatorship 1974. A pre-revolutionary situation has emerged in Greece. The indignant proletarian and popular masses, with the youth up front, are already on march, in different speed, all over the Old Continent. As we had written elsewhere (see our article on The Arab Spring now under press in the journal Critique), the Simoun, the wind of the Arab deserts, is now blowing in the squares of the European Metropolis.
The old specter of social revolution, exorcized by capitalists and bureaucrats, has come back. It spreads fear to all the rulers and hope to all those deprived from any hope. The old battle cry of the European Revolution of 1848 becomes today more actual than ever: Revolution in permanence!
4-5 June 2011
Claudio Katz, Eduardo Lucita, Jorge Marchini
Argentina will see a series of elections in the coming months. Provincial elections have already begun in Catamarca, Chubut and Salta. The presidential elections in October will be the culmination of an intense political process. This will include high-profile elections in the Federal Capital of Buenos Aires, in July, that will surely go to a second round. Then there will be compulsory primaries in August to weed out minority candidates – parties with less than the high threshold set by the new electoral law will be eliminated from the electoral race.
Turnout is likely to be high. In a context of increased participation, people are more interested in politics and the vote has recovered some of its prestige. So far the contenders include various candidates of the right, several strands of the ruling majority, some centre-left options and a left front.
1. Those of us who are active on the left, in the social movements and in intellectual life from a left perspective, need to take a public position in relation to these elections. Some comrades think we should abstain, recalling the protest value such a stance has had on various occasions in recent decades. They do not realize that this position has lost the significance it had a few years ago. Electoral indifference and the blank vote – as expressions of resistance to the prevailing order of oppression – have not only become weaker, they have now lost all political meaning. Abstention is not a symptom of protest, nor does it strengthen the social movements. It runs counter to the political awakening of young people, who are looking for political channels to articulate their demands and concerns. To neglect electoral intervention at the present time leads to self-isolation.
Many comrades agree with this analysis, but feel the electoral options on offer do not open up any new emancipatory project. For this reason they prefer individual votes of conscience, or a “programmatic” message scribbled on one or other of the existing tickets. There is plenty of evidence that such positions do not lead to effective political action. They are individual acts that do not help to develop real experience. To limit ourselves to a silent vote, effectively endorsing the principle of the secret ballot, contradicts the commitment to open, public participation that we have always defended on the left.
We have to understand that voting for particular candidates does not mean total support for their parties, programmes or past histories. It simply defining the direction of our intervention, based on our complete rejection of some alternatives and our commitment to others. Given this need to take part in the electoral fight, what are the options available?
2. The current electoral landscape includes various manifestations of the right, which are obviously the left’s main enemy. It’s important to be clear about who represents what here. Some comrades think that the representatives of reaction are spread across the spectrum of the mainstream and there’s no point in distinguishing between them. They do not believe the right exists as a specific force. Others see it as something that is invented before elections to create a non-existent polarization. Both views seem to us mistaken.
The right does exist, with its own leaders and its own proposals. Its aim is to apply in this country the same policies that Santos implements in Colombia, Piñera in Chile or Calderón in Mexico. It represents directly the interests of imperialism and aims to restore neoliberal economic policy leading to more privatizations and trade liberalization. Its objectives were revealed when it demanded a reduction in export taxes and payment of the foreign debt through budget cuts, or when it opposed the nationalization of the AFJP pension funds [1]. It seeks to restrict democratic rights, annul the verdicts against those responsible for genocide (during Argentina’s military dictatorship) and generalize the repression against popular demonstrations. It hopes to reduce the age of criminal responsibility, in order to persecute impoverished youth. Its spokespeople are directly employed by the dominant media.
It is opposed to any democratisation of the media and acts as an agent of the Church and private education. So far this current has not managed to build a significant electoral option of its own, but it can fall back on Macri, Olmedo, Duhalde. Solá, Rodriguez Saa or De Narváez. It has representatives in the PRO, in the Federal PJ, in the UCR and in the Civic Coalition. [2] These candidates are poles apart from any kind of left activity. But it is important to understand that such representatives of the right are to be found not only on the opposition side of the spectrum.
There are many representatives of the right within the ruling coalition. This fact is glossed over by many government supporters who claim to represent progressive positions. They avoid talking about the provincial governors and city barons who prop up Cristina Fernandez at regional and national level while securing neoconservative policies on their home patch. They support damaging mining operations in San Juan, shore up the privileges of the oligarchy in Salta, back the Saadi in Catamarca, [3] evict small peasant farmers in Chaco, repress indigenous peoples in Formosa, top the corruption league in Córdoba and I Rioja they are behind Menem’s alliance with the government.
Many government supporters recognize all this, but believe it is necessary to do deals with the ’caudillos’ in order to ensure the country is ’governable’ and achieve the hegemony needed to carry through the progressive policies of pure Kirchnerism. But commitments like these compromise the position of the whole government; they end up reinforcing the enormous profits of foreign companies and the fraud carried out by provincial elites, at the cost of the rest of the population. Such agreements are not inoffensive. They perpetuate the power of tiny minorities and the structural poverty of those who suffer malnutrition and are forced to emigrate. Support for a progressive project is completely incompatible with voting for these ’Kirchnerite’ governors. Those who believe backing them is a way of backing the government while holding onto progressive principles are flying in the face of the obvious.
Lining up behind the government not only strengthens these power structures; it also leads some intellectuals to adopt a McCarthyite attitude when they come into conflict with the militant activity of the left. They find themselves repeating the official line which blames the victims and slanders the struggle of anti-bureaucratic currents.
3. So far Cristina Fernandez de Kirchner (CFK) leads in all the polls and looks set to win in October. This demonstrates that the government has recovered support as a result of three processes: economic growth, the consolidation of a number of social and democratic gains, and the debacle of her right-wing opponents. The continuing high level of economic activity is a result of favourable international circumstances, expansionary economic policies and the high rate of profitability that resulted from the crisis of 2001. The government has actively intervened to manage this situation. Its policies have helped rebuild the power of the ruling classes and generate an unprecedented level of profit for capitalist groups. This government support has tended to favour enormous business profits rather than real investment or “the hard work of the private sector”. But at the same time some workers and popular sectors have also seen their incomes improve.
The right-wing opposition has proved incapable of developing its own alternative and has been battered by two years of successful, governmental counter attack. One central aspect of this counter attack was the granting of social benefits (wage increases, collective bargaining, contribution-free pensions, universal child benefit, more public sector jobs), as well as significant democratic gains (on the bringing to trial and imprisonment of those responsible for genocide during the military dictatorship, on media legislation, equal marriage rights and violence against women, as well as less repression against the right to protest).
Those who support voting for the government candidates from a progressive point of view say they want to “deepen” these conquests, as if these improvements were the main characteristic of the current administration. They downplay the huge imbalance between the vast profits obtained by the big capitalist groups from economic growth and the modest progress achieved in workers’ wages and jobs. This modest progress sits alongside continuing inequality which merely recycles poverty and job insecurity.
A left vote cannot lend support to an economic model based on agricultural exports that push us into ever more dependence on primary commodities, on the absence of progressive tax reforms, the running down of oil reserves, the destruction of the railways, the giving away of natural resources and the refusal of even partial indexation of pensions. We have to find ways to promote a distinct, anti-capitalist project and challenge the current path that maintains the polarization of society and prevents the redistribution of income.
Many progressive pro-government sectors recognize these limitations. They say “much still needs to be done” and that “the project needs to be improved from within”. They suggest creating their own alliances with their own candidates within the pro-government “collector” lists [4] But being a part of the governmental coalition means accepting all that the president demands. It is a blank cheque that makes any initiative impossible unless it has the blessing of the Casa Rosada (presidential palace). It is a road that leads, not to the creation of a progressive current, but to accepting the discipline of the government. Such alignment will be even stricter this time, with a second mandate built around social pacts designed to reign in wage demands.
Uncritical promotion of the presidential figure could have grave consequences in the future. Peronism has a long, top-down history of demanding blind obedience to the “jefe” in the presidential palace, which some progressive sectors prefer to ignore. Such subordination also means living alongside the old Peronist placemen who run the political machine for the city barons. The support of the trade union bureaucracy is equally damaging. This sector has been receiving support from within the state to finance its gangs of thugs, attack activists and bankroll company unionism, while the leaders fill their pockets and are accountable to no one. Allying with the government means strengthening these power structures.
4. It is not enough to point out these problems. There is widespread support for the government at present. The majority of the population is well aware of the continuing social inequality, the drama of outsourcing, the absence of housing programmes, the breach between high-class private education and run-down state schools. But still fresh in their memory are all the earlier disasters of the Alliance government and the catastrophe it led to [5]. And the previous decade, under Menem, is seen by most as the antithesis of the current situation. Compared with the state of collapse which the country experienced at the start of the last decade, the reality today is seen as much more bearable. At the same time, the relative improvements obtained affect how people see their vote. This context has to be taken into account, when we explain our proposals from the left.
Our criticism has to be directed at the insufficient and precarious nature of the gains made, and not at denying their existence. These are conquests achieved by the popular movement, which can only be consolidated and developed over time, if a genuinely independent political force of the left is built. Blind opposition is too often a cover for political weakness. On the other hand, recognising these gains as a belated expression of the great rebellion of 2001 and the subsequent strikes and unemployed movements (known as piqueteros) allows us to relate to the broader masses on the basis of their reality.
5. The centre-left Proyecto Sur (South Project) [6] at first seemed to be questioning the government from a progressive point of view. It won significant electoral support in the Federal Capital and proceeded to denounce the government’s deals with right-wing governors and to question the bureaucracy. It correctly criticized the devastation of the mining and oil industries, the dismantling of the railways and the stifling of any investigation into the foreign debt. From this point of view it attacked the murky business of “friendly capitalists” in public works concessions, the management of privatized public services, the absence of any audit in Social Security and the destruction of the National Statistics Office (INDEC). These positions allowed it to run in the state elections in Catamarca, for example, on a platform of opposition to the mining companies.
But a political organisation is not defined only by the proposals it makes. It matters also how it plans to implement them. And here a series of contradictions emerged with the alliances it had made with traditional political figures. These agreements prevented it from achieving its progressive aims. First it flirted with the other opposition parties in Group A [7], then there were a series of speeches that sounded very much like the right. In this way it repeated the ambiguity, silence or complicity with the big soya farmers that it had shown during the agricultural conflict. [8]
Proyecto Sur had an appealing proposal: to break with the Radical-Peronist two-party system and create a third option. It sought to distance itself from the political degeneration imposed by the party machines of the UCR and the PJ. [9] This initiative – which inspired so much enthusiasm – has been drowned in the political practice of the last year. Instead of working for a real third force, it began negotiations with a series of figures (Juez, Stolbizer, Binner) who are no different from the two-party system that is so-reviled. It is is notable how far the traditional discourse of the Radicals has taken hold of Pino Solanas’ public profile.
Such flirting with the right impedes the development of a progressive alternative. The main criticism made of the government is its “disrespect for institutional” and constitutional norms and procedures. It fails to mention that all capitalist governments flout the rules in order to favour those with the economic power. On the other hand its almost exclusive focus on corruption sounds very much like the vacuous rhetoric that the Alliance churned out against Menem over a decade ago.[ See note 5 above.] Such a message does not go beyond the liberal orbit and reproduces the old, destructive prejudices against politics in general. What’s more, it challenges the government in terms very similar to the dirty tricks campaign waged against them by Clarín. [10]
Proyecto Sur seeks to emulate the more conservative governments in neighbouring countries. But in choosing Dilma and Lula or Tabaré and Mugica as models to follow, it ends up policies that tend to preserve the status quo, especially in the social and human rights fields.
We still have much to do alongside the centre left. But those of us who defend anti-capitalist proposals and the cause of socialist emancipation, have to do this on the basis of building our own political organisation.
6. A characterization of the right, the government and the centre left is essential in the elections over the coming months, which will certainly involve second rounds between these forces. We ought to consider now what position we will take in such situations. It is unclear whether there will be any such runoff at national level, but it will almost certainly feature in the elections in Buenos Aires. So what attitude should we adopt?
Some comrades think that “all the bourgeois candidates are the same and should be rejected on block”. This is wrong. It implies that the popular movement is completely indifferent to the outcome of a dispute between reactionary and progressive candidates. It ignores the fact that such outcomes directly affect whether the conditions for popular struggle are more or less favourable. In extreme cases, this kind of abstract neutrality can lead in other countries of the region to abstaining from the struggles that pit Evo Morales or Hugo Chavez against the right. For the same reasons that the left has not traditionally argued for neutrality in trade union struggles against the bureaucracy, or in the social movement, nor should it do so when it comes to crucial electoral runoffs.
7. The left has had little electoral relevance in recent years. There have been a series of frustrating experiences with building fronts and selecting prominent popular leaders. In the end the left has been dispersed among a variety of parties standing and had no impact on the results. This has systematically discredited the left and allowed it to be seen as politically irrelevant. This electoral weakness has given rise to a distorted picture of the real weight of the left, both non-party and party, as a social and political presence in the popular organizations, in the trade unions, in the universities and in the cultural sphere. It does not reflect its capacity to mobilize in the streets and promote popular demands.
This electoral weakness reflects the same problems the left had in the previous decade, when it was unable to transform the 2001 rebellion into an organized political force. That uprising did not produce the mass alternative that it should have been possible to build in such exceptional circumstances. The frustration was the result of long-standing internal problems, of an inability to turn day-to-day militant activity into clear advances. Sectarian behaviour, dogmatism, the habits bred of isolation, a taste for self-promotion and the cult of building the apparatus, were all decisive in this failure. Such behaviour breeds in turn a reaction against all forms of organization, exaggerated illusions in “assembly” activity and, in the name of autonomy, the rejection of active participation in politics.
To build a left that can really undermine the dominant system, we have to break out of this vicious circle. But none of these limitations eclipses the basic fact: the left today brings together an important number of social fighters, who are to be found in the front line of popular demands, risking themselves in the struggles against thugs, as the murder of Mariano Ferreira demonstrated.
8. The opportunity to turn this combative spirit into a political step forward is now open again. The coming elections are an opportunity to do just that. The creation of the FIT [11] - in spite of any criticisms of the parties involved, the closed way it was set up and the fact it was presented as a fait accompli – could be the starting point for such a process.
After so many years of standing alone and pointless disputes between candidates of the same hue, as step has been taken towards unity. The trigger was an attempt by the government to exclude the left from the elections. Paradoxically, it was this danger that led to the dropping of all the disputes over programmes and candidates that had been blocking the creation of a front. As a result, it has been possible to establish something that in the coming months could put the left in the centre of the political stage. The big challenge is to decide how this space will be used.
9. The main battle ahead for the Front is the primaries that begin in August. These were imposed by the main parties with the aim of restoring the two-party system. The struggle against this hurdle is a democratic struggle of which most people remain completely ignorant. The State not only interferes in internal party life but imposes restrictive organizational clauses which could wipe the left off the electoral map. Given the sensitivity on democratic questions in the country and the widespread resurgence of political awareness, this attempt at proscription could backfire and give the left a new lease of life. The battle to secure a turnout of 300,000 in the primaries and the campaign to ensure the left’s presence in the elections is a battle for the winning. Success in this would create a political situation of huge importance and would establish a very important electoral threshold for the vote in October. For us, building this campaign is a priority.
But the FIT can begin a political process that reaches beyond the elections if it creates the conditions for a real convergence of the whole of the left. Some parties have stood apart, others are in a variety of alliances and many organizations, currents, personalities and individual militants remain doubtful. Seeking convergences and the continuous broadening of the front would make this agreement much more attractive. The obligatory primaries could be used, for example, to organize different kinds of activities and debates with a plurality of views and a democratic dynamic. This multiplicity of views is essential if we are to bring together the left. The road is wide open for this kind of initiative.
10. It is in this sense that we believe it is necessary to:
a) Call for the broadest possible participation in the FIT’s primaries, regardless of how people plan to vote in October, as a way of ensuring its presence in the elections and as a way of challenging the exclusionary nature of the political reform.
b) Vote in the first round for FIT candidates with the aim of electing left-wing members of parliament. Any advance in this direction will be positive.
c) Open a debate on what position to adopt in any runoffs, both nationally and in the capital.
If we can convert the obligatory primaries into a victory that broadens competition, strengthens the front and introduces different opinions into the debate, this will be a political achievement that can regenerate hope in the left and open the way to building the kind of political organization the country needs.
Buenos Aires, May 18, 2010.
Claudio Katz is an economist, and researcher. He is a Fellow at the International Institute for Research and Education, in Amsterdam, and a teacher at the University of Buenos Aires. Katz is involved in the Argentine network ’Economistas de Izquierda’ (EDI, ’Economists of the Left’).
Eduardo Lucita is a Director of the Marxist review Cuadernos del Sur, and member of the group Economists of the Left (EDI).
Jorge Marchini is a collaborator of the group of left economists in Argentina (EDI).
NOTES
[1] These were all points of conflict between the government of Cristina Fernandez and the traditional right in the first years after she succeeded Nestor Kirchner (her husband) as President of Argentina in 2007. Her government’s attempts to raise taxes or duties on grain exports, in particular, set it against the powerful soybean growers, who blocked roads and mounted a big campaign that eventually forced the government to give way. A few sectors of the left, including the Socialist Workers’ Movement (MST), supported this mobilization, on the grounds that it also represented the interests of small farmers, and that the Kirchner-Fernandez governments were indistiguishable from other sections of the right. (Translator’s note)
[2] Mauricio Macri is a former businessman and Chairman of Boca Juniors football club, who has become the most prominent leader of the Argentinean right. He set up Propuesta Republicana (PRO) along with Ricardo Lopez Murphy from the right wing of the UCR in 2005. Eduardo Duhalde, Alberto Rodrigues Saa, Felipe Solá and Francisco de Narváez are all figures from the right of the Peronist movement, with shifting alliances and rivalries between them. Federal Peronism, or Dissident Peronism has been one of their vehicles, as distinguished from the Oficial Peronism of the Partido Justicialista, led by Nestor Kirchner until his death last year. The UCR (Unión Cívica Radical) is Argentina’s oldest bourgeois party and the traditional opposition to Peronism. The Civic Coalition is a centrist coalition bringing together heterogeneous strands from both the Radical and peronist traditions.
[3] The Saadi family, allies of former president Carlos Menem, dominated politics in Catamarca province for many years, amid allegations of fraud and criminal activity. Their control was eventually shaken in the 1990s by a national scandal over the murder of a young woman by the son of a local politician and its cover-up by the Saadi establishment.
[4] A curious feature of Argentinian electoral legislation, much exploited by the Kirchner governments, which allows parallel lists for other posts, for example Governors or senators, all to channel votes to the same presidential candidate, in this case Cristina Fernandez.
[5] The Alliance government of Fernando de la Rua (1999-2001) was a coalition between the UCR and Frepaso. Elected in opposition to the neoliberal policies of Carlos Menem, it collapsed in the midst of the economic crisis and popular revolt that gripped Argentina at the end of 2001.
[6] The Proyecto Sur Movement was launched in 2007 as a left, nationalist coalition around the figure of Pino Solanas, one of Argentina’s best known film-makers. It includes sectors coming from the left of the Peronist tradition, different strands of the old Argentinean Socialist Party, the ex-maoist PCR and the trotskyist MST, among others. It has 11 elected members of parliament.
[7] The football metaphor is applied to the group of principal opposition parties, including UCR, Civic Coalition, PRO, etc.
[8] This was the 2008 conflict between the government and agribusiness sectors over export duties mentioned in Note 1.
[9] Partido Justicialista is the name of the mainstream Peronist party.
[10] Clarín is Argentina’s best-known daily newspaper. The Clarín Group has waged an unrelenting campaign against the Kirchner governments from the right.
[11] The Left and Workers’ Front was launched in April 2011 by PO (Partido Obrero), PTS (Socialist Workers Party) and IS (Socialist Left), three of the main trotskyist currents in Argentina.
Replacing Economic Democracy with Financial Oligarchy
2 June 2011
By Michael Hudson
This article first appeared on Michael Hudson's website.
“But if a country is still not delivering, I think all would agree that the second stage has to be different. Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country’s economic policies if these go harmfully astray? A direct influence, well over and above the reinforced surveillance that is presently envisaged? Jean-Claude Trichet, President of the ECB on receiving the Charlemagne prize for European unity (Aachen, 2 June 2011)
Soon after the Socialist Party won Greece’s national elections in autumn 2009, it became apparent that the government’s finances were in a shambles. In May 2010, French President Nicolas Sarkozy took the lead in rounding up €120bn ($180 billion) from European governments to subsidize Greece’s unprogressive tax system that had led its government into debt – which Wall Street banks had helped conceal with Enron-style accounting.
The tax system operated as a siphon collecting revenue to pay the German and French banks that were buying government bonds (at rising interest risk premiums). The bankers are now moving to make this role formal, an official condition for rolling over Greek bonds as they come due, and extend maturities on the short-term financial string that Greece is now operating under. Existing bondholders are to reap a windfall if this plan succeeds. Moody’s lowered Greece’s credit rating to junk status on June 1 (to Caa1, down from B1, which was already pretty low), estimating a 50/50 likelihood of default. The downgrade serves to tighten the screws yet further on the Greek government. Regardless of what European officials do, Moody’s noted, “The increased likelihood that Greece’s supporters (the IMF, ECB and the EU Commission, together known as the “Troika”) will, at some point in the future, require the participation of private creditors in a debt restructuring as a precondition for funding support.”[1]
The conditionality for the new “reformed” loan package is that Greece must initiate a class war by raising its taxes, lowering its social spending – and even private-sector pensions – and sell off public land, tourist sites, islands, ports, water and sewer facilities. This will raise the cost of living and doing business, eroding the nation’s already limited export competitiveness. The bankers sanctimoniously depict this as a “rescue” of Greek finances.
What really were rescued a year ago, in May 2010, were the French banks that held €31 billion of Greek bonds, German banks with €23 billion, and other foreign investors. The problem was how to get the Greeks to go along. Newly elected Prime Minister George Papandreou’s Socialists seemed able to deliver their constituency along similar lines to what neoliberal Social Democrat and Labor parties throughout Europe had followed – privatizing basic infrastructure and pledging future revenue to pay the bankers.
The opportunity never had been better for pulling the financial string to grab property and tighten the fiscal screws. Bankers for their part were eager to make loans to finance buyouts of public gambling, telephones, ports and transport or similar monopoly opportunities. And for Greece’s own wealthier classes, the EU loan package would enable the country to remain within the Eurozone long enough to permit them to move their money out of the country before the point arrived at which Greece would be forced to replace the euro with the drachma and devalue it. Until such a switch to a sinking currency occurred, Greece was to follow Baltic and Irish policy of “internal devaluation,” that is, wage deflation and government spending cutbacks (except for payments to the financial sector) to lower employment and hence wage levels.
What actually is devalued in austerity programs or currency depreciation is the price of labor. That is the main domestic cost, inasmuch as there is a common world price for fuels and minerals, consumer goods, food and even credit. If wages cannot be reduced by “internal devaluation” (unemployment starting with the public sector, leading to falling wages), currency depreciation will do the trick in the end. This is how Europe’s war of creditors against debtor countries turns into a class war. But to impose such neoliberal reform, foreign pressure is necessary to bypass domestic, democratically elected Parliaments. Not every country’s voters can be expected to be as passive in acting against their own interests as those of Latvia and Ireland.
Most of the Greek population recognizes just what has been happening as this scenario has unfolded over the past year. “Papandreou himself has admitted we had no say in the economic measures thrust upon us,” said Manolis Glezos on the left. “They were decided by the EU and IMF. We are now under foreign supervision and that raises questions about our economic, military and political independence.”[2] On the right wing of the political spectrum, conservative leader Antonis Samaras said on May 27 as negotiations with the European troika escalated: “We don’t agree with a policy that kills the economy and destroys society. … There is only one way out for Greece, the renegotiation of the [EU/IMF] bailout deal.”[3]
But the EU creditors upped the ante: To refuse the deal, they threatened, would result in a withdrawal of funds causing a bank collapse and economic anarchy.
The Greeks refused to surrender quietly. Strikes spread from the public-sector unions to become a nationwide “I won’t pay” movement as Greeks refused to pay road tolls or other public access charges. Police and other collectors did not try to enforce collections. The emerging populist consensus prompted Luxembourg’s Prime Minister Jean-Claude Juncker to make a similar threat to that which Britain’s Gordon Brown had made to Iceland: If Greece would not knuckle under to European finance ministers, they would block IMF release of the scheduled June tranche loan package. This would block the government from paying foreign bankers and the vulture funds that have been buying up Greek debt at a deepening discount.
To many Greeks, this is a threat by finance ministers to shoot themselves in the foot. If there is no money to pay, foreign bondholders will suffer – as long as Greece puts its own economy first. But that is a big “if.” Socialist Prime Minister Papandreou emulated Iceland’s Social Democratic Sigurdardottir in urging a “consensus” to obey EU finance ministers. “Opposition parties reject his latest austerity package on the grounds that the belt-tightening agreed in return for a €110bn ($155bn) bail-out is choking the life out of the economy.” (Ibid.)
At issue is whether Greece, Ireland, Spain, Portugal and the rest of Europe will roll back democratic reform and move toward financial oligarchy. The financial objective is to bypass parliament by demanding a “consensus” to put foreign creditors first, above the economy at large. Parliaments are being asked to relinquish their policy-making power. The very definition of a “free market” has now become centralized planning – in the hands of central bankers. This is the new road to serfdom that financialized “free markets” are leading to: markets free for privatizers to charge monopoly prices for basic services “free” of price regulation and anti-trust regulation, “free” of limits on credit to protect debtors, and above all free of interference from elected parliaments. Prying natural monopolies in transportation, communications, lotteries and the land itself away from the public domain is called the alternative to serfdom, not the road to debt peonage and a financialized neofeudalism that looms as the new future reality. Such is the upside-down economic philosophy of our age.
Concentration of financial power in non-democratic hands is inherent in the way that Europe’s centralized planning in financial hands was achieved in the first place. The European Central Bank has no elected government behind it that can levy taxes. The EU constitution prevents the ECB from bailing out governments. Indeed, the IMF Articles of Agreement also block it from giving domestic fiscal support for budget deficits. “A member state may obtain IMF credits only on the condition that it has ‘a need to make the purchase because of its balance of payments or its reserve position or developments in its reserves.’
Greece, Ireland, and Portugal are certainly not short of foreign exchange reserves … The IMF is lending because of budgetary problems, and that is not what it is supposed to do. The Deutsche Bundesbank made this point very clear in its monthly report of March 2010:
‘Any financial contribution by the IMF to solve problems that do not imply a need for foreign currency – such as the direct financing of budget deficits – would be incompatible with its monetary mandate.’ IMF head Dominique Strauss-Kahn and chief economist Olivier Blanchard are leading the IMF into forbidden territory, and there is no court which can stop them.”[4]The moral is that when it comes to bailing out bankers, rules are ignored – in order to serve the “higher justice” of saving banks and their high-finance counterparties from taking a loss. This is quite a contrast compared to IMF policy toward labor and “taxpayers.” The class war is back in business – with a vengeance, and bankers are the winners this time around.
The European Economic Community that preceded the European Union was created by a generation of leaders whose prime objective was to end the internecine warfare that tore Europe apart for a thousand years. The aim by many was to end the phenomenon of nation states themselves – on the premise that it is nations that go to war. The general expectation was that economic democracy would oppose the royalist and aristocratic mind-sets that sought glory in conquest. Domestically, economic reform was to purify European economies from the legacy of past feudal conquests of the land, of the public commons in general. The aim was to benefit the population at large. That was the reform program of classical political economy.
European integration started with trade as the path of least resistance – the Coal and Steel Community promoted by Robert Schuman in 1952, followed by the European Economic Community (EEC, the Common Market) in 1957. Customs union integration and the Common Agricultural Policy (CAP) were topped by financial integration. But without a real continental Parliament to write laws, set tax rates, protect labor’s working conditions and consumers, and control offshore banking centers, centralized planning passes by default into the hands of bankers and financial institutions. This is the effect of replacing nation states with planning by bankers. It is how democratic politics gets replaced with financial oligarchy.
Finance is a form of warfare. Like military conquest, its aim is to gain control of land, public infrastructure, and to impose tribute. This involves dictating laws to its subjects, and concentrating social as well as economic planning in centralized hands. This is what now is being done by financial means, without the cost to the aggressor of fielding an army. But the economies under attack may be devastated as deeply by financial stringency as by military attack when it comes to demographic shrinkage, shortened life spans, emigration and capital flight.
This attack is being mounted not by nation states as such, but by a cosmopolitan financial class. Finance always has been cosmopolitan more than nationalistic – and always has sought to impose its priorities and lawmaking power over those of parliamentary democracies.
Like any monopoly or vested interest, the financial strategy seeks to block government power to regulate or tax it. From the financial vantage point, the ideal function of government is to enhance and protect finance capital and “the miracle of compound interest” that keeps fortunes multiplying exponentially, faster than the economy can grow, until they eat into the economic substance and do to the economy what predatory creditors and rentiers did to the Roman Empire.
This financial dynamic is what threatens to break up Europe today. But the financial class has gained sufficient power to turn the ideological tables and insist that what threatens European unity is national populations acting to resist the cosmopolitan claims of finance capital to impose austerity on labor. Debts that already have become unpayable are to be taken onto the public balance sheet – without a military struggle, needless to say. At least such bloodshed is now in the past. From the vantage point of the Irish and Greek populations (perhaps soon to be joined by those of Portugal and Spain), national parliamentary governments are to be mobilized to impose the terms of national surrender to financial planners. One almost can say that the ideal is to reduce parliaments to local puppet regimes serving the cosmopolitan financial class by using debt leverage to carve up what is left of the public domain that used to be called “the commons.” As such, we now are entering a post-medieval world of enclosures – an Enclosure Movement driven by financial law that overrides public and common law, against the common good.
Within Europe, financial power is concentrated in Germany, France and the Netherlands. It is their banks that held most of the bonds of the Greek government now being called on to impose austerity, and of the Irish banks that already have been bailed out by Irish taxpayers.
On Thursday, June 2, 2011, ECB President Jean-Claude Trichet spelled out the blueprint for how to establish financial oligarchy over all of Europe. Appropriately, he announced his plan upon receiving the Charlemagne prize at Aachen, Germany – symbolically expressing how Europe was to be unified not on the grounds of economic peace as dreamed of by the architects of the Common Market in the 1950s, but on diametrically opposite oligarchic grounds.
At the outset of his speech[5] on “Building Europe, building institutions,” Mr. Trichet appropriately credited the European Council led by Mr. Van Rompuy for giving direction and momentum from the highest level, and the Eurogroup of finance ministers led by Mr. Juncker. Mr. Trichet’s speech refers to “the ‘trialogue’ between the Parliament, the Commission and the Council.”
Europe’s task, he explained, was to follow Erasmus in bringing Europe beyond its traditional “strict concept of nationhood.” The debt problem called for new “monetary policy measures – we call them ‘non standard’ decisions, strictly separated from the ‘standard’ decisions, and aimed at restoring a better transmission of our monetary policy in these abnormal market conditions.” The problem at hand is to make these conditions a new normalcy – that of paying debts, and re-defining solvency to reflect a nation’s ability to pay by selling off its public domain.
“Countries that have not lived up to the letter or the spirit of the rules have experienced difficulties,” Mr. Trichet noted. “Via contagion, these difficulties have affected other countries in EMU. Strengthening the rules to prevent unsound policies is therefore an urgent priority.” His use of the term “contagion” depicted democratic government and protection of debtors as a disease. Reminiscent of the Greek colonels’ speech that opened the famous 1969 film “Z”: to combat leftism as if it were an agricultural pest to be exterminated by proper ideological pesticide. Mr. Trichet adopted the colonels’ rhetoric. The task of the Greek Socialists evidently is to do what the colonels and their conservative successors could not do: deliver labor to irreversible economic reforms.
Trichet states:
Arrangements are currently in place, involving financial assistance under strict conditions, fully in line with the IMF policy. I am aware that some observers have concerns about where this leads. The line between regional solidarity and individual responsibility could become blurred if the conditionality is not rigorously complied with.
In my view, it could be appropriate to foresee for the medium term two stages for countries in difficulty. This would naturally demand a change of the Treaty.
As a first stage, it is justified to provide financial assistance in the context of a strong adjustment programme. It is appropriate to give countries an opportunity to put the situation right themselves and to restore stability.
At the same time, such assistance is in the interests of the euro area as a whole, as it prevents crises spreading in a way that could cause harm to other countries.
It is of paramount importance that adjustment occurs; that countries – governments and opposition – unite behind the effort; and that contributing countries survey with great care the implementation of the programme.
But if a country is still not delivering, I think all would agree that the second stage has to be different. Would it go too far if we envisaged, at this second stage, giving euro area authorities a much deeper and authoritative say in the formation of the country’s economic policies if these go harmfully astray? A direct influence, well over and above the reinforced surveillance that is presently envisaged? … (my emphasis)The ECB President then gave the key political premise of his reform program (if it is not a travesty to use the term “reform” for today’s Counter-Enlightenment):
We can see before our eyes that membership of the EU, and even more so of EMU, introduces a new understanding in the way sovereignty is exerted. Interdependence means that countries de facto do not have complete internal authority. They can experience crises caused entirely by the unsound economic policies of others.
With a new concept of a second stage, we would change drastically the present governance based upon the dialectics of surveillance, recommendations and sanctions. In the present concept, all the decisions remain in the hands of the country concerned, even if the recommendations are not applied, and even if this attitude triggers major difficulties for other member countries. In the new concept, it would be not only possible, but in some cases compulsory, in a second stage for the European authorities – namely the Council on the basis of a proposal by the Commission, in liaison with the ECB – to take themselves decisions applicable in the economy concerned.
One way this could be imagined is for European authorities to have the right to veto some national economic policy decisions. The remit could include in particular major fiscal spending items and elements essential for the country’s competitiveness. …By “unsound economic policies,” Mr. Trichet means not paying debts – by writing them down to the ability to pay without forfeiting land and monopolies in the public domain, and refusing to replace political and economic democracy with control by bankers. Twisting the knife into the long history of European idealism, he deceptively depicted his proposed financial coup d’état as if it were in the spirit of Jean Monnet, Robert Schuman and other liberals who promoted European integration in hope of creating a more peaceful world – one that would be more prosperous and productive, not one based on financial asset stripping.
Trichet continued:
Jean Monnet in his memoirs 35 years ago wrote: “Nobody can say today what will be the institutional framework of Europe tomorrow because the future changes, which will be fostered by today’s changes, are unpredictable.”
In this Union of tomorrow, or of the day after tomorrow, would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the Union? Not necessarily a ministry of finance that administers a large federal budget. But a ministry of finance that would exert direct responsibilities in at least three domains: first, the surveillance of both fiscal policies and competitiveness policies, as well as the direct responsibilities mentioned earlier as regards countries in a “second stage” inside the euro area; second, all the typical responsibilities of the executive branches as regards the union’s integrated financial sector, so as to accompany the full integration of financial services; and third, the representation of the union confederation in international financial institutions.
Husserl concluded his lecture in a visionary way: “Europe’s existential crisis can end in only one of two ways: in its demise (…)
lapsing into a hatred of the spirit and into barbarism ; or in its rebirth from the spirit of philosophy, through a heroism of reason (…)”.As my friend Marshall Auerback quipped in response to this speech, its message is familiar enough as a description of what is happening in the United States: “This is the Republican answer in Michigan. Take over the cities in crisis run by disfavored minorities, remove their democratically elected governments from power, and use extraordinary powers to mandate austerity.” In other words, no room for any agency like that advocated by Elizabeth Warren is to exist in the EU. That is not the kind of idealistic integration toward which Mr. Trichet and the ECB aim. He is leading toward what the closing credits of the film “Z” put on the screen: The things banned by the junta include: “peace movements, strikes, labor unions, long hair on men, The Beatles, other modern and popular music (‘la musique populaire’), Sophocles, Leo Tolstoy, Aeschylus, writing that Socrates was homosexual, Eugène Ionesco, Jean-Paul Sartre, Anton Chekhov, Harold Pinter, Edward Albee, Mark Twain, Samuel Beckett, the bar association, sociology, international encyclopedias, free press, and new math. Also banned is the letter Z, which was used as a symbolic reminder that Grigoris Lambrakis and by extension the spirit of resistance lives (zi = ‘he (Lambrakis) lives’).”[6]
As the Wall Street Journal accurately summarized the political thrust of Mr. Trichet’s speech, “if a bailed-out country isn’t delivering on its fiscal-adjustment program, then a ‘second stage’ could be required, which could possibly involve ‘giving euro-area authorities a much deeper and authoritative say in the formation of the county’s economic policies …’”[7] Eurozone authorities – specifically, their financial institutions, not democratic institutions aimed at protecting labor and consumers, raising living standards and so forth – “could have ‘the right to veto some national economic-policy decisions’ under such a regime. In particular, a veto could apply for ‘major fiscal spending items and elements essential for the country’s competitiveness.’ ? Paraphrasing Mr. Trichet’s lugubrious query, “In this union of tomorrow … would it be too bold in the economic field … to envisage a ministry of finance for the union?” the article noted that “Such a ministry wouldn’t necessarily have a large federal budget but would be involved in surveillance and issuing vetoes, and would represent the currency bloc at international financial institutions.”
My own memory is that socialist idealism after World War II was world-weary in seeing nation states as the instruments for military warfare. This pacifist ideology came to overshadow the original socialist ideology of the late 19th century, which sought to reform governments to take law-making power, taxing power and property itself out of the hands of the classes who had possessed it ever since the Viking invasions of Europe had established feudal privilege, absentee landownership and financial control of trading monopolies and, increasingly, the banking privilege of money creation.?
My UMKC colleague, Prof. Bill Black commented recently in the UMKC economics blog: “One of the great paradoxes is that the periphery’s generally left-wing governments adopted so enthusiastically the ECB’s ultra-right wing economic nostrums – austerity is an appropriate response to a great recession. … Why left-wing parties embrace the advice of the ultra-right wing economists whose anti-regulatory dogmas helped cause the crisis is one of the great mysteries of life. Their policies are self-destructive to the economy and suicidal politically.”[8]
Greece and Ireland have become the litmus test for whether economies will be sacrificed in attempts to pay debts that cannot be paid. An interregnum is threatened during which the road to default and permanent austerity will carve out more and more land and public enterprises from the public domain, divert more and more consumer income to pay debt service and taxes for governments to pay bondholders, and more business income to pay the bankers.
If this is not war, what is?
Footnotes
[1] Mark Gongloff,“Moody’s Downgrades Greece,” Wall Street Journal, June 1, 2011.
[2] Helena Smith, “The Greek spirit of resistance turns its guns on the IMF,” The Observer, May 9, 2010.
[3] Reuters, “Greece PM fails to win austerity reform backing,” Financial Times, May 28, 2011.
[4] Roland Vaubel, “Europe’s Bailout Politics,” The International Economy, Spring 2011, p. 40.
[5] “Building Europe, building institutions.” Speech by Jean-Claude Trichet, President of the ECB ?on receiving the Karlspreis 2011 in Aachen, June 2, 2011.
[6] Z film
[7] Tom Fairless, “Trichet Calls for Tougher Debt Intervention,” Wall Street Journal, June 2, 2011.
[8] Bill Black, “Bad Cop; Crazed Cop – the IMF and the ECB,” New Economics Perspectives, May 30, 2011.
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This work by Radical Socialist is licensed under a Creative Commons Attribution-Non-Commercial-No Derivative Works 2.5 India License.
Radical Socialist is an internationalist Marxist organisation based in India.
