Monday, June 18, 2012

In the Wake of the Greek elections: Is there a way out of the Recessionary Spiral?

above: The Symbol of the Rising SYRIZA Left-Coaltion in Greece

In this article Tristan Ewins discusses the aftermath of today's Greek Election.  Debate very welcome here - and at our Facebook page.  See:

Tristan Ewins; June 18th 2012

There is some interesting analysis of the Egyptian and Greek elections over at radical-left blog 'En Passant'. Here at “Left Focus” I would like to take a moment to consider the consequences of the election in Greece – and alternative ‘ways forward’ – out of the depressive spiral which is engulfing much of Europe.
(See: )

In Greece, specifically, the Conservative “New Democracy” Party is set to form government – but with only approximately 30 per cent of the total vote. As a consequence of the specifics of the Greek electoral system the largest single party receives a 50-seat boost. This makes it very likely that New Democracy will attempt to ally itself with the pro-austerity PASOK. (Pan-Hellenic Socialist Party)

Nonetheless PASOK has historically supported a more moderate approach to austerity: the consequence of which must mean that any new coalition government between New Democracy and PASOK will see bailout conditions re-negotiated to “slow the cuts [and] introduce more generous unemployment benefit[s].” (See: )

But in any case - it would be ‘the same poison’ of recessionary austerity - even if a milder variety.

At ‘En Passant’ John Passant further reports that while “left-wing radical group SYRIZA came second with just under 27%”, PASOK received “a little over 12%.” Meanwhile, “the Democratic left, a moderate split from SYRIZA on just over 6% and the KKE, the Greek Communist Party [managed] about 4.5%.”

The fascist, so-called ‘Golden Dawn’ party was thankfully contained on just under 7% of the vote: but it is nonetheless a significant precedent and could bode ill for the future.

The division of the Left in Greece has therefore been crucial for the Conservative victory. Had SYRIZA maintained internal unity it clearly would have emerged as the largest party in the Greek parliament rather than ‘New Democracy’. While the Left broadly defined was a hair’s breadth from securing a majority of votes, the additional 50 seats that would have been delivered to SYRIZA in the event of maintained internal cohesion would have been enough to deliver a clear Left victory. The Greek Left needs to think upon this should continued instability create another opportunity for a Left majority in the near future.

According to one website, SYRIZA leader Alexis Tsipras “called Samaras to congratulate him but later rejected any notion of dealing with New Democracy or PASOK.” Tsipras stated:

“We shall be present in any developments from the position of the main opposition,” he said, stressing that that “everyone must know that the measures of austerity and the selling off of state property will not be able to move forward because they lack popular legitimacy.”

The refusal of SYRIZA to deal with PASOK leaves PASOK in a potentially fatal union with New Democracy. Without very substantial re-negotiation continued austerity in Greece will see ongoing unemployment, poverty and even homelessness. The privatisation agenda, meanwhile, is blatantly Ideological. By maintaining its distance from the austerity policies of a PASOK/New Democracy government, SYRIZA is likely to rise as the main beneficiary at the next Greek election; more decisively displacing a relatively marginal PASOK. This is exactly why PASOK is refusing to agree at this point to a coalition without the inclusion of a very reticent SYRIZA.

One online news source has reported that:

“The results should bring a sigh of relief to Greece’s lenders, the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) who provided Greece with an initial bailout two years ago of $152 billion and approved a second in February for $173 billion more, but said it depended on Greece continuing with more reforms, including privatization and another $15 billion in cuts.”

Rejecting the assumptions of this reporting, however, what is the answer for Greece?

As John Passant notes at En Passant:

“Unemployment Is running at over 22% and for the young it is approaching 50%. Growth fell last year by up to 7% and is predicted to fall again this year by around the same or slightly less.”

Firstly – as these figures demonstrate, a recessionary spiral is NOT the answer. Greece – as well as other affected countries such as Spain and Italy – need a plan for socially and economically sustainable debt repayment over the long term. Though this author does not claim to be an authority, it seems rational that if privately-financed bonds cannot provide Greece and other countries with fair repayment rates and schedules, then Europe as a whole needs to step in collectively at a public sector-financial level. As recognised above the IMF, European Union and European Central Bank are already providing a bailout. But this bailout has been offered under the wrong (ie: recessionary) terms.

Greece is currently caught between the toll of an eroding credit rating – with spiralling debt-repayment levels enforcing a macabre ‘discipline’ – and the real economic and human cost of austerity and enforced recession.

As an alternative, Greece’s effective credit rating needs to be fully restored in return for ‘locking into’ a European ‘economic contract’ aimed at restructuring the Greek economy, and repaying debts in the most efficient and sustainable manner possible – under conditions of full employment.

Only Europe-wide planning and co-ordination, now, can provide for such a process of restructure – mobilising the capital and the skills necessary to forge new and sustainable export markets – maximising that potential for debt-repayment under conditions of full employment. This applies as much for Spain and Italy as it does Greece.

The alternative is recessionary austerity: again with the consequence of homelessness, deskilling, poverty – in short, social and economic disintegration.

The SYRIZA anti-austerity platform can be found here and makes interesting reading:
(See: )

From 1929 until the dawn of the Second World War the world suffered a Depression the consequences of which radicalised a generation, and with the experience of war-time economies entrenched a Keynesian orthodoxy, providing the basis of the Post-war boom. With SYRIZA refusing to join a unity government the battle in Greece is far from over. Do we really have to learn all the old lessons over again – with the associated toll in human misery?

Debate very welcome!


  1. Thanks Tristan. There is in fact a discussion about whether keynesianism can lift an economy out of recession going on among the radical left. If the problem is profit rates and their tendency to fall, and that comes form the fact that labour creates new value, then keynesianism won't work either. Only the devalorisation of capital (actuarial or physical or both) could work, after other policies like austerity, longer working hours for no extra or little extra pay, social welfare cuts, etc have been tried and don't fully work over the long term. That means that while I support SYRIZA and its victory now or into the future (the political crisis in Greece will continue I believe) would have been or will be a real boost for the left across Europe and internationally, and the conditions for workers in Greece would have been eased a little, I don't see how, short of revolution, the current and ongoing and likely to worsen crisis can be solved. In Greece. In Europe. In North America, and ultimately Australia. And by revolution I mean the mass of workers setting up their own democratic institutions to determine among other things what should be produced to satisfy human need.

  2. John, I agree that the tendency of the rate of profit to fall exists - as a tendency. But I also believe there are countervailing factors. (eg: improved productivity with new technologies - and yes, increases in the rate of exploitation)

    New technology also improves material living standards even as the rate of exploitation intensifies in various forms.

    But with Greece specifically there are a number of other factors. First, there is a lack of confidence from investors. Secondly there is the impact of a rock-bottom credit rating. Then there are the financial markets demanding destructive austerity; and there is a political tendency in Germany which is demanding this as well.

    But a Europe-wide response for Greece, Spain, Italy - could make a great difference - especially with the provision of public credit which 'side-steps' the ratings agencies and private financial markets. And planning for new export markets would also side-step the 'hit and miss' nature of just 'leaving that to the market'.

    The tendency you point to does exist. But again and in conclusion - there are other countervailing factors. Those countervailing factors have 'kept capitalist alive' for over 150 years. We have to think of measures to ameliorate the suffering of the peoples of Europe for the here and now.

  3. Mike Fisher responded to this post over at 'ALP Socialist Left Forum' - where many articles form 'Left Focus' are republished. I am republishing his comment here - and also my response - in the hope of deepening debate.

    [BEGIN] The social justice case for an alternative to present austerity in Greece and elsewhere must be made and campaigned for.

    But in the absence of a political movement capable of imposing significant pain on the ruling elites that determine policy across Europe, such an alternative will not be implemented.

    Why not?

    Firstly, because in capitalist terms austerity is absolutely rational.

    Restoring profitability, partly by reducing unit-labour costs, requires devaluing unprofitable forms of labour and capital. Keynesian policies typically serve only to artificially sustain companies whose real cost structures are not competitive. A key lesson from Europe in the late-1970s and early-1980s is that Keynesianism, as a route to restoring profitability, does not work.

    Secondly, there is the political imperative to impose painful austerity.

    The primary aim of the Euro project has been to promote neoliberal restructuring across the most uncompetitive regions of Europe. Before the current crisis it was hoped that this restructuring would proceed incrementally. Those places that could not or would not compete with German unit-labour costs would slowly decline - with devalued labour and capital shifting between localities and industries in search of new opportunities for employment and profit.

    The Euro project always intended pain - but it would be gradual and not on a scale to threaten major political crises.

    But then the GFC hit. In this context the logics of austerity that the Euro was grounded in suddenly became accelerated and intensified.

    What is being imposed now on Greece was always intended - except it is now taking place at a pace that is shaking the state and the political class to its foundations.

    But the Euro elites cannot let Greece of the hook - they must apply the logic they have been following for the past 15 years. If they don't then the lack of discipline will spread across Europe and the single currency, along with the neoliberal restructuring it is intended to secure, will collapse. And the core capitalist states will be back to having their unit-labour advantages undermined by competitive devaluations among the periphery nations.

    This is not to argue they will succeed. But it is to argue that, short of the real threat of deep political turmoil, they are very unlikely to change course. I'm afraid that making appeals on the basis of alleviating human misery are neither here nor there. [END]

  4. [MY RESPONSE to Mike Fisher from 'ALP Socialist Left Forum'] Mike; Though would you agree it's (at least theoretically) possible to intervene to maintain full employment, and side-step private financial markets and provide Greece with a fair credit rating in return for restructuring and sustainable debt repayment?

    I understand practically all around the world falling profit levels have been driving restructuring for decades. (including in Australia in the 1980s for instance) The debt crisis and debt repayments - as well as accompanying restructuring - are inevitably going to hurt one way or another; But I think they would hurt less with intervention to provide a fair credit rating and conditions of full employment.

    There is a deeper problem with capitalism - with overproduction, and the periodic destruction of capital at regular intervals because of this; and because of competitive pressures. Even with all that's going on most people aren't reflecting that 'there may be something at fault with capitalism itself', here. But a hybrid economy, returning to strategic natural public monopolies (energy, water, communications, other infrastructure) could help I believe.

    Also I think if the elites if you talk of are going to press for wage restraint to restore profit levels - then the organised working class needs to demand something in return - proportionate to any sacrifice made. (For example, democratic collective capital share - think of Meidner, for instance)

    But that would be a real fight. [END]

  5. There are MANY causes of the Hellenic economic crisis, and purile insults from Australian media and threats from Madame Merkel do not assist the positive discussion process. Indeed, her nation owes the Hellenic nation SIGNIFICANTLY and her tough talk hide the fact that they played a MASSIVE influence of harming the Hellenic nation for decades after WW2.
    Slaughtering 15% of the population - farm producers, labourers, teachers, skilled persons...
    Obliterating massive infrastructure - bridges, roads, schools, factories, hospitals...
    Stealing money from Hellenic banks...
    And yet to this date while they have paid reparations to others they have refused to do so the the Hellenic Republic. Reparations critical to rebuild and to grow.
    That aside, there are far too many government employees - 10% of the population and so many doing nothing by any productive measure.
    There are many wealthy, as in Australia, who go out of their way NOT to pay tax.
    There are, in my opinion, far too many MPs and local government councillors and far too many being paid as well as they have been to date.
    There are massive tourism opportunities being neglected...
    And now they have been forced to buy trash/ junk/ very expensive faulty this and that from the French and the Germans as part of an austerity package that is killing the nation.


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