Debate: What Way Forward For Greece?

Greek Debt editedPublished: April – June 2015
Authors: Jonathan Clyne, Themos Demetriou and Sotiris Vlachos
Intro by: TSN Editor

The crunch is now here for the Syriza-led Greek government and the debate over what they should do next is ranging far and wide. Below are some contributions to the debate from members of The Socialist Network alongside a contribution from marxist economist Michael Roberts.

 

 

 

Contributions Index:
+ ‘Syriza ? From Defensive Tactics to Offensive Strategy’ by Jonathan Clyne (Swedish Socialist Network)
+ Comment from Themos Demetriou (from Socialist Expression Cyprus)
+ ‘Understanding the present situation in Greece’ by Themos Demetriou
+ Jonathan?s response to Themos?s comment and article
+ Themos’s Reply
+ ‘Debt – The absolute defeat of the market economy’ by Sotiris Vlachos (Socialist Expression Cyprus)
+ ‘The Case Against a “Grexit?” – a follow up contribution by Sotiris Vlachos
+ ‘Syriza, the Troika and the ironies’ by Michael Roberts (thenextrecession.wordpress.com)
+ A Comment on Michael’s Article by Pat Byrne (TSN Editor)

Syriza ? From Defensive Tactics to Offensive Strategy

by Jonathan Clyne (Swedish Socialist Network)

Since 2008, Greece has been hit by an economic and social firestorm. The victory of Syriza has raised hopes that at last the situation can be turned around. Internationally, the 99% have suffered defeats for at least three decades. Sympathy is widespread for the new Greek government. However, Syriza?s road to power has been extraordinarily short, and the new government have been thrown into a very difficult situation. Not only Syriza, but also the European and global left is unprepared for power. The tradition of winning struggles has been lost. The aim of class struggle has been reduced to either modest amelioration or empty slogans about socialism. This is reflected in the comments by the left about Syriza?s recent agreement with the EU?s finance ministers. Instead of sweeping criticism, unconditional support, or general patience with the newly elected government, the task of socialists inside and outside Greece is to work out a clear tactical and strategic path ahead. This article is a contribution towards such a discussion.

The Character of the Syriza Government
We have become accustomed to social democratic leaders in power rapidly extinguishing the hopes on which they were elected. After losing power, if not earlier, ex-ministers and other leading politicians have gone on to lucrative careers.

This is not the leadership of Syriza. It is a new party, unset in its ways, brought to power in a highly volatile situation. Furthermore, unlike traditional communist and social democratic bureaucratic parties it allows the free organisation of factions within the party and a public discussion of differences. This is one of the great strengths of Syriza, as it was for the Russian Social Democratic Workers Party in the years preceding the October Revolution. Democracy within the party opens up the possibility that, through experience and heated discussions, Syriza will be able to chart a successful path to social transformation.

Parallels should not be drawn between Syriza and the French Socialist Party under Hollande or even Mitterrand, but with the Spanish Socialist Party and Largo Caballero in the thirties. Once in government, it radicalized as events unfolded.

Yet, having a positive attitude towards the Syriza government is not the same thing as lionizing it and its individual ministers. Nor does it mean waiting passively to see what it will do next. Instead, everybody on the left has to put itself in their shoes and from that vantage point try to work out what has to be done immediately and what the broader goal should be. This means taking responsibility for the development of the movement as a whole.

No Easy Way Forward
Michael Roberts (https://thenextrecession.wordpress.com/2015/03/03/greece-breaking-illusions) gave a possible perspective where the government might just be able to get through the next years without a major confrontation with the IMF, EU and ECB. If enough tax income can be raised, if interest rates are low, if the economy grows, if exports increase and if they can make the most of the negotiations about the unclear terms of the loans, there might be sufficient room for some improvement for the poorest. Perhaps there might also be something left over for a broader segment of the population. This would not be a bad result. It would be a small victory. The working class, in Greece and throughout the rest of Europe, needs a respite from attack after attack. Instead of one defeat leading to another, one victory could lead to another. During this process, an alternative to capitalism could be worked out.

However, there are problems on the horizon, which could threaten this perspective.

  • The government might need a new bailout in four months? time, or before that, because it has failed to raise the necessary fiscal resources. In that case, the Troika has clearly indicated that it will leave little room for anything but continued austerity.
  • Recent opinion polls show that a big majority of the Greek population appreciate the good intentions of the government and understand that they are facing a formidable enemy. Despite only limited reforms they will continue to support the government. However, this does not apply to all layers in society. Some will be less patient. The experience of Venezuela under Chavez shows the problems that can arise. Economic problems pushed middle layers ? shopkeepers, middle management, small businessmen, even students ? into the reactionary hands of the oligarchs. Due to the increase in things like crime, inflation, and power cuts, support for the opposition reached deeper into the population. Even more worrisome, the opposition mobilised successfully in the streets, providing a groundswell of support for coup attempts. Greece is one of the countries with the greatest share of small businesses in Europe (although less than Venezuela). In Greece, Golden Dawn, an openly fascist party, is already lurking in the shadows and has considerable support in the police.

The world economy has been slowly climbing out of the great recession, but at a pace that is the slowest ever for a global capitalist crisis. Already the Dow Jones has passed its pre-2008 record, as has derivatives trading and debt in many countries. Only investment has not recovered. When the world economy moves into its next recession, the system will be less financially stable than ever. This could happen within 3-4 years. Greece will be pressed back down into the hole out of which it may have just begun to crawl.

All this means that, most likely, sooner or later the Greek government will have to face up to the Troika in order to drastically reduce its debt. The alternative is more suffering for the Greek population.

Preparing For the Next Battle
On the 7th of January, gunmen stormed into the editorial offices of Charlie Hebdo in Paris killing eleven people and injuring a further 12. On the evening of the attack some 100 000 gathered spontaneously throughout France, in response to what was in effect a national trauma. The following day, the French government declared a day of mourning. And four days after the attack, demonstrations led by the French government were held. Around two million gathered in Paris and almost as many in the rest of France. It was a strong manifestation for freedom of expression, despite being marred by the hypocritical presence of world leaders who think nothing of suppressing free speech themselves.

Greece has also been hit by a national trauma, although its character is different from what happened in France. In Greece, there has been an unprecedented depression and a serious threat to democracy. The Troika imposed a technocratic government at one stage and is trying to prevent the Syriza government from implementing the programme it was elected on. As Germany?s finance minister, Wolfgang Schäuble, put it bluntly before Syriza came to power: ?New elections change nothing?. This more than justifies and makes feasible a huge national and international rally led by the Greek government – for democracy and against austerity.

Varoufakis has talked about a referendum. This would also be good way of getting people involved. However, if it is just thrown out as a negotiating gambit, it risks having the opposite effect. Reducing people?s activity to something that negotiators turn on and off at will, tends to pacify people.

70-80 percent of Greeks support the government?s stand against the Troika. This support needs to be channelled into a broad-based organisation for democracy and against austerity, including those that are neither members of Syriza nor trade unions. In the preparation for the re-call referendum against Chavez in 2004, ?electoral battalions? were organised to mobilize the no-vote in the referendum. In a similar fashion, groups could be organised to prepare the rally or referendum.

A huge rally in Greece, combined with the creation of mobilising groups, would also be the beginning of an all-European campaign for democracy and against austerity. This can be combined with a concerted campaign to expose the myths about Greece that the media has been busily promoting throughout Europe. Greeks do not work a shorter working week than others do in the EU. They work longer than most. Nor do they retire earlier. Their retirement age is slightly higher than the European average. Money has not been given to Greece to bail them out. It is loaned, and they pay a far higher rate than the German government does for its loans. And so on?

The Syriza-led government?s attempt at increasing tax collection from the wealthy, cutting bureaucracy, and cleaning up administration are important steps towards freeing Greece from the stranglehold of the Troika. It is unlikely that it will be sufficient. Even if the Greek government manages to follow all the rules that are laid down by the Troika, there is no guarantee that the institutions themselves will live by these rules.

One of the reasons why Greece is in such trouble today is because the rules were changed to suit the interests of the German and French banks. The Maastrich Treaty does not allow the EU to be used for bailing out banks (http://foreignpolicy.com/2015/03/06/is-the-euro-compatible-with-democracy). Most of the Greek state?s debt was to German and French banks. These banks were richly rewarded for supposedly taking risks. When their bets failed, they were rescued by the ECB, EU, and IMF. The banks? debts became public debts. Being indebted to public institutions rather than ordinary banks puts Greece in a much weaker position.

In the end, it is not rules that decide, but power. The Troika has the backing of many of the richest people and most powerful governments in the world. The Greek government has the support of the overwhelming majority of the population. If that is mobilised, and linked up to all those that are in favour of democracy and oppose austerity in the EU and even further afield, then the Syriza government has a fighting chance.

Two More Preparatory Measures
Capital controls and public ownership of the banks are both permitted within the legal framework of the EU. Despite the free movement of capital being one of the foundations of the EU, capital controls can be implemented for exceptional reasons, for example if they are ?justified on grounds of public policy or public security”. (http://ec.europa.eu/finance/capital/framework/treaty/index_en.htm)

The present catastrophe in Greece is an exceptional situation, unprecedented within the history of the EU. As we saw in Cyprus, even the IMF has been forced to reverse its long-standing policy of opposing capital controls. It simply had to recognize that capital controls are necessary at times in order to stabilize the economy, nationally and internationally.

With capital controls and democratic public ownership of the banks, the Greek government could go into a new round of negotiations without the knife of capital flight held against its throat (and it would be a better basis for extracting tax revenues). Just before the recent agreement, capital was fleeing Greece at a rapid rate. Thus, the Troika could afford to be obstinate and draw out negotiations, knowing that the position of the Greek government deteriorated day by day. However, with capital controls and a democratic public banking system, the Greek government would be in a stronger position.

Leave the Euro?
A useful frame of mind in politics is to hope for the best, prepare for the worst and not be surprised by anything in-between. In four months? time, the Greek government could aim for a negotiated settlement, which approaches the conditions achieved by Germany in 1953. The London Agreement on German External debts, as it was called, reduced Germany?s debts (public and private) by half, stretched out their repayment over thirty years, and limited repayments to 3 percent of export earnings, if Germany had a trading surplus. Some of the debts were to be repaid after German unification, so it was not until 2010 that the final amount was paid back.

At the time of signing, the USA and other countries were moving into the sharp recession that followed the Korean War boom. Despite that, the USA pushed for the agreement. Most likely, the reason was the uprising of workers in East Germany against their Soviet-supported government a few months earlier. The USA wanted to induce East Germans to support capitalism. Therefore, then as now, any agreement will be a political trial of strength, with economics only being a secondary factor. However, what should be done if the Troika, despite the preparations suggested above, does not accept a fair settlement?

The main discussion of an alternative has centred around leaving or not leaving the euro. Some arguments are mainly emotional, on both sides. Those in favour of leaving the euro argue that ?without our own currency, we cannot be independent?. But any nation which is highly integrated into the world economy, such as Greece, will only have a limited economic independence. Political independence is a different matter. On the other hand, those that are in favour of staying in the Eurozone claim that ?we must be part of the European project, if we are not going to remain backward?. Yet, a progressive European project does not exist.

Some of the less emotional arguments in favour of leaving the euro are: the consequent rapid devaluation will aid exports from Greece, because they will become relatively cheap; the Greek government can again freely print money and issue as many bonds as it likes; and a weak currency would attract more tourists to Greece. On the other side, there are also reasonable arguments against leaving the Eurozone: imports will become more expensive leading to inflation (which in practice means lower wages), and as exports have a high import content, exports will also be affected; the government might be able to issue as many bonds as it likes, but would have to pay very high interest to buyers.

More arguments can be piled up on either side, each representing real tendencies and counter-tendencies in the economy. The fact of the matter is that nobody can say which of these tendencies is going to predominate. Some European economies outside the euro did relatively well during the great recession, like Sweden. Others did worse, like Bulgaria. Likewise with countries within the Eurozone. It has not been the currency, but the basic ability of each country?s commodities to compete on the world market that has been decisive.

Default
There is one consequence of leaving the euro that is absolutely clear. Greece would have to default on its debt. In all likelihood, a newly introduced drachma would not be a strong currency. As the debt will still be in euros, the cost of servicing the debt (never mind repaying it) would sky-rocket. Default will most likely also be necessary if Greece stays in the euro and does not get a London Agreement. Therefore, the question is not for or against the euro, but for a euro default or a drachma default. There is a major difference between these two types of default.

Continuing inside the euro but with a democratic public banking sector in Greece, the government could declare that the debt to the EU, IMF and ECB would henceforth be repaid under the conditions of the London Agreement. This would minimize financial turmoil. Foreign direct investment is also less likely to be derailed. Perhaps even more importantly, such a default maintains the debt question in the realm where it belongs ? politics. The institutions that pushed Greece into a deep depression are all politically appointed. After default, a campaign could be mounted to reopen negotiations with the institutions to get them to accept the London Agreement. This campaign could include a huge demonstration in Brussels (the headquarters of the EU) or Berlin (the government with the most power in the EU). ?Electoral battalions? for democracy and against austerity could link up throughout Europe.

To leave the euro, all that is needed is a decision by the government, not people organising and fighting. In other words ? demobilisation ? just when things were getting going. A default after leaving the euro would also lead to much broader financial disruption. It would be difficult to limit the default to the institutions. A bit more than a fifth of the debt is still held by others than the institutions. They could probably not be paid either when the drachma collapses. Greece would have to default on these loans too. More importantly, many Greek families and businesses have euro loans from foreign banks. These would suddenly become very expensive following a Grexit, threatening bankruptcies and personal tragedies. It is not for sentimental reasons that, despite opposition to the Troika, a solid majority of Greeks still want to remain in the Eurozone.

A large part of the European left claim that a default is impossible within the EU/EMU. They argue that ?these are neo-liberal institutions that would never accept a default and would therefore force Greece out of the Eurozone and probably out of the EU too?. Yet, they provide little evidence to back this up. It seems to be based on a feeling (a hope?) that this would happen. There is plenty of reasoning about the EMU being dysfunctional and why it should be abandoned, but not about why default would never be accepted. And even if it were true, why leave the EU/EMU simply to avoid being thrown out? In the final analysis, it is a question of power relationships. The Greek government went into the negotiations with the Troika with a weak position and were therefore rebuffed. The point is to do everything to strengthen their position. Fleeing the battle, and thinking that will resolve things, will be illusionary. If a default leads to expulsion, then the Greek government will have to deal with it. That possibility should not stop the government from defaulting, but that is not an argument for leaving in advance.

So, the Greek government?s second line of defence should be a controlled default on its debt to the institutions, while remaining within the Eurozone. Unless it is kicked out.

From Defensive Tactics to Offensive Strategy
The Thessaloniki Programme of Syriza calls for an immediate increase of public investment by ?4 billion. This puts a finger on what needs to be a central part of a plan to revitalize the Greek economy – investment. This is something which most of the world economy is also in sore need of.

Agreement seems widespread in Syriza that there must be investment in education, infrastructure and community projects. The hope is that private businesses (at least small and medium-sized enterprises) will fall into line and start investing too, perhaps with a bit of further encouragement from the state. If private investment does not take off, then there can just be a one-off boost to Syriza?s projects. One of the fundamental flaws of the Venezuelan Revolution was that investments never took off. Oil revenues improved people?s lives for quite some time, but when they declined, economic chaos ensued.

Globally, investments have been low for some four decades now. That is the main reason why living standards have barely improved or declined for most people. The great recession of 2008-2009 pushed investment rates down to an even lower level, which has led to an extraordinarily slow recovery. Due to monetary policies, the stock market, derivative trading, property prices and all kinds of other speculation have recovered to pre-crisis level and even surpassed them. But not investment in production and services.

The developed world has lapsed into Third World behaviour ? many capitalists, not least the most powerful ones, do not find it profitable enough to invest in the real economy. Instead, they find all kinds of fanciful and often criminal ways to earn money with their money. As right wing economist Jeffrey Sachs put it after the crash: ?What has been revealed, in my view, is prima facie criminal behaviour?It?s financial fraud on a very large extent.? He terms the behaviour of Wall St. ?pathological?. This is the type of capitalism that confronts Syriza.

?Developmental? Policies?
There has been talk about ?developmental? policies for Greece as a means to solve this dearth of investment. South Korea and Taiwan are examples of what have been called ?developmental states?. They climbed from being severely under-developed, corrupt countries to becoming industrial powers. In 1950, their GDP per capita was less than Kenya and Ghana. Today South Korea has the twelfth largest economy in the world. In these countries, the state pushed and enticed capitalists into investing.

They are the lone exceptions. Most states cannot push capitalists because the state is too weak. The successful developmental states had land reforms imposed by the US army, effectively abolishing the landlord class and providing a vast passive support to the government among peasants. At the same time, they were in the frontline in the Cold War and therefore received massive aid from the USA. In South Korea, the bourgeoisie was weak because of its collaboration with the Japanese during the occupation. In Taiwan, most industry was Japanese and fell into state hands after the war. This gave the state pushing power vis-?-vis the capitalists.

On the other hand, capitalists could be enticed to invest by high profits. The USA provided them with the most privileged access of all nations to the US market at the same time as they were permitted to limit the import of competing goods. And they began to take off in a period in which capitalism globally was having its best performance ever. No other countries have had such favourable conditions. Certainly none of these conditions apply to Greece today.

Quantitative Planning?
An alternative way of increasing investments is by the state taking over the whole economy and planning it centrally. The model for this is the Soviet Union ? with the possible addition of democracy. This is the programme of the Greek communist opposition party, KKE, but it also has some support in part of the left of Syriza. So far, there has not been much of an alternative for those that want a genuine and deep social transformation. The shadow of Soviet planning slips into the void.

The Soviet Union was highly successful in mobilising resources for investment, but it failed at investing them well. Labour productivity was very low. By the 1980?s, the Soviet Union was investing on a grand scale, but barely growing at all. A large black and grey market developed in the gaps left by quantitative planning. The grey market consisted of a sort of bartering, outside of the plan, between state companies in a desperate bid to try and fulfil the plan. The black market was the breeding ground for the mafia that took over the Russian economy after the collapse of the Soviet Union.

The bureaucratic planning model developed in the Soviet Union was a product of the underdevelopment of the Soviet Union. So-called ?quantitative planning? (deciding all prices and exactly what should be produced centrally) is simply unfeasible, except in a primitive economy. That is why the Soviet Union stagnated and collapsed once the economy reached a certain size.

The whole idea of quantitative planning is theoretically unsound. Marx wrote that the central contradiction of capitalism was between the social character of production and its private ownership. Some companies have genuine social production (large companies that employ and sell to many people) but most do not. It takes decades to accumulate massive production capacities and with it the centralised structures and knowledge to run large units. To imagine, that the whole economy can be treated as one factory, by simply taking it over and declaring it to be one factory, is delusional. All it does is create a new contradiction, that between the social ownership of production and its private (small-scale and scattered) character. Democracy cannot paper over that contradiction, only bureaucracy. And only temporarily, until the contradiction simply becomes too big and the economy grinds to a halt.

Tossed between the inadequacy of this alternative and the existing capitalist system, it is tempting to just quieten down and try and make the best of a bad job ? to act honestly, try to scrape together as much possible for those that most need it, and try to efficiently run the existing system. But resigning oneself to just administering the present system would be a mistake.

It is neither necessary to take over wholesale a model of the past, nor to accept the status quo. By combining lessons of past models with the specifics of the current situation, a new way forward can be mapped out. This cannot be done in this article. There must be a broad discussion involving Syriza, trade unions, workers, the broader population, and academics, in Greece and internationally. If such a discussion began soon, within a year or two a viable plan for Greece could be worked out. Then it could be put to a vote. Either in a referendum or, far better, via a new election, in which Syriza has that plan as its platform. Most likely, Syriza would be re-elected with a whopping majority.

In this article, all that can be done is throw out a few ideas that hopefully can be useful in such a discussion.

Competing in the Global Market
Greece is a poor, but developed country. Although the agricultural sector is fairly large by European standards, employing about 12 percent of the labour force, it produces less than 4 percent of GDP. Greece has done well in a few areas, above all in shipping, with the largest merchant navy in the world, and in tourism. The problem for Greece is that there are just too few areas where it is competitive on the world market. The Netherlands, in the euro, and Sweden, outside the euro, are also small countries, but they have done relatively well. In a limited, but sufficient, amount of areas large companies exist in the Netherlands and Sweden that can compete globally. Germany has a far larger proportion of such companies.

When the Wall fell, Greek capitalists had the advantage of being early in Eastern Europe. They (especially the banks) could quickly move into Bulgaria, Romania, Hungary, and upwards. Turkey is Greece?s largest export market. However, having trailed behind for a long period of time, Greek capitalists find it difficult to establish themselves in or compete in the wealthier developed countries. At best, with a few exceptions, they can strive to be junior partners to foreign capitalists. Global economic problems are hardly going to encourage them to make the necessary investments required for them to step outside their ?comfort zone?. And the areas free from domination by the really big international capitalists are declining.

The introduction of the euro presented them with an opportunity to borrow money more cheaply than before, and although growth rates increased to the higher range of EU countries, little was used to create companies that could compete outside Greece. Instead, much went into various speculative schemes. No Greek government will be able to push or entice more Greek capitalists into becoming ?national champions?. Neither subsidies nor monetary or financial tricks will do the job.

Without some serious investing, there will be no more Greek firms that can compete globally. In or out of the euro, Greece will remain a victim of its balance of payments problems. Depression has restored the balance, because imports plummeted, but the cure has been worse than the disease.

The first task of a government that is committed to getting investments going must be to control the investments of those companies that are large enough to be drivers of speculation. A restaurant owner or even the owner of a factory producing feta cheese has only limited possibilities of engaging in speculation. Mostly they will be focusing on churning out their products. The situation for the large companies is very different. They have both the resources, the contacts and the knowledge to shift their money around. As far as smaller capitalists engage in speculation, they are simply following in the tracks of the larger companies.

There is no alternative to the state taking over these large companies. Then investments can be pumped in the right direction. However, it would be a big mistake to see this change in ownership as a first step towards quantitative planning, nationalisation of the whole economy, and autocratic rule. On the contrary, publicly owned companies would need to compete on the world market, especially in the EU and the Eurozone, which for Greece is easier to break into than American or Japanese markets.

This sort of public ownership would need to be very different from what governments, like the British and Austrian, implemented in the post-WWII period. Then they took over failed companies that remained vital to the economy. Once nationalised these companies were not run to out-compete capitalist companies, nationally or internationally, but to provide their national capitalists with cheap transport, energy, and basic products such as steel. Public ownership in Greece today could involve workers in democratic decision-making.

Democratic Dynamic Planning
A new type of planning which is dynamic and democratic is the essential tool for helping state-owned enterprises battle it out on the world market. For this goal, there is little to be learned from the Soviet Union?s top-down system of planning which was crude and bureaucratic, and lacked any democratic input from the Soviet population or effective feedback from the market. But there is something to be learned from the ?developmental states?, and China. While China too suffers from a lack of democratic participation in its state and economy, its willingness to allow the state-owned economy to compete on the market has had a dynamic effect on planning and a dramatic effect on economic performance.

From the early nineties, the dominant view of the Chinese economy was that planning was becoming less and less important, or as it was put, China was ?growing out of the plan?. Little research was done about Chinese planning, because it was considered to be a relic. However, in August 2013, for the first time in almost twenty years, an article appeared in an academic journal (Modern China) that had a comprehensive overview of Chinese planning. The authors, Sebastian Heilmann and Oliver Melton called their paper ?The reinvention of development planning?, because Chinese planning is qualitatively different to the East Asian developmental states? industrial policies. China underwent a process of ?growing out? of ?quantitative planning?, but for the past decade and more China has been ?growing into? a new unprecedented type of ?Dynamic Planning?.

At the centre of China?s new Dynamic Planning system is a flexible Five Year Plan that is evaluated continuously throughout its five-year period. The overall plan is the product of a network of thousands of sub-plans that themselves ?evolve?. Feedback is built into the planning process so that it can be continuously fine-tuned as it proceeds. It is not like the top-down Soviet plan but is a sophisticated and flexible bi-directional process. Much of the input that goes back to the top comes from interacting with the market.

The central and sub-plans are then translated into detailed instructions for all levels of government. The sub-plans are divided into three different types: comprehensive plans, special plans, and regional plans. Cross-provincial macro-plans and their local counterparts complement the plans. The plan reaches right down to individual production units if they play a significant role in the economy.

The plans contain policy prescriptions. These are implemented via detailed follow-on instructions, fiscal outlays, and individual policy decisions, but not with quantitative targets and centrally planned prices. This is how Heilmann and Melton summarize the role of the plan:

Importantly, during the 2000s, the role of planning was actively reinvigorated and institutionalized as it re-emerged as a central component of economic and public policy coordination and oversight. A new type of binding targets ????? was introduced in the Eleventh and Twelfth Five-Year Plans (2006? 2010 and 2011?2015) to reinforce party influence over administrative action. Premier Wen Jiabao stated in a State Council meeting that no investment project would be approved if it was not incorporated in a multiyear program.

This dynamic type of planning is possible because the Chinese state owns the dominant part of the economy. The key criteria for promotion of the state appointed heads of state-owned enterprises is that they fulfil the plans. At the same time they have to do so by confronting the global market. This means that, unlike in the Soviet Union, or China under Mao, production in modern China cannot be a bureaucratic end in itself, but must successfully sell its output on the national or international market. This combination of state ownership and Dynamic Planning within a system that accepts many elements of the market – ?market socialism? as it is called in China ? is an important reason why China achieved the fastest economic expansion in human history, and lifted hundreds of millions out of poverty.

Major shortcomings remain within the Chinese system. The lack of democratic participation in the planning process and economic decision-making inevitably results in bureaucratic wastage and corruption on a wide scale. The embrace of the market has also led to the growth of inequality and highly exploitative practices especially in the private sector. The lack of full democratic rights makes it difficult for the Chinese people to overcome these problems.

There is nothing intrinsically authoritarian about the method of Dynamic Planning. In China, a combination of urbanisation, workers? struggles, and precisely-run planning has meant that China has moved far from the dictatorship it was. For example, within a few years gays have moved from being criminals to being declared legal, from being regarded as ?a medical problem? to being allowed to organize.

It is worth noting that the suppression of the democracy movement in Hong Kong, despite all the publicity in the western media, was much milder than that of ?Occupy Wall Street? in New York. They simply waited until the vast majority of the population were fed up with the traffic being blocked in central Hong Kong and then the remaining protesters were peacefully moved away.

The West likes to put the spotlight on a handful of dissidents that suffer house arrest and detention, but the Chinese police have developed the tactic, at politically sensitive times like party congresses, of sending off most dissidents to stay at luxury hotels at remote holiday resorts. Meanwhile, the non-independent All-China Federation of Trade Unions has grown very rapidly in recent years, partly as a way to absorb workers dissatisfaction. However, that has also had the effect of workers beginning to insist on democracy in the unions. A lively academic and public debate that ranges over many issues now exists across the country. These developments would have been unthinkable in China in the past. Obviously, Dynamic Planning cannot function in a society were the top has total control over every detail.

In contrast, Greece is more urban, has a larger working class and a democratic tradition. Therefore, public ownership combined with Dynamic Planning could be more democratic and work better than in China.

Planning in the Greek Context
Any large company already contains within itself a microcosm of a planned economy – the knowledge and techniques needed for planning already exist inside big companies and without them they could not have succeeded. The state merely needs to tap into that planning structure and as the new owner give it a new direction ? away from short-sighted speculation to longer term investment. On top of that, the state can increase productivity by coordinating some of the activities of the large state-owned companies.

Through the democratic public ownership of the strategic Greek companies, the Syriza government could move resources out of speculation and into productive investments via the state-owned enterprises. Aided by a planned coordination of the state sector, state companies could take a slice out of the world market. Problems with the euro would greatly recede. Instead, Greece would stand to benefit from the euro, as Germany and other more competitive economies do today.

The role of Small and Medium-sized Private Companies
Small and medium-sized companies are better left in private hands. They do not have a sophisticated planning mechanism built into their structure that enables them to coordinate large expanses of production and distribution.

In its programme, Syriza wants to give special support to small and medium-sized companies, in order to promote investment and growth. This seems uncontroversial. A leading left Syriza member of parliament, Costas Lapavitsas, supports this. However, I believe it is the wrong path to go down. Red tape and corruption should be abolished to make life easier, but small and medium companies should be taxed heavily and most should not be subsidized. They should provide the finance that the state can then use to promote some of them into ?national champions?. Choosing the investment areas of the future would be an important part of working out a five-year plan. This does not mean that the remaining small and medium enterprises would suffer greatly. On the contrary, they would be doing fine too.

For many years, Chinese small and medium companies were completely cut off from raising money either from banks (that were state-owned and only lent to the large state-owned enterprise) or from the stock market. Subsidies were out of the question. Yet small and medium companies managed to flourish. They borrowed from friends, family, found foreign partners. Above all, they reinvested their profits because they knew that in a steadily expanding economy they would get their money back, and more. Instead of following the speculation of large companies, they followed the state owned enterprises? investments. That is not to say there has been no speculation. There has been by both small and medium enterprises and the large state-owned enterprises. However, it has been contained by state planning.

A planned state sector that dominates the economy ensures macro-economic stability and rapid growth. This is the best support that small and medium enterprises can get.

In Greece, legislation could encourage another source of finance for small and medium companies. In exchange for providing workers with shares in their business they could borrow money from their workers. This could even be subsidized by the state as a means of gradually transforming small and medium-sized companies into cooperatives. These shares would not be marketable and would have to be returned if a worker leaves the company. In the next stage, when the state provides finance for some small and medium-sized enterprises to make the leap to becoming large companies, they would have to give shares to the state. It is standard procedure under capitalism that fast growing small companies give shares to venture capitalists in exchange for finance, often losing control in the process.

The process I envisage could be schematically described as consisting of three phases:
For privately-owned small companies as they grow their workers will begin to get shares. Thus, firms retain their private character, but ownership is broadened.
When the firms start to get bigger the state would begin to step in as a co-owner.
As firms become large the state would become the dominant owner. Workers would have a significant share while a residual share would remain with the original owner. This reflects the input of each as the company becomes more and more socialised.

Would ?exploitation? (i.e. heavy taxation) when they are small and partial ?expropriation? as they become bigger cause capitalists to go and protest in the streets, as they have done in Venezuela? Most likely not. A rapidly growing economy would open up possibilities for them to earn plenty of money anyway, and keep their minds focused on doing so. In addition, they would be dependent on finance from their workers and the state to grow. They would also be tied into the state sector through buying or selling contracts with large state firms. As such they would be much less likely to ?bite the hand that feeds them?.

The Deepening of Democracy
The measures above are a tentative outline of how Greece could manage to take its place in the world economy and do better far better than today. It is not a perspective of merely trying to squeeze a few drops out of the system for those worst hit. Nor of Soviet-style stagnation or Keynesian nationalism. Under such a new system the economy would get its dynamism from the conflict between the state-owned planned sector and the privately-owned market sector in Greece, in the EU, and globally. In national terms, the state-owned sector will dominate the economy. In international terms, the Greek economy will do more than hold its position. But that is not enough.

The relationship between the state and capital in Greece is complex. The big capitalists have fed off the state and at the same time not paid taxes. There are networks of clientelist relations that run between capitalists, political parties and the state. Nationalisation of the big companies is a necessary, but not sufficient condition for breaking up these networks.

In Syriza?s Thessaloniki Programme (http://www.syriza.gr/article/id/59907/SYRIZA—THE-THESSALONIKI-PROGRAMME.html) the need for deepening democracy is emphasized. This is of decisive importance for creating a transparent relationship between the state and big companies, and for improving the lives of the majority. It is also the means to safeguard against progress being sabotaged by undemocratic forces.

Already, due to the crisis and inspired by the election of the Syriza government, local initiatives have been taken by people to collectively take control over aspects of their lives. The development of the commons on the internet is part of this process. These initiatives must be given significant support. The proposed broad mobilisations for democracy and against austerity are part of the process of empowering people. Much remains to be discussed and implemented to truly get a deepening of democracy.

However, one thing is for certain, without a material base there can be no long-lasting deepening of democracy. For example, time is a key ingredient for the effective practice of democracy – Greece has to go from having among the highest amount of working hours per year in the EU to having less than the country with the least ? Germany. Without that, any talk of deepening democracy in society, on the internet, and at work, will be empty. It is for that reason that the emphasis in this article has been put on the economy.

The suggestions above about what to do in Greece do not mean that socialism will be established in Greece. They can take Greece out of the crisis and open up a path towards socialism, but that is all. Greece will still be a society with class conflicts, inequalities, and imbalances. Some of its social problems can be ameliorated over time by consistent reforms. That is the best that can be hoped for at this stage. Socialism can only be established on an all-European basis and that is going to take time to mature.

However, Greece taking a major step forward will undoubtedly break the sense of hopelessness that has gripped the working class for a long time in many countries. And inspire them to move into struggle. Then we can begin a serious discussion about how to create a democratic socialist Europe.

by Jonathan Clyne
Doctoral student researching Chinese Planning in the Economics Department of the School of Oriental and African Studies, University of London.
Jonathan can be reached at: bretorp@gmail.com

With thanks to Kajsa Ekis Ekman, author of Skulden ? Eurokrisen sedd fr?n Aten (http://www.biblionet.gr/book/196825/Ekman,_Kajsa_Ekis/%CE%9A%CE%BB%CE%B5%CE%BC%CE%BC%CE%AD%CE%BD%CE%B7_%CE%AC%CE%BD%CE%BF%CE%B9%CE%BE%CE%B7), for her valuable contribution to the article.

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 Comment from Themos Demetriou (from Socialist Expression Cyprus)

The article offers a host of interesting ideas, some of which I feel need to be discussed. The problem I have with the article though, is not their general validity but there relevance in the specific situation of Greece and the Government of Syriza in particular. It seems as if the article takes for granted that Greece can be given space to compete in the world economy on Syriza?s terms and be able to support a leftist government for a long period of time. This I consider utopian. The European governments cannot allow that. They will either crush Syriza or they will be swept away by completely new forces. Inside or outside the Euro and the EU, Greece cannot be allowed to demonstrate that there is an alternative to austerity.

Thus the problem Syriza faces today is either to succeed in changing European policies (and probably this means changing European Governments as well), or to be crushed. In the latter case this could happen economically through being humiliated into following exactly the same austerity measures as the previous Government, by more violent means through economic collapse, or even political and/or military overthrow.

Jonathan?s article unwittingly considers Greece as if it could follow an independent development path within world capitalism by adopting some socialist measures. This half-socialism in one country can lead nowhere. China?s example is completely irrelevant, if only because of the difference in size.

I am attaching a draft of my views. I would be grateful if Jonathan could comment on it.

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Understanding the present situation in Greece
By Themos Demetriou

On the 25th of January Syriza was swept to power winning an astounding 37% of the vote in the elections for the Greek parliament and securing 149 seats, just two short of the 151 needed for an absolute majority.

Syriza?s victory was not unexpected. The Greek people suffered untold pain for years. They suffered the indignity of being refused to exercise their elementary democratic and human rights. They suffered the torture of being refused hope. The history of their revolt can be counted in decades rather than years ? something that is probably lost in the dizzying speed of today?s sudden front-page discussion in the European and World media. It is worth sketching an outline of that history in order to put today?s events in perspective.

From Civil War to Andreas Papandreou
Greece was not liberated from Nazi occupation by the Red Army. Nor was it liberated by American and British troops. It was liberated by the Greek Popular Liberation Army, ELAS, which was led by the Communists. However, Stalin made a deal with Churchill in Yalta that placed Greece within the British ?sphere of influence?. A vicious civil war followed in which the Greek monarchists, with the help of British and American troops and aid, crushed the Communists. By 1948 Greek Communists were hunted down like stray dogs, most of their leadership ending up dead, prisoner or in exile.

The early sixties saw a short lived return of hope. George Papandreou, one of the politicians instrumental in salvaging Greece from the Communists, led his Centre Union party to power on a ticket of national reconciliation and democratic reform. Most of the Communist vote, something like 35% at the time, went to the Centre Union in the hope of ending the obscene suppression of anything on the left. This was unacceptable to the Crown which organised his downfall with the help of turncoats from his own party. New elections were called and with the prospect of a landslide victory for the Centre Union the Colonels stepped in in 1967 and imposed their seven year military dictatorship.

During the Colonels dictatorship, the Greek Communist Party, the KKE, split into two parts. One followed the leadership in exile, while another, the KKE (Interior), remained with a leadership more in touch with the realities in Greece. KKE (Interior) managed to retain a small but influential force in Greek politics, morphing later into Synaspismos tis Aristeras (Coalition of the Left) and then into Syriza (Coalition of the Radical Left). At the same time Andreas Papandreou, son of George Papandreou, formed the Pan-Hellenic Resistance Front (PAK), the precursor of PASOK.

After the Fall of the Colonels
The fall of the dictatorship in 1974 sparked off a revolutionary period in Greek politics. The two Communist Parties commanded a sizable part of the electorate, roughly in equal proportions. Meanwhile, Pasok adopted the extremely radical programme of the ?3rd of September?, and numerous ?revolutionary left? parties were formed. It was, however, Constantine Karamanlis, the pre-dictatorship Conservative Right leader who was chosen by the Greek people to lead the post-dictatorship transition to democracy.

It wasn?t until some years later that the Greeks felt confident enough to vote a left government into office. That government was not a Communist government but the more radical Andreas Papandreou?s Pasok government.

From Pasok to Syriza
In hindsight it is easy to accuse Andreas Papandreou of being a populist and of presiding over unprecedented corruption in his government. But that would be to ignore his contribution to the welfare of the Greek people and especially to the rehabilitation of the Greek left. It was not until Papandreou?s ?recognition of the Resistance? that the wounds of the civil war were finally healed. And it was his heavy borrowing that allowed Greece to get out of misery and abject poverty. He may not have implemented the programme of the ?3rd of September?. He may not have led Greece to Socialism. But he certainly gave the Greek people a decent life and self-respect.

His illness and ultimately his death left Pasok in an impossible situation. The Party?s new leadership under Simitis tried to introduce ?reforms?, within the neoliberal meaning of the term, in order to reverse the social gains of the previous period. By 2004, plagued by economic setbacks and rampant corruption, Simitis lost power to Costas Karamanlis (a nephew of Constantine Karamanlis) and his New Democracy party.

Costas Karamanlis? period in office is one considered to be a joke. He is famous for taking virtually no decisions on anything. He presided over the monumental deception of the EU and the Eurozone about Greek finances and managed to exceed by far the official corruption of the Pasok Governments. He was forced to call elections in 2010 when it became clear that Greece was on the brink of economic collapse.

The reaction of the Greek people was impressive. Having tasted this new dose of government by the Right, they returned Pasok to power with a resounding 44% of the vote. Notwithstanding Pasok?s abysmal track record, they entrusted their fate to its new leader, George Papandreou, son of Andreas, hoping for another revival of hope. They were badly betrayed. The son was no match for his father?s reputation. To be sure, he tried to call a referendum before committing Greece to the Memorandum, but he succumbed to angry threats from Merkel and Sarkozy, with his own party deserting him. He was forced to resign and support, together with Samaras of New Democracy, a banker prime minister imposed by the Europeans in order to implement the brutal austerity that exacerbated the Greek crisis.

By 2012, when elections were called, Pasok had lost all credibility. We must not forget that Pasok was no typical social democratic party. It won its voting strength from the left and marginalised the KKE Communist Party on the basis of a radical programme. When Simitis tried to turn it into a ?New Labour? type of social democratic party he set it on a path that would rob it of its soul. The failure of George Papandreou to live up to the expectations of Pasok?s followers, opened the floodgates that would provide Syriza with its dizzying success. While KKE remained stagnant, Syriza got 17% in the first election of that year, just 2% shy of the New Democracy vote. And a month later they won 27% of the vote, again just shy of winning first place. In contrast, Pasok slumped into oblivion.

Drawing the battle lines
How did Syriza achieve its meteoric rise? This question, given the voters? swing away from Pasok, could be rephrased as: why did voters choose Syriza as opposed to KKE or Antarsya, a well-known and sizable ?revolutionary left? party? The answer lies both in history and in the way these parties behaved during the implementation of the disastrous austerity programme.

Syriza was not really a unitary party with strict discipline. It consisted of a number of ?components?, ranging from left social democrats to revolutionary radical left formations. Squeezed between the Stalinist centralist KKE and Pasok they managed to stick together while retaining their heated discussions and vibrant differences. There were a few vital issues that kept them united: on the one hand they were clear on their condemnation of the austerity measures and the Memorandum and on the other, they aligned themselves with the protesting masses against official attempts to suppress the popular protest.

They refused to join the chorus of hypocritical condemnation of the violent excesses of the protests, explaining that these excesses were inevitable under the horrid suffering of the Greek people. When riots broke out after the assassination of 15 year old Alexis Gregoropoulos by a policeman, they joined the protesters, not the police. In contrast, KKE was wavering, accusing the protesters of being just a way to let off steam and distract from the real need for elections. Paradoxically, when elections were called, it was Syriza that stressed the need for a win of the left and KKE that saw the elections as just another trick by the establishment to perpetuate their rule.

Antarsya followed a different logic. While Syriza was involved in the mobilisation of the masses and sought to translate this into an electoral win, Antarsya focused on transforming this mobilisation into a socialist revolution. Elections were of secondary importance to them and it contested the elections not as a means to power but as a count of their strength and an opportunity to present their programme to the people.

Both KKE and Antarsya saw the Euro as the main obstacle to freeing Greece from the shackles of the Memorandum and advocated a return to the Drachma. Syriza?s position was more nuanced. Faced with internal disagreements, they proposed ditching the Memorandum and trying to remain in the Eurozone ? but not at any cost. ?No sacrifices for the Euro? was their official position and argued that they were firmly in favour of keeping the Euro, but if the Europeans were to throw Greece out because of their refusal to continue the social catastrophe of austerity, so be it.

The Greek people were sure of one thing. They wanted an end to austerity. For that they were prepared to desert the traditional parties that were supporting the memorandum. However, they could not imagine a revolutionary overthrow of capitalism and the introduction of socialism. All they wanted was a radical change in the situation. Thus, they polarised, turning to the Left, towards Syriza and Demar, and to the Right, towards Anel and Chrysi Avgi. In an election that saw the collapse of Pasok and heavy losses for New Democracy, KKE and Antarsya failed to make any gains. Their supposedly radical programmes calling for socialism failed to make any headway into the consciousness of the masses. Demar survived as a significant force on the left, until it entered into coalition with Pasok and New Democracy to help implement the memorandum. After that, it was a downhill slide to extinction.

And yet, in the twin elections of 2012, the Greek people were not clear on what they wanted. In the first election, confusion reigned. It is significant that no party exceeded 20% of the vote. The second election turned into a two-horse race with the left rallying around Syriza and the right around New Democracy. It was only an accident that New Democracy came up first and, under Greek electoral law, got the bonus of 50 seats which enabled Samaras to form a coalition Government with the support of Pasok and Demar.

Had Syriza won that election the revolutionary potential would have been enormous. Of course Syriza was probably not ready to take over. We can only speculate what would have happened. But it is not too far fetched to imagine serious internal squabbling leading to splits and eventual defeat. The party had no worked out programme, no established procedures for dealing with differences, and no way of forging a governmental programme in such a short time. All this on top of the need to find allies in the pro-austerity memorandum camp in order to form a coalition.

Two and a half years later the situation was radically different. Syriza had had time to put its act together. Without suppressing its components, it turned itself into a proper party with democratic procedures. Its leadership worked out a governmental programme which congealed into what became known as the Thessaloniki Programme. The ?components? stuck to their guns and remained part of Syriza where they formed opposition platforms that were free to campaign for a different policy. Organisationally, they deepened their structures at grassroots level. When the opportunity presented itself Syriza was ready to force an election and take over the reins of the country. By then, the Greek people were eager for a change of tack. Syriza won the elections way ahead of New Democracy.

Modest Radicalism 1
The Thessaloniki Programme is not a programme for socialist revolution. Just a few decades ago, such a programme would be seen as a very mild reformist programme, akin to the ones implemented by European Social Democratic parties. Today in Greece, this programme is seen as the ultimate threat to the European establishment and to the Capitalist system itself. What is the cause of this?

To seek an answer we must break out of the parochialism of Greek politics. As Yanis Varoufakis in his seminal work says:

In the same way as climate change, so with the crisis, each country, each continent of the planet, is experiencing it very differently. However, the crisis is the same. Common for all humanity.

The crash of Lehman Brothers in 2008 was a milestone event for World Capitalism. The long drawn out crisis that started in the seventies was ended with the neo-liberal policies ushered in by Reagan and Thatcher. A number of events and processes contributed to an unprecedented period of concentration of wealth and global integration of the economy – the fall of Stalinism; the new world order with the undisputed hegemony of the US; the entry of China into the world economy – all are such important events. The words ?globalisation? and ?financialisation? were coined to describe this new state of affairs: the one to signify the global reach of Capital and the other the extreme growth of the financial sector of the economy worldwide.

This, however, came at a price. With profits in the financial sector far bigger than in the ?real economy? investment became a question of who can swindle whom, and the system morphed into what became know as ?casino capitalism?. Huge deficits turned the USA from a net international lender into the world?s biggest debtor. These deficits were funded by ?financial products? that were good only because of the undisputed might of the USA. They were propped up with fake values, mainly on the basis of a property bubble that burst leaving Lehman Brothers in the lurch. Panic followed for a time during which all the principles of the free market were forgotten and capitalist governments, with the USA Government in the lead, bailing out the banks, investment institutions and huge enterprises. Despite throwing trillions of dollars into the economy they just managed to avoid complete meltdown. And when some sort of revival came, it was weak and uncertain.

The Austerity Programme
Nevertheless, when the initial panic subsided capitalist governments homed-in on a new strategy: ?Austerity?. They launched an all-out assault on wages and salaries and proceeded with dismantling what remnants of the welfare state existed. A new, far more vicious neoliberal onslaught was launched all over the world. The weaker countries were hit the hardest. To add insult to injury, in Europe these weak economies, suffering the effects of a world crisis that started in the USA, were blamed for their woes. Portugal, Ireland, Greece and Spain were branded as PIGS by the very same bankers who initiated the crisis.

Greek capitalism was never a serious enterprise. Entry into the EEC was more a political decision from both sides than an economic one. Entry into the Eurozone was achieved with heavy doctoring of Greece?s finances, aided by the European Central Bank. The economy was sustained by mainly German loans that mostly bought German goods. Corruption was rampant, encouraged and promoted by foreign firms, including German ones. By 2010 the situation was already unsustainable. With borrowing turned off due to the crisis, Greece was driven into asking for EU help and agreed to the Memorandum. The formula was simple: save the banks and the ultra-rich; squeeze dry the poor and the middle classes in order to repay the debt. For good measure, throw in the sale of the family silver in the form of privatising state property.

The programme was economic madness. The Greek debt could never be paid back and squeezing an economy that was already gripped by recession was bound to make the situation worse. Wages were reduced by 25% while unemployment reached an astounding 35% (with youth unemployment at more than 55%). And the economy is still contracting. The debt that was supposed to be reduced by austerity shot up from 148% of GDP in 2010 to 175% in 2013. Privatisations that were supposed to bring in tens of billions turned out to be giveaways.

It is no wonder that the mainstream parties of Pasok and New Democracy which were the instruments for the implementation of the Memorandum policies were deserted by their followers. Their supporters turned to the Right, to Anel and Chrysi Avgi, and to the Left, to Syriza. When the first election of 2012 showed that Syriza was in with a chance, people rallied to New Democracy and Syriza as the two main poles in the conflict.

In retrospect it may seem odd that European governments, especially Germany, were trapped into such a harsh course towards Greece. It is not as if there were no precedents. The Great Depression following the crash of 1929 eventually led in America to the New Deal ? with massive redistribution of wealth in favour of the poor. In Germany to the rise of Hitler and massive armaments spending. In America, the fear of a revolt by the workers enabled Roosevelt to convince capitalists to give back some of their wealth in exchange for hanging on to the rest. In Germany, the trade unions were crushed by the Nazis.

In the post-2008 period, no such fear of the working class existed. The neo-liberal period made sure that trade unions were weakened; that Social Democracy was tamed and recruited to the neo-liberal project; and that Stalinism simply collapsed. The ?End of History? was declared and the only challenge to Capitalism and US supremacy appeared to be coming from insignificant rogue states and terrorists. With no fear of a working class revolt, they could see no reason to part even with part of their wealth. Having won the ideological battle by convincing everybody that ?There Is No Alternative?, they tried to resolve Greece?s and the rest of the PIGS? impasse with more of the same. More loans to pay the old loans in exchange for squeezing the last drop of blood out of the poor.

That the situation was untenable was explained by many economists, mostly Keynesian and Marxist. But the ruling classes of Europe did not want to hear. In their arrogance they thought that they could impose their ?rules? and weather the storm. Even today and despite Syriza ruling in Greece, Podemos and Sinn Fein waiting on the wings, and a spate of extreme right wing and Nazi parties growing dangerously throughout Europe, the European ruling classes seem locked into a course of destruction. In a desperate attempt to retain their ideological high ground, they want to crush Syriza, to make an example of Greece in order to prevent any hopes for a better life emerging among the working people of Europe. The reason the discussions between Greece and the Europeans will fail is not because it is difficult to meet Greece?s demands or because Greece is intransigent but because any concession for Greece will spell the death knell for many a European government ? starting from Spain and Ireland, with Portugal and Italy not far behind. Even France, Britain and Germany will feel the reverberations of such events. Austerity and There Is No Alternative could well become a thing of the past. When this happens, who is to say where it will stop?

This is where Varoufakis? thinking becomes really interesting. In a brilliant paper, based on a presentation a few years ago, he defines himself as ?an erratic Marxist? . Not mincing his words he says that the West is on a course of self-destruction that will lead to barbarism. He goes on to stipulate that the Left is not yet ready to take over and, presumably, implement Socialism. In the light of this, he proposes that it is the duty of the Left to follow policies that will save European capitalism from itself and thus avoid ending in barbarism. Somewhat unconvincingly, if not naively, he traces this approach to his error in expecting the rise of Margaret Thatcher to lead to the rise of working class revolt, only to be bitterly disappointed.

So, he puts forward, together with Stuart Holland and James K. Galbraith, A Modest Proposal. In it they propose an ambitious programme of reform that would, according to them, get Europe out of its economic mess. This programme is designed strictly within the scope of the rules of the EU and the Eurozone. Nothing in it is even remotely revolutionary. It is also a very serious programme. Varoufakis claims that, in private conversations, officials of the IMF and the ECB concede that he is right. He sees the refusal to change the direction of European economic policy as a political issue, not an economic one.

The programme of the Syriza Government has the same philosophy. The Thessaloniki Programme is indeed very modest. Even this has been watered down during the stormy negotiations in the Eurogroup. No doubt, it will be further eroded in the coming period. And yet, the clash with the European establishment continues to be as strong as ever. If Syriza won nothing in the negotiations, as Schäuble and Samaras say, why so much fuss? If Syriza is following the path of Pasok, why the vicious campaign to get rid of Varoufakis?

The answer was given partly by Tsipras and Varoufakis during the briefing of the parliamentary group of Syriza. The Europeans were not just trying to contain Syriza?s demands, they wanted to humiliate the Greek Government. They were not trying to find a compromise, they wanted to crush any hope for a path different from austerity. We can add to this that the Europeans probably had no other option. Ceding to Syriza?s demands even slightly would open a can of worms that they didn?t want to face. In a beautiful symmetry, neither could Syriza give in completely. The clash was inevitable.

Syriza is a fine example of modest radicalism, if ever there was one. We live in an age where cleavages of the past no longer have meaning. Revolution and Reform are no longer as violently opposed to each other as they used to be. Any serious reform programme is leading to revolutionary measures, any revolution has to start with a reform programme. Keynesianism is seen today as much of a threat to present day capitalism as Marxism. The two are not the same but, at this juncture, one could be excused for failing to see the difference in the proposed policies.

Negotiations strategy and tactics
How did the Syriza Government fare in its negotiations with the Europeans? It is wrong to try to answer this question by merely comparing the Thessaloniki Programme with the new Agreement. Such a comparison is only part of the equation. What is much more important is to see whether Syriza continues to be on a path of rejecting austerity or has sunk into the quagmire of the old Memorandum. The jury is still out on this and the actual policies tabled for the immediate future could lead to either. It all depends on what Syriza will do next, not what it has done up to now.

To start with, we have to assess what were Syriza?s aims at the negotiation table. One cannot know what was in Varoufakis? head when he was pursuing his flamboyant tour de force in the European capitals but we can get a good glimpse of Syriza?s tactics if we follow what its theoreticians were saying. Having, for the time being at least, side-lined the out-of-the-Euro forces within the party, the Syriza leadership?s stated aim was not just to ?save Greece? but to change European policies. In line with Varoufakis? analysis, there is no hope if Greece goes it alone. It has to exist within a radically changed Europe. So the Greek Government seems to have set out not merely to win concessions from Europe but to change Europe. This may seem too arrogant and audacious, but this is the stuff of which revolutions are made.

We should also note an interview by Yannis Milios, the Syriza economics guru, during Syriza?s election campaign. In it he scorns prophesies of doom about capitulation at the negotiations and spells out a negotiation strategy with amazing clarity. Of course they would negotiate. Of course the negotiations would be difficult. But they would be negotiations like no other. They would be negotiations in full view of the people of Greece. In full view of the people of Europe. The message is unmistakeable. They knew that in the negotiations they would get bloodied, but being done in full view of the masses meant that there would be no mistake who was the bully and who the victim. The importance of the negotiations would lie not in the resulting Agreement but on the success of the Greek Government to rally support, both at home and abroad.

Within such a strategy, Varoufakis? tactics were a brilliant success. For the first time in decades real issues are being discussed, not just public relations generalities. They are being discussed not among small intellectual elites but at every coffee-shop and every workplace in every country of Europe, in every country of the world. Greece is no longer seen as the country of the idle and the slothful but the victim of European bankers. It has turned from an example of punishment of the sluggish into a beacon of revolt.

It is no accident that Podemos? slogan of tic-tac, tic-tac is such a huge success all over Europe. As Euclid Tsakalotos, another Syriza economist, said in Sinn Fein?s Conference: ?It is not us they fear. It is you?.

Greece is not the only issue here. The future of Europe itself is at stake.

How did Varoufakis pull off such a gamble? First of all by being absolutely sincere about his objectives and proposals. What he proposed was modest, within the framework of European practice and, if implemented, would provide a way out of the Greek and European impasse. This provided him with the moral ground to claim that there would be no chance of failure. He turned the tables and forced the European leaders to appear for what they really are – agents of the bankers. Even his refusal to comply with the stupidity of the formal dress code added to the sincerity of his approach. What started as a focus for ironic jests ended in changing public consciousness about proper behaviour.

Did Varoufakis expect the Europeans to accept his proposals? It is very doubtful. Just a few months ago he was writing that he was tired of hearing promises of an easy solution to the Greek crisis. He yearned for a Government that would stop lying. That would only promise blood and tears and tell the truth. If you read carefully what he says, he sticks to this principle. He doesn?t hide behind obscure jargon. He speaks a language understandable to the man in the street. He seems far more interested in explaining what he does to the broad masses than to his interlocutors in Berlin or Brussels. He knows that his only strength lies in the mobilisation of these masses that would lead to a change in one or more European governments along the lines of the change in Greece.

If all this is true, the measure for the success of Syriza is not how far Syriza has retreated from its electoral programme. But whether Syriza will survive until Spain or Ireland or another European country joins them in the attempt to change Europe. True revolutionary thinking does not lie within the confines of Greece. It must encompass the whole of Europe. That is why it is catastrophic to campaign for an exit from the Euro. Such an approach is based on a quick fix strategy that will never work. Whether we follow a Keynesian strategy of an agreed exit (Lapavitsas) or a ?revolutionary? one of exit, default and clash with Europe (Antarsya) the results would be catastrophic. They both lead to the isolation of Greece. The Keynesian strategy to an underdeveloped capitalism. The ?revolutionary? exit to chimaeras of an Enver Hoca Albanian type of ?socialism in one country?. If Europe doesn?t change, Syriza cannot win. And changing Europe cannot be done by quick fix attempts. It has to be done by the mobilisation of the masses. Ditching the Euro will send the signal for the masses to go home and expect results from ?good governance?.

Syriza is doing a good job mobilising the masses, both in Greece and in Europe. In order to keep this up two things are needed: clarity in policy and moderate successes. The Greek people are not greedy or stupid. They know that Syriza cannot perform miracles. Even if tiny parts of the Thessaloniki Programme are honoured, even if there is just a simple arrest of the downward slide, they will continue to stand by their government. Small gains will be a bonus. The European masses will be satisfied with even less. The negotiations were never a Game of Chicken. They were a battle for the hearts and souls of the European masses.

Sicilian Expedition
In 415 BC, during the Peloponnesian war, Athens embarked on an over-ambitious expedition to Sicily. The architect and proponent of this expedition was the brilliant and spoiled aristocratic youth Alcibiades who convinced the Athenians, against more sober opinion, that they should undertake this campaign against the Spartan colonies there. With the expedition hardly begun, Alcibiades was recalled in order to answer for the blasphemy of vandalising the Hermes (statues used as road signposts), in a drunken orgy. Command of the campaign was given to Nikias, an opponent of the expedition. On the way back Alcibiades, the only man who could conceivably have a slim chance of pulling off the campaign, turned his ship and defected to the Spartans, explaining in his famous speech why there are circumstances in which it is proper to betray one?s motherland. The Sicilian Campaign eventually collapsed paving the way for Athens? final demise.

It is hard not to be reminded of this episode in the history of ancient Greece when we hear the petty criticisms levelled at Varoufakis. The issue is not his supposed disrespect for custom or his supposed arrogance. What matters here is whether we understand his strategy and tactics and allow him the space to develop it. There are no guarantees of success and certainly failure will be immensely costly. But this is no excuse not to try.

Notes
[1] I borrow the term ?modest radicalism? from Olga Demetriou. See ?Modest Radicalism in the light of events in Greece? a presentation at a Cypriots? Voice Symposium on 5.3.2015. In turn, she follows Varoufakis on this terminology, taken from ?A Modest Proposal? by Yanis Varoufakis, Stuart Holland and James K. Galbraith. Of course, the original phrase can be traced back to none other than Jonathan Swift ? whatever that may imply.
2 Yanis Varoufakis: The World Minotaur, Greek edition 2012, page 16.
3 Such was the fear of the capitalists for any challenge to their authority, that it made them react in such a disproportionate way that led eventually to the rise of Islamic fundamentalism as a real force in the equation. Iraq, Libya and Syria bore the brunt of this imperialist onslaught, ending up not as democracies but as cradles for ISIS.
4 The way he criticises Marx is strange. He accuses him of ?two mistakes. One of omission and one of commission?. The first one is not having realised the power his ideas would give to potential dictators. The second is Marx?s attempt to mathematicise the workings of capitalism and leading future Marxists to waste their lives trying to solve the impossible ?transformation problem?. These are hardly criticisms, let alone enough to make him an ?erratic Marxist?. Of course, it is not his criticism of Marx that determines whether he is a Marxist or not but his work and policies.
5 Assessment of the quality of this programme is not the intention of this article. I deal here with the issue of tactics and not whether the programme will solve Europe?s problems or not.
6 It is somewhat disconcerting that Milios came out against the Agreement accusing the Greek Government of reneging on its promises. He doesn?t completely lose hope from this. On the contrary he goes on to give very useful advice on how to proceed further. Nevertheless, his criticism betrays simmering differences that could derail Syriza?s programme.

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Jonathan?s response to Themos?s comment and article

At last! So far we have spent a lot of time raking over the past and discussing generalities. Now we can discuss social transformation as it is unfolding. In the final analysis that is the only meaningful discussion. It is a discussion that should continue as long as the process develops. I think we will have a very fruitful discussion. There are many things we agree upon.

I have read through Themos?s article and have a few quick reactions to it and to his email about my article. Correct me if I am wrong, but I would summarize what he writes as follows:

?To achieve progress there has to be a change throughout Europe. Greece cannot do it alone. The present European governments are hell-bent on imposing austerity because they believe that without clinging on to TINA (There Is No Alternative) all will be lost. The job of the Greek government is therefore to use the negotiations in order to expose the institutions as the bullies. This combined with sincerity, clear language and moderate successes will radicalize Europe.?

I think this line of reasoning, makes a wrong estimate of the psychology of both the ruling and working classes of Europe.

The last thing the working classes need today is more evidence of the ruling classes being bullies. That has been beaten into them for the last four decades, and led to widespread demoralisation. What they need is evidence of two completely different things. Firstly, that somebody dares to stand up to bullies. Secondly, TIA (There Is an Alternative).

There is only one successful way of standing up to bullies. At every stage, one must raise the level of confrontation. If they shove you, you grab them by the throat. If half a dozen or so surround you and threaten you, you break the arm of the closest guy. It doesn?t matter how many bullies confront you or even if it costs you the odd beating along the way. Bullies are cowards. If they realize that they always get things back or even worse, they scare off. Secondly, even if you lose you get respect from people around you. You will not get that by being crushed and then saving your left hand by reasoning with your bullies. And passing that off as a victory. That is a sure way of insuring that you will be bullied forever.

European workers today do not want the narrative ?look at me, I am a whipped dog, help me?. That is all too familiar. They want David against Goliath. Now that is a story that has inspired people for thousands of years.

Fine, Syriza did not get what it wanted at the first negotiations. One can?t expect more after having such a sudden election victory, and few did. But now they must raise the level of confrontation ? demonstration, nationalisation of the banks, capital controls. If that still fails they must raise the confrontation again ? default. This will penetrate the fog of bourgeois media and get through to workers.

I think Themos?s assessment of the consequences of the agreement are way off the mark. He writes that ?Within such a strategy, Varoufakis? tactics were a brilliant success. For the first time in decades real issues are being discussed, not just public relations generalities. They are being discussed not among small intellectual elites but at every coffee-shop and every workplace in every country of Europe, in every country of the world. Greece is no longer seen as the country of the idle and the slothful but the victim of European bankers. It has turned from an example of punishment of the sluggish into a beacon of revolt. It is no accident that Podemos? slogan of tic-tac, tic-tac is such a huge success all over Europe.?

I do not see the evidence of this. I didn?t even know what tic-tac, tic-tac was. I had to Google it. The top hits refer to a Spanish parody and it was not until the bottom of page two that the first non-Spanish reference to it came up, an article in the Guardian. Four or five pages after that, I gave up trying to find further non-Spanish references. What I do know for certain is the line of the mainstream media, which is being put forward without much opposition. They jeer at Syriza for signing the agreement. Without an explicit widespread confrontation with the Troika, this is bound to be how most people interpret the agreement. Tsipras and Varoufakis declaring a success appears pathetic in that context, and it jars with the narrative that Themos says they are trying to put across. Either they want to portray themselves as being beaten by bullies or they want to be seen as having wrestled a significant concession. You can?t have both.

Even if it were true that people are discussing Greece in coffee-shops, that does not let the Syriza leadership off the hook. They are not mobilising people, neither in Greece nor in Europe. To do that they have to talk directly with European workers, not talk to them via talking to their corrupt governments. To threaten with a referendum is not mobilising either, unless it is done. In the meanwhile, the message such a threat is sending is: ?Leave it to us. We will call upon you when needed, but stay calm until then.?

Varoufakis was brilliant before the agreement. His interview on the BBC http://m.bbc.com/news/world-europe-31070329 was easily the best political interview I have seen in decades. I proudly showed it to my son to show him that things are really changing, that there really is hope. And he was impressed. Since then we have had interviews like this one http://www.bloomberg.com/news/videos/2015-02-26/we-ll-do-everything-to-stay-in-euro-zone-varoufakis. Here Varoufakis appears like a lawyer trying to cleverly defend a case that he does not believe in himself. ?The Troika is gone? he exclaims and ?The Greek people understand that?. It left me completely unconvinced.

The second point about workers? consciousness that I want to make concerns the TINA (There Is No Alternative) effect. The success of TINA is not so much due to the power of neo-liberalism as the failure of an alternative, i.e. reformism and Stalinism. The Swedish model has been long dead. The only reasonable reply, when non-Swedes ask Swedes what they think of the Swedish model, is to say that they would like it too. And Soviet planning is a non-starter in every sense today. Without a concrete alternative plan, such as the one I sketched in my article, TINA is strengthened. To vaguely refer to a socialist Europe in the future gets us nowhere. We must show there is an alternative NOW.

Themos?s main objection to my plan is that the ruling classes of Europe would never permit it. I don?t agree. They certainly would hate it, but that is not the point. The starting point of our analysis of the ruling classes today should not be to imagine that they are self-confident. Not at all. They are gripped by fear. They have not been as afraid at any other time since WWII. The system which they so ardently believed in suddenly fell into a deep crisis precisely because they got to do what they wanted with the economy. Then they had to get the hated state to bail out the system. In Europe the economy is still (seven years after the crisis began!) crawling along. The post-Cold War stability-of-sorts based on US hegemony is completely disrupted. Russia is aggressively exerting its claims. There is war in Europe for the first time since the disintegration of Yugoslavia. The war in Ukraine is far more dangerous for the EU than the Yugoslav war was. Apart from the military threat, there is the energy problem connected to Ukraine and Russia. China is becoming the dominant economic power. There are all kinds of tensions building up within the EU. In the UK a referendum has been proposed to deal with EU membership, which might very well end up with the UK leaving the EU. Who would be next to leave is what they are asking themselves. The Euro could disintegrate even more rapidly, undermining Germany? power considerably.

I think the powers that decide in Europe, France and especially Germany, are counting their lucky stars that that they could easily save their own banks by getting governments in other countries to so willingly ride roughshod over their electorate and do the dirty job for them. Of course, they are going to attempt to save taxpayers money too by not agreeing to better conditions for Greece, when it is so easy to do so. Of course, they want to make an example of Greece, scaring off others from abandoning austerity. Suffering means little to them. But their willingness to continue down the road of enforcing austerity has barely been tested. They have not yet had a full-frontal collision with an elected government.

In Germany, the government has not tested austerity during the crisis. They have not dared. For a long period of time, preceding the crisis, German wages stagnated as the unification of Germany was used to press down wages. But unemployment has been kept low in Germany throughout the crisis and has even fallen consistently since 2009 to its lowest level since 1981. Despite stagnant wages, German workers extracted an agreement that instead of sacking workers during crisis, they should go down in time during crisis and the difference in wages would be made up by the state. Not surprisingly between 2008 and 2012 the budget deficit increased rapidly in Germany. State-financed work-sharing during a crisis is far from neo-liberal austerity. This is one of the reasons why Germany has done relatively well during the crisis.

For 15 years the US government has been forced to accept a leftish government in Venezuela. They have made coup attempts, but the point is that they were defeated. And this is in a country with a weaker working class. Greece is part of the EU. It is, as somebody said, not in the periphery, but in the periphery of the centre. That makes it more difficult to bring down the Syriza government.

Themos writes that my proposals for ?half-socialism in one country can lead nowhere?. But that is precisely how a social transformation must begin. It cannot begin with negotiations with the enemy and then suddenly leap over to a fully-fledged all European socialism. That if anything is utopian. It must begin in one country and it must begin with half-measures. The main political decision-making in Europe is still based on the nation-state. How would things otherwise begin to be changed if not there? By appealing to the European Commission or via the toothless European parliament? No, it must begin through measures taken by a national government. And those measures must begin to breach private ownership of the means of production and deepen democracy. That is the only transitional approach that I see as realistic. I do not expect such a radical government to last forever. It will need support from other European countries. It might not last as long as Chavez, but during that time it has to do much better than Chavez. That will not be achieved with Varoufakis? strategy.

Themos also objects to my plan because Greece cannot ?follow an independent development path within world capitalism? and that China is different in size. These are generalities that I cannot argue against. Could Themos please specify what in my proposals could not be implemented by the Syriza government, and why. Then we can deepen the discussion further.

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Themos?s reply

I agree on many of the things that Jonathan says. I agree that the ruling classes of Europe are not at all confident. That they feel more insecure than ever. But this is exactly why they are behaving in such a vicious way. That is why they cannot allow Syriza to show there is an alternative. If they allow Syriza to implement even modest reforms they are afraid that they will open the floodgates for the masses of other, more important countries to follow the same path. That goes against the very philosophy they have chosen to get out of the Crisis ? squeeze wages to such levels that profits can again be made.

Squeezing wages in Greece is not the issue either. It is the working class of the whole of Europe that is at stake. Even the richest countries of Europe are affected by the pressure on Greece. They want to keep the example of the ?lazy? Greek workers and their punishment as a warning of what happens to the ?wicked?. The moral of the Aesopeian Ant and the Grasshopper has to be driven home at any cost. If you work hard you will have food for the winter. If you don?t, if you want to live a lush life, you die. Literally.

So, they squeeze Greece dry. They sweep democracy aside. They destroy any welfare institutions. They privatise or are in the process of privatisation of all Government Enterprises. They lower wages and pensions to ridiculous levels. They push unemployment to unheard of hieghts. And still they want more. They prevent a referendum about the memorandum but they cannot quite forbid elections. So, the Greek people after five years of the medicine of austerity propelled Syriza to power with a mandate to end their suffering.

First Shots of the Revolution
Syriza did not come to power the easy way. The Greek people struggled for years in the streets and the squares of Athens, Thessaloniki and other Greek cities. Strikes, general strikes, rallies, riots, and clashes with the police were the everyday events which led to the twin elections of 2012 and which nearly gave Syriza first place. That was hope. And although strikes and rallies were taking place after that as well, all the effort of the masses was channelled into the building of the party of their new-found representatives in Syriza. Syriza?s win cannot be seen as simply an electoral victory.Iit is a continuation of the mobilisation of the masses. It is the first shots in an unfolding revolution.

Now, the Greek people are not yet ready for a socialist revolution. Had Syriza campaigned for the nationalisation of the banks or for the occupation of factories or even for a break with the Eurozone and the EU, they probably would have not come half-way here. This is the way KKE and Antarsya tried and got nowhere. In contrast, Syriza campaigned for a modest programme: the Thessaloniki Programme. That is the Programme they are trying to implement and this is what the European elites are trying to prevent them from doing in full view of the Greek people. If Syriza succeeds in implementing the Thessaliniki Programme, or even parts of the Programme, they will retain the support of the people and maintain their readiness for mobilisation. If they stop the downward spiral of the economy and the fall in living standards they will be seen as the Davids taking on Goliath, to use Jonathan?s example.

Mobilisation does not necessarily mean coming out in the streets or occupying factories. It is much more than this. It is understanding what the leaders are doing. It is supporting the leaders. It is readiness to fight when it matters. Continuous mobilisation without concrete results leads to disillusionment and apathy. Of course, if Syriza remains in the Government and oversees a worsening of the situation for a long time the masses will be disillusioned in them as well.

Even less ready for revolution are the European masses. With the exception of Spain and, probably, Ireland there doesn?t seem to be a considerable movement towards the left. Anger at European elites is channelled into right-wing parties and separatist tendencies. Syriza?s victory is beginning to change this. A victory for Podemos in Spain or Sinn Fein in Ireland could start to turn the direction of discontent away from Marine Le Pen and Nigel Farage. Even Podemos and Sinn Fein are hardly the best examples of sure footed Leninist parties. The one is just now forming into a force of revolt. The other is still carrying a lot of nationalist baggage. There is a lot of ground to be covered before the European Revolution is set on track.

So, Greece is on a collision course with the European ruling classes. The only correct revolutionary stance for Syriza is to plan its strategy in a way that will prepare the Greek masses first and make them ready to support a revolutionary course. They have to prove to them that the only way forward is to go ahead and take all the measures needed (nationalisation of the banks, taking over big enterprises, defaulting etc.) and make sure that the masses can defend such measures even against coup attempts if necessary.

The second thing that is necessary is to make sure that they time such actions to synchronise with the raising of the consciousness of the European working class, so that when the European leaders try to suffocate Greece they are in a position to change these leaders. If they move too fast they run the risk of finding themselves alone in enemy territory and being decimated.

I usually avoid analogies because they are usually interpreted too literally and confuse more than they clarify the situation. Nevertheless, if we want to use the analogy of the Russian Revolution we are more in a situation of trying to avoid the July events rather than at the point of storming the Winter Palace. Syriza is not at the moment strong enough to break with the European ruling classes. Negotiation is necessary to buy time and we should see these negotiations in a Brest-Litovsk frame of mind.

Of course, if what Jonathan says about the non-existent impact of the negotiations on the European masses were true, the Greek tactics are failing. However, this is not our impression here. Polls in Greece show a meteoric rise of support for the Government. In Cyprus the Greek Government has never been more popular and the Government of Cyprus is losing support by the day. In Spain Greek flags appear in every demonstration, as they do in the smaller mobilisations in other European countries. In Ireland Euclid Tsakalotos gets an enthusiastic reception at the Sinn Fein Conference. As for the mainstream press coverage which Jonathan summarily dismisses as totally negative and derisory, there are plenty of positive articles and a lot of balanced ones from writers that have little relation to revolutionary politics.

Syriza?s success will depend on whether its Government can last until Europe is ready for a radical change. If it can survive without complete capitulation for long enough for the European masses to move in the direction of challenging austerity policies, and to force their Governments either to change course or be replaced.

Half-Socialism in One Country
However, I think that our most important difference in this discussion is Jonathan?s vision of how socialist transformation is to come about. Expecting that a socialist, or half-socialist country can survive for any significant length of time in the midst of a hostile capitalist world is not only theoretically problematic but also empirically shown to be an impossibility. Let me consider the two examples that Jonathan actually mentions as probable prototypes of such half-socialist experiments, China and Venezuela.

China is a big country. Really big. It is the sort of country that could have a chance for self-sufficiency. To call mentioning the difference in size with Greece as a ?generality? surprised me. China could conceivably be one of the few countries that could serve as an example of an alternative in the way Jonathan proposes. Not only for its size but also for the fact that it had its revolution and broke with capitalism back in 1949. Its vast economy is nationalised to all intents and purposes and it is overseen by the Communist Party Government with five year plans which are monitored closely. The capitalist mode of production that now exists there was introduced in a very careful way so that it would not disturb the iron grip of the Party on the Chinese economy and Chinese society in general. The West could do nothing about this. It was not as if they didn?t try their best to undermine the Chinese Government. They just could not win. So, they had to choose either to try to accommodate China into their world trading scheme or clash with it in the global arena. Remember, those were the days of triumphant capitalism, the days of the highest level of self-confidence for the capitalist ruling classes. Their agenda was simple and had a precedent: integrate China into the world market and it will implode in Soviet Union fashion. China was accepted by the West because it was seen as moving away from socialism and towards capitalism, not the other way round. Things got out of hand of course after 2008 and it is anybody?s guess what will happen next.

There is also the little problem of ?democracy?. The last thing I would like to do is to join in the hypocrisy of the western world in condemning human rights in China. But the reality is that democratic practises are scarce on the ground. Whether crushing demonstrations in Hong Kong or banning gatherings in Tiananmen, jailing and exiling artists or executing drug dealers hardly forms an attractive model for western workers. It is not enough to add that democratisation of Chinese society is needed; the ?Chinese model? is based on authoritarianism. That is why it is successful. That is why it can survive in a capitalist world. In fact, its success seems to find willing imitators in Europe, whose democracy is rapidly moving the way of China.

Venezuela too has its roots in the days of confidence and plenty in the capitalist world. Closer in size to Greece than China, and an easier prey for the USA, Venezuela has one big difference with Greece: oil. Had it not been for oil, Chavez would probably have been deposed long before he could make a name for himself. Moreover, he was a charismatic leader able to mobilise the people and a great tactician. But above all he could fend off economic subversion by local and international capital because he could rely on a steady income from oil. It would be extremely unfair to Maduro to trace the difficulties he faces today to a personality deficiency in comparison with Chavez. Simply, the US drive against the Leftist government of Venezuela is at last making progress because we no longer live in a confident and prosperous capitalist world, and because oil does not anymore provide Venezuela with the hard cash it needs to survive.

Can Greece follow its own road to becoming an example of socialist transformation? Of course it can! But time is scarce. There is no time for building a semi-socialist society which will be able to compete with the capitalist countries. The ?financial water boarding? that Greeces ?partners? have been subjecting it to is not going to stop anytime soon. The clash with the capitalist elites of Europe has already started. It is a folly to think that they will allow a left wing government to nationalise the Banks or the ?commanding heights of the economy? unless they have no choice. And the only force that can stop them is the European, not solely the Greek, working class. The unfolding of the revolution (or its defeat) will take place in a time-frame of months, not decades. And remember, we are talking about the European revolution, not just the Greek one. Thinking about an idyllic half-socialist society where companies are serenely taken over as they grow and compete with the private sector proving that they are more efficient is just simple misreading of the political situation that can only lead to defeat.

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Jonathan?s reply to Themos

To assess the mood of a population of a country, or even a continent, as a whole is almost impossible to do as events unfold. It is far easier to backtrack once we have seen what a mood has resulted in. Yet, as political activists we have to do assess moods all the time. Lacking solid scientific tools, we have to rely on experience and intuition. What makes it worse is that we are mainly trying to understand things from afar. Themos has an advantage because of his closer connection to Greece. However, I think we should sort out some conceptions to help the discussion forward. There are two different things we are trying to assess.

One is the effect of the election of Syriza and the period leading up to the agreement between the EU and the Greek government. I think we can agree that this inspired hope throughout the EU. Starting with activists on the Left, it spread to wider circles as it became clear that the election of Syriza did not mean that just another bunch of careerist had come to power. There was something much more appealing about them. This has led to a great deal of sympathy for Greece and the Greek government. I think much of the flag waving and discussion that Themos refers to is due to this.

The other effect we are trying to understand is the reaction to the agreement. This is not a question of measuring the actual content of the agreement. That we would probably settle fairly rapidly, if we took the time to sift through the agreement thoroughly. But the agreement in and by itself is not the main issue. Rather it is the effect of the agreement on the mood. This is more tricky.

Opinion polls are a not decisive in assessing mood, but it is one of the few rapid non-subjective methods we have available. Since the agreement, the government has enjoyed solid support. Tsipras and Varoufakis in particular have an approval rating of over 70%. What is disturbing (presuming that google translate works) is that 43.3% of Greeks are pessimistic, 15.9% are optimistic and 39.1% are undecided about the country’s future (http://left.gr/news/dimoskopisi-tis-mrb-gia-stargr-703-theorei-ti-nea-symfonia-kalyteri-aptin-proigoymeni). This could be interpreted in different ways, but to me this paints a negative picture of the results of the negotiations. What it is saying is: ?Yes, we trust the government. They are doing the best they can. But they are most likely going to fail. The enemy is just too powerful.?

To struggle, a belief in the possibility of victory is needed. It therefore appears that the agreement has resulted in a loss of momentum for the struggle. (I do not think it is an accident that the first places that struggle against the crisis turned into radical political formations was in Greece and Spain. Two countries, unlike most of the rest of Europe, which had decades of advances for the working class before the crisis struck. This gave them the expectation that thing should improve not get worse. The same was true in Russia in 1917).

Internationally things are also a bit worrying. Podemos rode high in the opinion polls after the Syriza victory, but in the elections in Andalucia after the Greek agreement they performed lower than in previous opinion polls. There might be other reasons for that.

In any case, the mood in the immediate aftermath of the agreement is not decisive. As Themos says, we are just at the beginning of the process. So what are the next steps? I proposed capital controls and bank nationalisation. What does Themos think of these steps? If that is not sufficient, I favoured default. The same question follows: what does Themos think of this?

Then we come to the question of going onto the offensive. I think this is the most interesting issue. It is almost a bit spooky how we slip into analogies with the Russian Revolution, despite us both acknowledging that ?they are usually interpreted too literally and confuse more than they clarify the situation.? We are not the only sinners in this respect. References to Brest-Litovsk abound in Greece and Lapavitsas considers himself a Bukharinite. If only! His position would have been far better in that case. But, to take another analogy from the Russian Revolution, the French Revolution, more than a hundred years earlier, was discussed as the Russian Revolution unfolded. To a certain extent it is inevitable that we relate events in Greece to the experiences of October 1917. We just have to be aware of the limitations of this approach. So here we go?

I would like to go back to the Bolshevik Party conference of 1922, rather than the ?July days? of 1917. As I wrote in my article, I think we must above all look at things from the vantage point of the Syriza government – not of an opposition either commenting on the side-lines or preparing for power. Syriza has government power in Greece, with an economy in a mess, facing a hostile world. Just like the Bolsheviks in 1922. Of course, unlike the Bolsheviks it still lacks control over the commanding heights of the economy. It is essential that it gets it as soon as possible via the process I outlined in my article.

Anyway, by 1922 the Civil War had been won. NEP had been running for a year. Much had been privatised, although the biggest companies were still state owned. Market relations had been re-established. The economy had picked up, but was still in a complete shambles. At the party congress that year, Lenin, who had a bit of a one-track mind once he had made up his mind, hammered home that it was not enough for communists in administrative positions to have the right intentions. They had to learn how to run state businesses, how to compete and trade on the domestic and the world market. He declared that that this should be one of the main tasks that the congress should decide upon. Only in that way could the capitalist restoration be avoided, bar a revolution in the Europe.

Although he fervently expected and worked for the European revolution, the Soviet Union could not just wait while people starved in Russia. A few years later, when the Soviet economy had made substantial progress, the debate was reborn. This time the main protagonists were Bukharin and Preobrazhensky for the right and left respectively. At the centre of the debate was the question of whether or not resources should be taken from the peasants to industrialize faster via the state sector.

The point I am trying to make here is that no socialist government is ever going to face perfect conditions for a social transformation. It is always going to come to power in the wrong place at the wrong time. Nonetheless, something has to be done in order to get out of the mess that capitalism creates. One cannot wait until conditions have matured in a place that one has no control over. Russia was far more backward and isolated than Greece today. Although hard statistics are difficult to come by for Russia at the time, the difference of GDP between Russia and say Germany or the UK was probably about the same as between Greece and Germany today, say 1 to 10. Thus, I think it is wrong to counter-pose what Themos calls idyllic half-socialist measures now to building full-blooded socialism in the future. It is not a question of either or. On the contrary, half-socialist measures now are a pre-condition for going further later, in Greece and internationally.

There is no guarantee that a successful half-socialist state can be built in Greece. However, if the Greek government just waits until some date in the future, which is impossible to predict, when the rest of Europe abandons neo-liberal governments, it is much less likely to succeed in even staying in power, never mind making substantial improvements in people?s lives. The government must forge ahead.

Now, I would like to turn from this the point of view, and look at things from the perspective of the European working class. It has been battered by decades of setbacks. Reformism and Stalinism as strategies for social transformation have evaporated. The labour movement has declined and first neo-liberalism and then right-wing nationalism have risen. TINA (There is No Alternative) weights like a ton of bricks on the consciousness of most workers. This can only be lifted by starting to create an alternative ? theoretically and practically.

In Greece, Syriza has that opportunity. I think that is the only way of transforming the sympathy that undoubtedly exists into active support for Greece. And more importantly, to bring down those governments in Europe that are playing a key role in beating the Greek population, replacing them with ones that will support Greece. Vietnam inspired a global movement that was instrumental in ending the war, not because Kissinger and Le Duc Tho negotiated in Paris, but because Vietnam was transformed into a more egalitarian society and the Vietnamese fought like tigers to defend it.

Thirdly, I think we need to look at things from the point of view of today?s Left activists who already want socialism. Their main problem is that the idea of socialism is very vague today. In the past if one was a Stalinist one could point to the Soviet Union and say ?that is how we want it?. If one was a Trotskyist, one could say one wanted the Soviet economy plus democracy. And if one was a reformist one would also say one wants it like the Soviet Union plus democracy, but that it had to be constructed bit by bit over a long time and in the meanwhile one has to help capitalism develop. The collapse of the Soviet Union changed all that.

Now socialism is either a nice idea about how we should treat each other or an empty slogan, which is shouted louder and louder because the echo is less and less. Or, and I think this is the most important tendency among the serious Left, there is a void where the socialist goal should be. But no mental void can remain for long. The void is filled with the ghost of the Soviet planned economy with or without democracy. This has a paralysing effect on the Left. They want a grand goal but they cannot speak about it because they know that what they imagine is unworkable. It is better to fill that void with a realistic ?half-socialist? vision.

Of course, as I write in my article, the construction of a half-socialist state cannot be commenced instantaneously. There is no mandate for this. First, the ?financial water-boarding? must be stopped. There is a mandate to take the necessary measures to do this ? capital controls, bank nationalisation and if necessary default. In the past couple of years there have been bank nationalisations all over the place. After this, a new step can be discussed and taken. That should not stop us from discussing the next step now. We must map out the way forward. Otherwise, even if the debt is restructured and especially if it is not, the movement risks running down the wrong road – leaving the euro and towards national Keynesianism, or worse.

What about the strength of the opposition? Themos thinks the ruling classes of Europe will never accept such a regime and bases his argument on what they have done so far ? humiliating Greece in order maintain the TINA myth. The European working classes must come to the aid of Greece. Without that, the ruling classes cannot be successfully challenged by Greece. This appears to me a catch-22 argument. Because Greece is humiliated TINA reigns. Therefore the European working classes will not aid Greece. Therefore Greece will continue to be humiliated and TINA continues to reign. If now is not the time (after a period of defensive tactics) to begin social transformation, then when? The fact of the matter is that we can never be certain of victory before the battle is waged.

Some of things Themos writes lead me to think that we do not disagree at all. He writes ?So, Greece is on a collision course with the European ruling classes. The only correct revolutionary stance for Syriza is to plan its strategy in a way that will prepare the Greek masses first and make them ready to support a revolutionary course. They have to prove to them that the only way forward is to go ahead and take all the measures needed (nationalisation of the banks, taking over big enterprises, defaulting etc.) and make sure that the masses can defend such measures even against coup attempts if necessary.? And ?The second thing that is necessary is make sure that they time such actions to synchronise with the raising of the consciousness of the European working class so that when the European leaders try to suffocate Greece they are in a position to change these leaders. If they move too fast they run the risk to find themselves alone in enemy territory and get decimated.?

I completely agree, therefore I have suggested a sort of schematic step-by-step plan of how Syriza could move from defensive tactics to offensive strategy. A vision that makes it easier to assess the actual course of development. I am not suggesting a time-scale. That can only be decided as events unfold, but it is possible to make a logical plan, even though that must be amended as things develop. But then Themos objects to that, not on the grounds that this or that step is wrong, but because the opposition of the ruling classes is too strong and the working classes are not ready. Thus it appears to me that the paragraphs cited above do not fit together with the other things Themos writes.

Varoufakis? plan just does not make sense. He wants to save capitalism first. To do so he wants to negotiate with the Troika, in order to wake up the European working class by showing them in the negotiations what bullies their rulers are. Then workers will remove their rulers in order to save capitalism. Then they will abolish capitalism. It sets my brain into a spin! I do not think he is going to ?awake? the European working class with his methods (although there will be plenty of sympathy). Nor do I understand how he is going to convince them to save capitalism once they are ?awakened?.

Themos dismisses the half-socialist countries of Venezuela and China as irrelevant for Greece because they have individual characteristics that make them special ? oil, and dictatorship and size. However, I do not consider Venezuela a half-socialist country. It has had a revolution that has developed over fifteen years, but the economy has been dominated by capitalism all along. There has been an exceptional amount of reforms that have benefitted the poor, but that does not imply a structural change in the economy. Chavez and the Venezuelan people were feeling their way forward, but the ghost of Stalinist planning as the only alternative to capitalism prevented them from making a systemic change.

Then there is the question of China. Is Chinese ?dynamic planning? fundamentally based on the regime maintaining an iron grip? In the Soviet Union, quantitative planning developed, and fell, in symbiosis with totalitarianism. In China, quantitative planning was taken from the outside and superimposed on a peasant revolution. (I attach a draft chapter from my dissertation that draws a picture of China?s political economy since 1949). When the Soviet economy was at its most developed almost 60 000 commodities were planned centrally. In China, the number of commodities planned centrally never exceeded 600. China never was an economically totalitarian society. Yet it was, and still is, a dictatorship.

In the past decade several hundred million workers have lifted themselves into a standard of living on the level of workers in Greece or Portugal before the crisis. (At the same time as there remained hundreds of millions in rural areas in the less developed provinces whi had to live on a few dollars a day). In China the working class is very militant, very confident and winning victory after victory. Personally, I believe China is on the verge of a sort of France ?68? movement. A movement born on the one hand out of revolt by youth against conservative oppressive norms and on the other hand a confident working class used to social and economic advances and demanding not to be subjected to dictatorship at work. On this I may be wrong. The flexibility of the regime so far has astonished me. The examples I gave in my article of changes in the position of workers, gays and so on would had been unthinkable in the Soviet Union without a revolution.

However, there remains the key issue of the monopoly of power in the hands of the leadership of the Communist Party (plus the highly sensitive national question). The further development of China will make this situation more and more untenable. I don?t know how and when that is going to be broken. But once it has I see no reason why China?s successful planning system would not continue, and indeed improve. Nor do I see why dynamic planning would be incompatible with democracy in any developed country.

Then there is the question of China?s size. From the point of view of economic development, self-sufficiency is no longer of any importance. Trading costs have fallen steeply. One of the reasons why China rose rapidly in the past decades is because it broke with self-sufficiency. The rise of China has also recreated a bi-polar world that had ended with the collapse of the Soviet Union. A bi-polar world gives a layer of countries an importance space to manoeuvre in, something that they did not have when the USA was the world?s dominant power. Now the USA still remains the wolrld?s dominant military power, but not its economic one. The recent developments connected with the China-backed Asian Infrastructure Development Bank illustrate that. The US explicitly opposed any body joining, but the UK (its closest ally) joined anyway. And Germany, France and Italy rapidly followed. Now the US has made a U-turn and said it will cooperate with the bank.

The risk for military intervention is minimal today. While the US ruling class has experience of fomenting ?colour revolutions? and coups, the EU ruling classes experience is limited. They might decide to hand over Greece to the US or take their advice, but I think that is unlikely. In any case, even the US has no experience of bringing down a left-wing government in a European developed country. It is an entirely different kettle of fish to what they have been up to previously. The European ruling class can of course exercise economic pressure. Kicking Greece out of the eurozone, even the EU, but that will not leave Greece in a worse state than today. I see neither economic nor political reasons why a small country cannot commence a social transformation. That is not to say that you can build socialism in one small country, but for a period of time half-socialism can put things on the right track.

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DEBT – The absolute defeat of the market economy

A Contribution by Sotiris Vlachos (Socialist Expression in Cyprus)

The economies of Europe, like those of the entire world, need a breathing space for development. They certainly cannot afford an increase of debt. Nor can they repay the present debt burden. Thus, SYRIZA?s efforts to achieve:
a) ?deletion of most of the debt and repayment of the rest as long as the economy is developing beyond a certain level,
b) ?need for an agreement on the question of deletion, not unilateral actions “is a central one.

But there is no possibility for an agreement. While Merkel and Schäuble grind their teeth, the SYRIZA commitment to convene a pan-European conference on the question of debt remains a key focus of its stated objectives.

“In this context the proposal of the European left for convening a European conference to tackle the debt crisis is timely …” (John Milios- in charge of SYRIZA?s economic planning).

The possibilities that SYRIZA can step back from its commitments in these times of crisis and the mass protests of the Greek people, are very limited. Nonexistent are also the chances of retreat on the part of the political representatives of capital still in control of the institutions of Europe.

The possibilities of capital for concessions are nonexistent. Not because, even in this deep crisis, they could not afford some extra money for a small country like Greece, but because such a move could be the trigger for a pan European explosion: the “time bomb? of PODEMOS indicates the tempo of the next period.

What is at stake then is not whether SYRIZAS can secure agreement on its basic demands in the four month period agreed. There is no such a possibility. The question here is whether SYRIZA will succeed, with its arguments and policy, to extricate the peoples of Europe from the policies of Merkel and her counterparts in Europe. And to mobilize the European masses in support of the Greek demands.

?WE ARE FAST APPROACHING THE MOMENT OF TRUTH?

Greece has the moral authority to request deletion of most of its debt. Up to 95% of Greek installments for repayment of loans are being channeled to repay old debts in order to rescue the failed German Banks – as the current Minister of Finance, John Varoufakis, has been arguing for some time.

The Greek people were increasingly indebted, at the same time they were becoming poorer, not for helping the development of the country, but to save the German and, in consequence, the European banking system.

The huge debt burden, for which ?irresponsible? Greeks are being accused of being responsible, is not only a Greek phenomenon. It is also a characteristic of the “Spoiled” Europeans of the South, the “unworthy” Third World masses, of USA, of Japan.

The huge debt burden is the main problem of the world economy. By the end of 2014 the total debt of the world, public and private, stood at the inconceivable amount of ? 199 trillion.

On this enormous debt creation, the neoliberal period based itself to give lease of life to the global economic system. In understanding the role of neoliberal economics in providing breathing space to the world economy, the Finance Minister of the SYRIZA government, Yanis Varoufakis, has contributed significantly with his famous book, “The World Minotaur”, as well as with a series of articles and interviews.

The creation of debt helped to “… maintain for decades a world tranquility (unstable, it is the truth) based on the continuous flow of voluntary funds, that one can interpret as ‘gifts of servitude’ (instead of taxes) from the global periphery to the US metropolis, which ‘gifts’ the metropolis, in its turn, was using (consuming) to keep the periphery prosperous. “(The World Minotaur, p. 63. Greek version)

The gift of servitude Varoufakis refers to was the money that the global periphery was giving to the US, by buying bonds and other US securities, public and private. This money the US then used to buy products from the periphery, thus maintaining the functioning of global economy.

The whole system though was ?a system too unstable to survive in perpetuity …? (ibid, p. 63).

The year 2008 marked the end of this unstable system.

China, the main benefactor of US debt in the years of growth, in trying to survive after the end of this unstable system in 2008, saw its debt growing more dramatically than elsewhere. Since 2007, its total debt quadrupled, reaching the huge level of 282% of GDP.

So when European lenders blame Greece for irresponsible lending, they provide no answer to the most crucial question of the moment we live in. Where would not only Greece, but even Germany, stand today if Greece and many other countries did not borrow in order to have the ability to spend on German products? Is it a total coincidence that the main lenders to Greece were German banks? Is it a total coincidence that Germany has been the main exporter to the European Union countries?

The question facing us, therefore, is not the heavy borrowing of some countries, including the USA, but a deeper malady of the world economy, which under the present economic system has for decades now lost the ability to sustain itself, borrowing from the future to sustain the present, and thereby ?colonising the future? (Fotis Lysandrou)

We are rapidly approaching the moment of truth. While it is likely to witness some compromises between the government of SYRIZA and the representatives of European capitalism on minor, secondary issues, there is no room for compromise on the issue of debt. Because, above all a compromise on the part of SYRIZA would mean that the crisis continues relentlessly. Already, the limits of the Greek masses have been stretched to the full: unemployment is at the staggering level of 26%; 300,000 families have been without electricity and as many homeless; and 40% of the population are living below the poverty line. A compromise by the representatives of capital in SYRIZA?s favour would have revolutionary repercussions throughout Europe.

It is not only Greece that the crisis of capitalism and the austerity policies have thrown into a tragic state. It is the whole European economy, with Spain following the footsteps of Greece and Portugal, Ireland, Italy and the rest just awaiting the next big blow.

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EPSON scanner imageThe Case Against a ?Grexit?

A follow up Contribution by Sotiris Vlachos (Socialist Expression in Cyprus) published: 18 June 2015.

Exiting the Euro is not the way out for the Greek economy or its people.

In these years of austerity Europe found itself in the worst economic position since the end of the 2nd World War. In Greece this policy has caused an economic catastrophe similar to the one that the crash of 1929 inflicted on the United States.

Exit from the Euro, however, cannot in any way be an answer to the crisis. Instead, it will deprive all possibilities for treatment of the disease.

Increased independence in constructing one?s own economic policy is one of the basic arguments of those supporting Exit from the Euro. But such an argument does not stand on anything that could be called solid ground.

?The two most striking trends characterising the contemporary world economic landscape are globalisation and financialisation.? 1

The real meaning of these trends though, which all admit in words, should be clear: There can be no insulation or protection of any national economy from the daily developments, whims and storms of the world economy. The neoliberal period especially, can be seen as the extreme manifestation of this reality.

  1. With the collapse of Lehmann Brothers in 2008, the collapse of a single bank in the US, the financial system of all countries in the world almost completely froze, and without exception. The situation was saved at the last moment, not through the independent policy reactions of the different countries, but through the largest financial subsidy package in US history.
  2. The crisis in South East Asia in the summer of 1997, the deepest in modern times before 2008, ?marked a structural break in the thinking behind the euro project? – when one Asian currency after another, from the Thai Baht to the South Korean Won, were subjected to massive speculative attacks and forced off their dollar pegs and into free-fall devaluation with catastrophic domestic economic effects ? they realized the importance of currency mass in the new global financial reality.? 2
  3. With the release of Nelson Mandela in 1990 and the African National Congress?ss march to power, the leadership of the ANC was confronted with realities that paralyzed every attempt to implement their program, in the center of which was the nationalization of the banks, of the mining industry and of the monopolistic corporations of the country. ?When the government tried to implement the visions of ?The freedom Charter?, it discovered that real power was in the hands of others … every time a top official of the party implied that ?The freedom Charter? might be applied, the markets reacted with a shock, causing free fall of the rand (the country’s currency)? 3

All national economies are subject to the will of a dozen Euro-American banks and to the effects of any negative developments on the international level.

The size of an economy is important affecting its ability to resist to external pressures of any sort. This is especially so at a time when economies are so interconnected and financial institutions have so much power. It was exactly to create such a large-sized economy that the Eurozone was set up, ?when the French and certain other European governments saw what happened across South East Asia that summer (1997)? 4

Greece, Cyprus and any of the other Eurozone countries, are a huge step forward in regard to their ability to cope with the global economic crisis; a huge step that is determined by the size of the Eurozone. On this scale there is the potential for radical economic changes that could reverse the present economic picture throughout Europe.

The Eurozone?s fragmentation on the other hand would represent a similarly huge step backwards. A step at the head of which the most conservative, right-wing and fascist political formations would place themselves, exactly the forces that are already the most vocal in supporting the independent road for national salvation.

Absolute inadequacy of the capitalist recipes
A return to the national currency, its supporters maintain, would provide, together with policy independence, the ability to compete with other countries by offering cheaper products and services. According to this argument, the exit of Greece from the Euro and its return to its old currency, the Drachma, would enable Greece to devalue its new currency and thereby better compete with other countries such as Portugal – generally the products and services of the weakest European countries, since Greece could never compete with the Germans. An Exit from the Euro would take place in order to improve the Greek economy, reduce unemployment and so on, at the expense of the Portuguese economy, at the expense of Portuguese employment and the already dramatically reduced standard of living there. The only result of such a policy would be a reaction of Portugal along the same lines, something that would exacerbate the economic downfall, the nationalist sentiments and put the possibility of war on to the agenda.

The Troika?s policy of the Memorandum policies and austerity aims at ?increasing competitiveness?. But ?increasing competitiveness? is also the aim of Exiting the Euro. In the first case, by reducing labour costs through wage and benefit cuts. In the second by reducing labour costs through depreciation of the currency?s value, i.e. depreciation of the real value of salaries and allowances. Thus the Memorandum and Exiting the Euro are both capitalist methods designed to achieve similar ends through different routes. And to solve the crisis at a time when there is no such a possibility.

It is exactly the absence of possible solutions under capitalism that is causing the despair of the strategists of capital, the International Monetary Fund and the European Central Bank. They continue to insist on economic formulas which had the potential to provide solutions, in some cases and under certain conditions, in the period before the 2008 crisis, as in the period prior to 1929. Such formulas were unfair to the working class through slashing their living standards, but they could help to reduce unemployment. After 2008 though, just as after 1929, such policies are unable to provide results, since the capitalist economic system has once more exhausted itself – another legacy of the post-1929 period, and of Marxist analysis.

If the Exit from the Euro could provide a solution to the crisis, then someone needs to explain why the crisis is global and concerns all countries, the US and Japan included. Countries that possess their own currencies still, cannot find a way out of the economic mire, despite the fact that they are pursuing all possible expansionary policies. And despite the fact that their debt, especially that of Japan, has risen to extravagant levels, levels higher than those of 2008, which were put forward as the reason for the crisis.

International cooperation
?If countries such as Greece or Portugal or Spain give up the euro and return to their separate national currencies, any hope of a radical change in the economic direction of Europe will be crushed because that change requires international solidarity and that solidarity in turn requires the euro.? 5

It’s exactly such solidarity that is needed today. International solidarity is not a romantic idea for socialist dreamers, but a necessity spelled out by the most concrete fact of our times: that its opposite – national competition, this same competition that originally gave capitalism an enormous advantage over all social systems that preceded it, albeit with enormous social suffering ? such national competition can now only lead to disaster.

To save the economy of Greece is to save the economy of Europe. There is no future for the Greek economy in the middle of a capitalist Europe, even less in the middle of a capitalist Europe after the 2008 crisis. Whatever measures Greece takes, even if it were to nationalise the banking system and all key industries of the economy, Greece would be doomed if it were to move alone.

It is extremely important that the SYRIZA government moves along these lines, at least for the time being. The Syriza leadership has repeatedly made it clear that there is no solution to the crisis outside of the Eurozone. They have repeatedly made it clear that there is no solution for Europe either as long as there is no solution to the Greek crisis. And with these basic acknowledgements at the fore, they keep going on with the negotiations, negotiations that they have handled pretty well from the point of view of winning the sympathy of the European masses. The Greek government has shown that they are not the intransigent ones, that it is the European institutions which are insisting on continuing a program that has failed miserably, a program that has devastated Greek society.

The Break up of Negotiations Was Unavoidable
We did not believe that there was a possibility for an agreement between the institutions of Capitalist Europe and SYRIZA. Capitalist Europe?s plan is to humiliate SYRIZA as an example to all the others. From the perspective of the capitalist elite, they do not have many other options. Even a small reversal of their policies would put into question everything which they argued for so arrogantly in the previous period, insisting that ?there was no alternative?. Even a small reversal in their policies would be a signal to the European masses that ?there is an alternative?, a signal that could call forth an explosion of struggle against the austerity programme.

We are fast approaching the moment of truth. Greece may soon find itself out of the Eurozone as a result of a conscious decision of the capitalist institutions of Europe. But it is one thing to be expelled from Europe after you have defended the basic demands of the people of Greece, demands that many other European working people equally consider important and unquestionable. It is a totally different matter to cultivate the illusion that there is a solution to the crisis outside of the Eurozone. That there is even a remote chance of success on an independent national path.

If Greece is thrown out of the Eurozone, then it will have to intensify its appeal to the European masses to the highest possible degree, with the hope that it won?t be long before the European people come to its rescue, not just for Greece?s sake but for their own too.

You can contact Soteris directly about this contribution at: vlachos.soteris@cytanet.com.cy

FootNotes

  1. 1. Three Myths Behind the Case for Grexit: A Destructive Analysis, by Photis Lysandrou Associate Professor of Economics, SOAS and Research Professor, City University, London
  2. 2. The same
  3. 3. “The Shock Doctrine?, Naomi Klein, Greek edition, p. 266 p. 282.
  4. 4. Three Myths Behind the Case for Grexit?
  5. 5. The same

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Vote No 2Syriza, the Troika and the ironies

by Michael Roberts (thenextrecession.wordpress.com)

The ?impossible triangle? for the Syriza government was 1) reversing austerity 2) staying the Eurozone; and 3) Syriza staying in power (see my post: ‘Syriza, the economists and the impossible triangle‘). The Troika prepared to break that triangle. What the Troika wanted was a Greek government carrying out a full programme of austerity (running a government budget surplus in the middle of a depression) and ?structural reforms? (ending labour rights, deregulating services and finance and privatising state assets). The previous Samaras government got bailout funds in return for such ?conditionalities?. When Syriza wanted to change those conditions, not only did the Troika not concede, it actually tried to impose even harsher ones on Syriza.

This is partly because the Greek economy and government revenues have deteriorated during the five-month bailout extension. But it is also because the Troika wants to break Syriza and end a government pledged to oppose fiscal austerity and neo-liberal reforms. This is to ?encourage? the others.

The most forceful exponents of applying these even harsher measures include the IMF (which wants its money back); the German finance minister, Schauble, some small Eurozone states which are poorer than even Greece; and conservative governments in Portugal, Ireland and Spain which have imposed severe austerity on their electorates and now face anti-austerity movements at home. All these forces outweighed any forces for compromise that came from the French, the Italians and the European Commission.

And remember the cruel irony is that all these tortuous negotiations were designed not to provide help to the Greek people, but simply to release funds so that the IMF and the ECB would be repaid without any default. Over 90% of all the loans made by the Troika in the last five years have merely been siphoned back to Greek government creditors without touching the sides of the Greek economy (see my post: ‘Greece: ?third world? aid and debt‘). And these creditors were mainly French and German banks and hedge funds who got the value of their speculative purchases of Greek government bonds repaid with only a small ?haircut? in 2012. After that, the Eurozone, the IMF took on the debt while the Greek pension funds were stripped of their reserves.

The Syriza government went very far in dropping all its commitments which originally were: cancelling the debt, then halving the debt, reversing austerity, opposing privatisations etc. Eventually, to get a deal, the Syriza government even proposed a tax increase to annual incomes above $33,000 (thus suggesting that individuals in that income bracket rank among the wealthy). Basic food items and services were to carry a 23% VAT. The special VAT rate on Greek islands, which is so crucial for the tourist sector of the economy, was also to be removed. The early retirement age was to be increased as of the start of 2016 and a benefit for low-income pensioners was to be gradually substituted, beginning in 2018.

But on 25 June, the Christine Lagarde/Wolfgang Schäuble duo (IMF chief and German finance minister) wanted the benefit for low-income pensioners to be completely eliminated by 2017. If this proposal for overhauling the nation?s pension system were to be accepted by the Greek government, it would mean that a person who today receives a monthly pension for the amount of, say, 500 euros ($560) ? close to 50% of Greek pensioners receive pensions below the official poverty line ? would be deprived of nearly 200 euros ($223). This was one step too far for Tsipras and the Syriza leadership.

To understand why is to hear from Greeks themselves in various media reports. Here are the reactions gleaned from the media of Greeks living in Thessaloniki, Greece?s second largest city.

Michalis Nastos, 54, runs a clothing stall selling ?10 jeans, ?6 shirts and an array of cheap summer dresses, has seen his profits fall by more than 50% after years of crisis, unemployment and tax hikes. Nastos said his main fear was the proposed rise in VAT ? an indirect sales tax that would push prices up and indiscriminately affect all shoppers, most of whom are already struggling with the effects of previous tax hikes. ?Of course I?m against VAT rises, it?s already very high, it will have a knock-on effect. It?s the little details that will really affect people. The price of bread would go up ? that?s important because people in Greece still eat a lot of bread, so you could see the price of a sesame-seed loaf rise from say 50 cents to 70 cents, that would really have an impact. Packaging costs will rise, energy, basics like pasta. Low-income people won?t be able to afford to buy and more and more people won?t be able to make it.?

Michalis Hadji-Athanasiadis, 84, a former police officer who had retired aged 50, said his pension had shrunk from ?1,600 a month to ?1,000 a month, and his extra benefits had been cut. But his pension was still far higher than the shrinking salary of his 52-year-old daughter who was a high-school teacher and who, like her brother and his wife, still lived with their parents to make ends meet. He said: ?People are hungry. For five months it seems there has been no progress and business is down everywhere, a lot of shops have closed. Income is down, with VAT going up everything you need to buy becomes so much more expensive.?

Near the market, one woman in her 50s, who said her main income came from selling black market Balkan cigarettes, described how customers used to buy five or six packets but were now only buying one or two. ?It feels like life is over,? she said. ?We can barely manage to feed ourselves.? Her adult children, who had lost their jobs as shop-assistants during the recession both lived with her. She adds: ?It feels like they?re going after the little guy, all the high-income people got away with it and got their money out of the country.?

The next irony was that the IMF knows that Greece can never repay a ?300bn debt equivalent to 180% of GDP and rising. Greece asked for ?debt relief? in return for agreeing to more austerity. And it asked for a long-term package. The Troika refused. It refused to consider debt relief and only offered ?bailout? funds for another five months in dribs and drabs, thus keeping Greece in the grip of depression and poverty.

So we have a referendum. Greeks will be asked to vote on a complicated set of proposals put forward by the Troika. The question put is whether they will accept the Troika package or not. If they vote YES, then presumably the Syriza government will return to Brussels saying that they accept any terms offered. If the Greeks say NO, then the Greeks face the prospect of no more funding to pay their government debts and the cutting off of credit by the European Central Bank, which is currently financing the Greek banks to meet the increasing demands of depositors withdrawing their cash by the billions.

The government will have to impose capital controls to stop the flight of money (most of the rich and companies have already taken theirs already); it will possibly have to issue IOUs to pay its government workers and pensioners. These ?euro IOUs? will quickly devalue, as ?real? euros become scarce.

There are two more ironies here. The first is that if the Greeks vote yes to the Troika package, there will be no package to agree to. The current bailout programme ends on 30 June. After that, a completely new package will have to be negotiated and the Troika is talking about the impossibility of working with Syriza. They are looking to remove Syriza from power so they can negotiate with an amenable government.

The second is that if the Greeks vote no and the Greek economy is then cut off from euro credit by the ECB and Greece defaults on all its debts, there is no actual procedure for removing a member state from the Eurozone. Under the rules, a member state must ask to leave; it cannot be ejected. This is clearly uncharted waters for Merkel, Hollande and the Euro leaders.

The criticism of the pro-Troika parties in Greece was that Tsipras is using the referendum to avoid taking the decision himself. He is hiding behind the electorate. There is some truth in this but it is not the whole truth because Syriza will campaign for a no vote.

But what if it gets it? Surely, the government must move to end this tortuous mess. It must refuse to recognise the ?odious? Troika debt. It must impose capital controls; it must nationalise the Greek banks; and bring the commanding heights of the economy under the control of labour. The Greek people can start to turn round this depressed economy. But the Greeks cannot do this alone; it requires the combined efforts of European labour to break the grip of capitalist forces on economic policy and investment.

In another post, I shall try and analyse the state of the Greek economy and what could be done to turn it around within a plan for Europe.

Michael Roberts publishes a regular column at https://thenextrecession.wordpress.com

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A Comment on Michael’s Article by Pat Byrne (TSN Editor)

Michael has indicated in this article that he is planning the second part to be on “the state of the Greek economy and what could be done to turn it around within a plan for Europe.”

For some time I have been proposing that Syriza organise conferences for each of the main economic sectors in Greece to bring together the various actors in each industry – workers, customers, SMEs, radical economists, environmentalists, political activists and so on – in order to assess the problems of each industry and develop democratic socialist plans to take their sectors forward. Part of this would be to identify which companies need to be taken into public ownership in each sector.

In Greece, I guess this would have to include finance, shipbuilding, tourism, agriculture, energy and so on. Out of such a process an overall economic plan for Greece would emerge as well as (as Jonathan has suggested in his article above – ed) highlighting the key sectors and technologies for development that require top priority for national assistance.

The advantages of such an process is that it neatly leaves behind the possibility of theoretical pipedreams being formulated in this or that radical economist’s head. More importantly, it offers the opportunity to gather mass support behind such an economic plan – having included the input and involvement of all the relevant economic groups in the population it would be seen as plan of the people not of any party or government. Last but not least, such a process takes economic planning away from the top-down, centralised approach of the command economies and thereby is likely to significantly reduce bureaucratically imposed mistakes.

Of course, I do realise that Greece cannot solve all of its problems on its own. As Michael has indicated, it must be part of a European economic plan which needs to be developed from now onwards. But that is the music of the future and Greece has to start to develop its socialist planning now or all will be lost. Moreover, we need to avoid the idea of a European plan being used to argue that Greece can’t start to take action itself now to solve its problems. This could easily become a recipe for inaction, despair and passivity.

On the contrary, if Greece was to begin the democratic planning process I have described above it would be an inspiration for workers and progressive forces all over Europe to start to do the same on a national and continental basis.

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