In early 2010, Greece became the first among a number of peripheral member states in the euro area, the ultimate neoliberal zone throughout the entire capitalist universe, that fell victim to the global financial crisis of 2008 by being shut out of the international credit markets and subsequently having to end up in the arms of a rescue mechanism designed by the European Union (EU) and the International Monetary Union (IMF) in order to avoid an official default that would have caused a massive meltdown in Europe’s banking system since it was mostly major German, French and Swiss banks that had recklessly loaned billions of euros to the Greek government and Greek businesses.
The EU-IMF rescue mechanism provided Greece in May 2010 with a massive loan package worth 110 billion euros (meant to cover the country’s financial needs until June 2013) while a second one was extended in February 2012 worth 130 billion euros. The first bailout loan for Greece carried a usurious interest rate of 5 percent and demanded the enforcement of a scorched-earth policy aimed at reducing deficits and the debt-to-GDP ratio as well as improving the competitiveness of the Greek economy. Initially conceived more as a punishment rather than as a rescue policy, as it sought to implement a series of policies across Greek society that would have no bearing whatsoever on the above stated goals (such as sharp reductions in wages and salaries in both the private and public sector and creating medieval-like conditions in the labor market through the elimination of collective bargaining agreements and the enforcement of various other labor rights violations), the bailout plan ultimately became a sinister Machiavellian plot for institutionalizing a radical neoliberal economic setting.
Under the bailout terms imposed, GPD dropped by 20 percent in the course of four years; unemployment reached as high as 27 percent; and one of three Greeks ended up either near or below the poverty line.
In other words, the neoliberal European masters took the opportunity presented to them by the debt crisis to turn Greece (with the collaboration of the domestic political and corporate-financial elite) into a neoliberal laboratory and to transfer public wealth into private hands (all publicly owned assets were to be sold at bargain prices) and skim wealth from the many and transfer it to the few (whether in the form of shutting down thousands of small businesses to the benefit of large commercial enterprises or the opportunities presented to real estate investors by the free fall in property prices or simply through the barbarous exploitation of labor, which is highly underpaid and in many instances goes altogether unpaid even when employed).
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Under the bailout terms imposed by the twin monsters of global neoliberalism, the EU and the IMF, the Greek economy and society experienced a traumatic situation which can only be compared to wartime conditions: GPD dropped by 20 percent in the course of four years; unemployment reached as high as 27 percent; one of three Greeks ended up either near or below the poverty line; many hospitals operated without basic medicine and equipment; school administrators in many parts of the country were unable to supply heating oil due to budget cuts; suicides became a rampant phenomenon in the first two to three years of the crisis, and the young with skills and higher education emigrated en masse, seeking job opportunities in Germany, the United Kingdom and other European countries.
Politically, things fared no better: After the explosion of massive demonstrations during the first two years of the crisis, which, as always, were met with brutal force by the illustrious Greek police riot units, the Greek citizenry retreated into its own private realm, feeling impotent, defeated and probably guilty for having sided during the pre-crisis period with the two dominant political parties in the land – the conservative New Democracy (ND) and the Socialists Party (Pasok). These two parties were not only responsible for wrecking the country with their similar and catastrophic policies of political clientelism, cronyism, corruption, and plain inability and/or unwillingness to alter course even when the world around them was radically changing, the economy was in dire need of reforms and the political culture could only be described as toxic and pernicious, but became actual enforcers of the cruelest and most destructive set of economic and social policies envisioned outside of Ceaușescu’s Romania in the 1980s.
The Greek citizenry continued to vote in support of the parties of the old establishment during the bailout period, in the course of which its international creditors quickly deprived Greece of its fiscal autonomy and even much of its national sovereignty, so that its polity was gradually transformed from an undeveloped and corrupt parliamentary democracy into a highly authoritarian, proto-fascist state (with neo-Nazi gangs roaming the streets), while the brutal antisocial policies of the twin monsters of global neoliberalism were becoming deeper and more and more expanded all at the same time.
What is certain, though, is that Greece’s debt is unsustainable and must be reduced via a generous haircut if the country is to have the slightest hope of exiting the crisis.
Sometime in early 2013, the Coalition of the Radical Left (Syriza) began to gain substantial popularity among the public. Its anti-austerity message seemed finally to hit home with many battered citizens who in normal times would probably have aligned themselves with the incredibly unscrupulous neoliberal socialist party of Pasok, particularly as Syriza’s leadership toned down its criticism of Europe and by late 2013 began to talk about the EU as Greece’s “natural home,” conveniently brushing aside the question of what the EU actually represents and seemingly overlooking the objectives of the policies it pursues, not only with regard to the highly indebted nations of the periphery of the eurozone, but for the continent as a whole.
Following the parliament’s failed effort in late December 2014 to elect a new president, Greece will hold what it calls “snap elections” on January 25. All the latest polls indicate that Syriza will emerge victorious, but probably not win an overall majority, which means it will have to form a coalition government. Syriza’s elected strategy is no longer to “shred into pieces” the agreements regarding the bailout terms (but it insists that it will nonetheless implement its own anti-austerity economic program) and it says it will renegotiate the debt (instead of taking unilateral action), which is now held almost entirely in the official sector of the country’s international creditors.
What will happen if Syriza’s strategy fails – i.e., if Germany as the eurozone’s master refuses to renegotiate Greece’s public debt and also seeks to block Syriza from implementing its own economic program out of fear that it will deteriorate the fiscal condition of the country and cause havoc in international credit markets, which might create undesirable conditions for Italy, Spain and Portugal – is anybody’s guess. What is certain, though, is that Greece’s debt is unsustainable and must be reduced via a generous haircut if the country is to have the slightest hope of exiting the crisis (Germany itself received such special treatment in the London Debt Agreement of 1953, although one must recognize that today’s conditions on the international scene are radically different from what they were back then) and that austerity must give way to growth-oriented policies under the aegis of a reformed, restructured and ultimately competent Greek state, which now, unfortunately, simply does not exist, although Syriza has made a commitment to reshape the Greek public sector once it gets to power.
The final chapter of the Greek drama may very well come down to essentially a game of chicken.
Still, Germany and the other member states of the eurozone do not like the idea of telling their citizens that Greece got a “free ride,” especially after they went to great lengths with their insidious government propaganda to present Greeks as lazy and profligate, nor do they look favorably upon the notion of adopting a policy of appeasement toward the radical left, especially since Spain also seems to be moving in that direction and there is always the risk that other indebted governments might also get into their heads the idea of debt restructuring and doing away with neoliberal reforms.
Thus, as things stand now, everything is up in the air. Indeed, the final chapter of the Greek drama may very well come down to essentially a game of chicken to see who blinks first: Syriza, which seeks to change the status quo in Greece, but wishes to remain inside a neoliberal euro area under the command of Germany, or the euro master that might be afraid that Greece’s exit from the euro area may have unmanageable repercussions for all remaining parties? A “Grexit” would be an extremely painful process for Greece, particularly if it occurs in a disorderly way, but it is hard to see Germany having a change of heart or the EU becoming more progressive. The EU is an undemocratic, regressive and thoroughly neoliberal entity pursuing nothing short of open class war policies against the common people of Greece (as well as those in the other highly indebted nations of the eurozone) while it protects the interests of banks and big corporations. If Syriza believes it can change the institutional framework and the policies of the EU, then even the great revolutions of past history may pale in comparison to its accomplishments. In the meantime, all of Greece and Europe’s progressive forces must stand beside Syriza and support its cause.
In its struggle to challenge neoliberal Europe and reshape the Greek economy, Syriza should keep clear in mind what the realities were before the Greek crisis erupted while never turning its eyes away from the damage that has been done to the country as a result of the implementation of the so-called rescue plans – how it was done and by whom.
What follows are some “notes” about the class warfare from above that has been waged in Greece by the domestic political class and its allies prior to the debt crisis and the impact of the bailout terms following the outbreak of the debt crisis. The first section that follows concerns the morphology of Greek capitalism prior to the crisis, while the second section outlines the consequences of expansionary austerity on the Greek economy and society and raises some critical questions about social and economic change inside today’s EU.
Greek Capitalist Accumulation Prior to the 2010 Debt Crisis
1. Since the end of the reign of the military junta that ruled Greece from 1967 to 1973, the Greek economy has marched to the tune of an extremely deformed type of state capitalism that functioned purely on the basis of the reproduction of the dominance of capital against labor, with the nation’s two mainstream political parties, the conservatives and the socialists, acting as both servants of the domestic plutocracy and functionaries accommodating international capitalist developments. Under this setting, the structure of the Greek economy is largely oligopolistic and a small group of families dominates the key industries in the economy, including the media, and relies on the state for its major profit-making activities.
2. With the introduction of the euro, the competitiveness of the Greek economy begins a downfall trajectory and growth is now based almost entirely on a model driven by debt-fueled overconsumption, which is one of the main types of the financial market-based models of economic development, while capitalist accumulation continues to rely on the looting of public resources but also serves as the vehicle for the transition into a neoliberal economy in accordance with the dictates of the EU.
The structure of the Greek economy is largely oligopolistic and a small group of families dominates the key industries in the economy, including the media, and relies on the state for its major profit-making activities.
3. The state managed capitalism on behalf of the plutocracy does not invest in stability and the real growth of the economy in the context of the attainment of full employment and the realization of a humane and effective social state, but rather in the shaping of a favorable environment for quick and massive accumulation for the benefit of big capital through stock market scams, bubbles in the real estate market, speculative investments for quick profit-making, waste of public resources etc.
4. The dominance of the financialization of the economy is accompanied by the implementation of policies that lead to deregulation, increased labor exploitation and intense economic and social inequality, all of which, and in combination with the backward nature of the Greek state and the social policies in place, transform Greece into one of the more unequal societies in Europe in the midst of an alleged economic boom (2004-2007).
5. Public borrowing and private sector indebtedness follow on the footsteps of the economy’s decline in competitiveness and expand in accordance with the rate of the deepening of the forthcoming crisis, which the ruling political class seeks to exorcise with various incantations while at the same time strengthening it by making continuous concessions to big vested economic interests.
6. The financial crisis that erupts in the United States in 2007-08 quickly reaches the shores on the other side of the Atlantic. The highly vulnerable Greek economy, based on a model of debt-fueled consumption and with a highly corrupt political class in charge, is the first to receive the blow of the Great Recession and collapses like a fighter who never even entered the ring.
Bailout Plans, Peonage, Economic Collapse and Neo-Feudalism
1. The “socialist” government of George Papandreou had approached the IMF for possible assistance prior to Greece resorting to the EU-IMF rescue plan as mainstream political parties and their leaders were never able or willing to envision alternative strategies of development and chart a course away from capitalism. In this manner, political parties and organizations of the radical left must not forget that there is a very small difference, if any, between neoliberals and social democrats when it comes to envisioning alternative social orders.
2. The Greek government surrendered every initiative to the EU-IMF duo over the terms of the bailout plan in 2010 as it was politically committed to the EU and ideologically aligned with its neoliberal aspirations. For the same reasons, all Greek governments up to now have been willing to carry out the brutal austerity policies of Greece’s international creditors – they are lackeys of a neoliberal Europe.
The pathologies of the Greek state and of the Greek political culture are in some ways quite unique and thus require a major overhaul.
3. The Greek crisis was in some ways a “special case” as it represented the only true fiscal crisis among the highly indebted, peripheral member states in the eurozone, which is to imply that the pathologies of the Greek state and of the Greek political culture are in some ways quite unique and thus require a major overhaul.
4. Nations without sovereign monetary policy (the euro represents a “foreign” currency for all eurozone member states) are especially vulnerable to financial and debt crises because they have surrendered the right to issue their own sovereign currency.
5. Brutal fiscal adjustments in the midst of a recession represent the natural reaction of an intentionally flawed euro financial architecture, which was designed to undermine the postwar European social state and to enhance the power and the reach of European capital.
6. Austerity represents the overarching policy framework of financial capitalism in its attempt to secure the repayment of debts and to maintain its dominance in an era of intense economic crisis.
7. Contractionary fiscal policy and austerity give rise to a spiral of debt-recession-austerity, blocking out every prospect for real growth.
8. Governments, societies and businesses pay a hefty price for the financialization of the economy and the ensuing class war that the financial sector and the financial elite wage against public agencies, the social state, wage earners and pensioners.
Contractionary fiscal policy and austerity give rise to a spiral of debt-recession-austerity, blocking out every prospect for real growth.
9. Peonage and neo-feudalism are imposed as necessary conditions on indebted societies and stem from the relentless class struggles launched from above by financial capital and carried out by the national governments that operate as its satellites. In this context, capitalism and democracy in the contemporary era are more antithetical than ever before and recapturing the social state and socializing major economic activities and processes through forms of direct participatory democracy in industries and the workplace is a prerequisite for the reestablishment of the democratic spirit.
10. The Greek crisis has far exceeded anything experienced in the United States during the era of the Great Depression. Under the so-called bailout plans, the debt-to-GDP ratio ballooned even further and even the last vestiges of the nation’s industrial production were destroyed, thereby ensuring that Greece will permanently remain a peripheral, underdeveloped nation in the absence of the formulation of an economic policy outlook that looks not merely to end austerity, but to redesign the economy in a bold and innovative manner.
11. The euro as a protective shield against economic crises constitutes a myth and a shameless pretext used by the ruling class to run roughshod over domestic labor in the various euro area economies.
12. The radical restructuring of a domestic economy is simply impossible inside today’s euro area as the overall policies and institutional framework of the EU preclude the possibility of a transition to a rational and humane economic system, which remains the ultimate vision of a true and authentic left. With the working class in disarray and decomposed due to the structural changes that have taken place in the workplace due to the new technologies of the last three decades, it would be at least naïve for one to expect that the turn to socialism throughout Europe has even a slight chance of materialization. Indeed, if anything – and contemporary political trends seem to support this claim – it could be reactionary right forces that prevail in most European countries, not the likes of Greece’s Syriza and Spain’s Podemos. Thus, the struggle, as ever, is national while international coalition building remains essential. With a neoliberal Europe or not, we are still very far away from sorting out the relationship between ethnicity, nationality and class for the building of a radical international social order.