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The Greek Elections and the Future of John Maynard Keynes

In what is certainly the most closely watched election that Greece has ever had, the center-right New Democracy Party took nearly 30 percent of the vote, with SYRIZA rising to 27 percent.

From coffee houses in Melbourne to beer halls in Munich and juice stands in Rio de Janeiro, yesterday’s election in Greece has been a topic of much discussion and anticipation. Even those living in the United States have gotten a steady flow of reports on the Greek elections; articles on Alexis Tsipras, leader of the anti-austerity party SYRIZA, proved to be an especially popular topic featured in Time Magazine and the Wall Street Journal in recent days. Well-known intellectuals such as Etienne Balibar, Alain Badiou, Giorgio Agamben and Judith Butler have come out in favor of SYRIZA and the anti-austerity program. Slavoj Žižek went further, traveling to Athens to give a rousing speech to thousands of SYRIZA supporters. From the opposite side, the anticipation regarding the elections reached the point where the British government explained the decision this week to transfer 100 billion pounds to British banks as a measure intended to minimize the fiscal crisis that could follow the Greek elections should SYRIZA win.

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In what is certainly the most closely watched election that Greece has ever had, the center-right New Democracy Party took nearly 30 percent of the vote, with SYRIZA rising to 27 percent. It is very likely that in the hours or days ahead, New Democracy will form a government together with third place (12 percent) PASOK, the “socialist” Party. Barack Obama and Angela Merkel immediately praised the election results and euro exchange rates jumped with news of the New Democracy victory. A mini-rally in many equities markets will likely take place the following day.

Beyond these immediate reactions, however, what do the results tell us about the core issues that have consumed most discussions of the Greek elections so far, the future of the euro, austerity and the left in Europe and beyond? Is this a definitive defeat for the left? Is austerity here to stay? Is the euro now safe for the near future?

I believe that the answer to all three is an emphatic no.

The dire economic conditions that led to SYRIZA rising to 27 percent in the elections are creations of the same people who will continue to govern Greece. There is no reason to expect that New Democracy and PASOK’s inability to resolve the crisis will not continue. More to the point, the economic and political contradictions that austerity entails can only be altered through changes in policies. As long as New Democracy continues the existing austerity programs, the days of the both the euro and the pro-austerity government in Greece are numbered.

Many headlines today described New Democracy as “pro-bailout.” In this context “bailout” is a euphemism worthy of Tony Soprano. Indeed, ever more high-interest loans (with countries like Germany charging Greece more that four times the interest rate Germany pays) together with demands that shrink your income are hardly a “bailout” and are more akin to a loan-sharking strategy designed to entrap and plunder. This is the core issue today and ties together all three sub-questions: austerity, the euro and the future of the left. It is impossible to avoid political upheavals and maintain the existing euro zone without abandoning austerity. Even with 27 percent of the vote “only,” a huge percentage for a party of the radical left, SYRIZA has been successful in that they have clearly demonstrated the political limits and costs of continuing with the austerity programs.

Merkel has already indicated that some flexibility may exist for renegotiating the terms of the loans given to Greece. If that happens, then there is some hope that they could salvage the situation in Greece and the euro crisis more generally, but it would not seem very likely that Merkel and her co-conspirators are willing to abandon the general contours of the existing plan.

In fact, as this situation in Greece, Spain, Italy, and beyond has been playing out, ratification of a German-backed EU fiscal stability treaty has been proceeding throughout the euro zone. Most recently (May 31), it was approved by Ireland in a referendum. Greece, Portugal and Slovenia had previously approved the treaty. At least eight more euro zone countries would need to ratify it for it to take effect for the full seventeen-member euro zone. Under this treaty, any deficit spending annually beyond .5 percent of gross domestic product (GDP) would be outlawed. A deficit above .5 percent would trigger a series of interventions and penalties intended to coerce and punish any attempt to go beyond the agreed upon limits. In effect, it is a treaty to outlaw John Maynard Keynes.

The political struggle in Greece today and Europe more broadly is not between some pragmatic pro-capitalist neoliberal center-left/right verses a far left radical anti-capitalist movement. It is between forces which are so tied to speculative capital that they are willing to destroy the internal political capacities and economic base of national societies versus those who believe that the longer term stability and growth of capitalism is tied to the need to maintain and increase effective demand in those same societies.

SYRIZA is a genuine leftist party. I am a card-carrying member myself, and there is no question that most of those who constitute its organizational and intellectual core are dedicated to principles that are quite antagonistic to the alienation and exploitation of capitalism. The battle that SYRIZA is currently fighting, however, is not on behalf of a post-capitalist future; it is to rationalize capitalism in ways that make it more stable and capable of reproducing itself and meeting its promise to provide economic growth and the material needs of society. Such is the paradoxical character of the current political rabbit hole, the “left,” from SYRIZA in Greece to the Occupy movement in the US, becomes the voice of a rationalized capitalism capable of surviving for the foreseeable future versus a “right” that accepts the logic of short-term speculative capitalism even when this may very likely result in destroying the political and economic conditions that make capitalist societies themselves possible.

The great hysteria seen in the media at the prospects of the “far left” SYRIZA winning the elections and demanding a new economic policy for Greece underlies the difficulty of the situation. Keynesian policies, on the verge of being outlawed, are now “far left.” The political “mainstream” of the moment would be unthinkably right wing just one generation ago. In this context, SYRIZA coming second in the elections may well be a blessing in disguise. Given the low probability that those who run the International Monetary Fund, the European Central Bank, the European Union and related institutions, would suddenly see the light and reverse their catastrophic policies, a Greek exit from the euro is still a near certainty, and a much deeper crisis will hit everyone once Spain and Italy are no longer able to borrow from private lenders. If SYRIZA had been the governing party when these deeper economic disasters hit, they would get saddled with much of the blame. Now, those who are truly guilty of causing this crisis will be in command when the full contradictions of the present economic strategies become realized. In the meantime, SYRIZA can further organize and solidify its base and, equally importantly, develop a truly counter-hegemonic project based upon rejecting the materialism, consumption patterns and dedication to self-interest that characterize bourgeois societies.

Keynes was the savior of capitalism the last time it was on the verge of destroying itself. Financialized capitalism and its political agents are not simply deaf to the lessons of that moment, but seem hell bent on shackling themselves with an oppressive fiscal treaty lest the temptation to diverge from the present path prove too strong in the future. The ongoing struggles and political schisms within Greece and beyond show us that the immediate fight today is one between those who are dedicated to maintaining and increasing effective demand as both a strategy for overcoming the economic crisis and as a policy for safeguarding the standard of living for common citizens versus those who are faithful to the logic of speculative capital regardless of the risks and costs. Either we are on the verge of a Keynesian revival, a stark reversal of current policies, or we are witnessing the rapid destruction of those political and cultural elements that allowed actually existing capitalist societies to reproduce themselves. The Greek elections would seem to indicate that the later is more likely. SYRIZA now faces the historical mission of imagining and helping create a new society from the ashes of the old one. Far from being a defeat of the left, the Greek elections indicate that the path of the radical left is the only viable road that exists.

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