Wednesday, June 20, 2012

Greek Elections: For the United Socialist States of Europe

by John Reimann

On the eve of the (second) elections in Greece, the Wall Street Journal ran a story in which they talked about a "cocktail of fear and uncertainty" amongst worldwide finance capital. Their web site ran a video entitled "Has Europe reached its endgame?" and the commentators in the video said "we really are in the realm of uncertainty," and commented on the stock market in the US having dropped 160 points. What happens with Greece "might not be a deliberate process or one they (the policy makers) can control… Markets hate uncertainty," they said. A massive run on banks throughout Europe was raised as a possibility.

Who would have thought that this tiny little peninsula nation, with a GDP of under 230 billion euros, whose main exports include olive oil and feta cheese, whose population is under 12 million - slightly over half the population of greater Mexico City -- who would have ever thought that this nation could shake the entire world finance system?
But the problem was (and is) not Greece alone, after all; the entire Spanish banking system is in crisis, requiring a bail-out not only from the Spanish government but from the entire euro zone. Italian capitalism is not far behind, and even France is threatened.

Tip of Iceberg

In other words, the Greek crisis is only the tip of the iceberg.In the event, conservative party New Democracy took 29.5% of the vote and the new left party Syriza took 27.1%. Combined with the pro-austerity "socialist" PASOK (which took 12.3%), New Democracy will most likely be able to form a new government in coalition with PASOK. Global finance capital breathed a sigh of relief. But it was short lived. The very next day "Market Watch" ran a story "Europe stocks wobble as Greece euphoria fades". They reported that interest on Spanish debt was continuing to climb and that the European stock market had barely increased after the close call of the Greek elections.

Greek Exit from Euro?

Greek voters were threatened with being kicked out of the euro zone. Forced to return to a national currency (the drachma) prices for imports (including gasoline and other basic consumer items) would rise dramatically. On the other hand, Greek workers and middle class people faced a perspective of hardship without end. Already there have been massive lay offs, pay cuts, cuts in social services including health care. The only "business" that is booming in Greece is the soup kitchens. In the end, though, more Greeks chose to vote for the devil they knew (austerity) than the one they didn't (return to the drachma). Neither choice is appetizing to them, though, especially since another 11 billion euros in cuts is being demanded.

Syriza and its principle leader, Alexis Tsipras, met the threat of expulsion from the euro by claiming that this was just a bluff, that the euro leaders wouldn't dare expel Greece, since this would threaten the entire currency. He may have been right, but exactly because of the instability posed by the Spanish and Italian crisis he may be wrong. After all, if the Greek voters could in effect blackmail the euro powers - principally Germany - into a better deal, then the Spanish and the Italians would be next. On top of this, it does seem as if the main power in the euro - German capitalism - is presently being led by a chancellor (Merkel) who seems in part to see Greece as a cancer that should simply be removed.

What Next - More Austerity?

What are the perspectives following these elections? Again, speaking on behalf of finance capital, the Wall St. Journal has made things clear: They write that German capitalism is "beginning to conclude that Greece may be unreformable." Even a New Democracy-led Greek government will be forced to demand changes to the "memorandum" - the austerity package already agreed to. "Would the German Chancellor dare to say no…?" they ask. "That would be a terribly painful result for Greece, but as a lesson to the rest of Europe to shape up or suffer the same fate, it would have considerable utility." The Journal advocates "supply-side reform in taxes, pensions and labor markets that will lure investment and make Europe's economies more competitive. They need austerity for government but growth for the private economy."  In practice, this means tax cuts for the corporations and the wealthy, accompanied by cuts in social services, job protection, etc.
In the short term, this is a prescription for even greater debt. As incomes shrink, government tax receipts also shrink while demands for the few remaining social services increase. Meanwhile, the overall economy contracts even further. This is exactly what has been happening in Greece, and it has only exacerbated the crisis. In the longer term, however, it can help the overall European economy… vs. its rivals. As wages decline and "labor peace" is imposed, companies may be willing to shift some production back to the EU. This is exactly what has happened in the United States.

Thus, it is true that the European economy can experience an increase in investment if workers' overall wages are cut. But this is a zero sum game. In fact, it is a negative sum game, as such growth will come at the expense of investment and jobs elsewhere in the world. There will then be an attempt to force workers elsewhere to accept further cuts in order to attract jobs back there. This, then, is no solution.

Contradiction of Euro Zone
There is also the contradiction of the euro zone itself. This was always an inherently unstable currency, based as it is on the disparate and at times conflicting interests of the different capitalist nations. It only was able to be created and held together due to the prolonged period of economic (and therefore also political) stability and growth. Back in 1929, Leon Trotsky wrote about the perspectives for a united Europe. He compared that idea to the unification of Germany in the previous century from a series of little, independent German states. He wrote that the analogy between the unification of Europe to that of Germany "is not a bad one," but what must be considered is that "to achieve its unification - solely on a national basis - Germany had to pass through one revolution (1848) and three wars (1846, 1866, 1870) - not to mention the wars of the Reformation."

What was required for the unification of one nation is infinitely more simple than what is required for the unification of Western Europe as a whole. One simple fact serves to show the difficulty: Greek labor productivity is 25% below that of the European Union as a whole. It's true that the same is the case for labor productivity in the US state of Mississippi vs. the US as a whole, but that is entirely different because there is a general national consciousness in the United States. The great majority of people in the US see Mississippi as part of one individual nation, as do those of Greece, France, Germany, Spain, etc. They speak the same language and have a common history and cultural heritage. Barring an extreme crisis, well beyond anything that has been seen yet, there is no chance that this national consciousness could collapse and these individual nations break up. On the other hand, the different languages, culture, traditions (including political traditions) plus the history of European wars between the nations tends to drive the EU nations apart. While a closening of ties can occur during times of stability, the inevitable periods of crisis will reverse the process, exactly as is happening now.

As a result, national consciousness and national tensions in Western Europe are increasing. The interests of German capitalism, while also aligned with those of the rest of European capitalism, also are somewhat in conflict, including with those of French capitalism. The former, as the strongest capitalist power in the EU, focus on stability including economic stability. First and foremost, this means price stability. As a slightly weaker power, and feeling more pressure from the French working class, French capitalism is now moving more towards the need for immediate "growth", meaning increased government spending (a form of Keynesianism).

Conflicting "National" Interests & Rising Nationalism
As one financial analyst web site ( put it: "This is not a simple matter of divergent economic theory. It is a matter of national interest. France is not as economically decrepit as Spain or Italy, let alone Greece, but nonetheless it is feeling the pressures of the financial crisis. If Europe continues on its path toward recession, France will face higher unemployment and therefore domestic political pressure under the German plan. It is not in (newly elected French 'Socialist' President) Hollande's or France's interests to follow the German course. For its part, Germany cannot risk further government deficits in the European economic system. Germany's robust economy gives the country a financial cushion to soften the effects of deficit cuts; the rest of Europe, including France, does not have this luxury."

This same crisis which is tending to pull the euro zone apart is also creating another tendency: Increased centralization of power, in part in the European Central Bank. This would mean increased power of appointed representatives of the capitalist class to determine the economic policies - including the national government budgets - of the different member nations.

The different national capitalist classes are appealing to their own working class in order to secure a base for their interests. This, combined with the economic crisis, is giving rise to far-right nationalism. In the case of Greece, it has been seen through the rise of the neo-fascist Golden Dawn party, who for the first time will have some representatives in the Greek parliament (although their overall vote count declined marginally compared to the first election). Golden Dawn, which uses the Nazi salute, claims that the existence of a large immigrant population in Greece is a major part of the problem. They have been associated with physical assaults on immigrants. They also oppose Greece's being in the European Union. It is possible that one outcome of these elections could be increased Golden Dawn attacks on immigrants. A series of chaotic street battles with Golden Dawn, possibly leading to an increased role for the Greek military, cannot be ruled out. That is especially so if the austerity measures continue and no real way forward is offered by Syriza.

Potential of Syriza
For its part, Syriza has really set European capitalism back on its heels. For the first time, a mass political force has openly called for defiance of the austerity that the "markets" as well as their political representatives (German Chancellor Merkel, etc.) demand. This has given hope to millions of Greek workers and youth. The problem is, however, that refusal to accept this austerity has some implications.

Even before the elections, a run on the Greek banks threatened, with millions of euros per day being withdrawn. Depositors, large and small, feared that their accounts in euros could be transformed into drachmas if Greece were forced out of the euro zone. If that were to happen, their deposits would suddenly be worth a fraction of their previous value. That is only one example.

Unfortunately, the response of Tsipras and other Syriza leaders has been somewhat confused. One senior spokesperson for Syriza was quoted in the Wall St. Journal as saying that they wanted to "calm the markets." Tsipras, himself, writing in the London Financial Times has called for bringing "greece into a new era of growth and prosperity." He is quoted as saying that he will approach European finance capital not "to pick a fight, but to convince them." The main economic advisor in Syriza, George Stathakis, is quoted in sky news  as telling them "his party was "avowedly" pro-Europe and wanted to keep the single currency, but the terms of the bailout were stifling growth."
Nevertheless, the amazingly rapid growth of Syriza, its near miss in the recent elections, the powerful presence it will have in the new parliament, the militancy of the Greek workers and youth -- all this combined with the crisis of world capitalism as well as that of Greek capitalism itself have certain implications. The Greek government bureaucracy has proven its corruption and willingness to allow Greek capitalists to avoid taxes, for instance. This, alone, means the necessity for direct workers' control and management of tax collection. Further, the threat of capital flight shows the necessity for workers' control and management over the banking sector. Then there is the threat of increased attacks on immigrants, and also against the left, by Golden Dawn which can effectively be dealt with by united defense squads of workers, youth and the immigrants. This could be linked with building direct links to the rest of the working class of Europe for a start, as well as the workers of the rest of the world. In part this could be done through a mobilization of the immigrant workers (many of whom come from Eastern Europe as well as from Pakistan, northern Africa, etc.) Teams of workers and youth could be sent to meet with and plan a common program and strategy with workers starting in the EU, but not confined to there.

Unites Socialist States of Europe   
On the all-Europe arena, it is clear that the idea of a united Europe is slowly being ground down by the capitalist economic crisis. But a return to the individual capitalist states - with economic borders, increased national tensions, etc. - is no solution either. In place of advocating simply that Greece remain inside the capitalist dominated EU, what needs to be raised is united action of the European working class against austerity and wage cuts in general. This can only lead in one direction - towards the United Socialist States Of Europe.

No comments: