Okay, now what?
Citizen CoKane always has relevant comments to my blog that put me on the spot:
His question this time is what are workers in Greece supposed to do when their counterparts in Germany appear to be complacent, even indifferent to their plight? The workers of Greece clearly can’t overthrow capitalism worldwide all by themselves and the rest of Europe seems paralyzed at best. I reproduce his comment in its entirety:
According to Panitch and Gindin, it turns out that Syriza’s room for maneuver was less than we hoped:
“Of course, the room for manoeuvre was much narrower than the leadership hoped, not least because of the incapacity of the left in Northern and Central Europe to shift the balance of forces in their own countries in even a minimal way. On the other hand, Syriza would never have been elected on the basis of a call for leaving the eurozone, nor would it have won the recent referendum. Those in and out of the party who have always called for an immediate Grexit never were persuasive on the necessary political conditions for this. Given the limits imposed by the unfavourable international balance of forces, those of us who argued that the room for manoeuvre inside the EU was a lot narrower than the Syriza leadership hoped, and therefore favoured connecting a socialist strategy to Grexit – and always made this view clear to our Syriza comrades – could not, however, help but be sympathetic to the dilemmas they faced. Not to have been would have been churlish beyond measure, especially given the socialist left’s own political weakness in our own countries.”
Which begs the question: Who is we? Most Leftists I follow were highly skeptical of SYRIZA’s prospects, and even its commitment to radical change, from the first.
Unlike Panitch and Gindin, most of us knew already from the very first that SYRIZA’s space for maneuver was critically compromised and it did not take five months of frustrating negotiations to arrive at this conclusion. In the United States, all you had to do is look at the history of recent labor negotiations at Boeing and GM, where labor was forced to concede terrible losses simply so workers could keep their jobs. Was this not enough to conclude labor’s bargaining position had been critically undermined by four decades of neoliberalism? If not, could we not extend this to the abandonment of the working class by the labor and social democratic parties of the world market? Finally, when even the Soviet Union and China together went all in for capitalism wasn’t this clue enough?
From FT Economics today, China is dangerously flirting with deflation:“PBoC admits defeat in war on deflation.”
“China’s central bank this week faced reality and revised down its inflation estimate to half the level targeted by Beijing, implying it is failing — as global peers have before — to combat the threat of deflation.
That is not only bad news for a country struggling to stimulate growth, it also threatens a ripple effect around the world: cheap made-in-China goods contained price rises around the world when that was a force for good.”
China needs a plan B just about now and I think they should revisit the debate between Mao and Deng over China’s path for the most rapid development path.![HKG105:CHINA-DENG:SHANDONG,CHINA,13OCT94-FILE PHOTO 03MAR59- Chinese leader Deng Xiaoping (L), is seen confering with the late Chinese Chairman Mao Tse-tung [Mao Zedong] in Shandong province March 3, 1959. B/W ONLY](http://web.archive.org./web/20150912130833/https://therealmovement.files.wordpress.com/2015/06/maodeng.jpg)
Maoists will know I am referring to the debate of the 1960 and 1970s over the path for China’s development. The two sides of the debate is pretty simple to describe. The Dengists raised the slogan: “Black cat or white cat; the cat that catches the mouse is a good cat.” Essentially, their pragmatic argument was that it did not matter which measures the state employed, so long as those measures sped the development of the productive forces. This attitude, of course, horrified the Maoists who rightly saw in it the formula for unbalanced growth, rising inequality and, eventually, full capitalist restoration. This debate shaped China history for most of the latter part of the 20th century and played a significant role in the Great Proletarian Cultural Revolution, which shook China and the world for more than a decade. In the end, Deng and the Dengists won, in large part simply by outliving Mao.
In part one of my blog post, The Myth of Secular Stagnation, I explained the background to the debate among bourgeois simpleton economists. The stagnation debate among bourgeois economists begins with the Great Depression and Keynes’ characterization of the problem of the Great Depression as “technological unemployment”. The source of the technological unemployment was the improvement in the productivity of labor, the industrial revolution wrought by capital. For Keynes in 1930, this was not necessarily a malady in and of itself, it promised a future where labor itself would be abolished. The transition to a society of less work might be very painful, but the distress was only temporary.
By 1933, however, Keynes’ argument had changed: although he continued to insist that, technically, the “economic problem” had been solved he now focused on the problem of restoring capitalist profit. The Great Depression was no longer caused by the lack of investment opportunities, instead there was a lack of sufficient state deficit spending. The Great Depression, now having lasted 3 years, required state intervention; “a blend of economic theory with the art of statesmanship”.
I received a very welcome and interesting comment on my blog post, “Deficit reduction is not austerity; it kills capitalism”, from Rschard1. The commenter argues that my own argument is technically correct but ignores the messiness of historical contingency. I am, the commenter states,
“glossing over the uncomfortable truth that recessions caused by voluntary deflation have, without any exception I know of, led to horrid consequences for the working class.”
“Der Kampf gegen die Arbeitslosigkeit”
As support for his/her view, the commenter presents the classical case of fascist full employment policies of the German Nazi party. While the German Marxists followed what the commenter argues is essentially my solution for the Great Depression, the fascist introduced a series of measures to create jobs by rearming Germany and preparing it for World War II. These policies rapidly brought Germany to full employment, just as Keynes predicted they could and aided the fascist rise to power. Austerity, as the commenter argues, is great for the more advanced countries, but terrible for countries like Greece.
I have been rereading the paper by Kallis, Kalush, O’Flynn, Rossiter and Ashford, “Friday off”: Reducing Working Hours in Europe. I first learned of the paper when it was tweeted by Alex Tsipras on the night SYRIZA was elected to lead 
the government of Greece. I found it remarkable that this paper, which calls for a reduction of labor time, was being distributed by the head of that radical party on the eve of its victory. Did it signal his intention to pursue a new, radical, approach to the crisis in the European Union?
After that initial reaction, I’m now beginning to understand how the argument of Kallis, et al. was limited by a flawed approach to labor hours reduction in which labor hours reduction is essentially treated as just another tool of fascist state management of the economy. Many of the flaws relate to their poor (perhaps, non-existent) grasp of the basics of labor theory and reliance on neoclassical theory to make their argument. Those flaws can be broken down into three questions:
The following is my take on their approach.
The beauty of reducing hours of labor is that it appears to be an insignificant reform, 
when, in fact, it has the potential both to lay the foundation for communism and destroy capitalism. The significance of the conflict over hours of labor is as deeply obscured by capitalist relations of production as the role labor plays in the production of surplus value. However, anyone familiar with Marx’s reasoning, would understand why he called the struggle for reduction of hours of labor, “the modest Magna Carta of a legally limited working day.”
Anti-euro advocates increasingly have to characterize the SYRIZA government as a failure. Thus, SYRIZA is trapped between bourgeois ideologues who spin its brief stint as government a failure and Leftists ideologues who do the same.
The problem: Dimitris Pavlopoulos and Yiorgos Vassalos argue that even the mildest Keynesian policies are not possible within the eurozone:
“If one thing has become clear, it is that the long-expected change of course in Greece and the EU more broadly, will not come just because SYRIZA has come to power. The question that emerges is whether things could have gone, and can still go, differently. Is it possible for a left government in an austerity hit country to apply even a mild Keynesian policy while remaining within the eurozone and the EU? The answer is simply NO!”
But it was already understood by most observers before SYRIZA won the election that Keynesian policies could not be successfully implemented within the eurozone. This problem has nothing whatsoever to do with SYRIZA, but with the structure of the eurozone itself, which essentially strips the nation state of its fiscal and monetary powers without creating an alternative authority to implement countercyclical policies during economic downturns.
The Left and SYRIZA already knew this before the elections and should not be complaining about it now.
Here is another silly attempt to fix capitalist crisis with money: “Why Understanding Money Matters in Greece” by Robert W. Parenteau. It is typical MMT nonsense:
“The modern state, then, imposes and enforces a tax liability on its citizens, and chooses that which is necessary to pay taxes. That means a state with a sovereign currency is never revenue constrained. In fact, the government has to first create the money before the private sector can find a way to get the money it requires to pay taxes and by government bonds. Taxes and bonds are therefore not really the source of government funding or finance.”
The standard MMT boilerplate thus argues the state creates money before taxing this money back into its coffers. It “creates” the paper first, and employs the paper to purchase “goods and services” from the private sector; then it taxes the private sector for more or less the full amount of its purchases.
“Taxes simply give value to money, as households and nonbank firms cannot create money – that is counterfeiting. Instead, they have to sell an asset or a product or a service to the government to get money, or they need to be beneficiaries of government corporate subsidy or household transfer programs to get money.”
So, when individuals and businesses do what the state does, print up a bunch of currency and spend it, this is ‘counterfeiting’; when the state does it to individuals and businesses — not so much?
By the time you read this, SYRIZA will likely be the governing party in Greece. That said, 
SYRIZA will find its desk filled with a large number of pressing problem, the most important of which — according to common wisdom — is what to do about the debt. Here is my suggestion: Tell Greece’s creditors to screw and let the state go bankrupt. The only path for SYRIZA out of the crisis is to let the already failed Greece state fail officially as well.
