Can SYRIZA be fixed? Can Greece?
by Jehu
If this Jacobin article, Becoming Syriza Again, is any indication, even the remaining radicals within SYRIZA have no idea why it is failing.
The writer acknowledges that the debate over Greece leaving the euro, which raged within SYRIZA for a period of time before the split, was an oversimplification. However, even now he proposes no alternative economic program that would allow SYRIZA to achieve its stated aim of bringing austerity to an end while avoiding Grexit.
He proposes a 5 step solution in which SYRIZA must:
- Hold onto power;
- Stop fighting with KKE and other Leftists;
- Eliminate opportunism in its ranks;
- Reconsider staying in the eurozone; and,
- Put forward a new vision that inspire the country.
Here is my problem with this essay.
Earlier in the essay the writer said the debate within SYRIZA over Greece remaining in the euro was an oversimplification of the real issues:
One of the notions created was that all those who proposed a vague plan B (mainly the Left Platform) were identical with the radical-wing Syriza. Arguments around the party’s strategy were often reduced to the simplistic euro vs. drachma dilemma.
Yet, despite calling the debate over Grexit simplistic, he still maintains SYRIZA should reconsider staying in the euro.
If staying in the euro was never a problem, why was it never the problem before the split? And why should SYRIZA reconsider its decision now, after the splits and the collapse of the first SYRIZA government?
SYRIZA has no economic plan
The self-contradictory logic in his discussion of remaining in the euro points to the real problem with SYRIZA and with his analysis. The debate over Grexit didn’t matter because whether SYRIZA decided to keep Greece in the euro or move the country outside it, it has never had any idea how to address the austerity imposed by the EU.
The primary reason why it didn’t matter whether Greece stayed in the euro of left it is that SYRIZA only wants to address austerity as a set of economic policies imposed by the ECB, the IMF and the EU without ever touching on the underlying capitalist material relations of production that are driving austerity. There is also the profound political problem that SYRIZA wants to address austerity while clinging to the existing state power.
But is it possible to cling to state power when austerity policies are driven precisely by the debts accumulated by the state on loans from the banks, the IMF and the EU? If pensions are being reduced while the working lifetime of the labor force is being extended, this is only because the state needs more cash to service its debts to the banks, the IMF and the EU.
Unlike the United States and the United Kingdom, the state cannot simply print up currency to cover these debts. And unlike Germany and China, the economy is not running the trade surpluses necessary to service the state’s debts. Since Greece has neither control of its currency nor sufficiently large trade surpluses to service its debts, the state must impose austerity on workers if its to repay its debts.
Will Greece eat or pay its debts?
The problem at this point is that both the state and the working class are fighting over the same pot of cash — the working class needs it to eat, the state needs it to pay its external debt.
SYRIZA’s problem is that it wants to have its cake and eat it too: to avoid reducing the state sector and avoid imposing more austerity on the working class, But it cannot do both — the math doesn’t work. So, SYRIZA is being forced to choose between the clinging to state power and imposing more austerity on the working class. This contradictory position has produced a crisis in the party leading to the split and bringing down its first government.
The immediate political crisis was created by the fact that a large part of the subsistence of the working class depends directly on state expenditures. This is also true of a significant share of employment as well as the income of public pensioners. Any effort to reduce the state expenditures on which the working class depends must also directly and indirectly reduce the living standards of the working class who are dependent on them.
Some folks on the Left think this problem can be fixed not by reducing state expenditures, but by “growing the economy” as a whole. However, this too is an illusion, since the only way to grow a capitalist economy is to create more surplus value; and since increasing surplus value means wages mist fall; folks who think Greece can just magically grow its way out of this crisis either ignorant of how capitalist growth is achieved or deceiving the public. They either don’t know capitalistic growth requires production of surplus value and lower wages or they are trying to conceal this fact from the rest of us.
In any case, paying off the debt by austerity measures or by growing the economy has the same impact: both point to lower wages for the working class. Under any neoclassical, Keynesian or heterodox scenario I can see, the Greece state cannot pay its debts or grow the economy without imposing more austerity on the working class.
Greece has gotten to the point where there is absolutely no way around this under any of the prevailing bourgeois economic approaches.
Default cannot fix austerity
Given this dead-end, the SYRIZA government could just default — refuse to pay its public debts entirely. However if the state does not pay its debts, it will be locked out of the credit markets. Greece won’t be able to run a deficit because no one in their right mind will lend to it at least for the foreseeable future. By not paying its debts the state will at least be forced to run a balanced budget even if the ECB, IMF and EU do not retaliate and bring down the entire economy. Its expenditures will have to be matched by its tax revenue, because no one will trust the government. Locked out of the credit markets, it still will be unable to “grow” the economy through deficit spending.
If that is not bad enough, the government will lose all economic policy control. If the economy continues to contract, as has been happening for the last six years, it still will have no ability to offset this contraction through the usual policy tools of deficit spending and lowering interest rates. Moreover, as the economy continues to contract, the state will be forced to add to this contraction by reducing its spending even as unemployment and poverty rise.
This is the economic dilemma SYRIZA has been unable to figure out. It is the dilemma the author tries to sweep under the rug in his essay. And, finally, it is what caused the party to split and brought down its first government.
Grexit cannot fix austerity
The writer wants this problem to go away because he has no answer for it. It can be seen that the problem SYRIZA faces has nothing to do with cadre, organization, opportunism or fighting with other parties. All of those problem are just a smokescreen to deflect our attention away from the heart of the author economic argument: Greece should leave the euro.
Although we are told the debate over the euro was unimportant, reconsidering Greece’s membership in the euro is his only concrete economic proposal.
But there is a big problem with this proposal: 80% of voters want to stay in the euro. Some may think this opinion is pure ideology, but this same ideology is right now moving tens of thousands of refugees into the eurozone. Everyone who can travel is trying their best to get to the eurozone. But this writer wants Greece to reconsider leaving the eurozone.
Moreover, even assuming Greece did leave the euro, what happens next? Venezuela, which had both an export surplus and its own currency, is a basket case. While Venezuela is not Greece, this suggests, at the very least, that leaving the eurozone requires more than just changing currencies. If Greece leaves, it will have its own currency, but it will not have a trade surplus sufficient to make good on that currency. Its creditors, lent it euros and will want to be paid in euros and its trading partners will demand euros as well. Even outside the Eurozone, Greece lacks a realistic economic plan B.
The state versus the working class
Greece is a rapidly warming pot of water with two crabs — the state and the working class — each whom is trying to get out of the pot. Each one is pulling the other one back into the pot. Meanwhile, SYRIZA thinks it can represent the interests of both. Sooner or later, SYRIZA will be forced to choose between the state and the working class.
SYRIZA could very easily end this crisis by attacking the state and quickly cutting everything that does not impact the living standards of the working class. The military, for example, consumes 2.3% of GDP, produces nothing and is not economically sustainable. Greece does not need a military.
Nor does Greece need a government that operates five days a week — most of it can be shut down for all but 2 days a week. This shutdown can be accomplished with no cut in salaries or the wages of the soldiers. The public employees need only work two or three days a week in return for their regular salaries.
Third, it costs the government nothing to end the chief cause of poverty in Greece: low wages. SYRIZA can fix this by mandating all business owners pay a minimum wage equal to the average wage for the EU. This will end the need for all programs for the working poor.
Fourth, it costs nothing as well to end the chief cause of unemployment in Greece: hours of labor are too long by European standards. SYRIZA can fix this by simply mandating a workweek that is the same as Germany – 1300 hours per year versus the present 2000 hours.
If everyone has a job at a minimum wage set to the EU average, all poverty should be eliminated in short order. Again, none of this requires any new spending by the Greece state.
To recap: the state does not require new spending to:
- Reduce its hours of operation;
- Cut its military to zero;
- Raise wages; or
- Reduce hours of labor
The state must go if the working class is to eat
Most writers insist SYRIZA can only address the problem of poverty and unemployment by increasing state spending. The opposite is true: SYRIZA can only address poverty and unemployment by cutting state expenditures and putting in place social policies that universally guarantee no one is left without a job and decent wages.
SYRIZA has no way to escape unemployment in the foreseeable future — if ever — by relying on Keynesian policies. And it has no way to escape poverty by simply waiting for economic growth to restart in some equally imaginary future.
Will SYRIZA meet resistance from the EU for these steps? Yes, but no more than it is facing now. The EU is speaking for the interests of Greece capital and these steps crush Greece capital.
SYRIZA must make a choice between the state and the working class and soon.
SYRIZA can never be fixed and cant fix Greece either, for the simple reason that SYRIZA has nt got any plan,it has nt got a right-wing plan and it has nt got a left-wing plan either.
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I really appreciate your blog. Thank you. I have one question because I’m really bad at economics: why does producing surplus value (growth) lead to lower wages?
Isn’t the neoclassical argument that a growing economy increases the price of labor, as production increases and more workers are needed to increase the rate of production? I.e. Higher demand for labor increases its price.
In any case I found the analysis to be otherwise very well explained and again thank you very much for your consistent production.
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Hi Gabriel,
I’m not Jehu, but I’ll take a crack at your question anyways.
I think you’ve got the causation backwards. It is lower wages that leads to the production of more surplus value. Although it does imply that, if surplus value is lacking, one solution is to lower wages.
The neoclassical argument that a growing economy increases the price of labor is also a correct observation. The two statements are not mutually exclusive. During the boom phase of the industrial cycle is when labor-power is in the scarcest supply and when workers obtain the most leverage versus their employers.
Only Marxist theory, though, explains why those boom phases must inevitably end (neoclassical theory assumes that the boom could go on forever, if only it were not for nefarious XYZ factor). If the boom phase went on forever, wages could get bid up higher and higher, cutting into and eventually erasing surplus value generation (and thus profit), which would destroy the incentive to employ people, leading to a recession. From the standpoint of capitalism, recessions are the necessary corrective to make sure that the rate of surplus value stays high enough.
I recommend reading this article for more information:
The Phases of the Industrial Cycle, Part 3: The Boom
https://critiqueofcrisistheory.wordpress.com/the-phases-of-the-industrial-cycle/the-phases-of-the-industrial-cycle-pt-3/
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Great article, Jehu! But I want to quibble about a few points you made.
“SYRIZA could very easily end this crisis by attacking the state and quickly cutting everything that does not impact the living standards of the working class.”
Exactly! Now, what are those sectors?….
“The military, for example, consumes 2.3% of GDP, produces nothing and is not economically sustainable. Greece does not need a military.”
I agree that Greece does not need a military, but you are going to have to persuade a lot of people on that one. Still, let’s take that as a given. This is a good start, but it is only 2.3% of GDP. And cutting spending on the military necessarily means not paying soldiers to be soldiers, among other things. What are those people going to do to survive?
“Nor does Greece need a government that operates five days a week — most of it can be shut down for all but 2 days a week. This shutdown can be accomplished with no cut in salaries or the wages of the soldiers. The public employees need only work two or three days a week in return for their regular salaries.”
I’m sorry, but if you don’t cut pay, then you won’t have accomplished anything. Cutting service hours while keeping the pay of public employees the same will just mean shittier public services. Longer lines, more hassle, etc. Now, if you cut hours AND keep pay per hour the same (and thus cut total salaries), then you might be getting somewhere…but that will also mean cutting the subsistence of a large part of the population.
“Third, it costs the government nothing to end the chief cause of poverty in Greece: low wages. SYRIZA can fix this by mandating all business owners pay a minimum wage equal to the average wage for the EU. This will end the need for all programs for the working poor.”
Hahaha…can you say “capital flight”? Not being able to make a profit after having to pay such higher wages, capital owners will be pulling their money (and any physical capital not cemented to the ground) out of Greece and into greener (more profitable) pastures so fast it’ll make your head spin. What’s the only thing worse than 25% unemployment? 100% unemployment.
“Fourth, it costs nothing as well to end the chief cause of unemployment in Greece: hours of labor are too long by European standards. SYRIZA can fix this by simply mandating a workweek that is the same as Germany – 1300 hours per year versus the present 2000 hours.”
Yes, but employers won’t want to do this if they still have to pay the same salaries to workers. Once again, capital flight. Employers will pick up and move out of Greece so fast, it’ll make Flint, Michigan look like a paradise. Even with work-sharing, if there’s no employment at all, there won’t be anything to share….
“If everyone has a job at a minimum wage set to the EU average, all poverty should be eliminated in short order.”
If.
Sadly, that’s not going to happen. Here’s what the Greek state will have to do after following your advice:
1. Institute capital controls. No capital leaves Greece. Any time someone leaves the country, they will have to be checked at the border to make sure that they are not smuggling currency, factory tools, or any other capital out of the country. (This also means no new capital will want to come to Greece, of course. Which means that Greece will have to be self-sufficient in EVERYTHING it needs. Think “Mediterranean Cuba.”)
2. Even if the capital is imprisoned in Greece, capital owners will not want to productively employ it if their only reward will be the certainty of reaping a loss on that capital. So they will try to hoard their capital “until a better business climate arrives” (perhaps at the hands of a military coup or a column of NATO tanks).
3. So, to get anything running, the Greek state, or workers themselves, will have to seize physical control over the means of production and put it to work—not to run them as worker-owned or state-owned businesses to produce surplus value (because the workers or the state will have no better luck at that than the previous owners), but to run them as worker-controlled, syndicalist-planned collectives producing use-values for the immediate use by society, to be rationed to various collectives and members of society according to how some democratically-elected and recallable planning board sees fit. (And questions about how this rationing could work are precisely the sort of thing I have been trying to investigate on my blog recently. Check it out!)
In other words. FULL COMMUNISM. No half-measures are possible. Your road leads straight to full communism within less than a month, I’d reckon. And Greek workers intuitively know this. Only if they are confident that they can manage such a communist society, that it will work, and that they can do so SELF-SUFFICIENTLY and while POSSIBLY ALSO HAVING TO DEFEND THEMSELVES AGAINST EXTERNAL ASSAULT, will they leap into such an experiment.
I’m sorry, but I don’t see Greek workers having this sort of courage. Not enough of them. At least, not yet.
What will happen instead? Well, the Greek depression will worsen, and the labor market will worsen enough that wages will be cut to the point where it is once again profitable to hire workers to produce surplus value, and Greek will start a miserably slow “recovery” that will probably last decades to bring Greece back to where it was before this depression, and meanwhile many Greeks will die in misery. Hey, I didn’t say that I WANTED this. But it seems that there are not yet enough Greek workers who think that full communism is yet possible, so this is the alternative that they will be stuck with.
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Full communism isn’t the answer for Greece. Greece is just about self sufficient agriculturally, so if the question was simply food production, the Greek population would be able to have a comfortable autarchy. Unfortunately for Greece, there are other questions, but I’ll just point out energy: Greece produces 1/200th its oil needs ( http://www.indexmundi.com/energy.aspx?country=gr&product=oil&graph=production+consumption ), renewables take up 40% of its energy production (meaning that oil consumption accounts for nearly 60% of energy production–coal is insignificant, but it too is imported more 50 times more than is exported), and it needs to import electricity itself.
What this means is that even this ‘just about self sufficient’ production of food is dependent on imports just to get it to market.
An autarchic Greece, whether that’s full communism or not, won’t be able to survive.
There is nothing Greece can do. Greece needs an integrated world economy, or at least a European one. It needs to trade. If it can’t trade, and it has fuck all to trade and will have even less if it goes autarchic.
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I agree Roxy. That’s why I think you’d need a somewhat geographically large entity (such as North America, or the EU as a whole, or the former Soviet Union now that it is more industrialized) to take the plunge into full communism together as a single unit. Not necessarily the ENTIRE world all at once, but at least a large-ish unit.
Because that society is going to be cut off from world trade until the rest of the world follows in its footsteps, and so there needs to be a reasonable basket of raw materials, existing capital, and know-how within that full-communist geographical entity to begin with. Plus, it doesn’t hurt to have a large enough population that it would have the muscle to defend itself military against the rest of the (still capitalist) world if/when it needed to do so.
Greece cannot do it alone. The Greeks will understandably capitulate and worker for lower wages sooner or later if the rest of the EU (especially Germany) does not lead the way to full communism.
Germany has always been the achilles heel of European communism. Torn between the communists and “Herrenvolk” imperialist capitalism, the Germans have never quite risen to the leading revolutionary role that they, by all rights, ought to have played.
(Although the same can be said of the United States as far as North America is concerned. The U.S. and Germany are very similar in many ways. The U.S. is what Germans like Hitler aspired to but have always fallen short of: an imperial capitalist power that expanded west (east in the case of Germany), killed off the native Indians (slavs and Jews in the case of Germany), and used the proceeds of continental and world imperialism (and internal racism) to cultivate a labor aristocracy of (white) petty-capitalist homeowners who are more worried about their real-estate returns than the prospects of freeing themselves from wage-slavery through communist revolution.
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Syriza would probably collapse, but the fact that leftist governments began winning in Europe is a sign of a new era
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2017.Greek banks with Left SYRIZA Government, recapitalised with Greek pensioners money cuts, lend GERMAN FRAPPORT CO. to buy 14 main Greek airports, reminding the Occupation loan that Nazis obliged Greece to give to Germany in WW2.
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