Greece and Europe: Why the Left Is Not Enough 10


This is the second post on economics, challenging the orthodoxies of the Left critique in our time. It is about another Greek drama, about agony and ecstasy in twelve parts – about why the glimmering hopes of a radical change will not materialize and be met this time around. It is not because, like many on the Left are bound to say, that Syriza’s electoral victory will be betrayed and not “genuinely left” enough. No, it is because the new Left victory in Greece is really just the old Left. This movement lacks the cultural, intellectual, analytic, technological and economic understanding to actually maneuver towards brighter days. I’m sorry, but that is my honest assessment. You are bound for failure, because you simply don’t know what you are doing.

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“The right kind of austerity is the best thing in the world. Another word for “good” austerity is “economic sustainability”. But the wrong kind of austerity is extremely harmful. The question was never to spend or not to spend.”

What Syriza gets right

There are some things that the Syriza movement gets absolutely right. First and foremost it is the ethical and pragmatic question of the Greek debt. There is no reason to treat national economies as individual people with their own debts and individual budgets. Because they are just not. They are part of a transnational economic, globalized system – a system that produces winners and losers, accumulation of capital and labor and vast swathes of desolate zones. Greece is not a person who “owes” this or that to Germany or France. It is a node in a system that has crashed the Greek economy and subdued it to a fiscal form of domination.

The Greek population is not “responsible” for all those abstract flows and dynamics. All that talk is the product of a reified idea of the collective we call “nation state” and of a basic misunderstanding about how the economy works. Syriza and related movements on the Left and Right are completely justified in their resistance against the debt. It is unjust and counterproductive to all the parties involved, because insisting on this debt has few gains for Germany, great losses for Greece and it fundamentally undermines the European project and its legitimacy (which also means that Germany loses out in the long run).

The second thing that Syriza gets right is its general suspicion towards austerity measures. Now, this is said with a very big caveat, namely that austerity is anything but a binary question of yes-no. The right kind of austerity is the best thing in the world. Another word for “good” austerity is “economic sustainability”. But the wrong kind of austerity is extremely harmful. The question was never to spend or not to spend. The question is to understand the fundamental structures of the economy and act upon them in a deliberate, non-linear fashion. This means that you may need an economically active government in order to tackle crisis by creating a wide range of opportunities for the economy to gain more complexity, finding more pathways to activate people in genuinely productive ways.

Complexity of Greece Economy

The composition of Greek exports 2010.

What Syriza gets wrong

The first thing to understand about a movement like Syriza is from what general perspective or narrative (analytic and emotional) it is coming: both its leadership and its political mandate in the electorate.

More than anything, Syriza is a movement against the austerity measures and the power balance in the European Union. Its chief narrative goes something like this:

The evil international capital has attacked and robbed the Greek people in order to make a few people rich, ruining the lives of so many innocent, honest folks. Now a few a heroes are arising, with the courage and clarity to call a spade a spade, and to do the right thing, which was really obvious all along: go left! Just say no to the rich and powerful and start giving it all back to the people.

This is a core narrative. Because it is analytically so faulty, its ability to produce desired effects in the real world is very limited.

The first thing to note about this narrative is that it draws its main legitimacy from a resistance against the “neo-liberal” European Union. But if you look at the mandate from the electorate, the legitimacy of Syriza is simply the combination of being the Left alternative (like to social democrats) that is EU-aversive (not like the social democrats).

So the faulty narrative set aside, the reason that Syriza is getting all the action and the moderate center-left almost none, is simply that they represent a popular combination of being Left, and having a narrow, nationalist view on how to fix the economy. The Syriza movement is a displaced center left. Its legitimacy among its supporters is largely the same as the other popular movements against the EU. It is parallel to Podemos in Spain (although Podemos is a somewhat more progressive version). But, more relevantly, it is the parallel of right wing movements such as Alternative für Deutchland in Germany, UKIP in the UK – and the Independent Greeks in Greece. And yes, the first move of Syriza was to gang up with none other than the Independent Greeks (a more conservative version of UKIP).

The parallel to these right wing movements is the simplistic and populist resistance to the EU within the frames of a national mindset. What we need to understand is that both Syriza and Alternative für Deutchland are the same popular impulse: “No man! We’re not gonna let some greedy bureaucrats and big business run off with our gold and share it with those nasty Greeks/Germans! We’ll stand up for the common people and stick together with our own national economy and its interests!

Alternative für Deutchland and Syriza are fundamentally the same movement! They have the same drives, the same logic, the same simplicity and bad-guy theory! Just so happens one is Left and South of the fence, the other is Right and North of the fence. What these movements don’t see is that neither has the solution for the fundamental transnational problems of the economy and that they are both likely to antagonize and vilify each other to the detriment of everyone involved.

And what is worse, perhaps, is that both movements are built on quicksand. Neither actually has an ideology more efficient and superior to the prevailing green social liberalism of European politics. They have an electoral mandate to defy the European Union, and “save the common man” (with opposite measures) and they mistake this for a mandate to radically transform society. They have no such ability or mandate, and they will fail at any such attempt. They will also fail at saving the economy.

Syriza

But they need a better plan, and a better mandate.

What Syriza gets really wrong

The thing about Syriza and similar movements is that they haven’t updated their view of culture, democracy, the economy, international politics or technological development.

They do not understand that you can’t just stimulate away with a new wave of spending, unless you have a very specific and intelligent plan for how that would create long-term, lasting value. If you start fighting capital within the borders of little Greece, capital just flees. If start spending without having the fundamentals of your economy right so that you actually gain a strong position on the international market, you get inflation and a patron state with passive client citizens – which is where this mess started in the first place. And if you let Germany and the US get all the high quality growth, you are outcompeted again and you will be back in a worse crisis than when you started.

Getting off the Euro so that Greece can use inflation might be a short term remedy for this, but really this is a solution that is bound to backfire.

What needs to be done is to write off the debt and to gather international, long term support for cultivating a Greek economy that offers sustainable, genuine value to the European and global markets. Such value can be:

  • A cultural development towards higher value memes, so that the art, ideas and services of the country become symbolically valuable on the global market.
  • An increase in the collective intelligence by deepening or refining democratic self-organization and participation.
  • A refinement of the complexity of the economy so that the relative position of the economy is improved and people are activated in ways where they create genuine, long-term value for themselves and others.
  • That the country gains more favorable relations with the surrounding world, not on a governmental level but in the real world, by offering things and services that are highly valued by other populations. Green energy, progressive health care, social entrepreneurship – these things may be good candidates.
  • That the country takes decisive steps to entering the Bio-Info-Nano-Cogntive (BINC) age, which includes stimulating the founding of companies within these areas and making sure there is an abundance of research going on.

All of these are long term goals. They are not in opposition to anything like the EU. They require not angry resistance, but a cool head, an open heart, imagination, analysis – and the friendship of neighboring countries and populations. The achievement of such goals is not helped by an antagonistic, downright stupid, black-white narrative about the evils of global capital.

“What needs to be achieved is a fundamental remake of the Greek economy, its position on the world market, and the functionality and intelligence of the Greek democracy.”

What needs to be achieved is a fundamental remake of the Greek economy, its position on the world market, and the functionality and intelligence of the Greek democracy. From such a position, the more radical currents of Syriza may actually find a home: shorter workdays, better social security, perhaps even basic income. These things are achieved by the common effort of many countries and economies. They cannot be achieved by denying the economic relations and realties of today and fantasizing about the magic powers of socialism in one country. We have heard that before.

The radicalism of Syriza today is understandable, but quite misplaced and misrepresented. The movement has very little real possibility of changing Greece, let alone Europe. We must, unfortunately, see it for what it is: another populist movement with a shaky popular support, a weak analysis of our times, and a poor plan for its country.

Calling a spade a spade. Sorry.

-

Hanzi Freinacht is a political philosopher, historian and sociologist, author of ‘The Listening Society’, and the upcoming books ‘Nordic Ideology’ and ‘The 6 Hidden Patterns of World History’. Much of his time is spent alone in the Swiss Alps. You can follow Hanzi on his facebook profile here.


10 thoughts on “Greece and Europe: Why the Left Is Not Enough

  • Anthony Binder

    Could have helped with a study of Syriza’s own agenda – not one that is concucted in media – there is loads of economic studies I could recommend as well as substance for analysis, not least from German researchers that could benefit any analysis. Just to many incorrect views on Syriza’s agenda to comment.

    • Hanzi Freinacht Post author

      Hi Anthony. From a reading of the Syriza congress paper this really is my assessment. I seriously don’t see this movement emphasizing the things I believe would help overall. This being said the new finance minister of Greece is a very interesting guy http://yanisvaroufakis.eu/

      Some friends pointed this out and yes, I should definitely have discussed it in the post. Varoufakis has a similar critique of Piketty as I have proposed in an earlier post.

  • petermartin2001

    If Greece’s creditors wish to see any of their money back, there has to be a recognition that something has to change, and notwithstanding any useful improvements that might be made to the Greek taxation system, primarily that change has to come from the Germans and the EU governing class. The Germans, and others, have to realise that if they want to run a trade surplus, which they seem to like doing, (it was about 7% of GDP the last time I looked), then they should be actively encouraging other countries, including Greece, to run deficits. The larger their deficits the higher the German surplus.

    Naturally, those trade deficits translate into government budget deficits too. That way the Greek government spends Euros into its economy so that ordinary Greeks will be able to afford more German imports and so further increase German trade surpluses.

    If it sounds that everything is working backwards, that’s because there it is. Surpluses are considered good, but how it is good that I swap $5 worth of goods and services for $4 worth? OK so I have a $1 of surplus what can I do with it? If I spend it I’m not in surpus any longer.

    What is the point of Germany insisting that Greece and everyone else in Euroland runs a surplus too? How can Germany ever be repaid when it always wants to run its own, even bigger, surplus? Why does it even care about being repaid in money it can never spend? Germany, and German creditors, can only ever be repaid when it decides to change its ways and run a deficit in trade and a deficit in its Government budget.

    In the world of international trade, debts can only be repaid in things. ie real goods and services. If Country A exchanges more things, for fewer things, with Country B, so putting Country B into debt, that debt can only be repaid, at some time in the future if Country B gives Country A more things than it gets back. That means country A has to go into deficit to be repaid.

    So, the battle isn’t just between Greece and Germany. It’s between German neoliberal economic stupidity, otherwise known as ordo-liberalism, and the idea of scientific rationalism.

    • Hanzi Freinacht Post author

      Hi Peter. I agree that Germany’s strict policy is counterproductive – but we should be careful with what “scientific rationalism” we place in opposition to it. Like I say, there is good and bad austerity, and good and bad spending.

      • petermartin2001

        Yes of course there is good spending and bad spending. We can all think of examples where governments have spent money, ie utilised available resources, in very bad ways indeed. They have made very poor choices. They should have utilised those resources better.

        But, there’s only bad austerity in the current circumstances. If high inflation were a problem there would be a case for cutting back on spending but that’s not the same thing as austerity. Science is based on the idea that we collect evidence to support our beliefs. There is simply none that imposed regimes of financial austerity have ever worked. There is no scientific basis for thinking that economic austerity can ever work. It is an irrational concept.

      • petermartin2001

        Hanzi,

        Perhaps I have not explained myself very well. I will try another approach. Germany prides itself on being an exporting country, but, those excess exports (7 % of GDP) are causing a big problem in the Eurozone.

        Trade is a good thing. If I grow apples and my neighbour grows pears then it makes sense for us to trade. I give my neighbour 5 apples and he gives me 5 pears. Some weeks my neighbour may only have 4 pears to spare. So I give him 5 apples and he gives me 4 pears so I have a surplus. The next week I give him 4 apples and he gives me 5 pears so we are even again. That week my neighbour has the surplus. But it does not make any sense for me to give out 5 apples every week and every week my neighbour only gives me 4 pears. As the weeks go by my neighbour is getting more and more into debt. After a a few years of this he owes me so many pears he cannot possibly pay. Also I don’t actually want several hundred pears anyway. What am I going to do with them? So I get upset because my neighbour has the debt, he doesn’t have anything I want to buy, but I insist he pays anyway, even though I won’t buy anything more off him. I really like running that surplus!

        Do you see the problem now?

          • petermartin2001

            Hanzi, I don’t think it does agree. For example you say; ” What needs to be done is to write off the debt and to gather international, long term support for cultivating a Greek economy that offers sustainable, genuine value to the European and global markets.”

            There doesn’t need to be any writing off of Greek debts. In fact that’s not going to solve anything. Instead, there does need to be a recognition by all Greek creditors that Greece cannot repay its debts directly in euros. So, they have to be repaid in goods and services. Tourism. Olives. Feta cheese. Ouzo. Shipping. Whatever Greece makes, does and sells, Germany needs to buy to enable the debt to be settled.

            And it needs to buy more from Greece than it sells to Greece. That way Greece ends up with the euros, which pays the Greeks for growing the olives, running the tourist hotels, making the cheese etc . This enables the Greek economy to give jobs to the unemployed, improve its Government’s tax revenue base, and also enables the Greeks to service, and eventually settle, their German debts.

            The same naturally goes for Spain, Italy and even France. In other words, German debts get repaid when, and only when, Germany decides to accept real goods and services instead of euros. This in turn means that Germany has to run an economy more along the lines of the UK and the USA economies and import more goods and services than it exports.

          • Hanzi Freinacht Post author

            Ah, sorry, I actually didn’t understand that this was your suggestion! An interesting line of thinking. Thank you for bringing it up.

            Are there economists who have expanded this line of thought, maybe you have somewhere?

  • petermartin2001

    Well, my thinking is influenced by people like Bill Mitchell, Steve Keen and Yanis Varoufakis. Not that all three are in total agreement! Bill Mitchell is of the opinion that the Greek economy will never function properly with the Euro. Yanis is more optimistic. Theoretically I think Yanis is correct. But I fear Angela Merkel will ensure that it is Prof Mitchell who is seen to be right. He’s got a book coming out on the European question shortly which you might want to look out for.

    Ironically, the solution is not for Germany and Holland to pay more. The solution to the Greek “debt problem” involves putting them less into debt, rather than more into debt, as the so-called bail-outs do, and which of course means that the creditor countries have recovered their money rather than lost it. That’s just basic accounting.

    The end result is that Germany ends up better off not worse off. But,it does means fixing the Greek economy rather than breaking it. It means working with people like Yanis Varoufakis who, I believe, genuinely want to do that. What has Germany got to lose? Nothing. The only chance Germany has of coming out ahead is Greece comes out ahead too. There can be no repayment or even servicing of debts otherwise.

    I hope I am wrong in thinking that Angela Merkel and the other German ordo-liberals are far too pig-headed to allow that though!

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