Weekend Edition Jan 30-Feb 01, 2015
Greece Fights Back
Financial Blackmail and International Capitalism
Austerity is a malignancy in world economic development. The term
is loaded, connoting asceticism as applicable to an entire society when
in reality it applies only to working people and the poor, whilst upper
socioeconomic groups enjoy the fruits of exploiting those below.
Austerity is class-driven, and in the last several decades directed to
the financial sector as the source of wealth accumulation: that is, the
financialization of capitalism itself at the expense of a more rounded
capitalistic political economy with industrialism the major driving
force. Hence, the so-called troika looming over much of Europe’s
economic destiny (and presently affecting the global economy): the
European Central Bank, European Commission, and International Monetary
Fund—no disrespect intended, in failing to include the World Bank, US
Treasury, major hedge funds, investment banks, etc. If I may speak
broadly of the Investment Community, in my untutored way, you, the
Community, are a bunch of parasites and bloodsuckers enjoying the
protection of governments themselves wedded to banking interests seeking
to control of, among other things, global investment patterns and
international monetary standards. Bretton Woods is like, and is, a
distant memory in the game of world financial dominance compared with
what we have today. Even then (1944), because the US had a controlling
interest in the IMF and World Bank, currency stabilization, for one,
worked to America’s advantage. Now the stakes are still higher, with
“austerity” the Trojan Horse inside the capitalist compound, seeking to
create a world power division, in which Greece is but one of several
casualties.
But Greece is fighting back, and even if this still remains essentially an intra-capitalist struggle, the potential for an emergent socialism, or at the very least, democratization of capitalism on lines abhorrent to the current financial structure and nations supporting it. Greece is our David, in battle not merely against Goliath but the Behemoth of Mega-Capitalism. (Not coincidentally, I think, side-by-side with this resistance to international capitalism, Greece is also honoring its resistance fighters who fought against the Nazis in World War II.) So much ideological garbage surrounds the demand for and enforced movement toward austerity as both the sign of accommodation to the international financial system of monopoly capital and, as a consequence, the arbitrary designation of reputability so as to be able even to function in the world of credits, loans, investments, on impartial and fair terms. Bluntly, the weaker economies, already in ways large and small deprived of autonomous growth, are made hostage to the dominant powers, one of whose purposes is to keep them weak, subordinate, analogous to the reserve army of labor Marx discussed in his elaboration of primitive accumulation. The international financial division of labor is doing well, thank you. Now, the dynamic duo, Tsipras and Varoufakis, may just gum up the works. If in the process Greece is forced into default, one takes—at least I do—satisfaction in the drastic loss of values facing Greece’s creditors. (Perhaps Russia and China could come to the rescue, with ramifications for a realignment of the world power system. Ideally, in that regard, if Greece goes, so goes Spain, with others waiting in the wings.)
***
Liz Alderman’s New York Times article, “Tsipras’s Debt Plan Sends Athens Stock Market Sliding,” (Jan. 29), is an up-date on Greece’s initial skirmishes with European financial ministers after last Sunday’s election—indeed, a forthright position which somewhat quieted the troika’s braggadocio and threats after the results became known. Neither Tsipras nor Varoufakis is a loose cannon or nonentity; both are well-trained and understand the situation fully. And both are incorruptible, a trait in short supply until recently. Alderman writes: “Investors made clear on Wednesday [Jan. 28] the depth of their concerns about Greece’s new leftist-led government, driving up its borrowing costs, pushing down stock prices and highlighting the risks in the country’s banking system.” She might have added (and this is probably what is meant by “leftist-led”), in addition to antagonizing upper financial/power groups, the intent to halt the ongoing privatization of the previous government—a thorough housecleaning of the detritus left over by what Tsipras referred to as crony capitalism.
Alderman continues: “Despite some soothing words from Prime Minister Alexis Tsipras, who at the first meeting of his new cabinet said Greece would not seek a ‘catastrophic solution’ in its debt negotiations with the European Union and its other creditors, financial markets seemed increasingly rattled by his government’s pledges to reject the austerity policies imposed on the country over the last five years.” And well they might! These financial markets were not overly upset by the 25% rate of unemployment, or the cut in social services, but now they’re upset because Greece has the temerity to question existing international ground rules. More to the point, Varoufakis appears still more unyielding than Tsipras when it comes to staring down Greece’s creditors: “Later, the new finance minister, Yanis Varoufakis, appeared to harden the tone, saying that Greece’s bailout deals were ‘a toxic mistake’ and that the new government was determined to change the LOGIC OF HOW THE CRISIS HAD BEEN TACKLED.” (my caps.) He was calling for “a Pan-European New Deal, which would be a bridge between previous agreements and a new arrangement with creditors.” What that would be, is yet to be determined—but the term now widely heard is of course, the creditors will have to take a “haircut” in the new arrangement. (And since “haircut” has become synonymous in the capitalist mind with confiscation, we can expect, if not invasion or non-recognition, at least a retaliatory tightening of the screws as the Western financial game plan.)
The sham of it all: Tsipras spoke with Obama (Jan. 28), who putatively has been critical of austerity (perhaps in Europe, certainly not in America, as defense spending, corporate subsidies, and taxation policies eat wide holes in the social safety net), which, the reporter writes, he [Obama] qualifies by “recogniz[ing] the need for structural reforms to accompany growth policies.” Sham? “Structural reforms” refer to only one thing, the Washington Consensus, market fundamentalism, etc., right back to austerity as the prime vehicle for economic growth. After the call, a White House “spokesman made clear that Mr. Obama favored a balanced strategy.” The incessant double-talk, “reform” transmogrified into its opposite. She quotes Mark Stroh of the White House: “’The United States looks forward to working closely with the new Greek government to build on recent structural reforms, which lay the groundwork for economic recovery.’” Recent structural reforms: i.e., the old regime, austerity, on which the new government is expected to build. Stroh again, reform via the troika (all of the foregoing mine, not Alderman’s): “’We [the US] will also continue to discuss ways to boost demand and job creation with our European partners to help foster an environment that supports reforms in Greece and elsewhere in Europe.’”
Tsipras mightn’t have bothered with the call, so obvious the White House statement of lack of sympathy with Greece’s new government. As Stroh notes, America intends to work with “our European partners,” not with Greece, in support of reforms for Greece, and “elsewhere,” the prescribed course of austerity for Europe as a whole, a synchronization of economic repression to benefit what we might quaintly call, “market freedom.”
Already, Alderman states, “investors were rattled.” On Jan. 28, “the Athens Stock Exchange, where billions of euros in value were wiped out during Greece’s election campaign, fell 9.2 percent,” the day before, 11 percent, and also the 28th, Greek bank shares “plummeted nearly 27 percent,” and “the yield on Greek 10-year government bonds spiked” to 10.1 percent. Rattled investors, obviously used to having their way and being top dog. The Swiss Guard of the Vested Interests (as Veblen would say) got into action; the reporter writes, “European Union officials [in addition to bond yields “indicative of the new government’s borrowing costs”] also outlined a tough-sounding position on Wednesday before what would no doubt be long negotiations over the terms of Greece’s bailout and an effort by the new government to reduce the country’s mountain of debt.” The Three Horsemen of the Apocalypse, the ECB, EC, and IMF, are right up there, their spokespersons, here, Jyrki Katainen, of the European Commission, expressing the common refrain: Let’s talk, but “’We expect them [Greek government] to fulfill everything that they have promised to fulfill.’” No scaling down the debt there.
For his part, Tsipras, knowing the obdurate mood, told his cabinet (Jan. 28) that “his government’s top priorities in order” were: “tackling what he called the country’s humanitarian crisis [it is significant that he placed this first, the aforementioned widespread unemployment, etc., rather than servicing creditors’ interests], stimulating the economy so it could start growing sustainably, entering into a new negotiation with creditors aimed at finding a ‘mutually beneficial solution to the debt,’ creating a ‘fairer’ tax system, and confronting vested interests and corruption ‘that no one has had the guts to go against.’” Tsipras vowed in the meeting “to end what he called a regime of cronyism, in which past governments would ‘negotiate with the rich, but not to the benefit of the poor.’”
***
Greece, by standing bold, has a good hand. David’s slingshot is taking careful aim; Behemoth is actually if not quaking in its boots, is showing signs of extreme nervousness. Alderman writes: “The market gyrations, driven by investors’ bailing out of Greek assets, reflect fears over the coming showdown over Europe’s austerity ideology. If Greece exited the eurozone and reintroduced the drachma currency—something Mr. Tsipras says he has no intention of doing [but the hint is dropped, the fears and rumors spreading]—many of the Greek investments held by foreigners would plunge in value when the new currency was introduced at a sharp discount to the euro.” Too, questioning austerity can become out of control: “Also, by rocking the boat, the new government has turned an uncomfortable spotlight on the Greek financial sector’s dependence on the European Central Bank for exceptional funding support.” Matters I’m not qualified to discuss, such as emergency liquidity assistance, also come under review. Fortunately, Tsipras and Varoufakis are highly qualified economists.
Finally, we see the interrelatedness of debt servicing and privatization, the Damoclean sword the IMF and World Bank wield to place societies on acceptable capitalist foundations. Bait the hook, and then roll back the public sector! Here the reporter observes: “Adding to the uncertainty [both the flight of capital and the possibility of leaving the eurozone] was a report that Mr. Tsipras had basically frozen Greece’s privatization program, which had been a central demand of creditors in approving the country’s international bailouts. The troika had expected Greece to raise tens of billions of euros TO PAY ITS DEBTS BY PRIVATIZING STATE ASSETS.” (my caps.) Thus, the new energy minister, Panagiotis Lafazanis, “told Greek television that the government was immediately halting plans to privatize a public power company.”
Tsipras, having received positive messages from the leaders of Russia, France, and Spain, was ready to do battle, as can be seen in these eloquent words: “’The country is lifting up its head, assuming global significance, attracting international interest. Greece is regaining its self-confidence and building alliances that will allow it to set its own agenda at the European table. We have no time to delay. There is no room for mistakes.’”
My New York Times Comment on the Alderman article, same date, follows:
But Greece is fighting back, and even if this still remains essentially an intra-capitalist struggle, the potential for an emergent socialism, or at the very least, democratization of capitalism on lines abhorrent to the current financial structure and nations supporting it. Greece is our David, in battle not merely against Goliath but the Behemoth of Mega-Capitalism. (Not coincidentally, I think, side-by-side with this resistance to international capitalism, Greece is also honoring its resistance fighters who fought against the Nazis in World War II.) So much ideological garbage surrounds the demand for and enforced movement toward austerity as both the sign of accommodation to the international financial system of monopoly capital and, as a consequence, the arbitrary designation of reputability so as to be able even to function in the world of credits, loans, investments, on impartial and fair terms. Bluntly, the weaker economies, already in ways large and small deprived of autonomous growth, are made hostage to the dominant powers, one of whose purposes is to keep them weak, subordinate, analogous to the reserve army of labor Marx discussed in his elaboration of primitive accumulation. The international financial division of labor is doing well, thank you. Now, the dynamic duo, Tsipras and Varoufakis, may just gum up the works. If in the process Greece is forced into default, one takes—at least I do—satisfaction in the drastic loss of values facing Greece’s creditors. (Perhaps Russia and China could come to the rescue, with ramifications for a realignment of the world power system. Ideally, in that regard, if Greece goes, so goes Spain, with others waiting in the wings.)
***
Liz Alderman’s New York Times article, “Tsipras’s Debt Plan Sends Athens Stock Market Sliding,” (Jan. 29), is an up-date on Greece’s initial skirmishes with European financial ministers after last Sunday’s election—indeed, a forthright position which somewhat quieted the troika’s braggadocio and threats after the results became known. Neither Tsipras nor Varoufakis is a loose cannon or nonentity; both are well-trained and understand the situation fully. And both are incorruptible, a trait in short supply until recently. Alderman writes: “Investors made clear on Wednesday [Jan. 28] the depth of their concerns about Greece’s new leftist-led government, driving up its borrowing costs, pushing down stock prices and highlighting the risks in the country’s banking system.” She might have added (and this is probably what is meant by “leftist-led”), in addition to antagonizing upper financial/power groups, the intent to halt the ongoing privatization of the previous government—a thorough housecleaning of the detritus left over by what Tsipras referred to as crony capitalism.
Alderman continues: “Despite some soothing words from Prime Minister Alexis Tsipras, who at the first meeting of his new cabinet said Greece would not seek a ‘catastrophic solution’ in its debt negotiations with the European Union and its other creditors, financial markets seemed increasingly rattled by his government’s pledges to reject the austerity policies imposed on the country over the last five years.” And well they might! These financial markets were not overly upset by the 25% rate of unemployment, or the cut in social services, but now they’re upset because Greece has the temerity to question existing international ground rules. More to the point, Varoufakis appears still more unyielding than Tsipras when it comes to staring down Greece’s creditors: “Later, the new finance minister, Yanis Varoufakis, appeared to harden the tone, saying that Greece’s bailout deals were ‘a toxic mistake’ and that the new government was determined to change the LOGIC OF HOW THE CRISIS HAD BEEN TACKLED.” (my caps.) He was calling for “a Pan-European New Deal, which would be a bridge between previous agreements and a new arrangement with creditors.” What that would be, is yet to be determined—but the term now widely heard is of course, the creditors will have to take a “haircut” in the new arrangement. (And since “haircut” has become synonymous in the capitalist mind with confiscation, we can expect, if not invasion or non-recognition, at least a retaliatory tightening of the screws as the Western financial game plan.)
The sham of it all: Tsipras spoke with Obama (Jan. 28), who putatively has been critical of austerity (perhaps in Europe, certainly not in America, as defense spending, corporate subsidies, and taxation policies eat wide holes in the social safety net), which, the reporter writes, he [Obama] qualifies by “recogniz[ing] the need for structural reforms to accompany growth policies.” Sham? “Structural reforms” refer to only one thing, the Washington Consensus, market fundamentalism, etc., right back to austerity as the prime vehicle for economic growth. After the call, a White House “spokesman made clear that Mr. Obama favored a balanced strategy.” The incessant double-talk, “reform” transmogrified into its opposite. She quotes Mark Stroh of the White House: “’The United States looks forward to working closely with the new Greek government to build on recent structural reforms, which lay the groundwork for economic recovery.’” Recent structural reforms: i.e., the old regime, austerity, on which the new government is expected to build. Stroh again, reform via the troika (all of the foregoing mine, not Alderman’s): “’We [the US] will also continue to discuss ways to boost demand and job creation with our European partners to help foster an environment that supports reforms in Greece and elsewhere in Europe.’”
Tsipras mightn’t have bothered with the call, so obvious the White House statement of lack of sympathy with Greece’s new government. As Stroh notes, America intends to work with “our European partners,” not with Greece, in support of reforms for Greece, and “elsewhere,” the prescribed course of austerity for Europe as a whole, a synchronization of economic repression to benefit what we might quaintly call, “market freedom.”
Already, Alderman states, “investors were rattled.” On Jan. 28, “the Athens Stock Exchange, where billions of euros in value were wiped out during Greece’s election campaign, fell 9.2 percent,” the day before, 11 percent, and also the 28th, Greek bank shares “plummeted nearly 27 percent,” and “the yield on Greek 10-year government bonds spiked” to 10.1 percent. Rattled investors, obviously used to having their way and being top dog. The Swiss Guard of the Vested Interests (as Veblen would say) got into action; the reporter writes, “European Union officials [in addition to bond yields “indicative of the new government’s borrowing costs”] also outlined a tough-sounding position on Wednesday before what would no doubt be long negotiations over the terms of Greece’s bailout and an effort by the new government to reduce the country’s mountain of debt.” The Three Horsemen of the Apocalypse, the ECB, EC, and IMF, are right up there, their spokespersons, here, Jyrki Katainen, of the European Commission, expressing the common refrain: Let’s talk, but “’We expect them [Greek government] to fulfill everything that they have promised to fulfill.’” No scaling down the debt there.
For his part, Tsipras, knowing the obdurate mood, told his cabinet (Jan. 28) that “his government’s top priorities in order” were: “tackling what he called the country’s humanitarian crisis [it is significant that he placed this first, the aforementioned widespread unemployment, etc., rather than servicing creditors’ interests], stimulating the economy so it could start growing sustainably, entering into a new negotiation with creditors aimed at finding a ‘mutually beneficial solution to the debt,’ creating a ‘fairer’ tax system, and confronting vested interests and corruption ‘that no one has had the guts to go against.’” Tsipras vowed in the meeting “to end what he called a regime of cronyism, in which past governments would ‘negotiate with the rich, but not to the benefit of the poor.’”
***
Greece, by standing bold, has a good hand. David’s slingshot is taking careful aim; Behemoth is actually if not quaking in its boots, is showing signs of extreme nervousness. Alderman writes: “The market gyrations, driven by investors’ bailing out of Greek assets, reflect fears over the coming showdown over Europe’s austerity ideology. If Greece exited the eurozone and reintroduced the drachma currency—something Mr. Tsipras says he has no intention of doing [but the hint is dropped, the fears and rumors spreading]—many of the Greek investments held by foreigners would plunge in value when the new currency was introduced at a sharp discount to the euro.” Too, questioning austerity can become out of control: “Also, by rocking the boat, the new government has turned an uncomfortable spotlight on the Greek financial sector’s dependence on the European Central Bank for exceptional funding support.” Matters I’m not qualified to discuss, such as emergency liquidity assistance, also come under review. Fortunately, Tsipras and Varoufakis are highly qualified economists.
Finally, we see the interrelatedness of debt servicing and privatization, the Damoclean sword the IMF and World Bank wield to place societies on acceptable capitalist foundations. Bait the hook, and then roll back the public sector! Here the reporter observes: “Adding to the uncertainty [both the flight of capital and the possibility of leaving the eurozone] was a report that Mr. Tsipras had basically frozen Greece’s privatization program, which had been a central demand of creditors in approving the country’s international bailouts. The troika had expected Greece to raise tens of billions of euros TO PAY ITS DEBTS BY PRIVATIZING STATE ASSETS.” (my caps.) Thus, the new energy minister, Panagiotis Lafazanis, “told Greek television that the government was immediately halting plans to privatize a public power company.”
Tsipras, having received positive messages from the leaders of Russia, France, and Spain, was ready to do battle, as can be seen in these eloquent words: “’The country is lifting up its head, assuming global significance, attracting international interest. Greece is regaining its self-confidence and building alliances that will allow it to set its own agenda at the European table. We have no time to delay. There is no room for mistakes.’”
My New York Times Comment on the Alderman article, same date, follows:
Right on, Tsipras and Varoufakis! Investors feel they can rule the world, creating via austerity widespread unemployment, dashed dreams, and human suffering. The troika–ECB, EC, IMF– represent a global financial architecture that fosters wealth concentration and creates domestic unrest. Greece is now a breakaway nation, asserting a sovereignty against the pressures of international capitalism. Its unemployment rate, as well as Tsipras’s election, justifies the quest for autonomy against an international system prejudicial to human welfare.Norman Pollack has written on Populism. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at pollackn@msu.edu.
Even were Greece forced out of the euro zone, even if forced into default, at least the Greek people could hold their heads high–and who knows, maybe Spain would follow. For right is on their side, and bloated investors will finally be told that people come before returns, and that, this time, financial blackmail will not avail. Varoufakis was right; the game plan amounts to fiscal waterboarding. Must development accord with market fundamentalism? with IMF and World Bank ground rules? with the sacrifice of the people themselves for the sake of foreign creditors? I think not. And the new Greek government agrees.