Would European capital sacrifice Greece to protect profits? posted by Richard Seymour

Answer: what do you think they've been doing?  On Monday, the Greek Prime Minister announced that his government would hold a referendum on the latest Euro austerity package.  And look at the reaction to this ostensible democratic naivete.  Stock markets slide everywhere.  The BBC expresses its disbelief: "For whatever reasons, George Papandreou was standing up for democracy."  German and French politicians throw tantrums, demanding accountability.  Papandreou has been summoned to Cannes to explain himself and get chewed out.  PASOK MPs have defected, and the Blairites are calling for Papandreou to resign.  The cabinet has backed the PM, but a no confidence motion is being raised in parliament, and the government could easily collapse by the end of the week.  Yesterday, Greece's military top brass was sacked and replaced by the PASOK defence minister.  The ides of march forestalled?  I'll come back to that.

The decision to hold a referendum is a tremendous risk for the government.  As Costas Lapavitsas puts it: "Assuming it is not withdrawn amid all the political turmoil afflicting the ruling party, the vote is planned for January, and the issue will presumably be the latest bailout. But the real question will be: "Euro or drachma?""  As Papandreou has put it, the referendum would be on "our European course and participation in the euro".  PASOK are talking as if they can win a referendum.  Maybe they really believe this, because as yet most Greeks don't see the need to leave the Euro.  Polls show that 70% favour staying in.  But if the choice is between the Euro and a reasonable standard of living, it's very possible that people will choose their living standards.  And even if a referendum happens now, it won't be over the present deal, which isn't going to be on the table.  In the most polyannaish situation imaginable, Merkel et al would concede that things have reached a critical impasse, offer a much better deal, and allow Papandreou to put this to the electorate.  But that looks very unlikely at the moment.  Almost all the 'haircuts' applied to Greece's debts so far have been to the disadvantage of Greek banks, not French and German banks.  Substantial further reductions would harm politically dominant class interests which makes it highly unlikely to happen.


One can imagine the fears that pro-Euro politicians would work with: banks collapsing, international capital flight, currency instability, rapid inflation or deflation, house prices slumping, years of painful re-financing, and Greek isolation within Europe.  And that's not just scaremongering.  Default would pose a set of challenges that can by no means be wished away.  But it would allow Greece to stop the massive annual interest payments to bondholders, which Greece's productive base simply can't sustain, and prevent the need for further austerity.  A people's default is conceivable.  A people's austerity is not.  Yet, if the scare tactics were going to work, one would have expected the middle classes to cave already, and that has not happened.  The PASOK government has created a situation now where there's a realistic possibility of Greece simply pulling the plug on the Euro.

The consequences for the Euro as a viable currency would be dire.  Lapavitsas is probably right that the managers of the ECB and the EU never intended to push Greece to the point that it may end up withdrawing from the euro.  Yes, they're turning Greece into a basket case.  Yes, they are literally asset-stripping the entire economy, presumably because they don't expect it to be a viable export market any time soon.  Yes, it's a death spiral.  But, they apparently imagined, that's no reason for anyone to go off in a huff.  But French and German banks are probably unwilling to sacrifice a single cent of the debt interest they believe they have coming to them.  After all, there isn't much money to be found elsewhere.  As Michael Burke points out, the recovery in profit rates facilitated by the attack on labour over the last few years has been accompanied by a slump in corporate investment.  There's little for the banks to invest their money in but speculation and debt.  The EU leaders have said clearly that the main elements of the current deal are not up for renegotiation.

So, we're back to the ides of march.  The replacement of the top generals, despite bland official assurances that it's all regular, suggests that PASOK smelled a coup in the works.  There have also been hints that Papandreou may be unwise in going to Cannes, as a lot can happen while he's out of the country.  The opposition are feigning outrage, hinting that PASOK themselves are the agents of a coup, but that seems unlikely.  Now, the EU may not prefer a military coup, if it was possible to orchestrate the political collapse of the government through a no confidence vote, and facilitate a new right-wing New Democracy-led government.  But the structures of the European Union have always been profoundly anti-democratic, and the politics of austerity, pushed most aggressively by the EU, are pushing the institutions of capitalist democracy to their limit.

Consider what Greece is up against.  Guglielmo Carchedi, in a superior class analysis of the European Union, argues that the project of economic and monetary union is driven by European capitalist oligarchies, led by German oligarchies, with the aim of creating a new superpower.  This would, of course, be an imperialist power, re-asserting European influence after decolonisation.  It would allow Europe under united Franco-German leadership, to compete with the US by overcoming the limited scale of national markets and production.  As importantly, it is a reaction by capital against the post-war influence of communist and socialist parties in Europe, and an attempt to create a political framework that would systematically reduce the power of labour.  The project of European unification has, on these grounds, been successful.

But, a consequence of Carchedi's analysis is that, far from reflecting a community of interests, the EU is necessarily characterised both by class antagonisms (the working class has always made its presence felt, even while it has been excluded from the construction of the EU) and by national or inter-imperialist conflicts (Franco-German competition, and the predatory relationship between core and peripheral economies).  The antagonisms at the heart of the EU could blow the whole project apart.  The neutral (but intensely ideological) language of the mass media and the political classes treats the suppression and management of those antagonisms (in the interests of the dominant capitalist oligarchies) as a merely technical problem, albeit one complicated by various pressures.  This is why they don't understand when politicians invoke 'democracy'.  What has democracy got to do with it, they think, when Everyone Knows What Needs To Be Done?  We're all in it together, after all.  (This ideology was expressed concisely in a tweet I saw this morning, complaining that Greece was 'letting the team down': the hashtag said, '#globalvillage'.)  In this view, the exclusion and suppression of working class insurgencies is a duty of 'responsible' politicians serving the general interest.

Greece's PASOK government has tried its best to fulfil its brief as a responsible government.  But the severity of the crisis is overwhelming its ability to cope, and its referendum gamble has offended its masters in Europe.  There is a continent of surplus value at stake.  There is an imperialist super power at stake.  There is decades of institutional construction and refinement at stake.  There is a whole austerity formula at stake.  For that reason, I suspect there'd be corks popping in Cannes if the government fell by one means or another.

Labels: austerity, capitalism, capitalist crisis, coup, dictatorship, eu, eurozone, greece, recession, socialism, working class