Yves here. Louis Proyect has written previously about operational issues involved in reintroducing the drachma (see here and here for examples). Here he focuses on the political economy interpretations of the course of action that Syriza took.
By Louis Proyect, who has written for Sozialismus (Germany), Science and Society, New Politics, Journal of the History of Economic Thought, Organization and Environment, Cultural Logic, Dark Night Field Notes, Revolutionary History (Great Britain), New Interventions (Great Britain), Canadian Dimension, Revolution Magazine (New Zealand), Swans and Green Left Weekly (Australia). Originally published at Louis Proyect: The Unrepentant Marxist
Like Akira Kurosawa’s “Rashomon”, the story of Syriza is also one about a rape told from different, self-serving and contradictory perspectives. For both the sectarian “Leninists” and the anarchists, Tsipras’s failure was ultimately a failure to smash the state and proceed rapidly toward the construction of communism. For post-Keynesians like Jamie Galbraith and Mark Weisbrot, there was a strong identification with Syriza’s general program and approach. When Tsipras finally signed an accord with the bankers that was even more austere than the demands put upon Greece in the beginnings of the negotiations, his supporters blamed the bankers rather then Tsipras for essentially taking the nation hostage. As for the capitalist ideologues at the Financial Times or the Wall Street Journal, you get more or less the inverse interpretation of the ultraleft. Where they would have seen a plus, the neoliberals instead saw a minus: Greece was a tragedy caused by Tsipras’s anticapitalist hubris.
Since the last version of what happened is so patently absurd, there is no point commenting on it. It is the clash between the first two that interests me especially since they both strike me as undertheorized. Probably the best presentation of the Marxist analysis can be found on Michael Roberts’s blog in an article titled “Greece: Keynes or Marx?” that was written before the infamous deal that amounted to a new round of debt and austerity. Referring to an interview that Sebastian Budgen conducted with Costas Lapavitsas, he finds fault with Lapavitsas’s confession that he remains committed to Keynesianism despite being a sharp critic of Alex Tsipras: “Let me come clean on this. Keynes and Keynesianism, unfortunately, remain the most powerful tools we’ve got, even as Marxists, for dealing with issues of policy in the here and now.”
Roberts concludes his article thusly: “The issue for Syriza and the Greek labour movement in June is not whether to break with the euro as such, but to break with capitalist policies and implement socialist measures to reverse austerity and launch a pan-European campaign for change.” I want to return to this question of implementing “socialist measures” later on but for now would dwell at length on a matter that came up in Roberts’s article that has preoccupied me for some time, namely whether repudiating the debt owed to Western banks would have broken the back of austerity, a view shared by Marxists and post-Keynesians alike.
In a way, the question of the Greek debt reminded me of the problems faced by an old friend who was forced to run up tens of thousands of dollars in credit card debt because illness prevented him from going back to work after he retired. Social security did not leave him enough to pay the rent and medical bills for Parkinson’s treatments, a disease that actually kept him unemployable. His strategy was to go to bankruptcy court and appeal to have the debts written off. This might have offered temporary relief but in the long run he would have run into another financial crunch. It would seem to me that Greece has the same sorts of problems with a chronically backward economy amounting to its Parkinson’s.
As an example of how debt relief can become a kind of panacea for the left, there is Eric Toussaint’s article in CounterPunch titled “Greece: an Alternative”. He writes that a “popular government” would do the following:
Suspend debt payment, organize an audit and radically reduce the debt and its repayment by an act of repudiation (which will necessarily be unilateral), adopt discriminatory measures to protect the people’s savings invested in debt.
This measure and others recommended in a laundry list of radical reforms would be the first stage in establishing 21st century socialism in Greece, one that was inspired by Venezuela’s demonstration that “it is entirely possible to resist the capitalist offensive.” Since his words come from a 2012 speech, we can certainly fault Toussaint for being a flawed seer but more egregiously for being unable to theorize Venezuela properly. It was not socialism that was being built but something owing more to John Kenneth Galbraith as Hugo Chavez would have been the first to admit.
As many of you know, Syriza’s economists were very interested in the Argentine solution to austerity that was facilitated by a kind of debt repudiation in 2001. This matter is taken up in Roberts’s article, where he quotes Lapavitsas on the supposed success of Argentine debt restructuring and peso devaluation: “I hasten to add that in the case of Argentina (though by no means would I suggest that Argentina is a shining beacon for the Left), it is much-maligned and much-misunderstood. What was obtained in that country after default and exit was vastly better than what held before and vastly better than what would have happened had the country continued along the same path, for working people.”
Roberts challenges this assumption:
The breathing space created for Argentina by breaking the dollar peg [an Argexit, in effect] does not seem to have restored the Argentine economy to stable growth. After a few years of a commodity-export led boom, the Argentine economy is back in crisis, despite Keynesian policies adopted by the government. There has been a 6% fall in per capita GDP since 2011.
There’s a lot more to be said about what happened in Argentina in 2001 especially if it is going to be used as a model for a Grexit and debt repudiation. Long before I began writing about Greece, I tried to analyze Argentina’s long-standing economic ills that like my old friend’s Parkinson’s is of a rather chronic nature going back to the British colonization of the 19th century.
To start with, it is important to note that although Argentina defaulted on bond payments in 2002, it eventually agreed upon a debt restructuring that was acceptable to the IMF and major banks in the USA and Europe. Despite a hefty “haircut”, most investors saw them as an opportunity to make a handsome profit especially since interest rates had plummeted to historic laws in “safer” bond markets.
In fact Wall Street banks made a killing in the bond restructuring deals. Goldman Sachs made millions of dollars in fees, as did other blue chip firms. Even if the working class suffered from the devaluation that went along with the 2001 Argexit, the bourgeoisie could toast itself with champagne over the profits that could be enjoyed.
Furthermore, at the very time the terms of the restructuring had been nailed down, Argentina’s economy began to improve dramatically. In September 2005, the nation enjoyed its 37th consecutive month of positive growth. What accounts for this? Notwithstanding the devaluation of the peso in 2001, agricultural exports remained pricey and a rising demand for soybeans and other essential crops lifted the economy. With a government committed to financial austerity, the balance sheets continued to tend more to the black.
Within four years, Argentina appeared to be on top of the world again as the FT reported on July 18, 2005:
The Argentine government this week made a triumphant return to the dollar-denominated debt market, only three and a half years after staging the largest default in world history and less than two months after restarting payments on its private debt.
In the first issue in foreign currency since the default at the end of 2001, investors, led by foreign investment banks, oversubscribed the $500m offer by more than three times. The government set a cut-off point of 7.99 per cent interest on the 2012 bonds, barely more than the price being paid by neighbours Brazil and Uruguay – neither of which have Argentina’s recent history of missed payments.
Argentina has managed to attract so much foreign interest that the treasury expects to make a similar issue in coming months.
All this was taking place when Nestor Kirchner was president. While nobody could possibly confuse this veteran Peronist as an advocate of 21st century socialism, he certainly was seen as part of Latin America’s Pink Tide, so much so that Mark Weisbrot could regard him as having “made an enormous contribution in helping to move Argentina and the region in a progressive direction” shortly after his death.
Like Venezuela, Argentina is no longer considered to be on the front lines of anti-imperialism. Falling commodity prices have made both nations vulnerable to external pressure from lending institutions.
But even if the consequences of debt repudiation were short-lived, why wouldn’t Greece consider similar measures if for no other reason that like my old friend going to bankruptcy court, it would at least spell some relief even if not permanent. Perhaps such a solution might seem worthwhile as long as you ignore the immediate consequences following the devaluation of the peso in 2001. In a 2002 article in the New Left Review titled “Racking Argentina”, David Rock described the calamity that befell the country:
Of Argentina’s population of 37 million, 52 per cent—some 19 million people—now fell below the official poverty line, while 20 per cent, 7.5 million, could no longer afford sufficient food. There were reports of children starving in the impoverished rural province of Tucumán. Unemployment soared to 23 per cent of the workforce, with a further 22 per cent ‘under-employed’—in part-time jobs and seeking further work. Public services disintegrated: hospitals could no longer treat the sick; schools closed, or gave up any attempt to teach. State pensions and public-sector workers’ salaries went unpaid. The construction industry came to a halt. Faced with declining revenues, the federal government had started to issue ‘Lecop’ bonds in lieu of wages. The provinces followed suit, led by Buenos Aires with its patacones, and by early 2002 there were some 4 billion pesos’ worth of local bonds in circulation.
Advocates of a Grexit refer to the short-term suffering that might accompany the devaluation that would attend adoption of a new currency but can they project a recovery based on an uptick in commodity exports? One Greek is skeptical. In a May 16, 2012 blog post titled “Weisbrot and Krugman are Wrong: Greece cannot pull off an Argentina”, Yanis Varoufakis wrote:
While it is quite true that Argentina’s export performance in 2001 was by no means better than Greece’s today, it is crucial to note that Argentina’s export potential in 2001 was vastly superior to that of Greece’s in 2012. By export potential I mean the degree of underutilisation of productive resources whose employment can, potentially, produce goods and services for which there is effective demand. In 2001, Argentina’s farms were woefully underproducing primary commodities that were, at that time, seeing their demand skyrocket. In sharp contrast, idle productive resources in Greece cannot produce much for which there is increasing demand.
Take for instance shipping and tourism, mentioned by Paul Krugman as two potential sources of Greek export growth: Both are in speedy decline! Additionally, whereas in the case of Argentina, its next door neighbour (Brazil) was entering a period of rapid growth, Greece’s neighbours are showing no such signs of vitality. Indeed, our traditional trading partners are also buffeted by recession (pushing down the demand for Greek tourism) while non-EU countries (such as Russia) cannot, and will not, make up the difference to any appreciable degree.
These are the hard facts that all leftists have to deal with, no matter what version of “Rashomon” they put forward. If Argentina was not a suitable model for Greece, could Cuba or the Soviet Union be to one’s liking? For the anarchists and Alex Callnicos, these would be just as unsuitable since nothing could come close to their communist ideal their imagination summoned up. Most Marxists are more inclined to accept the dialectical realities that Marx described in the Critique of the Gotha Program: “What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.”
If we are ready to accept a communist society stamped with such birthmarks, does that mean that a communist Greece would have met our expectations? For those of us who had a chance to see Nicaragua in the mid-1980s, we would have gladly accepted a new Greece, warts and all.
Unfortunately, there were a couple of obstacles in our way, starting most importantly with the consciousness of the Greek masses. No matter how desirous readers of the Marxist press were for the abolition of capitalism in Greece, there were worrisome signs that the average Greek was not up to our lofty standards. Leaving aside the polling results on leaving the Eurozone, there were indications that parties standing for communism were simply not that popular no matter how many general strikes or mass demonstrations had taken place on the streets of Athens. Votes for Antarsya and the KKE were minimal at best. This leads one to consider the possibility that our anger might be better directed at the taxi driver or barber shop owner who was foolish enough to vote for Tsipras than Tsipras himself.
If by some miracle, the KKE had been voted into office, what would be the outlook for a communist society plus warts (and under such a grotesquely Stalinist sect, they would be plentiful.)
This leads me to an article by William I. Robinson that appeared in Truthout today. I first came across Robinson’s writings in the late 1980s when he was reporting from Nicaragua with his writing partner Kent Norworthy in the Guardian newsweekly in the USA, a newspaper that is sorely missed. Robinson now teaches sociology, global studies and Latin American studies at the University of California at Santa Barbara and is a specialist on globalization. His “Global Capitalism and the Crisis of Humanity” is a good starting place for those trying to theorize the struggle against capitalism in a world in which capital has taken wings to fly around the world in a ceaseless quest for profits. Unlike the period that began in Marx’s age and came to a conclusion in the post-Bretton Woods period, today’s bourgeoisie could care less about the “health” of its body politic. If American bridges and railways are falling apart, why should it matter to a hedge fund manager? His only obligation is to his investors and himself.
Robinson’s article is a critique of Thomas Piketty, who is one of those thinkers that is for social justice while rejecting Marx, a problematic stance to say the least. He makes an essential point about the conditions we face today:
Transnationally oriented elites and capitalists captured governments around the world and used states to undertake sweeping restructuring and integration into a new globalized production and financial system. The “neoliberal counterrevolution” opened up vast new opportunities for accumulation. Free trade agreements and financial liberalization lifted state restrictions on cross-border trade and capital flows. Privatization turned over everything from public industries, to educational and health systems, mail service, highways and ports to transnational corporations and provided an investment bonanza to the transnational capitalist class as it concentrated wealth as never before. Labor market reform led to the erosion of regulated labor markets. As workers became “flexible,” they joined the ranks of a new global “precariat” of proletarians who labor under part-time, temporary, informalized, non-unionized, contract and other forms of precarious work.
For those of us trying to build revolutionary parties, it is essential to keep in mind the social and economic realities we face. In the 1970s the American Trotskyist movement made a fatal decision to base its strategies on the supposition that a repeat of the 1930s was in the offing. When reality interfered with that strategy, the party rejected reality and continued on its futile path until it lost 90 percent of its membership.
As opposed to the SWP leadership and virtually all the other sects, Lenin was a master of getting to the heart of underlying socio-economic dynamics. In the early 1900s leading up to the “What is to be Done” conference, he tried to explain that “Economism” was a reflection of the more primitive, handicrafts phase of Russian capitalism when shops were smaller and more isolated. He noticed the great concentration of large factories in major cosmopolitan centers and concluded that a more professional and more generalized approach was needed in line with the changed circumstances.
Economism belonged to Russia’s past; orthodox Marxism was the way forward. He saw modern social democracy as corresponding to the highly complex and specialized nature of modern mass production. He saw socialist parties as the working-class equivalent of large-scale industrial plants. A centrally-managed, large-scale division of labor was needed to move the struggle forward, just as it was necessary to construct steam locomotives. Lenin was no enemy of capitalist technology and mechanization. Rather he sought to appropriate its positive features whenever necessary.
Isn’t it about time that Marxists began to explore the organizational forms and strategies that correspond to the world that William Robinson describes? If large-scale industrial plants (Fordism, in other words) is the forms appropriate to the party that Lenin built, should we not be thinking of post-Fordist methods of struggle that use the Internet in the same way that Lenin used Iskra? These are points I have been making for the past twenty years or so and please excuse me in advance for making them as long as I have breath to make them.