Notes on Greece 6: The Challenge of the United Front

NOVEMBER 15, 2012: Note 6 of 6 – SYRIZA, as its name “Coalition of the Radical Left” implies, is an expression of the coalescence of anti-capitalist forces in Greece, a coalescence produced through the struggles of the first years of the 21st century as well as the resistance to austerity and crisis from 2007 on. It is not the only such expression. Earlier notes have also mentioned another such coalescence with a very similar name – ANTARSYA, “Front of the Greek Anti-Capitalist Left”. The SYRIZA coalition has 12 components, ANTARSYA has nine.[1]

The deep crisis of Greek society, the collapse of support for the mainstream parties, and the sudden surge towards SYRIZA, have all combined to create an intense climate favouring unity against austerity. In the run-up to the June elections, without question the principal issue flowing from this, was the call from SYRIZA for an electoral united front with the KKE, a united front which was rejected out of hand by the KKE, leading to a steep drop in support for what had been the historic left party of the Greek working class.

But the much smaller electoral force, ANTARSYA, also rejected the call for an electoral united front. While this of course had nowhere near the impact of the actions of the KKE, in terms of the unfolding of the anti-austerity movement in the coming months and years, it deserves attention. If with the benefit of hindsight, it is very clear that the refusal of the KKE to link arms with SYRIZA in June 2012 was a lost opportunity for the anti-austerity forces throughout Greece, then surely the same is true, on a smaller scale, for the similar stance taken by ANTARSYA.

The lost opportunity of June 2012 is, of course, yesterday’s issue. But today and tomorrow, the need for a united front approach will be posed, both electorally and on the streets. In future elections, there are certain to be new alignments. Between elections, in the coming months and years, there will be huge challenges confronting the social movements in Greece, as the austerity policies intensify. What is posed on a weekly and daily basis, is the daunting task of building unified resistance to attacks on wages, cuts in services and the disappearance of jobs. Here, a premium will be on activists and local organizers, and both ANTARSYA and SYRIZA have been important sources for these movement resources. What, then, has divided ANTARSYA from SYRIZA?

First, the contours of this division have been quite different from those characterizing the divide between the KKE and SYRIZA. For the KKE, deep-rooted inertia and sectarianism were the over-riding issues. For ANTARSYA, by contrast, the key issue was programmatic. ANTARSYA saw it as essential to make visible its program for combatting the crisis, a program that in crucial respects differs from that of SYRIZA. Here are some of the key issues on which ANTARSYA campaigned during the May 2012 election:

  • Immediate termination of the loan agreement, of any memoranda and the related measures;
  • Non-recognition of the debt, debt cancellation and suspension of payments;
  • Break with the system and decoupling from the euro and the EU;
  • Nationalization of the banks and corporations without compensation under workers’ control (ANTARSYA 2012b).

Contrast that with the points, outlined by SYRIZA leader Alexis Tsipras, during the attempt to form a coalition government after the May 2012 election.

  • The immediate cancellation of all impending measures that will impoverish Greeks further, such as cuts to pensions and salaries.
  • The immediate cancellation of all impending measures that undermine fundamental workers’ rights, such as the abolition of collective labor agreements.
  • The immediate abolition of a law granting MPs immunity from prosecution, reform of the electoral law and a general overhaul of the political system.
  • An investigation into Greek banks, and the immediate publication of the audit performed on the Greek banking sector by BlackRock.
  • The setting up of an international auditing committee to investigate the causes of Greece’s public deficit, with a moratorium on all debt servicing until the findings of the audit are published (ekathimerini.com 2012).

There are of course differences between the two programs. Unquestionably the most visible difference, and the one which has been the focus of much of the debate, has been ANTARSYA’s call for a break with the euro, a call which SYRIZA does not make. But this difference does not justify a divide. It is after all, not a difference of political principle, but rather one of political analysis. The key issue in determining an orientation to SYRIZA is the fact that SYRIZA has become the political expression for mass anger against austerity.

Prominent economist Costas Lapavitsas is widely known for advocating a “progressive exit” from the Eurozone, particularly for economically peripheral countries such as Greece (Lapavitsas et al. 2010, 369–371). He strongly believes SYRIZA is making a mistake in not advocating such a course of action. However, he did not see this as a reason to stand aside from its call for unity during the elections. “[T]he pressing issue at the moment is to free the country from the stranglehold of debt and austerity. As long as SYRIZA is prepared to take action to achieve these aims, and the Greek people wish to give it the benefit of the doubt on the euro, its role can be positive. At the very least, it offers a chance for Greece to avoid a disaster that might truly lead to the rise of fascism” (Lapavitsas 2012).

It is also the case, that there is nothing inherently radical about calling for a break from the Eurozone. Prominent SYRIZA spokesperson, Michalis Spourdalakis, argues forcefully that for the KKE at least, there is something “extremely conservative” about its call for a break from the euro. The KKE’s call, he argues, builds illusions that a solution to the deep crises in Greek society can be found in institutional change far away in Brussels, while the truth is, regardless of any institutional changes, the only hope for Greek society lies in the strengthening of the mass movements (Spourdalakis 2012b; see also Spourdalakis 2012a; Baltas 2012).

We also need to take seriously the opinion of the Greek people themselves. An overwhelming majority of the Greek population – in some polls as many as 80 per cent – favours retention of the euro (Giles, Spiegel, and Hope 2012). There are legitimate fears inside Greece that a break with the euro would massively worsen the already catastrophic situation in the country. Perhaps these fear are an expression of conservatism on the part of the Greek population. But perhaps they also reflect a common sense appreciation of a real truth – that in a globalized world, there can be no national solution to the crisis, that any solution has to be in concert with the rest of Europe. Almost 90 years ago, Leon Trotsky made just this point.

The European continent in the present state of development of its productive forces is an economic unit – not a shut-in unit, of course, but one possessing profound internal ties – as was proved in the terrible catastrophe of the world war … Europe is not a geographical term; Europe is an economic term, something incomparably more concrete especially in the present post-war conditions – than the world market. Just as federation was long ago recognized as essential for the Balkan peninsula, so now the time has arrived for stating definitely and clearly that federation is essential for Balkanized Europe (Trotsky 1972, 342–343).

This is an important discussion, something to be developed in more detail at a later time. The central point of these notes has been to emphasize another issue, the challenge in Greece, and a challenge shared by social movements in every other country, that of finding our way to united fronts against austerity. This is not a new story. John Riddell (2011) has very helpfully reminded us that this was precisely the dominant issue facing the social movements 90 years ago, where debates about how to form united fronts were dominated progressive political debate.

In very difficult circumstances, the social movements in Greece have taken steps towards such a united front. Both SYRIZA and ANTARSYA – coalitions of very diverse forces – represent organizational expressions of the desire for unity. The same sentiment for unity was revealed sharply when the base of first PASOK and then the KKE moved en masse towards SYRIZA during the two elections of 2012. We have seen the case for unity in elections made electorally by the gesture towards the KKE and ANTARSYA by SYRIZA, and for unity in action by Panos Petrou of SYRIZA who indicated that it was SYRIZA, “together with forces from ANTARSYA” who gave “important organizational and political support” to the movement of the squares in 2011 (Petrou 2012). The call for unity in action also comes from ANTARSYA, which in its election material issued an appeal to “all of the collectives and movements struggling for the past two years against the terror of the memoranda, the Troika, and the euro-junta to communicate in solidarity and to cooperate before, during and after the elections. This appeal is directed to all forces that have bled in the strikes and clashes, that have filled the squares with life, that want to strengthen the rebellion of the labour movement” (ANTARSYA 2012b).

In the coming months and years, we will undoubtedly learn important lessons from our friends in Greece, about how to turn these sentiments for united action into reality.

Previous in the series
Notes on Greece 1: Economic Crisis
Notes on Greece 2: Political Upheaval
Notes on Greece 3: The KKE

Notes on Greece 4: SYNASPISMÓS and SYRIZA
Notes on Greece 5: Greece, France, and the limits of the Concept ‘Left Reformism’

© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

End Notes

[1] For SYRIZA, in the order presented on its web site, these components are Renewing Communist and Ecological Left (AKOA), Anti-capitalist Political Group (APO), Internationalist Workers’ Left (DEA), Democratic Social Movement (DIKKI), Active Citizens (Energoi Polites), Movement for the Unity in Action of the Left (KEDA), Communist Organization of Greece (KOE), Red (Kokkino), Eco-socialists of Greece, Rosa – Radical Left Group, The Radicals (Rizopastes), and Synaspismós (SYN). For ANTARSYA, again in the order presented on its web site, these components are Left Recomposition (ARAN), Left Anti-capitalist Group (ARAS), Revolutionary Communist Movement of Greece (EKKE), Communist Renewal, New Left Current (NAR), Youth Communist Liberation (NKA), Alternative Ecologists, OKDE-Spartakos, and Socialist Workers Party (SEK). (SYRIZA 2012; ANTARSYA 2012a)


References


ANTARSYA. 2012a. “Organizations Involved in ANTARSYA.”

———. 2012b. “Statement on the Parliamentary Elections to Be Held on May 6 in Greece.” International Viewpoint 447 (April).

Baltas, Aristides. 2012. “The Rise of Syriza: An Interview.” In The Question of Strategy: Socialist Register 2013, ed. Leo Panitch, Greg Albo, and Vivek Chibber, 120–136. Pontypool, Wales: The Merlin Press.

ekathimerini.com. 2012. “Tsipras Lays Out Five Points of Coalition Talks.” Kathimerini, May 8.

Giles, Chris, Peter Spiegel, and Kerin Hope. 2012. “Eurozone: If Greece Goes …” Financial Times, May 14, sec. News.

Lapavitsas, Costas. 2012. “Why Europe Needs Greece: Syriza’s Success Starts the First Major Battle Against Austerity. The Continent Should Will Them to Win.” The Guardian, May 12, sec. News.

Lapavitsas, Costas, Annina Kaltenbrunner, Duncan Lindo, J. Michell, Juan Pablo Painceira, Eugenia Pires, Jeff Powell, Alexis Stenfors, and Nuno Teles. 2010. “Eurozone Crisis: Beggar Thyself and Thy Neighbour.” Journal of Balkan & Near Eastern Studies 12 (4) (December): 321–373.

Petrou, Panos. 2012. “The Making of SYRIZA.” SocialistWorker.org, June 11.

Riddell, John. 2011. Toward the United Front: Proceedings of the Fourth Congress of the Communist International, 1922. Boston: Brill Academic Publishers.

Spourdalakis, Michalis. 2012a. “Left Strategy in the Greek Cauldron: Explaining Syriza’s Success.” In The Question of Strategy: Socialist Register 2013, ed. Leo Panitch, Greg Albo, and Vivek Chibber, 98–119. Pontypool, Wales: The Merlin Press.

———. 2012b. “Left Strategy in the Greek Cauldron: Explaining Syriza’s Success”. Panel: The Crisis of the Eurozone and the European Socialist Parties presented at the Weighs Like a Nightmare. Ninth Annual Historical Materialism Conference 2012, November 11, London, U.K.

SYRIZA. 2012. “Components SYRIZA.”

Trotsky, Leon. 1972. “Is the Time Ripe for the Slogan: ‘The United States of Europe’? (A Discussion Article).” In The First Five Years of the Communist International, trans. John G. Wright, 2:341–346. New York: Monad Press.

Notes on Greece 5: Greece, France, and the limits of the Concept ‘Left Reformism’

NOVEMBER 13, 2012: Note 5 of 6 – There are, as Alex Callinicos outlines, New Lefts forming across Europe in countries other than Greece. How should we assess these New Lefts? Callinicos, in a short newspaper article attempted to survey the development of the left throughout Europe as a whole, putting the entire New Left of four countries – Germany, Greece, France and Holland – under one label. He asked: “What is the politics of this rising left? Over-simplifying a little, it is essentially some version or other of left reformism. It’s true that SYRIZA includes within its ranks an assortment of far-left groups, but the dominant force, SYNASPISMÓS, originates in the more accommodating and pro-European wing of the Greek Communist movement”. This left reformism, he argues, is “filling a space left by the rightward shift of mainstream social democracy.” Leaders of left reformism “are able to reach out to traditional social-democratic voters by articulating their anger in a familiar reformist language.” However, “ambiguity is inherent in any version of reformism, which seeks simultaneously to express workers’ resistance to capitalism and to contain it within the framework of the system” (Callinicos 2012a).

It is always difficult in a short newspaper article to convey all the nuances of a political position. But Callinicos is also the editor of a quarterly theoretical journal, and in a much longer analysis in that theoretical journal in the Summer of 2012 he developed exactly this position at more length, including direct quotations from the earlier, shorter newspaper article (Callinicos 2012b). For Callinicos (and others, as we shall see below), the starting point in an analysis of SYRIZA is categorizing it as one of several formations in Europe of “left reformism”. But adjectives such as “left reformist”, “accommodating” and “pro-European” are not helpful when it comes to understanding the political dynamics being unleashed by the new social facts taking shape on the European political landscape.

This can be shown through a brief, comparative analysis of the situations in Greece and France –one of the most important countries where New Left formations have been takng shape. Such an examination will show that there are in fact interesting and important parallels between the situation in France with that in Greece. But there are also important differences, which make over-generalization difficult and misleading.

Perhaps the most important parallel, has been the challenge posed, in both countries, by large breaks to the left from the traditional parties of social-democracy. The Front de gauche is an electoral coalition, originating in a left split, led by Jean-Luc Mélenchon, from the Socialist Party in France. His grouping was joined, in 2009, by the French Communist Party. The 2012 campaign of the Front de gauche had a movement feel to it, marked as it was by enormous mass meetings. “Around 20,000 people turned up at Mélenchon’s meeting in Lille, 70,000 were present at a huge open air meeting in Toulouse, 100,000 were in Marseille and around 50,000 attended an indoor rally in Paris”, and it ended up achieving a vote of 11% in the April 2012 elections (Wolfreys 2012, 40).

François Sabado – a leading member of the Nouveau Parti Anti-capitaliste (NPA) – deploys the same label used by Callinicos, “left reformist”, to describe the Front de gauche. He does so as part of an analysis to try and situate the rise of the Front de gauche and the relative eclipse of other forces on the left, including his party, the NPA. He offers an interesting analysis to explain the ability of the Front de gauche to become the main expression of the radicalization in France. He suggests that the 2012 pre-election situation in France was “marked by social defeats, which encouraged the hope and the illusion that ‘what is blocked in the struggle can be unblocked by the election’” (Sabado 2012, author’s translation). He is undoubtedly referring to “the defeat inflicted on the impressive movement that developed in the autumn of 2010 against Sarkozy’s pension reforms, reflecting a displacement of hopes invested in struggle onto the promise that they may be realized by electoral means” (Wolfreys 2012, 41).

The struggles of 2009 and 2010 were in fact, massive. “In March 2009, over two million workers supported a general strike organized by the Confédération générale du travail (CGT) against President Sarkozy’s handling of the economic crisis. … This was followed in October 2010 by major stoppages and street demonstrations (including a week-long blockade at France’s twelve oil refineries and a three-week dockworker strike in Marseille) over Sarkozy’s privatization and austerity measures, which included plans to raise the minimum and full retirement ages to sixty-two and sixty-seven, respectively, a move the government claimed was vital to stem a soaring pension deficit” (Burnham 2011, 503–504). Millions participated in the 2010 “rolling strike” strategy of the French union leadership (Davies 2010). On October 12 and 19 2010, the CGT claimed that 3.5 million people took to the streets each day against the pension reforms. The Interior Ministry had lower figures, putting the demonstrations of October 12 at 1.23 million, and those of October 19 at 1.1 million (Erlanger 2010). But even these lower figures indicate a social movement of enormous proportions.

It is also true that these struggles did not, in fact, stop the pension reforms. Just weeks after the massive October protests, then president Nicolas Sarkozy signed the reforms into law, in this sense, defeating the movement. Sabado is suggesting that demoralization from the failure of these street battles turned peoples’ eyes towards the ballot box. In that situation, the left-reformist Front de gauche could do very well, while the more radical NPA, with its emphasis on extra-parliamentary action, would do more poorly.

Is this persuasive? In Greece, as earlier notes have outlined, there have been equally massive strikes and street protests. And, as in France, those struggles have not prevented the imposition of austerity measures. But the austerity measures imposed in Greece are far more serious than those in France. Sarkozy’s pension reform “increases the minimum pensionable retirement age from 60 to 62 and the full state pension entitlement age to 67 from 65 for anyone who has not contributed to the system for 41 years. The measures will come into effect gradually from July next year, and be fully enacted by 2018” (Samuel 2010). But contrast this with the immiseration being imposed on the Greek workers through the various “memoranda”. The attacks on the living standards of the Greek population are qualitatively worse than those in France.

By the same logic, shouldn’t the Greek movements failure to stop these memoranda constitute a “social defeat”, a much more drastic social defeat than that experienced in France? Should we then see the rise of SYRIZA – like the rise of the Front de gauche – as a result of demoralization from the failure of street protests? In the case of SYRIZA, this seems entirely unpersuasive, given the scale of the break from social-democracy.

It also feels unsatisfactory as an explanation of dynamics in France – a search for an objective explanation for problems that are actually rooted in serious, subjective political errors. While the Front de gauche has been galvanizing tens of thousands, Sabado’s party, the NPA has entered a very serious internal crisis. Part of this is certainly rooted in the party’s inability to consistently challenge Islamophobia – a very big problem in a country where the extreme right is building a base on hard, anti-Islamic politics. In 2010, this erupted into a nasty controversy when Ilham Moussaid was chosen as an NPA candidate in her region. Moussaid is a hijab-wearing woman, and her candidacy sparked a storm of controversy, including a resolution put forward by a minority “that hijab wearers can’t be candidates for the party”. Moussaid ended up resigning from the party, along with several other members (Mullen 2010). This is an open door through which many internal problems can enter. But a probably bigger reason for the crisis in the NPA has been its decision to stand aloof from the Front de gauche. Jason Stanley argues that, even before the April 2012 elections, the NPA was “hemorrhaging members and struggling to stay afloat”. He roots this crisis in large part in the NPA decision to not participate in the Front de gauche, something he labels “sectarianism” (Stanley 2012).

Even if we do decide to call both SYRIZA and Front de gauche “left reformist,” it does not justify standing aside from the radicalizations they represent. Sabado uses the label “left reformist” to emphasize the ambiguities and contradictions inside the Front de gauche – and there are many such ambiguities and contradictions. The Front de gauche refuses to take a stand against nuclear power “because of the many ties linking the French Communist Party to the French nuclear industry” (Sabado 2012, author’s translation). Mélenchon himself, while very much opposed to U.S. imperialism, is more muted when it comes to French imperialism, reaffirming his position in a recent publication that “in the current situation, the nuclear deterrent remains the essential element in our defense strategy” (2012, author’s translation). Sabado emphasizes these ambiguities and contradictions, in order to justify his party – the NPA – standing apart from the Front de gauche electoral coalition. But labeling the Front de gauche “left reformist,” outlining its contradictions, and on that basis standing aside from its campaign is quite one-sided. Surely more important than the ambiguities of the Front de gauche and its “left reformism” is the social fact of it representing a new radicalization of tens of thousands? When the latter is seen as the key factor, then without question the task for groups like the NPA is to stand in solidarity, not stand aside. To refuse to engage with a new radicalization, whatever its limitations, will push formations like the NPA into political crisis – the bigger the radicalization, the bigger the crisis. If this is true for the challenge created in France by the rise of the Front de gauche, it is doubly true for the challenge created in Greece by the rise of SYRIZA.

There is a general point, relevant to this analysis, which can be gleaned from this short survey of France. In the tumultuous political situation which currently exists in Europe, the traditional architecture of mass politics is in flux, and in key countries – certainly in both Greece and France – this has resulted in important new “social facts” emerging, mass left political formations expressing a radicalization to the left of traditional social democracy. The key task is to engage with these mass processes, not to label them and use the resulting categorization as an excuse to stand aside. But we shouldn’t stretch the comparison between France and Greece too far. There are very big differences between the New Lefts of France and Greece, and of the political and economic terrain in the two countries. To conclude this section, some of these differences will be highlighted.

First, in their attitude to imperialism, the Front de Gauche and SYRIZA are quite different. Sabado shows clearly that the Front de gauche is ambiguous at best on the question of French imperialism. By contrast, one of the strengths of SYRIZA is its roots in the anti-imperialist movement. In a message from SYRIZA to anti-NATO protesters in the United States in May of 2012, this was made extremely clear.

Here in Greece, the struggle against NATO has always been important and the demand to exit the war machine, and shut down its military bases in Greece had always been central for the Greek left since the ’70s. More recently, we still remember that the foundations for the emergence of the radical left, SYRIZA, that today is on the rise, are back at the anti-war movement of 2003 against the invasion in Iraq. And today, the country that is most hardly hit by the crisis and austerity, maintains military presence to Afghanistan, it supported actively the war on Libya, it deploys its navy in Somalia and Lebanon. Greek governments, in their competition with the Turkish state about which power can act best as the ‘military bully’ of the area, had been spending billions of euros in a frenzy of constant armaments. And the military spending continues even now, at the time of the most severe austerity that threatens public schools and hospitals with collapse (Davanellos and Martalis 2012).

Second, the impact of elections in 2012 was completely different on the political landscape of the two countries. In Greece, there was a coalescing of support for the extreme right, including the fascists, but it was not the main story. The main story was clearly the emergence of SYRIZA. In France by contrast, the main story of the April 2012 election was precisely the third place finish of the far-right National Front, which won more than 18% of the vote in the first round, “a stunning result for the far right … a record for France’s Front National, beating the previous best in 2002 … Everyone had said it could not happen. The opinion polls suggested it would not. It did”. The Front de gauche did manage to receive just over 11% of the vote, but “the Front de gauche leadership had hoped for results above 15%, and above all, to finish in third place, ahead of Marine Le Pen” (Sabado 2012, author’s translation). This “caused deep disappointment” among its supporters because the result was “several percentage points lower than had been expected” (Willisher 2012). In short, while the elections in Greece crystallized the rise of a New Left, the elections in France led to widespread disappointment in the ranks of the New Left, a disappointment mixed with fear in the presence of a very dangerous emergence of a mass base for the racist far right.

Third, the economic terrain in the two countries is quite different. We saw in earlier notes the continuing decline in GDP in Greece, and the inexorable rise of unemployment to truly painful levels. In France, there was a decline of GDP for five quarters in 2008 and 2009, a decline not unlike that experienced in Greece, but in the years since, the economy has expanded, not contracted. That expansion has slowed considerably in 2012, it is true. But the difference between contraction and expansion is not trivial. Unemployment in France did spike, as a result of the recession, from 7.5% to 10%. But this is not significantly higher than the unemployment rates experienced through the economic expansion in the first years of the 21st century, and is certainly far removed from the catastrophic levels in Greece, outlined at the beginning of these notes (Trading Economics 2012a; Trading Economics 2012b).

It is instructive to extend the gaze beyond France. In the summer of 2012, unemployment in Germany, at just over 6%, was at levels lower than at any time this century. In Austria, unemployment was 4.3%; in Denmark, 4.5%; in the Netherlands, 6.3%; in Belgium, 7.2%; in Sweden, 7.8% (Trading Economics 2012c). The contrast between the economic situation in these countries, and that in Greece could not be more pronounced.

To this point in the aftershocks from the 2008-2009 recession, Europe has proceeded on two tracks. The weaker economies, largely in the south (Greece, Portugal, Spain, and to some extent Italy) have experienced very severe economic contraction, and – in Greece, and Spain – depression-era levels of unemployment. But the stronger countries, largely in the north, have returned to growth – shaky and uneven growth – but growth nonetheless. Now of course, this could change. Perhaps Greece’s present is France’s future. Perhaps. But the political perspectives of the present cannot be built upon the objective conditions of the future. An abstract category such as “left reformism” – when applied to New Lefts developing in different countries in quite different circumstances – can obscure more than it reveals.

A comparative analysis of the Europe’s New Lefts must be sensitive to these differences. Without question, the development of a New Left is far more advanced in Greece than in France and the rest of Europe. The Front de gauche of Mélenchon is a welcome development to the left of social democracy. But it contains within it nothing like the deep history of development through struggle experienced over years by SYRIZA. It is at a much earlier phase of development than the New Left in Greece. This is not surprising. The economic and social crisis in Greece is incomparably deeper than that in, for instance, France. The very depth of that crisis has accelerated the conditions which have produced a very rapid decomposition of old political parties, and a radicalization to the left. The French working class has engaged in many, very militant struggles. But no one could paint the compelling picture of workplaces and neighbourhoods becoming the “fortresses of resistance” outlined so dramatically by Antonis Davanellos in his sketch of the state of working class resistance in Greece.

The concrete is always more difficult than the abstract in political analysis. The abstract formula “left reformist” hides more than it reveals. The contexts in which the New Lefts are developing in these four countries are quite different, and each one of the emerging left formations has its own story. This is part of an international phenomenon, which includes formations as different as Die Linke in Germany and Québec solidaire in Quebec. To properly assess each, including SYRIZA, we are going to have to concretely study their roots and history. Without such an attempt, there is a danger of political analysis falling back on extremely generally-formulated abstractions which tell us little about the real content of a political current, and can in fact can become a barrier to developing a proper understanding. Most seriously, there can be a tendency to use the label “left reformist” as an excuse for standing aloof from an unfolding radicalization. Interestingly, this point has been made very well by Callinicos himself. In 2009, in a debate with, among others, François Sabado, he argued that the using the label “left reformist” for the New Lefts in Europe can be used to “accentuate the negative” and runs the risk of an analysis which “ignores the fundamental fact that, for the first time in decades, the decay of social democracy has produced a serious breakaway to the left” (Callinicos 2009).

Previous in the series
Notes on Greece 1: Economic Crisis
Notes on Greece 2: Political Upheaval
Notes on Greece 3: The KKE

Notes on Greece 4: SYNASPISMÓS and SYRIZA

Last in the series
Notes on Greece 6: The Challenge of the United Front

© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

References


Burnham, Peter. 2011. “Towards a Political Theory of Crisis: Policy and Resistance Across Europe.” New Political Science 33 (4): 493–507.

Callinicos, Alex. 2009. “Revolutionary Paths: a Reply to Panos Garganas and François
Sabado.” International Socialism 122 (Spring) (March 31).

———. 2012a. “The Politics of the Rising European Left.” Socialist Worker (London), May 19, 2303 edition.

———. 2012b. “The Second Coming of the Radical Left.” International Socialism 135 (Summer) (June 28): 10–22.

Davanellos, Antonis, and Sotiris Martalis. 2012. “Message from SYRIZA to Chicago anti-NATO Protests.” Links: International Journal of Socialist Renewal (May 20).

Davies, Lizzy. 2010. “Nicolas Sarkozy Calls for Calm as French Pension Protests Gather Pace.” The Guardian, October 19.

Erlanger, Steven. 2010. “Amid Strikes, French Leader Vows Order.” The New York Times, October 20, sec. News.

Mullen, John. 2010. “Islamophobia and France’s NPA.” SocialistWorker.org, December 15.

Sabado, François. 2012. “Front De Gauche : Et Maintenant ?” Tout Est à Nous, June 2.

Samuel, Henry. 2010. “Nicolas Sarkozy Claims He Has ‘Saved’ French Pensions as Bill Becomes Law.” The Telegraph, November 10.

Stanley, Jason. 2012. “France: The NPA in Crisis.” Against the Current 26 (6) (February): 25–26.

Trading Economics. 2012a. “France GDP Annual Growth Rate.”

———. 2012b. “France Unemployment Rate.”

———. 2012c. “Unemployment Rates, List by Country.”

Willisher, Kim. 2012. “Marine Le Pen Scores Stunning Result in French Presidential Election.” Guardian.co.uk, April 22.

Wolfreys, Jim. 2012. “France After Sarkozy: Confronting the Politics of Despair.” International Socialism 135 (Summer) (June 28): 27–50.

Notes on Greece 4: SYNASPISMÓS and SYRIZA

NOVEMBER 7, 2012: Note 4 of 6 – The explosive changes in Greek economics and politics have introduced the entire world to SYNASPISMÓS and SYRIZA, the anti-capitalist coalition of which SYNASPISMÓS is the leading part. The roots of SYNASPISMÓS go back to the 1968 opposition to Russian imperialism in Czechoslovakia, the original dividing point in the old KKE.

At its core the opposition to Russian tanks was based on the marvellous, instinctive anti-authoritarianism of the 1960’s youth radicalization. This willingness to be influenced by a new generation is more important in categorizing SYNASPISMÓS than the label “eurocommunist”. Stathis Kouvélakis captures this clearly. The wing of communism from which SYRIZA emerged was “marked by eurocommunism” but was also “open, since the 1970s, to the new social movements. … It is a party which is at ease in the feminist movement, youth mobilizations, the anti-globalization, anti-racist and LGBT currents, all the while keeping an important orientation on the workers movement” (Marlière 2012, author’s translation). There is, in other words, a generational divide between the two historic wings of Greek communism. One study of the KKE concluded that, after the political developments of the 1990s, “the KKE has become a party of retired people with limited education and resources. SYNASPISMÓS has, instead, a far more dynamic social profile, reaching its peak among people in their thirties and forties, with a higher degree of education” (Kalyvas and Marantzidis 2002, 682).

There is a tendency to see this in “class” terms – the KKE keeping its roots in the poor and the working class, SYNASPISMÓS (and by extension, SYRIZA), evolving away from the working class towards “urban bourgeois intellectuals” (Kalyvas and Marantzidis 2002, 681). But we should be cautious before so easily pigeon-holing the class character of these parties. The same authors who define the base of SYNASPISMÓS as that of “urban bourgeois intellectuals” also use the term “young, professional, urban and affluent” to describe the party’s base. However, the authors argue that SYNASPISMÓS acquired this base by appealing “to the ‘new-left/post-materialist’ segments of Greek society. It is creatively combining all kind of anti-globalization, ecological, anti-nationalist, pro-immigrant messages” (Kalyvas and Marantzidis 2002, 680).

Is it really meaningful to see the anti-globalization, ecological, anti-nationalist and pro-immigrant movements as expressions of young, professional, urban, affluent bourgeois intellectuals? Or are these issues the developing concerns around which are cohering the most advanced sections of the modern working class – a class which is increasingly educated, increasingly urban, and (from certain perspectives) increasingly professional?

Class needs to be seen, not as static layers of privilege within society in the manner of Max Weber, but rather as a relationship between exploited and exploiter in the manner of Karl Marx. The working class cannot meaningfully be restricted to those who have little education and who work in factories. The working class encompasses all those who have to sell their labour power to capital. An elementary point about the modern working class in advanced capitalist countries, is that increasingly – alongside blue-collar, factory workers – the working class (and the union movement) is more and more comprised of white-collar, office and service workers, many with quite a lot of education. Where would the class struggle in Greece (and Canada, and Britain, and the U.S.) be without teachers, civil servants and nurses? Perhaps the divide between the KKE and SYNASPISMÓS should not be seen as one of class (factory workers versus urban bourgeois intellectuals), but as one within the working class, between the old working class and the new working class? With the latter perspective, the evolution of SYNASPISMÓS and SYRIZA makes sense.

In any case, much of this discussion has been made moot by the rapid developments of 2012. The social composition of the electoral base of SYRIZA has been dramatically transformed. In the May 2012 election “SYRIZA came first among young voters, as well as among the voters ageing up to 55 years.” But the party also “prevailed in the big urban centers, where the economic and social crisis is particularly acute. It even managed to represent big parts of the popular strata in the poor neighbourhoods of Athens and other big cities, where traditionally its penetration had been low” (Golemis 2012). These tendencies accelerated in the June election, with the shift of a quarter of a million votes from the KKE to SYRIZA. The KKE, in other words, no longer has a monopoly on the left in terms of having a base among the poorest strata of the working class in Greece.

One of the component parts of SYRIZA is a group called the International Workers Left (DEA, from its Greek initials). Panos Petrou, a leading member of DEA, outlined the evolution of SYRIZA from 2004 until 2012. His history dovetails very nicely with the above analysis. Petrou argues that SYNASPISMÓS was in some difficulty in the early part of the 21st century.

A left-wing turn was needed, and it was expressed mostly through the involvement of SYN in the anti-globalization movement and the antiwar movement of 2003 against the invasion of Iraq. Regular joint actions between SYN and organizations of the radical and anti-capitalist left – DEA among them – took place in the anti-globalization and antiwar movements, and in the creation and activities of the Greek Social Forum. This kind of coordination represented an important break with the sectarian past of the traditionally fragmented Greek Left. The pressures from the movement itself – for unity of action and to express in the political field the dynamic of the Social Forum and the anti-globalization and antiwar movements – gave birth to SYRIZA.

The process that unfolded in the following years was, again, not straightforward. There was resistance to the left-turn in SYNASPISMÓS, the turn which had allowed for its formation in 2004. There were individuals and groupings which split to the right, more comfortable working with PASOK than with the new radicalization. But again and again, it was the pressure of the social movements which pushed SYRIZA to the left.

There was a mass student movement against the New Democracy government in 2006 and 2007. “Universities were occupied for months, thousands of students attended the general assemblies on their campuses, and tens of thousands of students marched in every city of Greece each week … It was during these months of struggle that SYRIZA re-emerged. In the student assemblies and in the university teachers’ union, activists from the radical left worked together to lead the struggle”.

This was followed in December 2008 by a youth revolt “after a 15-year-old student was killed by two police offers in Athens. SYRIZA was the only force in parliament that supported the youth revolt.” Finally, in 2011, in the wake of the occupation of Tahrir Square, harbinger of revolution in Egypt, and as part of the “Occupy” movement which swept the entire world, “the so-called ‘movement of the squares’ broke out – massive occupations of public plazas, like Syntagma Square in front of the parliament building in Athens, led largely by youth, in imitation of the indignados movement in Spain. SYRIZA activists threw themselves wholeheartedly into the movement. Together with forces from ANTARSYA, they provided important organizational and political support to the demonstrations and the assemblies held in the squares” (Petrou 2012).

One central story completes this picture. The big social movements tha shaped SYRIZA (and ANTARSYA) were underpinned by the extraordinary militancy of Greek workers. In 2010 and 2011, there were 17 general strikes in Greece, as workers mobilized against the harsh austerity measures (Garganas 2012). Here we can only give short accounts of a few of these – but in truth, each was a story in itself.

On May 5, 2010, “a general strike was called … and a hundred-thousand-strong demonstration resulted in rioters attacking the Greek parliament and burning banks in Athens … [T]he protest was the biggest, and most violent, seen in the country since the return to democracy in 1974. In February 2011, a twenty-four hour general strike effectively closed Athens airport and over thirty thousand protesters clashed with police outside the Central Bank of Greece” (Burnham 2011, 504).

In 2011, a 48-hour general strike on October 19 and 20 “confirmed that this cycle was entering a new phase. According to the most reliable estimates, around 300,000 turned out for the demonstrations in Athens and at least 200,000 in the rest of the country, out of a total population of 10.5 million. … Participants included workers from the public and private sectors, the unemployed, young people, small business owners and entrepreneurs, retired people. The scale, spread and diverse social composition of the demonstrations indicated the support of the majority of society. The two days of protest also included a range of spontaneous actions: occupations of public buildings, including government ministries; refusal to pay the new taxes; prolonged strikes by groups such as dustmen and hospital staff” (Kouvelakis 2011, 18).

These strikes and mass street protests have not stopped the austerity measures. But neither have Greek employers or the Greek state been able to impose a significant defeat upon the Greek workers’ movement. SYRIZA’s Antonis Davanellos, in a recent speech in Chicago, gave an extraordinary picture of the way in which this working class resistance has carved deep roots into civil society.

The backbone of the resistance has been the working class movement – a series of strikes, then a general strike, then a new cluster of walkouts, a new general strike, occupations and on and on … [T]his resistance has spread everywhere in Greek society. We say that we are protecting public space in Greece. That means that every public hospital has become a fortress of resistance – not only, by the way, involving the workers inside the hospital, the doctors and nurses, but the people who are in the hospital and their friends [and] relatives. Everyone together works to protect and save the hospital. Around the hospital is the neighbourhood, and the chains of solidarity are built between them. The same is true with public schools. The same is true about child care facilities, which are absolutely crucial for working-class families. But it’s not only that – it’s parks and other public facilities. This is the public space that we are protecting against privatization, against speculators and against austerity (Davanellos 2012).

This is an extraordinary picture of a class in mobilization. It is the immediate background to the rise of SYRIZA.

The preceding short history is a modest attempt at concretely locating SYRIZA within the history of the Greek working class, and the current Greek economic and social crisis. The most important thing here is not the label that is applied to this current, but an awareness that it has become the vehicle which is expressing, in mass politics, the current radicalization in Greek society.

Previous in the series
Notes on Greece 1: Economic Crisis
Notes on Greece 2: Political Upheaval
Notes on Greece 3: The KKE

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Notes on Greece 5: Greece, France, and the limits of the Concept ‘Left Reformism’

© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

References


Burnham, Peter. 2011. “Towards a Political Theory of Crisis: Policy and Resistance Across Europe.” New Political Science 33 (4): 493–507.

Davanellos, Antonis. 2012. “From Crisis to Resistance in Greece.” SocialistWorker.org, July 5.

Garganas, Panos. 2012. “Greek Vote Proves Disaster for Ruling Class.” Socialist Worker (London), May 5, 2301 edition.

Golemis, Haris. 2012. “A Triumph of the Radical Left in Greece – A Message to Europe.” Transform! European Network for Alternative Thinking and Political Dialogue.

Kalyvas, Stathus N., and Niko Marantzidis. 2002. “Greek Communism, 1968-2001.” East European Politics & Societies 16 (3): 665–690.

Kouvelakis, Stathis. 2011. “The Greek Cauldron.” New Left Review II 72 (November-December): 17–32.

Marlière, Philippe. 2012. “« Syriza Est L’expression D’une Nouvelle Radicalité à Gauche » (Entretien Avec Stathis Kouvélakis).” Mediapart.

Petrou, Panos. 2012. “The Making of SYRIZA.” SocialistWorker.org, June 11.

Notes on Greece 3: the KKE

NOVEMBER 6, 2012: Note 3 of 6 – Throughout the entire modern period in Greece, the principal party to the left of PASOK has been the KKE. There is a real loyalty to the KKE among many in the Greek working class, and this loyalty has legitimate political roots. Party members faced severe repression during the years of the dictatorship between 1967 and 1974. Before the dictatorship, its cadre were forged in the terrible years of World War II and the civil war which followed it. This very small country, between 1940 and 1949, saw some 650,000 people lose their lives in war, resistance to fascism, and civil war (Hitchens 1983, 177). The KKE was at the centre of anti-fascist resistance. This has not been forgotten, and explains in part the intense loyalty towards the KKE displayed by thousands of Greek workers.

After the civil war, tens of thousands of KKE members were forced into exile. The communist movement then developed in two sharply different ways, shaped by being either outside or inside Greece itself. The leadership of the party was centred in exile – many in countries of the former Soviet bloc (Russia and Russian-occupied Eastern Europe) – and developed a peculiar kind of deep Stalinism, so deep it was to survive the collapse of that bloc in the late 1980s and early 1990s. “In 1995, the KKE … suddenly rediscovered that Stalin was allegedly one of the greatest Marxist thinkers and began doing absurd things … like glorifying the 1930s purges” (Karadjis 2012).

Inside the country however, there was a quite different political evolution. The Communist Party of Greece of the Interior was formed in 1968, in opposition to the Russian invasion of Czechoslovakia. The label ‘Interior’ “carried an important symbolic charge insofar as it implied that the KKE, often mockingly referred to as KKE Exoterikou (KKE Exterior) … was not really an independent party but a Soviet puppet” (Kalyvas and Marantzidis 2002, 667–668). An uneasy history ensued, culminating in 1991 in a final split between on the one hand what is now the current KKE (essentially a continuation of KKE Exterior) and SYNASPISMÓS (essentially a continuation of KKE Interior) (Kalyvas and Marantzidis 2002, 676).

To see the relationship between this history and current developments is not straightforward, and frequently, old images from the past are not helpful. Typically, the KKE is seen as being a more orthodox group, and SYNASPISMÓS (and the KKE Interior which preceded it) as being more heterodox, from 1968 on part of the Eurocommunist current. Kalyvas and Marantzidis call the post 1991 KKE “hard-line” and the post 1991 SYNASPISMÓS “reformist” (2002, 676). Alex Callinicos says that SYNASPISMÓS “originates in the more accommodating and pro-European wing of the Greek communist movement” (Callinicos 2012a).

These labels, however, are of little use in charting the evolution of either the KKE or SYRIZA. Examine first the KKE. Terms like “orthodox” and “hard-line” usually imply more radical and left-wing. But the hard Stalinism of the KKE, outlined above, has served to disguise, behind left-sounding rhetoric, a deep political inertia and an adaptation to quite traditional nationalist politics.

The latter point is revealed openly in its publicly-accessible program, where the party on the one hand says it is rooted in “scientific socialism” but on the other that it is “a profoundly patriotic party” (KKE 2012). For the left in other member states of NATO and the European Union, the term “patriotic” is usually a label claimed by the right and not the left. This nationalism is based on its “view of Greece as a colony of Western imperialism rather than a mini-imperialist power in its own right” (Karadjis 2012).

The former – the deep political inertia – is revealed in its response to the electoral crisis of 2012. SYRIZA put out a call for a left government, calling on the anti-austerity parties to campaign together in the June elections. ANTARSYA, the other anti-capitalist coalition, had received 75,000 votes in the May election, and its cooperation with the SYRIZA list would have been important. Much more crucially, however, would have been winning the cooperation of the KKE with its half-million voters, and much bigger party apparatus (Davanellos 2012a). The issue of a government of the left poses its own issues, which very much require separate treatment at a later date. One in-depth analysis, deploying the older concept of a “workers’ government” was developed by Britain’s Richard Seymour (2012). John Riddell (2012) has helped to re-introduce this concept into the contemporary discussion. However, the point of an electoral united front is not measured solely by the prospect of office, but by the way in which an electoral united front could lead to an increase in confidence, determination and unity for the bitter struggles on the ground that are inevitable in the coming years.

Given the depth of the crisis, the collapse of PASOK, the emergence of an open fascist threat and the sudden rise in support for SYRIZA, it would seem elementary that the call for an electoral united front between the two big formations on the left, the KKE and SYRIZA, would be met with enthusiasm. In the May election, the Greek “masses handed their votes to SYRIZA, and secondarily to the KKE, with the mandate for them to take power, reject the memorandum, reject austerity [and] restore their livelihoods”. However, this prospect of a united front against the crisis foundered on the rocks of the “spectacular sectarianism of the KKE, which … point blank refused to join a united front with SYRIZA. More than that – criminally – the KKE … refused to even talk about it … [T]he KKE claims it will not work with SYRIZA who it denounces as social democrats who will inevitably sell out” (Karadjis 2012).

The KKE leadership might have refused to link arms with SYRIZA, but many supporters of the KKE went a different direction. Tens of thousands of workers abandoned the KKE and voted for SYRIZA in June 2012. The KKE ended up paying a very steep price for its sectarian position, losing half of its electoral base, and receiving the fewest votes it has ever received in a modern Greek election.

So clearly, one image from the past is not useful. It is not useful to see the KKE as being “extremely left”. The KKE is better seen as being extremely sectarian, a sectarianism shaped in its peculiar embrace of hard Stalinism, political baggage leading to a terrible, conservative inertia in the face of the most profound crisis in Greece since the Second World War.

Previous in the series
Notes on Greece 1: Economic Crisis
Notes on Greece 2: Political Upheaval

Next in the series

Notes on Greece 4: SYNASPISMÓS and SYRIZA


© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

References


Callinicos, Alex. 2012. “The Politics of the Rising European Left.” Socialist Worker (London), May 19, 2303 edition.

Davanellos, Antonis. 2012. “A New Stage of the Resistance in Greece.” SocialistWorker.org, May 23.

Hitchens, Christopher. 1983. “Eleni.” Grand Street 2 (4): 173–181.

Kalyvas, Stathus N., and Niko Marantzidis. 2002. “Greek Communism, 1968-2001.” East European Politics & Societies 16 (3): 665–690.

Karadjis, Michael. 2012. “Greece: SYRIZA, the Communist Party and the Desperate Need for a United Front.” Links: International Journal of Socialist Renewal (May 16).

KKE. 2012. “Programme of KKE”. Document. Communist Party of Greece.

Riddell, John. 2012. “What Would Lenin’s Comintern Have Made of SYRIZA?” Links: International Journal of Socialist Renewal, September 3.

Seymour, Richard. 2012. “The Challenge of SYRIZA.” Links International Journal of Socialist Renewal (July 12).

Notes on Greece 2: Political Upheaval

NOVEMBER 5, 2012: Note 2 of 6 – Greece’s deep economic crisis has led to a revolution in the traditional structures of mass politics. New Democracy (Tories) won elections in 2004 and 2007, and were in office as the crisis struck its first blows. October 4, 2009, they were swept out by a newly resurgent PASOK (social-democrats), as voters turned to the traditional party of the workers’ movement and the left in the face of the clear failure of conservative politics. But PASOK’s social democracy proved equally bankrupt. The only “solution” PASOK (and New Democracy) could come up with, was to agree to two so-called “bailouts” supervised by the “troika” – the European Central Bank (ECB), European Commission (EC) and International Monetary Fund (IMF – a €110 billion “bailout” in May 2010, and another €130 billion “bailout” agreed to in February 2012.

The word “bailouts” is put in quotation marks, because what in fact is being bailed out is not the Greek government, let alone the people of Greece, but rather financial institutions, particularly key European financial institutions, which stood to lose heavily should the Greek economy go under. So – while the second bailout agreement involved a “forgiveness” of 70% of the debt owed by the Greek government to certain key lenders, it came with a key condition that the Greek government’s first priority was to use the money advanced to keep servicing its still massive remaining debt. A European Commission report outlining the nature of the conditions wrote: “the government has expressed the intention of adopting legislation giving priority to the debt service vis-à-vis other cash outflows” (European Commission 2012, 45). The bailout money does not go into the pockets of Greek workers and the unemployed. The bailout money is “recycled” from the European Central Bank and the IMF in particular, back onto the balance-sheet of key financial institutions (Fontevecchia 2012).

And there were other conditions – the imposition of truly drastic austerity measures. Those austerity measures were codified in a series of “memorandums” associated with each of the bailouts. These memorandums make for shocking reading, mandating extraordinarily severe cuts in jobs, wages and services (European Commission et al. 2010; European Commission et al. 2012a; European Commission et al. 2012b). From May 2010 on, much of Greek politics has polarized around this one word: for or against the “memorandums”. The February 2012 memorandum agreement between the troika and the Greek government, called for:

  • a 22-percent cut on the standard minimum monthly wage;
  • for those under 25, a 32-percent reduction;
  • wage freezes on several categories of workers until the unemployment rate falls below 10 percent;
  • €3.2 billion in spending and pension cuts so that;
  • monthly pension payments above €1300 will be reduced by 12 percent;
  • supplementary pensions, paid out of workers’ own contributions, will be slashed by up to 30 percent;
  • reduction in pharmaceutical expenditure by at least €1,076 million;
  • reduction in overtime pay for doctors in hospitals by at least € 50 million;
  • an average reduction by 10 percent in the so-called ‘special wages’ of the public sector (Reuters 2012a; European Commission et al. 2012b).

Because New Democracy and PASOK were both equally implicated in this horrendous attack on the population, they have each paid a huge political price. Throughout the first elections of the 21st century (outlined in Chart 3), New Democracy and PASOK took turns winning elections, each normally polling around 3 million votes, New Democracy in 2004 almost reaching the 3.4 million mark. But in June 2012, when New Democracy managed to top the polls, it did so with just 1.8 million votes, a decline in support of more than 1.5 million from its 2004 peak.

For PASOK, the situation is even worse. In three of the four elections held between 2000 and 2009, it won just over 3 million votes. But having accepted responsibility for the austerity packages designed by European and international bureaucrats as part of the “rescue” of the Greek economy, PASOK saw its base evaporate. In May of 2012, it could not even reach the one million voter threshold. In June it just barely held on to three-quarters of a million voters. Between 2004 and 2012, more than two million voters had abandoned the traditional party of the trade unions and the left. The social-democratic pillar of mainstream politics has been eroded to an even greater extent than the conservative pillar.

The rise of SYRIZA (the Coalition of the Radical Left) is the other side of this picture. This is a political formation with roots in the Greek communist tradition. Its activists have been prominent in the big movements of the 21st century – anti-globalization, anti-war and (since 2007), anti-austerity. Inspired by the occupation of Tahrir Square during the Egyptian Revolution of 2011, a worldwide rebellion against capitalism took shape through the various “Occupy” movements. Its Greek counterpart was “the movement of the squares,” and SYRIZA was a key part of that movement. SYRIZA combines, then, both an electoral presence and an activist presence in the mass movements, a distinct break from the passivity of traditional social-democracy.

Through the elections of 2009, SYRIZA’s vote was fairly modest, ranging from just over 200,000 to just over 350,000. This did not even mark SYRIZA as the most popular of the parties to the left of PASOK, being surpassed in every election by the votes of the KKE (the Greek Communist Party). But this changed dramatically in the election of May 6, 2012, when SYRIZA’s vote soared to just over one million. In the election of June 17, 2012, that total soared again to over 1.6 million, SYRIZA winning more than twice as many votes as PASOK, and trailing by only a few thousand the winning total of New Democracy. There has clearly been a pronounced shift to the left in Greece, with hundreds of thousands of voters moving from PASOK to SYRIZA.

But the crisis in Greece has not simply produced a move to the left. Chart 4 shows this very clearly. First, with each passing election fewer and fewer people have even bothered to vote. The voter turnout in June 2012 was fully 1.2 million below that of March 2004, this in a country where the electorate is just over 9 million. So while one million have turned left towards SYRIZA, an equal number have turned their backs on electoral politics altogether. This evidence of mass, political disengagement is extremely worrying. More worrying still has been the advance of the right. Just over a decade ago, a useful analysis of the Greek left could make the following claim. “It is interesting to note that as of 2002, no successful extreme-right party had emerged in Greece” (Kalyvas and Marantzidis 2002, 690). This is no longer the case. In the election of 2009, an openly neo-Nazi party, the so-called “Golden Dawn”, entered the electoral arena, winning just under 20,000 votes. But by May of 2012 that total soared to 440,000. When a Golden Dawn member physically attacked a left politician on television, many presumed that this would lead to a collapse in its vote. These hopes proved illusory, Golden Dawn keeping the bulk of its votes. In fact the truth is, Golden Dawn has built its base through violence – racist violence – feeding on and encouraging a situation where there have been literally “thousands of attacks against immigrants” (Marchetos 2012). It is also not the only new right-wing party in Greece. A proliferation of splinter-right parties has developed, some basing themselves on extreme Greek patriotism, others on a politics of scapegoating immigrants. The total vote for these splinter-right groups topped 1.2 million in May of 2012.

Finally, to complete the picture emerging from these six elections, Chart 5 maps the changing contours of politics to the left of social democracy. Traditionally, that left has been a terrain dominated by the KKE, the Communist Party of Greece. The chart shows that as recently as 2009, the KKE outpolled SYRIZA, winning more than half a million votes. But in the turmoil of 2012, almost half of those votes have disappeared, undoubtedly in their majority moving to support for SYRIZA. ANTARSYA, the Front of the Greek Anti-Capitalist Left, is a third important component of the left-of-PASOK. In 2004, 2007 and 2009, ANTARSYA slowly increased its support from just under 20,000 to just under 25,000. In the election of May 2012, its vote tripled to 75,000. However, in the very polarized campaign of June 2012 it, like the KKE, saw many supporters move to SYRIZA, ANTARSYA’s result returning to the 20,000 vote level.

The big parties have lost millions of supporters because of their inability to deal with the crisis of Greek society. There has been an important coalescing of the left, and SYRIZA has emerged as a legitimate player on the terrain of mass politics. But there has also been the emergence of a hardened far-right threat, violently profiting from the stew of chauvinist and anti-immigrant politics churned up on the right of the political spectrum.

Previous in the series
Notes on Greece 1: Economic Crisis

Next in the series
Notes on Greece 3: the KKE

© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

References


European Commission. 2012. The Second Economic Adjustment Programme for Greece. Occasional Paper. Brussels: European Commission – Directorate General Economic and Financial Affairs.

European Commission, ECB, IMF, and Hellenic Republic. 2010. Greece – Memorandum of Economic and Financial Policies (MEFP). Brussels, Washington, Athens: European Commission, ECB, IMF, Hellenic Republic.

———. 2012a. Greece – Memorandum of Economic and Financial Policies. Brussels, Washington, Athens: European Commission, ECB, IMF, Hellenic Republic.

———. 2012b. Greece—Memorandum of Understanding on Specific Economic Policy Conditionality. Brussels, Washington, Athens: European Commission, ECB, IMF, Hellenic Republic.

Fontevecchia, Agustino. 2012. “Greek Bailout Deal A Farce To Benefit Banks At The Expense Of Greece.” Forbes.com (February 21): 19.

Kalyvas, Stathus N., and Niko Marantzidis. 2002. “Greek Communism, 1968-2001.” East European Politics & Societies 16 (3): 665–690.

Marchetos, Spyros. 2012. “Golden Dawn and the Rise of Fascism.” Guardian.co.uk, June 19.

Ministry of the Interior. 2012a. Results of Parliamentary Elections in June 2012. Athens: Ministry of the Interior.

———. 2012b. Past Election Results. Athens: Ministry of the Interior.

Nohlen, Dieter, and Philip Stöver, eds. 2010. Elections in Europe : a Data Handbook. Baden-Baden, Germany: Nomos.

Reuters. 2012. “Greece Cuts Minimum Wage, Austerity Begins – Greek Cabinet Agrees to 22 Per Cent Cut in Minimum Wage.” The Times – Transcript, February 29.

Greece in the Eye of the Storm

NOVEMBER 5, 2012: Note 1 of 6 – An economic crisis of enormous proportions has erupted in a first world country in the Global North. The scale of the economic crisis in Greece has few modern equivalents, and is at the root of a massive social and political upheaval. Navigating that crisis poses difficult challenges for the social movements in Greece, and has important lessons for activists around the world. The notes that follow are an attempt to provide information that can assist those, unfamiliar with the situation in Greece, in navigating this situation.

Notes on Greece 1: Economic crisis

The economic crisis in Greece rivals that which broke out in Yugoslavia in the late 1980s. There have been two “bailouts” of the Greek economy, orchestrated by key European and international institutions. Panos Garganos is editor of the Athens-based Workers Solidarity, and a leading member of The Front of the Greek Anti-Capitalist Left (known by its Greek initials as ANTARSYA, a pun on the Greek word for “mutiny”). In March, 2012, Garganas wrote: “We are now in the middle of the second bailout and it is imposing worse conditions than in 2010 when the IMF first came to Greece. Wages have been cut by 22 percent, pensions by 15 to 25 percent, and there has been a whole wave of destruction in social services, in terms of access to hospitals, doctors and childcare. For working class families survival is a real, real struggle” (Garganas 2012a, 9).

The 21st century began with steady growth for the Greek economy, but with quite stunning speed, that economy went from growth to slump in 2007. It has stayed mired there ever since, something that Chart 1 clearly demonstrates [double-click to see in full]. Annual growth rates for Gross Domestic Product (GDP) were usually close to, or just under 3% from the first quarter of 2001 until the third quarter of 2007. On several occasions, GDP growth came in at above 6%; once, in the second quarter of 2006, at almost 7.5%. But in the last quarter of 2007, growth slumped to near zero, stayed just above zero for two more quarters, and then turned negative. GDP has shrunk every quarter since, except for a brief moment in the first quarter of 2010. From the fourth quarter of 2010 on, this slide has been exceptionally steep, often hitting 7%, and on one occasion coming close to 9%. By the first quarter of 2012, GDP sat at €40.6 billion, a level not seen since the first quarter of 2001. To put this another way – absolutely all of the growth experienced in the first years of this century in Greece has been wiped out by five years of slump.

This economic contraction has led to a jobs crisis, outlined in Chart 2. Just five years ago, in 2007, overall unemployment was at 8.5% and falling, dropping to 7.8% n 2008. But it has risen steadily since then to 16.2% in 2011 and a truly shattering 22.5% in the 2nd quarter of 2012. For young people, aged 15-24, it is far worse. From 22.9% in 2007, unemployment has risen to 51.15%. More than half of young people in Greece, who wish to have a job, can’t find one.

This unemployment is not restricted to the young – for whom high levels of unemployment have become a chronic condition in many countries. For those 45-54, unemployment is now at 17.2%; for those 35-44, 19.2%; and for those 25-34 it is almost at 30%. These figures are the statistical profile of social calamity. And it may get even worse. “Given the fact that the jobless rate is a lagging indicator of broader economic activity, unemployment may not have reached its peak yet,” said Platon Monokroussos, an economist at EFG Eurobank (Reuters 2012b).

A terribly revealing and sobering statistic, is the one to do with suicides. According to James Meadway, “Greece used to have the lowest suicide rate in Europe.” But in the wake of the economic crisis, “[s]uicides have increased by 40% in the last year” (Meadway 2012). The individual stories are heart-rending. Antonis Perris was a young man who, in 2012, had been unemployed for two years. “Perris wrote in an online forum late one night that he had run out of money to buy food and cursed those responsible for the economic crisis in Greece. ‘I have no solution in front of me,’ he typed. The next morning, Perris took the hand of his ailing 90-year-old mother. They climbed to the roof of their apartment building and leapt to their death” (Cha 2012).

Next in the series:
Notes on Greece 2: Political Upheaval

© 2012 Paul Kellogg

Publishing history

This note is one of six. The six notes have been published together as  “Greece in the eye of the storm (the Greek left, SYRIZA and the limits of the concept of ‘left reformism’)” Links, November 18.

References

Cha, Ariana Eunjung. 2012. “‘Economic Suicides’ Shake Europe as Financial Crisis Takes Toll.” Associated Press, August 14.

ELSTAT. 2012a. Quarterly GDP – Expenditure Approach (Constant Prices) (1st Quarter 2000 – 1st Quarter 2012). Quarterly National Accounts. Athens: Hellenic Statistical Authority.

———. 2012b. Labour Force Survey: April 2012. Athens: Hellenic Statistical Authority.

Garganas, Panos. 2012. “Greece: The Struggle Radicalises.” International Socialism 134 (Spring) (March 27): 9–19.

Meadway, James. 2012. “Greek Austerity: The End of the Line.” The New Economics Foundation.

Reuters. 2012. “Record Jobless Rate Marks Greek Woes.” The Star (South Africa), July 13, p. 21.

The Septembers of Neoliberalism

It was September 11, 1973, that the neo-liberal experiment began. The brutal U.S.-backed coup against Salvador Allende’s government opened the door for the “Chicago Boys” – a group of Chilean economists who had studied under Milton Friedman at the University of Chicago[1] – to “reconstruct the Chilean economy … along free-market lines, privatizing public assets, opening up natural resources to private exploitation and facilitating foreign direct investment and free trade.”[2] September 7, 2008 – thirty-five years later – that experiment came to an end, not with a whimper, but a bang. The neo-liberal regime of George Bush – more closely identified than any other world figure with the politics of keeping government out of the market – is now presiding over a state intervention into the so-called “free” market that is without parallel. When the dust settles: a) hundreds of billions of dollars will have been spent to try and fix a broken financial system; b) a generation of free-market arrogance and ideology will lie in ruins, its ideological clarion call “neo-liberalism” completely discredited; and c) the U.S. empire will be exposed as a declining (if vicious) beast. The events of September 2008 mark a watershed in the history of capitalism.

Fannie and Freddie

The first act in this story is in many ways still the most significant if not the most dramatic. September 7, 2008, the United States Treasury announced it would seize control of two institutions called Fannie Mae and Freddie Mac. At the time, this represented “the world’s biggest financial bailout” (a record it would only claim for a few dozen hours). The U.S. government pledged to guarantee literally trillions in the two companies’ investments, something that estimates said would end up costing U.S. taxpayers in the order of $25 billion.

What are these peculiarly named institutions? Fannie Mae stands for “Federal National Mortgage Association” and Freddie Mac stands for “Federal Loan Mortgage Corporation.” Both are GSEs – “government-sponsored enterprises,” creations of the U.S. government, but which operate as shareholder run companies. Fannie Mae’s roots go back to the depression-era. It was created in 1938 to “provide funding to the housing market … Freddie Mac was created in 1970 to provide competition to Fannie Mae.”[3]

Their role in the housing market is indirect. Homeowners in the United States borrow money from lenders (banks and other financial institutions) just as in other countries. What Fannie and Freddy do is to buy these mortgages from the lenders. This gives the “mortgage initiators” instant cash, and a little bit of profit, allowing them to go back and quickly offer new mortgages. Fannie and Freddy then turn around and repackage the various mortgages they have purchased as “mortgage-backed securities.” They sell these securities on the secondary mortgage market – in effect borrowing money, but using these “securities” as collateral – counting on the income from the payment of mortgage principle and interest to give them cash to repay these loans.[4]

This “provides liquidity” to the housing market. It also has the effect of creating a huge incentive to get more and more people to buy houses, as at every level of this structure, incomes and profits are dependent on a constantly expanding base of home ownership. In the scheme above, there are massive fortunes to be made – by the banks and other mortgage issuers, by Fannie and Freddy and their hangers-on, and by the investors who buy up the Fannie and Freddy debt. Former Fannie CEO Daniel Mudd was in line to receive up to $8.4 million in compensation. Freddie Mac’s former CEO was in line for $15.5 million.[5] And John McCain’s campaign for the U.S. presidency, suffered a setback when it was revealed that Freddy Mac had been paying $15,000 a month from the end of 2005 until September 2008 to a firm owned by McCain’s campaign manager.[6] All had an incentive in “priming the pump” – creating incentives for working people to pony-up and enter the world of home ownership. The whole scheme works fine as long as homeowners can pay their mortgages. But if they can’t …

So base greed is an element that fed this bonfire. But that wasn’t the only, or even the biggest issue – the problems were structural. In the stock market crash at the turn of the century, huge fortunes were lost when the dot-com bubble burst. With investors burned from their experience in the stock market, U.S. interest rates were reduced to unprecedentedly low levels, as the U.S. federal reserve essentially “printed money” to stave off a deeper crisis. One key measure of interest rates, the U.S. federal funds rate, dropped below two percent in November 2001, and stayed below two percent for three years, bottoming out at just below one percent in December 2003.[7] Mortgage rates don’t track Federal Funds Rates exactly, but mortgage rates did come down, so that at their lowest point in 2003 and 2004, it was possible to get Adjustable Rate Mortgages (mortgages which increase or decrease with the rise and fall of interest rates) for between 3 and 4 percent.[8] In fact, people often were able to get mortgages below that rate – with incentives of very low interest rates in the first few years of the mortgage to encourage the plunge into home ownership. With millions moving into home ownership, the mortgage-backed securities market prospered. The effect was to create an environment where billions of dollars could flee an insecure stock market, and find a “safe haven” in the housing market, by investors moving from speculating in stocks to speculating in “mortgage-backed securities.”

This structure was riven with problems. The rush into home buying which this created, pushed house prices very high very fast. This has been a visible problem for some time. In 2006, one analyst wrote: “Cheap money turned the real estate boom into a frenzy … prices in most hot markets … soared by 55 per cent to 100 per cent (on top of inflation). Trying to keep pace, buyers increasingly resorted to riskier loans to lower monthly payments. Two types became the rage: adjustable rate mortgages and exotics.” We have already looked at the ARMs. The Exotics bear a little examination, the most extreme of which was “the negative-amortization loan, which allows borrowers to pay less than the interest due. The unpaid interest is tacked onto the principal, so the size of the loan grows every month. In 2004 and 2005, no less than 75 per cent of all mortgages were either ARMs or exotic loans, compared to 20 per cent in the late 1990s.”[9]


This outline is important. Some are blaming poor home buying decisions by ordinary working people for the way in which this crisis has unfolded. But it was not “reckless spending” by the poor. It was a structure, driven by greed, which created enormous pressures and incentives to abandon renting and jump into the home-buying game – simply because massive fortunes were being made. Suddenly, working people were being pressured to take on debt far in excess of their capacity to pay. The best way of measuring this is looking at the ratio of house prices to household income. The graph here shows a steady upward climb in that ratio for the United States as a whole, from the late 1990s to the mid-point of this decade – in some cities, an extremely steep rise.[10]

But interest rates don’t stay low forever. Here the story has another layer of complications. There is a close relationship in most countries between the health of the currency and the trend in interest rates. Roughly, if the country is increasing its international indebtedness, there will be downward pressure on its currency relative to other currencies. This can be countered by increasing interest rates to attract investors in spite of the increasing debt burden. At times these rates have to go up considerably to prevent a precipitous fall in the currency.


There are some who say this pressure has yet to make itself felt in the United States. The entire post-war period has been defined by the domination of the international economy by the U.S. dollar. Its “unique” place in the world economy is often seen as making it relatively immune to the downward pressure that other currencies experience when their economies become increasingly indebted. A commonly used measure of this is a comparison of the U.S. dollar to major currencies. The resulting graph does not show overwhelming U.S. dollar weakness, but rather a generations-long fluctuation with no clear trend either up or down.[11]

But there is a problem with this way of representing the health of the U.S. Dollar. The figures in this comparison go back only until 1973. This leaves out of the picture the biggest story in the history of the U.S. dollar, the effect of it “freeing itself” from the gold standard. This was the decision Richard Nixon took in 1971, allowing the U.S. to “print dollars” unencumbered by maintaining an equivalent stock in gold. The most readily accessible international comparative figures, because they begin in 1973, do not factor this epochal event into their picture. But it is possible to improvise a comparison.


The chart “Decline of the U.S. Dollar” shows the U.S. Dollar measured against the Yen (currency of Japan) and something that is being called the “EuroMark” – a statistical composite of the Mark, formerly the currency of Germany, Europe’s biggest economy, and the Euro which has now replaced the Mark and most other major European currencies. The result is very clear. The U.S. dollar is approximately 1/3 of what it was in 1971, compared to the Yen and the “EuroMark”.[12]

The U.S. Dollar has been steadily declining against its major competitors for years. The devaluation that happened after the abandonment of the gold standard was immediate and quick, becoming precipitous in the late 1970s. This was reversed in the early 1980s by a policy of very high interest rates, then fell steadily until the 1990s, recovering somewhat in the Clinton years, but returning to decline under Bush. As the dollar declines, it inevitably leads to a day when interest rates have to go up, or the dollar’s fall could accelerate dangerously. So in Bush’s second term, interest rates have inched upwards, and this in turn became part of an environment pushing higher and higher the interest rates on millions of peoples’ mortgages.

Finally, none of this works if homeowners start to lose their jobs. When this cycle began, unemployment was at historically low levels – just 3.9 per cent, in the last four months of 2000. That increased to 6.3 percent by September 2003, dropped below five percent through the last half of 2005 and the first two months of 2008, but has since climbed steadily to 6.1 percent by August of 2008.[13]

The effects of these problems became visible in the summer of 2007. With interest rates rising, some homebuyers could not make the payments, and the number of defaults began to rise. Rising interest rates and rising unemployment, started to decrease demand for houses, so prices began to fall. And with house prices falling, many saw the value of their house fall far below the principal remaining on their mortgage – creating an incentive to simply walk away from the debt – default on the mortgage, and go back to renting. The result has been the highest rates of foreclosures in the modern era. A report from the Mortgage Bankers’ Association indicated that: ”about 2.75 percent of all home loans, or about 1.75 million mortgages, were in foreclosure at the end of June [2008], up from 2.47 percent in March. That was the highest foreclosure rate since 1979, when the Mortgage Bankers first collected the data.”[14]

As these millions of foreclosures rippled through the system, the whole flimsy structure started to shake. Between them, Fannie and Freddy had issued $3.7 trillion worth of mortgage-backed securities.[15] But suddenly, as mortgage payments started to fall because of defaults, as the assets backing these mortgages started to lose value with the falling prices of houses in the United States, these securities looked a whole lot less secure.

Bankers’ Strike

Neo-liberalism is a modern restatement of an old “free-market” orthodoxy. Markets know best. Let the “hidden hand” of the market do its magic, and a million individual decisions based on individual self-interest, will end up with a virtuous direction for the economy and society as a whole. Sometimes there are barriers to the operation of this hidden hand – too much government intervention, too much regulation being two of the most often cited. Get rid of them. The state’s role is to do away with regulation, to unfetter the markets from the hands of government, to let the markets do their work.

So – from the standpoint of neo-liberal orthodoxy, it is a matter of some indifference that Fannie and Freddy were under stress. Joseph Schumpeter argued last century that capitalism worked through processes of “creative destruction” where periodically whole sections of capital are destroyed in economic slump. This process, while painful, was central to the working of capitalism, clearing the ground for a new round of investment, the way in which a forest fire burns away the underbrush, allowing new saplings to reach for the sky. In Schumpeter’s words the “creative destruction” of competition, bankruptcy and consolidation “revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist has got to live with.”[16]

But the capitalists who made the decisions leading to the impasse of the U.S. financial system are not going to live with the consequence of their actions. Something pushed the neo-liberals into acting against neo-liberal orthodoxy and save those capitalists from the consequences of their actions. What the neo-liberals discovered was that the U.S. economy was not all-powerful, that had they let the process go too far, and the consequences of a full-blown cycle of “creative destruction” would have been disastrous. The issue was not simply one of mortgages – it was about the structural problems of the international, not just the U.S., capitalist system.

So far only one part of the story has been told, the story of mortgages, Fannie and Freddy, and their selling of “mortgage-backed securities”. The next question that has to be asked is, who buys these securities? The economists’ answer is that they are bought by “risk-averse investors such as banks, pension funds and central banks around the world,”[17] investors in other words who want a guaranteed return on their investments, and little or no risk of these investments turning into worthless paper. Fannie and Freddy’s total liabilities is mostly debt, most of it from the sale of mortgage-backed securities, and it totals in excess of $1.7 trillion dollars.[18] Significantly, increasing portions of that debt have been sold to non-U.S. banks and investors. The top five in reverse order, as of June 2007 were Taiwan ($55 billion), South Korea ($63 billion), Russia ($75 billion), Japan ($228 billion) and China ($376 billion).[19] The entire structure then was increasingly dependent on the willingness of banks and other institutions in these countries, to continue giving Fanny and Freddy billions of dollars.

This summer, it came to an end. Under pressure from their eroding mortgage business, Fannie stocks fell from $67.30 a share October 5 2007, to just $7 a share, September 4, 2008.[20] Freddy stocks followed the same downward slide, from $63.43 to $4.95.[21] Suddenly, non-U.S. investors, particularly in Asia, began to worry. The slide in share value of Fannie and Freddy raised the possibility that the two companies could go bankrupt. That would leave banks and investors in Asia and elsewhere holding pieces of paper worth billions of dollars less than their face value. “Chinese banks ‘were probably facing significant losses,’ says Logan Wright, an analyst with Stone & McCarthy Research.”[22]

Bankers from outside the United States began to apply leverage. In the first half of 2007, central bank holdings of Fannie and Freddie securities increased on average by $22 billion a month. But in 2008, those holdings fell by $27 billion from mid-July through early September.[23] And the Financial Times reported in August under the headline “Bank of China flees Fannie-Freddie,” that “Bank of China has cut its portfolio of securities issued or guaranteed by troubled US mortgage financiers Fannie Mae and Freddie Mac by a quarter since the end of June. The sale by China’s fourth largest commercial bank, which reduced its holdings of so-called agency debt by $4.6bn, is a sign of nervousness among foreign buyers of Fannie and Freddie’s bonds and guaranteed securities.”[24] “The threat of a central bank buyers’ strike was real,” accord to Brad Setser, a former Treasury Dept. official and now a fellow at the Council on Foreign Relations.[25]

Neo-liberal orthodoxy dictated “let the market rule,” let the processes of creative destruction work themselves out. But bankers outside the U.S. who stood to lose billions from this market failure said; “Creative Destruction be damned. If you don’t act, we will start withdrawing our money. We are already doing it. We will not let you ‘cleanse’ your economy by leaving us holding worthless pieces of paper.” So facing an enormous catastrophe, Bush and the U.S. administration suddenly switched from the world’s biggest neo-liberals, to the world’s biggest state-capitalists, when they intervened to guarantee the debt held by Fannie and Freddy. Many of their neo-liberal ideologues were left wondering what had hit them. This whole thing might, said one commentator become a “nightmare scenario, the descent into quasi-socialism” which “balloons the national debt and wrecks foreign investors’ faith in the economy.”[26]

The state and capital

But of course this has nothing to do with “socialism” – unless it is a kind of Frankenstein’s Monster socialism, where the state robs from the poor to give to the rich – because that is exactly what is happening: tax dollars from U.S. workers to be used to pour into the balance sheet of two failed corporations. It is a myth of the neo-liberals that the state is separate from the market. There is of course the central role of state militarism. The British Navy ruled the waves so that British business could penetrate every corner of the globe in the 19th century. The U.S. military has time and again overthrown governments in Latin America to keep the hemisphere open for business. But there are also the directly economic ways in which the state is intimately tied to the development of capitalism. British imperialism jealously protected its industries behind the walls of empire. India did not build its rail network with British steel and rolling stock because of the market, but because of imperialism.[27] Japanese capitalism burst into the 20th century after the Meiji Restoration used the Japanese state to mobilize resources in order to industrialize.[28] Canadian capitalism had at its core the construction of a continental rail network, which bankrupted the private capitalists, and was only finished because of the state-capitalist “National Policy.”[29] In South Korea, the industrial revolution in the post-war era was inconceivable without the “chaebols”, very much creatures of the South Korean state.

The myth that capitalism is about the retreat of the state, and that socialism is about its reverse – state intervention – is a myth made easier by the long nightmare of Stalinism, where there were states which called themselves “socialist” and which said the same thing as the neo-liberals only in reverse: “We are socialist because the state owns everything: never mind the absence of civil rights and the absence of democracy.” But the Stalinist states are long gone, and a new generation is returning to the roots of the socialist movement, understanding that socialism is about popular control, workers’ control of the economy and the state, or it is about nothing. It can be important to have the state intervene to fix problems in the economy. But the key question becomes – who controls that state? In the United States, we can be pretty sure that the state is controlled by the corporate elite.

That capitalist state, having got the taste of government intervention to save capitalism from itself, has now become ravenous for more. Fannie and Freddy were only two of the institutions under stress because of economic problems in the United States. September 16, the U.S. Federal Reserve took over American Insurance Group for $85 billion. House Speaker Nancy Pelosi criticized the rescue, calling the $85 billion a “staggering sum.” Ms. Pelosi said the bailout was “just too enormous for the American people to guarantee.”[30] But that staggering sum has now been dwarfed by another even larger sum. United States’ Treasury Secretary Henry Paulson is asking Congress to come up with $700-billion to clean “toxic assets” out of the U.S. financial system. What he wants is to have enough money on hand so that any bank or financial institution which has a piece of paper that is looking pretty worthless, Paulson will have the money to say “no problem, we’ll take it off your hands.”

How do you come up with this “worst-case scenario” figure? Federal Reserve Chairman Ben Bernanke said in testimony that “ ‘various metrics’ could be used to arrive at that $700 billion number. It is 5% of $14 trillion in outstanding mortgage debt and roughly the same percentage of the $10 trillion to $12 trillion of commercial bank assets. ‘So it seems like an appropriate amount relative to the size of the problem.’”[31]

Seems like an appropriate amount. You would have thought he would have hired someone to get figures so that he could be a little more definitive given the “size of the problem.” What we are looking at is a trillion-dollar intervention by the U.S. government into the financial system of the world’s biggest economy – the biggest ever economic intervention by a state into any economy anywhere – that is going to change the shape of economics and politics for a generation. The crisis brings into focus three central points.

1) The decline of the U.S. and the Danger of Militarism

There has been a sharp divide in anti-capitalist circles over the position of the U.S. in the world system. Theorists like Antonio Negri and Michael Hardt argued that empire had become disembodied from the state.

In contrast to imperialism, Empire establishes no territorial centre of power and does not rely on fixed boundaries or barriers. It is a decentred and deterritorialized apparatus of rule that progressively incorporates the entire global realm within its open, expanding powers. Empire manages hybrid identities, flexible hierarchies, and plural exchanges through modulating networks of command. The distinct national colours of the imperialist map of the world have merged and blended in the imperial global rainbow.[32]

The actions of states in the context of the current crisis shows this analysis to be inadequate. The states of the various central banks which had holdings of U.S. securities, including the state in China – all have particular interests that they seek to assert. Similarly, the state in the U.S. is suddenly enormously and obviously important to Empire – doing what no corporation on its own can do, mobilizing the tax resources of working people to bail out the financial system. “Empire” is just as bound up with the state system – a system of competing and predatory states – as were all previous systems of imperialism.

Theorists like Leo Panitch and Sam Gindin have challenged Hardt and Negri on exactly this point, seeing very clearly the continuing role of the state in shaping the field of power that has been called “Empire.” However, in the place of a system of imperialist states, they tend to reduce “Empire” to just one state – the overwhelmingly dominant U.S. state. They have argued that U.S. penetration of European and Asian capital is so profound as to make irrelevant and archaic any notion of inter-imperial rivalry.[33] But this view too is being revealed as problematic. The long decline of the U.S. dollar, documented above, is an indication of the worsening competitive position of the United States against its rivals in Europe and Asia. And the way in which this bailout took shape – in part from the threat of a strike by central bankers outside the United States, refusing to further invest in U.S. securities, is another powerful indicator of a changing world order. The U.S. remains the world’s biggest economy and most powerful state. But its position relative to others has been in decline for decades, and this débacle shows that the decline is ongoing.

There is a very developed literature, under the heading of the “Permanent Arms Economy,” that makes a compelling case to explain this decline.[34] The long-term structural shift of resources into arms has effectively starved key sections of the U.S. economy of investment, allowing others in the world system to catch-up and in some cases economically overtake the United States. The massive military presence sustained by the U.S. since the Korean War, has been accomplished at the cost of its international competitiveness. Other countries have invested in their “civilian economies” to a much greater extent than the U.S., overtime weakening the relative position of the U.S. in the world system, something now being starkly revealed in the current economic crisis.

But we also know from the last empire to fall under the weight of its arms spending – the Soviet Union – that an addiction to war might have negative effects for an economy, but it is still an addiction. The Soviet Union stayed mired in pointless and bloody wars abroad virtually until it collapsed in the years 1989-1991. The U.S. addiction to arms spending is likely to have the same contours – bad for the economy, but unshakeable for the state. It means that the wars in Iraq and Afghanistan are likely to be with us for some time.

2) Ideological crisis of neo-liberalism

This September financial shock, has opened up a period of deep confusion and splits for the hegemonic ideology of neo-liberalism. The $700-billion bailout is being pushed by Republican George W. Bush, the world’s pre-eminent neo-liberal. Its principal opposition has come from – the staunchly neo-liberal Congressional Caucus of his own party.[35] It was these neo-liberal hardliners who were at the core of the defeat of the $700-billion bailout package in the first vote in Congress.[36] The neo-liberal monolith has cracked over its key precept – that markets should be “free” of the state.

Without any question, this chaotic, sudden shift from the neo-liberal orthodoxy of the small state and the free market to a new state-capitalist interventionism – this shift will like a thunderbolt make millions question the orthodoxies of neo-liberalism. Why are the bankers being given billions, while those who have lost their homes get nothing? In the parlance of the journalists, “why is Wall Street getting billions that come from the pockets of the ordinary folk of Main Street”? If we are going to have state intervention, why not go all the way – use the money for public transit, green jobs, public housing, schools and education, investments that help ordinary people not overpaid bankers?

But as Naomi Klein has pointed out, a crisis in the ideology of neo-liberalism is not the same thing as a retreat from the policies of neo-liberalism – the privatization and deregulation which have so plagued working peoples’ lives for more than a generation.

It would be a grave mistake to underestimate the right’s ability to use this crisis – created by deregulation and privatization – to demand more of the same. … the dumping of private debt into the public coffers is only stage one of the current shock. The second comes when the debt crisis currently being created by this bailout becomes the excuse to privatize social security, lower corporate taxes and cut spending on the poor. A President McCain would embrace these policies willingly. A President Obama would come under huge pressure from the think tanks and the corporate media to abandon his campaign promises and embrace austerity and “free-market stimulus.”[37]

It is worth remembering that one of the modern architects of neo-liberalism, Margaret Thatcher, was very clear on this point. Thatcher is associated with the phrase “there is no alternative” or “TINA” – usually seen as justifying the unbridled rule of competition. Susan George writes that Thatcher:

… was well known for justifying her programme with the single word TINA, short for There Is No Alternative. The central value of Thatcher’s doctrine and of neo-liberalism itself is the notion of competition – competition between nations, regions, firms and of course between individuals. Competition is central because it separates the sheep from the goats, the men from the boys, the fit from the unfit. It is supposed to allocate all resources, whether physical, natural, human or financial with the greatest possible efficiency.[38]

But in Thatcher’s classic and most often cited use of the term, this was not quite what she said and this was not quite her point. At a speech to the Conservative Women’s Conference, May 21, 1980, Thatcher’s theme was the way in which wages were increasing too quickly.

Wages in the public sector are still higher than the country can afford … earnings will have to rise much more slowly if we are to avoid still more unemployment and if we are to get inflation down. It is too often forgotten that during the last two years there has been considerable increase in average living standards. What we produce has been growing much more slowly. We have to get our production and our earnings into balance. There’s no easy popularity in what we are proposing but it is fundamentally sound. Yet I believe people accept there’s no real alternative.[39]

The point is, Thatcher was not in the first instance driven by an abstract commitment to the market, but by a class commitment to transferring wealth from workers to employers. In this, the role of the state is a tactic, not a principle. The Thatcherite state showed its capacity to intervene against workers’ wages with real brutality during the bitter miners’ strike of 1984-1985.[40] Neo-liberal orthodoxy may lie exposed as nonsensical, but the class which brought us neo-liberalism remains in power, motivated by the same project – capturing the wealth produced by “Main Street” and making sure it ends up in the pockets of “Wall Street.”

3) The need for social movements against capitalism in all its forms

Which leads to the most important point, the need to insist that Thatcher and the neo-liberals are wrong – there is an alternative. In the 1990s and early 21st century, there was a magnificent international movement against neo-liberal globalization. The great protests against NAFTA led by the Zapatistas, the protests against the WTO in Seattle, against the FTAA in Quebec City, against the G8 in Genoa – these protests mobilized hundreds of thousands.

But the political leadership of these movements rested in groups like ATTAC in France or the Workers’ Party of Brazil. For them the target was not capitalism itself, but capitalism in its neo-liberal form. Neo-liberalism is now in open crisis, but the alternative on offer is not re-assuring – a strong state that protects corporations from their own excesses, and does so by taxing and squeezing the wages of ordinary workers. The problem is not just neo-liberalism. The problem is capitalism, whether in its “neo-liberal” or “state-interventionist” form. The next round of anti-corporate mobilizations needs that understanding at its centre.

We are seeing today in North America the hollowness of the neo-liberal dystopia. Others saw it earlier. It was after all the indigenous people of Chiapas who rose up against the neo-liberal North American Free Trade Agreement (NAFTA) in January, 1994, the peasants of Cochabamba in 2000 who stopped the water privatizers in their tracks, the masses of Caracas who in 2002 prevented the coup d’état which would have restored neo-liberalism in Venezuela, part of the swelling rage of all the oppressed in Latin America who, the principal road-block to the 2005 imposition of the U.S. led neo-liberal Free Trade Area of the America (FTAA). Perhaps just as neo-liberalism’s birth was in Latin America, it will similarly be Latin America where we will see the beginnings of the new social movements challenging capitalism in all its forms.

© 2008 Paul Kellogg

References

[1] Gilberto Villarroel, “La herencia de los ‘Chicago boys’,” BBCMUNDO.com, December 10, 2006, http://news.bbc.co.uk
[2] David Harvey, Spaces of Global Capital: Towards a Theory of Uneven Geographical Development (New York: Verso, 2006), p. 12
[3] “US rescues giant mortgage lenders,” BBC News, September 7, 2008
[4] Alana Semuels, “Q&A about mortgage giants Fannie Mae, Freddie Mac,” Los Angeles Times, September 8, 2008, www.latimes.com
[5] The Associated Press, “Answers to your Fannie Mae, Freddie Mac takeover questions,” New York Daily News, September 11, 2008, www.nydailynews.com
[6] Jackie Calmes, David D. Kirkpatrick, “McCain Aide’s Firm Was Paid by Freddie Mac,” The New York Times, September 23, 2008
[7] Bank of Canada, “Monthly Series: V122150: Federal Funds Rate”, www.bankofcanada.ca
[8] HSH Associates Financial Publishers, “HSH’s National Monthly Mortgage Statistics,” www.hsh.com
[9] Shawn Tully, “Real Estate Survival Guide,” Fortune, Vol. 153 Issue 9, May 11, 2006, pp. 94-102
[10] Calculated from Joint Centre for Housing Studies, The State of the Nation’s Housing 2007, “Additional Table: Metropolitan Area House Price-Income Ratio, 1980-2006,” www.jchs.harvard.edu. Figures are not yet readily available for 2007 and 2008. However, an update has been released to one analyst, which shows the same general trend, with the addition that from 2007 on, house prices have started to fall – the graphical representation of the bursting of the housing bubble. See CalculatedRisk, “Update: Ratio Median House Price to Median Income (2008 Report),” June 24, 2008, http://calculatedrisk.blogspot.com
[11] U.S. Federal Reserve Board, Federal Reserve Statistical Release, H.10 “Foreign Exchange Rates,” “Price-adjusted Major Currencies Dollar Index,” www.federalreserve.gov
[12] Derived from “FXHistory®: historical currency exchange rates,” accessed September 24, 2008.
[13] Bureau of Labor Statistics, U.S. Department of Labor, “Labor Force Statistics from the Current Population Survey,” http://data.bls.gov
[14] Vikas Bajaj, “Foreclosures Rose as Delinquencies Eased in Quarter,” The New York Times, September 5, 2008
[15] According to Peter Coy, “Back on Track – Or Off The Rails?” Businessweek, September 22, 2008, p. 24
[16] Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Routledge, 1994), p. 83
[17] Coy, “Back on Track,” p. 24
[18] MarketWatch, The Wall Street Journal Digital Network, www.marketwatch.com and Forbes.com
[19] U.S. Treasury Dept., as reported by Bruce Einhorn and Theo Francis, “Asia Breathes a Sigh of Relief,” Businessweek, September 22, 2008, p. 32.
[20] Yahoo Finance, http://yahoo.finance.com
[21] Yahoo Finance, http://yahoo.finance.com
[22] Einhorn and Francis, “Asia Breathes A Sigh of Relief,” p. 32
[23] Einhorn and Francis, “Asia Breathes A Sigh of Relief,” p. 32
[24] Saskia Scholtes and James Politi, “Bank of China flees Fannie-Freddie,” Financial Times, August 28, 2008
[25] Einhorn and Francis, “Asia Breathes A Sigh of Relief,” p. 32
[26] Coy, “Back on Track – Or Off the Rails,” p. 25
[27] Clarence Baldwin Davis, Kenneth E. Wilburn, Ronadl Edward Robinson, Railway Imperialism (Westport: Greenwood Press, 1991)
[28] Colin Barker, “Origins and Significance of the Meiji Restoration,” 1982, www.marxists.de
[29] Stanley Ryerson, Unequal Union (New York: International Publishers, 1968)
[30] Edmund L. Andrews, “Fed’s $85 Billion Loan Rescues Insurer,” The New York Times, September 16, 2008
[31] Joshua Zumbrun and Liz Moyer, “Your Guide To The Bailout Debate,” September 24, 2008, Forbes.com
[32] Michael Hardt, Antonio Negri, Empire (Boston: Harvard University Press, 2000), pp. xii-xiii
[33] See essays in Leo Panitch and Colin Leys, eds., Socialist Register 2004: The New Imperial Challenge and Socialist Register 2005: The Empire Reloaded (London: Merlin Press). For an exchange that goes over this controversy in detail, see: Alex Callinicos, “Imperialism and Global Political Economy,” International Socialism 108 (Autumn 2005); Leo Panitch and Sam Gindin, “ ‘Imperialism and Global Political Economy’ – A Reply to Alex Callinicos,” International Socialism 109 (Winter 2006); and Alex Callinicos, “Making sense of imperialism: a reply to Leo Panitch and Sam Gindin,” International Socialism 110 (Spring 2007) – all available online at www.isj.org.uk.
[34] See Michael Kidron, Capitalism and Theory (London: Pluto Press, 1974) for a classic development of this thesis. Some of Kidron’s writings are available at The Marxists Internet Archive, www.marxists.org
[35] Sheldon Alberts and Don MacDonald, “Bailout plan stalls as conservative Republicans voice their opposition,” The Vancouver Sun, September 26, 2008
[36] Carl Hulse and David M. Herszenhorn, “Lawmakers Defy Bush and Party Leaders, Rejecting Bailout,” The New York Times, September 29, 2008
[37] Naomi Klein, “Now is the Time to Resist Wall Street’s Shock Doctrine,” The Huffington Post, September 25, 2008
[38] Susan George, “A Short History of Neoliberalism: Twenty Years of Elite Economics and Emerging Opportunities for Structural Change,” Transnational Institute,, March 24, 1999, www.tni.org
[39] Margaret Thatcher, “Speech to Conservative Women’s Conference,” Margaret Thatcher Foundation, May 21, 1980, www.margaretthathcer.org
[40] See, among other accounts, Alex Callinicos and Mike Simons, The Great Strike: The Miners’ Strike of 1984-5 And Its Lessons (London: Socialist Worker, 1985)