Tuesday, 14 July 2015

A Deal That Is Not A Deal

Love Me Or Leave Me

The EU is a state that is not a state; a single market that is not a single market; a currency union that is not a currency union. So, its no wonder that when those contradictions reached crisis point in Greece, they have resulted in a deal that is not a deal.

The situation facing Greece, for the last six months, is one in which conservatives have presented the options as being to either suck up the austerity meted out, or else for Greece to leave the Euro. Left nationalists, opposed to the EU, who have wanted to see Greece leave the Euro, as merely the first domino to fall, in the break up of the EU itself, as well as all of the ultra nationalist, eurosceptic forces, across Europe, have wanted to present those as being the only available options too. The reason that Syriza represented such a threat to the conservative leaders of Europe was precisely that they refused to accept those as the options.

In reality, its rather like complaining about the poor wages you receive from your employer and being told, well either accept it, and stop moaning, or find another job. For a socialist, or even just for a trade unionist, of course, those are not the only options. There is also the option of staying in the job and fighting for better pay, by organising with other workers in a trade union. That is the option that Syriza has presented, and it is an option that traditionally social-democrats have adopted.

Of course, Marxists understand that, ultimately, workers cannot resolve their problems by just fighting for higher wages. Employers do not pay low wages just out of meanness. There are objective laws, which determine the level of wages. As Engels put it, in general, trades unions can only secure the wage rises that competition, for labour-power, between firms, would anyway have brought about, in times when the demand for labour-power is high, and when the demand for labour-power is low, no amount of trade union struggle will push them higher, because, if firms are pushed into making losses, they will simply close down.

“Such being the tendency of things in this system, is this saying that the working class ought to renounce their resistance against the encroachments of capital, and abandon their attempts at making the best of the occasional chances for their temporary improvement? If they did, they would be degraded to one level mass of broken wretches past salvation. I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labour, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. By cowardly giving way in their everyday conflict with capital, they would certainly disqualify themselves for the initiating of any larger movement.” 

(Marx – Value, Price and Profit)

Reform and Revolution

And, the same is true in relation to Greece, or any other economy and the EU. In the end, workers can only resolve their problems by replacing capitalist production with socialist production, rather than simply fighting for an amelioration of their condition, by social-democratic, trade union struggle for higher wages. But, equally, the kinds of financial and economic crises that lead to the problems faced by Greece, and other EU economies, can only be resolved by the creation, in the first instance, of a United Socialist States of Europe. But, just as Marx indicates above, in relation to wage struggles, that does not mean that, in the meantime, workers should simply “ abandon their attempts at making the best of the occasional chances for their temporary improvement”. That is especially the case when the aims they are seeking are not just in their own interests, but in the interests of capital itself.

To once more make the comparison between Greece, and a single employer, it is as though an employer, having found that their production is uncompetitive, instead of investing in new machines and equipment, to raise productivity, borrows money to finance their losses, and uses some of that money to redecorate their office, and buy themselves a new company car. When the creditors come knocking for their money, the employer responds, by demanding that their workers agree to their wages being cut, to defer their retirement, and buy their own tools. Then seeing that their productivity drops further, as the best workers leave for employment elsewhere, and the remaining workers suffer ill-health, due to their low wages reducing their ability to eat, or heat their homes, the boss responds to the lowered productivity, by demanding that the workers also work longer hours, and weekends!

Such a strategy is certainly against the workers' interests, but it is clearly against the interests of this capitalist too, because instead of resolving his problem it simply makes it worse. The whole problem could have been resolved had he invested in new machines and technology, in the first place, so as to raise their productivity. That is what Henry Ford realised, when he doubled his workers wages, and introduced a corporate welfare programme for them and their families, alongside investing in new machines, and assembly line production that raised their productivity. It is what big industrial capital as a whole realised, as it introduced social-democratic, welfare states.

Parasitic Money Lenders Despoiling Industrial Capitalists

The cruel irony, is that the policies being inflicted on the peoples of Europe, by the EU's conservative political leaders, as with the same policies being inflicted on British workers, by the Tories, is that, although they cause misery for workers, they are simultaneously against the interests of big industrial capital too, and increasingly even against the interests of smaller productive-capitals. The only interests being served, by these policies, are the interests of the money-lending capitalists, who want their pound of flesh, and want at all costs to prevent a collapse in the astronomically inflated prices of all their fictitious capital, be it in the form of bonds, shares or property.

As Marx put it,

“The credit system, which has its focus in the so-called national banks and the big money-lenders and usurers surrounding them, constitutes enormous centralisation, and gives to this class of parasites the fabulous power, not only to periodically despoil industrial capitalists, but also to interfere in actual production in a most dangerous manner — and this gang knows nothing about production and has nothing to do with it. The Acts of 1844 and 1845 are proof of the growing power of these bandits, who are augmented by financiers and stock-jobbers.”

(Capital III, Chapter 33)

Post War Social Democracy and Big Industrial Capital 

It is the interests of these money lenders that the conservative politicians promote, not the interests of big industrial capital. A comparison of the policies pursued by conservative politicians today, after a period when these money lenders have enjoyed considerable global power should be compared with the situation after World War II, when big industrial capital was dominant, and when social-democratic forces, based upon it, held political sway. It resulted then in the creation of a series of social-democratic, para state global bodies, such as the IMF, World Bank and GATT (now WTO); it led to the introduction of the Marshall Plan, which was a huge, Europe-wide package of Keynesian fiscal stimulus to recapitalise and restructure capital across Europe; it led to the repeated use from the late 1940's, through the 1970's of Keynesian fiscal stimulus to cut short every recession, as it started. 

Also, in comparison with today, and learning from the mistakes of the Treaty of Versailles, which imposed massive austerity on Germany, a further part of the strategy was the writing off, in 1953, of Germany's debt, at the London Conference. Germany had 15 billion Deutschmarks written off its debts, going back to the 1920's, or about 50% of its total debt. In addition of the remaining 50%, it was given 30 years to repay, with repayments limited to just 3% of Germany's export earnings.

That is in complete contrast with the deal which Germany and other conservative governments have just inflicted on Greece. It is even in contrast to the approach that Germany itself took, when it was reunified with the GDR. Then Germany organised significant fiscal transfers to the East, as well as making large investments of productive-capital in the East. Germany has implemented a similar policy in relation to its traditional spheres of influence, when those countries escaped Stalinism. Large German firms, like VW, for example, have not only taken over firms like Skoda, in the Czech Republic and Slovakia, but have also pumped large amounts of productive-capital into those businesses. 

Drug Dealers, Pimps and Thieves

Had Germany been providing the same kind of investment in productive-capital, into Greece, over the last 15 years, rather than simply sending reckless loans to Greek banks, so that middle class Greeks could buy Skodas, built in Slovakia, then Greece's debts, and its lack of competitiveness would have been avoided. This is rather like the heroin dealer, who complains they have lost an income stream, because one of their customers dies from a heroin overdose!

The current deal is no better than all the others. In fact, its more like simply offering to sell the heroin at a slightly cheaper price, but demanding that the customer, work directly as a prostitute for the dealer, having been first roughed up a bit, for having dared suggest that they wanted to kick the habit.

Syriza began, in January, by correctly saying that they were not interested in yet another bail-out. Correct, because 90% of all the money from the previous bail-outs had gone straight back out again. They constituted not a bail-out for Greece, but only a bail-out of the banks and other money-lenders, that had recklessly lent to previous Greek governments and banks. What is more, the remaining 10% did not benefit the ordinary Greek citizens, by being used for productive investment, but went simply to provide current liquidity, to help cover interest payments.

But, now, in the current deal, they have been pushed into yet another bail-out, which once again is a bail-out for the countries creditors, not the provision of funds that can be used to reverse the damage that austerity has already caused, or to improve the country's productive capacity, so as to increase its future income, and avoid debt.

The new bail-out, will be €86 billion, and again €50 billion of this will be to simply cover the immediate debts that Greece has defaulted on, or was about to default on to the IMF and ECB. Technically, this is necessary under ECB rules, in order that Greece can get the necessary liquidity required for its banks to open, without there being a bank run. But, lending Greece, €50 billion from the ESM, for this purpose, still leaves Greece with that debt, merely postponed, when in fact, it would have simply defaulted on it anyway!

Moreover, Greece has been forced to put up its state assets into a fund for privatisation, which is to be used essentially as collateral for this ESM loan. So, in reality this is not even a loan, but a sale of Greek assets to cover its debts, and all experience of such privatisations, is that they amount to simply an opportunity to pick up assets on the cheap, by the same money-lending capitalists. In reality, this is only little less a case of robbery than is the continued possession of the Elgin Marbles by Britain.

Euro Fudge and Hypocrisy

In reality, there was some validity in some of the points raised by former Belgian Prime Minister Guy Verhofstadt, last week, in the European Parliament. Socialists would have little argument that Greece should end the privileges of the Greek Orthodox Church, ensure that the rich ship owners and others pay their taxes, and that Greece's spending on its military be ended. All very well, other than in every other country in Europe, we see large corporations and rich people avoiding tax, and the EU has done nothing to create the conditions to stop it. In fact, EU President Jean Claude Juncker, presided over the development of a huge tax haven economy in Luxembourg, whose banks are like a ticking time bomb, waiting to explode. In many countries across Europe, the Church is given privileges that should have ended centuries ago, and the EU and NATO would be the first to complain, if Greece did the rational thing and saved money by leaving NATO, and selling off its expensive military hardware, let alone rented out its ports and military bases to the highest bidder!

And that is the problem with the way the EU works; it is hypocrisy and bureaucratic manoeuvre, of which this deal is another, example. Juncker declared that there had been no winners or losers from it, “a typical EU solution,” he said. Yet, the truth is that everyone has been a loser from this deal. Greece is the immediate loser because of further austerity being forced upon it, with no measures to provide a way out of it in future, but the EU is also the loser, because it has lost all political credibility as a consequence of its actions. It has undermined every tenet upon which it was supposed to be based, for a handful of silver to be paid to the financial paymasters, of the ruling conservative politicians.

Hollande, Renzi and Gabriel Just Got Butt-fucked By Merkel On World Wide TV

In that process, the real division between those conservatives and social democracy has been exposed, a fact, that even Italian Prime Minister Renzi seemed to have grasped. But, how really could he do otherwise. To paraphrase a line from “Die Hard”, Hollande, Renzi, Gabriel and all the other European Social Democratic leaders “just got butt-fucked” on world-wide TV, by Angela Merkel and the other conservative leaders.

One of the problems the EU politicians have had with Syriza, especially with Varoufakis is that they have not played this bureaucratic game upon which the EU relies. Previous Greek governments, accepted the austerity measures handed down from Berlin and Brussels, but large parts of the package, such as dealing with the tax evasion was simply left undone. Other parts of it, such as the privatisation programme, could not be carried out, because it was resisted by Greek workers.

An element, of that can be seen in the current deal. The privatisation fund that is to be set up is supposed to contain €50 billion of state assets. But, in the last five years, only €5 billion of assets was disposed of, and only a further €7 billion of assets has been identified as potentially disposable. As Paul Mason put it in one tweet,

“In a village I know, 60% of land is in foreclosure. Bank that owns it = bust. How in the €50bn fund will that land be valued?” 

And, of course, that is the truth behind the mirage of all the European banks, that are as insolvent as those in Greece, and in some cases, more so, and only appear solvent, because of bank capital that is massively inflated by astronomical, but unreal property prices used as collateral, along with bonds and equities that are equally inflated. 

A Deal That Will Not Withstand First Contact With Reality

But, not only is this not a deal in reality, because it offers no solution for Greece, whilst undermining the foundations of the EU, it is not even a deal that is going to withstand its first contact with reality. Paul Mason has already reported the opposition to it in Greece, not just from Syriza supporters, but even from conservative supporters.

“... consider the headline of Dimokratia, a conservative tabloid: “Greece in Auschwitz: Schauble attempts eurozone holocaust”.”

No Greek socialist MP could vote for the deal that has been presented to them. Its understandable why Tsipras, may, after being “mentally water-boarded”, during the all night session, have made such a deal, given the conditions existing in Greece, but in the cold light of day, he must now himself call for its rejection, and so must Syriza, just as having won a resounding “No”, in the referendum, they were prepared to still negotiate with the EU leaders, on what had been rejected. Whether he will, or not only time will tell. As I have said from the beginning, Syriza is not a revolutionary party – and as Lenin and Trotsky pointed out, even they have to make concessions, whatever the ultralefts might demand – it is merely a social democratic party, and such parties always tend to place inordinate emphasis on the importance of remaining in office.

The first signs are that a sizeable section of Syriza will vote against the deal if Tsipras puts it forward, and some of its Ministers are likely to resign today in protest. As I suggested five months ago if Syriza, were to make such a deal, it would spell its doom, and the beginning of chaos in Greece, and the rise of Golden Dawn, as the only practical choice for the Greek masses. It would signal the break-up of the EU, as its periphery frayed, and was dragged into the same kind of turmoil already seen on its existing borders, in Turkey, Syria, Egypt, Libya and Tunisia.

That will be so, because there is only so much that a people can stand, before they have nothing to lose. Social-democratic states can only survive, if the basis of social-democracy itself exists. That is that the workers must form a majority of society, and feel incorporated in it, to have a stake in its maintenance. They must be prepared to accept their own exploitation, on the basis of being able to negotiate a steadily and noticeably rising standard of living. Conservative regimes across Europe, have undermined that condition.

The Establishment Bubble

Watching the coverage of events in the bourgeois media, it is apparent how the middle class, pundits simply have no intellectual tools for understanding the real world. Their analysis is rather like that of the old TV repairman. They have a list of common problems that they go through, and if the situation does not fit any of them, they are lost. They exist within an establishment bubble, where the people inside it, all of whom come from a similar background, simply reinforce each others views, and where confirmation bias abounds.

They live in a world which is black and white, a pure duopoly of choices, which even then is no choice at all. They have become so used to a world, where in whatever country, when the masses become restless, the answer is simply to throw out the existing government, and put in the alternative, which is essentially no alternative at all. It is why they are so desperate for the Blairites to defeat Corbyn in the race for Labour leader.

In their discussions now about Greece, they simply see the embarrassment of Tsipras, in being forced into this deal, as meaning simply that he will be swapped out for the alternative of one or a combination of those parties that caused the debt crisis in the first place. They idea that those parties have been even more destroyed than has been the Liberal-Democrats in the UK, and for similar reasons, is simply not within the range of possibilities that their world view can cope with. The simply see it being a matter of a rush to the centre, a centre which in reality does not exist.

It is the same mistake, and failure of understanding that they made in Iraq, in Syria, in Libya. They saw only two options. Get rid of the bad guy, and something to our liking must replace him mustn't it? In fact, as with all those examples, the opposite is the truth. The old centre has collapsed, and the collapse of the Liberal-Democrats, of PASOK, the PSOE and the Blairites within the Labour Party is merely an indication of it.  The conservatives hope that by bringing regime change in Greece, they will deter support for Podemos in Spain, but all they have shown is that Podemos has a better chance of succeeding, where Syriza may fail, because Spain is a much bigger economy.  Where the conservatives were prepared to risk a Greek default, they will not be prepared to risk a Spanish default, especially if in the intervening period, a similar politics spreads to Italy, Portugal, and France.

The actions of the conservatives have been rotting that centre for the last 30 years, an illusion of health that was only maintained, during all the time, by the blowing up of huge asset bubbles, that really represented a growing level of private indebtedness, whose limit has now been reached. The solution will now be resolved by forces outside that centre. In Greece, Syriza will split if Tsipras tries to push forward these proposals with the support of other parties. The supposedly revolutionary sects in Greece, connected to sects in the UK like the SWP and SP, have no more influence in Greece than their UK counterparts have here, because their sectarian stance towards Syriza, has left them isolated from the working-class, just as that same stance towards the Labour Party, has isolated them from the working-class here.

The actions of the conservative EU politicians has forced the Greeks towards a belief that the only solution to their problems will be outside the EU, and that is the message that will be pushed forward by Golden Dawn, just as it will be pushed by the FN in France, UKIP in Britain, and by ultra nationalists and fascists in Spain, Italy, Portugal and elsewhere. The EU is being pushed towards politics which will be far from those that these pundits are used to within the establishment bubble that has existed for the last 30 years.


davidjc said...

How do you think this will affect the politics in the UK referendum? As well as the long running left nationalist trend, post-Greece, there is going to be increasing scepticism from the loose soft-left pro EU trend as represented by Syriza and Podemos and the social movements - see Owen Jones for instance - weighting the pro EU Labour campaign further to the Blairites, which itself will likely fuel left euro scepticism.
In the meantime, there will be news stories of more political and social chaos in Greece and German intransigence. The EU will be more easily characterised as a German austerity machine and the choice one between English/British nationalism and German nationalism. After the kicking dished out to Syriza, the yes to a more social democrat EU line is going to look a bit of a fantasy. On the plus side, it makes the SNP's plans look daft.

Boffy said...

Actually, I think it does the opposite. I think it makes the choice far more stark. I agree that it strengthens the right nationalist argument. It says, the whole social-democratic basis of the EU is a sham. Its every man for himself just as it always has been, and devil take the hindmost. That is basically the position that Germany and the other conservative governments across Europe have been pushed into by Syriza's stand, and it was the logical conclusion they ultimately had to arrive at. UKIP and the Tory Right, as well as their co-thinkers across Europe merely show to those conservative parties the future of where their political position rationally leads. How can you have even a single market, when each national capital within that market operates under different rules than capitals in other parts of that market? As Hayek pointed out, the basis of a free market is not that there are no rules or regulations, but that any such rules should apply to everyone equally and impartially. As Marx put, it what the capitalists demand above all else is a level playing field.

But, by the same token. The Blairite option has been decimated. Greece adopted it, and its economy was shattered. Everyone from the IMF to the EU Commission has admitted that the debt cannot be repaid, and will have to be written down. As Paul Mason writes today, the IMF in the report the EU leaders wanted to keep secret, has itself admitted that the policy of austerity has failed, and Greece has proved it.

The option of simply following the conservative prescription of austerity, which is only designed to keep fictitious prices from bursting for a while longer, but with a little less vigour, has failed too. When the European Social Democrat leaders attempted that, with Hollande drawing up the latest proposals for Greece, and when the German SPD opposed the idea of a temporary Grexit, as part of a typical Blairite fudge, as I put it above, they got "publicly butt-fucked" by Merkel and the conservative leaders.

The only option, now, as Renzi himself stated, is for a comprehensive restructuring of the whole EU, on the social-democratic basis it was supposed to represent. The idea that social-democrats could leave the existing structure of the EU intact, is no longer an option. The events have shown that a monetary union must be backed by a single EU state. Such a state, will require far more power for an EU legislature. It will mean that this state must conduct fiscal transfers, which means a single fiscal regime, and debt managament regime.

But, that will mean that far more integrated social institutions will be required across such a union. it requires common taxes, and benefits, and so on, which will make necessary integrated trades unions, co-operatives and workers parties. The only rational and credible alternative that social democrats can now put forward in opposition to the position of the nationalists, is for the creation of a United States of Europe, and a struggle within it for a Workers Europe.