This week has been a taste of what the economy would look like with a real rupture with the Eurozone: uncertainty, elite blackmail, banks teetering on the brink and the start of rationing. That the mobilization of Syriza and the left outside it has overcome this and made Oxi a possibility is impressive. Greece and its economy can expect no miracles either way Sunday’s vote goes and for quite some time afterwards, but they deserve full international solidarity.
And so on the eve of the Greek referendum, with the streets of Athens still buzzing from Friday night’s enormous Oxi!/No! rally in Syntagma Square, I’ve collected and parsed some of my notes on Greece from afar. A text on where things stand is first, then some notes on how things came to be for those not keeping close track the past few months.
Where things stand
Five months of torturous, fruitless negotiations came to a head last week when the more-or-less polite dance around the table in Brussels abruptly broke down. Whether this was a costly demobilization or a calculated strategy to demonstrate the intransigence of the Institutions doesn’t quite matter at this point. When Alexis Tspiras called a referendum on a take-it-or-leave-it offer last Friday, he precipitated a political rupture, which soon started to foreshadow the economic rupture that Greece leaving or being pushed out of the Euro would bring.
Over at Ricochet, I’ve transcribed my podcast interview with Yanis Varoufakis, economist and Syriza candidate in tomorrow’s Greek elections. With Syriza looking to get the most votes and possibly an outright parliamentary majority, I asked Yanis about the Greek economy, Syriza’s economic plans, his views on what these mean for Europe and how we can expect Greece to take its place in Europe come Monday. Here is the interview in full.
Michal Rozworski: I know this is an enormous topic but what is the current economic situation on the eve of the elections in Greece? Can you give a kind of snapshot?
Yanis Varoufakis: In brief, everyone owes to everyone, and no one can pay. The banks are bankrupt; they owe money to the state, to each other, to foreign banks. Citizens owe money to the banks and owe money to the state. The state owes money to everyone. So we have a triple insolvency: bankrupt banks, a bankrupt state and a bankrupt private sector. There are of course pockets, like everywhere, within society of people who are really well off. They have money in banks in Switzerland, in the city of London, on Wall Street, in Frankfurt, and even some money in the Greek banks.
But the overall situation is that — even though in the last year or so there’s been a small rebound, not in terms of income but in terms of expenditure — the economy is quite clearly still in a downward spiral that is filling everyone’s soul with negative expectations.
It’s interesting you mention that slight rebound. What I found interesting is that there seems to be a bit of a reversal of 2012. So, on the one hand, now some of the economic indicators have improved in minimum ways, if we can even use that word, but on the other hand, the population seems to be more immune to the fear-mongering on behalf of Greek and European elites against the left. What’s changed? What’s led to Syriza actually having a chance of gaining a majority in parliament?
Well, two things mainly. Firstly, Syriza has matured over the last two years; there is no doubt about that. So it has inspired more confidence in the electorate. Secondly, and perhaps even more significantly, now it is abundantly clear that the whole narrative of a “Greek-covery” — if you remember a year ago or so — was just utterly bogus. It was a piece of propaganda, a bubble that burst and Greeks are sick and tired.…
Look, I was in a taxi this morning. The taxi driver said to me — he recognized me as a candidate — “Look, Greeks fall into two categories. There are those who are really scared of losing what little they have left. The rest don’t give a damn; they just want to vote in a way that states it in a way for everyone outside of Greece to see that we’re not interested in this vicious cycle anymore.”
I’ve been visiting family in Poland for the past few weeks so, fittingly, this week’s podcast deals with the situation of the left at two opposite ends of the European periphery: Greece and Poland. My first guest is Yanis Varoufakis, professor of economics at the University of Athens and candidate for SYRIZA in this Sunday’s parliamentary elections. Syriza is the main Greek left party and is poised to take the most votes, potentially even form a parliamentary majority, on Sunday. Yanis spoke with me about Greece’s economy on the eve of the elections and Syriza’s economic program.
My second guest is Jakub Dymek, Polish academic, journalist and editor. Jakub is, among other things, the Polish correspondent for Dissent Magazine and a member of the editorial collective of Krytyka Polityczna (Political Critique), the major journal of Poland’s “New Left”. Unlike its Greek counterpart, Poland’s electoral left is currently at its lowest point since the post-Communist transition. I spoke with Jakub to get a sense of this electoral decline, the situation of left social movements and the future prospects of Poland’s left.
Very briefly, I say that Greece and Poland are at the opposite ends of the European periphery for two reasons. First, Greece has undergone years of recession and brutal austerity in response to the global crisis of 2007/8; Poland, on the other hand, has managed to grow through the crisis, at least according to the major economic measures. Greece and Poland are also opposed when it comes to the fortunes of the electoral left. It is in Greece that the left has may well take government this Sunday or at least become the largest force in parliament, whereas in Poland the electoral left is currently virtually non-existent. Looking at these two lefts and the political economic conditions that led to their different fortunes makes for a fruitful juxtaposition.
“Privatizing gains and socializing losses” could be the motto for the neoliberal era. Alongside this and “there is no alternative”, few slogans better capture the ideology that has been so successfully diffused throughout the world over the past several decades.
Five years after latest financial crisis, this motto rings true as ever. To say that the losses stemming from the crisis were large is a heroic understatement; indeed, not only were they humongous, their exact size remains a tad fuzzy. Meanwhile, across the world in the aftermath of the crisis, stock markets have rebounded, wealth and income inequalities have grown and corporations and financial institutions have returned to making healthy profits. At the same time, many countries have seen both employment and median incomes either stagnate or fall.
In short, once again, losses were socialized, while gains privatized. Prominent among the means employed by governments to ensure that this be the case were various kinds of asset purchase programs. First, in the immediate aftermath of the crisis, came actions that transferred toxic financial assets into public hands either through direct buybacks (as in the US TARP program) or temporary nationalization/bailout. Since these short-term, more explicit socializations of private loss came to an end, the policy of quantitative easing (QE), through which central banks purchase vast amounts of long-term debt from financial markets, has been their implicit continuation. Unlike the earlier programs, QE is aimed instead at the other end of the equation, privatized gains.