Greek Vote Signals Return Of Euro Crisis

The Greek Parliament has failed to elect a President proposed by the government, which means that parliamentary elections will be held in the next few weeks. All opinion polls suggest that those elections will be won by the left social-democrats of Syriza.

Syriza's economic plan is politically astute. It places the responsibility for resolving the crisis on Eurozone institutions, rather than on institutions such as the IMF. By implication, it says, that the Greek debt crisis, as with the whole Eurozone debt crisis, flows from the inadequate economic and political structure of the EU itself, and that the real solution, therefore, requires a resolution of that political crisis in the EU, not on further bail-outs provided by international finance. In that they are right. The Eurozone debt crisis, is the result of a political crisis in Europe, as I have set out many times in the past, and as I have set out in my book – Marx and Engels Theories of Crisis:  Understanding The Coming Storm.

That political crisis exists on two related levels. The first, superficial, level is that the political superstructure of the EU, is inadequate and incomplete. The political superstructure of the state has to fulfil a number of functions for any capitalist economy. As Marx puts it, the role of any state is to act as the executive committee of the ruling class. Modern capitalism is comprised of a global ruling capitalist class, but, as is the nature of all reality, this class is not some uniform homogeneous mass, but comprised of multifarious, and often contradictory components. At times, this global class has unified interests, but most of the time, different sections of this class have conflicting, contradictory interests. Over time, the coalition and coalescence of those interests changes, as the material basis of property relations changes.

The growth of productive forces, which required an ever larger market, created the requirement, initially, for the development of the nation state, and the further development of those forces, meant that even the nation state became a fetter on the further development of capitalism, requiring the establishment of larger political structures, like the EU. But, for the EU, as a political structure, to perform that function of executive committee of the European capitalist class, it must have all of the power that a single, centralised, capitalist state enjoys. It must be able to determine, and to enforce all of the laws that operate within the geographical confines of its remit. Only on that basis can it fulfil the other role that Marx says capital requires from its state – to create a level playing field in which each individual capital competes. Currently, the EU does not have such a state, and the EU proto state, exists in continual conflict with the individual nation states, that continue to reflect the conservative interests of the smaller, more backward segments of capital, and which act as a fetter on the further development of capital.

The second level on which this political crisis exists is that the reason that this inadequate political structure persists is the failure of social democracy to exert its dominance, and to establish such a state against the resistance of conservative forces. In the US, when such a situation existed, it led to the US Civil War, during which the forces of northern, big industrial capital, joined with the forces of the northern industrial working-class, to destroy the forces of conservatism, based on more primitive property relations, which sought to defend the independence and power of the individual states. The victory of the former established the power of the federal, social democratic state, over the power of the individual states.

Repeated European wars in the 19^th and 20^th century attempted to bring about a similar solution, but the power of British Imperialism, supported by US Imperialism, in the 20^th century, prevented such a solution. The EU was intended, by social-democracy, after WWII, to bring about such a solution peacefully, but, particularly after social democracy was weakened, as big industrial capital was weakened, in the 1980's and 90's, it has failed to push forward that agenda. On the contrary, rather than engage in the kind of open political conflict with the forces of conservatism and reaction, that is necessary, it relied instead on a bureaucratic, statist solution, that created the kind of democratic deficit within European political institutions, that only leave it open to criticism, and create weakness. What Syriza is doing, is actually issuing a rallying cry to the forces of social democracy to reverse that trend. As Paul Mason puts it,

“So even as the symbolism of moderate Marxism is plastered all over Syriza, in reality its programme for Greece is mainstream Keynesian economics.”

That is of course, the same Keynesian economics that the social democratic state in the US has been pursuing for the last 5 years, in contrast to the austerian economic policies pursued by the forces of conservatism in the UK and Europe, that has brought stagnation. What Syriza represents is a political reflection of the material conditions existing within Europe, which have driven towards a crisis which must resolve this contradiction, one way or the other. It is the other side of the coin to the other political reflection of that contradiction, the growth of more extreme, reactionary nationalistic forces such as UKIP, the FN, AFD and so on. It is a political reflection of the fact that those material conditions have driven the contradiction to the point whereby the fudge that has existed for the last 25 years can continue no longer. Either big industrial capital, joins with the European industrial working-class to openly confront the forces of reaction, and push forward to the creation of a modern federal, European social-democratic state, similar to the USA, or else the forces of conservatism and reaction will triumph, and the existing EU will be broken apart. It will no longer be a question of whether Scotland, should be separate from the UK, Catalunya from Spain, and so on, but whether the EU as a whole, will become balkanised, blown apart into small, competing, reactionary states, driven backwards economically and politically, and as with the Balkans at the start of the last century, the playthings of much bigger, more powerful states.

Syriza, as Paul Mason sets out, is not calling for any bail-out by private capital, or by the IMF. It is calling for half of its €319 billion of debt to be written off by the EU, and after that for the ECB to buy all future Greek debt at zero interest rates for the next 60 years. This is being presented by the forces of conservatism as utopian, and a near revolutionary proposal that must lead to chaos, and a Greek exit from the EU. In fact, as Paul describes, it is no such thing. The reality is that, every economist knows that Greece's debt will have to be written off one way or another. The question is under what conditions that happens, and as part of what kind of structure to move forward, to remove the conditions which led to the crisis in the first place.

One of the reasons for the debt crisis is that the absence of a single federal state, with the attendant single fiscal as well as monetary union, itself creates contradictions that meant that the EU periphery got most of the downside of monetary union, without any of the upside. The Euro's value was high because it was based on the strength of the German economy. But, the high value of the Euro was a constraint on foreign capital investing in the European periphery, a fundamental requirement if those economies were to be modernised, and achieve a level of global competitiveness. The high value of the Euro meant that exports from those economies were expensive, whereas their imports were cheap – a similar problem to that faced by Russia and other petro-dollar economies. That also encouraged, a build up of debt, especially in conditions of low interest rates.

As described previously, a single European state, with a single fiscal policy, would have meant that the value of the Euro would have been based more on the competitiveness of the EU as a whole, not just on the strength of Germany; it would have reflected the borrowing needs and credit worthiness of the whole EU, behind which the EU state would have to stand. Similarly, such a single fiscal policy, with a single Debt Management Office, issuing Eurobonds, to cover the deficit of the whole EU economy, would have reflected the overall condition of the EU economy, and would simultaneously have meant that each economy was able to borrow at the same costs, rather than as at the moment, Greece facing yields on its 10 year bonds of 9%, whilst Germany faces yields of only 0.5%!

The establishment of such a single social-democratic state would have meant that other unified conditions would have to exist within its borders. There would have to be the same pension age, the same entitlements to pensions and benefits across the whole economy, which in itself would be a powerful stimulus to economic growth by facilitating the free movement of labour, whilst simultaneously undermining the siren calls of reaction. Once all such payments are made from a single European budget, there can be no more nonsense spoken about immigrants moving only to obtain benefits, or even nonsense about the need to contribute to benefits for given lengths of time before being entitled to draw from them. Such suggestions would be no more logical than to argue that someone moving from Lancashire to Yorkshire, should not be entitled to use services there until they had lived there, and paid Council Tax for some minimum amount of time!

Readers of this blog for some time, will know that I do not believe that any of these social-democratic solutions are adequate. In fact, in some ways, but only in some ways, they detract from an adequate socialist solution. Had workers continued to develop their own co-operative production, their own Friendly Societies, which provided them with social insurance under their own direct control, and which would have required that their funds be used to finance the development of their own co-operative production, or to buy an increasing share of socialised capital, as Marx had thought would be a natural progression, this would have provided them with a much better long-term solution than reliance on the capitalist welfare state. It would, necessarily have meant that such co-operative production would be developed by workers across borders, undermining nationalistic sentiments, as well as creating such international social insurance.

But, we have to deal with reality as it exists not how we want it to have developed. On that basis, social-democracy represents a more mature form of capitalism, and its on that basis that Marxists defend it against conservatism. It is hilarious to watch the political representatives of conservatism like George Osborne, or its media representatives, such as those that present programmes on the US business channels, as they try to deal with the contradiction they face from capitalist development. Out of one side of their mouth, they continually decry the inevitable failings of socialist planning, out of the other side of their mouth, faced with the reality that modern capitalism itself could not have survived without such planning, they simultaneously attest to the omnipotence of central planners based in the central banks to unilaterally determine interest rates!

However, it is equally hilarious, but more frustrating to watch the representatives of social democracy as they try to deal with the contradictions of that development. On the one hand they fear the forces of conservatism that threatens to turn the clock backwards, but they are repeatedly unable to counter those forces by an outright assault, because to do so leads them to look forward to their own defeat, at the hands of the forces of the working-class they rely on as foot soldiers to defeat their conservative enemies. The task of Marxists, under such conditions, is to act like commanders in a battle, and to prevent any wavering on their part in that movement. The events in Greece, and the growing power of the forces of social-democracy in Europe, makes that task easier.