Greece is already a failed state: SYRIZA must let it die

by Jehu

By the time you read this, SYRIZA will likely be the governing party in Greece. That said, Laurel & Hardy3SYRIZA will find its desk filled with a large number of pressing problem, the most important of which — according to common wisdom — is what to do about the debt. Here is my suggestion: Tell Greece’s creditors to screw and let the state go bankrupt. The only path for SYRIZA out of the crisis is to let the already failed Greece state fail officially as well.


In my opinion, Greece’s debt dilemma shows that the state is no longer compatible with the production of surplus value. Most of the objections to neoliberalism have centered on the hostility of neoliberals to social welfare spending and support of free trade. However, this discussion takes place in the context where social spending and national border are treated ahistorically. (Pardon, for using the term “ahistorically”; it could not be avoided in this case.)

State social spending is taken to be the normal case and if ever questioned is done so only in relation to private charity; which is to say, it is generally assumed charity of some sort is necessary; the state is better suited to this than private individuals. The idea no one in present society should be dependent on any sort of charity, public or private, in present society is, of course, dismissed as utopian and, not surprisingly, often by the same sorts of folks as are “outraged” by statistics on concentration of wealth that circulate in the media.

It is not necessary to recount how the present system of social spending can be traced to the poor laws and other such atrocities. If you wish to convince yourself of the truth of this fact, you need only begin with the Wikipedia entry on the English Poor Laws, which points to a vast literature on the subject. Any sensible person will soon realize, public social spending has never been a “war on poverty” but a class war on the proletariat.

What is necessary at this point is to show why even a system of social spending, which amounts to no more than a class war, is now incompatible with production for profit. Which is to say, even if we assume state expenditures have no other purpose than to manage poverty and keep it within certain limits, the mode of production can no longer tolerate even this minimal aim.

Greece is a case study for how avowed socialists of almost every description propose to address a mode of production that is no longer compatible with even the most minimal standards of working class subsistence. And it is a good one, because, by every report of the situation on the ground, SYRIZA has no room to maneuver within existing relations. SYRIZA will be forced to choose between putting an end to existing relations or utter capitulation.

Just to review the severe constraints SYRIZA faces on its actions, according one writer:

“Clearly there is a strong incentive on all sides to agree a token extension to this extension to allow time to negotiate a new agreement, but with Finland adopting a very hard stance (comments last week from the PM Stubb), this is going to be far from trivial. Also note that the ball is now in Greece’s court – they have to formally ask for an extension which will have to be formally considered and approved by the Eurogroup (16th Feb), possibly voted in Euro area parliaments before 28th Feb and [this bit is very important] any extension will come with conditions. This means that less than a few weeks into his administration, an inexperienced Tsipras, distracted by the task of coalition formation, will already be under pressure to agree to the troika’s version of the broad outlines of a deal. Balking is not really an option at this stage as the ECB can refuse to finance bills, bonds (including Pillar 2 bonds) and cancel ELA. While this will damage markets everywhere in Europe (it will be ugly but in my opinion survivable for other sovereigns especially if the ECB is implementing sovereign QE), it will effectively be a bankruptcy event for the Greek financial system, there would be mass riots and I doubt that Tsipras will want to be known as the man who brought down the financial system as that would basically validate ND’s current election campaign and hand power back to Samaras [or in the event he is replaced, someone else in ND] in the election that would obviously follow.”

Greece is bankrupt and its available cash will not even allow it to service its debts to the end of June. All present hope, not just for its program, but mere survival as a functioning state, requires that SYRIZA agree to the troikas demands. It should be noted that these demands are so onerous that even the outgoing Samaras government would not sign it. SYRIZA will then face an immediate choice to agree to troika demands so damaging to Greece even the fascists could not comply

Or SYRIZA can refuse as well.

If SYRIZA refuse to comply with troika demands, they will then have to decide how to effect this refusal. Their options will be to exit the euro and return to the drachma or resist the troika within the euro framework.

Option 1: Grexit

This option calls for SYRIZA to leave the common currency and begin issuing its own currency, perhaps the old drachma. There are pros to this option that are consistent with how the SYRIZA majority views the situation.

According to what I have read, most SYRIZA factions think the problem for Greece is the problem of economic growth. At this point, it is impossible for Greece to grow because an intolerable portion of its presently produced surplus value is devoted to servicing past debts.

As anyone familiar with labor theory knows (or should know) the rate of growth of Greece’s economy is a function of the quantity of surplus value that can be reinvested in expansion of the national capital. If too much surplus value is being exported to repay Greece’s debts, very little is available to expand the national capital. This can go so far as to mean the national capital actually contracts — as has happened for the last five years. Greece’s depression is, in first place, the result of the contraction of the national capital. The situation is not that much different than it would be in the case for private capital: more  debt service means less surplus value to expand production.

The problem is this: Exiting the euro does not change this side of the equation: the amount of debt Greece owes and the burden of servicing the debt does not decrease. What Grexit changes is the real subsistence of the working class by forcibly devaluing the drachma (and wages paid in drachmas) against the euro.

Think of it this way: when Greece entered the euro currency zone, its currency was pegged to some unit of euro; say ten drachmas to one euro. The drachma has been fixed at that exchange rate since integration. However, to facilitate investment in Greece, wages have to fall so that instead of 10:1, (drachmas to euros), it is now 20:1 or even 50:1.

Resetting the peg requires Greece leave the euro, at least for a period of time, but Greece need not even leave the euro permanently — it can, (as the UK did during World War I with the pound sterling and the gold standard), float the drachma for duration of the crisis and accomplish a planned reintegration after devaluation is finished.

This seems to be the plan suggested by the so-called Left of SYRIZA. Why on this basis these people are called the Left of SYRIZA is quite beyond me since their plan is nothing more than a savage, brutal, unvarnished attack on the living standards of the working class. At the end of this barbarity, it will take five drachmas of wages to buy what one drachma of wages can buy today.

If you think I am in any way being hyperbolic, please read the results of a similar devaluation in Argentina. Moreover, I must point out this “Left” savagery will take place on a working class that has already seen its wages fall by 30%.

The forces proposing this sort of silliness are wrapping themselves in the Greece national flag and its history of resistance to fascism. At least this seems to me to be their reasoning on this. It is really quite bizarre how Left activists can naively end up supporting the most clearly fascistic policies in Greece history.The possibility this sort of economic measure might be brought in by a radical Left party is unthinkable even in my worst nightmares.

In any case, this bring us to the other possible course SYRIZA may take.

Option 2: Let the Greece state go bankrupt and repudiate its debts.

Can a nation state go bankrupt? The prevailing view is that it is impossible for any state to go bankrupt, because they are sovereign. In this view, the state simply tells its creditors to go screw themselves and continues to function as before.

However, telling its creditors to go screw themselves and going on as if nothing has happened is not a possibility for SYRIZA, I think. SYRIZA can indeed tell the creditor of the Greece state to go screw themselves, but then it cannot self-finance any of its programs nor create any sort of economic growth to repair the damage caused by austerity.

Without growth, SYRIZA cannot address unemployment, inequality and poverty that the radical Left is always going on about like a bunch of emoprog social justice warriors. And if it turns out you can’t fix unemployment, inequality and poverty, you really aren’t any more use to society than the fucking capitalists, except you don’t dress as nice.

IMF's Christine Lagarde: Impeccable fashion sense

IMF’s Christine Lagarde: Impeccable fashion sense

Alexis Tsipras

SYRIZA’s Alexis Tsipras: Radical JC Penny

So, the difficulty SYRIZA will face is how to solve unemployment, inequality and poverty in what basically be a bankrupt fascist state, with no access to credit and no ability to further reduce wages through the mechanism of internal devaluation.

This should be no surprise to any of us: SYRIZA has only come to power because there was no solution to Greece severe ecoomic problem within the existing fascist state construct.

Think about it: Wasn’t it Lenin who said a revolutionary situation means “the ruling class can no longer rule in the old way”? It is only once the crisis of the fascist state has rendered Keynesian policies obsolete and reduced the state itself to a pauper alongside the rest of society that the radical Left would be reluctantly handed power.

I think this is Greece today.

SYRIZA has no choice but to let the state go bankrupt and abandon the tools of Keynesian fascist state economic policy, because it only comes to power because those tools are effectively obsolete. And this means SYRIZA can only address the deep crisis Greece faces by unconventional means.

STEP 1: Reduce hours of labor: In first place, the only solution to the intolerable level of unemployment is a radical reduction of hours of labor until the mass of unemployed are reabsorbed into the workforce. Since the unemployment rate is nearing 27%, this suggests SYRIZA may have to reduce hours by at least this much and probably as much as half.

STEP 2: Abolish the military: But this massive reduction of hours of labor is itself incompatible with the present size of the state sector. Thus, the state sector will have to be radically down-sized as well — which means, in first place, the bloated military must go.

STEP 3: Protect the social welfare state: Certainly social support for the poor cannot be abolished but must be allowed to “wither away’ as the society recovers from the austerity.

STEP 4: Cooperative management: Moreover, social protection for the working class also cannot be abolished, but must be replaced by a system of cooperative management; which means, the workers must be handed management of their firms, irrespective of whether these firms are nationalized. To be sure, ownership and management has long been divorced from one another, so this is not a problem. With the management of the firms in the hands of the working class, the ownership of the capitalist firms will cease to be a factor in their operation.

STEP 5: Let the banks fail: Whether or not the banks are nationalized is of no importance, since the financial sector itself is toast. SYRIZA will likely not have to nationalize the banks because the banks will disappear. What has been keeping the banking sector afloat is the debt service paid by the now bankrupt state. The massive quantity of fictitious capital underlying this sector will immediately disappear once hours of labor are reduced. SYRIZA should do nothing to step in and save them.

Fascism has simplified our tasks as communists by making the whole of economic relations dependent on the fascist state. Once the state is allowed to go bankrupt, so will most of the national capital itself — particularly the fictitious capital in the form of state debt.

Although the situation looks desperately grim for SYRIZA, from the standpoint of the existing state, in reality its job is very easy once it accepts that the state is bankrupt and should be treated as such.