Can SYRIZA be fixed? Can Greece?

by Jehu

If this Jacobin article, Becoming Syriza Again, is any indication, even the remaining radicals within SYRIZA have no idea why it is failing.

The writer acknowledges that the debate over Greece leaving the euro, which raged within SYRIZA for a period of time before the split, was an oversimplification. However, even now he proposes no alternative economic program that would allow SYRIZA to achieve its stated aim of bringing austerity to an end while avoiding Grexit.

He proposes a 5 step solution in which SYRIZA must:

  • Hold onto power;
  • Stop fighting with KKE and other Leftists;
  • Eliminate opportunism in its ranks;
  • Reconsider staying in the eurozone; and,
  • Put forward a new vision that inspire the country.

Here is my problem with this essay.

Earlier in the essay the writer said the debate within SYRIZA over Greece remaining in the euro was an oversimplification of the real issues:

One of the notions created was that all those who proposed a vague plan B (mainly the Left Platform) were identical with the radical-wing Syriza. Arguments around the party’s strategy were often reduced to the simplistic euro vs. drachma dilemma.

Yet, despite calling the debate over Grexit simplistic, he still maintains SYRIZA should reconsider staying in the euro.

If staying in the euro was never a problem, why was it never the problem before the split? And why should SYRIZA reconsider its decision now, after the splits and the collapse of the first SYRIZA government?

SYRIZA has no economic plan

The self-contradictory logic in his discussion of remaining in the euro points to the real problem with SYRIZA and with his analysis. The debate over Grexit didn’t matter because whether SYRIZA decided to keep Greece in the euro or move the country outside it, it has never had any idea how to address the austerity imposed by the EU.

The primary reason why it didn’t matter whether Greece stayed in the euro of left it is that SYRIZA only wants to address austerity as a set of economic policies imposed by the ECB, the IMF and the EU without ever touching on the underlying capitalist material relations of production that are driving austerity. There is also the profound political problem that SYRIZA wants to address austerity while clinging to the existing state power.

But is it possible to cling to state power when austerity policies are driven precisely by the debts accumulated by the state on loans from the banks, the IMF and the EU? If pensions are being reduced while the working lifetime of the labor force is being extended, this is only because the state needs more cash to service its debts to the banks, the IMF and the EU.

Unlike the United States and the United Kingdom, the state cannot simply print up currency to cover these debts. And unlike Germany and China, the economy is not running the trade surpluses necessary to service the state’s debts. Since Greece has neither control of its currency nor sufficiently large trade surpluses to service its debts, the state must impose austerity on workers if its to repay its debts.

Will Greece eat or pay its debts?

The problem at this point is that both the state and the working class are fighting over the same pot of cash — the working class needs it to eat, the state needs it to pay its external debt.

SYRIZA’s problem is that it wants to have its cake and eat it too: to avoid reducing the state sector and avoid imposing more austerity on the working class, But it cannot do both — the math doesn’t work. So, SYRIZA is being forced to choose between the clinging to state power and imposing more austerity on the working class. This contradictory position has produced a crisis in the party leading to the split and bringing down its first government.

The immediate political crisis was created by the fact that a large part of the subsistence of the working class depends directly on state expenditures. This is also true of a significant share of employment as well as the income of public pensioners. Any effort to reduce the state expenditures on which the working class depends must also directly and indirectly reduce the living standards of the working class who are dependent on them.

Some folks on the Left think this problem can be fixed not by reducing state expenditures, but by “growing the economy” as a whole. However, this too is an illusion, since the only way to grow a capitalist economy is to create more surplus value; and since increasing surplus value means wages mist fall; folks who think Greece can just magically grow its way out of this crisis either ignorant of how capitalist growth is achieved or deceiving the public. They either don’t know capitalistic growth requires production of surplus value and lower wages or they are trying to conceal this fact from the rest of us.

In any case, paying off the debt by austerity measures or by growing the economy has the same impact: both point to lower wages for the working class. Under any neoclassical, Keynesian or heterodox scenario I can see, the Greece state cannot pay its debts or grow the economy without imposing more austerity on the working class.

Greece has gotten to the point where there is absolutely no way around this under any of the prevailing bourgeois economic approaches.

Default cannot fix austerity

Given this dead-end, the SYRIZA government could just default — refuse to pay its public debts entirely. However if the state does not pay its debts, it will be locked out of the credit markets. Greece won’t be able to run a deficit because no one in their right mind will lend to it at least for the foreseeable future. By not paying its debts the state will at least be forced to run a balanced budget even if the ECB, IMF and EU do not retaliate and bring down the entire economy. Its expenditures will have to be matched by its tax revenue, because no one will trust the government. Locked out of the credit markets, it still will be unable to “grow” the economy through deficit spending.

If that is not bad enough, the government will lose all economic policy control. If the economy continues to contract, as has been happening for the last six years, it still will have no ability to offset this contraction through the usual policy tools of deficit spending and lowering interest rates. Moreover, as the economy continues to contract, the state will be forced to add to this contraction by reducing its spending even as unemployment and poverty rise.

This is the economic dilemma SYRIZA has been unable to figure out. It is the dilemma the author tries to sweep under the rug in his essay. And, finally, it is what caused the party to split and brought down its first government.

Grexit cannot fix austerity

The writer wants this problem to go away because he has no answer for it. It can be seen that the problem SYRIZA faces has nothing to do with cadre, organization, opportunism or fighting with other parties. All of those problem are just a smokescreen to deflect our attention away from the heart of the author economic argument: Greece should leave the euro.

Although we are told the debate over the euro was unimportant, reconsidering Greece’s membership in the euro is his only concrete economic proposal.

But there is a big problem with this proposal: 80% of voters want to stay in the euro. Some may think this opinion is pure ideology, but this same ideology is right now moving tens of thousands of refugees into the eurozone. Everyone who can travel is trying their best to get to the eurozone. But this writer wants Greece to reconsider leaving the eurozone.

Moreover, even assuming Greece did leave the euro, what happens next? Venezuela, which had both an export surplus and its own currency, is a basket case. While Venezuela is not Greece, this suggests, at the very least, that leaving the eurozone requires more than just changing currencies. If Greece leaves, it will have its own currency, but it will not have a trade surplus sufficient to make good on that currency. Its creditors, lent it euros and will want to be paid in euros and its trading partners will demand euros as well. Even outside the Eurozone, Greece lacks a realistic economic plan B.

The state versus the working class

Greece is a rapidly warming pot of water with two crabs — the state and the working class — each whom is trying to get out of the pot. Each one is pulling the other one back into the pot. Meanwhile, SYRIZA thinks it can represent the interests of both. Sooner or later, SYRIZA will be forced to choose between the state and the working class.

SYRIZA could very easily end this crisis by attacking the state and quickly cutting everything that does not impact the living standards of the working class. The military, for example, consumes 2.3% of GDP, produces nothing and is not economically sustainable. Greece does not need a military.

Nor does Greece need a government that operates five days a week — most of it can be shut down for all but 2 days a week. This shutdown can be accomplished with no cut in salaries or the wages of the soldiers. The public employees need only work two or three days a week in return for their regular salaries.

Third, it costs the government nothing to end the chief cause of poverty in Greece: low wages. SYRIZA can fix this by mandating all business owners pay a minimum wage equal to the average wage for the EU. This will end the need for all programs for the working poor.

Fourth, it costs nothing as well to end the chief cause of unemployment in Greece: hours of labor are too long by European standards. SYRIZA can fix this by simply mandating a workweek that is the same as Germany – 1300 hours per year versus the present 2000 hours.

If everyone has a job at a minimum wage set to the EU average, all poverty should be eliminated in short order. Again, none of this requires any new spending by the Greece state.

To recap: the state does not require new spending to:

  • Reduce its hours of operation;
  • Cut its military to zero;
  • Raise wages; or
  • Reduce hours of labor

The state must go if the working class is to eat

Most writers insist SYRIZA can only address the problem of poverty and unemployment by increasing state spending. The opposite is true: SYRIZA can only address poverty and unemployment by cutting state expenditures and putting in place social policies that universally guarantee no one is left without a job and decent wages.

SYRIZA has no way to escape unemployment in the foreseeable future — if ever — by relying on Keynesian policies. And it has no way to escape poverty by simply waiting for economic growth to restart in some equally imaginary future.

Will SYRIZA meet resistance from the EU for these steps? Yes, but no more than it is facing now. The EU is speaking for the interests of Greece capital and these steps crush Greece capital.

SYRIZA must make a choice between the state and the working class and soon.

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