It’s a whole new ball game in Greece following the referendum, with Syriza and its anti-austerity policies firmly in the saddle and the polls suggesting they will win an absolute majority if there is a re-election. The negotiators in the Schäuble, Juncker and Dijsselbloem camp had been assuming that Tsipras and Varoufakis would eventually yield on the issues, but now a decision is needed on whether to climb down and show a willingness to compromise – or let things collapse. This question has presumably not been answered and is virtually impossible to predict.
The more intelligent response would, of course, be the way of compromise but it will be difficult for the neoliberals, especially for the Germans.
Some measures which Greece needs to put in place could be agreed relatively easily: the tax system and its administration have to be modernised but that takes time. The same goes for the fight against corruption. The reduction of the defence budget will be objected to by NATO but there is no other option anyway. But all this is insufficient and the process is not going quickly enough.
And, for the rest, the parties are basically going in different directions. I have three points to make on this subject:
Firstly, what is the political target?
Let me try to explain by using a metaphor: suppose 20 coaches of national teams meet to discuss training programmes. 19 of them recommend endurance training and weight loss. One suggests biceps training and weight gain. How can that be? Because 19 of them are working on the assumption that the sport in question is a marathon. But the 20th one wants to win in weightlifting. The two don’t go together.
It is not only necessary to understand Greece but also, most importantly, the discourse in Germany. Because the German politicians and media are so radical and uncompromising in their reactions that even American media are shaking their heads at this market fundamentalism.
The explanation offered by Florian Schui in his book “Austerity” is along the lines that it is a question of self-image and national pride in Germany – but it is not called that. In the first half of the 20th century, Germany lost two world wars and committed the largest act of genocide in history, and the Nazis had even tarnished their own culture. There was nothing to be proud of. So the focus turned to the economy. German engineering and German industrial products, from cars to power stations, were soon back in demand the world over. Export became the source of a new German pride which claimed to be neither political nor cultural in substance but purely economic. Free of ideology, so to speak. More on that later. This national pride is quantified in the bottom line: a surplus of exports in the balance of trade. In no other country in the world does this figure play such an important role. And it is logical too, because the balance of export and import worldwide has to be zero if all countries could define themselves by it. It is of no consequence whatsoever for the self-image of the USA, for example.
In Germany a deficit in the balance of trade would be seen as a disaster. Even so much as a decline in the surplus is regarded as a problem by the media and the political establishment. This view has spread throughout the governments in the whole of the EU in the last few years and decades, and since the 2008 crisis it has been almost unchallenged. It is the basis of crisis intervention policy, stability pact, liberalisation and free trade agreements.
Tsipras and Varoufakis do not share this target. They are of the opposing view – like many economists and especially those outside Europe – that too high an export surplus is disadvantageous. It is at the expense of other countries. They want to prevent social welfare catastrophes – and boost domestic demand in the country’s economy. Therefore they talk absolute nonsense from the viewpoint of the other negotiators and make proposals which are diametrically opposed to their targets.
Secondly, the way there
The targets are contradictory therefore there is a desire to go different ways. Greece is unwilling to make further cuts in social security systems and pensions, unwilling to engage in further liberalisation of the labour markets, and unwilling to reduce wages further.
As far as the others are concerned, all this would be the right way to go because that’s how they do it themselves. The German export surplus, which has been virtually skyrocketing since the 1990s, is only partially down to the high quality of the products and much more down to political framework conditions. Labour costs in Germany have been going down for some time, and there have been agenda reforms, liberalisation moves and a retrenchment of the welfare state in the name of competitiveness – and all practically without opposition and with media plaudits. It is not quite so stark in other European countries but it is going in the same direction. The profits in exports are growing but the people are getting less and less of the surplus in the name of competitiveness. It’s the same in the north of Europe and Austria. This reduces domestic demand and so leads to a situation where the export industry is even more important. A self-reinforcing effect which has many consequences. The European trade union leaders are sharing the load, social democracy in any event. They buy into the narrative that an increasingly prosperous Europe cannot redistribute its surplus profits because it wouldn’t be able to survive on the global markets. They accept that poor jobs are better for a flourishing export industry than no jobs. One key way of shaping the “reforms” is always to put measures in place which lead to a situation where the employees are competing more fiercely with each other and the companies have an increasingly strong bargaining hand. Actual earnings are falling and the holes in the social safety net are getting bigger.
I have already discussed at length here where all this is leading: a large section of the population is slipping down the ladder into precarious circumstances but is not optimistic of any improvement in the situation or confident of any possibility of upward social mobility, and so has turned its attention further down the ladder in its battle over entitlements and is fighting against migrants.
Thirdly, the ideology
There is one advantage to the obsession with the export surplus: a figure seems strangely free of ideology. It conveys the impression that we are not talking politics here but about objective criteria. Those who advocate this course always claim in discussions that they are taking a hard line and pursuing almost scientific economics but that is not true. If it was the case, they would listen to economists.
Their action is indeed profoundly ideological because the trade surplus is also a means to an end – and this end is called “market-compliant democracy”. The European governments, regardless of whether they are conservative-led or social democrat-led, have all accepted the target that all social negotiation processes should take place on the market – and that the state is only required to provide security in order to guarantee this. Therefore they are calling for less state, less administration and less (democratic) policy – except when it comes to more surveillance and curtailment of the right to demonstrate. That is the neoliberal nightwatchman state.
This is the reason why the Greek referendum was an affront to these governments, because it is fundamentally opposed to their ideology to decide a social negotiation process by ballot instead of on the market.
And that is why this referendum was so important.
The resistance of the Greek government is also important for this reason and we should show full solidarity. Naturally there is much which can be criticised in a complicated package; Tsipras does not need a blank cheque to do everything right. He will not do this. But he is fighting the right battle and deserves to be supported. Supported in the sense that pressure is put on governments in the other countries to change course.
How will it all end? No idea. I don’t even know what will happen tomorrow. Thankfully I am no longer a journalist under pressure to fill column inches.