Print this post.ERIC LERNER
Rescuing Capitalism is Impossible
The problem with Syriza is that it supposedly represents the working class but has too many bourgeois elements, including in its leadership.
The first act of the Greek drama ended swiftly. Entering “negotiations” with no strategy and no real threat in hand, the new Greek government of Syriza came out empty-handed. Without any fig leaf, the terms of the agreement reached February 20 with the EU are simply an extension of the existing bailout and all its horrors of unending austerity. Despite the apologies from liberals worldwide, the Euro- group’s statement—the terms the Greeks agreed to— are unequivocal: “Funds are to used only for recapitulation and resolution”—only for paying the debt”, there is no reduction in the debt—“the Greek government promises to pay the creditors in fully and timely” and there is no shift in the fiscal surpluses which are to be “in line with the agreement of Nov 2012” . In others words, the Greek workers must continue to pay off the debt. This is a complete and abject capitulation.
Despite all the rhetoric since this agreement was reached, the Greek government continues to reinforce this capitulation, most recently dutifully paying the IMF debt on April 9, even though it is on the verge of defaulting on pension and wages at the end of April.
But the hopes raised by the Greek election will not disappear so swiftly as the courage of the Syriza cabinet. Now will Greek workers accept passively, as the Prime Minster has, the continuation of crushing austerity policies. A reaction is inevitable as this debacle emerges in government policies.
The question which will determine if that reaction can change those policies and force a real confrontation with the European bankers is what alternative policy can be offered to the craven one of the Syriza leadership? Is the only alternative the exit from the Euro, a new drachma and drastic devaluation, with it attendant ills of inflation and real wage cuts? What is the actual strategy that can lead Greece out of its impasse?
The answer is that only resolute action that goes beyond the confines of capitalist “reality” can lead Greece, and the rest of Europe forward. That means concrete feasible steps that result in the transfer back to the workers of the tens of billions in wealth that has been taken from them. These step must include :
* stoping all payments on all foreign debt,
* limits on the movement of capital out of the country,
* a tax on the wealth of the richest Greeks,
* seizure of productive properties for non-payment of taxes and,
* most important of all, a massive government public works and public services program to put Greeks back to work and restore essential services.
None of these steps require a new currency and all can be accomplished while still using Euros and avoiding a devaluation.
Rescuing Capitalism is Impossible
The key strategic error being made by the Syriza top leadership is made clear in the essay by Finance Minister Varoufakis, “the Confessions of an Erratic Marxist”. Varoufakis writes that it is the duty of leftists to “rescue capitalism”—to save capitalism from the disastrous neo-liberal policies that have been destroying the world economy. To attack capitalism, Varoufakis argues paves the way not for socialism, which he views as politically impossible, but only for fascism.
The fundamental problem with this strategy is that capitalism is beyond rescue in the present epoch. As Rosa Luxemburg pointed out a century ago, capitalism requires continual expansion into a non-capitalist surrounding economy to survive. It can’t exist as a closed system. Today, Luxemburg’s concepts are being dramatically confirmed. The only thing keeping the global capitalist economy afloat is the growth of China’s economy. China’s capitalist economy in turn is financed mainly by the sales of state-owned land. This sale of non- capitalist property fuels the vast infrastructure projects. These projects then produce the demand for a rapid expansion of industry and of imports of goods and capital for the rest of the world.
Land is scarcely an inexhaustible resource and as, Luxemburg described in detail in her book “The Accumulation of Capital”, such methods lead to an inevitable crash. The global crash of 2008 was due in large part to the slowing of the rate of Chinese expansion and a second and probably considerably larger crash is the inevitable consequence of the the current peaking of many of the drivers of Chinese expansion, including the real estate boom and the steel industry, which now produces 50% of the world’s steel.
The policies of neo-liberalism are not a free choice of the capitalists. They are the inevitable product of an historical epoch in which capitalist expansion is becoming impossible. In a closed capitalist system the expansion of profits can only occur by decreasing workers incomes. This, of course, in a closed system reduces the market, decreasing sales and putting renewed pressure on profits in an endless downwards spiral. The periodic debt crises are not the cause, but merely the symptom of this inexorable transfer of income from workers to capitalists.
The growing series of endless local wars that have smashed over half a dozen countries to bits are another symptom of this crisis. They are fomented by the crushing austerity and unemployment that drives tens of thousands of young men to become fanatical killers. The wars in turn facilitate even more ruthless capitalist looting of the terrorized and atomized populations of these ruined states.
The Greek situation is an example in miniature of the global crisis. The Greek government can pay salaries and maintain vital services, or it can pay the debt. It can’t do both, which is what the Syriza leadership is currently trying to do—by negotiating more loans!
Going beyond capitalism today
Objectively there is no choice for workers worldwide but to go beyond capitalism. The capitalist future offers only unending declines in standards of living, a collapse of services, depopulation, a long agonizing retreat to a new Dark Age. But unfortunately the lack of substantial victories for the working class in the past decades leaves the vast majority of the population skeptical that real social change is possible. What is necessary today is steps that go beyond capitalism, but at every point appear to all, and in fact are, feasible and sensible. At the same time, that means mobilizing the political support needed globally to carry out such change.
In Greece, the very first step that must be taken is to abrogate the Greek government foreign debts and stop all payments on them. The debts were incurred by corrupt governments fully in thrall to the Greek oligarchy and deserve no respect from workers in Greece, Germany or anywhere. They are not debts owed by Greece to other countries, but claims by banks and the capitalists on Greek workers’ incomes.
As soon as debt payments are halted the “cash crunch” of the Greek government disappears. The government actually takes in more than it spends, excluding the debt payments and, again excluding the debt payments, the country as a whole imports just about as much as it exports. (Sources: Bank of Greece here and here)
However, this is in the current depressed state of the Greek economy and the crippled condition of the Greek government’s essential services. Any steps to economic recovery require more government income to fund more expenditure. Since 2009, government expenditures have fallen by $8 billion euros a year and working class incomes by about $22 billion per year.
There is only one source to recover that money—the wealth of Greek capitalists and the profits of Greek corporations. The only way is to take back what the capitalists have stolen from Greek workers. As Thomas Picketty’s best selling book “Capital in the 21st Century” abundantly details, a direct tax on the wealth of the wealthiest is an excellent way to reverse the concentration of wealth and income that has occurred globally over the past 40 years. A wealth tax of about 10% per year on the wealthiest 1% of individuals is the second step that needs to be imposed.
Right now, at least $200 billion of Greece’s total financial wealth of $900 billions in the hands of the wealthiest 1%. (Estimate based on 2013 Global Wealth Databook) A 10% tax would raise $20 billion per year, increasing the Greek government’s income by about 65%.
Of course, the oligarchs will try to evade such taxes,moving their money overseas. To prevent that the Greek government should place strict control on the movement of capital abroad. In addition, the government is already the dominant shareholder in the major Greek banks. It should actually exert direct control over the banks, and use their records to track down the real wealth of the wealthiest. The failure of the Syriza government to take this basic step has already allowed the oligarchs to move billions of euros out of Greece. Each day of delay makes this situation worse.
Equally important, despite capital flight, governments everywhere have the power to seize productive property to pay for back taxes. Greek corporations make about $100 billion a year in profits. Seizing , “de-privatizing”,the profitable assets of tax-evading oligarchs will bring instant revenue into government coffers.
But all these steps deal with gathering in money revenue. The real key to restarting the Greek economy is what is done with the money. It has to be used to mobilize the now-idle human resources of the country, the vast number of unemployed, to real social benefit. The way to do this is to initiate a massive public works and public service program to provide free education, health care, transportation and housing to all Greeks. A $20 billion a year program would create about 1.3 million new jobs at current wage rates, enough for nearly all the current 1.4 million unemployed in Greece. About half the jobs would be those directly created by the program and and the other half would be those those resulting from more spending throughout the Greek economy due to the new income of the direct employees.
This program must be democratically run by the workers and communities involved at all levels. The jobs must be direct government employment, not though contractors. This is the only way to eliminate the corruption that has plagued the Greek public sector for decades.
By heavily taxing the capitalists and creating a public works and service program, the Greek government will be able to shift the type of imports to Greece and thus can greatly improve living standards without significantly increasing the trade deficit. Greater amounts of necessary goods will replace lesser amounts of luxury goods.
Each of these steps is feasible for the present Greek government and will appear eminently sensible to the population. But they also go beyond capitalism, because if they are sustained over time, and spread to other countries, they would transfer to the state complete ownership of the productive wealth. And they would make impossible the essential function of capitalism, which is to increase profits year by year. Over a short period of time, capitalists can sustain huge losses. But if they become permanent, capital will disappear. And if they succeed in Greece, they will threaten to spread elsewhere.
The real Fascist Threat
So if these steps threaten capitalism, won’t the EU leaders do everything they can to defeat them? Won’t they overthrow the Greek government, engineer a coup, bring in the fascists? This is the fear that Varoufakis uses to justify his hopeless strategy of “rescuing capitalism”. The alternative, in his view, is fascism brought in by the vengeful capitalists.
But this argument ignores the actual historical process by which fascism triumphed in the 1930’s and the real threat of fascism today. In an industrialized country, with an urban population, it is impossible to impose a military dictatorship or bring fascism to power without a substantial popular base of support and without the demoralization of the left. What actually brings fascism to power is the betrayal by leftist governments of the hopes that their supporters have placed in them. If a leftist government actually carries through on its promises, its popular support both at home and abroad will cut any possible support from under the fascists’ boots.
In France in the 1930’s, the Popular Front Government, like the present Syriza leadership, sought an alliance with a small right wing party, the Radicals. While the 1936 General strike at the beginning of the Pop Front regime won substantial concessions for the working class, the Popular Front rapidly backed away from these gains during the subsequent two years. It allowed the flight of capital, devalued the franc, and then announced in February 1937 a “pause” in pro-worker reforms. In the process the Pop Front demoralized their own supporters and allowed right wing parties to gains strength as the only alternative to the failure of the Blum regime to substantially end the economic crisis. The result was a major popular base of support for fascism, which undermined France’s fight against the Nazi invasion and underpinned the collaborationist Petain regime set up under the Nazi Occupation in 1940.
In Germany, the Socials Democrats, in power in the 1920’s made concession after concession to the capitalists, not the workers, allowing armaments spending to increase while slashing social benefits. After falling from power, the party continued to have no solution to mass unemployment. So millions of the unemployed turned to the Nazis.
No where in history can Varoufakis or others who agree with him point to an example of a leftist government that carried through pro-working class polices without compromise and then was toppled by a military coup of by a fascist movement.
Yes, world capital will do whatever they can do defeat a Greek government that has dumped the debt. But in today’s political climate, a new German invasion of Greece to enforce debt payment is an impossibility. And the best insurance against internal threats is a fearless and uncompromising policy that transfers wealth from the capitalists to the workers, with no concern for the future viability of the doomed system of capitalism.
The critical role of democratic structure
The key question is how can the Syriza leadership be persuaded or compelled to change their current policy and how can a new, resolute, policy be supported in action? The answer is easy to state, but hard to accomplish—democratic structures and decisions at all levels. Within Syriza, activists have to fight at all levels to change the structure of the party to make everyone, including the Prime Minster, responsible to delegates elected by the party members.
But equally or more important is developing democratic institutions to make demands on the government from without. As in France in 1936, mass strikes can occur in Greece in the current situation. In such strikes, it is imperative to set up truly representative organs of workers democracy with delegates elected for short terms, responsible to electing assemblies.
The weakness of the popular assembly movement in Greece in 2009-2011 was that the assembles were not representative of the whole population, but were meetings of whoever came. At the end of the movement, there was an effort to send delegates from community or neighborhood assemblies to an Athens-wide or national council of assemblies. In the current situation, that latter model of delegates, elected for very short terms, or a single meeting, could be one that can be taken up within workplaces as well as neighborhoods to organize mass democratic institutions that could demand that the Syriza government take resolute action, and as they grew, actually assume some governmental functions.
Setting up the embryos of such mass democratic institutions is a task for activists in unions, community organizations and left parties. A first step can be to organize open forums to discuss this and other alternative programs, to aim for broad agreement on goals, which is a requirement for united action among many organizations.
The construction of such a democratic movement cannot be limited to Greece alone. Greece is a small country and a small part of Europe. For Greece to succeed in freeing itself from the troika and the banks, it will need the active support of workers organizations across Europe, indeed worldwide. Instead of meeting with hostile EU Prime ministers, the Syriza leader would be better off touring European anti-austerity coalitions, building a Europe-wide coalition to take similar resolute action Europe-wide. Even the beginnings of such a movement would strike fear into the hearts of the EU leadership and would be the best protection for any actions by the Greek government against the debt. Equally, even the smallest start to such a movement would be a real reason for rising the hopes of workers throughout Europe, and throughout the world.
[box] Eric Lerner can be reached at: elerner@igc.org. [/box]