On the one hand, you have the Austerity Tale—essentially, that Greece needs to get with the (Eurozone) program. On the other, Greece, birthplace of democracy, taking whatever stand it can in defiance of a fundamentally undemocratic financial system—and demanding expanded support from Europe as a whole—a just demand given the demands integration had placed on Greece in the first place. Underlying both tales is the myth of financial scarcity. For whatever reason, Syriza is afraid (for I do not think them uninformed) of taking the most radical, surefire measures to take back Greece’s financial autonomy. Those solutions—public banks, sovereign issuance of currency and credit—would obviously stick a finger in the Eurozone’s eye, and would undoubtedly be met by regional and global elite pushback. But nations have survived worse. And, as I will say down at the end, I’m reluctant to condemn Syriza. They’re up against some real monsters, and the scarcity narrative is formidable.
As Bill Black explains, the European decision is being made “entirely” (at least in the final analysis) by
the CEOs of the elite German corporations and banks that direct the troika's policies . . . The troika consists of the ECB, the IMF, and the European Commission. None of these three entities represents “Europe.” . . . they are apoplectic that the Greek government dared to ask the people of Greece through a democratic process whether to give in to the troika’s latest efforts to extort the Greek government to inflict ever more destructive and economically illiterate malpractice on the Greek people . . . the troika and a host of heads of state that have caused grave harm to workers in their nations responded immediately to the election of the anti-austerity Syriza party in Greece in January 2015 by shouting their increased eagerness to “make an example of Greece” for daring to elect Syriza. The government of Spain, for example, is desperate for the troika to double-down and “make an example of Greece” by crushing its economy in order to stave off the newly created and surging Podemos anti-austerity party that won key municipal elections in Spain. Prominent German elected officials have made explicit their desire to force Syriza (and Greece) to fail because they oppose its politics.
Scarcity is the ideology of austerity
Black hit the nail on the head calling out the New York Times for using rather pathetic language to frame the new round of negotiations. “Now Europe Must Decide Whether to Make an Example of Greece,” was the headline, which Black calls “chilling” and like ordering “a mob ‘hit.’” Actually, it’s even more insidious than the language of the mob—it’s also the language of condescending stern-ness associated with parenting. The BBC says Athens is being offered a “Euro time-out,” with one “unnamed official said some of the proposals appeared designed to ‘humiliate’ the Greek Prime Minister Alexis Tsipras and his left-wing Syriza government.” Former U.S. assistant Treasury Secretary Paul Craig Roberts lauded Greece’s decision to hold a referendum at all, calling it an act of “democracy” for which the rest of Europe was bitterly punishing Greece. Europe’s position has always been “destroy the village in order to save it,” meaning impose destructive austerity out of a professed concern for the economy. Austerity is an ideology of stern-ness. When used in the process of integrating countries into a currency, it has terrible effects, but compounds those effects with “shut up and take your medicine” messaging. Last week Thomas Piketty , Jeffrey Sachs , Heiner Flassbeck , Dani Rodrik and Simon Wren-Lewis published a devastating economic critique of austerity:
The humanitarian impact has been colossal—40 percent of children now live in poverty, infant mortality is sky-rocketing and youth unemployment is close to 50 percent. Corruption, tax evasion and bad accounting by previous Greek governments helped create the debt problem. The Greeks have complied with much of German Chancellor Angela Merkel’s call for austerity—cut salaries, cut government spending, slashed pensions, privatized and deregulated, and raised taxes. But in recent years the series of so-called adjustment programs inflicted on the likes of Greece has served only to make a Great Depression the likes of which have been unseen in Europe since 1929-1933. The medicine prescribed by the German Finance Ministry and Brussels has bled the patient, not cured the disease.
The International Monetary Fund, which had led the charge early on and alleged Greek irresponsibility, later admitted it was wrong and that Greece should receive further financial support. Prior to its admission of error, the IMF was inflexible towards Greece for months. Of course, nearly all the “condemn Greece” arguments have been proven wrong, as James Galbraith’s “9 Myths” post suggests. Some of the myths might be more diplomatically described as differing perspectives, but nearly all rely on the larger myth of financial scarcity, and tend to blame Greece exclusively.
Proponents of public banking can challenge the scarcity myth by pointing out the ephemeral, power-laden way that big banks justify their oppressive financial terms. Banks create the money they lend. The only question is how to prudently do that—whose interests are served, what checks and balances and barometers in place, what overall policy goals agreed upon. Public models sometimes run into efficiency problems, but if democratic governance is the goal, profit-based private banking offers nothing—and is inefficient in larger ways.
Ellen Brown weighed in toward the end of last week with a list of options for Greece to take back its banking system, and public banks were at the top of that list (though there were plenty of interim options). Germany, a shrill voice in the Austerity Tale, loves its public banks--so much that one of them, the L-Bank, is suing the European Central Bank for regulatory exemptions. Pilot programs for public banks in Greece planned by the German Savings Bank Foundation for International Cooperation, were reportedly in the works earlier this year.
Beyond Point-Counterpoint on Syriza
Some are calling the Syriza government cowardly and counterrevolutionary for agreeing to impose more austerity measures on the people as a condition for a new bailout. It’s certainly frustrating that Syriza’s takeaway from the strong referendum mandate was merely to aim for slightly better terms (and in some cases, it’s even hard to see the “slightly better,” since, as John Pilger points out, Tsipras’ initial offer was apparently a €13 billion cut from the public budgets, €4 billion more than the figure rejected by Greek voters. That Syriza is limited in its governing capacity has been acknowledged by everyone since the beginning; they’re a coalition government led just barely by radical economists trying to implement their principles in policy—in a very limited, overdetermined, oppressively framed political world. But, as Leo Panich and Sam Gindin point out, the EU itself sees Syriza as different, the political manifestation of anti-austerity, and anti-neoliberalism, “with socialism in its DNA,” holding against “a European Union which has neoliberalism in its DNA.” Building rather than blaming should be the aim here--building a movement to establish the material footholds for economic justice--including public banks and other public financing options, because those institutions would re-write the scarcity narrative.