Since Syriza’s election victory, the dispute over the “bailout of Greece” has gotten increasingly nastier. It centers on the question of how best to achieve “fiscal consolidation” in this southern European country. Should it be through “budgetary consolidation,” meaning severe cuts in any government expense defined as superfluous, in particular anything that supports the people? Or through “credit-financed growth incentives,” meaning a policy of growth in the service of the people?
The politicians on both sides claim to be looking out for the “little people.” The Greek government points to the Greek workers, pensioners, unemployed, sick, etc., who have already sacrificed far beyond their pain threshold. The German finance minister Schäuble always likes to refer to the hard working German taxpayers who years ago had seen the need for the deep cuts which the Greeks should also now expect.
Regardless of whether the politicians are sincere or professional hypocrites — this is a dispute between governments which is not about the entitlements of either the Greek or German people. It is about the entitlements of governments to their economic resources. So instead of siding with the Greek underdogs or the German bullies, one should step back from this dispute and look at what it is about.
The Prized Euro Credit
Schäuble’s side insists that European credit must be used by the Greeks solely to service their debt and that they should cut “unproductive” expenses at the same time. This underlines an interesting fact about credit: it is a relation of economic subjugation. Because when a money economy or a state takes out loans, the growth of national business and the state with its debts has to satisfy the calculation of the creditor. This is the only reason that finance capital grants loans. All the productive activities of the society are subordinated to the lender’s money being increased, and this interest is guaranteed by force of law. Credit is not a universal means for any purpose, but for the growth of capital. Social life serves this goal — or else it loses its right to exist.
This is also recognized by Syriza in its own way when they argue that new loans are absolutely necessary for the existence and growth of their nation. They are still calling for a “haircut,” but they want a fraction of the debt written off and payment on the rest postponed until there is growth on the basis of their social democratic program. Once there is economic growth, they promise to pay it back as a fraction out of their surplus. Then – and only then — they promise to service the “investors” whose goal can again be met.
Syriza’s program sees the starting point for growth as a population that is willing and ready to work when called upon. They say that business needs a thriving working class, and that the bottom of the working class must be kept from falling out of the working class. However, no welfare state is ever designed to keep the whole working class alive. Social democracy is an ideology that sometimes works out in successful capitalist nations, but if there is no anticipation of real capitalist growth, then there is no capitalist justification for a welfare state. Syriza is right that capitalism can’t exist without a functioning working class. But this is only if capital has a use for it. A healthy, educated working class is only a means for economic growth when capital says it is a means. It is not that capital doesn’t use workers because they aren’t suitably prepared — it’s the other way around: they become useless because capitalists don’t need them.
Syriza thinks it’s a contradiction to cut public spending during a credit crunch. They don’t accept the verdict of the bond market that Greece is a loser in Europe, and want their European partners to subsidize them so that they can get back in the game. They think that Europe should work out for them, and if doesn’t, then this must be recognized by the European partners. But you can’t have political economic competition without losers – or winners. And the winners are informing them what they should be doing: cutting the budget, which means not inflating the euro for the wasted purpose of keeping people alive.
The Splendid “European project”
Germany is calling the shots. A central part of the European project has been a German conquest of Europe by civilian means; to do economically what they failed at militarily. And this conquest has more or less taken place. In the current dispute over Greece and its bankruptcy, Schäuble demands that Greece politely continue servicing its debt in accordance with the rules it signed when it joined the euro. This is necessary for ensuring the continued strength of the euro, which has been earned not by Greece but by Germany with its world-class capital — in Greece, among other places.
Germany has the ideological point of view that sound fiscal policy gives sound money and sound money is the basis of a sound economy. Nobody can argue they haven’t been successful. Their standpoint, which goes under the name “austerity,” takes seriously that money has to be capitalistically useful when the state borrows money. It’s explicitly stated in the rules for the euro that the European Central Bank is not to bail out countries. This is a matter for the individual countries; the bank is not to ruin money in this way.
Syriza calls this “fiscal policy waterboarding.” They bring the damage that Greece has already taken to the bargaining table and threaten a “Grexit” : you can’t kill us, because we will take the euro down with us. Syriza says: you have to pay not only for our sake, but yours as well. At the same time, Greece wants to remain part of the EU and the euro. If they really want a program of state debt initiating a new period of capitalist growth by taking care of the working class, they will have to do it with their own money, the drachma, not the euro. If Greece leaves the euro, it would be printing drachmas only for domestic circulation; it wouldn’t be traded and sold outside Greece on the international credit markets. And Greece very much wants to be part of the much larger power of the euro.
Germany also does not want a Grexit because it needs Greece for its own reason. The German banks don’t want the final verdict that Greece is broke. Germany says it just wants to bring down the cost of Greece, which means that the loans for the Greek bailout are only so that Greece is a credible entity that is capable of paying the interest on its debt. If Greece fails, it could be a “Lehman Brothers moment” when the markets question the euro’s ability to withstand the flood of speculation going after Spain, Portugal and Italy. If Wall Street and the people who trade in billions do this, it could kill the euro. Germany would be fine, but its euro project will have failed.
Schauble reminds the Greeks: you have to abide by our rules because you too have to look out for the euro. If we constantly credit you, we will endanger the value of the euro – and that is a bigger question than the current poor trading of its exchange rate. If Greece keeps pushing its agenda, this will weaken the euro in its quality of functioning as capitalist credit, measure of value and power over the world’s wealth.
The promise of the euro as an imperialist rival to the dollar is its economic solidity; it is not fiat money like the dollar, which is backed solely by America’s military might. The Europeans say: “our money is good because it is used for economic purposes only.” Europe’s disadvantage of not being a single power like the US is a selling advantage: we make sure every euro printed is a euro which is there because it’s a true market euro. That’s the reason the German banks are guardians of Europe’s fiscal monetary prudence – not some “Teutonic obsession” with savings, as business observers in the Anglo-American world complain.
In this mutual extortion, the European partner states show the true colors of their Euro Club with their community of money, in which Greece is a member and would like to remain one: it is an institutionalized competition between nations. The European nations do business with a single money, but bitterly compete for the euro credits which are and should be the lifeblood of their market economies. They need and use euro credit to become successful business locations in this competition by accumulating money surpluses. They differ as winners and losers according to who enjoys popularity with the financial markets and who does not. Greece doesn’t!
This verdict may come down from the financial markets, but the political rulers sign and execute it. As the winner of the competition between states, the German politicians insist that Greece, as loser, vouch for its debts and “make itself fit for European competition” again. Meaning: cut everything in Greece which is not profitable. Germany’s success and the euro’s power simply must not suffer any harm from the ruin of the losers in the competition. And Germany’s economic success gives it the political-economic means of power to enforce the valid economic “reason” of this pan-nationalist community.
The Role of the People
Both conservative and leftist euro-politicians agree on the role of the people. The German politicians – whether Greens, Social Democrats, or Christian Democrats — proudly attribute Germany’s economic success to the German workers’ willingness to always work harder for less money. And the Syriza politicians point out that a decimated population won’t be any good for a future economic recovery – more of what brought them so much misery in the first place!
In both viewpoints, people exist so that the capitalists can make successful use of them with their calculations. In the factories, offices and everywhere else, they have to work hard and cheap enough so that as much money as possible is made with their toil.
During booms and busts, in big countries and in small, the most important duty of the people is the same: their living standards must be reduced so that their poverty is useful — especially in the winner nations of Europe. By the same logic, if their poverty is useless for the calculations of investors, their poverty is bottomless.
Syriza is struggling to keep its country and people somehow alive in order to make them productive again, and European headquarters is telling them that the success criteria of the euro is incompatible with their previous standard of living. In this way, both sides argue about the national benefits of their people’s poverty. Isn’t it time that people question whether they can afford all this?
Geoffrey MacDonald co-edits Ruthless Criticism.