Austerity as Class Warfare of World Capitalism

Greece has Syriza, unacceptable, not because it is so radical (the fact that Syriza has its own Left means the remainder is quite moderate), but because Europe, strongly under American influence and support, has become rigidly Center-Right, hostile to all evidences of socialism and, antecedently, become enlisted in the global freezing into place of market fundamentalism, which translates militarily as anti-Russia and anti-China as though they exemplify (which they no longer do) communism. We are back to the post-World War II era, a continuous span of history to the present manifested in capitalism’s unwillingness to reconcile itself to social change, whether as the democratization of productive systems or acceptance of ideological themes sanctioning social welfare over individual gain. Retrograde ideas and values die hard, while nations and institutions which are based on them gradually petrify, lose their appeal, encounter resistance from within as well as without—and die.

Greece is a straw in the wind, at this point not more, and certainly not less. Europe will not crumble, nor the eurozone, should Greece be ejected from or quit the latter (even Merkel’s Germany cannot force it out of Europe itself), but departure or not, its position signifies a step in the awakening of countries no longer willing to acquiesce in their forcible subordination to the dictates of international capitalism. It is no coincidence Syriza and the referendum over continued austerity, a context of challenging the hard line taken in political-financial circles against rising living (including health) standards of the working people, occurred now. Capitalism is growing nervous, its vision of globalization, beyond yielding panics in the financial markets which might lead to their interconnected failures, reveals the cruelty inhering in a world system based on the hegemonic claims and ideological superiority of the US-led structural and military framework of alliances, already tested via America and NATO, in successive interventions. In sum, the emperor stands exposed; he wears no clothes, or rather, clothes himself in military hardware for starters, embellished by myths of free-market economics and, for the good of all, sacrificing to the needs and wishes of elites.

Austerity spells hierarchy, necessarily crammed down the throats of the unwilling or less convinced if all else fails, e.g., appeals to patriotism, fear of political or economic ostracism; but largely unnecessary in practice because advanced capitalism is predicated on a long-term habituation process of submission to its imperatives, from blind consumerism to acceptance of war as the realization of national honor, to the designation of the poor as degenerate, unfit, lacking in moral worth. Oddly, EU leadership harbors these views toward Greece (as perhaps does America toward Europe as a whole and Russia and China beneath even moral notice). Degenerate, unfit, lacking in moral worth, all because Greece rejects austerity, as in essence the summum bonum of political economy and human conduct. A referendum declining such an honor could not but anger the righteous, the convinced, the true believers of capitalist ethnocentrism—we vs. they (the defaulters)—and more, capitalist xenophobia (those rejecting market fundamentalism), the enemy in both cases inhabiting a nether world of assorted socialist leanings, like decent pensions and adequate medical care.


Yet the world’s masses are slowly wising up. What is happening to Greece does not augur well for other nations caught in cycles of debt reflecting external circumstances not of their own making. America’s own financial crisis sent shock waves through the world economy whose effects have still not dissipated, Greece, among others, paying the penalty. If Tsipras were CEO of Morgan, Chase, bailouts would not be held up until ironclad assurances of obeisance to austerity, as is now the case with Greece. I’m struck by the current hardships facing the Greek people, to which the European Central Bank seems unconcerned and EU leadership wholly indifferent. Consider New York Times reporter Liz Alderman’s article, “Deal or No Deal, Greece Faces a Difficult Aftermath,” (July 9), in which she writes, “As Greece hurtles toward a Sunday deadline for either reaching a bailout deal or risking a hasty exit from the eurozone, the one certainty is that its economy is already on the brink of collapse.” Should the former happen, a bailout deal, the damage has already knowingly been done, as though creditors value setting an example more than settling accounts. The punitive attitude is clear, notwithstanding children’s malnourishment and pharmacies close their doors. Nikitas Kanakis, local head of Doctors of the World, states: “’Greece already has a humanitarian crisis, and we’ll have to prepare for a harder aftermath if a deal collapses. I’m not sure how proud we should feel about letting social destruction return within Europe.’”

Does he exaggerate? Cargoes of food and medicine are piling up on the docks at Piraeus. Many blame the capital controls imposed by the Tsipras government, and in fact the situation is becoming dire, but is he and Syriza to blame, when the challenge to austerity is viewed as resistance to class warfare, and on the other side, dishonor, ingratitude, refusal to play by the rules of the game formulated from above? Alderman perhaps inadvertently, given NYT’s bias (Syriza invariably has the label “leftist” attached to it), assigns less than full blame to Tsipras (he took office in January) for the dire conditions: “Five years of economic crisis have already taken their toll on Greece, hollowing out the solid middle class and causing tens of thousands of small and midsize businesses to close their doors.” Capitalism when it plays hard ball has a way of devouring its young, or in this case, small and midsize businesses. Christian Noyer, the governor of France’s central bank and on the ECB’s Governing Council, stated that emergency lending to Greek banks would be ended unless the Greek government first reached “an accord” with creditors. In his words, “’The Greek economy is on the verge of catastrophe.’” In passing, several analysts have said that the No vote in the referendum “may have doubled or tripled the cost of any new bailout.” Greece must pay the price for its disobedience.

My New York Times Comment on the Alderman article, same date, follows:

The EU is practicing economic strangulation on one of its members primarily because Greece rejects conditions of austerity, a paradigm heartless in its evisceration of social services and wealth redistribution. If the Tsipras government were not socialist, the way would have been smoothed for further aid. As it is, the Left is unacceptable to global capitalism, for as an alternative political economy it violates principles of market fundamentalism.

This economic brinkmanship on the EU’s part will prove ultimately harmful to the very system advocated by the US-EU-IMF because Greece–and down the road–Spain, Portugal, Italy, and Ireland–will receive assistance from Russia and China and possibly become integrated into a new trading bloc. Thus runs the revitalized Cold War, taking on an economic form but spelling disaster for world peace. At this point, it looks like Greece will depart the eurozone, a step more drastic than US and EU leaders may realize, not least because of the repercussions for NATO. The unity of Europe is more than a slogan, it is the essential requirement for fortifying NATO and keeping up pressure on Russia, that which US foreign policy wants to see happen.

Strangely, we are back to the 1950s with Germany, burnishing its anticommunist credentials (though hardly accurate in describing today’s Russia) emerging as the economic powerhouse of Europe, largely on its own terms. I can smell the gunpowder.


A day passes, Thursday’s midnight deadline (July 9) having resulted in the Tsipras government’s apparent accommodation to the creditors’ demands as pressures mounted. Can one blame him, with economic-political ruin staring Greece in the face? I originally titled this article, “US-EU-IMF Gang-Rape of Greece,” perhaps a bit strong even for a learned and radical readership, however apt in light of the merciless ideology and practices directed against that nation to bring it to its knees. I criticized Tsipras for easing out Varoufakis as a needless compromise to the forces of Order (whether “troika” or my own list of culprits and their reasons, including protection of NATO for offensive purposes), yet his hands were tied and rather than seeing here utter capitulation he deserves credit for seeking to salvage Greek independence and autonomy, the latter to continue to pursue domestic welfare measures. Tsipras deserves our respect; he keeps his head high.

Thus Times’ reporters Alderman and James Kanter’s article, “Greek Plan Accepts Austerity to Get Debt Relief,” (July 10), reveals some degree of movement on the part of Greece’s severest critics to what may seem a politic compromise on Tsipras’s part (but remains true to longer-term objectives)—altogether an improvement, although not assuring a satisfactory outcome. Greece may still depart, or be forced to, the eurozone, creditors now dimly aware of the consequences, structural and military, to unity of such an outcome. Suddenly one sees the mock-generosity of Schauble, Germany’s finance minister, to keep the situation stable, testimony to Tsipras’s own applied pressures. The reporters write, “Only a day after grim predictions of financial and social collapse in Greece, a scramble appeared underway to work out the details of a new bailout package to bring the country back from the brink of falling out of the euro.” Resistance worked, even though Alderman and Kanter pointed to what appeared as Tsipras “capitulating to demands on harsh austerity terms that he urged his countrymen to reject in the referendum last Sunday, like tax increases and various measures to cut the costs of pensions.”

Stonewalling cuts both ways, and one senses that the EU blinked first, putting a best face on the matter. The reporters concede, “But Mr. Tsipras sought a three-year bailout loan totaling 53.5 billion euros (about $59 billion) and asked creditors to commit to discussing restructuring the nation’s massive debt,” the latter especially important and until now totally off the table. Then Schauble, who admitted that “’debt sustainability is not feasible without a haircut,’ or write-down of debt,” and even more astonishing, in light of past pronouncements, Donald Tusk, president of the European Council (and former prime minister of Poland), said that any “’realistic proposal from Athens needs to be matched by realistic proposal from creditors on debt sustainability to create win-win situation.’” Prior to today (July 10) no-one on that side wanted a win-win anything, so imperative was it to punish and humiliate Greece.

Light at the end of the tunnel? The reporters are cautiously optimistic, reflecting the mood of European leaders and their Swiss Guard in the think tanks. “It is still too early to gauge,” they write, “whether this prospective bailout will be any more effective than earlier pacts in balancing the demands of the creditors against some relief from austerity. What was breathtaking, however, was how in a matter of hours the entire dynamic in the Greek crisis seemed to shift, from apocalyptic warnings of a Zimbabwe in the Balkans, to a fresh optimism that the basics of a deal could be worked out.” I surmise, Europe recognized it had gone too far. The reporters write further: “Prospects for a deal improved through the day as a procession of European leaders came around to Mr. Tsipras’s conviction that pure austerity measures were insufficient in their own right and had to be accompanied by a commitment to reduce the burden of Greece’s stupendous debt.” This shift in opinion was helped by the role of France (heretofore, Hollande and Merkel were two peas in an austerity pod) in providing political support and technical assistance to Greece. France assisted in “mak[ing] sure the Greek proposal, submitted just before the midnight deadline, would be as thorough and salable as possible to Greece’s creditors and would smooth the way for a compromise on a new bailout package to keep Greece afloat financially and inside the euro.”

This last is exciting because it suggests a thin crack at the top between Germany and France in European unity, possibly isolating Merkel in the future as the chief spokesperson for austerity and bringing the practice as both EU and national policy under closer scrutiny. Merkel is unrepentant, this week stating her opposition “to actually writing off some of Greece’s debt,” although perhaps willing to reduce interest rates and extend the payment period. Be grateful for small favors, when face-saving is at stake. Valls, France’s prime minister, was more forthcoming: sustainability meant reducing the debt. There matters stand, what I termed the giant elephant in the room whom no one mentions, NATO, is nevertheless vulnerable to any fractionation of the political alliance, making Greece of major significance in the future course of international politics and, as the possible moderation of EU policies, the easing of Cold War tensions.

My New York Times Comment on the Alderman-Kanter article, same date, follows:

“…an open wound in Europe’s southern and eastern flank.” Finally we’re getting somewhere. Nobody will admit that the EU is the political-economic complement of NATO, perhaps better, NATO’s surrogate to make military interventions appear more normal. Greece, of course, should it be ejected (which now seems increasingly unlikely), would destroy Western unity in its confrontation with Russia, the prepositioning of heavy equipment and joint maneuvers including B-52 bombers near the Russian border already in evidence.

Even Merkel and Germany, laboring under the fiction that Russia fully intends to invade and gobble up the West, or propagates the Cold War myth the better to consolidate its own power and influence on the Continent, finally has to adopt a softer posture toward Greece for geopolitical reasons–hostility toward Russia. How reminiscent of the World War II setting, when the appeal of anticommunism (Russia today is hardly communist) allowed Hitler to take over much of Europe. No, Merkel is not Hitler, nor Germany, Naziism, yet the historical parallel remains of a Germany manipulating European fears (include Britain and the US here) to its advantage.

The US is hardly an innocent bystander, having initiated the global financial crisis, nurturing NATO for the role it is now playing, and continuing the Cold War through demonizing Russia and Putin. Greece is caught in the middle of a global power struggle and merits our compassion.

More articles by:

Norman Pollack Ph.D. Harvard, Guggenheim Fellow, early writings on American Populism as a radical movement, prof., activist.. His interests are social theory and the structural analysis of capitalism and fascism. He can be reached at pollackn@msu.edu.

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