this article is from issue 45 of the journal Soundings written in May 2010.
The stories that we tell about the economy are part of the political battle. In April 2010 the leaders of the Euroland countries agreed an `emergency bailout’ of Greece, lending the fiscally stricken country billions of euros to prevent it defaulting on its debts and reaping untold havoc on the European banking system. The future of the euro itself was questioned. Now Greece is expected to `take its medicine’ by dealing with its deficit through a combination of spending cuts and the liberalisation of its economy. But the medicine suggested by financial markets, other European governments and much of the media may well prove poisonous, and to involve enormous economic and social costs.
There are many questions that must be asked. How did this situation arise? Who is to blame? What should happen now? And on whom should the costs fall? The emerging consensus appears to be to blame a profligate Greek state for overspending in the good years, and to suggest that the only answer is spending cuts and austerity, paid for by the Greek people.
But perhaps a more important question to ask would be how this narrative came to hold sway – and whether or not this widely believed narrative itself has an impact on the developing situation. And here the recent work of George Akerlof and Robert Shiller has much to offer: their recent book Animal Spirits (Princeton 2009) points to the importance of behavioural economics, and the ways in which perception influences reality. Recognising the central importance of stories in macroeconomics is crucial to understanding the drivers of the Greek crisis, and to understanding the route ahead. Read the rest of this entry »
by Richard Wolff.
PUBLISHED ON JUNE 4, 2010
Political theater now grips Greece. As with ancient Greek plays, today’s drama also reaches and touches everyone else. We sense Greece’s dilemmas becoming our own.
Her rulers declare that a crisis now threatens Greece. They blame it on the masses. To overcome it, they must impose great suffering on the masses. The rulers’ chorus intones the absolute necessity, the utter unavoidability of that suffering as the only solution. There is, it insists, no other option. The masses waver. Many lean toward resignation, accepting the suffering as punishment for their sins that caused the crisis. For the moment, the rulers exult as their elaborate political theater of blame seems to have successfully shifted the costs of the crisis from them to the masses. And yet, there are also signs of impending oppositional anger from the masses. Huge demonstrations rocked Athens in May. Cathartic moments loom. Read the rest of this entry »
by Richard Wolff.
PUBLISHED ON APRIL 27, 2010
Yet again, business leaders, politicians, academics, and media are blowing smoke around Greece’s efforts to cope with “national debt” problems. Something far more important for the world than this small country’s financial travails is at stake. Indeed, what is at stake affects us all. What is happening in Greece parallels developments everywhere; only details and timing vary.
The struggles in Greece begin with the complex relationship among workers, employers, and the state. Workers and employers are locked into the endless, multi-layered struggles of capitalism (workers vs. employers over wages and working conditions, workers competing for jobs, and capitalists competing against one another for profits). One object of these struggles is the state: varying combinations of workers and employers press the state to (a) serve their interests rather than others’, and (b) shift the cost of doing so onto the others. Read the rest of this entry »
By Walden Bello, July 14, 2010
Cafés are full in Athens, and droves of tourists still visit the Parthenon and go island-hopping in the fabled Aegean. But beneath the summery surface, there is confusion, anger, and despair as this country plunges into its worst economic crisis in decades.
The global media has presented Greece, tiny Greece, as the epicenter of the second stage of the global financial crisis, much as it portrayed Wall Street as ground zero of the first stage.
Yet there is an interesting difference in the narratives surrounding these two episodes. Read the rest of this entry »
Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan.Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne).
by Panagiotis Sotiris*
During the past months Greece has been the most dramatic example of the current sovereign debt crisis and the first to be forced to introduce an extensive set of policy changes. The package of measures negotiated by the Greek government with the EU, the ECB, and the IMF represent the most aggressive attempt in Europe to violently and rapidly implement ‘structural reforms’ that the forces of capital have been trying for decades to introduce. This has led to an impressive wave of social unrest, that will not be easily subdued especially if we consider that the full impact of the measures has yet to be felt. That is why both the crisis and the measures have acted as a litmus test for the Greek Left and its ability to act as the leading force of social protest and resistance.
by Alex Callinicos
The price of the so-called “rescue” of Greece is massive austerity for working people. This is coming up against resistance from the most militant working class in Europe.
The general strike on 5 May was very significant. Greece is a country where general strikes happen quite a lot—but this wasn’t just a good general strike. It had qualities of a real workers’ insurgency.
In Constitution Square in the centre of Athens, massive crowds confronted riot police as they tried to get into the parliament.
The struggle is moving beyond the stage where a one-day general strike, or a succession of one-day general strikes, is sufficient to express workers’ anger. Read the rest of this entry »
by Rick Wolff
Clearly, the global capitalist crisis that started in 2007 will be neither short nor shallow. The government rescue of the US financial industry pumped enough extra money into the economy and sufficiently reduced interest rates to give banks and the stock market the heavily hyped “recovery” that started March 2009 and is now over. What is worse, their recovery never reached much of the rest of the economy. Efforts to broaden the recovery or extend it beyond one limp year have failed. That failure cost Washington trillions in borrowed funds from lenders who now demand guarantees that those loans will be repaid to them with interest. Similar demands now confront many other governments who likewise borrowed heavily to cope with the crisis in their countries. Read the rest of this entry »
The political ‘explosion’ that took place in Greece was a symptom of a systemic and deep-rooted legitimation crisis of the Greek state. This essay examines some of the causes of this crisis, how the political space in which this explosion occurred was produced, and possibilities for continued political antagonisms and struggles. Events belie forecasts; to the extent that events are historic, they upset calculations. They may even overturn strategies that provided for their possible occurrence. Because of their conjunctural nature, events upset the structures which made them possible (Lefebvre, 1969: 7).
The dramatic upheavals in Greece, sparked by the December 2008 murder of a ﬁfteen-year-old student by the police, have been the focus of much interest and speculation. This ‘explosion’ has been one of the most acute challenges to the Greek political
establishment since the end of the Greek Civil War. Read the rest of this entry »