By Costas Douzinas
Published at: The Guardian, “Comment is free”, Tuesday 27 April 2010
Greece’s surrender to the diktats of the IMF and the EU last Friday was confirmation of a death foretold. Three waves of austerity measures imposed by the government under EU instructions failed to persuade the markets to reduce their extortionate rates. Representatives of the IMF and the EU, like postmodern colonial administrators, are currently in Athens imposing further austerity to accompany the loan. Deep cuts in the public sector, reduction of civil servants’ salaries and pensions of up to 30%, a VAT hike and extensive redundancies had already been accepted by the Papandreou government.
The new demands will decimate the public sector, undermine the national health service, privatise the remaining utilities and extend salary cuts to the private sector, destroying hard won employment rights. No public debate, parliamentary vote or referendum has authorised this wholesale destruction of the post-dictatorship social contract.
The government and the media present the crisis as an act of God not dissimilar to the volcanic eruption. The increasing difference in yields between German and Greek bonds (the “spreads”) has been charted in the news like the rising temperatures of a summer heatwave. Strategic choices by financiers and the IMF are presented as unavoidable. Possible alternatives (exit from the eurozone, a eurobond, renegotiation of debt, suspension of payments) are dismissed without discussion.
The lesson is simple: our economies move according to unbreakable laws. Politics either accepts its status as the muscle man of neoliberalism or is marginalised. And yet the reality is exactly the opposite. Every step that led to the current predicament has been deeply political. The financial meltdown revealed the fundamental immorality of neoliberalism. Ordinary people are daily subjected to the discipline of the market, losing homes, jobs and hope while banks and bankers had their enormous losses taken over by the state (some €28bn in the Greek case). This is socialism for the rich, capitalism for the rest. Or to paraphrase Bertolt Brecht, you go to prison if you fiddle your benefits but you get immense bonuses if you bankrupt a bank.
Collective guilt and punishment for the misdeeds of the nation’s rulers is morally problematic. The attacks on Greeks for laziness, corruption and inefficiency forget that the debt was amassed by successive Pasok and New Democracy governments over 30 years. A large part of public spending was used by the alternating political elites to gain party advantage. Election campaigns were fought by opposition parties on a promise to introduce public morality, rationalise public finances or re-found the state. Once the elections were over the new government would forget its promises and go back to the old ways, dispensing largesse to its followers. The majority of the population has not benefited from the windfall. These low-earning people are now asked to bear the brunt of the correction. The two government parties blame each other for the debt, as if there is a single member of the political elite who is not to blame. Economic and moral bankruptcy seem to be fellow-travellers.
Across Europe, the 3% deficit ceiling (broken by every eurozone state), the stability plan, and the speculation of the markets are political supports of the neoliberal model. The downgrading of Greece by credit-rating companies and market speculation is based on traders’ ideological and self-fulfilling prophesies about the government’s trustworthiness and the risk of default.
These market attacks are part of the wider arrangements of post-industrial capitalism. Profit is no longer based predominantly on production but on consumption and debt. This applies as much to individuals (neoliberalism treats us as consumers who must borrow and spend ceaselessly) as to states. Capital accumulation through extraction of interest and rent must be externally controlled, since the loan contract, unlike its labour counterpart, does not automatically create the conditions for its reproduction or enforcement. This is the case with the Greek spreads, which continued rising even after Papandreou called in the IMF. The market pressure is a way to oblige debtors to accept the most extreme neoliberal recipes or go bust. “Debtors beware” is the message. “Destroy the welfare state or become the next Greece.” It is not that different from protection rackets: if the shopkeeper challenges the terms, he is beaten up.
The IMF/EU measures start the final assault on the European welfare state, suiting the neoliberal ideology of privatisation, deregulation and transfer of capital and power from the public to the private.
The way beyond the public/private divide is to return to the idea of the “common”. The postwar European social contract was based on social justice and solidarity. The common good or commonwealth is conditioned by the deep antagonism between the people (who are asked to bear the burden of economic restructuring) and the economic and political elites (who created the problem and profited from it). But at this time of peril, the common interest of the people in protecting the social contract is Ariadne’s thread transcending class, sector and regional divisions. This pool of common sentiment can be mobilised for resistance against deeply unjust measures.
Various initiatives would help in this direction. A committee of inquiry with Greek and foreign economists and social scientists, free from the two-party oligarchy, should be established to examine why the debt spiralled and how the money was spent. New ways out of the debt crisis should be explored. Politicians should be called to account for their partisan decisions and broken promises. A wide patriotic front beyond current political loyalties should be developed to defend the social contract. It should expose the lack of legitimacy in the measures imposed by a government that campaigned on a strong anti-neoliberal manifesto only six moths ago. It should ask for an Iceland-type referendum on the IMF involvement. It should aim at Greece’s Nick Clegg moment.
For the picture is not all bleak. Clegg has shown that cosy and arrogant two-party systems are not as safe as they believe. In last week’s election, the Hungarian Socialists, who as the government brought the IMF into Hungary in 2008, were reduced from 43% of the vote in 2006 to a rump. Many Pasok trade unionists and voters are already joining the left in strikes and protests in Greece. Perhaps the closest parallel to the current crisis is not the 1930s crash but the collapse of the Italian political system in the 1990s. Luckily no Berlusconi lurks in the sidelines.
Economic commentators fear that the Greek malaise is part of a wider attack on the euro. Now that the measures are proving worse than the disease, their imposition may mark the return of radical politics. The defence of the common good and democracy, a proud Hellenic tradition, shows the political way out not just for Greece but for the whole of Europe. As Eyjafjallajökull reminded us, the eruption of life-changing events is still a historical possibility.
Costas Douzinas is a Professor of Law at Birkbeck College and the Director of the Birkbeck Institute for the Humanities