Greece and the world capitalist crisis

Savas Michael-Matsas

A Greek tragedy? “All the world’s a stage”

After the October 4, 2009 parliamentary elections in Greece, it was publicly admitted the farce of the “creative accounting of the Greek statistics” and revealed the fiscal tragedy of the country crashed by the twin unsustainable burden of debt and deficit. The impeding catastrophe was described by Giorgos Papakonstantinou, the finance minister of the newly elected Papandreou government, by the metaphor of the legendary “Titanic” sailing in a fatal collision course towards the iceberg.

But is the ship in that metaphor, representing Greece – or, rather, the entire system of globalized capitalism? Or, looking from another vantage point, isn’t Greece just the most visible part of the hidden gigantic iceberg responsible for a generalized shipwreck of capitalism sinking now in an ocean of debts?

The implosion of the US sub-prime mortgage market triggered, in summer 2007, the eruption of an unprecedented world crisis and credit crunch that took dramatic dimensions with the bankruptcy of Lehman Brothers in September 2008, the meltdown of the entire global financial system, and the plunging of the world economy into a global Great Recession. It followed a State intervention in all the main capitalist countries, in 2008-2009, to halt the fall into the abyss. But, in turn, the ballooning of the State deficits and sovereign debts opened a new phase in the deepening crisis. At the end of 2009, Dubai was the first symptom of a globally propagated disease. Shortly it has been followed and superseded coming into the center in the world stage by what it has been called the “Greek tragedy”, the impending default of over-indebted Greece.

Commenting on the case of Greece, board members at large western banks rightly predicted that “after two years of worrying about mortgage and corporate risk, sovereign risk is going to be the big debate for 2010- both for banks, and the wider investment community”.[1]

Sovereign debt was normally considered as risk –free. “It is the touchstone by which other riskier financial assets are priced”, David Roche and Bob McKee write. “A repricing of sovereign debt as dangerous debt would be an earthquake for financial markets. It would blow a hole in the balance sheets of previously safe financial institutions. That would be a new chapter in the credit crisis.”[2] This new chapter is a logical progression in the current world crisis, according to these authors, and it has been already opened. The manifestation of a series of sovereign debt defaults as “black holes” in the space of globalized capitalist relations is threatening the entire system.

Sovereign debt in Organization for Economic Co-operation and Development (OECD) countries has, after 2007, exploded by nearly 70 per cent from 44 per cent of GDP in 2006 to 71 per cent.[3] The critical point for sovereign debt, according to studies by the IMF and by Reinhart and Rogoff, is in the area of 60-90 per cent of GDP. Sovereign debt in the US, the UK, and the Euro-zone has already risen far beyond, and in Japan is more than twice that level.

Dominique Strauss-Kahn, the head of the IMF, has warned that public debt in the advanced economies will rise to about 110 per cent of the GDP in 2014. He called that “a tremendous challenge” and he predicted that “for the next decade or two, cyclical upswings should be used to reduce public debt than finance expenditures or tax cuts”. [4]

The Greek case has to be situated in this global, peculiar and complex framework of a world capitalist bankruptcy. “Greece”, Mohamed El-Erian, chief executive of Pimco, writes, “is part of a wider, and historically unfamiliar phenomenon-that of a simultaneous and large disruption to the balance sheet of many industrial countries. Tighten your seat belts.”[5]

Warnings for the global implications of a fiscal tragedy not to be limited to Greece nor to Southern Europe are issued by the neo-liberal Niall Ferguson as well, who sees a Greek crisis coming to America itself: “It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies […] it is a fiscal crisis of the western world.”[6]

For the unfolding Greek tragedy “All the world’s a stage”. And all the players, all conflicting social forces, classes, and States are acting and clashing in “this wide and universal theatre”[7].

Capitalist globalization in crisis

The danger of a default of a Greek economy representing only 3 per cent of the European GDP never could reach such importance without a danger of a destructive “contagion” not solely to the peripheral countries of the Eurozone but to the hard core of the European Union itself, and even beyond it, affecting all the lenders of Greece, first of all the French, Swiss, and German banks. [8]

The centrality of the “Greek question” would be inconceivable without the high degree of interconnectedness of all parts of the world economy reached by the capitalist globalization of the last three decades, including the contradictory process of European capitalist integration, advanced particularly by the Maastricht Treaty after the demise of the Soviet Union and the collapse of the so-called “actually existing Socialism” in Eastern Europe.

Globalization and European economic and monetary unification under capitalist conditions do not abolish unevenness of social economic development in different countries; on the contrary exacerbate it, strengthening all centrifugal forces. With the post 2007 implosion of global finance capital, unbalances and contradictions emerged violently not between an “austere”, “disciplined” Germany accumulating surpluses at the center and a “profligate” peripheral Greece ridden by deficits, debts and corruption, nor solely between the strong European North and the weak Mediterranean South of the arrogantly denigrated “PIGS”                              (Portugal, Italy, Greece, Spain) but in the German-French central axis itself of the Maastricht project and of the European Monetary Union. 20 years after its re-unification, and following an austerity straitjacket imposed for decades to the German workers, thanks to Schröder and Social Democratic bureaucracy, industrial Germany is a major export country, second to China globally, confronted to a declining, des-industrializing as most other European countries, parasitic French capitalism. The specter of a default in a country-member of the Eurozone like Greece threatening a devastating contagion in other EU countries put the first major danger to the existence of the EMU, and a deadly challenge to the entire European imperialist project of integration of the Continent.

Commenting on the rising sharp antagonisms, tensions, and hollow compromises among the major countries of the EU core manifested before, during and after the Summit on March 25, 2010 in relation to a “rescue package”, a bail-out urgently needed to prevent an official declaration of a Greek default, George Soros rightly warned that the EU is “at the brink of disintegration”.[9]

This process has not stopped by the shaky and vague compromise in the March 25, 2010 EU Summit for a “rescue mechanism” including the crucial role of the IMF to avoid a Greek default – a decision which do not halted but exacerbated the crisis raising  the spreads of the Greek State bonds  and the CDS’ to astronomic heights . Even the attempted concretization of that vague “mechanism” by a EU promise of 30 billion euros as aid of last resort at the usurer’s rate of 5 per cent interest, in the tele-conference of the EU finance ministers on April 11, 2010 could not solve the solvency problem of the Greek economy nor to overcome the historic impasse facing the EU. On April 15, the Greek government started the formal procedures to activate the process of a bail-out, which involves new draconian austerity” measures demanded by the IMF[10].

The official call to the US-led IMF to participate in a rescue operation in Europe involving this time not Latvia or Hungary but a serious crisis internal to the Eurozone itself demonstrates not simply the narrow mind of Chancellor Angela Merkel but the impotence of European imperialism to challenge the world hegemony of its transatlantic antagonist, US imperialism, even if the later is in advanced decline and crisis.

The huge obstacle for a bail out of a Eurozone member like Greece reflects the absence of a common fiscal policy, which is possible only through a political unification. The historical verdict is clear: throughout a century, the European ruling classes failed to unify the Continent under their iron heel despite the barbarism of two world wars, a Cold War and more than 50 years of efforts to establish a common economic and monetary space. The historical task of European unification can be fulfilled only by the European working class by revolutionary means in a United Socialist States of Europe.

It is the crisis of finance capital globalization that erupted in 2007, a global crisis having as its center the United States that brought forward all the internal contradictions and weaknesses of European capitalism.

At the same time, it demonstrated the failure of three decades of finance capital global expansion and of the so-called neo-liberal strategy to give a sustainable solution to the tremendous crisis of overproduction of capital produced by the “Thirty Glorious Years” of post war capitalist development in the Keynesian framework of the 1944 Bretton Woods Agreement. It is this crisis of capital over-accumulation in the productive sphere, and the law of the falling rate of profit, the “Nemesis” of capital, the driving force both for the expansion of finance capital as well as for its current implosion.[11]

Keynesianism and anti-Keynesian neo-liberalism, the two economic strategies developed by advanced imperialist capitalism to confront its systemic contradictions and historic decline as a mode of production, have failed. The crisis of overproduction of capital prevents a return to the Keynesianism of the post war period because it will intensify the falling rate of profit and it will fuel inflationary pressure. From the other side, the globalization of finance capital and its policy, “neo-liberalism”, led to the worst crisis in the history of capitalism; its uncontrolled continuation of bubble creation will produce more uncontrolled catastrophes of fictitious capital deepening the world depression. This strategic impasse opens a protracted period of convulsions and disruption of all social and international relations where the questions both of imperialist wars and civil wars, all kinds of revolts, social and anti-imperialist revolutions are on the agenda.

The nature of our epoch of capitalist decline as an epoch of transition to world communism comes forward negating all the bourgeois illusions for an “end of communism” prematurely celebrated in 1989-91. The diagnosis and prognosis made by Karl Marx in the Grundrisse and in Capital are historically vindicated. The “universalizing tendency of capital”, developed to its extremes in the epoch of imperialism, particularly in the last decades of finance capital globalization, drives it to its dissolution, “ finally to its violent overthrow” [12] and transition to a new mode of production in a classless society : “this[universalizing] tendency- which capital possesses, but which at the same time, since capital is a limited form of production, contradicts it and hence drive it towards dissolution-distinguishes capital from earlier modes of production, and at the same time contains this element, that capital is posited as a  mere point of transition ”[13].

The current world systemic crisis not solely accelerates all processes of dissolution (mass destruction of surplus capital, mass chronic unemployment and misery); it drives the transition as well beyond capital.

The Greek December: a message from the future

Prominent leaders of international capitalist institutions or of leading EU countries, like IMF chief Dominique Strauss-Kahn and French President Nicolas Sarkozy rightly characterized the popular revolt led by the youth in Greece in December 2008[14], following the murder by police of a 15 years old schoolboy, as the first political explosion of the current world economic crisis.[15]

The December revolt came indeed in the aftermath of the collapse of the Lehman Brothers, the meltdown of the international financial system and the panic produced by it. All the class conscious sections of the capitalists all over the world clearly saw in the events in Greece a message from the near future of world capitalism for social and political upheavals to come.

Comparisons were and still are made between the Greek revolt in December 2008 and the Argentinazo, the mass revolt in Argentina in December 2001 following the default of that Latin-American country. There are obviously similarities between the two popular revolts but more instructive are the differences.

In Argentina, the default preceded the revolt; from the other side, the Greek revolt was the first manifestation of a deep, on-going crisis, which will bring the over0-indebtedcountry in 2009-10 in a dramatic situation of social economic catastrophe and default.

Differences do not stop here. Argentina’s default in 2001, the bankruptcy of a country considered until then as the “success story” of neo-liberalism and “the jewel in the crown” of IMF, was indeed, in a sense, an announcement that the period of finance globalization and neo-liberalism has exhausted its dynamic- a fact that dominates reality after the 2007-2008 meltdown of the world financial system. But Argentina’s default had come at the completion of a full circle and in the opening of a new one.

It was the culmination of an international financial hurricane that started with the crash in Asia in 1997, and spiraled internationally, with Russia’s default in 1998, the Long Term Capital Management collapse, the bursting of the bubble of the US “dot.com” economy and recession in 2000-2001, the Enron debacle, the crises in Turkey and Brazil.

The Argentine default triggered the popular revolt. In Greece, the revolt foreshadowed the default to come.  But the global economic environment has completely and dramatically changed between the two revolts.

Immediately after the Argentinazo, more precisely during the period 2002-2007, a weak world economic recovery followed. The financial maelstrom was contained by means applied also in previous major shocks and crashes during the decades of finance globalization (for ex. after the 1987 international crash). Interest rates everywhere, following the leadership of the US Federal Reserve, were kept extremely low providing cheap access to liquidity lifelines. Finance capital turned massively to all kinds of exotic financial instruments-later to be proved to be “toxic”, explosive mines hidden everywhere in the globalized financial system. Derivatives permitted an extension of credit on a colossal scale as banks could “securitize” their loans.  Combined to this world “bubble” economy, growth of military expenditures linked to the imperialist “war on terror”, particularly the Afghanistan and Iraq wars, contributed to a short-lived recovery on a world scale.[16]

The backbone of that weak recovery of the world capitalist economy was the US-China axis. The huge deficits of the strongest and more over-indebted capitalist power in the world were financed thanks to the enormous reserves that the export-led hybrid economy of China accumulates, after its turn to capitalist restoration. It could not be more evocative image of the decline and parasitism of an economy representing the highest point of world capitalist development…

Professor Robert Skidelsky summarizes the web of Sino-American relations as follows: “Instead of having to borrow from the American public to finance its fiscal deficit, the US government could borrow Chinese savings by issuing Treasury bonds that were bought by the Chinese. Therefore federal deficits did not raise the cost of domestic borrowing, which they would have done had the government had to borrow American savings rather than selling debt to China. […] With Chinese savings available, the US government could run a deficit without crowding out private spending. This allowed the Fed to establish a  much lower funds rate- the rate at which banks borrow from the Fed and one another- than it would otherwise have been able to do, helped in this by the downward pressure on prices exerted by the import of cheap Chinese goods produced by cheap Chinese labor. Cheap money, in turn, enabled banks to expand their deposits and their loans to customers more than they could otherwise do. In short, it was via their impact on the financing of the federal deficit that Chinese savings made it possible for the US consumer to go on a spending spree. ” […] Capital over-accumulation in the productive sphere, and the fall of profitability, oriented the spending into speculative activities. Skidelsky continues: “The lack of opportunities for profitable investment determined the pattern of American spending. Americans borrowed not to invest in new machines but to speculate in houses and mergers and acquisitions. The resulting growth in paper wealth triggered a consumption boom. The situation was unsustainable because no new resources were being created with which to pay back either domestic or foreign borrowing”[17]. The immense pyramid of paper wealth could not but to collapse, starting from the sub-prime mortgage market in 2007 and leading to the world financial meltdown and recession.

It is this entirely new world situation, recognized even by the capitalists as the worst in the history of their system that produced the Greek December and initiated a qualitatively new period of social conflicts and political explosions not solely in Greece but also in Europe and internationally. There cannot be a return to the status quo ante. The massive State intervention in 2008-2009 was not limited to monetary policies, combining extremely low interest rates with enormous rescue packages, superseding in scale everything experienced in the past, after the 1987 or the 1997 international crashes. The fact that this kind of unprecedented intervention led at the end of 2009 to a non-sustainable gigantic public debt burden all over the capitalist world indicates the inadequacy of the old means to solve the current historical problem of world capitalism.

Greece, thus, is not an exception but a microcosm condensing in a peculiar, original way the main characteristics of the world process.

Why Greece?

Greece is considered as the weakest link in the international chain of the EU member states, the weakest even amidst the despised by the European center “PIGS” of the European periphery. The empirical data come to corroborate this observation: the combination of a staggering deficit of 12.7 per cent of the GDP for 2009 and of an enormous public debt of 113 per cent of GDP (about 300 billion euros) to be raised to 120.8 per cent in 2010[18], according to the forecast of Bank of Greece, make Greece more vulnerable than any other country of the European Union.

But empirical comparisons are not sufficient and do not reveal by themselves the structural-historical reasons that made Greece the “privileged” locus of the first political explosion of the current world economic crisis and of an impeding default threatening the entire Eurozone.

The accession to the European  capitalist integration process, and above all the integration ton the European Monetary Union in 1999 produced the appearance, accepted by the global  markets, that Greece made its exit from the ranks of “emerging countries” to join the “advanced economies”, in OECD language. Becoming a pole of attraction of surplus financial capital after the 1997 Asian Crash because of the creditworthiness given by its integration to the Eurozone, the Greek bourgeoisie attempted to realize its old ambition to transform itself into the regional hegemonic power by investing massively and controlling the banking system of the Balkans, and extending its economic influence in this vital geopolitical area, in the soft underbelly of Russia and in the front door of the Middle East.

Ten years after the introduction of the euro, the EMU and the EU are confronted now with their worst crisis and the danger of dissolution while Greece is under the shadow of a State bankruptcy. The centrifugal forces of capitalist integration intensified combined development but the centripetal forces of its historically established inner contradictions deepened uneven development as well. The moment of truth came with the crisis: misleading appearances are shattered when essential contradictions explode.

“Greek capitalism was born already old”, as Pantelis Pouliopoulos, the founder of Greek Trotskyism rightly has written.[19] The belated historical development of bourgeois Greece, with absence of a strong industrial base and an over-extended, bureaucratic public sector supervising and giving fiscal and financial support to local capital, determined a debt-led growth of the economy that made it dependent from and extremely sensitive to the flows of foreign capital and of world trends in capitalism, particularly in its imperialist stage.

Foreign loans and inroads by the international financial capital, to which   Greek capital linked its own accumulation and survival, played and still play a determining role in the course of the economic and political history of modern Greece.[20]

In one sense, the history of Greek capitalism is the history of its bankruptcies.  These bankruptcies, in turn, coincide with the crisis moments and Great Depressions in the history of world capitalism: the Great Depression of 1873-1896 led to the State bankruptcy of Greece in 1893; the 1929 Crash and the Great Depression of the 1930s led to the 1932 Greek default; the current crisis at the end of the fist decade of the 21^st century put again on the agenda a third State bankruptcy of the country. Each of these bankruptcies is connected with major political upheavals and new chapters in the history of class struggle.

To understand the nature of the debt crisis behind each of these State bankruptcies it is needed to situate it in the proper historical framework as it’s is shaped by social struggle.

The historical background of the current impeding default involves the development of the class struggle, after the betrayed by Stalinism and defeated by imperialism Greek revolution of 1941-49, including, as a major milestone, the fall of the CIA imposed anti-communist military dictatorship of 1967-74 and its implications. The youth uprising in Polytechnic University in Athens in 1973, precipitating a crisis that the military junta could not, finally, survive, was, as a matter of fact, the last battle of the previous civil war putting an end to the post-civil war authoritarian regimes.

The inglorious collapse of the dictatorship in 1974 revealed a vacuum of power, which together with the political radicalization of the people produced the greatest threat to the power of the ruling class from the time of the civil war. To defuse the revolutionary potential, channeling it into a revived bourgeois parliamentary system, it was necessary to introduce political and economic concessions to the workers, peasant, and urban petty bourgeois strata.

At the same years when  the post war Keynesian edifice  was dismantled all over the capitalist world  after the collapse of the Bretton Woods Settlement in 1971( the collapse of the Greek military dictatorship itself was part of the international upheaval and revolutionary tide engulfing the entire planet from the late ’60s to the mid ’70s), in Greece, a reverse process took place:  immediately after the fall of the junta and particularly  after the 1981 ascent to power of the populist PASOK of Andreas Papandreou, were introduced Keynesian type of measures                             (nationalizations, growth of the State sector enterprises, raise of the popular income etc.) in order to check the re-affirmed militancy of the working class and diffuse a potentially revolutionary political crisis.

These measures were taken on the basis of a growing foreign debt. Greece’s over-indebtedness is due not solely to the corruption of its ruling class and of its politicians but also to their deep fear for the post-1974 popular pressures from below.

Greece was not immune to its global environment sinking into a crisis of overproduction of capital. The industrialization period of 1963-1973, due in a great measure to the penetration of multinational companies taking advantage of the absence of trade union activity under the military regime, has been halted and a so-called industrial “investors strike” followed. Industrial investment remained weak. Traditionally competitiveness of Greek products was based on high tariff protection and low relative labor costs.  Both factors were eroded from the mid-seventies; labor costs increased and tariff protection has been phased out after the 1981 entry in the EEC. “Furthermore”, Takis Fotopoulos remarks “the erosion of the Greek comparative advantage in terms of labor costs and the failure of free-market economic restructuring to change the export pattern implied a very weak response of exports to the continuous expansion of imports”[21].

The traditional agricultural sector based on small land property, despite the inflow of European subsidies, was drastically shrinking.  The agricultural population dramatically declined from 31 per cent of the active population in 1981 to 13 per cent in 2006.[22]

As the productive tissue of the economy both in industry and agriculture was decomposing, the declining occupation found as a relative way out only to the over-grown services and public sectors. Clientele networks tied to corrupt political personnel of the parliamentary system and a State bureaucracy both intimately connected with foreign and local capital proliferated precipitating the decay of bourgeois parliamentary democracy restored in 1974.

Social inequalities in income distribution supersede by far the EU average, with the 20 per cent of the poorest receiving less than 7 per cent of income, while 20 per cent of the richest receive almost 42 per cent.[23]

From the 1990s chronic unemployment was combined with the introduction of “flexibility” in labor relations, hitting particularly the younger generations. On the eve of the 2008 December youth revolt a quarter of the unemployed was youth, and one in two unemployed youth has a university degree.

Cheap labor by over-exploitation of foreign immigrants working under the most barbaric conditions became the basis for the preparations of Greek capitalism to join the EMU, as Yannis Papantoniou, then finance minister in the neo-liberal PASOK government of Costas Simitis, had cynically boasted.

The structural weaknesses of the Greek capitalist social economic formation, integrated now as a metropolitan knot in the plexus of globalized capitalist relations, were manifesting themselves into a growing deficit to be confronted by increasing foreign lending, and through the growing payments for debt servicing to a vicious circle of accumulation of debt.

Since the 1980s both the public debt and the external debt have increased three times, and according to the Deutsche Bank, the external debt today has reached the 150 per cent of GDP mark.[24]

Finance globalization with the protracted over-extension of credit sustained the growing mountain of public and private debt –until its inescapable implosion after 2007.

Wither Greece?

From early 2010, a de facto bankrupt Greece has been reduced into an EU protectorate[25] with its fiscal situation and economic policies put under the official “surveillance” of the EU Commission, the European Central Bank and the IMF. The government abdicates national economic sovereignty, and the country is reduced to the same quasi-semi-colonial position that it faced more a hundred years ago, in 1897, when, after the default and a disastrous Greek-Turkish war, an “International Economic Control” (DOE) of the foreign banks was imposed on Greece.

The introduction by the “Socialist” Papandreou government on March 3, 2010 of a misnamed “Stability and Growth Program” of drastic cuts of public social expenditures, wages and pensions, agreed with the EU to accomplish the impossible mission to cut the deficit from near 13 per cent to 3 per cent of GDP. This was solely the prelude of the drama, the entrance to “Wolfgang Schäuble’s torture chamber”, as aptly was called by Gideon Rachman referring to the name of the German finance minister.[26] This austerity program was followed by an anti-popular tax “reform” benefiting only the richest sections as well as money laundering of all kinds of Mafiosi and crooks, a new neo-liberal counter-reform in Education, and at the end of April 2010 by a new legislation smashing all pension rights.

The EU led by Merkel’s –Schäuble’s Germany with the assistance and “technical know how“of the IMF are “turning the screw” on the Greek working class and popular masses. It is an attempt not only to face the danger of  Greece’s State bankruptcy and its implications for the Eurozone but also a barbaric social “experiment” using the Greek people as a guinea pig, a frightening example for the entire European working class.

The call to the IMF ands its active involvement in Greece means further “turnings of the screw”, new draconian cuts to impose the kind of IMF plans already applied, with disastrous results, in Hungary, Latvia and Romania. Dominique Strauss-Kahn prescribed a massive deflation of wages and prices for an indefinite period as a condition to a bail-out.

Apart the enormous social catastrophe and mass sufferings of the people, could this deflationary offensive against the workers provide any real solution to the systemic crisis both of Greece and of the Eurozone?

“A Greek bail-out at last but no real solution”, Wolfgang Münchau had remarked[27]. “As a member of a large monetary union Greece can improve its competitiveness only through relative disinflation against the eurozone average, which in effect means through deflation. But as the French economist Jacques Delpla has pointed out, this will invariably produce a debt-deflation dynamic in the Greek private sector of the kind described by the economist Irving Fischer during the 1930s […] the really treacherous aspect about the Greek crisis is that the country’s liquidity position is better than its solvency position. Insolvency is a gradual, invisible process. The negative effects of debt-deflation dynamics have not yet begun, but will become inevitable as the Greek public and private sectors go through a simultaneous debt reduction process”.[28]

The debt-deflation spiral will depress further the economy and depression will increase again the deficit needing to be covered by the accumulation of more debt.

Arguing about the inevitability of a Greek default, Münchau stresses: “It is hard enough to imagine how Greece can get out of a simultaneous debt and competitiveness crisis without falling into some vicious circle- debt deflation, for example or just extreme public hostility that will thwart the government’s reform efforts. But it is impossible, at last for me, to imagine a situation in which Greece can manage to extricate itself from appending catastrophe without some debt restructuring”[29].

It is noteworthy in this statement not solely the pessimistic, from a bourgeois standpoint, prediction of a debt-deflation vicious circle but also the fear for an “extreme public hostility”, in other words, an “extreme” workers’ resistance to a barbarism that is more than extreme!

Furthermore, it is not only Greece caught in this vicious circle but the Eurozone as a whole. The danger of contagion remains hovering, first of all, over Portugal (already pressurized by Brussels for a new “fiscal adjustment’), and Spain, the fourth largest economy in the Eurozone with an annual GDP of more than a trillion euros, and whose hypothetical bail-out cannot but explode the entire difficult and unstable compromise, up to now, within the Eurozone, between Germany and France.

Proposals are put forward for a way out for the EU from this vicious circle by the reformist European Left party and Synaspismos in Greece, a asking for a radical restructuring of the Stability Pact, and of the EMU, putting the ECB under the “democratic” (?) control of the European Parliament, asking from the ECB for cheap credit to countries on the brink of default, and form the EU amore re-distributive budget. Apart from revolutionary Marxists, Costas Lapavitsas and his research team have showed the futility of such wishful thinking for a “good euro”, for “a reformed EMU” in a ‘reformed EU’.[30] Leaving aside the tremendous political obstacles, these reforms are also economically utopian as they do not resolve but exacerbate the contradiction between the euro as a simultaneously international and national currency and the fiscal independence of the States-members of the Eurozone with final result the collapse of the EMU itself and the disintegration of the EU; last but not least, these reformist proposals are socially reactionary, misleading the workers’ movement into a blind alley, and tying its fate to the demands of a crumbling imperialist European Union of big capitalists .

It remains as an alternative solution, the exit from the Eurozone and from the EU. Lapavitsas makes the distinction between a “conservative” and a “progressive” exit, with the later necessarily connected with major transformations in the economy and society such as nationalizations of the banks, controls on capital outflows, nationalization of strategic sectors of the economy, a program of industrial revival, public works etc.

The terms of these measures are not clarified, and above all, the transformation of social economic relations seen by Lapavitsas et al. is separated form its central presupposition: a radical overthrow and transformation of existing class power relations in Greece, in Europe and internationally.

The Gordian knot of the debt and of debt servicing indeed has to be cut by class mass action, rejecting strangulation in the hands of the international usurers, of the EU/ECB and of the IMF policemen of finance capital. Exit from Schäuble’s torture chamber is a question of life or death.

A unilateral repudiation of the foreign debt to the international usurers, and a radical break from the EMU and the EU necessitate not solely a change in relations of distribution of social wealth but a radical break from the capitalist production relations, a re-organization of social relations on new, socialist bases; hence they raise the central question of a revolutionary confrontation with bourgeois rule and its State, the struggle for workers’ power,  and furthermore, the impulse to an international dynamics of extension these social revolutionary changes in Europe and world wide.

“Socialism in a single country” proved to be a tragedy that ended without a catharsis, ingloriously, at the hands of capitalist restoration. A repetition in today’s conditions of advanced interconnectedness of all parts of world economy, or reactionary nationalist dreams of autarky in “capitalism in a single country” could be only a short-lived tragicomedy.

The Greek tragedy –tragedy for the people, and a piñata of super-profits for financial predators- has as stage the entire world. The denouement will take place in this universal theater, where the Hubris of capital will be punished. The exit from the capitalist vicious circle of destruction cannot be but an exit from the system, a socialist revolution on an international scale, towards a new world to come, Communism without borders, bosses or bureaucrats. This is not the best alternative; it is the only solution.

April 15, 2010

[30] See C. Lapavitsas et al., Eurozone Crisis: Beggar Yourself and Thy neighbour, Studies of Research on Money and Finance (RMF), March 2010, www.researchonmoneyandfinance.org/media/reports/eurocrisis/fullreport.pdf