50 Years of Austerity

"--Should I pay the rent and not pay  the electricity, or should I pay the loan and not eat?

-Jack, what are you doing?

-I'm negotiating."

by Frank Brenner

In popular consciousness capitalism is reality and socialism is utopia. Or, to put this another way, inertia always works in favor of preserving the system as it is and resists radical change. But in a crisis, some truths like this get overturned. And nowhere on the planet is capitalism more in crisis than in Greece.

Just this week Greece didn't make a scheduled debt payment to the International Monetary Fund, and now the countdown is on to the end of the month, when Greece may well officially go into default on its debts. If this happens, the country will likely have to exit the Eurozone, setting off a chain reaction which could wreak havoc not just on Greece but on Europe as a whole. The euro as a currency could quickly unravel and other countries in economic trouble – Spain, Italy, Ireland, Portugal, possibly even France – could be pushed over the brink.

The left reformist government of Syriza, elected on an anti-austerity platform in January, assumed the European elites would be willing to give Greece some debt relief to avoid this catastrophe scenario playing out. It wasn't an unreasonable assumption, but these aren't reasonable times. To which one should add: Syriza would never have been elected in the first place if these were reasonable times.

As a number of commentators (Tariq Ali, for example) have pointed out, what passes for the political mainstream in Western countries has now become the 'extreme center', so that what looks like politics as usual has become radically reactionary. The position of the German government on Greece is extreme center politics in operation. Because of its intransigence – not seen from Germany since the Nazi era – the EU has refused to budge, even to the extent of granting Greece a few token concessions. This hard line has set off alarm bells internationally, with the US Treasury Secretary warning about the destructive potential of a European “accident” and NY Times columnist Paul Krugman talking about “that 1914 feeling”, drawing a parallel between the current crisis and how Europe 'sleepwalked' its way into the First World War.

But the plain truth is that whatever happens on June 30 – default or some patched up deal at the last minute – Greece will still be in a shithole. The country's debt is 180 percent of its GDP. That is a staggering number, far beyond the realm of the reasonable. You could think of it this way: if everyone in Greece worked for nearly two years but CONSUMED NOTHING, that would repay the debt. Of course they'd all be dead because they couldn't buy any food. It's almost as if we're in Alice in Wonderland territory, except the story line is much starker and far less entertaining.

Of course that isn't quite what the European elites are demanding of Greece. No, all they want the Greek government to do is generate a 2% or 3% annual surplus for the foreseeable future, with that surplus being skimmed off to repay the banks. Which sounds reasonable, except it would be the kind of reason only Alice's Queen of Hearts would appreciate.

It means the government will be stripped of all its disposable income: it will have nothing to reinvest in a country that has already endured a depression for six years and where official unemployment sits at 25%. It will mean, in other words, ongoing austerity for the foreseeable future. How long is that future? Here is an answer from a recent comment by the BBC's economics editor Robert Peston: “It would take around half a century for Greek public sector debt to fall to a level regarded as sustainable.” Then Peston adds: “A half century of austerity? In what modern democracy would that be regarded as a realistic option?”

It is wildly – brutally - unrealistic but it is also the ONLY OPTION ON THE TABLE. Which brings me back to my initial point. The idea that Greece can continue to be BOTH a capitalist country and a “modern democracy” has long since become an exercise in wishful thinking.

Now wishful thinking isn't always bad. The wishful thinking of the left can play a powerful role in arousing the political consciousness of the oppressed and sustaining their hope for freedom. But wishful thinking can also be delusional – being in denial while on the brink of falling off a cliff. This is the kind of wishful thinking that afflicts the major political parties in Greece – including the governing Syriza. The only exception is the fascist Golden Dawn, whose position amounts to this: if capitalism and democracy cannot both be sustained, so much the worse for democracy.

For anyone in Greece who isn't a fascist the only REALISTIC way out of this crisis is socialism. Revolutions aren't magic: a government committed to socialist policies wouldn't make everything better overnight. Nor do revolutions come with crystal balls, but this much can be said with scientific precision: socialism would NOT condemn Greeks to fifty years of blood, sweat and tears. The socialist program amounts to this: less pain, much more gain. That can be a powerful message in a desperate situation.