SYRIZA crash-lands against the euro

Alexis Tsipras addresses the Greek people after the elections, January, 2015. Demotix/Nikolaus Georgiou. All rights reserved.A man goes to the tailor to pick up
a custom-made suit. He puts it on, and notices that the sleeves are too long.
When he complains, the tailor says: ‘just bend your arms a little’. ‘But the
collar is too low!’ ‘Just raise your back a little’ says the tailor. ‘But the
trousers are too long!’ ‘Just stand on your toes’ says the tailor. The man goes
out into the street and can barely walk in his new suit. Everyone says: ‘poor
guy’. ‘Yes, but great suit!’

This joke represents the structure
of entanglement of working class Greeks with the euro over the past five years.
Unemployment presently stands at 27 per cent.
Millions have been plunged into poverty and homelessness. The country has seen
the biggest increase in inequality and xenophobia in Europe since the 1930s.
But hey, at least we’ve got the euro!

The referendum
announced by the Greek government on Sunday is its last-ditch attempt to get
some leverage against the latest round of blackmail
by the troika of the European Commission, the ECB and the IMF. Whatever the
outcome of the referendum, however, the chances that SYRIZA will be able to
orchestrate an economic recovery with Greece in the Eurozone are still
virtually nought. Let me explain.

During last week’s negotiations,
the Greek government and its creditors failed
to reach agreement on a new bail-out. Part of the reason was IMF’s insistence
that the revenue-raising measures proposed by the government, amounting to some
€8bn, involved too many taxes on the rich.
They were therefore likely to choke off the chances of economic recovery. The
IMF effectively said: if you don’t cut taxes on the rich—while cutting back on
everything else—there isn’t going to be more private investment. For greater investment requires greater net
profit, and greater net profit only accrues when taxes on the rich are low.
Such is the inexorable logic of capital accumulation in the neoliberal era.

The irony of all this is that, even
if SYRIZA reaches an agreement to cut a ‘mere’ 8bn from an already depressed
economy, it will, eventually, have to follow IMF advice. For how else will it get
the Greek economy out of depression while committed to the euro? How, in other
words, is Greece to reduce its massive reserve army of the unemployed without
cutting taxes for the rich, thus raising profits and eventually investment in
the private sector?

The standard Keynesian response to
this question is: by raising public
spending and employment. But this avenue is not open to straitjacketed Greece.
If the country had its own currency, then it could print its way out of the
recession. But this cannot be done while it is dependent on the ECB for liquidity
and interest rate policy. On the one hand, the ECB’s liquidity programmes,
disseminated as they are through the national central banks—and governed by a
colonial ideology worthy of Montague
Norman—offer a pittance compared to the country’s spending needs. On the
other hand, Greece cannot engage in deficit spending due to prior Eurozone
commitments, including the Growth and Stability Pact. For these reasons, Greece
cannot fund a recovery by resorting to deficit spending or the printing press.
It follows that even in SYRIZA’s best case scenario—where Greece stays in the
euro and the government gets the deal it wants—it cannot both reduce
unemployment and tax the rich. For Greece there is no such thing as a
labour-friendly recovery: the Eurozone is a one-way street to labour
emasculation. The implication is that there is no way for SYRIZA to implement
its programme,
or even rudiments thereof.

These important but neglected facts
have ramifications for Greece’s immediate future. If the Greek people vote ‘no’
on Sunday, then the Greek government might be able to extract some minor concessions
from its creditors and reach a new bailout agreement within the week—that is,
assuming that the ECB does not force a Grexit. It will
then have to enforce further austerity in order to revive the economy. This is
likely to destroy SYRIZA electorally, by bringing about its pasokification
and eventual demise. This is the message of the previous paragraph: no Grexit,
no labour-friendly recovery.

If, on the other hand, the Greek people vote
‘yes’, then the plot thickens further. Say the government does not declare an
election. Then it will have to enforce the same kind of austerity that
has decimated the country over the past five years. The Greek Left will be all
but eradicated for a generation. Say the government does declare an election.
It will then have to give in to the creditors’ threats until such time as the
election takes place—or worse, enforce austerity on the event of its
reelection! The opposition from the Right will naturally blame austerity on
SYRIZA’s ‘capitulation’, on its negotiating ‘ineptitude’, and similar gimmicks.
Whatever happens, Tsipras’ room for manoeuvre is completely circumscribed by
the euro; and you can’t really conduct an orchestra in a straitjacket.