Greece, Syriza and Conspiracy Theory as Politics

I’ve attracted some anger from Twitter and Facebook followers for my scepticism over Syriza and the mess in Greece. This is an attempt to clarify why I believe the left has been misled by Syriza and the supposed anti-austerity movement, and become increasingly nationalistic in the process.

With yesterday’s referendum (supposedly) rejecting austerity, the long-running Greek tragedy seems to have come to a head. But the events also highlight two longer-running and more worrying tragedies: the seemingly unstoppable rise of European nationalism, and (regular readers will know this is a recurring interest of mine) the intellectual collapse of the political left.

Without some understanding of the economics behind what has happened to Greece, one is left with empty slogans, applied in a childlike fashion. Austerity bad, banks bad, people good, elite bad, Syriza good, Germany bad. Where the reality of the situation comprises a long string of corruption and errors, instead we’re presented with idiotic conspiracy theories: They want to bring down Greek democracy; They want to punish Greeks for electing Syriza. In terms that a 5 year old would appreciate, we have heroes and villains, goodies and baddies.

From the moment of the financial collapse, Greece has been a tricky one for the left to explain, as we tried to find a way to blame capitalism for the disaster. While the crashes in America, Ireland and Spain were largely due to market overreach and a frenzy of property speculation, Greece’s problem has always been the state. Before the financial crash even took place, Greek governments had run up eye-watering levels of debt, which had become freely available because of the decision to allow Greece to join the Euro – a decision that, in hindsight, pretty much everybody accepts was a mistake.

Now the left attempts to blame shadowy ‘neo-liberal’ forces for the creation of the debt: ‘the banks’, ‘the elite’ or ‘the establishment’, implying that ordinary Greeks did not benefit from the spending spree. But ordinary Greeks did benefit, and once the money taps had switched on, they insisted they stayed on. For any political party to attempt to end the fiesta would have been political suicide. The money was spent on creating public sector jobs with little purpose other than to spread wealth downwards, on early retirement and on generous pensions. Furthermore, many ordinary Greeks decided that paying tax was tiresome, so didn’t bother.

Having joined  the Euro, Greece had become a third-world economy pretending to be a modern, European one. Like a teenager winning the lottery, the outcome was never going to be pretty.

None of this was ever secret. Economic commentators would express amazement at the way southern European countries happily trampled the Euro rulebook, and some predicted eventual disaster. So the financial crash came, and as Warren Buffett amusingly told us, when the tide goes out, you find out who is swimming naked.

And so the immense bailouts began. Vast amounts of money were pumped into Greece, and enormous debts were forgiven. So it’s puzzling today that the left should be whining about the need for ‘solidarity’, or the need for something like the Marshall Plan that rebuilt Germany after WWII. Here was solidarity on an unprecedented scale. Taxpayers from rich countries pumping money into a poorer country to keep it from the brink of collapse.

Of course, this money was injected out of self-interest; but then, so was the Marshall Plan, and so is aid to Africa. Collapsed economies threaten instability, and create economic ripples that weaken other economies. But still, the action demonstrated the inherent liberalism of the EU project: wealth was being redistributed from rich to poor on a huge scale.

And naturally, the bailouts and debt write-off came with strings. There would be no point trying to save Greece without its conversion to a more dynamic, self-supporting economy. Greece has almost no exports. Without a massive economic restructure, Greece would simply come back for more, over and over again. So the demands for austerity and economic reform did not come from a position of neo-liberal anti-democratic evil, as so many on the left have convinced themselves.

But still, the depth of the austerity measures was misguided, and prevented economic recovery. Although the left seem to think that they alone have been saying this, in fact many commentators have said this since the start of the bailouts. Given Greece’s economic infantilism, and the prospect that they would be permanently supporting the nation, nobody can blame the EU or IMF for distrusting the ability of the Greek government to take the nation off welfare, or trying to force its hand.

The accusations that the austerity was some kind of punishment, or an attempt at a coup, are beyond ludicrous. The very people demanding austerity were those who lent the country money, and most certainly wanted their money back. So the austerity, however misguided, was not the result of a conspiracy, but dual forces: a pigheaded approach from the lenders, coupled with Greek bureaucracy, corruption and ineptitude.

Ironically, the economic signs were cautiously beginning to improve in 2014. Then politics intervened to destabilise the situation again. Nobody can blame the Greek people for being angry or exhausted, and so the election of Syriza in January was unsurprising. Syriza came to power by peddling an attractive lie: Greece could both reject austerity and stay within the Euro. This could only be possible if the electorate of the Eurozone countries were prepared to subsidise the nation forever. And no electorate would ever do that. The governments of Germany and France had been subsiding Greece despite the will of their electorates, but would eventually be overrun by nationalistic forces if they continued to do so indefinitely.

Greece’s new leaders have behaved like overexcited children, and have burned bridges with the very bodies keeping Greece afloat. The (now ex) Finance Minister Varoufakis built a reputation for sweeping into meetings and giving lectures on economics to some of the world’s top economists. Then finally, with a new deal almost agreed, Greece’s government abrogated their responsibility to make hard decisions, and instead called a referendum.

Yesterday’s vote was unbelievably misguided at multiple levels. It asked ordinary people to answer an incredibly complex economic question; the proposals voted on were no longer on offer anyway; criminally, the effect of the one-week delay on the Greek economy was catastrophic, estimated to have cost Greece €1.2bn: money that the country hardly has to spare, and which must be added on to any new bailout package.

But most of all, the vote repeated Syriza’s core lie. The people were told they could reject austerity while remaining in the Euro. So of course, they did. But regardless of Prime Minister Tsipras’ reassurances, this was essentially a vote on Euro membership. Without understanding what they were doing, the majority of Greek people voted yesterday to leave the Euro. Tsipras, of course, now says he has a strengthened mandate to negotiate, but those days may be over. Syriza has blown the chance to negotiate for the past 5 months, choosing instead to call their lenders ‘Nazis’ and make revolutionary speeches – it’s highly unlikely they can do any better now.

Greece will probably have to leave the Euro, possibly beginning this week. It’s estimated that this will lead to a further 25% fall in the economy, on top of the 25% already lost since the crash. This will be catastrophic, and seriously threaten Greek democracy. Syriza and the European left will, of course, present this as further evidence of a neo-liberal coup; but it’s simply further evidence that the left has lost the plot.

The greatest tragedy of all this is that nationalism wins. The anti-austerity left suddenly finds itself in bed with an anti-EU right, from Greece’s Nazi Golden Dawn party to our very own UKIP. Nationalism is the order of the day in Europe, and we’ve learned twice over in the past century what that can mean. The right rails against the free movement of people; the left rails against the free movement of goods, services and capital. But these are two sides of the same coin.

While I no longer subscribe to many of the Marxist ideas I once did, I am still as strong an internationalist as ever. The embrace of nationalism across the political spectrum is sad indeed. Sadder still, that the left has mostly abandoned internationalism altogether, and that the libertarian right is now the strongest bulwark against nationalism.

This is the end-game of the collapse of the progressive left, which began 30 years ago. If there is a liberal, progressive force in European politics today, it is hard to identify it. Left and right increasingly morph into one, nationalistic blob. With Syriza about to be discredited by a total failure to deliver, it’s likely the far-right will rise again. Vote Syriza, get Golden Dawn.

8 thoughts on “Greece, Syriza and Conspiracy Theory as Politics”

  1. Unbelievably bad. Takes an (ex) Marxist I suppose through using a commodity money labour of theory value to completely not understand Fiat systems.They can reject austerity as the ECB has an infinite capacity to take on balance sheet expansion. Obviously you do not understand the expansionary austerity hypothesis (aka Ricardian equivalence) make no mistake it is political.
    Will not also overlook your moral argument they over borrowed as of course flip side is banks over lent. Moral hazard was always about bad lending not bad borrowing.

    If you really want a progressive left understanding I would suggest Kalecki’s Political Aspects of full employment and drop the Marxist stuff.

    1. What you have to tell us in this “expansion” of the state what those people employed by the state will do if the state doesn’t employ them?
      Do you think things like marketing, HR, advertising are any more productive than state jobs? Really seems like your argument is ironically state bad private sector good.

      1. Greeks “decided paying tax was tiresome (like that was a new thing in Greece…nope). Again a lack of understanding of fiat ops (your Marxist past no doubt) Governments even in the euro “spend” bonds, mistake is thinking if you wrap a bond as not ‘money’ you change anything fundamental but you don’t. In a currency issuing state like UK this is this is just savings, in a fixed fx like the Euro it is still savings but someone who runs a trade surplus collects those savings.
        Calling justifiable criticisms of a fixed fx system is lousy.

  2. I think the problem with the IMF/German lead response to Greece was that the austerity required, and the further contraction of the economy that would entail, meant that, even with continued austerity, Greece would never be able to start repaying its debts, so there was no end in sight (like the Greek legend of Sisyphus). That’s never going to be an easily saleable proposition.

    It’s fair to point out that a number of other larger European economies (Spain and Italy being the most prominent now) have serious debt problems, partly as a result of European grants, partly (as you say) property related, and partly due to widespread tax evasion. It would be entirely natural for lenders to want to make clear that this sort of behaviour will no longer be tolerated (in the way that Napoleon was said to execute a general occasionally “to encourage the others”). This may explain German/IMF inflexibility.

    Specifically on Syriza, they were not responsible for the size of the state sector: that was the “mainstream” political parties over many years (either by deceiving their lenders, or with their connivance). Syriza therefore started out with a very weak hand and played it badly (shouting the odds weakens it further). From the point of view of the mainstream parties, not being in power at this point has its benefits (this is not to say they deliberately lost elections, but Syriza will almost certainly disappear at the next election).

    The related issue is the Euro. Had the Euro been purely an economic project (in other words, had the ECB stuck to its entry criteria, and applied them rigorously), it would probably be very successful. However, it became a political (vanity) project, trying to encompass the whole of Europe, and the entry criteria (to do with debt, public sector deficits, etc) were ignored or fudged. This in turn means that fiscal policies designed to deal with uniform economic conditions have to apply to a wide variety of economies, which doesn’t work (it’s like selling one pair of shoes to fit all feet).

    On the wider (and, in the long term, more worrying) issue of rising nationalism in Europe, this always tends to increase in bad times. Unfortunately, some mainstream politicians (Cameron is an obvious example) pander to this in the hope of getting votes. Unfortunately I don’t think there is a solution to this, other than positive education and experience, and the exploitation of Islamophobia by the extreme right and ISIS (two sides of the same coin) adds fuel to the fire.

  3. BS analysis. No discussion about roots of problems. No discussion about function of credit, IMF, ESM treaty and the rest. What you are saying is that people are morons (“baddies”) and the financial institutions are “goodies.” Moreover, they offended by loosing numbers in computers. Bad irresponsible Greeks used them to their benefit and now bullying by blackmails of non payment. My god! I’ll go cry myself to death about poor financial suckers.

    1. No, I’m not saying anyone is a “goodie” or “baddie” – I’ll leave that to the conspiracy theorists. Besides, the “evil” IMF are now on Greece’s side… which is hard to explain if you believe in a world of goodies and baddies. This is a mess caused by a build-up of errors on all sides. It seems from your comment you didn’t read the article in full.

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