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17.11.11 About MR



Monthly Review Press

Antonio Gramsci
ANTONIO GRAMSCI by Antonio A. Santucci

The Political Economy of Growth
THE POLITICAL ECONOMY OF GROWTH by Paul A. Baran

The Law of Worldwide Value by Samir Amin
THE LAW OF WORLDWIDE VALUE by Samir Amin

The ABCs of the Economic Crisis: What Working People Need to Know
THE ABCS OF THE ECONOMIC CRISIS: What Working People Need to Know by Fred Magdoff and Michael D. Yates

Put To Work: The WPA and Public Employment in the Great Depression
PUT TO WORK: The WPA and Public Employment in the Great Depression by Nancy E. Rose

The Crisis and the Left
THE CRISIS AND THE LEFT: Socialist Register 2012
Debunking the Greek (and European) Crisis Narrative
by Costas Panayotakis

In a recent debate the candidates for the Republican presidential nomination treated cutting the deficit as the panacea that would address the European crisis and prevent the United States from having a similar fate.  This diagnosis is wrong but it is unfortunately not unique to the Republicans in this country.  In fact, it is this way of thinking that has informed the European response to this crisis, a response that has not contained the crisis but made it spread and deepen.

In this respect, the experience of Greece, the country where the European sovereign debt crisis first surfaced almost two years ago, is very instructive not only because its debt crisis prefigured the debt crisis of a number of other countries in the continent (Ireland, Portugal, Spain, Italy, and counting) but also because the dismal failure of the austerity medicine prefigures what we are likely to see throughout Europe as austerity policies become generalized.

When the magnitude of the Greek debt became clear, the first reaction of politicians, journalists, and commentators around the world was to define the problem as a national problem, one which could be traced to the cultural pathologies and political dysfunctions of Greek society.  While some of this commentary was correct (for example, the ability of wealthy Greeks to evade taxation), other tropes (such as the 'bloated' public sector) were downright misleading, since they obscured the fact that neither do public sector workers in Greece represent a larger share of the labor force than in other European countries nor is the Greek welfare state anywhere as developed or generous as that of other European countries, including ones that do not find themselves in the kind of severe fiscal crisis now facing Greece.

Moreover, these attempts to define the crisis as a national crisis diverted attention from the more important structural imbalances within the eurozone.  Locking countries of vastly different levels of competitiveness and technological development into a common currency meant that countries in the European periphery, like Greece, found their productive structure and industrial capacity decimated as their markets were flooded by more competitive German products.  In that context, economic growth in the periphery came to rely on easy and cheap credit fuelled by the mistaken belief of European banks that default by a member of the eurozone was inconceivable.

While the prevailing narrative regarding the nature of the Greek crisis is seriously misleading, it is still widely shared because it justifies a response to the crisis that assaults the most basic living conditions of ordinary Greeks.  This response, which was set down as a condition for providing Greece with loans that would allow it to keep servicing its debt, includes drastic cuts in pensions and in the wages and salaries of public and private sector workers, reforms that make it easier to fire workers while denying them decent severance pay, repeal of basic labor and collective bargaining rights, thousands of layoffs in the public sector, and severe cuts in social services.  The result has been skyrocketing unemployment, which now stands at 18.4% for the general population and 43.5% for young Greeks.  When imposing these measures on Greece, the European Union, the European Central Bank, and the International Monetary Fund predicted that Greece would be able to borrow from international markets within three years.  As made clear by Greece's need for a second bailout, this expectation has been disproved by reality.  This is not surprising, since the rapid shrinking of the economy these measures have produced has also led to a collapse of tax revenues.

Greek citizens understand this and this is why, according to polls, they are opposed to a second bailout agreement that would prolong austerity further.  European leaders, by contrast, refuse to recognize that their insistence on harsh austerity measures has, instead of containing the crisis, led it to spread and deepen around Europe.  Instead, they have effectively suspended Greek democracy by dictating to the two major parties in Greece what their position on austerity has to be and by vetoing any attempt to ask Greek citizens themselves what they think about the decisions that will seal their future for decades to come.  The result of this European pressure is a new government headed by an unelected banker and including, for the first time since the end of the military dictatorship in 1974, the racist, anti-immigrant political descendents of the Greek colonels.

As European leaders insist on prescribing the Greek medicine to the growing number of European countries in trouble, they are pushing Europe into a new round of economic contraction, with all the suffering this will entail for ordinary citizens around the continent.  The latter, faced with the convergence of mainstream political forces around an austerity agenda, are likely to respond to the political system's failure to represent their needs and desires by taking to the streets.


Costas Panayotakis is Associate Professor of Sociology at the New York City College of Technology of the City University of New York and author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.  He has written extensively on Greece and has appeared on dozens of TV and radio shows around the world.
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