Inside Merkel’s Greece

Greece has taken on the characteristics of a matinee horror show. Like other states on Europe’s periphery, the postwar success story been transformed into a mad laboratory, where technocrats experiment with the importation of disaster capitalism into the EU. You’d be forgiven for thinking it was Germany in the early 1930s, or Chile in the 1970s. So dire is its situation that the country’s name is practically an epithet, tabloid-inspired shorthand for the failings of excessive regulation and a welfare state work ethic.

In Crucible of Resistance: Greece, the Eurozone, and the World Economic Crisis, Christos Laskos and Euclid Tsakalotos offer badly needed correctives to this commentary. Greece’s problems stem from deficiencies in democracy rather than in energy and entrepreneurial spirit, the authors argue. It’s only through mobilizing those worst effected by the crisis, that the challenge of far right groups such as Golden Dawn will be met, and Greek society properly transformed. The argument betrays Laskos and Tsakalotos’ ideology. Both are members of SYRIZA, the country’s largest leftwing party.

Greek exceptionalism is one of the central points of most narratives explaining the economic crisis. The common story, even on the center-left, has been one of insufficient application of market forces leading to gross inefficiency, unsupportable public employment, and rampant corruption. To wit, Paul Krugman and Mark Blyth contend that the Greek situation involves a greater degree of profligacy than do those of Italy, France, Spain, and Ireland, although both also note that Germany (and particularly German banks) played a crucial enabling role.

The prevalence of this narrative, so the authors argue, is peculiar in that it is grounded in neoliberal principles of which thinkers in the orbit of social democracy ought to be more critical. Yet social democratic parties across Europe have abandoned their previous critical stance toward neoliberalism in favor of purely (or predominantly) technical approaches. This has resulted in what amounts to an inversion of the old style and content of social democratic politics. “From defending working people from the vagaries of the market, reform now increasingly [means], at best, helping them to manage their own (including human) capital.”

In the absence of social democratic criticism (and perhaps reinforcing this absence) a new narrative has taken hold which contrasts thrifty and industrious northern Europeans (read Germans) with shiftless, grasping, and overpaid southerners (Greeks, Italians and Spaniards.) Laskos and Tsakalotos are at pains to rebut these claims, summoning an impressive array of statistical measure to argue that Greece was not so far removed from the European norm as has often been argued. Their presentation is generally convincing, although it does contain some peculiarities.

To note one that could stand in for a number of others, Greek productivity (measured by hours worked versus GDP) was growing faster than that of Germany in the years leading up to the crisis. However, the authors perplexingly fail to note that the starting point for Greek workers was considerably below that of their German counterparts, as well as falling short of the EU average. This is a relatively minor point, given the broad scope of data that Laskos and Tsakalotos adduce. But to make such an error is to give ammunition to proponents of the neoliberal narrative.

The roots of the Greek crisis are to be found in the metapolitefsi, the period following the end of the military dictatorship, in 1974. Unlike Germany, where the transition to democracy was imposed by occupying Western powers, the countries of Europe’s southern periphery exited dictatorship in a more piecemeal fashion. In Spain, Portugal, and Greece, authoritarian rule was followed by restoration of democratic institutions that left much of the clientelistic structures and practices of the previous regimes in place.

Lacking the institutions of civil society, whose nascent elements had been severely repressed in the last years of Dimitrios Ioannidis’ regime, Greek politics was dominated by the competition between the center right New Democracy and the center-left PASOK. The smoothness of the transition (which atypically involved the jailing of some former members of the junta) was preserved by avoiding measures that involved wealth transfers in favor of further ensconcing the clientelist system through augmented levels of state employment.

One consequence of this was the Greek government’s persistent failure to address the complexities of the country’s legal and regulatory systems. Another was the decoupling of the main political parties from substantive engagement with their supporters, a crucial element of the turn to technocratic management evinced by both New Democracy and the PASOK as the Greek crisis gathered steam.

Confronted by significant fiscal deficits, the response of the country’s political echelon was to extend the implementation of neoliberal norms via the elimination of public employment and services, draconian cuts to pensions, and attempts to wring increased tax receipts from the lower reaches of the state income (for example, through the privatization and extension of toll roads.) The key feature of this policy was clarity in terms of who needed to be disciplined.

Other matters, such as the intensely regressive Greek tax structure and the prevalence of the informal economy (estimated to comprise between a quarter and a third of Greek GDP) were either dealt with superficially, or not at all. Rather, the only strategy regarded as acceptable, particularly given the monetary strictures imposed on the Greek government by the ECB, was austerity. Although occasional end dates were proposed (2020 being commonly suggested,) all but the most irrationally optimistic observers conceded that such measures needed to be applied indefinitely. The results were predictable: a decline in Greek GDP rivaling that resulting from invasion by the Wehrmacht in 1941 (admittedly with less catastrophic human consequences.)

Crucible of Resistance is both an explanation and a manifesto of sorts. It presents SYRIZA’s explanation of the crisis, and its strategy for overcoming it. With the KKE failing to take up the cause of anti-austerity agitation, resistance has been built through the grass roots outreach of SYRIZA and its activists. The authors are careful to point out that much of the basis for this has been built on the politicization (often quite spontaneous) of Greeks confronted with the disciplinary forces of the state and of international actors. The picture that they paint is hopeful, but does not gloss over the challenges that have arisen from the benefits that the far right has reaped from the crisis.

Photographs courtesy of Aesthetics of Crisis. Published under a Creative Commons license.