The Stakes in “Punishing” Greece

Global capitalism imploded in 2007.  The central causes of capitalism’s crisis include:

  1. the end of real wage increases in the US and the substitution of rising worker debt far beyond what workers could sustain;
  2. the buildup of excess global industrial capacity;
  3. the explosion of speculation and excess risk-taking by banks, other financial and non-financial corporations, and the rich;
  4. the systematic misrepresentation of credit risks by capitalist rating firms;
  5. the failure of supervision and regulation by governments increasingly dependent on corporations and the rich (for campaign contributions, lobbyists’ supports, etc.) over the last quarter century;
  6. the growing indebtedness of governments;
  7. the huge imbalances between trade and capital flows among nations (and, above all, the trade deficits of the US and the trade surpluses of the PRC)

In this list, the role of Greece is minor almost to the vanishing point.  But Greek workers loom large among the proposed victims of the capitalist crisis they did not cause.

When the global capitalist crisis hit in 2007, Greece like most other countries boosted its deficit finance.  It had already been running high government deficits largely based on very rosy predictions of Greece’s economic prospects given its low (for Europe) wages and rising productivity in the years before 2007.  So Greece has borrowed a lot (although other countries who borrowed more and for similar reasons are not — yet — being treated like Greece).

The problem for Greek national debt is that other, larger, richer capitalist nations — those whose capitalists’ actions were the leading causes of the global crisis — have also vastly increased their borrowing.  Lending to the latter is far safer than lending to the poorer, often more indebted countries like Greece, Portugal, etc.  So lenders are requiring them to pay much higher interest rates just to meet their current debt obligations (and they probably need to borrow more, just like other countries, to avoid another nasty recessionary downturn).  Lenders are also threatening to stop lending unless these poorer countries lower the ratio between their debt and their GDP (the widely used measure of the country’s total output and thus its ultimate ability to pay back its debts).

To make the billions in extra interest payments and/or to lower their outstanding debt, governments in countries like Greece would have to raise taxes on their people or cut spending on their peoples’ needs or both.  Those steps would provide those governments with the funds to pay higher interest rates on their debt and lower the total of outstanding debt.

In simple English: the global capitalist crisis first brought an economic downturn to Greece, and now the “recovery” seeks to impose on the Greek people an indefinite period of economic suffering as global lenders provide funds to the richer, larger capitalist economies elsewhere so that they can avoid what is demanded of the Greeks.  The same leaders of business and government who produced the crisis are managing the “recovery” in just this way.

Nor should we fail to mention that the Greek government and its business leaders are now forced to make a big decision too.  Will they go along with the plan?  Will they force the mass of Greek workers and their families to pay higher taxes, earn lower incomes, and lose government services to “service Greece’s creditors”?  Or will they be blocked from doing so by the Greek peoples’ resistance?  That’s what is at stake in the mass strikes now rocking Greece.

And how might that resistance handle matters differently?  In the immediate future, they might finally demand an end to the massive evasion of Greek taxes by its billionaire and millionaire elite on both their corporate and personal accounts.  Let them finally pay — according to their exalted abilities — to service Greece’s creditors.  However, given their equally notorious mechanisms of tax evasion, honed over centuries, it would be better — and sooner rather than later — to abolish private Greek enterprises and reorganize them as worker-controlled enterprises sharing power with the government.  Their joint project would then be to produce a “recovery” not just from this particular capitalist crisis but from the system that reproduces capitalist crises every few years.

Such a Greek resistance might also stimulate and inspire parallel movements in other countries whose people are likewise boiling because they bear the costs of a crisis they did not cause and a “recovery” that is not theirs.  And so it should be, because the Greek resistance would need allies elsewhere to succeed and vice versa.  Capitalism’s global crisis is a burden for the working classes of the world, but it is also an opportunity.  To suffer the former while missing a chance to grab the latter would only make this crisis yet more tragic.

Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York.   He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications.  Check out Rick Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, at  Visit Wolff’s Web site at, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.

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