Europe’s Moment of Truth

Greek Premier Alexis Tsipras’ acceptance of an “austerity package” on July 13, which contained measures rejected by the Greek people in a referendum barely a week before, represents not just an abject surrender by the Syriza government, or a sign of contempt on the part of German finance capital for the Greek electorate; it marks a decisive turning point for Europe (and indeed for the rest of the world), and the end of the road for a whole way of thinking on the Left, especially the European Left.

The point is not whether Tsipras should have accepted the terms or not; the point is that within the terrain of discourse in which much of the European Left has remained confined, there was no alternative before Tsipras.  Syriza’s capitulation only demonstrates that the basic presumption underlying this terrain of discourse is flawed.  This is not meant as a flippant criticism of Syriza; it should rather be the beginning of a serious Left rethinking, as opposed to mere Left-wing phrase-mongering, in Greece, in Europe, and elsewhere.

This terrain of discourse is best illustrated by the remarks of the Greek Finance Minister Yanis Varoufakis (who resigned on July 6), an avowed Marxist, in an article in The Guardian:

A Greek or a Portuguese or an Italian exit from the eurozone would soon lead to a fragmentation of European capitalism, yielding a seriously recessionary surplus region east of the Rhine and north of the Alps, while the rest of Europe would be in the grip of vicious stagflation.  Who do you think would benefit from this development?  A progressive left, that will rise Phoenix-like from the ashes of Europe’s public institutions?  Or the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs?  I have absolutely no doubt as to which of the two will do best from a disintegration of the eurozone.  I, for one, am not prepared to blow fresh wind into the sails of this postmodern version of the 1930s.

Varoufakis went to add that if this meant saving European capitalism from itself, then it had to be done, not out of any love for European capitalism but to minimise the human toll of the crisis.

The problem is that just as the fascism that Varoufakis apprehends extracts a human toll, so too does the imposition of “austerity”; and, what is more, the acceptance of “austerity” by a Left government that has been voted to power precisely to resist it can only have one consequence, namely to get the very same “Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs” to power, on the ashes of the people’s illusions about the Left.  Underlying Varoufakis’ position therefore is a general presumption: that European capitalism can be “saved” within a framework of democracy; that it is possible to keep out fascism, and keep the human toll minimised, by making European capitalism take a course different from the one that would force “a Greek or a Portuguese or an Italian exit from the eurozone”; that it is possible to instill some sense into the heads of the Brussels bureaucrats which would make them see “reason” and desist from imposing such conditions upon the people of Greece, Portugal and Italy that they are forced to exit the eurozone.

It is not just Varoufakis who believed this.  A large chunk of the European Left, given the context of the two extraordinarily bloody world wars fought primarily on European soil, continued to remain committed to the cause of European unity, even though they were acutely aware of the fact that the EU in its current form was an instrument for the assertion of the hegemony of finance capital, above all German finance capital.  They obviously believed that a united Europe could overcome this hegemony, and all that it entailed (in terms of “austerity”, a perpetuation of the crisis, and a rolling back of the welfare State), through an assertion of the democratic will of the people.

It is this which underlay the call for the Greek referendum.  The Syriza government, as is clear now, did not have any fall-back options in the event of a continued insistence by the “troika”, consisting of the EU, the European Central Bank and the IMF, on the “austerity” measures which it was asking the Greek people to reject.  It simply believed that the very fact of an emphatic rejection by the Greek people of the “austerity” measures would force a rethink on the part of the “troika”, and would strengthen its hands in negotiating for a better deal on debt relief for Greece.  It believed in other words exactly what this large chunk of the European Left believed, namely that finance capital could be made to bow before the democratic will of the people.

This belief at first sight did not appear too far-fetched.  After all Europe did have, and parts of it still have to an extent, an impressive welfare State apparatus, together with a functioning bourgeois democracy.  If “austerity” had emerged as the favoured measure at the moment, if the crisis had taken a toll on countries of the European periphery, and enabled finance capital to impose its will on their people, then this was only a recent development.  All it required was merely a rolling back of the situation to where it was just a few years ago.

This presumption — that finance capital could be made to see “reason” and be tamed as a consequence through popular pressure; that Europe could thereby go back to where it was but a few years ago, this time not through the operation of Centre-Left politics, but through the initiative of the Left that increasingly acquired hegemony in society; that democracy under Left hegemony could triumph over finance capital even while preserving the institutions of European capitalism — has been shown to be false.

Indeed, this presumption is similar to what Karl Kautsky and others were arguing in the context of capitalism around the First World War, namely, that if monopoly capitalism strangulated the people then we should demand a going back to pre-monopoly capitalism.  Such a demand might work as a “transitional demand” (in the Leninist sense) but did not constitute a solution.  The point, as Lenin had insisted, was not to go back to a pre-monopoly capitalism but to go forward to socialism.

A basic reason why such a strategy of “going back”, by making finance capital see “reason” through a democratic assertion by the people, does not work is that it does not reckon with the “bloody-mindedness” of capitalism, and especially of contemporary financial capitalism.  Finance capital wants domination.  It understands force.  It cares two figs for the mere expression of democratic opinion; it cares two figs for “reason”.

This is a point that even John Maynard Keynes had missed long before this segment of the European Left did.  Keynes had assumed that the opposition of finance to State intervention in “demand management”, which could overcome the deficiency of aggregate demand and hence make capitalist economies function close to full employment (that would benefit both capitalists and workers and hence constituted what economists call a “non-zero-sum game”), arose from a lack of understanding.  If capitalists, especially finance, could be made to understand how the economy really functioned, and thereby made to see “reason”, then the system could be saved even without their being deprived of their property.

It appeared for a while after the war, when State intervention in “demand management” became established in advanced capitalist countries, that Keynes might have been right after all.  But this was a mistaken impression.  Finance capital accepted “demand management” because it had its backs to the wall in the post-war years when the whole system faced a serious threat to its existence.  The moment it had recovered its strength (and this recovery was associated with its becoming globalised), it undermined “demand management” to a point where we now have “austerity” being imposed in the midst of a crisis, something that would have made Keynes turn in his grave.

What is remarkable in this entire episode is that apart from the mere expression of Greek democratic opinion, finance capital has been subjected to no coercion at all, no credible threat to its hegemony.  The Syriza government made no effort whatsoever to contact Russia, or China, or the BRICS Bank or any other potential source of funds outside of the “troika”.  It might not have succeeded; indeed, most probably it would not have.  But such a move would at least have given some credibility to Syriza’s threat.  But Syriza’s tying its own hands, with the kind of reasoning that Varoufakis provides, meant that Syriza offered no threat whatsoever to finance capital, let alone a credible threat.

There is a second remarkable aspect of this entire episode.  And that consists in the fact that there was no pan-European working class expression of support and solidarity for the Greek people.  There was in short no pan-European working class resistance, not even in the form of mass demonstrations outside of Greece, against the tyranny of finance, against the clear contempt for democracy embedded in the hegemony of finance over the European Union.

Fascism was characterised by Georgi Dimitrov as an “open terrorist dictatorship” by finance capital.  What Greece demonstrates is that while there may not be an open terrorist dictatorship, the European Union nonetheless entails a dictatorship of finance capital.  And no working class resistance against the expression of this dictatorship in Greece is visible as yet anywhere in the rest of Europe.  Paradoxically therefore while finance remains united in a pan-European sense, the working class is fragmented along national lines.

The fight for democracy itself becomes difficult in a situation where “inter-imperialist rivalries” are muted.  This fight is even more difficult in such a situation if the country in question happens to be a small and import-dependent economy like Greece that does not have the potential product-diversity and capacity for self-reliance which continental economies like Russia and India possess.  But this fight becomes infinitely more difficult when the Left places its faith in a “change of heart” on the part of finance capital, which is supposed to be brought about by a mere expression of the popular will of this small and import-dependent country.

The Greek case should finally remove any illusion on the part of this segment of the European Left that the contradiction inherent in its support for a European Union that is dominated by finance capital will get resolved through a mere expression of the democratic will of the people.  This will not happen, and especially when the expression of democratic will occurs not in a pan-European demonstration, but in separate countries on separate occasions.  Europe’s existing “public institutions” will need to be destroyed before new ones, appropriate for a democratic Europe, are put in place.

Prabhat Patnaik is a Marxist economist in India.  This article was first published in People’s Democracy 39.28 (19 July 2015); it is reproduced here for non-profit educational purposes.