Crisis in Greece

A commonly heard expression among politicians and newspapers during this economic crisis has been the phrase “too big to fail”. It refers to the basic principle under capitalism that in times of crisis, which capitalism necessarily engenders every now and then, the largest companies and banks cannot be allowed to go bankrupt. Smaller businesses can go bankrupt, millions can become unemployed, but a truly ‘free’ market solution of bankruptcy for all overinvested corporations would so thoroughly destroy any modern advanced economy that it would inevitably lead to revolt and revolution. To stave this off, any amount of tax money and borrowing is therefore justified to save banks and companies of such size that their fall would risk taking everything else with it. As a result, real unemployment in the United States is estimated to be around 16%, yet enormous sums in the billions of dollars have been borrowed by its government to prop up the profitability of its largest banks and insurers, from AIG to Goldman Sachs.(1)

Yet rarely is this expression used for an entire country, even though there is no reason why entire economies should not have the same position within regional wholes. Where Iceland has now gone essentially bankrupt as a result of its ultraliberal banking policies and the subsequent extortion of its debtors by the Netherlands and Great Britain, its small size and relatively one-sided economy prevents this from becoming a major economic problem. The same cannot be said of Greece. The Hellenic Republic was forced last year to publish its real figures after having hidden its veiled loans, which turned out to imply a real government deficit of 12.7% of its GDP, vastly above the Euro central banking norm of 3%.(2) Now several countries have also ‘bailed out’ their own major banks and corporations at the expense of the public and borrowing from the future, leading to even usually fiscally conservative countries like the Netherlands going twice the limit. But the Greek case is so extreme and its ability to repay so precarious that it threatens the entire European currency union. Other Southern European economies are performing weakly, and if Greece is unable to float enough government bonds to repay its debt, its credit rating may be downgraded or it may be forced to default altogether. The result would in either case be a loss of investor confidence in the Euro, the united currency in which Greece was allowed to participate on the basis of its bogus figures. Combined with the enormous borrowed spending for the benefit of bankers and other capitalists by most major European economies, the result would be an inflationary spiral, which might become large enough to significantly lower the living standards of the lower class and not even benefit the indebted middle class, because of the loss of savings value.

Of course, there are many ‘mights’ in this. The European Union has refused any ‘bailout’ of Greece in turn, oddly leaving an entire country to its fate when even the most recklessly managed banks and insurers are to be protected from the ‘efficiency of the market’ at all costs. The result is that Greece would be required to seek the succor of the International Monetary Fund, which will force enormous reductions in expenditures on it and a balanced budget of a sort that absolutely no capitalist government has demanded of any major company it has bailed out with tax money. In other words, Greece will be extorted into accepting rigid liberal orthodoxy by the same people who have been unable or unwilling to foresee the global economic crisis caused by their own liberalism.

Of course, this will not pass by unnoticed by the Greek population. The newly installed nominally social-democratic government of PASOK leader Papandreou has accepted a policy of shoving off the costs of governmental malfeasance and the demands of foreign investors onto the population. It has proposed freezes and cuts in the salaries of public employees, who in Greece are very well protected in their jobs, but already earn relatively little money. (Greece besides has very little real state welfare, so many families consider a lower bureaucratic job as the ideal position for their children, as it at least frees them from the specter of unemployment.) It has proposed to crack down on the widespread tendency to evade taxes in Greece, which may account for as much as one-third of the total income of the country, yet it has not been able to understand that Greeks refrain from paying their taxes because they know that the corruption and incompetence of its pseudo-hereditary two party system will guarantee that it is wasted. In this sense, Greeks and Americans are not so different: compare the repeated bomb attacks against banks and other prominent targets in Athens with the recent suicide attack by private plane against the tax office in Austin. The figure responsible for the latter had written a long tirade against taxes, normally reserved for white petty bourgeois tax evaders – but he had also worked his way through political economy to finally understand the real system of corruption, capitalism, and ended his letter with a reference to the Communist Manifesto.(3) In Greece, too, not just anarchist bomb attacks answer Papandreou’s policies, but also persistent resistance on the part of its unions as well as the orthodox but still formidable KKE, Greece’s Communist Party, as well as the left wing bloc SYRIZA.

There is a different background to the events in Greece as well: the widespread revolts against the then-ND government of Karamanlis as a result of the police shooting of a teenager. When 15 year old Alexis Grigoropoulos was killed by police, this led to two weeks of rebellion. The real inspiration was the enormous unemployment in Greece, in particular among the young and even the highly educated youth, as well as a persistent lack of social mobility and the failure of Greece’s impressive economic growth since the fall of the dictatorship to seriously raise living standards. A cynic could remark that the occasion was fortuitous since it was a native son who had been brutalized, not one of the many immigrants from Albania and elsewhere who are daily violated by police and others, but nonetheless the anger was real. There had been much brouhaha about the perceived violence and riotous nature of the rebellion, but there is reason to believe most of this was due to the Greek police practice of employing agents provocateurs. In any case, the long history of repressive reactionary government in Greece, from the monarchy on to the military regime, has left its mark on the Greek psyche and made the population aggressively hostile to central authority. In any case, 60% of Greeks did not believe the riots to be mere attacks from organized ‘anarchists’, as is the traditional explanation by the Greek ruling class of any form of revolt.(4) This revolt did not lead to any major achievement in the social or economic fields, but it is widely credited to have aided the fall of the Karamanlis government, combined with its inept response to a season of uncommonly deadly forest fires.

Since these two currents of discontent are now coming together in Greece, it is worth taking a look at the possibilities for reform Greece has and the participation of Communists in this matter. During the period of the Grigoropoulos riots, the KKE had operated analogous to the position of the PCF to the revolt of 1968: it had praised the concept while opposing its practice. This has greatly weakened its ability to profit from and steer the popular discontent, although no doubt its criticism of the overly short-term thinking of the rebels is quite justified.(5) Its sectarian position vis-á-vis Synaspismos/SYRIZA is also to blame for the inability of the KKE to mobilize its quite significant support in a systematic manner. But even if such became possible under the renewed assault upon Greece’s social structure, what possibilities for reform exist? Indeed, there ought to be significant potential within Greece itself. Greece is clearly a First World country and will not from scratch, even under circumstances of significant downward pressure on living standards, make a revolution. But it is an encouraging sign that the left-wing parties were good for 25% of the youth vote in 2008, that 46% of Greeks have a positive opinion about socialism; that 21-26% of people between the age of 18 and 34 expressed the view that “we need a revolution”; and 60-65% of all age groups expressed the view that “we need deep social change”.(6) This is not a revolutionary situation, but it is a situation with serious potential for significant reform, at the least. The Greek trade unions are also still strong, and there have been eleven general strikes during the government period of the ND, effectively defeating earlier attempts at cutting the public wages. However, such strikes on their own without clearly defined goals run the risk of damaging the position of the unions and their supporting parties due to ‘overextension’, without leading to any positive gains.

Progressive Greece needs a common platform to unite around:
– Preventing the great outflow of capital from the Greek upper class as they flee their tax duties. The current government is unwilling to seriously prevent this, when a severe tax on such capital flight could ensure either the necessary government revenue or a reinvestment within Greece itself which in turn would reveal the assets as taxable.(7)
– Pressure the European Union to support Greece as its wealthier member states have supported their own finance capitalists. Since the ‘efficiency of the free market’ is abandoned as soon as trouble arises within these nations, they can hardly protest violating its sacred and eternal laws for the sake of one of its member states. What’s more, Greece has the potential to unite with Italy (which is at least as indebted) as well as Portugal and Spain, equally weak economies, to form a common bloc within the EU for such support funds. It would be highly difficult for states such as Germany and the United Kingdom to refuse, especially given the veto powers of each nation. This also implies rejection of any individually imposed IMF loans. As an additional benefit, the bailout pressure will damage the position of the conservative-liberal coalition in Germany.
– The Greek unions must demand that the wealthy in Greece seriously pay their taxes in return for cooperation with tax payment among their members. They must pressure the government through any and all means available to make an end to the systematic corruption among the Greek ruling class and to pave the way for destruction of the nepotistic clan system in Greek politics.
– Systematic wage increases and government investment should raise living standards and decrease unemployment, leading to a positive cycle which will have its effect on government revenue. Some inflation is to be taken as unavoidable, but it will be made affordable by the bailout funds to be extorted from the Northern European nations. This will also have an overall egalitarian effect on wealth differentials within the European Union.

It is not for the Northern countries to complain about this: after all, these are the countries most persistently extolling liberal capitalism with their right hand while their left hands feeds their bankers from the public trough and squeezes Hungary and Iceland dry. The European Union and its common currency only have a future if the principle of egalitarianism between its member states obtains, and nations such as Greece should use their formal powers within the EU to enforce this. Given the hypocrisy of Germany, the Netherlands, Britain and so forth, all a southern bloc would need to use are the words of Shylock: “My deeds upon my head! I crave the law, the penalty and forfeit of my bond.” The time is ripe for revolt: the Greek people must not allow their Athens to be reduced to Spartan poverty.

1) “Real Unemployment 18% – Will Stocks Falter?”. Yahoo Finance (Feb. 5, 2010).
2) Nelson Schwartz & Sewell Chan, “In Greece’s Crisis, Fed Studies Wall St.’s Activities”. New York Times (Feb. 25, 2010).
4) “Calm returns to Athens after riot”. BBC News (Dec. 14, 2008).
5) “Speech of the General Secretary of KKE, comrade Al. Papariga, delivered in the big rally organised by KKE in Athens on 8th December, after the murder of Alexandros Grigoropoulos by the police”.
6) Fred Weston and Stamatis Karayannopoulos, “The crisis of Greek capitalism and how it is impacting on the labour movement”. In Defence of Marxism (Feb. 19, 2010).
7) Costas Paris, “Wealthy Greeks Send Money Abroad”. Wall Street Journal (Feb. 23, 2010).


Very thought provoking and lucid article. I must concur that Greece is being vilified unjustly a treated with extreme prejudice. My fear is that the people will suffer mote than the initial switch from the Drachma to the Euro

Leave a Comment

Your email address will not be published. Required fields are marked *