Postcards from the future: The Greek Debt Crisis, the Struggle against the EU-IMF Austerity Package and the Open Questions for Left Strategy

Postcards from the future: The Greek Debt Crisis, the Struggle against the EU-IMF Austerity Package and the Open Questions for Left Strategy

Spyros Sakellaropoulos and Panagiotis Sotiris



Since December 2009, Greece has been at the center of international attention. The revelation of high levels of public debt, the downgrading by international grading agencies, the widespread assumption that a Greek default is highly probable and the consequent extreme rise in the cost of borrowing have led to draconian packages of austerity measures, a prolonged recession, a sharp decline in living standards and the imposition of a regime of limited economic sovereignty under the terms of supervision by the EU – IMF – ECB ‘troika.’[i] It also led to a unique sequence of protest, a crisis of hegemony and profound changes to the political scene. In what follows, we attempt to asses this conjuncture, answer some of the prevailing myths about the Greek crisis and insist on what all these mean for left-wing politics. 


1. Some myths about the Greek Crisis revisited

The extreme measures taken in Greece have been legitimized through the appeal to certain characteristics of Greek economy and society: deviant public borrowing and spending, constantly rising salaries undermining the competitiveness of Greek economy, and an unsustainable consumption mode.[ii] Apart from being used as justification for the measures, these characteristics have also been instrumental in creating a sense of collective guilt in Greek society.

However, a scrutiny of Greek economy shows that many of the accusations are far from true. The Greek debt crisis was not unique, since other European economies also face a heavy debt burden. In addition, it was not more dramatic in Greece than in other countries. Wage increases in Greece were not ‘irrational,’ especially if we consider that from 1991 to 2005 they lagged behind rises in productivity, a fact that indicates rising rates of exploitation.[iii] The broadening of the consumption base, mainly through access to cheaper credit, was necessary to keep high rates of growth, a tendency observed in most OECD countries.

Missing from this picture are other important aspects of the Greek Debt crisis As far as the Greek debt burden is concerned what is missing from the dominant discourse is that capital in Greece has enjoyed one the most lax tax regimes in Europe. Taxation on business earnings is one of the lowest; indirect taxes aimed mainly against households are the most important source of tax revenue; tax exemptions of all kinds are extremely widespread (for example scandalous exemptions of the Shipping Industry in what concerns VAT in business transactions[iv]). At the same time, before the crisis there was conscious tolerance of on the part of the Greek government as a means to build class alliances, especially with small capitalists and the petty bourgeois strata. It is also important to note that deficits also reflected the pressure on Greek governments to accommodate big business, both national and international: overpriced public works, extremely high cost of medical supplies and of course high military spending – a large part of it openly politically motivated with the Greek government buying US fighter planes, French frigates and German inoperable submarines amidst a recession.


2. The crisis of the Greek developmental paradigm

It is also worth noting that the recession of the Greek economy, and consequent debt burden, is not a simple local manifestation of the global capitalist crisis. It also reflected a deeper crisis of the whole ‘developmental paradigm’ of Greek capitalism that was based upon low labor cost, the exploitation of immigrant labor, the use of European funds and increased household consumption fueled by debt. Although Greece went through a phase of deep capitalist restructuring during the past two decades, it seems as if there is no growth dynamic left. The dependence of important sectors of the Greek economy (construction, tourism, and shipping) on the tendencies of the economic cycle and the global economic conjuncture only made things worse. There was also the absence of sectors producing high value added goods that could trigger processes of endogenous growth. As a result Greek capitalism, after a period of constant growth entered a prolonged economic downturn.[v]


3. The crisis of the Eurozone and the strategy of internal devaluation

In the discussion of the Greek crisis, the whole question of the Eurozone and the consequences of Greece joining the European Monetary Union (EMU) had been left outside the discussion for a long time. Yet this is exactly the problem: The introduction of a common currency without a common authority and mechanisms of redistribution was intensifying regional imbalances, hurting workers in both core and periphery countries, yet benefiting the capital of the core European countries. 

In our opinion, the Greek case brings forward the structural contradictions of the Eurozone and the financial and monetary architecture of the EMU. The introduction of the euro as a common currency accentuated the problems caused by the differences in competitiveness and productivity in European economies. The traditional justification for this structure was the need to avoid inflationary pressures in an attempt to guarantee the role of the euro as world money, but, in terms of the social balance of forces, it has mainly functioned as a constant pressure for capitalist restructuring. The euro practically meant currency devaluation for higher productivity and competitive export countries and a currency overvaluation for lower productivity import countries, making even more obvious the differences in productivity and competitiveness. In periods of relative growth this structural imbalance could be tolerated or even endorsed and enhanced because it could act as a pressure for capitalist restructuring, since it could be seen as a something like an ‘iron cage’ of capitalist modernization. This helps explain why the bourgeoisies of countries such as Greece could accept such a strategy of extended pressure upon their productive base, especially if they could also enjoy the benefit of lower interest rates. However, in a period of recession all the contradictions of this strategy are intensified. Therefore, this partial concession of national monetary sovereignty could act, in times of growth, as a way to force capitalist restructuring (at the same time ideologically using the reference to Europe as legitimization). In time of crises and recession, however, pressures can pass the limit of restructuring and lead to the destruction both of productive forces and social alliances.

The absence of any mechanism of redistribution and compensation in the Eurozone and the reluctance particularly of Germany to consider any such mechanism (especially since German capital has been a benefactor of the imbalances within the EMU) means that the competitive pressure on lower productivity and less competitive countries can become destabilizing. Consequently, the financial and monetary structure of the Eurozone seems like an economic straightjacket, offering no other way out than a constant attack on worker’s wages and rights, even at the cost of endangering social cohesion. This had already been theorized by Olivier Blanchard, IMF’s chief economist, in 2007 as a of strategy ‘internal devaluation’ through reduction of nominal wages as a way to counter the erosion of competitiveness within a single currency area such as the Eurozone.[vi]

As even Paul Krugman acknowledges,[vii] it was predictable that at some point the establishment of a single currency by countries with entirely different levels of productivity would bring to light a host of contradictions. These contradictions have to do with the different structural characteristics of each country, the uneven rates of capital accumulation, the unequal contributions to international competitiveness. All of this lednot only to differentiations in the rates of inflation, an increase in GNP and a spiraling of public debt but also, and above all, to differences in international specialization of the national productive systems.[viii]

The creation of the Eurozone was a successful race to the bottom for Germany who benefited both by high initial productivity and competitiveness and by placing bigger pressure on wages. Current account deficits in the European South contrasted with the surpluses in Germany point to this structural imbalance in competitiveness.[ix] It is also worth noting that the structural imbalances of the Eurozone were also instrumental in creating aspects of the debt crisis for countries such as Greece. Current account deficits and a decline in private savings led to an accumulation of external debt. As Lapavitsas et al. note:


In other words, external indebtedness reflects the biased integration of the periphery into the Eurozone. Generalized pressure on wages has allowed the core to gain competitiveness, thus leading to rising indebtedness of the periphery to the core. Far from promoting convergence among member states, European Monetary Union has been a source of unrelenting pressure on workers that has produced systematic disparities between core and periphery resulting in vast accumulation of debt in the latter. [x]


In this context, in conditions of capitalist accumulation, from the moment that the single currency rules out devaluation, it exerts constant competitive pressure on less competitive capitals and social formations. This is, precisely, the reason that Germany, as the economically most powerful country in the European Union, supported the introduction of the euro. It judged that its superiority in competitiveness, reinforced by the inability of the individual member states to implement devaluations, would result in protracted export growth, as indeed occurred. However, the worsening of the financial crisis had the effect of partially, but not totally, modifying the existing economic and political context. In conditions of recession, the competitiveness deficit became ever more obvious, with the result – among much else – of greater deficits and a rise in the cost of borrowing. This occurred because of the fall in consumption, leading to a cutback in state revenues and a consequent increase in the deficit. The situation was aggravated by the fact that the recession also triggered an increase in unemployment, so that there was an even greater shortfall in public revenues and more frequent resort to borrowing to cover basic needs. The absence of redistributive policies with the potential to offset the uneven development shows that the EU is not a confederation, much less a federation, but a sui generis institutional conjunction of national formations competing with each other for the largest possible appropriation of produced wealth.

In the context of a continuing crisis and the clear signs of a global recession, the European bourgeoisies decided to deal with these contradictions through the continuation of a “fuite en avant” tactic.  Thus, on March 25, 2011 they consented to the “Treaty for Establishing the European Stability Mechanism,” which was signed in July 11, 2011.  Under its terms, each state must present a long-term plan for securing the confidence of the financial markets. An annual “stability and convergence program” will be drawn up, at the national level, establishing its goals in relation to deficits, income and expenditures, the strategy by means of which these goals will be attained and a timetable for its implementation. For the purposes of achieving the goals each state must implement a number of structural adjustments.  Supervision by the EU bureaucracy will be stifling: the draft budget of every member state will have to be presented to the European Council prior to its submission to the national parliament, and the recommendations of the European Commission inserted into it.   

As regards labor costs, these will be subjected to close monitoring and constant comparison with the corresponding figures for other member states of the Eurozone and with those of the EU’s trading partners. If it is judged that wages are not commensurate with competitiveness, they will be subject to revision. Similarly, the viability of the pension system will be monitored continuously and closely through establishment of special indicators to correlate them with the levels of debt. An additional objective is for the retirement age to be brought into alignment with life expectancy by abandoning any provisions for early retirement. 

In parallel with all this is the projected creation of a mechanism for restraining increases in debt. This mechanism will be mandatory in character and will come into operation automatically on each occasion that the deficit exceeds a prescribed limit. This will be implemented through legally binding commitments (constitutional revision, draft legislation). Also proposed is a further reduction in employer contributions to insurance funds, and one basic priority is development of a common and uniform base for company taxation.

Finally, the Treaty on Stability, Coordination and Governance was signed in March 1, 2012, which introduced mandatory balanced or surplus budgets, increased supervision of member-States’ economies, processes of pre-approval of major policy decisions, and a penalty mechanism for whatever State fails to meet the agreed budget targets.

All this institutional reform is aimed at solving the multitude of problems we have just outlined –– the contradictions and antagonisms that transverse the EMU ––precisely because it is not a national formation but many national formations in a relationship of mutual competition for the most favorable position in the international division of labor.  

Consequently, the structural imbalances of the Eurozone have forced countries such as Greece towards a policy of internal devaluation, in the sense of a sharp reduction of wage costs, in order for the economy to have a new lower starting equilibrium.[xi] The problem is that although processes of internal devaluation can be extremely violent socially, at the same time they are either unsuccessful in bringing forward the desired rises in competitiveness (amongst other reasons because they tend to put too much stress on labor costs) or they must take too long.


4. The crisis of neoliberalism and the ‘fuite en avant’ tactic of European bourgeoisies

From the above it is obvious that in a period of an open crisis of neoliberal strategy the EU remains fixed to neoliberal orthodoxy. According to this, ‘structural reforms’, such as mass lay-offs, flexible labor relations, lowering of labor costs, cannot only lead to growth but also to a solution of the fiscal problems; it is obvious, though, that, at least in the short term, these measures will intensify recessionary tendencies and public deficits. The reason for this strategy is the way the current capitalist crisis is perceived. Despite the ambitious targets set in the ‘Lisbon Strategy’ back in 2000, it is obvious that European capitalisms did not manage leaps in productivity and are facing elements of a profitability crisis. The European sovereign debt crisis is an expression of this more structural capitalist crisis. ‘Markets,’ that is the ‘organic intellectuals of capital’ employed in rating agencies and financial firms, are already assessing the future consequences of current economic contradictions. 

With aspects of the European ‘social model’ still in place and signs of growing militancy and even radicalism, European elites opt for a deepening of recession in order to take advantage of its disciplinary aspects. They can accept a delay in recovery if this can help them take advantage of the situation and enforce a change in the balance of forces against labor. The fact that austerity measures are being introduced all over Europe regardless of actual deficit problems highlights the assumption that we are not dealing with contingent extreme measures, but with strategic choices on the part of the European bourgeoisies. This can also explain the different strategies between the EU and US. The near total defeat of the US labor movement, the lack of which helps explain the absence of a ‘Welfare State’ in the US in the sense that it has in Europe, can explain why, at least initially, US elites, faced with a structural capitalist crisis, were ready to introduce some form of a stimulus to the economy or why the extent of counter-cyclical state intervention has been so big. On the contrary, one can discern a strategic unease on the part of European elites. The absence of clear bourgeois strategy for the exit from the economic crisis is evident. A whole set of strategic assumptions, based upon the ability of the market to act as a means of rationalization, has been challenged by the failure of the markets and their inherent irrationalism. The attack on workers’ rights can change the balance of forces and offer capitalists some room to move, but it does not address the roots of a structural crisis of over-accumulation. This would need a new social and technological paradigm. However, it is obvious that capitalists and their political representatives tend, at least for the time being, to turn back on attacking workers rights, than tackle questions of strategy. Without a plausible strategy for a new wave of restructuring and technological innovation that will lead to a leap in productivity, the lowering of labor costs, labor market flexibility and further liberalization seem as the only way out for the ‘European Project.’ All of this induces a ‘race to the bottom’ when it comes to the condition of labor.


5. Permanent economic emergency as a class strategy

Therefore, it is necessary to bring forward the class rationale behind this strategy of a ‘constant state of economic emergency.’ The whole process of Greek Debt restructuring agreed on at the July 21, 2011 EU Summit meeting and the conditions associated with the new prolonged loan package are making this even more obvious. However, the evocation of the need for extreme measures to tackle the debt crisis cannot account for the extent of the current Pan-European attack on labor. The adoption of aggressive strategies against labor rights all over Europe implies that the problem is not just debt but a more structural capitalist crisis, the result of a falling profitability in conjunction with the process of financialization. Without getting into detail we would like to insist that we consider the current crisis a crisis of over-accumulation, having its roots, in the last instance, in structural contradictions at the heart of capitalist production, even though its ‘form of appearance’ was that of a crisis of capitalist financialization. We would also like to stress that in our view even if we take financialization as the causal trigger of the current capitalist crisis, still a way out of the crisis would not be possible without capitalist restructuring in the sphere of production.  On this debate see Costas Lapavitsas’ recent book for the most eloquent version of the ‘financialization crisis’ thesis[xii] and the work of Stavros Mavroudeas as an example of the ‘falling rate of profit’ position.[xiii] Therefore what we are experiencing all over Europe is a giant attempt at social engineering in the sense of imposing a radically altered balance of forces: capitalist restructuring of unprecedented scale.

Thus, the strategic calculation behind the austerity package in Greece is not only fiscal but also political. It aims at imposing a humiliating defeat upon the working classes and permanently changing the balance of forces in favor of capital. What is at stake is not just an emergency package of austerity measures but a profound change of social paradigm: the unleashing of systemic capitalist social violence against the forces of labor and the reversal of whatever is left of workers’ gains in the 20th century. Greece is becoming a testing ground for a more general strategy of radically deteriorating the position of workers. It is a test of the ability to impose a radical ‘shock therapy’ of structural reforms in advanced capitalist social formations with long traditions of social struggle. If the ‘Greek experiment’ is successful, one can expect similar attacks on labor in other European countries, beginning with countries of the European South. Therefore, a defeat of labor in Greece will affect the balance of forces between capital and labor all over Europe.

Current developments show that we are dealing with a broader tendency. Austerity is now the key word all over EuropeQ drastic cuts in public spending, in the South, in countries of the European core and also in countries outside the Eurozone such as Britain; attack on wages; rises in pension ages; acceleration of processes of commodification of public goods. European policy planners and national governments seem to agree on an aggressive neoliberal policy of “creative destruction,” where the cuts in public spending and a sharp decline in wages will offer companies both a competitiveness advantage and a pressure to higher efficiency and productivity, plus an incentive to bold new entrepreneurial endeavors. However, missing from this picture is both the tremendous social cost and the danger of a vicious recessionary circle.[xiv]

Also important is a growing strategic change in how European Integration is being conceived. Though the whole transition towards ‘European Economic Governance associated with the EFSF mechanism, the hegemonic formations in the EU are opting for imposing limited sovereignty upon countries of the European periphery that are facing debt crisis and need assistance. This is not only a means to impose prudent public finance management. It has also to do with an attempt to impose on these countries a radically different social model, with the emphasis on low labor cost and the lifting of any barriers to foreign investment.


6. Greece: A change in social paradigm

The measures introduced by the Greek government as a part of the agreement with the IMF and the EU exemplify this attempt at a change of social paradigm. Measures that until recently were aspects of ‘wishful thinking’ for the forces of capital have been rapidly introduced in a ‘shock and awe’ tactic of consecutive legislative coups. Moreover, the whole mechanism of EU-ECB-IMF ‘supervision,’ in reality something close to economic and financial occupation, led to successive waves of measures. Sharp reductions in both public and private sector wages, along with abolishing existing legislation on collective bargaining, led to a 25.2% reduction in real terms of average wages.[xv] The reform of the pension system will lead to dramatic increases in pension age limits and decreases in pensions and, more importantly, to the change from a redistributive system based on the solidarity of generations (current workers’ contributions pay for pensioners) to a system where pensions will be determined by the level of contributions introduced during the whole work-life. Moreover, current pensioners are already facing sharp reductions in the amounts they receive. The changes in the system of collective bargaining have left extensive parts of the workforce with no collective contract whatsoever. The easing of the restrictions to mass firings and the reduction in  severance packages has reinforced workplace despotism. We are facing a deregulation of the labor market of historical dimensions and the full unleashing of the disciplinary aspects of capitalist crisis.[xvi] The rise of the VAT and other indirect taxes combined with constant increases in the prices of most goods means a further attack on the income of working families.[xvii] New taxes have been introduced including extra income tax and a new property tax. The sharp reduction of public sector employees, with mass lay-offs not only of public employees on limited term contracts, but also of civil servants with permanent positions, will only aggravate the problem of mass unemployment and intensify the problem of workplace precariousness. At the same time it will severely undermine the quality of services provided. A massive wave of privatizations has increased commercialization of the access to basic goods and services and has led to a pillage of public assets in the name of repaying the debt.  Higher Education Reforms by the Ministry of education have intensified the move toward a more ‘entrepreneurial’ Higher Education.

            The result of these measures has been a sharp deterioration in living standards. If we include the effects of increased taxation, the purchasing power of the average wage-earner has been reduced by 30%.[xviii] With the Greek economy continuously contracting since 2008 many small businesses have been forced to close. The official unemployment rate was at the 4th quarter of 2013 27.5%, with youth unemployment (15-24) reaching 57% according to the data of the Hellenic Statistic Authority.[xix] Most analysts, though, calculate real unemployment to be much higher, and the trend is rising. Drastic cuts in public spending have led to reduced services by public authorities, exemplified in the fact that on September 12, 2011 the school year started without textbooks because of a delay in their printing. Hospitals, public universities and public transportation systems face extreme budget cuts, areseriously understaffed and can no longer function properly. According to trade union data, there is a deficit of 32,000 teaching hours per week in Greek secondary education. Budget cuts that have reduced access to healthcare along with increased poverty have led to sharp deterioration in public health.[xx]

Moreover, the whole process of the implementation of the measures has also been an attack on national sovereignty and the democratic process. The Greek government is treating the loan agreements and the ‘Memoranda of Understanding’ with the EU and the IMF as something above even the Greek constitution, the supervising EU –ECB – IMF ‘troika’ can always demand extra measures and dictate important policy changes which are then implemented by simple ministerial decrees. Moreover, the whole process of constant evaluation of the ‘progress’ made offers ample room for blackmailing Greek governments into accepting even harsher measures.


7. Hegemonic instability

However, this process is facing grave contradictions both in Greece and in Europe, as the current circle of social contention shows. Contrary to the ascent of neoliberalism, which coincided with a long period of defeat for the working class and the political left, now we face an open crisis of neoliberalism as hegemonic ideology. References to the market and its inherent rationality do not have the same appeal today as they had back in the early 1980s. Moreover, both the crisis of neoliberalism and the alienation of large strata –– both middle class and working class –– from the political scene, as the result of the consequences of the crisis, mark a growing crisis of hegemony. This introduces an element of instability in the conjuncture.

There is no doubt that the coalition of forces around the ‘Stability Program’ is a strong one. Apart from the open blackmail from the EU, the IMF and the international rating agencies, there is the political consensus of the Greek political and media elite and the open support of all the segments of the bourgeoisie. They see these measures as a unique opportunity to lower labor costs and radically alter the balance of forces in the workplace – something that in the absence of a viable developmental strategy seems as the only possible solution for them.

On the other hand, the hegemonic efficacy of this strategy is minimal: the popular classes have been reluctant to give their consent.  After more than two decades of attempts at capitalist restructuring and demands for temporary sacrifices in the name of future prosperity, the subordinate classes are being told that they will have to endure austerity without end. Instead of the appeal to modernization and ‘becoming part of Europe’ as ‘national goals,’ which was the axis of the ruling ideology in the past decades, what is being projected is more an attempt towards collective guilt in sharp contrast to what most people perceive as a sharp deterioration of their living conditions. This ‘thin’ basis of legitimization, this reliance only on a ‘passive’ form of hegemony, is something that can turn into a more profound crisis of hegemony. This can explain the extent of protest and anger in Greek society. It can also account for the extremely high rates of disapproval for the measures and a general disillusionment with the political system. This can account for the dramatic changes of the political landscape, exemplified in the electoral earthquake of the May-June 2012 elections. The dissolution of the historical ties of PASOK to the subaltern classes, the losses of New Democracy, the rise of the neo-fascist Golden Dawn and, above all, the impressive electoral rise of the Left and in particular SYRIZA: all these reflect the extent of the political crisis and the profound changes in relations of representation.[xxi]

The fact that in most European countries we have not seen an expression of tendencies of such magnitude in the political scene has more to do with the inability or absence of a political Left than with a stabilization of the balance of forces. 

Moreover, there are also signs that we have entered a new historical cycle of mass protest. From December 2008 in Greece, the first such example of extreme forms of social discontent and contention,[xxii] to the Arab Spring, the Indignados Movement, the Occupy! movement in North America, the student revolts in Britain, Canada and Chile and the 2013 Turkish protests, we have been witnessing movements that are not only massive but also go beyond simply articulating grievances and demands. Facing this situation, the forces of Capital have chosen a very aggressive strategy. One could describe it as being at the same time post-democratic and post-hegemonic.[xxiii] Several pieces of evidence attest to this tendency: The Schmitian overtones of the “state of permanent economic emergency,” the total disrespect of the democratic and more generally political procedure, the new forms of international economic intervention (along with nation-building, we now have economy-building!). At the same time, there is a certain ‘fear of the masses,’in both senses suggested by Balibar in his reading of Spinoza.[xxiv] Fear of the possibility of social explosions, December 2008 being the closest example, and also fear of the masses themselves regarding the precariousness of their material condition.

The repressed and disavowed aspect of this conjuncture of austerity and protest is that of a looming hegemonic crisis. The erosion of any broad legitimizing basis after more than two decades of ‘actually existing neoliberalism,’ the open crisis of neoliberalism after the current crisis of financialization, the growing class inequalities, the growing alienation of large segments of the population from the political scene and even the end to high consumption driven by cheap credit: all these are contributing factors to a crisis of hegemony.


8. The ‘Movement of the Squares’ and its importance

The mass rallies and assemblies at city squares all over Greece in May-July 2011 exemplified the looming crisis of hegemony. This movement was based on the collective experiences of struggle in the past years, such as the December 2008 youth explosion, the massive strikes in 2010-2011, the movement of civil disobedience to increased toll prices, and the heroic struggle of the people of Keratea, a small town in the greater Attica region, which  fought with riot police for months, successfully opposing plans for an environmentally disastrous landfill in their vicinity. At same time, people with no prior experience of struggle come forward in these protests, which were not simple imitations of the 15-M protests in Spain, but a much more widespread form of protest with deeper roots in Greek society.

These protests were deeply democratic, radical and profoundly anti-systemic. They represented a strong desire for political change, the demand for safe employment, dignity for labor, authentic democracy, and popular sovereignty against the attempt to implement measures dictated by the EU, the IMF and the ECB. Moreover, these protests have brought forward a new wave of politicization and radicalization of Greek Society. People begin to question dominant policies, especially in what concerns the debt and Greece’s participation in the Eurozone. A very important aspect of the movement has been the growing disillusion of people with the European Union. Contrary to a traditionally strong pro-EU popular opinion more and more people are beginning to question the participation of Greece in the Eurozone and the withdrawal from the euro is being openly discussed by people, instead of being rejected in advance, as was the norm until recently.

It is true that this movement has been extremely suspicious of traditional party politics, a suspicion also directed against the parties of the Left. But to pass judgment on this anti-political stance, we must also take into consideration that for the majority of Greek people party politics is associated with unjust neoliberal policies, media manipulation, corruption and close links to big business and lately an almost servile stance towards international organizations. In light of the above, one can say that this ‘anti-political’ stance is exactly the foundation of an authentic process of radical politicization, the beginning for an alternative politics of collective action, direct democracy and radical social change.

That is why on the squares of Greek cities we witnessed a unique experiment in democracy. The mass assemblies, with their very strict rules of equal voicing and collective decision that leave no room for traditional demagogy, offered an alternative paradigm of the collective processing of political demands and strategies, and produced demands and political positions going beyond a simple refusal of dominant policies. If the forms of a potential ‘dual power’ must always be the result of a process of collective inventiveness, then we experienced the beginning of such a process.

The fact that the Greek government used extreme forms of police brutality in order to suppress the movement provides further evidence of the absence of legitimization and of the deepening hegemonic crisis. At the same time it brought forward both the dynamics and the limits of such forms of protest and contention. On the one hand, the movement intensified breaks in the relations of representation and eroded what was left of the neoliberal hegemony, forging new bonds of solidarity and common militant experiences. On the other hand, it made evident that in a situation of limited sovereignty and post-democratic and post-hegemonic ‘state of permanent emergency,’ traditional displays of social anger and loss of legitimacy, are not enough. What is required is an escalation of social and political struggles that should include the articulation of clear alternative political goals and not just abstract needs, forms of struggle that pose actual material obstacles to the implementation of the measures, and those forms of political representation and organization that would challenge the actual balance of forces. This has been the main challenge for the forces of the Left.

The Movement of the Squares was a turning point in the development of social and political antagonism in Greece. It intensified the political crisis and turned it into something close to a hegemonic crisis and a crisis of state authority. A series of social and political events followed: the disruption of military parades in October 2011,[xxv] the fall of the Papandreou government, the 2011-12 Papademos government, led by a former central banker, the increased social contestation that led to the February 12 2012 mass rioting, the elections of May-June 2012 that led to the impressive rise of the Left and especially SYRIZA. All of these events exemplify how forms of mass collective protest and politicization intensified the political crisis and changed the political landscape.


9. The Challenge for the Left

That said, the challenge for the political left is enormous. The total defeat of the governmental Left and the illusions about a ‘neoliberalism with a human face’ have left a certain political vacuum. A left strategy cannot be a simple strategy for the movement, although having strong movements is a most important aspect of the struggle we have to wage. We cannot miss the political, the political level, the question of power.

Especially in Greece, this has been an urgent exigency, since SYRIZA came close to gaining governmental power in the June 2012 elections and it is probable that they will be the first party in the next legislative elections. Therefore, questions of political strategy, especially regarding the political program and how to deal with political power are not theoretical but have a direct relation to everyday politics.

The problem is that these developments coincide with a period of strategic crisis for most tendencies of the European Left. One should not forget that the basic problem for the European Left has been that, after its subsequent defeats in the last decades, first by the mutation of social-democracy and the decline of the communist Left, and then by the subsequent waves of capitalist restructuring and neoliberal reforms, it has not managed to offer a strategic alternative. For the most part, it has contributed to student and workplace militancy, with varieties of success, it has acted as an electoral outlet of protest, and it has offered some form of ideological defense of socialism. Nevertheless, it has not managed to offer those concrete political answers that would transform it into a counter-hegemonic force. Yet, this is exactly what is currently required: a Left that can address the whole of society and offer an alternative to ‘actually existing capitalism.’ This means offering those concrete answers that have to with economic and fiscal policy, ownership, foreign relations, the ways to integrate or not in the international system, in short the question of power. At the same time, the crisis of the trade union movement, as a result of both the extensive capitalist restructurings of the past years and the inability of the trade union bureaucracy to challenge them, makes rethinking how to organize collective struggle and resistance an urgent matter.

Therefore, the challenge for the forces of labor and the Left is twofold. On the one hand, it is necessary not only to try and organize forms of social resistance and struggle, but also to contribute to a social mobilization of such scale that would undermine important aspects of the hegemonic strategy, induce sharp breaks in the relations of representation, especially those that attach large parts of the subordinate classes to social-democratic parties, and create conditions of social unrest that would make the implementation of the Austerity Programs unbearable for the ruling classes. On the other hand, this requires the articulation of a concrete program of radical political goals that will offer an alternative.

The question of political power is necessary if we want to avoid two extremes, between which current Left strategy vacillates. On the one hand, we have the strategy of “changing the world without taking power,” based on the advances and creativity of social movements, especially in areas where the movement  implies not only contention but also building social networks and forms of self-organization.  This strategy misses the importance of political power and the need to resist the materiality of political power (exemplified by the heroic and tragic struggle in Oaxaka). One the other hand, we face a certain immersion in realist politics that leads to an identification of political intervention with a plausible governance of current capitalism, a strategy that has led to many defeats, especially in Europe. The participation of the French Communist Party to the Jospin government and of the Party of Communist Refoundation in the Prodi government in Italy are the most recent examples of such disastrous political choices.



10. From resistance to hegemony

The challenge for the Left is not simply to be instrumental in the development of social contention or to be the organizing force of social resistance. The challenge is to offer a viable alternative to ‘actually existing capitalism.’ This cannot be a simple evocation of communism, however necessary the search for the ‘traces of communism’ in current struggles is (the refusal of commodification, the refusal of capitalist hierarchy, the demand for spaces that are free of the value form, the new forms of ‘democracy of the struggle’). It cannot be a simple list of anti-capitalist demands or the verbalism of simply appealing to ‘world revolution’ or its counterpart ‘pan-European revolution.’ It cannot be a simple projection of social needs, but must instead include an articulation of concrete radical demands. Refusing the debt, demanding an immediate opt-out of the euro, nationalizing banks, imposing capital controls, and requiring redistribution of income towards labor are urgent demands . Today, they can be articulated with a demand for a radical alternative, and they provide a way to think not simply about  left-governance but about the highly original ways today a broad anti-capitalist social and political front can pose the question of power, especially if we see an escalation of contention and a deepening of the tendencies toward open political crisis.

First, this requires a clear position on the question of debt. Since the whole mechanism of debt has been used as a means to impose systemic social violence against Greek society, it is clear that it presents an unbearable burden. Trying to find a way to finance it can only lead to a vicious circle of more austerity and at the same time greater indebtedness. Even after a large scale debt restructuring in 2012 - the cost of which mainly fell upon public sector institutions - in 2013 the Debt/GDP ratio was at 175.1%.[xxvi] That is why it is necessary to fight for debt annulment. This is made even more urgent by the fact that, as it has been shown in many other cases, debt can be a very powerful mechanism of imposing aggressive capitalist politics. Furthermore, current levels of debt, especially in countries like Greece, can lead to various forms of creditor-led ‘restructuring,’ which could be used as the pretext for yet another round of attack on labor.

Secondly, a clear position on the question of debt can support the demand for a complete repeal of the Greek government’s agreements with the EU, the ECB and the IMF and of all the measures associated with these agreements.

Thirdly, the whole project of European Unification must be questioned. Contrary to a tendency to view European Unification as a neutral or natural tendency, it must be viewed as the materialization of a class strategy and as a mechanism for the strengthening of capitalist modernization. De-linking European countries from these processes and reclaiming aspects of national sovereignty in fiscal and monetary policy, is the only defense against the systemic social violence of the internationalization of capital. The architecture of both the EU and the Eurozone implies that it is not possible to have European-wide processes of income redistribution or compensations for regional inequalities or any other aspect of a ‘progressive monetary union.’[xxvii] On the contrary, one must expect from the part of the EU an insistence on neoliberal orthodoxy. Today, any possible solution of the Greek crisis in favor of labor requires the immediate exit from the eurozone, the rejections of EU treaties and their constraints, the re-introduction of national currency and radical policy changes: introduction of capital controls, nationalization of the banking system and public control of crucial sectors of the economy. It also means the insistence that radical social change requires full withdrawal from the European Union. Contrary to a tendency of a great part of the European Left to take European Union for granted, what is needed is struggle against the EU. Creating obstacles to the process of European integration and de-linking social formations from this process is an internationalist position. We think that such a stance is not to be considered some form of economic nationalism of protectionism, nor is it a retreat to the supposed ‘safety of the capitalist sovereign-state.’[xxviii] In Greece, all segments of the ruling classes and the all the political establishment, including the Far Right, are pro-European. De-linking a social formation, under the pressure of a broad social and political front of the subaltern classes, from forms of capitalist transnational market integration and systemic social violence against the subordinate classes is, in our eyes, a form of true internationalism. Today a ‘united’ Europe is unavoidably a Europe of capitalists and big banks. Dismantling the financial, economic, and political architecture of the European Union is the necessary condition of true solidarity between movements in Europe.

It is true that there has been a great debate within the Greek Left regarding the question of Greece’s relation to the EU and particularly its being part of the euro. There have been strong arguments in favor of Greece’s exit from the Euro. According to this position, exiting the euro, along with other measures such as the annulment of debt based on a process of debt audit, the imposition of capital controls to avoid flight of capitals, the nationalization of banks and strategic enterprises and the redistribution of capital in favor of labor, is the necessary starting point if we want to avoid social disaster. By regaining the possibility of an active monetary policy, in order to avoid resorting to foreign debt, and adjusting the exchange rate in order to stop the erosion of the productive base, monetary sovereignty can indeed be progressive change and open up the way for broader process of social transformation in a socialist direction.[xxix]

Contrary to these positions, there have been other positions in the Greek Left. There have been strong arguments suggesting that any exit from the Eurozone would lead to a flight of capitals, a run of the banks and a catastrophic erosion of working class savings and income, therefore tactically creating obstacles to a progressive solution. On a more strategic – ideological level emphasis on monetary policy has been associated with economic nationalism and protectionism and the identification of left-wing strategy with the fantasy of a good keynesian capitalism.[xxx] Although we agree on the need to distance left-wing strategy from any attempt to ‘salvage’ Greek capitalism, at the same time we think that these positions avoid treating the euro and the EMU as class strategies and not just ‘objective’ realities. Moreover, equally missing from these positions is the fact that politics is always overdetermined and there are no ‘pure’ class contradictions. Greece’s relations with the EU, the whole financial, monetary and political architecture of the EMU, and the debt burden, over-determine the current conjuncture. These are the nodal points around which the forces of capital attempt to maintain their hegemony, by presenting their strategy as the only way out of the crisis. These relations are not simply international alliances. They represent the core aspects of the strategy of the forces of capital

Fourthly, we must insist that this radical challenge to the Eurozone and this demand for the radical dismantling of its political, financial and monetary architecture can be at the benefit of workers both in ‘peripheral’ countries such as Greece and in ‘core’ countries such as Germany. Contrary to the prevailing image that the danger is for German workers to have to pay for the problems of the Greek economy, the European Monetary Union means that both German and Greek workers are facing a reduction in their  wages and a deterioration of their working conditions: the core economies need this in order to keep their competitive advantage and the peripheral economies need it in order to sustain the pressure exerted by more competitive core economies.

Fifthly, against the ‘fuite en avant’ tactic of the bourgeoisie on a pan-European level, the Left must insist on the necessity and possibility of an anti-capitalist alternative. The violence of the attack against workers, the capitalist crisis as crisis of neoliberalism and ‘actually existing capitalism,’ the realization of the deeper irrationality of the ‘markets,’ make this alternative much more plausible and convincing. Radical demands such the imposition of a ban on mass lay-offs, the nationalization of the banking system, the decrease of military spending, the increase of wages and pensions and in general the redistribution of income toward the subordinate classes, are now more urgent than ever.

All these require dealing with the question of political power and the possibility of a left wing government reversing austerity and opening up the possibility of social transformation. However, thinking in terms of political power does not mean thinking simply in terms of a change of government. Nor does it mean a smooth transition process strictly within the limits of existing legality. It means a process of breaks and transformations, and radical reforms, which in some cases also means a constituent process of changes and radical reforms in legislation, including the basic aspects of contemporary constitutions, which increasingly tend to constitutionalize austerity, private investment and international trade liberalization agreements. Moreover, if it is not possible to think of political power simply in terms of government power, we still need a strong movement. Without a strong movement from below, without forms of popular power from below, of self-organization, and self-defense, any government of the Left will in reality be weak and unable to answer the pressures and blackmails from the part of international markets and organizations. We must never forget that the class character of contemporary states is deeply rooted in the very materiality of their institutions, forms of decision making, knowledge process, however traversed they are by class struggles. There are going be strong resistances and obstacles from the judicial system, the coercive state apparatuses, segments of the state bureaucracy, especially the ‘specialists’ and ‘technocrats’ dealing with the facilitation of ‘investment.’ Consequently, the Left can never be a ‘normal’ party of government. It will always be in a necessarily contradictory relation to the State. That is why it can never simply have a government policy. It must always be based upon mass movements and at the same time trying to impose a profound transformation of state apparatuses.

We understand that this argument is in contrast to the dominant line within SYRIZA, which insists on the possibility of having a break with austerity within the Eurozone, provided that we have a strong government of the Left that will be in a position to negotiate. We disagree with this position because we have tried to stress the importance of a break with the eurozone and the EU as a necessary condition for any progressive solution to the Greek crisis and also the need for a radical approach to left-wing governance. At the same time, our argument is in contrast to those positions within the Greek Left that treat any reference to a government of the Left as a sign of reformism placing all the hope upon the movement. It is not that we underestimate the importance of the movement; in fact we have shown how the impressive cycle of struggles in Greece has been a crucial factor in the political crisis and the turn to the left. However, without an alternative narrative for Greek society, in the form of a radical program, and a strategy for political power, reliance upon the force of the movement cannot suffice to turn social dynamics into political transformation.


11. Re-inventing the Left

All, these cannot take place without a discussion of how to reinvent the Left. This could only be a process of re-composition both of social subjects and of the political subject. On the one hand, fighting back such an attack, not only in Greece but also all over Europe, cannot be done simply by an alliance of social movements. The fact that large segments of the working class are outside union representation, the detrimental effect precariousness can have on forms of militancy, the mutation of the union bureaucracy towards pro-business positions, the fact that segments of youth (outside higher education) and unemployed usually lack the means for collective representation, and, of course, the problem of low participation by immigrant labor, exemplify the crisis of the labor movement. The fact that despite the extensive forms of solidarity at community level, we still have a humanitarian crisis to face, implies that we still need to work upon this. We are also lacking forms of coordination between different movements. What is needed is that form of articulated and conscious social combination of social movement and political struggle. Therefore, we need on the one hand a broad social front of struggle that could comprise trade unions, student activism, grassroots initiatives, local assemblies and forms of coordination, and a radical left front. This could be the actualization of the United Front tactic in our times.

Such a combination of social and political front of struggle would have to deal with the very complexity and difficulty of the necessary tactic. The EU, the IMF and the forces of Capital have opted for a tacit of very aggressive ‘war of maneuver’ that also aims at preemptively occupying those positions that would enable social movements to wage some form of ‘war of positions.’ Therefore, it is not possible for the forces of labor simply to wage some sort of social guerrilla warfare (the ‘bases of struggle’ can be eroded by the attack), to invest in some form of revolt (the attack is much deeper), or to wait for a better day since the time – however difficult this might be – is now (the aggressiveness of the attack means that the forces of Capital are trying to accelerate historical process and create societal points of no return). What is needed is a highly original combination of a ‘protracted people’s war’[xxxi] with the ability for frontal confrontations, when there is no alternative, and the capacity to counterattack. Such a tactic would lead to well organized sector strikes, combined with cross-sector reference points (e.g. general strikes), with a prolonged youth unrest, with ‘small’ battles that can create social and political landmarks and inspire confidence (for example forms of solidarity to attempts at workers self-management at companies that close), and at the same time, attempt to escalate the confrontation at a point where the pressure of social and political contention can destabilize the political scene and governments, though well organized and persisting forms of political mobilization making good use of the experience of the ‘movement of the squares.” Such a development can lead not only to important victories against austerity packages, but also to new opportunities for the Left.

That is why it is also necessary to reinvent the Left in the new conditions created by both the counter-attack of capital and the crisis of hegemony, this combination of dangers and opportunities. One aspect has to do with the necessary political program as a concrete set of steps and radical transformations that can restore the confidence of people that there is an alternative.

However, there is also the question of the political subject. From the 1990s, after the collapse of ‘actually existing socialism,’ the complete mutation of social democracy and the crisis of traditional communist reformism, at least two strategies have shown their limits. The first one is the logic of creating ‘anti-neoliberal’ coalitions aiming at some form of progressive government, a strategy that in the 2000s offered nothing more that left legitimization of capitalist restructuring. The other is that of the revolutionary or anti-capitalist realignment. Despite the ‘moral high ground’ of such a position, in the sense of not participating in painful compromises, there is the danger of sectarianism and consciously avoiding the challenge of building a counter-hegemonic block. Contrary to these positions, what is needed a fresh conception of the Left Front. This must not be conceived as a right wing turn in order to come in terms with dissident Social-democrats. Nor should it be seen as building a broad electoral coalition. What is needed is a Left Front with a radical and anti-capitalist orientation that could unite in a necessarily contradictory way, forces coming from the various forms of communist reformism that are now choosing more radical positions, the anti-capitalist Left, and new forms of radical militancy in grassroots initiatives. This Left Front is not to be seen simply as electoral alliance or an aggregation of political tendencies. It has to be a democratic political laboratory. The experience of social movements in Europe in past decades, the experience of European Social Forums, and the forms of organizing chosen by successful Left Parties, the very experience of the Greek movement suggest that more and more militants demand a open and truly democratic form of organization, one that could bring together different political experiences and sensitivities and also help the emergence of new and original political compositions. This conception of the Front (and also the Party) as political laboratory is also imperative if we want to enhance those collective forms of political intellectuality[xxxii] that could help form strategies and tactics and elements of a counter-hegemonic appeal.

This also means the opening up of the discussion of what socialism and a renewal of communist strategy might mean in the 21st century. What is needed is a collective effort to rethink the possibility of a non-capitalist organization of social life, beginning from those ‘traces of communism’ in actual struggles, demands and practices of solidarity: the refusal of the commodification of social goods and services, the resistance to the various forms of ‘enclosures,’ the egalitarian demands of social security and decent living for all, the various forms of ‘direct democracy of struggle,’ and the demand to create social spaces free of the violence of capital. Although this rethinking of strategic questions might seem like a luxury in times of a full-scale attack on labor, we should never forget that unless large masses of workers regain their confidence in the possibility of radical social change, the forces of capital will retain a strategic advantage.






[i] Ministry of Finance and Bank of Greece, Memorandum of Understanding with the IMF, (Athens: Ministry of Finance, 2010).

[ii] International Monetary Fund, Greece: Staff Report on Request for stand in Agreement, 2010..

[iii] INE-GSEE/ADEDY  Greek Economy and Employment (in Greek), (Annual Report from the Research Institute of the Greek Trade Union Confederations), Athens: INE-GSEE/ADEDY, 2006); INE-GSEE/ADEDY  Greek Economy and Employment (in Greek), (Annual Report from the Research Institute of the Greek Trade Union Confederations), Athens: INE-GSEE/ADEDY, 2008).

[iv] Ios tis Kyriakis, “The Dark Sea. Scandalous Tax-exemptions for Ship-owners” (In Greek). Eleytherotypia  May 30, 2010. Accessed October 29, 2010.

[v] INE-GSEE/ADEDY, Greek Economy and Employment (in Greek), (Annual Report from the Research Institute of the Greek Trade Union Confederations), (Athens: INE-GSEE/ADEDY, 2013); Bank of  Greece, Governor’s report 2013, (Athens: Bank of Greece, 2014).

[vi][vi] Ol. Blanchard ‘Adjustment within the euro. The difficult case of Portugal’, Portuguese Economic Review 6 (2007) 1-21; Il. Ioakeimoglou, Internal Devaluation and Capital Accumulation. A Critical Approach, (Athens: INE GSEE/ADEDY, 2012) (In Greek).

[vii] Paul Krugman, “The Making of a Euromess”,  New York Times February 15, 2010 (Accessed October 10, 2010)

[viii] Paul de Grauwe , “The Euro at ten: achievements and challenges”, Emprica 36 (2009) 5- 20..

[ix] Costas Lapavitsas et al., Crisis in the Eurozone (London: Verso, 2012)

[x] Lapavitsas et al. Crisis in the Eurozone, 90-91.

[xi] INE-GSEE/ADEDY  Greek Economy and Employment (in Greek), (Annual Report from the Research Institute of the Greek Trade Union Confederations), (Athens: INE-GSEE/ADEDY, 2010), 68-82.

[xii] Costas Lapavitsas, Profiting without Producing. How Finance Exploits us All. (London: Verso, 2013).

[xiii] Stavros Mavroudeas, “Greece and the EU: capitalist crisis and imperialist rivalries”, paper presented at the IIPE and Greek Scientific Association of Political Economy First International Conference in Political Economy, Rethymnon, Crete, September 10-12 2010.

[xiv] INE-GSEE/ADEDY, Annual Report 2010, 78-82; On austerity policies all over Europe see Armin Schäfer and Wolfgang Streeck (eds.), Politics in an Age of Austerity, (London: Polity, 2013).

[xv] Bank of Greece , Governor’s Report, 78.

[xvi] INE-GSEE/ADEDY, Annual Report 2013..

[xvii] In 2010 indirect taxes represent  a disproportionally high part of total taxation. In Greece direct taxation is only 7,7% of GDP compared to 13,1% of GDP in EU-27. (INE-GSEE/ADEDY, Annual Report 2010, 52)

[xviii] INE-GSEE, Annual Report 2013, 65.

[xix] Hellenic Statistic Authority, Press release. Labor Force Survey. 4th Quarter 2013, 2014.

[xx] David Stuckler and Sanjay Basu, The Body Economic. Why austerity kills. (London: Allen Lane, 2013).

[xxi] On the 2012 elections see Yannis Mavris, “Greece’s Austerity Election”, New Left Review 76 (2012), 95-107.

[xxii] On December 2008 see Panagiotis Sotiris, “Rebels with a Cause: The December 2008 Greek Youth movement as the Condensation of Deeper Social and Political Contradictions”, International Journal of Urban and Regional Research 34.1(2010) 203–9.

[xxiii] On the notion of post-democracy see Colin Crouch, Post-Democracy, (London: Polity, 2004).

[xxiv] Étienne Balibar, La Crainte de Masses ( Paris: Galilée, 1997).

[xxv] On the political crisis in Greece see Stathis Kouvelakis, ‘The Greek Cauldron’, New Left Review 72 (2011), 17-32.

[xxvi] Hellenic Statistical Authority, ‘Press Release: Fiscal data for the years 2010-2013’, April 14, 2014.

[xxvii] On the contradictions of any left-wing strategy aiming at ‘another Europe’ see Costas Lapavitsas “Debt, euro and the positions of the Left”, (In Greek), Avgi July 11 and 13 2010

(Accessed April 30, 2014)

[xxviii] See for example Slavoj Žižek’s criticism: “This is why one should avoid the temptation to react to the ongoing financial crisis with a retreat to fully sovereign nation-states, easy prey for free-floating international capital, which can play one state against the other. More than ever, the reply to every crisis should be more internationalist and universalist than the universality of global capital.” (, Slavoj Žižek 2010, “A permanent economic emergency”, New Left Review 64 (2010), 88.

[xxix] Costas Lapavitsas and Stathis Kouvelakis have presented important arguments in favor of this position. See Lapavitsas et al., Crisis of the Eurozone... and Kouvelakis, ‘The Greek Cauldron’.

[xxx] For positions within the Greek Left that have been critical of the proposal for an exit from the Eurozone see John Milios and Spiros Lapatsioras 2010, “The imaginary of the Left and the exit form the euro”,  (In Greek) Avgi July 18 2010 (Accessed April 30, 2014); John Milios, ‘Neoliberal Europe in Crisis: SYRIZA’s alternative, Studies in Political Economy 91 (2013), 185-202; Christos Laskos and Euclid Tsakalotos, Crucible of Resistance: Greece the Eurozone and the World Economic Crisis (London: Pluto Press, 2013).

[xxxi] Stathis Kouvelakis, “The Unseen End of Winter. Towards the second phase of social and political confrontation, (In Greek) Epohi  March 28, 2011 (Accessed April 30, 2014)  .

[xxxii] Antonio Gramsci, Selections from Prison Writings (London: Lawrence and Wishart, 1971), 335; Panagiotis Sotiris, ‘Hegemony and Mass Critical Intellectuality, International Socialism Journal 137.