Interview: Yanis Varoufakis

As the Greek crisis is far from over, I decided to reach out to Yanis Varoufakis and get his perspective on the challenges of the past and present. Major issues hang in the balance today: the future of Europe in particular, and the question of capitalism in general. This was as much the case when Varoufakis left office, as it is right now.

White: There has been much debate on the European Left as to whether or not the change in Syriza’s policy represented a betrayal of the party’s original aims. Is that a fair characterisation? Do you think the leadership had any real choice?

Varoufakis: My resignation, on the night of the referendum, reflects a conviction that, indeed, there was a real choice – and my view that PM Tsipras made precisely the wrong one. Having said that, I am loath to use terms, like ‘betrayal’, which demonise the ‘other’ viewpoint. It is time the Left abandoned sectarian practices and language.

White: What do you think would have happened if the Greek government had refused to shift its position?

Varoufakis: We would have had an honourable, an economically viable, agreement – instead of a surrender that leads the continuation of the debt-deflationary spiral that deepens our insolvency and inflames further the on-going humanitarian crisis.

White: The majority of Greeks wanted to stay in the Euro, but they also wanted to end austerity. Despite Syriza’s pledge to do both do you think the two were irreconcilable?

Varoufakis: Quite the opposite. The only way Greece can remain in the Eurozone in the medium term is if we succeed in ending the continual decline of national income and the exodus of our best-educated young. And the only way this will happen is via a combination of a smart debt restructure, the end of self-defeating austerity, and deep reforms in public administration and the private sector.

White: The German sociologist Wolfgang Streeck has argued that the integration of Europe would almost inevitably take on a neoliberal form. In this view, the problems with the EU today represent the fundamental flaws of federalism. What do you make of this argument?

Varoufakis: The first part is correct. The second argument, about the ‘flaws of federalism’ is… flawed. Yes, it is true that the Eurozone’s design was based on a serious misunderstanding of how macro-economies function; a misunderstanding that was functional to the political agenda of those who wanted to shift power away from electorates and toward vested interests. However, the Eurozone’s design was not a species of federalism – it was, in fact, utterly antithetical to the principles of a democratic federation. It is the absence of a federal sovereignty that renders the Eurozone crisis-prone and politically toxic.

White: Would you welcome the breaking apart of the European institutions we currently have? Or do you think the EU should undergo reform instead?

Varoufakis: There is no doubt that they need to be reformed radically. But to create the political conditions for such reform first we need to re-deploy existing institutions in a manner that stabilises the four sub-crises afflicting Europe: public debt, banking, low investment and poverty.

White: Now the centre-right government in Portugal has been brought down by a new anti-austerity coalition led by the Socialist Party. How does this situation compare with Greece?

Varoufakis: The two countries, Greece and Portugal, are caught up in the same Eurozone-wide crisis and both have been subjected to dead-end policies that have been portrayed as success stories (with the Portuguese one bathed in more adulatory light). But there is a difference: Last January, in Greece, our government was elected with a clear mandate to oppose these dead-end policies. In Portugal this is not the case, as the Socialist Party seems determined, even before forming government, to avoid challenging the basic logic of a failed policy agenda.

White: Until recently it appeared that the centre-left was weak. Do you think the events in Portugal demonstrate hope for a resurgence in social democracy?

Varoufakis: No. Social democracy remains in tatters of its own making. It has yet to articulate a valid criticism of its contribution to the Eurozone’s terrible architecture as well as to the illogical manner in which Europe responded to the inevitable failures of that architecture.

White: We’ve seen China’s growth falter in recent months. Do you think we should anticipate another global economic crisis before the end of the decade?

Varoufakis: The crisis unleashed by the events of 2008 has not passed. For seven years now it has been migrating across the planet, gathering strength and transforming itself constantly. China’s slowdown is part of this process. The global economy is again in a dollar recession (i.e. global GDP shrunk this year in dollar terms by an amount not dissimilar to that observed in 2009). Europe may be the weak link but the whole global chain is under great stress due to the G20’s failure to deal with global imbalances and low aggregate investment. Nothing short of a new Bretton Woods can made a long lasting difference.

White: You’ve described yourself as an ‘erratic’ and libertarian Marxist. What does this mean in the 21st Century?

Varoufakis: Marx’s quarrel with capitalism was not that it was unjust but that it was inimical to human freedom and particularly inefficient at pressing our magnificent capacity for technological innovation into humanity’s service. He got capitalism right but failed to predict how his disciples, the Left, would exploit the power of his ideas to build political power structures that proved detrimental to human freedom and particularly inept at harnessing technological innovation. In the 21st Century, a blend of Marx’s freedom-based critique of capitalism and libertarian warnings against too much trust in bureaucracies seems to me a great weapon against the current political and economic dead-end. Decentralising technologies can help to make this ‘marriage’ work.

White: What have you been doing since you left office?

Varoufakis: Agitating for a democratic European Union…

This interview was conducted in November 2015.

A Restless Summer.

Over the summer there seemed to be an endless flow of stories for the media to prepare narratives for and spoon-feed to us. This will come as a shock to those of you who have spent the summer in a masturbation furnace or perhaps on Mars. With everything from neo-fascist killing sprees and economic crisis to phone hacking and celebrity deaths, it was a damn good summer for news and certainly no silly season. Here are a few looks at major events in the summer, which you won't find in the mainstream media.

  
 THE GREEK MYTHS.

The debt crisis in Greece has rocked the Eurozone for months as it looked like German and French banks might be sunk the IMF and the EU moved in to force austerity measures in Greece to secure the interests of bankers in Western Europe. So Greece slashed €700 million more than the IMF and EU demanded of them, even as the country was saddled with yet more debt and the Europeans banks were handed €110 billion. The media so kind to inform us that the crisis was the result of "out-of-control" spending which we shouldn't pick up the bill for. The irony of all this is that the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to the countries that it had invaded, nor did the Germans have to pay back the loans that the Third Reich squeezed out of the countries it occupied in the war and especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after the First World War.

Even though from 2001 to 2007 the total spending of the EU was equal to 50.7% of GDP, out of the 27 member-states Greece was outspent by 13 states. Over the same time period public spending in Greece amounted to 44.6% of GDP. As the crisis hit Greece there was a jump in spending to 50.4% of GDP in 2009 and that is still the average expenditure in Europe. The relatively high level of public debt in Greece, before the crisis, goes back to the 1980s when the country was still recovering from the military junta. The weakness of the Greek government is in fiscal policy, though not spending but in tax-revenues that have collapsed as a result of anti-government sentiment exacerbated by an explosion of unemployment since the recession began. Sweden has the highest expenditure in Europe and yet there is no debt crisis, the reason being that the Swedish tax system is a lot better. The crisis in Greece was down to a flawed tax system and widespread anti-government sentiments which amounted to widespread tax avoidance and evasion.

Then there is the suspicious line that the Greeks are a "venal" and "lazy" people who have enjoyed a lavish state-expenditure at the expense of the rest of Europe. In actuality Greeks work around 2,120 hours a year compared with about 1,712 hours a year worked in Britain and 1,473 hours by Germans. Out of the OECD countries Koreans are the only people who work longer hours than the Greeks. You may have read of the "Greek Gravy Train", the tales of railway workers paid £60,000 a year and the way that professionals retire at 50 - though the average retirement is 62. There isn't much ink on paper about the huge numbers of Greeks who have received no pay in months and the ever-rising unemployment rate. Rationally, the Germans should bailout Greece in the way that the US bailed out Germany for free after it defaulted just after the Second World War. Instead the EU have been led by Germany into bailing out the banks at the expense of Greek democracy. The Greek people are now facing around 10 to 15 years of economic stagnation complete with a huge decline in the standard of living and in the end the country will still default anyway.

HACKED OFF!

The scandal at News International will probably be never fully said and done. It is much bigger than simply a scandal of hacking the phones of murdered children and soldiers killed in battle. We now know a lot more about the profoundly sordid relationship between the Murdoch media and the Establishment.  It has been common knowledge for a long time that the News International has a right-wing agenda. Out of the 247 editors who work for Rupert Murdoch not one came out in opposition to the Iraq war. The Murdoch media amounts to 40% of British media and has backed Margaret Thatcher, John Major, Tony Blair and David Cameron to electoral victory. We now know that soon after Cameron took office he first met with Rupert Murdoch before going on to meet with Rebekah Brooks when she edited The News of the World and then Dominic Mohan of The Sun for a "general discussion". Cameron attended the News International summer party where he gave an interview to James Harding of The Times and went onto give a speech at the CEO summit of that same newspaper.

Keep in mind that the Prime Minister also met with Paul Dacre, the editor of The Daily Mail, Lord Burns of Channel 4 and Deborah Turness of ITV News in the first month he was in office. Cameron later met with the editor of The Evening Standard for another "general discussion", the Prime Minister also attended the summer parties of The Financial Times and The Spectator. Unfortunately, the level of ingratiation that the political class has met with Murdoch does not end at a Christmas dinner with Rebekah Brooks and James Murdoch. We know that Tony Blair is the Godfather of Murdoch's daughter. We find that the Conservative Party and the police were entangled in the conspiracy ran out of a Murdoch red-top. No surprise here, it was the Thatcherites and the Met who colluded with Murdoch in 1986 to crush the print unions in Wapping. A favour for when The Sun led the media campaign against the Miners Strike of '84. Perhaps an extended favour for the campaign the Murdoch press led against Tony Benn - which went as far as actually fabricating psychiatric reports in order to question Benn's mental health - to prevent him from becoming leader of the Labour Party.


The problem with the dominant narrative in the mainstream media is that it assumes what went on at The News of the World was an aberration. As in All the President's Men we're told that the little guy can uncover a scandal which reaches the very top of power and then can bring down the President in the name of justice. So corruption can reach the very top but because of the democratic features of our society we can find it, root it out and restore greatness in our society. Once again it turns out we want the thing itself without the harsh element of it, just as so many of us want coffee without coffee (decaffeinated coffee), war without war (no casualties on our side) or even a revolution without revolution (no real change). In this case it is as if we want sleaze without sleaze, we need to get back to proper journalism which run without corruption and unscrupulous methods such as phone-hacking. It's the classic feel good story which is used to prevent a serious attempt to ask fundamental questions about the nature of the mass-media and the provision of news through corporate structures to the public.

NORWAY'S 9/11?

The massacre in Norway came out of nowhere seemingly, it took the pundits by surprise and prompted an embarrassing attempt to resurrect the "War on Terror" narrative. The Sun jumped on the opportunity to spin the headline 'Al-Qaeda Massacre: Norway's 9/11'. Clearly the Murdoch press were desperate to lead the public away from the stench of criminality around the papers and lead them by the nose against Muslims once again. It was almost as bad as when the American press looked up Edward Said for an "insight" into international terrorism in the wake of the Oklahoma City Bombing. Even though Said is a Christian, he is a Palestinian and therefore must be an expert on terrorism. After it turned out to be just another angry white man we could still read about the "failure" of multiculturalism that led to the attacks in The New York Times. We might choose to read in The Atlantic about how the massacre was a "mutation of jihad" whereby a white man goes ape as a Muslim fanatic would in order to prevent the coming "Islamization" of Europe. The leader of the English Defence League, a former BNP member, appeared on Newsnight to spin the same line.

In many instances the press came out no better than Robert Brasillach when he conjured up the notion of "reasonable anti-Semitism" during the Nazi occupation of France. Brasillach insisted he had no beef with Charlie Chaplin, Yehudi Menuhin and Marcel Proust, but the rest of Jewry could go hang as far as he was concerned. Similarly Breivik a distinguishes between "loyal" and "disloyal" Jews, who are a threat to the European civilisation, the state of Israel and global capitalism. For Breivik, Hitler was only wrong to exterminate the "loyal" Jews who deserved a homeland. In the same vein of thought we find Jack Straw who attacks Nick Griffin on Question Time as a Fascist before wheeling out Griffin's line that the Pakistani men see our women as "white meat". So there is a "reasonable racism" to be deployed for the protection of women against Pakistani rape gangs and to maintain "Britishness" with a ban on veils. There is nothing more suspect than the insistence that the actions of Anders Behring Breivik represent a current of working-class opinion in Europe which must be acknowledged in order to prevent such violent outbursts. 


In the manifesto Breivik churned out there are references and quotes to columnists Jeremy Clarkson and Melanie Phillips as well as Bernard Lewis, Bat Ye'or, Pamela Geller, Geert Wilders, Daniel Pipes, Ayaan Hirsi Ali and the Unabomber. The thought process behind the slaughter in Norway begins the mainstream right-wing discourse on Muslims and immigration in general, but then radiates outwards to the farthest reaches of jingo-lunacy. In one such instance Breivik used extracts of the Unabomber's manifesto and replaced words such as 'blacks' and 'leftists' with 'Muslims' and 'cultural Marxists'. You don't have to look too far to find hysterical noise in the gutter press about political correctness, multiculturalism, secularism, European integration and the "leftist" bias of the media. Interestingly Breivik didn't attack foreigners and turned his gun on his fellow Norwegians who were too tolerant towards the foreigners. As if the problem is not immigrants as such, but the political class that has been "corrupted" by the Left in a bid to subdue the unremitting greatness of the white man.
 

SHOPPING with VIOLENCE.

The riots seen in the UK seemingly came out of nowhere, inexplicable and indiscriminate violence tore through the capital before hurtling across the country. It was a peaceful protest in Tottenham over the death of Mark Duggan at the hands of police officers that descended into violence first. Then came a tidal wave of violence and looting that rushed through the streets of London, Birmingham, Manchester and a lot of other places. The commentariat was soon flailing wildly out of control for a useful narrative with Max Hastings wondering "How do you inculcate values in a child whose only role model is footballer Wayne Rooney - a man who is bereft of the most meagre human graces?" The Evening Standard pinned the blame on the GTA series whilst Melanie Phillips blamed the "liberal intelligentsia", oh and the rise of single-motherhood. As the Left called for a recognition of "legitimate grievances" the Right called for cuts to benefits and the repossession of property to punish the rioters. Then the decadent Starkey emerged to tell us all that it is down to the encroachment of "black culture" into a halcyon vanilla Britannia.

The conservatives were eager to shoot down any liberal nonsense about "legitimate grievances" and "social deprivation". At the same time the only permissible view was outright condemnation of the violence, which is a platitude to say the least as no one condones what happened. Even though the Right wanted to stress that these were the decisions undertaken by free individuals they could not bring itself to admit the exact nature of the riots. In the midst of the riots Kelvin MacKenzie was asked "Should we try to understand this?" and he responded "No, I don't think we should..." As if that wasn't bad enough then Michael Gove popped up to let us know that he's on "the side of order" and there are no excuses for violence. A strange position for Michael Gove to take given that he thinks the Iraq war is justified by the GDP of Iraq at the moment. Incidentally there are 5 million orphans in Iraq with over 1 million people dead as a direct consequence of war, with millions more displaced, deformed and dispossessed.

The violence of the student demonstrations came with a political message whereas the riots had no message at all. The rioters were not a revolutionary subject, in the Marxist sense, but more of a Hegelian 'rabble' who are outside of the organised social space and can only express their discontent through irrational outbursts - a 'lumpen-insurrection' of sorts. The rage and despair of the 'rabble' was expressed in the most impotent forms, the torching of random buildings and pointless thievery for example. Slavoj Žižek was right to call for a rejection of the demand to take a side, either that of a 'disenfranchised youth' or a 'small business owner'. In the riots we saw society attack society, a lot like watching a man slash away aimlessly at his own limbs, as Hunter S Thompson noted of much worse riots in the 60s "the American dream was clubbing itself to death". It was a conflict between people with a stake in community, who had managed to function within the system, and the people with no such stake and nothing to lose.

Zygmunt Bauman was correct to designate the riots as "defective and disqualified consumers" and it is easy to see the mass-looting as consumerism turned violent as it could not be realised in the proper way of shopping. Even the ignominious David Starkey acknowledged this point when he called the riots "shopping with violence". That was before he opted to wheel in the words of Enoch Powell to insulate the prevailing ideology from any damaging self-reflection. In the riots we find that at best "legitimate grievances" are secondary to impotent expression of anger, despair and envy. Ultimately the riots were a clear demonstration of the material force of ideology, it was the barbarous underbelly of consumerism rising to the surface and overflowing for all to see on Sky News. As for the people peddling vengeful answers to the riots, these are the same people who claimed there is no such thing as society. It was they who called for the "liberation" of the individual to pursue their own self-interest at the expense of others.

IRONY in TRIPOLI.

Then the Libyan Civil War resurfaced in the news as the rebels seized the capital to the surprise of Orientalist commentators everywhere, to whom the Arabs are still either incapable of winning a fight or are bloodthirsty animals. It looks as though this is the autumn of the Colonel, for Gaddafi soon disappeared. The great irony of the situation is that the Gaddafi regime was interventionist in foreign policy and had been for a very long time. The regime backed Idi Amin in Uganda, Slobodan Milošević in Serbia and Charles Taylor in Liberia as well as the IRA, the Sandinista movement and the ANC. Gaddafi sought to mediate disputes in African countries such as Mali, specifically between the government and rebels. He has even sent peace keeping missions to countries like Somalia. It has even been suggested that the Libyan government provided millions in investments to support governments in Liberia, Niger, Chad and the Central African Republic. Under Gaddafi the country had been led into armed conflict with Egypt and Chad on multiple occasions.

For years Muammar al-Gaddafi stood as the mirror-image of an American neoconservative as he saw a moral obligation to intervene where necessary on the side of the victim against the oppressors of the world. Of course, the side of the victim can be chosen selectively in accordance with the geopolitical value of fending off a particular oppressor. The same is true of the neoconservatives who wanted to fight the Communists in Afghanistan in the name of "freedom", but quietly supported Ceaușescu in Romania at the same time. We find similar contradictions in Libyan foreign policy, Colonel Gaddafi was on board for war crimes in Sierra Leone but backed the ANC at a time when Nelson Mandela was smeared as a "terrorist" in the US and Britain. The same reasoning was deployed to justify sending Libyan agents across into Egypt with the stated purpose of "subversion", even though Gaddafi was an admirer of General Nasser and wanted to emulate him as a "strong man".

Back in 1971 the CIA and MI6 put together a plot to bring down Gaddafi as part of an all-out-invasion of Libya, which would culminate in the release of political prisoners and the restoration of the monarchy. The plot fell apart as the CIA concluded that the Colonel sufficed as a bulwark to Communism in North Africa. The regime in Tripoli was opposed to Israel and Western imperialism, but  it was also opposed to the Soviet Union and Russian influence in the region. This was good enough for the time being. There has even been the suggestion (which has yet to be verified) that the coup which Gaddafi orchestrated in 1969 had been supported by the US. The regime modeled itself on the example set by Egypt, which had become a worrying example of independence by then. It is plausible that the coup was seen as a way to "buy-off" socialism and create a bulwark to the Soviet Union at the same time. So when tensions in the new regime led to a conspiracy to overthrow Gaddafi in 1975 the CIA immediately warned the Colonel who then steam-rolled over all internal opposition and continued to pursue an interventionist foreign policy.

As Gaddafi's regime became increasingly repressive and began to turn to the Soviet Union for greater support, so it was clear that Libya was going to become a "pariah state". Today commentators like to make reference to the way Gaddafi sponsored terrorism. When the US bombed Libya in 1986 the "reason" was that Gaddafi had sent arms and advisers to the Sandinista government of Nicaragua. Gaddafi mirrored the American support for the Contras, who were at the forefront of a terrorist campaign against the Sandinistas. The US continued to lean on Libya into the 1990s, this went as far as economic sanctions and backing an attempt to assassinate Gaddafi in 1996. A few years later the US made peace with Libya as Gaddafi made a bid to secure a comfortable place in a world that had changed greatly since the Berlin Wall fell. The support lent to Gaddafi was extreme, it went as far as selling him weapons which were later used against his own people. The British and the American governments even saw to it that the attempt to indict Gaddafi for his responsibility for the deaths of 1.2 million people in Sierra Leone.

The Media's Greek Myths.

 Greedy, Lazy and Venal.

The narrative which has sprung up around the crisis in Greece has taken a ethnic-cultural line, just as the French claimed that the financial crisis was an "Anglo-Saxon disease" which has nothing to do with the Continent. Now we hear that the Greeks are "venal" as well as "lazy" and "greedy" even from the commentariat and not just from the Right. We are told that the protests are really about keeping the "Greek Gravy Train" flowing, you will have no doubt heard of the rail workers who are paid £60,000 a year and the shameful way hundreds of professionals are being allowed to retire at 50 - though the average retirement is actually 62. What you won't read about is the way that a lot of Greeks have not been paid in months and even more are unemployed. The same goes for the other racist claims, the Greeks are supposedly a "lazy people" and yet they work around 2,120 hours a year compared with about 1,712 hours a year in Britain and 1,473 hours a year in Germany. Out of the OECD countries Koreans are the only people who work longer hours than the Greeks.

The "out of control" spending in Greece amounted to 44.6% of GDP from 2001 to 2007, which was not a huge deviation from the European average for most of the decade. The relatively high level of public debt in Greece, before the crisis, goes back to the 1980s when the country was still recovering from the military junta that ruled the country from 1967 to 1974 with the support of the US. There is a genuine fiscal weakness in Greece and it is not in public expenditure, it is the low level of tax revenue which was exacerbated by the recession that has led to a consequent fall in tax revenues as the level of unemployment rises. So it should not be a surprise that tax revenue is a lot less than predicted as the cuts hit ordinary Greeks. As the crisis hit Greece there was a jump in spending to 50.4% of GDP in 2009 and that is still the average expenditure in Europe. From 2001 to 2007 the total spending of the EU amounted to 50.7% of GDP, out of the 27 member-states 13 had spent more than Greece.

Then there is the line that the greedy Greeks have eaten the bailout funds and have continued to live in an excess of luxury. It is as if these are the spoiled brats of Europe who must be knocked in line with the rest of us! The austerity measures introduced previously have reduced public spending by €700 million than the IMF and the EU had demanded. €110 billion was handed over to European banks and Greece has been saddled with still more debt and rising interest payments. A bailout is not intended to pay for Greek welfare, it is intended to stabilise the European banking system and drive the Greek economy into meeting austerity targets. The impact will be no growth in Greece for years to come and a significant fall in the standard of living. The Greeks are expected to sign on for a €12 billion loan installment which will prevent a default for the time being, the preconditions for the loan are the austerity measures that were only just passed despite popular opposition.

Greece has not been bailed out, but the banks have been and the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to countries that it had invaded. The loans and occupation costs Germany had pressed out of the countries it had occupied in World War II were not paid back. Especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after World War I. As Albrecht Ritschl said, Germany was the biggest debt transgressor of the 20th Century. The decision on Greece has been delayed on the next bank bailout in the EU, the package could be around €160 billion which is meant to further the cuts that have already bled public services dry in the country. But it is true that a default on the debt is inevitable, it is only a matter of when and how at this point. The default should have come earlier rather than later, which is what is most likely to happen.

It is undeniable that the Greek government has some responsible for the mess, especially in regards to the collection of taxes, but the links of the crisis to the Greek national character and culture are nonexistent. The crisis is an economic one, it is international in scale and the responsibility of all Western politicians. We should keep in mind that it is Sweden that spends the most out of the European countries and yet there is no debt crisis. The reason being that the tax system is a lot better in Sweden, the same is true of France and Denmark. Greece was welcomed into the Eurozone with open arms before being encouraged to give up the Drachma for the Euro. The situation seems to confirm that a monetary union requires fiscal and political union, whilst the average Greek is being forced to pay for the errors of politicians and the recklessness of the European banking system. Naturally the Right has jumped at the opportunity to use this crisis as a stick to bash the European Union with. 

The Greek Tragedy.

European Tough Love.

The banks are opposed to a Greek default in order to avoid a cash haemorrhage, which is the same reason that the financial institutions are opposed to regulation and taxation, in one way or another. The natural option is austerity, the rape of the Greece, it only costs the poor who are mostly too disillusioned to participate in politics and the mega-rich are left unscathed whilst near a majority can be persuaded it is all necessary if the fear of deficits is just ramped up. The austerity measures will fail and only succeed to turn Greece into a basket economy. And yet no bank or financial institution has been allowed to fail. With the exception of Lehman Brothers which was losing around $8 million a minute at one point and then Dick Fuld walked away with $500 million from that year alone. Just think of the millions of American homeowners, many of which are black and poor, have lost their homes or have been left desperate to save a mortgaged property. We might think of it as tough love, love for the rich and tough for the poor as Noam Chomsky once noted.

It was clear before the vote that Greece is the point of a showdown between the people and the banks, even if it is still unclear what is going to happen in Greece and Europe as a whole. The general strike in Greece lasted two days and it was accompanied by huge demonstrations in opposition to the vote for €78 billion worth of spending cuts and privatisation stipulated by the European Commission. As the country is about to raped by the banks, the right-wing press ramble on about the "Greek Gravy Train" and the "flaws" in the Greek character which led to the crisis, a suspicious line of thought indeed. It isn't over yet, but the future does not look bright. For around 10 or 15 years there will be little economic growth in Greece, if any at all. The standard of living for the average person will go into steep decline and in the end the country will still have to default. No doubt Portugal, Ireland and Spain will be affected in just the same way. Unsurprisingly, the Eurosceptics are filled with the glee that is particularly devoid of compassion for the people affected.

The destructive consequences of the 1929 Crash laid waste to entire countries. Today there is the potential for serious political turbulence, no one should forget that it was back in 1967 that the Greek state was seized by a military junta which ruled with the support of the US for several years. Nor should we forgot the ways Fascism came to power in the midst of the economic and political crises of the 1920s and 30s. Though I am not saying that as a direct result of these measures we will live to see the resurgence of Fascism. The devastation may not be on the same scale as the Great Depression, which is a result of the bailouts, but the cuts will hit ordinary people hard and the reaction is not easily predicted. The core of democratic institutions are under threat in Greece from Big Finance. The Greek people took to the streets and have been on the streets fighting, but so should the people of Europe take to the streets against the measures that are hitting each economy. As Richard Murphy pointed out, there was no real choice in this instance.

The impact of economic factors on politics should not be underestimated. When we look back in history we find that the opening for democracy in Greece, the first of it's kind in the world, came about as a result of the advent of iron-based equipment which converged with popular struggle. The landowners had sought expansion through debt-bondage, which trapped small farmers into arrangements that would leave them without land or freedom if they could not repay the loan. It was the abundance of iron and the simplicity of the production process increased the availability of iron tools and weapons in Greece. The small farmers were able to form militias, for which peasants could serve as infantry and rowers on warships. All of which enabled popular uprisings which brought down the dictatorship and the aristocracy before going on to defeat the Spartans who took the side of conservatives in the country. Just as bronze had empowered only an aristocracy, iron had the potential to empower the masses and now we find that finance has the potential to empower a new aristocracy.

The different genres of narrative around the 2008 financial crisis typically exclude systemic risk, the contradiction internal to capital accumulation. As David Harvey points out the problem back in the 1970s was the excessive power of organised labour which necessitated the repression of unions through legislation and that in turn led to stagnant wages for many people. All the while the financialisation of the economy picks up speed and really accelerates in the 1980s. It is important to keep in mind that financial innovation is at the heart of the capitalist system, which is the reason for the greater focus on innovation and that focus has the potential to empower financiers at the cost of others. The insufficiency of demand which would result from the stagnation of wages is bypassed through credit, which would explain why the debt per household has exploded over the last 30 years. A huge amount of that debt is within the housing market, with absurd results in the US and ultimately the finance crisis was half-solved at the expense of a sovereign debt crisis.

In Franco-German financial institutions, where much of the Greek debt is held, there are hopes it can consistently profit regardless of the socio-economic consequences and even significant losses incurred by the systemic mania. In the case of a Greek default the French and German banks holding the debt could easily go under, which would necessitate another round of bailouts for the banksters. We should also note that the amount of trade between Greece and Germany increased dramatically after Greece joined the Euro. Germany has done very well out of exporting to Greece, where several industries have been decimated by the influx of German goods. Rationally, the Germans should bailout Greece in the way that the US bailed out Germany for free after it defaulted just after the Second World War. In fact, Germany is the country which defaulted in the last century more than any other country in Europe and in each instance the Germans were bailed out.

It used to be that the interest rates on loans were the only kind of insurance as it were, then people like Nigel Lawson came around to tweak the regulations and guarantee that the bank would be able to get its money no matter what. It might seem time to call for no bailouts, the banks are not too big to fail and so on. The problem there is that the banks generated a speculative housing bubble and when it all came crashing down the people who flip the bill are not the masters of the universe. To willingly fling open the door to the black abyss and then leap into it would not be advisable. You should keep in mind that the people calling for this are the same people who don't believe in universal health-care and the provision of any kind of safety-net. American and British banks gambled with equity on other peoples' homes and created imaginary capital in doing so, the most appropriate way to deal with this within the system is to impose regulations and restructure the financial sector.


Greece has not been bailed out, but the banks have been and the European country that has defaulted more than any other in the last century is Germany. Germany was excused from reparations to countries that it had invaded. The loans and occupation costs Germany had pressed out of the countries it had occupied in World War II were not paid back. Especially not to the Greeks. Germany didn't even pay back the US for the loans that were used to pay the reparations levied on Germany after World War I. As Albrecht Ritschl said, Germany was the biggest debt transgressor of the 20th Century. The decision on Greece has been delayed on the next bank bailout in the EU, the package could be around €160 billion which is meant to further the cuts that have already bled public services dry in the country. But it is true that a default on the debt is inevitable, it is only a matter of when and how at this point. The default should have come earlier rather than later, which is what is most likely to happen.