Published On : 02 February 2015

THE victory of the radical Left alliance, Syriza, in the recent elections in Greece should not be seen only as a Greek phenomenon, nor even as one whose significance is confined only to the Eurozone. In the conflict between finance and the people which is raging throughout the world at present, Greece has emerged as one spot where the people have stood up to the might of finance and beaten back for now its political offensive.


Discussing purely within the Greek context what Syriza per se can do with this victory, as most commentators are doing at present, is sheer scholasticism. Syriza’s victory is not the end of a process; it rather marks the beginning of a process. Just as the significance of a particular battle in a war has to be judged by how it affects the war as a whole, likewise the significance of the Greek developments must be judged on the basis of how they affect this war between the working people of the world and international finance capital; and even the outcome of this battle itself depends upon how it affects the war as a whole, which is why discussing what can or cannot happen in Greece in isolation is sheer scholasticism.

To be sure, many Latin American countries where the Left forces are in power are also resisting the hegemony of international finance capital, but the Greek case is different even from these Latin American countries. The uniqueness of the Greek case arises from the fact that the people’s anger in Greece is directly against the “austerity measures” imposed by finance capital and implemented through the IMF, the European Central Bank, and the European Union. The people of Greece in other words have directly taken on the might of finance capital, which, in the run up to the elections, had tried to terrorise them with dire consequences in the event of Greece’s reneging on its past austerity agreements; but these threats did not deter people from voting Syriza.

Even now, after the election results have been declared and Alexis Tsipras of Syriza has been sworn in as the new prime minister, ie, even after the people of Greece have decisively resisted the austerity agenda imposed upon them, the European Union has issued a “stern warning” to Greece that it must stick to its austerity and debt commitments. It has thus sought to coerce the new Greek government into repudiating the mandate given to it by the Greek people and to obey instead the mandate dictated by finance capital (which incidentally shows how much of a regard for democracy the European Union has); but what is remarkable is that these terror tactics have not had their desired effect.

This is hardly surprising. The Greek people’s revolt against the dictatorship of finance (a dictatorship which more or less underlies every bourgeois democracy in the contemporary world and will do so to an ever increasing extent unless the people intervene as in Greece), is rooted in their acute suffering under the regime of austerity. Under this regime Greece’s output has fallen by about 26 per cent; its unemployment rate stands currently at 25.5 per cent, with youth unemployment at 49.6 per cent; its minimum wages have been cut by a third; its nominal wages have fallen by 16 per cent in the private sector and by 23.5 per cent overall. And the Greek government during this period of five years has laid off about 19 per cent of its work force. People have also been cut off the electricity grid and denied basic pharmaceutical products.

These hardships arising from austerity moreover are far from over. Indeed the IMF forecasts more hardships in the years to come, projecting unemployment to be still as high as 15.8 per cent even in 2018 – a full decade after the crisis began. And it expects the Greek GDP even in 2019 to be more than 9 per cent below its pre-crisis GDP of almost 12 years earlier.

What Syriza proposes to do is to restore collective bargaining and workers’ basic rights, to reconnect people to the electricity grid, and to raise the minimum wage, all of which require its abandoning the austerity policies imposed upon Greece. Syriza does not wish to leave the Euro, but wants a debt reduction, without which of course any abandonment of austerity will not be feasible. Since much of the debt itself has its origin in the fact that interest had to be paid on previous debt through freshly-borrowed funds (much the way that the debt to village moneylenders keeps mounting), Syriza’s demands, far from being revolutionary, are indeed quite modest. And yet, as we have seen, the European Union’s first response to Syriza’s victory has been to warn that if it reneged on debt and austerity commitments then Greece’s membership of the EU will be in jeopardy.

The abandonment of austerity in Greece will not only strengthen democracy in Greece and hence in Europe in general, but will also ensure higher growth in Greece which cannot but be beneficial for the recovery of the crisis-hit economies of the Eurozone as a whole. And what is more, such debt write-offs and debt-rescheduling as Greece is demanding are by no means unprecedented in the history of capitalism. The German economy would not have recovered as expeditiously as it did from the ravages of the Second World War if it had not been granted substantial debt-relief. And in the UK’s loan from the US after the Second World War, which had been negotiated by the well-known economist J M Keynes, one of the conditions had been that the UK would start paying back the loan only when its economy had recovered to a certain specified extent.

Indeed a group of economists, headed by Joseph Stiglitz, have cited these very precedents to demand that Greece should be given a similar respite from austerity and that its economy should be allowed to grow, even while its economic system gets reformed by the Syriza government to ensure greater tax-compliance by the rich. The absence of such tax compliance is a major cause for the poor state of its public finances, and its removal would have the same effect, when it comes to closing the fiscal deficit, as the imposition of austerity, but without the latter’s anti-people character.

The question naturally arises: why should finance capital insist on imposing austerity when the very opposite policy, namely the abandonment of austerity, could not only work to the benefit of the people, but, by ushering in high growth, also result in full repayment of the debt as well, as all these economists have argued so persuasively?

This is not a question that is not specific to Greece or even to debt repayment per se. After all in the same spirit, one could even ask the question: why should there be a demand for “fiscal responsibility” (involving at best a minuscule ratio of fiscal deficit to GDP) in today’s world, when the entire world economy is still caught in a serious crisis of insufficient aggregate demand, and when curtailing government expenditure, which such “fiscal responsibility” typically entails, only makes matters worse?


The behavior of finance capital vis-à-vis the Greek economy, in other words, exhibits an aspect of capitalism that is as intriguing as it is central to its character. And that consists in what, in the absence of a better term, one can call the spontaneous “bloody-mindedness” of capitalism: whenever there appears to be a choice between two alternative ways of resolving a problem confronting capitalism, one of which involves an improvement in the conditions of the people and the other involves squeezing them, the preference of capital is invariably for the latter course. And this is so even when the latter course, which is preferred, does not actually resolve the problem but only appears to capital as if it would do so.

The classic example is a real wage cut during a crisis as opposed to an increase in real government expenditure. The latter is sure to alleviate the crisis (as would a real wage increase, though we are not even talking about it, since capital would never countenance it anyway), while the former, even though it would appear to alleviate the crisis (by supposedly restoring profitability), would actually worsen the crisis. Even so, the preference of capital is for the former, as is evident even today when workers’ rights are under attack everywhere while “fiscal responsibility” is being insisted upon. This “bloody-mindedness” is precisely what would prevent finance capital from consenting to any debt rescheduling or debt write-off for the Greek economy.

To be sure, there are occasions when capital is forced to abandon this “bloody-mindedness”, as for instance it did during the post-war period when Keynesian demand management for maintaining high employment was accepted by it. In Europe such demand management even took the form of larger government expenditure for undertaking “welfare state” measures (though in America it took the form of larger military expenditure). But capital acceded to larger state expenditure as a means of overcoming crisis only because it had to, ie, only because in the post-war conjuncture when there was a serious socialist threat and when the working class in the entire capitalist world had acquired greater militancy and power (reflected in many instances in the rise of social democracy to office), it had little choice in the matter. But when it had succeeded in consolidating itself, and the period of its post-war vulnerability was over, it rolled back Keynesian demand management and acted to enforce fiscal responsibility, as has happened of late.

Finance capital in other words will accept the democratic verdict of the Greek people, only when its position becomes vulnerable, only when the “democratic contagion” spreads from Greece to Spain, to other countries in Southern Europe, and beyond. This is why what happens in Greece is related to how the happenings in Greece influence developments elsewhere. As mentioned earlier, the outcome of the battle in Greece will depend upon how this battle affects the war between finance and the people that is occurring all over the globe. Meanwhile progressive forces everywhere must salute the people of Greece for the battle they have joined and support them in this battle, even while strengthening their own engagement in the war as a whole.

Author : peoples democracy.