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Issue #1446      10 March 2010

The message from Greece

A serious Greek debt crisis is unwinding in the European Union, threatening the stability of the Euro and, with it, of the EU itself. It is possible existing EU institutions including its central bank, are too weak to overcome current resistance from powerful EU members France and Germany to a bail-out of Greece. Either the EU-wide interests in assisting Greece prevail, or basic political stability both in Greece and the EU will be at risk.

The background and circumstances of the Greek debt crisis are summarised as follows.

The previous government of Kostas Karamanlis and the right-wing New Democracy Party, took a joyride on the global financial bubble jet. Not only that but the captain lied about how much fuel was left until a crash landing ensued. The details are important too: the new left-centre Panhellenic Socialist Movement (PSM) government actually issued the “no fuel” report, exposing the fact that the previous government had outright lied to everyone, central bankers too, about the size of government debt.

The report revealed the largest budget deficit in Europe, far exceeding the three percent cap mandated by the EU central bank, or the French and German member banks who would have to finance the largest burden of additional debt. The PSM plan to address deficit reduction and a restructuring of the Greek economy will mean targeted cuts in services, adjustments in taxation, as well as steps to reduce the size of its informal sector – closely related to immigration. Still in play are whose services will be cut, how progressive the tax program used to service the debt will be, and how the immigration question will be addressed.

European Social Watch estimates the 20 percent of Greece’s GNP is in the “informal economy.” Generally speaking, the informal economy of a country is defined as unreported economic activity. Sometimes called black, grey, moonlight, underground, shadow – informal markets often pose the single biggest economic obstacle to the normalisation of immigrants into national life, to sustainable democracy, and to beneficial participation in the globalised economy. Informal wealth cannot be taxed – a profound challenge to economic reform throughout much of the world.

If you cannot establish a progressive tax system on income, it is nearly impossible to fairly distribute wealth to promote all-around economic development, not to mention genuinely democratic institutions. Informal economic activity is a key structural component in the current crisis facing Greece. The persistent failure to integrate the large undocumented workforce into society has been a longstanding threat to social progress for all Greek workers.

Human capital – Greek workers laying pierced steel planking to improve airport, Salonka, Greece,1948.
(Photo: Dmitri Kessel)

Workers (and “businesses”) in the informal sector will be compelled to confront the likelihood that their income will be taxed, preceded and followed by an intense, very class oriented struggle over how wealth will be re-divided in society to accommodate the structural changes. Ten thousand workers have hit the street in recent weeks to make their views known. So far, the new PSM program has failed to convince investors that it can push the shortfall below three percent of GNP. France and Germany – the two strongest members of the EU completely based on the Euro – have long been proud of their relatively “progressive income tax” – supporting a broad social benefits, culture. Thus they are peeved at Greece for being so “irresponsible.”

But the EU will likely in the end make the necessary loans to Greece and deal with the new Greek leadership cooperatively. If Greece defaults on debt it risks Europe-wide instability that will be more expensive than PSM deficits needed to keep the restructuring from breaking down civil society, and democracy. Still, the “investing” class in the EU, however, is counter-attacking by speculating in Greek bonds. In effect they are saying any inflation from Greek deficit spending over three percent must be paid up front, by Greece, in higher interest.

There are important lessons for workers world-wide. First, staying focused on universal and progressive taxation must be a part of economic strategy and tactics at every level. It’s the flip side of the public investments in the abilities, health, and welfare of our people – and the infrastructures that propel advanced economic development. It is also an irreplaceable pillar of sustainable democratic institutions, accessible to all on an equal footing. Second, mismanaging immigration challenges so that they result in second-class “citizenship,” economic or otherwise, for the millions of globally migrating workers, poses grave risks for all workers.

There is a third lesson, related to certain Left-wing perspectives on the entire character of the recent global and ongoing financial storm of which Greece is the latest big wave. Some, for example, have characterised the entire point of the worker mobilisations – which are absolutely essential in any structural change resolution – as a repudiation of social democracy, of the democratic struggle in general. They propose replacing it with demands for the overthrow of capitalism altogether, as it is no longer reformable. Anything less is termed a sell out.

Greek working people are becoming fully mobilised, and will thus be able to pass judgment for themselves on which positions best correspond to their interests. But transposed to the US reform challenges, such positions are dangerous and weaken the ability of workers to unite, become fully mobilised, and bend an essentially democratic struggle against the dominance of ultra-right and finance capital interests as far as possible toward their needs. It is this struggle that demands our attention NOW, and to which all other questions must be subordinated.

Every great financial crisis has brought predictions of capitalism’s imminent demise from those who simply refuse to understand the foundations of commodity production, of which always gives rebirth to capitalist relations no matter how severe periodical cyclical, or even the less frequent structural, crises, may be. The recovery from each crisis has most often strengthened working class democratic rights, incomes and standard of living, usually through the ascendancy of social democratic reforms and policies.

The exceptions being (usually temporary) failed state scenarios and wars which intervene to reverse development, and neo-colonial or colonial relations which help persist backward economic and anti-democratic practices. The recoveries most often result in incremental, at times revolutionary, advances in “more socialist” economic formations which arise to cope with new relations of production. Each recovery has yielded MORE occupations that produce public, or quasi-public goods.

Each recovery – because it is closely related to revolutions in technology and material changes, in the means of production – increases the proportion of service to production occupations. The advance of public good production, and services in general, is the economic index of evolving objective conditions that illuminates the path for what the Marxist tradition has long characterised as socialist, and ultimately communist, relations. The reasons: one – because no, or very little, profit can be made from public good production; and two – because most services require very little private capital investment to sustain.

However, to the degree that conditions suitable to commodity production obtain in any given economy (e.g. scarcity, exclusiveness), especially to the degree that such conditions are dominant, capitalism, money, the division of labour and capital, and some form of private property relations must reproduce itself. (The Chinese found ingenious ways for this to happen without establishing private property as legal entity.)

The democratic struggle plays a powerful and indispensable role by focusing on raising workers’ incomes, education, welfare, and overall standard of living. Our participation and activism within this struggle – principally by inspiring working people’s self conscious leadership in it – helps force the capitalist reproduction process to re-invest in its human capital, which in turn helps accelerate the overall relative decline of commodity and overall rise of public values. Unfortunately this is a long and incremental process, involving powerful components of both private and public domains, no matter what constellation of social forces holds political power.

Misunderstanding the inherent importance of the democratic struggle has been a longstanding curse on the Left, noted by Vladimir Lenin in 1921, though I think underestimated by himself as well, that has assisted reaction in its efforts to marginalise socialist and other left trends many times in the last 100 years, and even sent more than one socialist government off the rails. For example, some confuse political and economic aspects of development.

Great Leap Forward strategies have a sorry economic record, though their slogans can have political appeal, especially in a crisis. If it sounds too good to be true – it probably is. Others permit famous pamphlets written under failed state conditions and civil wars to overly guide their harsh and pessimistic views on the degree of influence working people CAN gain through existing democratic institutions and reform alliances. There are many institutions of government not merely under the thumb of some undifferentiated “corporate power”, all of which should be contested, and none conceded under the influence of cowardice masquerading as dogma.

Stay focused on the concretes – especially the class angles – of the democratic struggle, count the real money on the political table – messages for us all from Greece. As in ancient times, they are running a marathon to bring us the news.

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