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How should social movements respond to the crisis in Europe?

photo of Michel Bauwens

Michel Bauwens
23rd July 2011


What is at stake in Greece is a core aspect of the political tradition of the Enlightenment that made it worthy to be called universal and inspired the national and social revolutions of modernity: that is the commitment to social egalitarianism rather than social privilege, to the redistribution of wealth rather than its accumulation.

The first text below is excerpted from a longer interview of Susan George (ATTAC), by Nick Buxton of the Transnational Institute. Please also see the follow-up items, which shed various lights on what is happening at the periphery of Europe.

“When radical privatisation, salary cuts, social spending wipe-outs and so on were imposed in really poor countries like Niger, they actually led to famine and mass deaths. In Europe, we have more leeway, some cushions, but Greece’s economy has already shrunk by more than 5% this year, unemployment has soared with no compensation, small businesses are failing in droves and everything in sight is being privatised.

It’s a criminal policy designed to push workers back into 19th century, to get rid of the social benefits people fought for over many generations. As usual, the rich will escape and international capital will have a heyday with the privatisation possibilities. Ordinary people are paying twice for the financial crisis—first to bail out the banks and now to sacrifice and bring about the ruin of their own countries and livelihoods.

* What is your response to those who say fault lies with Greece and its failure to control public finances?

People say “the Greeks don’t pay taxes” and that’s true for the rich who have a lot of money in Cyprus, a convenient tax haven. A Swiss financial house reports that only 1% of Greek money in Swiss banks is declared in Greece—and only 3% for France—the Greeks aren’t alone in this game. Greece has also maintained a proportionally huge military budget. Even when the Turks—supposedly the enemy—proposed joint military expenditure reductions, the Greeks didn’t accept.

The Greek orthodox church, the country’s biggest property and landowner pays zero taxes, which makes no sense. There’s also a large black economy. And when the PASOK took over, they discovered that their predecessors had cooked the books and radically understated what the country owed.

Despite all this, we should remember that Greece represents a mere 2% of the European economy. It is just not worth this huge polarising crisis or incredible psychodrama. The Germans and the European Central Bank are treating this not as a straightforward economic issue of indebtedness and default but as a morality play in which the Greeks must be punished.

Even if we include Portugal and Ireland, we’re talking about a small part of the Euro zone economy. With Spain, things start getting serious; it’s about 11% of the Euro-economy and Italy—well, no one wants to contemplate that.

Obviously, austerity will only worsen economic woes—less tax revenue, more unemployment, low investment, a larger underground economy and so on. Plus enormous human suffering and possible breakup of the Euro. There has not been a single case where a country came out better off because of IMF austerity policies.

The neoliberal economists have succeeded in erasing all memory of the 1930s when Keynesian policies were used to good advantage against the Great Depression. Instead we are faced with a festering debt problem, an economy being throttled by austerity and no hope of recovery.

* Do you think Greece should have defaulted? What alternatives should Greece have followed?

The Greeks can’t pay and they will default. They already have but no one is calling it that. After all this cliff-hanging, some makeshift solution will be used to paper over the reality.

If I had been [Prime Minister] Papandreou, I would have said “Can’t pay, won’t pay.” I would have then worked out what percentage of the debt was “odious”, a legal concept meaning illegitimate, and what Greece could reasonably handle over time.

Then I would have declared that Greece would not pay X %, say half, of its debt and offered to negotiate with all the private banks to determine under what conditions Greece would pay back the rest—at longer maturities, lower interest rates and so on. The banks would have to choose between receiving zero or 50% of something. And remember they have no troops—they’re not going to invade Greece! And Greece wouldn’t even have to leave the Euro zone because the Treaties make no provisions for forcing a country to leave. That would have concentrated minds considerably.

It’s obvious all the stopgap measures won’t work in Ireland or Greece. I’m not even sure they are meant to. In the developing countries and now in Europe, debt allows creditors to exercise a kind of colonialism without an army or an imperial administration. It’s no accident that the Latin Americans prioritised paying back the IMF as soon as they could afford to. It was the only way they could start running their own economies again.

We should remember what Keynes wrote in the 1920s in the Economic Consequences of the Peace. He warned that Germany would not be able to pay its post-war debts and there would be hell to pay for this. And there was, but Germany got a completely different debt deal post World War II – which limited debt service and interest payments radically – terms they are now unwilling to offer Greece.

* Who do you think is responsible for the crisis?

It’s the financial sector plus local politicians plus European politicians plus of course the Lisbon Treaty and European Central Bank structures that keep the Euro zone in an economic straight-jacket.

Nobody forced the French and German banks to buy so much Greek debt. The financial markets just assumed that Greek bonds were the same as German bonds: now they’ve figured out that Greek bonds are Greek and they’re determined to get back as much money as possible at the highest interest rates possible regardless of social costs.

And plenty of European governments clearly govern on behalf of their financial sector. But they are playing with fire and can yet blast open the Euro zone, at which point all bets are off.

* What are the structural problems with the Euro that have contributed to the crisis?

I am a fervent European, so I want the Euro to last, but we don’t currently have the economic and social machinery to go with it. We have a common currency but don’t have a common fiscal, economic or social policies. Instead of increasing taxes, governments are competing to reduce them as in Ireland with its 12.5% corporate tax rate.

We have a ridiculous European budget, no Europe-wide taxes, no tax on financial transactions. World-wide transactions just on currencies markets are now at an astronomical $4.000.000.000.000 a day. Even if you taxed that at only 1/10.000 it would bring in $400 million a day. You could solve a lot of problems with that kind of money!

The European Central Bank is the obstacle to success, not the Euro per se. The ECB doesn’t lend to governments but to banks, at 1% or less, and then banks lend to governments—short term Greek and Irish debt has “junk” status and is now priced at 20%.

The ECB unlike every other central bank doesn’t issue Eurobonds.So we have government by the banks and the ratings agencies. We need Eurobonds not just to discourage rampant speculation against individual countries but also so that Europe can invest in large ecological and infrastructure projects no country can manage by itself.

* Are there other issues in EU’s economic governance that have contributed to the crisis?

One of the reasons we fought so hard in France against the Lisbon Treaty was that it enshrined neoliberal economic policy at the heart of Europe, and set us up for the kind of crises we now face. Now the European Commission wants to examine all individual country budgets before their parliaments vote on them to make sure they meet certain standards. This is a blatant attack on democracy.

Everything under the European Commission is now judged in terms of “competitivity” which includes suicidal competition between European countries themselves. Not everyone can be Germany. In the Euro zone, government spending is still around 50% of GDP but corporations and capital want to get control over as much of that as they can. Once again, we’re being slowly dragged back into the 19th century.

* How should social movements respond to the crisis? What alternatives can we put on the table?

Get the financial sector under control, tax financial transactions, force European, especially Euro zone governments to act in solidarity with each other.

Carry out debt audits to determine how much is “odious”.

Develop a debt workout mechanism that isn’t skewed entirely in favour of creditors.

We need Eurobonds and a new charter for Europe with an ECB that’s much closer to the US Federal Reserve.

Use Keynes’ bancor as the currency for trade. We’ll need another interview to talk about that! “

Also watch this video by Canadian scholar David McNally, who reviews the global context. The overview of the current cycle of social struggles in the 21st century starts at 8:31 minutes:

Radical Democracy & Popular Power: Thinking About New Socialisms for the 21st Century from CSRCproject on Vimeo.

David McNally’s lecture can be augmented with this useful overview of recent mobilizations by the Take the Square movement:

“January 2006: Bolivia: Evo Morales, an indigenous Bolivian is elected to power by 54% of Bolivians in the election and then in 2009 is re-elected by 63% of voters. Morales was elected on the back of his campaign to create a constitutional assembly to develop a new constitution, to nationalise the gas industry and to introduce land reform, all of which he did in his first term of office. In the new constitution, the use of war as a means to resolve conflicts was abolished.

January 2009: Iceland: The Icelandic government is brought down by popular demonstrations that started with the collapse of the Icelandic private banking system. Deals for citizens of Iceland to repay the losses incurred by the UK and the Netherlands were rejected twice in 2010 and 2011 and a national forum was convened which led to the creation of a Constitutional Assembly to design a new national constitution.

December 2010: Tunisia: Mohamed Bouazizi, a street vendor in the small town of Sidi Bouzid, Tunisia, sets fire to himself in a tragic act of desperation following the confiscation of his goods, most likely following his failure to pay bribes to the local police. This act sparked demonstrations across the country that eventually led to the downfall of the dictator Ben Ali 28 days later. Since then a string of officials linked to the dictator have resigned, the secret police has been disbanded and elections for a constituent assembly are due on the 23rd of October.

January 2011: Egypt: A campaign of mainly non-violent civil resistance starts in Egypt, seemingly inspired by; events in Tunisia, the police murder of a young man, Khaled Saeed, the oppressive government of Hosni Mubarak and the state of emergency which had been in force since 1967. The protesters demanded the removal of the Dictator and within 3 weeks he had gone. In addition the constitution has been changed, the feared National Democratic Party and the secret police have been disbanded and Mubarak is under arrest and facing trial together with his sons.

May 2011: Spain: A movement that flourished on social networking sites with the name Real Democracy Now calls for protests throughout Spain on the 15th of May one week before local elections on the 22nd. In Madrid police brutality against demonstrators led to them camping in Puerta del Sol, the central square, and a similar phenomenon in solidarity spread to all parts of Spain and communities in other countries. Since then the movement has renamed itself 15-M and developed an Assembly style of public consultation with huge public gatherings in cities, towns and villages, always with the aim of gathering the demands of the people and making agreements based on consensus. Currently the movement is marching throughout Spain to reach the capital on the 23rd of July in what is expected to be a massive demonstration against political corruption, the rotten democratic system and the electoral laws that maintain it.”

A new Enlightenment?

Rosa Vasilaki shows how the peripheral countries are giving a positive example to the core of the European system, where the real locus of crisis is located:

” What is at stake in Greece is a core aspect of the political tradition of the Enlightenment that made it worthy to be called universal and inspired the national and social revolutions of modernity: that is the commitment to social egalitarianism rather than social privilege, to the redistribution of wealth rather than its accumulation. The much-maligned Welfare State, but also the constant attempts of its radicalization from the Left, is the practical application of these ideals.

What the PIGS are defending – and what they are accused for with a surplus of disdain – is not a return to the past, the residue of a traditional attachment to the dinosauric, ‘redundant’ Welfare State that is deemed too slow and old-fashioned for the fast financial capitalism that put us in this mess. Quite the contrary: this is a deeply political move oriented to the future, a future which must keep the promise of egalitarianism not only as a legalistic concept or not even limited in the idea of universal franchise and parliamentarism. Giving real content to these reduced by the neoliberalization of politics, empty-shelled concepts means resisting against the selling out of the national – and uncompromisingly common – wealth, such as water, electricity or transport; it means defending the labour rights and the right to education and healthcare; it means resisting the commodification of the basic human values, such as the care for the elderly, the poor, the ill, the unemployed; ultimately, it means resisting the dehumanization of society itself. What we witness in Greece is a remarkable resistance to the manipulation of those ideals in which the political edifice of modernity stands and a struggle for their meaningful application. ‘REAL DEMOCRACY NOW’ the slogan that emerged in the Puerta del Sol to conquer the squares of European cities, is not a claim looking at the past, as the intellectuals close to the Greek government affirm in a rather telling demonstration of bad faith. It is not mere discontent for the loss of ‘privileges’ of the Welfare, quasi-socialist in certain aspects, Greek state, for the simple reason that these are not ‘privileges’ but undeniable social rights. The Greek resistance is a battle for their protection, even for the widening of their inclusivity, at least for the most progressive ones amongst the protesters. ‘REAL DEMOCRACY NOW’ is a claim embodying a political desire for a future which needs to be imagined radically different from the precarization of life, from the accelerated economic, cultural, social and intellectual deprivation imposed to the Greeks at the moment.

From this perspective, then, the PIGS are possibly the most worthy defenders of the universalist ideals of the Enlightenment: the ones who re-imagine their future in human rather than economic terms, the ones who dream of a political rather than bureaucratic democracy. Despite the rhetoric of ‘innovation’ and ‘change’, it is the neoliberal devotees who are committed to the past, to a perverted cross-section of pre-political social privilege and post-political economic instrumentality. Therefore, the real possibility of change lies in the concreteness of resistance to pauperization, in the subjectiveness of the Greek rioters and not in the ‘objective’ abstractness (and invisibility) of the ‘economy’ and its political puppets. In that sense one could even see the Greek resistance as an exemplary instance of what is called catachresis in postcolonial theory: it displaces and seizes the value of concepts such as democracy or equality, whose ‘correct’, authoritative content was decided elsewhere, in the social formations of Western Europe and its contemporary bureaucratic configuration, the EU. In this perspective, what gets seized and displaced is also the conceptual topography of Europe. Today, the site of progress and political future is where the battle of meaning for universal concepts and desires such as democracy and equality is taking place: in the periphery of Europe, in the squares of Arabic world and the streets of Latin America. “

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