Why did Syriza fail? (2016)

Book Review from the June 2016 issue of the Socialist Standard

Syriza: Inside the Labyrinth. By Kevin Ovenden.  Pluto Press. 2015.

This is the first book issued by the new Left Book Club. An attempt at reviving the famous left-wing book series of the 1930s and 1940s, the new Left Book Club is part of the efforts of different shades of left-wing politicos to rejuvenate the Labour Party in the light of the election of Jeremy Corbyn as Labour leader. In its promotional literature, it sees itself as supporting the efforts of the Momentum campaign group in trying to produce a substantial and lasting leftwards shift in the Labour Party and British politics more widely.

Kevin Ovenden’s book on the rise of Syriza in Greece is a sympathetic account of the rapid rise of that political party’s rise from left-wing fringe group to a party of government. It is a readable enough account but suffused throughout by the optimism that behind Syriza’s rise and resistance to government cuts and privatisations lay revolutionary possibilities. Take, for example, the strikes and occupations of the state broadcaster ERT whose workers had been made redundant en masse and whose occupation of their workplace and continued broadcasting on a voluntary basis in new collaborative ways that replaced prevailing hierarchical management control. Ovenden claims that these were ‘a lived experiment of how democratic participation and control might be extended deeper into the society – if the central structures of economic and state power were brought under control’ (p.62-3).

Now, we can agree that workers taking over the workplace and running it on a wageless, democratic basis does provide a basis for socialist optimism but not in the way that Ovenden does. Despite Ovenden’s claims that the radicalism that resulted in the election of Syriza was anti-capitalist his use of the phrase ‘brought under control’ hints at the role of state ownership envisaged in this process by many on the radical left. The outcome for the ERT workers was to be re-employed by the state following the election of the Syriza government in 2015. Whatever revolutionary potential may be latent in the action of ERT workers they were not opened up by its end in state ownership. Whatever hope such actions inspire for socialists, without the intention to infuse them with a consciousness of the limitations of capitalism in serving human development in a fuller way then it can only be a transitory protest. If political action is to be meaningfully anti-capitalist it must not only have a clear idea of what capitalism is but of what it is not, a clear idea of what it is to be replaced with. Not only was action such as that of the ERT workers a minority experience in the struggles against government cuts and attacks on pay and conditions of employment but even within the radicalised minority there was and is no clear idea of how Syriza’s putative anti-capitalism was anything different from what had been tried before by left-wing governments of various hues. Essentially what was put forward was a change of management with radical intentions but still having to create favourable conditions for Greek capitalism or risk a worsening of state finances that would result in even greater cuts in expenditure than were already occurring.

The needs of capital to self-expand, that is, for economies to grow, is of its nature. Capitalists or politicians can no more get around this than Canute could hold back the tide. This was a central theme of Karl Marx who repeatedly wrote of capitalists as the personification of economic categories. Capitalists were (and remain)’embodiments of particular class relations and class-interests… the individual responsible for relations whose creature he socially remain’ (Capital, Vol. 1, Preface to German 1867 edition). It is not a matter of ethics, then, of capitalists and their crony politicians being bad men and women. It is that for capital to self-expand, for national economies to grow, certain requirements need to be met. As Marx colourfully put it, capital ‘lives only by sucking living labour, and lives the more, the more labour it sucks’ (Capital, Vol.1, p. 342). Politicians elected to run capitalism such as Alexis Tsipras, however sincere, can only tweak the amount of blood the vampire sucks but suck blood he must. Working class protest can only become revolutionary when it reflects on the nature of capitalism and its essentially exploitative basis, the inability of the economic basis of capitalism to allow workers full and free access to the results of its collective labour and demands its emancipation from wage slavery. The vampire is such by nature and must be slain – it cannot be befriended or counselled to suck blood benevolently.

Ovenden’s account stops as the story of Syriza starts to unravel with the acceptance of harsher terms on the extension of Greek government debt rather than the promises of easier terms or an alternative strategy (such as Greek withdrawal from the EU and the euro). Ovenden quotes from the left of Syriza on the unnecessary and defenceless abandonment of any alternative strategy, such as Younis Varoufakis and Costas Lapavitsas. The latter (a professor of economics in London and former Syriza MP) has commented that ‘the Syriza party is faithfully implementing the austerity policies that it once derided’ (Guardian 25 January) and that ‘Syriza is the first example of a government of the left that has not simply failed to deliver on its promises but also adopted the programme of the opposition, wholesale’. It is far from the first. The British Labour government in the late 1970s and the French ‘Socialist’ government in early 1980s spring quickly to mind but there are many other recent examples. Lapavitsas argued that ‘the Syriza leadership was convinced that if it rejected a new bailout, European lenders would buckle in the face of generalised financial and political unrest. The risks to the Eurozone were, they presumed, greater than the risks to Greece. If Syriza negotiated hard, it would be offered an “honourable compromise” relaxing austerity and lightening the national debt.’ The Syriza leadership were over optimistic to the point of delusion and unprepared to actually follow up with an alternative economic policy, which would have involved the exit of capital from the Greek economy. Therefore, the ‘EU calmly turned off the liquidity tap at the European Central Bank, and refused to give a penny of additional financial support until Greece complied.’ Lapavitsas (and Ovenden) conclude that the lesson for working class politics is to be prepared to break away from the EU and its monetary policy in order to break with neoliberal austerity politics as if life in capitalism before neoliberalism was a bed of roses. Lapavitsas is concerned that the failure of Syriza to deliver radical change encourages the perception that ‘austerity is the only way and nothing can ever change’. However, it is not politicians that shape capitalism but capitalism that shapes them. The vampire always needs to feed.

Colin Skelly

Greece, Austerity, and Capitalism (2015)

From the August 2015 issue of the Socialist Standard

When Syriza won the elections in Greece in January on a 'No to Austerity' platform left-wing opponents of austerity throughout Europe were delighted. ‘If they can do it, so we can’, they chanted. Yes, but do what? Saying 'No' to austerity is one thing. Ending it is another.

Why there is austerity

Knowing how capitalism works, we were sceptical; maybe Syriza could mitigate austerity a little for some workers, but end it, no. 'Austerity' , i.e. cutting back on government spending, is a policy that all governments are obliged to apply when capitalism is in one of its periodic downturns, at least if they don't want to make the situation worse.

The capitalist economy is driven by business investment and businesses only invest with a view to making a profit. A slump is an expression of the fact that, for one reason or another, production on the previous scale is no longer profitable. The only way that capitalism can get out of a slump is if profitability is restored. The main way this comes about is through the devaluation of capital assets: some firms go under and their assets pass cheaply to rivals, which means that less profit needs to be made to achieve the previous rate of profit on capital invested.

Another factor increasing profitability is the fall in labour costs: with higher unemployment there is a downward pressure on wages. The government can help by reducing taxes on profits as businesses are only interested in after-tax profits. But, as in the end all taxation falls on profits and property by being passed on to them wherever it initially falls, it isn't just by decreasing direct taxes on profits that the government can help. It can also reduce taxation generally by cutting its own spending, including on 'welfare' and 'benefits' for workers, undoing past social reforms.

Besides the pressure to reduce taxation to help restore profitability, governments are under an additional pressure in a slump to cut their spending. With the fall in economic activity there is also a fall in their tax receipts.

All this is why governments can be legitimately said to be 'obliged' to pursue a policy of austerity in a slump. Of course governments have the power, both in law and in theory, to decide not to do this. But the consequence would be that they would make things worse, by prolonging and perhaps deepening the slump in economic activity.

More government spending no way out

Those who say that a government should refuse to impose austerity in a slump offer a seemingly plausible and common sense argument: as total purchasing power falls in a slump, increase government spending to compensate and that will get the economy growing again. Surely, reducing it only makes matters worse? If capitalism was a system driven by paying demand this might make sense. But it's not. It's driven by business investment for profit. It's the effect of increased government spending on this that's relevant. The key question is: where is the government to get the extra money to increase its spending from?

As governments don't produce anything themselves (except marginally if they happen to directly operate some profit-seeking business) there are only three possible sources: taxation, borrowing, or the printing press.

Since all taxation falls in the end on profits, increasing it will have an adverse effect on business investment for profit, which is what drives the capitalist economy.

Borrowing needn't have this effect, but the interest on the extra borrowing would have to come out of taxation (as would in the end repaying the loans).

Printing more money might give a temporary boost to production, but would eventually lead to a rise in prices, creating other economic problems such as making exports more expensive and so less competitive; imports would be cheaper so threatening the jobs too of workers employed by businesses producing for the home market.

So, however financed, government spending in a slump is not a way out of it. When tried, as with the Labour governments in Britain in the 60s and 70s and with Mitterrand in France in the early 80s, it hasn't worked. The economic situation got worse and the governments which tried it had to resort to austerity. Basically, both theory and practice demonstrate that there is no way in a slump in which a government can avoid imposing austerity without making things worse.

Greek debts

The Greek state was hit particularly hard by the crash of 2008 because, with the drop in economic activity that followed, its revenue from taxes fell while its debt – what it owed those who had lent it money by buying its bonds – increased as, like other states, it had to borrow money to bail out its banks.

Critics have blamed the scale of the problem on the profligacy of the Greek State, even on the Greek people in general, for borrowing and spending money recklessly. But it takes two to tango and in the period up to 2008 banks from other European countries were buying Greek government bonds as part of the general lending spree which nobody thought would end. If there were reckless spenders there were also reckless lenders. But the economic boom did end and it is this that has caused the Greek sovereign debt problem. In fact the various Greek bail-outs are aimed at bailing out the Greek government’s creditors as well as the Greek government.

Other European countries, whether or not they were in the Eurozone or even the EU (think Iceland), suffered from a similar problem, even if not on the same scale, and adopted austerity to try to deal with it.

The Eurozone is basically an agreement between the EU Member-States involved to maintain a fixed exchange rate between their currencies, all renamed the euro. To do this the member-states must pursue broadly similar economic and monetary policies. In a slump, austerity. This is imposed by capitalism but, because it has been made a condition for Eurozone countries to borrow money from other Eurozone countries, it appears to be imposed by the Eurozone. This has led – misled – some anti-austerity campaigners in Greece and elsewhere into blaming austerity on  being in the euro and not being in capitalism and into imagining that this could be avoided if their country exited the euro. This, for instance, is the position of Costas Lapavitsas, professor at the School of Oriental and African Studies in London who was elected a Syriza MP in January, as expressed in his frequent articles in the Guardian. 'Forget the euro, Greece needs a new currency' he commented on the Greek deal. This, he claimed 'would also allow the government to finally get started on a productive reconstruction of the economy' (13 July).

But it's a delusion. If Greece withdrew from the euro, it still could not escape austerity. It would just take a different political form and could even be worse. Tsipras and most of Syriza seem to have realised this or at least were not prepared to put it to the test and preferred to have it imposed from Berlin. And just where would the money to finance ‘a productive reconstruction of the economy’ come from? Maybe Lapavitsas is thinking of the same sort of state-capitalist siege economy as in Cuba (or formerly in Russia and East Europe), as if that avoids austerity.

Incompatible with capitalism

According to Nigel Farage the deal imposed on the Greece government 'shows that national democracy and membership of the Eurozone are incompatible' (Times, 14 July). Others, from the left as well as the right, have made the same point, but it's misleading. If Greece withdrew from the Eurozone – or if Britain withdrew from the EU – the trappings of 'national democracy' would be restored, but what its 'sovereign' government would be able to do would still be restricted by the pressures of capitalism in a slump. Austerity would still be the order of the day, only it would now be decided by an independent decision of a government exercising unrestricted sovereignty.

The Greek deal does show an incompatibility between democracy and capitalism. The Greek people voted 'No' to austerity twice – when they elected the Syriza government in January and when they voted OXI in the 5 July referendum – but it made no difference. They still got austerity. The people may propose, but capitalism disposes.

It's not just carrying out democratically-made decisions that is incompatible with capitalism. It's also meeting human needs. In April the Greek parliament appointed a Truth Committee on Public Debt (on which Trotskyist economists such as Eric Toussaint and Michel Husson were appointed, as if Syriza wasn't stuffed full of its own left-wing economists). In its preliminary report in June (http://cadtm.org/Preliminary-Report-of-the-Truth) it argued that most of the Greek debt was 'illegal, illegitimate and odious' and suggested that these were grounds for repudiating it which would hold up in court (which planet are they living on?). One section, on 'The impact of the “bailout programme” on human rights', argued that, because repaying and servicing it imposed savage cuts on people's education, health, housing and other basic needs, it infringed their 'human rights' under UN and other charters. This is an excessively legalistic way of putting it, but the general point is valid: austerity does mean that human needs are ignored and come to be met even less than normally.

Capitalism is incompatible with meeting basic human needs too. In fact, austerity is a prime example of the capitalist imperative to put Profits before People.

There is a lesson in Syriza’s abysmal failure to even mitigate austerity in Greece, let alone end it. It’s that as long as capitalism is in a slump it can’t be ended. All the articles by left-wing economists saying that it can are not worth the paper they are printed on. All the (quite legitimate) protests and demonstrations against austerity are misdirected when they call on governments to end austerity. This is an impossible demand. All this energy would be more effectively directed instead at replacing the capitalist system of class ownership and production for profit by a socialist system of common ownership, democratic control and production directly to meet people’s needs. Only then will austerity be ended forever. Only then will what people vote for be able to be carried out.

Adam Buick