Friday, 3 July 2015

Visions of EU

The decision of the EU hardcore to make Sunday's Greek referendum a vote on the euro focuses on one vision of Europe: monetary union, stability and the necessity of austerity. Syriza is presenting an alternative vision based on solidarity, autonomy and dignity, insisting that the referendum is an expression of popular will. Given the ECB-triggered capital controls, the coordinated political coercion of the group of 18, and a Greek media primed for "project fear", it is hard to imagine anything other than a reluctant 'Yes' vote. The hardcore deal in that most tangible intangible, money, while Syriza deal in aspirations. The reason for the latter is not the "immaturity" decried by the Troika, but that the Greek government has no economic cards in its hand. However, that assessment in turn ignores the symbolic role of Syriza and why aspirations matter in Greece. I want to look at two things in this post: the structural constraints of the Greek economy and the role of Europe as an ideal of modernity and unity. First, the economy.

Land reform began in the 1830s with the break-up of holdings expropriated from Muslim landowners following the War of Independence. This converted a serf population into a new class of subsistence small-holders, which was considered a progressive development at the time. 20 acres was the average holding by the 1870s, and that has only marginally grown in the century and a half since. Many urban Greeks still have a rural smallholding, often sub-divided over the years through inheritance, hence the ready recourse to "the vegetable plot" in hard times. Many have also founded their modern wealth on selling all or part of their land for tourist development. The present zealous faith in the euro is less a reflection on the despised drachma than a recognition that the new currency has taken over the traditional role of land as the ultimate safe store of value.

The persistence of rural smallholdings, allied to the Greek terrain, made the growth of large-scale agriculture difficult outside the plains (only about 20% of the land area). The geography of Greece also made inland communications challenging (hence the city-states and reliance on ships of the Ancient Greeks), which inhibited the growth of industry in the late nineteenth century, with the notable exception of shipbuilding. Without the magnetic draw of towns, and with low agricultural yields, the resulting surplus in the rural population led to emigration, not just to new territories such as the USA and Australia, but to the traditional "colonies" around the Mediterranean such as Alexandria, Marseilles and the coast of Asia Minor (Anatolia).

The Greco-Turkish War of 1919-22 reversed this as over 2 million Greeks fled from Anatolia, while half a million Turks fled Macedonia and Thrace. This net immigration boosted the Greek population and aggregate commercial activity, particularly in Athens and Thessaloniki, but it also helped depress wages in the 1920s and 30s, leading to low levels of investment in industry and manufacturing. World War Two was particularly damaging for Greece, not just because of German financial extortions and reprisals for partisan activity, but because the forced export of agricultural produce led to famine, contributing to a 7% drop in the population. The parlous state of the country was then compounded by the ensuing Civil War (1946-49), which depleted both capital stock and the population further.

The Greek "economic miracle" of the 50s and 60s owed much to increasing international demand in the sectors of shipping, building materials and agricultural produce, but was most significantly boosted by the growth of tourism. By 2008 this was responsible for 18% of GDP and 19% of jobs (indirectly, it probably accounts for a third of all employment). This dominance is problematic because of seasonality, structural limits to productivity, and low wages. Over the course of the 80s and 90s, the Greek service sector expanded rapidly, mirroring developments elsewhere in Southern Europe, however it is worth noting that the sector was relatively under-capitalised and prone to restrictive practices, hence it remains distinguished by an excess of small firms. Greek SMEs account for 86% of all employees and 72% of turnover - the EU averages are 67% and 58% respectively - which partly explains the higher-than-average rates of tax evasion. Microbusinesses account for 55% of employees and 33% of turnover. Many of these are subsistence concerns and thus produce little income tax let alone corporation tax.

This points to another structural issue with the Greek economy, which is the high-level of self-employment (many of the microbusinesses are sole traders and partnerships), which in 2013 was running at 32% against an EU average of 15%. This share will probably have increased since then due to the continued growth in unwilling self-employment. The Greek economy today still bears similarities to the nineteenth century, with low levels of capital investment, low productivity and an over-dependence on shipping for foreign earnings. It's also worth noting that shipping (at 6% of GDP) is problematic because of low corporate tax yields (a large part of the Greek merchant marine is registered in low-tax Cyprus). While some commentators continue to insist that tax evasion is rooted in resistance to the Ottomans, it is actually structural and modern: too many small businesses, too much self-employment, and the few large private businesses enjoy too many tax exemptions.

We now turn to politics and the role of Europe. Greek social history for almost the entire course of the twentieth century was marked by the "national schism" (Ethnikos Dikhasmos) that arose around World War One when the pro-Allied bourgeois liberal government of Venizelos clashed with King Constantine I, who was thought to harbour German sympathies. Though this was framed as a progressive/reactionary face-off, it's worth noting that Venizelos was an irredentist whose adventurism led to the Anatolian disaster in the early 20s, while the king's preference was for neutrality. But in the context of the time, Venizelos was a "liberal democrat" and seen to be in tune with the victorious powers of Europe (he was keen to join the British at Gallipoli), while Constantine was married to the Kaiser's sister and iffy about democracy.

The schism became a central feature of modern Greek politics and civic society. It would mutate over the course of the century as it adopted contemporary fashions and adjusted to wider geopolitical tensions. It became a more clear-cut clash between democracy and authoritarianism during the crypto-facist dictatorship of Metaxas in the 30s, it reflected Big Power rivalries during the Civil War, while the 1967-74 military junta (the "Colonels") saw much harrumphing about Communist subversion and long hair. After the restoration of democracy, government spending did a lot of the work of social peace-keeping, leading to high levels of public debt. Some of this was due to the clientelistic nature of the schismatic state, as the Nea Demokratia/PASOK duopoly rewarded supporters and tolerated generous payoffs to opponents; some was the result of persistently high defence spending, intended to buy off the military; while the poor record in tackling corruption and tax evasion can be sourced to a reluctance to antagonise either powerful oligarchs or other vocal economic interests, such as middle-class professionals.

Given the living legacy of both the Colonels and the Civil War, it should come as no surprise that the contemporary anticapitalist left (i.e. beyond Syriza) and Golden Dawn both see society in "schismatic" terms, while the broad centre of ND, PASOK and To Potami (the current neoliberal darlings) see the idea of "Europe" as a way of superseding the schism, with both conservatives and progressives cherry-picking those aspects that appeal to their priors ("stability", "modernity" etc). In this context, it is important to understand that Syriza - which is a dynamic social movement that has only recently coalesced - is actually closer to the centrist position, in the sense of wanting to bridge the divide. The party might appear to be on the progressive side of the schism, but they have been careful to present themselves domestically as a broad church: hence the focus on national dignity and the willingness to include ANEL in the government.

The problem is that their platform - an end to austerity while remaining in the euro - is considered to be a logical impossibility by the hardcore. As a result, the historic divide of Greek society is once more aligning with wider expectations. Despite the schismatic stylings (demos, posters, shouting) and the weight of history, the divisions in Greek society are the same as those across Europe as a whole: between the beneficiaries of modern capitalism and those who have been asked to make ever greater sacrifices in terms of wage stagnation, flexible working and restricted public services. It has suited both sides to paint this struggle at times in moralistic and nationalist colours - lazy Mediterraneans, unrepentant Nazis etc - while many are happy to use it as evidence of the EU's inherent flaws, but the fundamental antagonism reflects the increasing inefficiency of capitalism as a generator of growth and the ineffectiveness (or unwillingness) of the state to mitigate the inevitable increase of inequality that arises from the concentration of capital.

Syriza were the best prospect for the progressive cause in Greece, and thus the necessary structural reforms to the economy and society, because they were able to bridge the schism. The EU's antipathy to Syriza - like its delusion that a media confection like To Potami can be transformed into a neoliberal election-winning machine - is naive, as it ignores the reality of the schism. Tsipras's accusation that the EU is "conservative" is spot on. His error is to imagine that the idea of Europe still means what it did in the 80s/90s, an era still current in Greece in many ways, namely solidarity, progress and reform. His dawning realisation is that it has become a fearful and negative project, dedicated to counter-revolution, the defence of capital and the primacy of financial interests. This is now a clash of visions for the EU, suggesting that the schism has graduated from a specific of Greece (left versus right) to a generality of Europe (authority versus democracy).

Evidence for this "promotion" is readily available in the British press. For example, Rafael Behr lumps the British "hard left" with UKIP as enemies of an EU that "is meant to aggregate the power of national governments in response to global forces that might otherwise be beyond the capacity of individual states: climate change, energy security, terrorism, and strategic parity with the US, China, India and Russia. Part of that function is political mediation in the borderless realm of financial globalisation" (that "meant" is a bit of a giveaway). This is the conventional centrist view of Europe. It uses residual nationalism as a threat to stability, while insisting that regional strength is a necessity in a competitive world, and casts EU governance as protective and benign, rather than the coordination of supranational class interests. The claim that the EU uses its "combined authority to moderate international capitalism" looks odd when you consider the Troika's recent negotiating position: an insistence on austerity combined with an aversion to an increase in corporate taxes. Jean-Claude Juncker's historic hypocrisy over corporate tax-dodging just rubs salt in the wounds.

Paul Mason indirectly suggests one reason why the group of 18 are unwilling to further negotiate (let alone sanction a deal) before Sunday, regardless of further concessions by Tsipras: "Paradoxically, a 'Yes' vote recommended by Tsipras would simultaneously close off the Grexit route and obviate the need to create a pro-Euro coalition with the centrist parties". In other words, if regime-change is a priority, and it looks like it is, then they only want Tsipras to win if he advocates a 'No'. This would be no worse than a 'Yes' victory (where Tsipras would fall on his sword), as the hardcore simply aren't going to budge regardless of what the Greek people may want. If they were sensitive to popular opinion in Greece, they would have accepted Syriza's mandate from day one.

As luck would have it, I'm flying to Athens on Friday for a social visit, so I'll be in a position to gauge the mood somewhat better than relying largely on the media, but I don't expect to find a united people. It's been clear since Tuesday that the Greeks remain divided, and that the old schismatic paradigm has simply assumed a new form. Syriza's only real hope since their election in January has been to break that paradigm, but they needed the cooperation of the other members of the Eurozone to do so - i.e. solidarity. The tragedy (and I mean as much for Europe as for Greece) has been the clear preference of the establishment for schism: for strivers versus skivers, for the industrial North versus the indolent South, for the honourable rich versus the dishonourable poor. What we'll be witnessing on Sunday is the death of a European dream.


  1. Excellent stuff, but you haven't cheered me up much!

  2. From your historical description it seems joining the euro was a terrible gamble for Greece. What did they believe at the time they were joining; a social democratic union or a project for coordinating supranational capital. Even if politically split nation joined a emergent conceptually split project, maybe all sides thought they could ride it out because there was just too much to lose for the elite to expel them. And the euro elite surely must know how much they stand to lose in crushing this rebellion, how much they've already lost by bringing on the rebellion in the first place. How much ruin do they think is in Europe before other bigger rebellions come?

  3. The situation is fascinating in as much for the reactions that it provokes and at times the utter disparity between reality and different people's view of reality, and the consequent ironies.

    For example, it would seem that Syriza at least initially believed that they could return the EU to its former progressive role, but has come up against the complete anti-democratic intransigence of the Troika. And yet, at the same time Syriza is probably offering the Troika the best way out of the crisis, but the latter is bent on rejecting them in favour of enforced acquiescence and regime-change.

    At the same time you have pundits like Behr who, sitting in their comfortable offices, still think even now that the benign fluffy EU still exists, even while confronted by "facts on the ground". Mason is always a much better read because, unlike most pundits, he is more in touch with the street and recognises the historical context and economic consequences.

    Almost beyond parody is the IMF, which is less schismatic than schizoid - with one wing issuing documents that the Troika's solution is fundamentally flawed, while the other wing is enforcing the Troika's conditions.

    The crisis has also revealed the fundamental anti-democratic nature of much of the EU - if that was in doubt after the imposition of a technocratic government on Italy.

    And how does this affect Cameron's EU campaign? Can he expect any "reforms", when the EU has showed such intransigence? How can he sell anything to the anti-EU Tories, who understand perfectly what is going on? At least in their own terms.