Greece Leads with Keynes, not Marx

By Steve Weissman, Reader Supported News

16 February 15

e-negotiating the Greek debt and bailout often seems surreal, especially when the country’s new finance minister Yanis Varoufakis plays the wild man. An internationally recognized expert in game theory and self-described “libertarian Marxist,” the purposely provocative Varoufakis gets right in the face of the European mandarins. They are, he says, little different from old-fashioned Soviet apparatchiks, refusing to acknowledge facts that do not fit with their received orthodoxy, which – in response to the global economic meltdown that began in 2008 – has become austerity über alles.

“A clueless political personnel, in denial of the systemic nature of the crisis,” he says, “is pursuing policies akin to carpet-bombing the economy of proud European nations in order to save them.”

Imposed by Germany’s Angela Merkel and the troika – the European Union (EU), European Central Bank (ECB), and International Monetary Fund (IMF) – the earlier bailout agreement that the previous Greek government accepted and that Varoufakis and the Syriza-led government of Alexis Tsipras now want to renegotiate provided money primarily to pay back French, German, and other European banks that had lent to the Greeks. But the bailout brought with it austerity measures that devastated the Greek economy, stifled growth, cut the social safety net, forced the sell-off and privatization of valuable assets, and put more than a quarter of the workforce out of work. This is “the carpet-bombing” Syriza now rejects – not just for Greece, but for all of Europe.

To be clear, let me highlight the obvious. In their rejection of austerity, Varoufakis and Tsipras are in no way calling for a Marxist revolution. They are not even trying to seriously restrain the capitalists who created the global crisis and continue to profit from it. Instead, they are following in the decidedly reformist footsteps of the British economist Lord John Maynard Keynes, “an enemy of the Left” who “worked hard and cleverly in order to come up with ideas that would allow capitalism to survive against its own propensity for, potentially, deadly spasms.”

That is how Varoufakis described Lord Keynes back in May 2013, when the Greek economist keynoted the 6th “Subversive Festival” in Zagreb. In his speech, Varoufakis offered a very personal insight into his thinking, including his attraction to Keynesian economics and its use of deficit financing to promote growth and create jobs. He called his exegesis “Confessions of an Erratic Marxist,” which he later expanded and continues to feature on his blog.

The economic crisis “puts radicals in a terrible dilemma,” he sums up his argument. “Should we use this once-in-a-century capitalist crisis as an opportunity for the dismantling of the European Union, given the latter’s enthusiastic acquiescence to the neoliberal policies and creed? Or should we accept that the Left is not ready for radical change and campaign instead for stabilizing European capitalism?”

For better or worse, Varoufakis has chosen the second alternative, as has his prime minister Alexis Tsipras, a former Marxist youth leader. “It is the Left’s historical duty, at this particular juncture, to stabilize capitalism,” says Varoufakis, “to save European capitalism from itself and from the inane handlers of the Eurozone’s inevitable crisis.”

Varoufakis fears that continuing austerity will unleash “radically repressive forces” like Greece’s neo-Nazi Golden Dawn that would “cause a humanitarian bloodbath while extinguishing the hope for any progressive moves for generations to come.”

But what if the troika and other guardians of European capitalism choose not to be saved? What if austerity remains the rule? Will there be a humanitarian bloodbath? Domino theories rarely play out as predicted, but what happens in Brussels in the next few weeks will surely affect how much support Spanish voters give to the anti-austerity Podemos party, which has openly allied itself with Tsipras and Syriza. The negotiations will similarly influence the prospects for anti-austerity protestors in Portugal and Italy, the prospects of Euro-Skeptics on the left and right throughout Europe, and the future of the Euro and European Union.

Much of the world’s smart money is betting that the negotiations will fail. It’s “just a matter of time” before Greece drops out of the Euro, former Federal Reserve chairman Alan Greenspan told the BBC. “All the cards are being held by members of the Eurozone.”

A longtime critic of the single currency, Greenspan also sees the real risk of a “much bigger break-up” with other southern European countries forced out, triggering the eventual collapse of the single currency and severe shock to the European Union.

One other threat needs to be considered. If Europe fails to help Greece and sticks with austerity, even with the too-little, too-late loosening that the European Commission’s Jean-Claude Juncker now seems to favor, Tsipras has indicated that he may seek financial aid from Vladimir Putin’s Russia. If the troika’s refusal to face facts and Greece’s need for economic survival push the left-wing Greeks to align themselves with a right-wing, Christian nationalist Russia, the stakes could be higher than any of the current players expect. At a minimum, the alignment would radically alter the fight against austerity, the future of sanctions, and the new Cold War that supporters of Hillary Clinton and their neocon fellow travelers are now pushing.

A veteran of the Berkeley Free Speech Movement and the New Left monthly Ramparts, Steve Weissman lived for many years in London, working as a magazine writer and television producer. He now lives and works in France, where he is researching a new book, "Big Money and the Corporate State: How Global Banks, Corporations, and Speculators Rule and How to Nonviolently Break Their Hold."

Reader Supported News is the Publication of Origin for this work. Permission to republish is freely granted with credit and a link back to Reader Supported News.