Can The Left save Greece?

A blog by the name of New Left Project published an article titled “Can the Left save Greece?”, as well as an interview with Yiannis Milios who is a Professor of Economics at the Polytechnic University of Athens. Prof. Milios heads a group of economists including Yiannis Dragasakis, Giorgos Stathakis and Efklidis Tsakalotos, who collectively shape SYRIZA’s economic policy (according to the article).

The article impresses because it is quite balanced. Put differently, it is not demagogic, which is what one might expect articles from such a source to be. It is the interview with Prof. Milios which I find particularly interesting, at least interesting enough to comment on Prof. Milios’ statements.

“They (EU countries) are mostly governed by neoliberal parties, while their socialist parties are actually neoliberal as well. There is obviously intensification in class struggle, not just in Greece but also in Italy, Spain and Portugal, which slowly de-legitimizes the neoliberal spin on the crisis. Therefore, it’s the class struggles themselves that change the circumstances and create this new situation in which the Left perspective steadily gains ground” – I have trouble seeing it that way. Certainly France is not governed by a neoliberal party and there are many, many Conservatives in Germany who criticize Merkel for having moved even left of the center. The whole idea of a ‘neoliberal spin’ is far-fetched to me. I think what we have seen in Continental Europe for much of the post-WWII period is the unfolding of Keynes-policies. Except that Keynes, I believe, recommended deficit spending only during parts of the economic cycle with a balance over the entire economic cycle, whereas most Continental European countries have had uninterrupted (or only briefly interrupted) deficit spending for decades now. And what made matters worse: the spending was, to an excessive degree, ‘true spending’ (on consumption) instead of investment in the future. Yes, I agree that there seems to be a new perspective for The Left but that is more the result of ineffective leadership of cozy political establishments than the consequence of a failed market system.

“The Left has a very clear position: only through reshaping the social and production models can European societies get through this crisis” – I wish members of the established and cozy political elites would make statements like that! This is assuming that Prof. Milios means what I think he means, namely: a common market (particularly when a large part of it has a common currency) cannot be sustained when investment, production, employment, etc. move into one direction and loans flow into the other direction to finance consumption there.

“The model of a social co-operative economy, operating in a more democratic context, is the one that can take our societies out of this crisis” – the so-called ‘Genossenschaften’ represent an important part of the economies in the German-speaking countries.  The concept for such ‘Genossenschaften’ was developed by Friedrich Wilhelm Raiffeisen in the second half of the 19^th century. Essentially, they are somewhat closed systems where the customers are also the owners. The owners’ profit motive becomes of secondary importance: if they earn less as owners because the ‘Genossenschaft’ makes less profit, they make up for that as customers who pay lower prices. Such ‘Genossenschaften’ are clearly interesting alternatives to capital market based ownership.

“Back in the 1980s, PASOK favored capitalist interests over the interests of the vast majority of the people.  Our lead is what society needs and not the imaginary ‘foreign ties of the country’ to its lenders. We say ‘people over profit’" – well, that is a statement for populist consumption. It would lend more credibility to SYRIZA if they didn’t use such statements which have general appeal but no specific meaning.

“We represent the social front created in Greece against austerity policies and our ambition, together with the affiliated forces of the European Left party and others who will join in the process, is to enable the establishing of a European front against austerity” – sounds like milk & honey! Prof. Milios should explain that there is not one Eurozone country which can print its currency. Thus, and to the extent that the above involves deficit spending, a country must be able to borrow. If it can’t borrow and if it doesn’t have the above-mentioned ‘foreign ties to lenders’, the country is caught in extreme austerity.

“We will call for an international forum to discuss the viability and targets of Greek and European debt and budgets. We also intend to take up initiatives in the direction of re-examining the European Union treaties that make up the pivotal points of what brought us to this" – well, I think Angela Merkel could live with that.

“Wages, for once, will be decided through free negotiation between social institutions that represent the productive classes” – I presume Prof. Milios means that wages should be freely negotiated between employees’ representations and managements of a company. That would be a dream come true for many entrepreneurs who despise dealing with central union dignitaries who have other things on their agenda than the well-being of the entrepreneur’s company.

“SYRIZA considers increasing revenue from taxation to be a major priority. We will use tools like the newly established assets list, we will establish a code that will discourage tax-dodging and we will achieve a dramatic (according to current data) increase in revenue” – all I can say to this is: more power to you!

“It’s unthinkable that in a society facing a humanitarian crisis, expenditure is directed towards military spending instead of covering basic necessities like feeding the population and heating schools and hospitals” – all I can say to this is: more power to you!

“It’s certain that the prosperity they (powerful lobbies) enjoyed for decades, the immunity from taxation, has created enough “stock” the powerful could and need to share in order to restart our society” – all I can say to this is: more power to you!

“There certainly need to be new ways to finance our dying economy. For instance, apart from the savings from structural adjustment, special purpose banks will be founded, to operate essentially as investment funds” – Prof. Milios is blowing smoke again because he leaves the impression that all Greece needs in order to finance new productive investment are special purpose banks. As pointed out above, Greece needs the money from those ‘foreign lenders’ because Greece doesn’t generate enough savings on its own in order to finance the necessary growth. Even a new special purpose bank can’t do any lending if it doesn’t have the funding.

“If we define ‘investment’ as a fund coming to buy up businesses which have found themselves in a tough spot because of the crisis, downsize them, fire staff and sacrifice its long-term prospects for short-term profitability, then we are categorically against this” – all I can say to this is: more power to you! Greece does not need asset strippers as it tries to turn-around its economy!

“If we define ‘investment’ as providing capital for the development of activities that respect our society as a whole, that in order to produce profit make use of what modern technology can provide, that respects the worker’s rights and the natural environment, if they cover basic social criteria like jobs creation, then yes, we are for that kind of investment” – all I can say to this is: more power to you!

“If a left-wing government is backed by the people who, in the past, flooded Syntagma square and demonstrated their dissent against austerity policies in every city in Greece, then we have nothing to fear. This negotiation will prove to be of benefit to the vast majority of the Greek society” – all I can say to this is: power away from you!

Conclusion: I am reminded of a previous interview with Mr.Yiannis Dragasakis of SYRIZA. He, too, had given a rather reasonable interview only to blow it with his last statement. Prof. Milios repeats that experience: by and large a reasonable interview but with his very last statement he confirms all the fears that some people have of SYRIZA.

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