Economic Crisis, Greek Theater, Our Drama

by Richard Wolff.

Published on June 4, 2010

Political theater now grips Greece. As with ancient Greek plays, today's drama also reaches and touches everyone else. We sense Greece's dilemmas becoming our own. Her rulers declare that a crisis now threatens Greece. They blame it on the masses. To overcome it, they must impose great suffering on the masses. The rulers' chorus intones the absolute necessity, the utter unavoidability of that suffering as the only solution. There is, it insists, no other option. The masses waver. Many lean toward resignation, accepting the suffering as punishment for their sins that caused the crisis. For the moment, the rulers exult as their elaborate political theater of blame seems to have successfully shifted the costs of the crisis from them to the masses. And yet, there are also signs of impending oppositional anger from the masses. Huge demonstrations rocked Athens in May.

Cathartic moments loom.

Also in May, all Greece's public employees had their wages cut by 15-20%: teachers, clerks, cops, and even soldiers. The government has indicated further cuts this autumn. More or less similar "austerity" is planned in many other capitalist economies.

There too the dominant ideological choruses repeat:

(1) there is no alternative, and

(2) this is all the workers' fault.

This chorus is deceptive, the claims made are false. "Greek wages, pensions, and other working conditions are excessively generous." This nicely ignores the fact that Greece's wages and workers' living standards are below those in major European countries. "Greek labor productivity is low because 'they don't work'." This nicely ignores the fact that the decisions about which technology to invest in and what goods and services to produce are made by employers, not employees. "Greece's industries are stagnant because the prices of Greek products are 'uncompetitive'." This claim ignores the fact that prices for Greek products are set by employers and aim not only to cover their workers' wages but also their own salaries, bonuses, corporate profits, etc.

These claims are not analysis; they are blame. They are heavily promoted by the same collection of business leaders, politicians, mass media, and supportive academics who celebrated the "economic development" that produced the current crisis. Blaming the workers and calling the crisis "national" aims to distract attention from the role of capitalism as a system and from capitalists as key decision-makers in that system. That strategy also prepares the population for austerity as the necessary punishment and corrective for Greece's difficulties.

This Greek economic theater is nothing new. It replicates an old, recurring pattern of capitalism everywhere. Greek capitalist enterprises and their top shareholders and managers (the rich) evade or avoid most taxes. Meanwhile the problems and contradictions of Greek capitalism drive employers and employees to demand ever more from the government to support their activities. Eventually, the government can no longer finance its expanding services by raising more taxes from the masses. The masses resist and social movement to tax enterprises and the rich accelerates. Then, Greek capitalists and the rich quickly offer to lend the government more of the money they have saved from taxes. The government then borrows from them (and often also from capitalists and rich citizens of other countries) to finance some more years of expanding services. It runs increasing budget deficits and so pays increasing interest to the capitalist enterprises and rich individuals that are the government's creditors. Eventually, those creditors respond to the accumulated government debt that they helped to create and that they have profited from by saying that further lending has become too risky.

At that point, capitalist enterprises and the rich threaten to stop lending to the government. The leading politicians panic, declare a national crisis, and announce a national solution that requires national austerity. To survive, Greece's creditors must be coaxed to resume lending. Because the Greek government fears to tax its own capitalist enterprises and richest citizens, it avoids taking that path. Because the government joined the chorus blaming the crisis on the workers, austerity is its program: reduce public employment, cut public wages, and decrease government services to the people. The government must decrease borrowing, reduce the national debt, and thereby "regain the lenders' confidence."

In this theater's next act, the economic consequences of austerity will likely play their usual roles. First, the Greek economy will contract as reduced public sector jobs, wages, and expenditures cut demands for goods and services, thereby driving private employers to fire people producing such goods and services. Second, private employers will cut wages because their reduced sales make that necessary while rising unemployment makes that possible. Third, major foreign or domestic investments will not rescue Greece because its falling wages are still no match for far lower wages in Asia and elsewhere.

Greece's entry into the European Community never generated the promised inflow of investments for similar reasons. Fourth, these developments will further depress government tax revenues and thus reproduce the budget deficits that austerity was falsely advertised to overcome. In the possibly final act, if austerity reaches the danger point of possible mass political backlash, a carefully choreographed drama will be unfolded. Either officially by bankruptcy (default on its national debt) or unofficially by repurchasing its depreciated bonds in private markets, the Greek government will reduce its outstanding debt by 20-50 per cent. At that level, the taxation of Greece's working class will provide sufficient revenue for the Greek government to induce its creditors to resume lending.

As countless past examples of the same staged drama show (the latest was Argentina five years ago), that is what creditors will do. After all, the fees, interest payments, and favorable decisions creditors get from the dependent governments they lend to are structured to already compensate creditors for

default risks -- official or unofficial -- of the kind Greece now contemplates.

One fundamental question emerges from this Greek theater. What final scene will the Greek working class (alone or with other European working classes) enact? Will this play end as a tragedy of mass Greek resignation, suffering, and decline? Or will a dramatic twist expose the austerity imposed on the Greek working class as a truly grotesque rescue of Greek capitalism from its own failures as well as from its participation in the global capitalist crisis? The world watches Greece now because we know that similar dramas and similar alternative endings confront us all.