[Marxism] A short interview
smavro at uom.gr
Mon Dec 17 00:18:09 MST 2012
Dear friends and comrades
The following is the transcript of a short interview I gave to an Indonesian
researcher that might interest you.
Stavros D. Mavroudeas
Assoc. Professor (Political Economy)
Dept. of Economics
University of Macedonia
e-mail: smavro at uom.gr
off. Tel: +30-2310-891779
1. In your opinion, what have caused the Greek Sovereign Debt Crisis? Is it
the internal factors only or there are external factors as well? Is Greece
membership in Eurozone influenced the debt crisis? How far the EU's economic
policies have role in causing the Greek Sovereign Debt Crisis?
The Greek problem is part of the 21st century Great Depression which affects
gravely its international architecture and particularly the long and
strenuous march towards the creation of a unified European imperialist
block. The Greek is a profoundly structural twin crisis: the combination of
the internal aspect (the overaccumulation crisis of Greek capitalism) with
the external one (the downgrading within the international division of labor
and particularly within the EU).
The internal aspect expresses a crisis a-la-Marx (i.e. stemming from the
falling profit rate caused by the increased organic composition of capital)
which is part of the 2007-8 global capitalist crisis. Contrary to both
mainstream (subprime crisis) and certain radical (financialisation crisis)
explanations, the latter is not a financial crisis but a crisis of the
'real' accumulation which was expressed ultimately through the financial
channel. Moreover, both the current Greek and the global crisis are the
result of capitalism's inability to solve properly its 1973 structural
crisis (reflecting the exhaustion of the previous socio-economic
architecture of the system) and the 'silent depression' era of poor economic
performance that followed. The latter was the result of the failure of the
post-1973 capitalist restructurings to create a new functional architecture
and boost satisfactorily capitalist profitability and accumulation.
The internal aspect is aggravated by the external aspect (i.e. the
structural problems caused by Greek capital's participation in the European
imperialist bloc). Greek capital aspired that, by participating, it would be
upgraded from a second-generation middle-range capitalism with limited
imperialist abilities to a 'partner' in a first-class imperialist block with
enhanced imperialist abilities (particularly in the Balkan and Mediterranean
areas). It considered that these benefits would surpass the risks of opening
the previously well-protected Greek economy to competition from the more
developed western European capitals. This, however, led to dissolution of
its previous coherent model without replacing it with another equally
efficient one. The subsequent delegation of crucial economic policies to
Brussels (particularly after the EMU) made things worse. The 2007 crisis
aggravated all these problems and leads to a relegation of Greek capital
within the EU and the international division of labor.
2. Is it true that EU economic policies only give advantage to big countries
(Germany, France) and give disadvantage to periphery countries (Greece,
Spain, Italy, Portugal)? Can we see Greece as only the "slave" of EU's
Greek capitalism's accession in the European integration dismantled its
previous coherent and competitive productive structure without replacing it
with another equally or more successful. On the contrary, the Greek economy
became, to a great extent, a supplement of the Euro-core. This has not
transformed it to a dependent economy - in the sense usually employed by
dependency theory. Greek capitalism remained a middle-range developed and
imperialist economy. However, it was downgraded comparing to its more
Additionally, Greek capitalism has gradually lost several crucial policy
instruments and this curtails its ability to face the crisis. The common
market restricted severely trade and industrial policy and, after the EMU,
monetary policy is guided by the ECB and a competitive devaluation is
forbidden. On top of that, after the IMF-EU Memorandum fiscal policy is also
almost completely controlled by the foreign lenders.
3. Can we see Greek Sovereign Debt Crisis as the real evidence of European
Union's failure as Economic and Monetary Union?
Yes. Monetary integration has several crucial merits for capitalist
accumulation. First, it expands and develops the common market as
instabilities and problems due to monetary differences are eliminated.
Second, it disciplines better intra-capitalist and intra-imperialist
antagonisms. Previously, the capitals of a less developed country (with
lower labor productivity) could repulse competition from the more developed
ones (with higher labor productivity and thus, possibly, lower prices) by
resorting to competitive devaluation. By devaluing their currency they could
make their products cheaper in international markets and thus compete with
the more developed countries, which fall prey to their stronger currencies.
Third, all these oblige individual capitals to solve their profitability
problems not mainly through intra-capitalist competition (although this
remains live and vibrant) but through the increased and more efficient
exploitation of workers. Last, but not least, the euro aspired to contest
the dollar as the world reserve currency and, thus, challenge US world
On the other hand the EMU project is fraught with dangers and difficulties.
The risks have to do with its well-known problem of being a non-optimal
currency area. This means that it tries to put under the same monetary mean
several very diverse economies, which instead of converging they have
actually started to diverge dangerously. Crises tend to have 'asymmetric'
effects on diverse economies and thus they exacerbate their imbalances. This
strains even more the function of common monetary unit. The current crisis
is a typical example of this case and it had, rightfully, challenged the
very existence of the euro.
Moreover, the EMU project did not create an equitable angelic world but
favored some at the expense of others. It boosted the competitiveness and
the overall dominance of a 'hard core' around Germany at the expense of the
less developed economies and particular the European South. Apart from
politico-economic intrigues at EU's commanding heights, the main fundamental
cause of this dichotomy is the fact that the abolition of national monetary,
industrial and commercial policies (and the severe curtailment of the fiscal
policies for the weaker economies) made intra-EU competition a competition
on the basis of 'absolute advantage'. This has the distinctive
characteristic (sometimes branded neo-mercantilism) that the gains of the
winners have to be paid by those left behind. This has exacerbating unequal
development and the divergence between EU's two main groups.
Additionally, ceding monetary and commercial policy to Brussels had
additional adverse policy effects for the Euro-periphery. Common EU policies
followed the sometimes completely different needs of the Euro-core. For
example, for a significant period, monetary policy remained lax - according
to the core's needs - whereas the Euro-periphery required a stricter
conduct. This intensified the dilapidation of South's productive structure
as it favored sectors linked to the Northern group and damaged others more
crucial for national development.
4. In terms of the sovereign debt crisis, can we also blame the Greek banks
as one of its causes? Should the Greek banks be supported? And why should
not the state keep control of the banks, since it is paying for their
recapitalization? What is the alternative for the Greek banks?
The Greek banks are a minor culprit for the Greek crisis. In fact, Greek
banks had a lesser degree of leverage comparing to their European
counterparts. Therefore, 'toxic' assets were relatively fewer in their
accounts. However, the fall of the general profit rate affected their
revenues (which are a part of the surplus-value extracted by productive
capital). Furthermore, Greek banks are the main bastion of Greek capital,
since inside (and behind) those all the main Greek capitalist fractions are
hidden. Thus, the Greek state financed them, in the beginning of the crisis,
without getting their control. And, under the Memoranda, the state borrows
from the IMF and the EU in order to recapitalize the banks, again without
assuming their control. In a nutshell, the Greek people are paying for the
bankers to keep their properties and businesses. Of course they should
already have been nationalized. Their nationalization and their operation
for the purpose of public good and not of the private interests of their
owners is an essential part of an alternative economic strategy.
5. Are the austerity measures taken by Greek Government and European Union
in Memorandum of Economic and Financial Policies effective to solve the
sovereign debt crisis? If it is not effective, why? What's wrong with the
austerity measures? And among the austerity measures, which policy is the
most effective in reducing the public debt to minimize the crisis, cut in
public sector size and wages, pension system reform, privatization, or what?
What are the impacts of the austerity measures on Greece's economic growth,
either macroeconomics or microeconomics? And also on Greek society?
The austerity measures are part of the wider strategy of the Memoranda
between Greece and the EU and the IMF. The Memoranda's declared aim is debt
reduction. Its undeclared aim is Greece's restructuring from a state-fed
capitalism to a privately-led one. This second aim implies that if Greek
economy becomes more competitive (and possibly export-led) it will boost
public revenues. It follows the typical IMF lines: (a) fiscal consolidation
(with extensive cuts and privatizations) and (b) competitive disinflation
(which means primarily austerity and 'internal devaluation', i.e. a barbaric
assault on wages). There is, however, a crucial difference with typical IMF
programs: currency devaluation is missing since the programs' aim is to keep
Greece within the EMU. This implies that the entire adjustment burden falls
directly on wage cuts. This is also a pro-cyclical strategy in the sense
that it attempts a structural transformation within a crisis. It follows a
'bourgeois Marxist' logic: crisis solution requires capital devaluation (and
primarily that of variable capital). Thus, the economy is actually directed
deeper in recession (by mainly restricting fiscal policy and its
anti-cyclical role) in the hope that a steep recession together with the
structural transformation would lead to an equally steep boom. This strategy
has another undeclared (for obvious social and political reasons) element:
foreign (primarily EU) capitals would take a growing chunk of the new,
The Memoranda strategy is deeply flawed and for this reason its reformations
fail systematically. Not because of its general logic: exit from
overaccumulation crisis can come only through massive capital devaluation.
But because its time-frame and the extent of productive powers' destruction
required are historically overambitious. The cumulative GDP loss for the
period 2009-12 would be approximately 20%, 2013 would surely be one of steep
recession and the first year of reverse is continuously pushed back. This
recession worsens all crucial indicators (debt to GDP ratio, public revenues
etc.). The only one positively affected is trade balance deficit which is
decreasing because of the contraction of internal demand. The Memorandum
strategy pushes forward and overambitious program that violates the current
historical socio-economic limits of Greek capitalism. The 'chinisation' of
the working class together with the 'proletarianisation' of the
middle-classes and the bankruptcy of sections of Greek capital can create a
truly subversive situation.
6. Is European Union the only actor who can save Greece from the debt
crisis? What should European Union do, in terms of economic policies?
As I argued above, EU is not a benefactor let alone a savior of Greece.
Quite the opposite: it aggravates the problem.
8. In your opinion, how can the Greek Sovereign Debt Crisis be solved? What
are the most effective and efficient solutions? Are the solutions you
offered profitable for both sides, Greece and European Union? And how long
does it take to solve the sovereign debt crisis?
The only realistic alternative to the distractive strategy of the Memoranda
is a total disengagement from the EU. Within the auspices of the EU there is
no salvation; neither for Greece nor for the other euro-periphery countries.
The expectation of a deus-ex-machina progressive transformation of the EU is
simply a fairytale and this has been proven during the recent decades.
Such a strategy would have a cost but this less than the colossal costs of
and the destruction of the Memoranda strategy. Only through the
disengagement from the EU the country can regain the necessary tools of
economic policy (monetary, financial, industrial, commercial, etc.) that
should be used according to the characteristics and needs of the Greek
economy. A simple exit from EMU, particularly for a less developed country
like Greece, is ineffective as it will continue to be bound by the rules of
the common market and the benefits of a competitive devaluation of the new
currency would be short-lived. The disengagement from the EU must be
(1) The default on the external debt.
(2) The introduction of capital controls.
(3) The nationalization of the banking system in order to avoid its collapse
and to use it to finance the economy.
(4) The creation of an effective system of progressive taxation in order to
stimulate the popular and middle-class' demand and simultaneously the hunt
of the big capital's tax evasion.
(5) The managed depreciation of the currency, so as to facilitate commercial
competitiveness combined with a system of price controls in order to avoid
any undue inflationary increases in particular types of mass consumption
Finally, such a strategy should be accompanied by a program of productive
restructuring of the economy. This program should be based on a general
economic plan created by the state. A key ingredient of this planned
restructuring of the productive economy is the social ownership and control
of at least the strategic economic sectors.
This alternative economic strategy is profitable for the Greek people but
not for the EU whose interests are in direct opposition to those of the
former. This alternative economic strategy solves the sovereign crisis (by
defaulting on the external debt) but moreover, aims to solve the deep
economic crisis of the Greek economy that lies behind the debt crisis.
8. What will happen if Greece exit from the Eurozone? What is the economic
impacts of Grexit, especially for Greece itself and European Union
A Grexit would cause significant problems to the EMU. Apart from the
immediate economic costs (whose extent is open to speculation), it would
have significant geopolitical repercussions since it would prove that the
boat is taking water. A most probable immediate consequence is that other
countries would also leave or be forced to leave. The dismantle of the EU,
this modern politico-economic monster, would be beneficial for the European
Greece and the EU: Capitalist Crisis and Imperialist Rivalries, IIPPE
The Greek External Debt and Imperialist Rivalries: 'One Thief Stealing from
The crisis of the European Union and the failure of its 'salvation plans',
More information about the Marxism