Syriza’s Two Mistakes and Two Lessons

Syriza’s Two Mistakes

That Syriza has made mistakes isn’t in dispute: they themselves have admitted to two main ones.

1) They failed to recognize, despite early warnings from party members such as Costas Lapavistas, that the EU was negotiating in bad faith.  The EU’s intention was never to reach an agreement but to destroy Syriza and with it the hope that the victims of the endless bleeding of austerity had any democratic recourse.  Furthermore, the negotiations were themselves a tactic in that, as former finance minister Yanis Varoufakis now admits, they prevented him from focussing on the one thing which Syriza could have used in its negotiations: a viable plan to exit the Eurozone in a way which minimized disruption to the economy and maximize the chances that it would return to health in the shortest possible time.

2)  We now know from Varoufakis that Syriza  had “a small group . . .   within the ministry, of about five people” that were planning in secret for a Grexit. This was, as he concedes, not even close to what was required to effect a viable transition to a new currency.  Of course, no serious person should have any illusions that a Grexit would be “easy”, even with a massive investment in staff and infrastructure, any more than recovering from a major earthquake, hurricane or bombing of a nation’s major cities by a foreign power. Rather, just as a government is expected to prepare for disasters whether these are acts of god or attacks from hostile foreign powers, Syriza was derelict in failing to plan for what Varoufakis now accepts was “a coup” albeit executed not by “tanks” but by “banks”.

Two Lessons from Syriza’s Mistakes

1) The Bankruptcy of “Speaking Truth to Power” Liberalism

Despite Syriza’s self-definition as “the party of the radical left”, much of its leadership and many of its advisers would reject the designation, more accurately being categorized within our political lexicon as liberals. Among these is Varoufakis’s close friend and UT Austin colleague Jamie Galbraith who described himself as  “a reasonable and hopeful observer” of  Syriza’s initial negotiations with the E.U.  Rather than dismiss as a right wing ideologue German Chancellor Angela Merkel Galbraith praised her for “having made some of the mildest comments of any German politician,” and for having “chosen with care” her words on the subject of debt relief which, according to him, she had not rejected. Galbraith’s report of the negotiations gave further grounds for hope that  “the German government, having taken a very tough line through the process, took a step back from that tough line in order to secure a basic framework agreement for going forward.”

As we now know, the softening on the Germans’ hard line was a liberal chimera. Galbraith now recognizes that “the negotiations were a bit of a farce all along” and has admitted that he should have recognized that Chancellor Merkel was always “completely unreceptive.”

Varoufakis, while famously defining his political orientation as “Marxist” (albeit “erratic”) evidently shared Galbraith’s liberal confidence in the good will of the Eurocrat negotiators. This is apparent in his surprise when his attempts to reason with them were unsatisfactory-to put it mildly.  According to his recent interview in the New Statesmen,

“It’s not that (they) didn’t go down well – it’s that there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply. And that’s startling, for somebody who’s used to academic debate. … The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken.”

What is on display is the disenchantment of liberals who operated on a presumption of good intentions and underlying rationality of elite technocrats. Radicals such as Lapavistas do not. For them, providing “arguments” to the institutional representatives of capital makes no more sense than addressing a hyena with its fangs clamped on one’s jugular.  The hyena is acting not according to reason but according to its fundamental nature and so are the capitalist hyenas who were the Syriza’s negotiating partners.

It was foolish to negotiate with any other expectation, as both Varoufakis and Galbraith now have effectively conceded.

2) Goldman Sachs DOES care (if you raise chickens)

A second explanation for one of Syriza’s crucial mistakes involves assumptions made by segments of their left, as opposed to (neo-) liberal wing, which includes Varoufakis and others who he refers to as “committed Europeanists.” By that he means that they are committed to the longstanding left principle of cosmopolitan internationalism .  As such, they  tend to view favorably the comparative advantage accruing to globalized trading networks which provide the economies of scale making possible large efficiencies in production of basic goods and also in making available raw materials at low cost.  While their position is reasonable, it also has a negative side in that internationalists tend to denigrate the potential of local, small scale experiments in alternative economic systems of the sort which have been championed by Richard Wolff and Gar Alperowitz among others under the heading of worker self directed enterprises and workplace democracy.

Why this matters is that it is apparent that some form of what Wolff and Alperowitz are proposing will be crucial in the event of a Grexit.  Prior to a national currency being re-established, local networks of production and exchange of the sort which globalization has long since eradicated will need to be revived and again made viable. That includes, incidentally, various forms of local food production of the sort denigrated by the verticalist left under the widely circulated meme “Goldman Sachs doesn’t care if you raise chickens.”

In fact,  whether Greece will collapse into chaos and starvation will have to do with whether they are able to reduce their reliance on imported goods ramping up local production in all spheres including most crucially in food production-not as a neo-Calvinist moral imperative but to maintain a minimal caloric intake.  It is likely that many small scale initiatives will need to be launched and developed to accomplish that, some along the lines the WW II Victory Gardens whose production equalled that all commercial sources of vegetables during the war years.  Of course, Goldman Sachs would like nothing better than for Greek efforts at self-reliance to fail which is to say they hope the Greeks don’t raise chickens-and starve for not having done so: the exact opposite of facile, leftish conventional wisdom.

Conclusion: No War but the Class War

While small, the Victory Gardens were not an insignificant contribution to a nation in a state of war.  And, to reiterate the point, the comparison of a state of war to what will be required of under a Grexit is entirely appropriate.

For while some of us want to avert our eyes, the left always recognized that the war by the rich against the poor is a war just as much as any other.  An economic war does not involve missiles, antipersonnel weapons and M-16s. Its weapons are state enforced privatization schemes, debt swaps and interest rate manipulation.  Rather than puncture wounds, severed limbs and crushed skulls the casualities take the form of thousands of unnecessary deaths due to inadequately staffed and supplied hospitals, bacterial infections due to inadequately maintained sewage treatment facilities, collapsing buildings and food poisoning epidemics due to the mass layoffs of inspectors in regulatory agencies. An almost endless list can be compiled of the social collapse resulting from economic warfare carried about by fountain pens rather than guns. Varoufakis has now woken up to the reality that his country has been attacked by an axis of foreign powers, that they are bent on its destruction and have one goal in mind: claiming the spoils of victory, disbursing to their owners in the investor class.It is time the rest of the left joined him there and here-on our feet and ready to fight them, in whatever way we can.

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27 thoughts on “Syriza’s Two Mistakes and Two Lessons”

  1. The basic tenants of Neoliberalism (privatization, free trade, deregulation of the financial industry, anti-labor laws, etc.) were written into the Maastricht Treaty of 1992 that defined the Euro and its economic policies. We are now seeing the results. European voters would never have voted for these policies, which will result in the gradual dismantling of their social democracies. The financial industry thus worked the policies into the Maastricht Treaty without the public realizing what was being done. The financial industry also carefully keeps the process gradual enough that the agendas of neoliberalism remain hidden.

    From this perspective, it is difficult to speak of SYRIZA as having made mistakes in the recent negotiations. The war was lost with the completion of the Maastricht Treaties in 1992.

    In contrast to Latin America, Greece is a bit unusual because Syriza has managed to make the attacks of neoliberalism upon their country’s sovereignty relatively visible to more sophisticated observers, but that vast majority of the population in the international community still has no idea what is happening.

    The financial industry will not allow Greece to develop an effective economy outside its reach. Cuba, North Korea, Iraq, Libya, Nicaragua, Serbia, Venezuela, Iran, and Chile are all examples of what will happen. Embargos, both declared and undeclared, are similar to a slow form of genocide. Efforts like Victory Gardens might help in small ways, but they won’t effectively feed the population. In the end, Greeks will not accept the living standards of a Third World country and will acquiesce to the demands of the financial industry.

    Germany was effectively instrumentalized in this effort due to the culture’s capacity of demonizing target groups. The German press about Greece over last five years can only be described as a hate campaign, and it has been very effective. Germany has already privatized many sectors of its economy such as its telecommunications, railroads, and post office. Little do they know that more is coming, even if the flow of money in the EU will be from poor to rich countries. Germany will initially benefit, as the USA did, and then the effects will begin to become apparent. Many aspects of their social democracy will be dismantled, including their extensive systems of cultural support.

    In 2004, I published an article discussing the effects of neoliberalism and the contrasts between America’s unmitigated capitalism and Europe’s Social Democracies of Europe. It is here:

    http://www.osborne-conant.org/arts_funding.htm

    Back then, I submitted it to a prominent German music journal. They said it was written too much from an American perspective and didn’t apply to Europe. Too bad they didn’t see what was coming.

    1. john.halle says:

      Thanks William, That’s all very well taken and cogent though with one caveat–I don’t quite get this:
      “In the end, Greeks will not accept the living standards of a Third World country and will acquiesce to the demands of the financial industry.”

      In fact, it seems to me that acquiescing to the demands of finance will insure, rather than prevent, Greece from achieving a third world standard of living.

      1. I’m sorry, I should have been clearer. If Greece acquiesces to the financial industry, it will become a deeply impoverished Balkan country similar to say, Albania. It’s economy will be so devastated it will not have the capital to recover. It will pay its debts and only have enough capital to subsist at the very lowest levels of First World standards.

        On the other hand, if Greece attempts to develop an economy independent of the financial industry, it will face embargos that will reduce it to far worse forms of economic devastation such as in Cuba, Venezuela, Nicaragua during the Sandinista government, Chile under Allende, and Iraq before the invasion. It will be far worse than just an impoverished Balkan country and be entirely destroyed.

        People do not realize the immense power of the financial industry’s embargos (both declared and undeclared.) The UN conservatively estimates, for example, that the 10 year embargo of Iraq caused about 500,000 deaths due to the loss of essential products like medicines and medical equipment. Depending on the duration and intensity of these embargos, the effects range from mass murder to genocide.

        From January 2009 to September 2013, fines imposed on 30 United States and foreign entities for relations with Cuba and other countries amounted to more than $2.4 billion. This is what Greece will face if it defies the financial industry, not just poverty, but devastation.

        This is the first time since WWII that a European country has faced what Naomi Klein terms “disaster capitalism” (taking advantage of a major disaster to adopt liberal economic policies that the population would be less likely to accept under normal circumstances.) I’m hoping that France, Spain, Portugal, Ireland, and Greece will form a coalition within the EU and effectively rebel. The first step will be to isolate Germany’s political leadership.

        1. john.halle says:

          Yes-exactly William. Brings to mind Joan Robinson’s famous one liner about there only being one thing worse than being exploited by internationalized predatory capital-not being exploited by them. Oy.

          More seriously, I agree that a first step needs to target the German political leadership-and not only Merkel, from whom one would have expected this, but the SPD which has been an utter disgrace.

  2. Kurt Hill says:

    Well said, prof! I’m so fucking disgusted with the Syriza “leadership” I could spit nails! If they had no Plan B for an orderly as possible exit from the euro, they had no business trying to be the governing party. Far better to be on the outside and pressuring strongly for amelioration of conditions. Five people late in the day is hardly enough. It should have been a top priority. Just as important is the fact that 61 percent of the Greek people voted against austerity. They said “NO!” And what did they get? The transformation of Syriza into a party of austerity little different than the other neoliberal “left” parties. As I said, I’m so pissed I could spit nails.

    Kurt Hill
    Bard ’72

    1. john.halle says:

      Hi Kurt, I do think they screwed up but I’m a bit more willing to cut them some slack. Galbraith, in an interview today, referred to the “rape” of Syriza by the troika. Was amazing to hear those kinds of word coming out of the mouth of the Lloyd Benson Professor of Business and Government relations. He’s learned-and so has Syriza. It’s the next step that will matter.

      1. Kurt Hill says:

        I agree. We have to do what we can to help the Greeks.–kh

    2. Anne-Marie Sileno says:

      I completely agree with Kurt Hill’comment and don’t understand
      this lack of preparation from Syriza
      unless it is not a lack but something like a will to submit …
      There ‘s a video on the Guardian website showing the fresh new governement-www.theguardian.com/world/video/2015/jul/18/greek-cabinet-sworn-in-presidents-office-video –
      They all look happy ! for how long …?

      1. Kurt Hill says:

        Well said, Anne-Marie.

  3. Calgacus says:

    Of course, no serious person should have any illusions that a Grexit would be “easy”, even with a massive investment in staff and infrastructure, any more than recovering from a major earthquake, hurricane or bombing of a nation’s major cities by a foreign power.

    Yes, Grexit is a big thing. The biggest thing to happen to Greece in a generation. But to believe it is comparable to war is to fall prey to omnipresent fearmongering, and baseless internet memes. Tell that to Manolis Glezos & he might finally die, of laughter.

    A very major fearmonger meme is that Greece would starve if left to itself. This is news to the farmers of Greece: Jan. 2012 Greece could feed itself, says farmers conference
    “We have to stop undermining Greek agricultural production and terrorizing people about not having enough to eat if the country goes bankrupt” “We can surpass self-sufficiency, create new wealth and support the country.” says Tzanetos Karamichas longtime head of the Greek farmers union PASEGES.

    See also Nov. 2013 Greece is 94% self-sufficient in agricultural products based on a PASEGES report.

    Note that ludicrous predictions of hunger, starvation & even famine! mean not enough calories, means ignoring the fact that humans are omnivores. While the Greek farmers are saying that Greece is / can be that self-sufficient across the board in just about all categories of food. Of course it is far above self-sufficiency in many major areas, like olive oil or rice, and it exports the surplus.
    Your victory garden idea is not so off base, not so far from current and recent Greek reality. Greece has a very high percentage of its labor force in agriculture, about 12%. Many are among the poorest people, including immigrants, but they aren’t going to starve. Charitably speaking, recent criticism in People’s War is as economically illiterate as the Bloomberg post it cites.

    Long enough comment already, but I strongly disagree with William Osborne’s analysis and history above. Your “In fact, it seems to me that acquiescing to the demands of finance will insure, rather than prevent, Greece from achieving a third world standard of living.” is absolutely right.

    A Greek exit could not be more costly than the current path is a place to start if one wants economic analysis on Greece based on facts and logic. Note that one can count on one hand the number of centers of economic thought in the whole world comparable to Bard’s Levy Institute, which sponsors much valuable work on Greece.

    1. You seem to think Greece would do well with a subsistence economy – the bare needs for survival. First World countries have economies that are much more complex: massive telecommunication systems, transportation systems, energy systems, massive mechanized civic infrastructures providing clean water and sewage, etc. Greece cannot maintain these systems without international trade.

      These systems would be seriously eroded if the country were to face declared or undeclared embargos from the financial system. These embargos can be overt as in the case of Cuba or North Korea, or they can be covert as in the case of Venezuela. Look at what is happening in Venezuela, or what happened in Serbia. The financial industry will not allow Greece to show that any country can live independent of it. To put it colorfully, those who defy the protection racket get knee-capped.

      And by the way, even agriculture could be affected if the country lacked petroleum to run farm equipment, fertilizers, pesticides, the mechanical and energy systems to transport food to consumers, and a stable currency for the exchange of goods. One need only look at the food shortages in the East Block in the latter days of the Soviet Union to realize what happens when economies collapse.

      That is why Syriza is at least formally trying to comply with EU demands. There are better options down the road for resisting neoliberalism in the EU than pushing Greece into a subsistence economy.

      1. john.halle says:

        Thanks William. I don’t agree but I accept your concerns. It is, ultimately, a factual question as to whether the North Korea like conditions will necessarily materialize or whether this is “fear mongering” as Calgacus suggests below. That said, it should be understood that complying with EU demands may not be sufficient. Schauble has proposed a forced Grexit in which case the conditions you describes will materialize whether Syriza wants them or not. It seems to me that a responsible government needs to prepare for this eventuality-just as it would any other potential disaster, as I argue in the piece.

        1. I was responding to Calgacus. In any case, the political landscape is already changing since last week.

          I think it unlikely that the most draconian scenarios will evolve. Germany is slowly realizing how badly it has damaged its image. It will eventually accept the more moderate stances of the USA, EU, France and the IMF – partial debt forgiveness, long-term delays in repayment, and stimulus capital, all combined with severe but manageable reforms. Schäuble was reacting out of a xenophobic German hysteria that had been long in the making.

          I think people will come to their senses, also because the destruction of Greece would ripple back and harm everyone. I think France, Spain, Italy, Portugal, Ireland, and Greece have seen that they need to form a coalition and set different standards for the Euro zone. The Euro zone will remain neoliberal and exploitive, but keep its cards better hidden than in this latest episode.

          1. Calgacus says:

            William Osborne:
            You seem to think Greece would do well with a subsistence economy – the bare needs for survival.
            No, I do not think and did not imply that. I cannot chop all the heads of a hydra at once. “Greece can’t feed itself” is a very important one.

            As I said, I disagree with much of what you said – while agreeing wholeheartedly with the spirit, I add. You are eliding many very important distinctions to arrive at wrongly pessimistic conclusions. Such as caused Tsipras to stupidly and dishonorably betray the will of the Greek people, and oppose the majority of his party by choosing a self-destructive course over an ultimately promising one. International trade is not the same as international finance. The first is basically good, the second is almost useless at best, frequently highly destructive, and entirely unnecessary for the first.

            International finance is nowhere near as powerful as so often made out, often by “Marxists” or “leftists” saying things that sound right and smart and knowledgeable, but that fall apart under examination. I agree that a complete block of international trade, especially if coupled with physical destruction, can have terrible consequences. Iraq’s punishment was outrageous, but it did invade Kuwait, which opened it to UN SC sanctions, the only body which can impose such terrible sanctions. There is zero probability of such against Greece.

            Greece’s situation is very different from those listed above, some of which e.g. Venezuela thrived after defying oligarchy / international finance. Greece is a member of the EU & NATO. The EU & Germany don’t have real trade-sanctioning power. Only the US does, and to make them really effective even the US needs the UN. Being in NATO, with US bases makes it hard to depict Greece as a terrorist / enemy state. For example, the German offer would have given the opposite of sanctions- aid to Greece after Grexit. So even weak and ineffective trade sanctions are vanishingly unlikely- and “international finance” has no other power, none that it has not already exercised to the limit. Last, little Greece has the world’s largest merchant shipping fleet – 16+% of all shipping in the world. Good luck on isolating such a country from trade.

          2. Greece will not, of course, face an overt embargo, but it is completely closed out of international money markets — which is essentially an embargo. It is thus dependent on EU bailout funds and in a very poor position to leave the Euro-zone. There is no Plan B when you have a gun to your head. You simply wait for an opportunity to escape. Given some of the recent comments by leaders of France, Italy, Spain, and the IMF, I hope that moment is coming. Even the Americans aren’t buying Germany’s stance.

            (BTW, the discussion about the murderous nature of embargoes were more of a general observation in reference to related comments made by John Halle in his original blog comment. It is rare to hear someone point out that they are acts of war and very deadly. You are quite correct, however, in noting Greece won’t face those extremes. All the same, its social democracy will be dismantled, which in my view violates the country’s sovereignty and is similar to act of war — which is, in my reading, one of John Halle’s original points.)

      2. Anne-Marie Sileno says:

        those” better options ” as you suggest and hope …would that be a coalition between France, Spain, Italy etc… against Germany ?
        Thanks for your response.
        Anne-Marie

        1. Yes. Many of the Eurozone member’s jaws dropped at Schäuble’s behavior. It seems reasonable to assume that that France, Italy, Spain, Portugal, Greece, and Ireland will formulate strategies to withstand Germany bullying. If Greece can hold on, it won’t have to go it alone.

          Germany has so damaged its image that there has been some talk in Germany of Schäuble resigning. It won’t happen, but it shows that Germany is aware of its image damage.

          And without a Grexit, Germany will agree to carefully controlled stimulus packages for Greece to avoid having the Euro weighed down by a cadaver.

          It’s ironic how neoliberalism is all for government intervention, as along as it is to private enterprises (like the $900 billion given to the banking and auto industries during the US mortgage crisis.) After massive privatization is completed in Greece, stimulus money will be arriving. It’s a pretty straight forward system: bludgeon away the public sector, then give tax payer money to stimulate corporations.

          1. There is more evidence of late that the Greek debt crisis will lead to reforms in the EU. European Commission President Jean-Claude Juncker and the heads of four other EU institutions have developed a plan on how to make the monetary union work better. The report suggests a common deposit insurance scheme for euro zone banks that are under ECB supervision. And French President Francois Hollande has suggested creating a parliament for the euro zone to give decisions greater democratic legitimacy. This would give the Mediterranean countries a forum for balancing Germany’s power in the Euro zone.

    2. john.halle says:

      Thanks very much for taking the time write this-very informative and enlightening. I think there is increasing recognition that Syriza did make a mistake along the lines we seem to agree on. Not sure if you’ve seen this piece by Leo Panitch and Sam Gindin which focuses specifically on the solidarity networks which, they claim, Syriza has allowed to wither and which need to be resuscitated. Here’s the link:
      http://www.socialistproject.ca/bullet/1145.php#continue

      Also, this piece by Mike Albert takes a more or less similar tack.
      http://www.telesurtv.net/english/opinion/Greece-and-the-Masters-of-Europe-20150717-0030.html

      So it seems that there is some degree of consensus forming on the basic criticism. Of course, Tsipras’s purge of the left yesterday was (possibly) the worst possible reaction-unless I’m missing something.

      In any case, thanks again for sharing this information.

      1. Calgacus says:

        John Halle: Schauble has proposed a forced Grexit in which case the conditions you [William Osborne] describe will materialize whether Syriza wants them or not.
        I strongly disagree. Staying in the EZ, staying in austerity is the way to get nearest to North Korea conditions. Schauble’s offer was comparatively reasonable, especially as a starting point. What happened was that the negotiations entered the bizarro world. Tsipras & the concession caucus rejected an offer far more favorable to Greece than the punishment they insisted on. Hard to take advantage of the insanity of your opponents in a negotiation if you’re insane too. As James Galbraith suggests here and presciently in his American Prospect piece- with a friend like France, Greece doesn’t need enemies; the French intervention forestalled Grexit, which is obviously to the benefit of Greece now. Which is why the people of Greece voted for it just now, more or less.

        Thanks for the Telesur link, there are some other good pieces there too.
        I saw the Panitch & Gindin piece & had commented on another Panitch piece there- The Denouement on usual, bad history of 1983 France – a turning point badly misunderstood even more than overlooked. What it actually showed is that states like France have nothing to fear from the bugbear of “international finance”. But “those who control the past control the future,” so bad history & bad economics leads to bad thinking about Greece. Thus, as often, “marxists” or the “left” end up to the right of “liberals” – Krugman, Weisbrot etc.

        1. john.halle says:

          Thanks for this, though I should say that, as a former elected official (even only a local one) I’m disinclined to accept on faith that the transition to a new currency would be as unproblematic as you suggest. Take the example of the Greek shipping fleet. OK, the government nationalizes it and deploys it as is necessary to provide the essential good to prevent mass starvation. But the ships need fuel. What currency will they use to obtain it? Drachmas? At what valuation rate? Assuming that the rate would be even minimally viable so that these purchases could be made, the negotiation process to set the rate would take time-who knows how long. Meanwhile, many small Greek islands have no water supply, relying on shipments from Piraeus and are quickly running out. Do I know this will not materialize-and a huge list of similar potential humanitarian crises? Can I trust your assurances to the contrary? I can’t say that I’m confident, and I can imagine that Tsipras feels the same way. To be clear, to fully address this matter would require a huge discussion of the sort which most of us would not have the professional competence to engage in, so we’re obviously not going to settle it here. I mention it not as a defense of Syriza (as you can see I am fully capable of criticizing them) but as an explanation for the basis of their concerns-which might be misplaced ultimately but which strike me as by no means irrational.

          1. Calgacus says:

            John – As I said, and I thought I convinced both you and William, Greece is not in danger of mass starvation. I am not saying that the transition would be smooth and costless. But even a sudden, forced, unnegotiated one tomorrow is better than insane austerity which has killed and will kill many, many more people.

            For example, your question: But the ships need fuel. What currency will they use to obtain it? Probably euros or dollars, which is what is used now. Such a nationalization would be enormously more than is necessary. Grexit is not as big a thing as a real war! People talk as if Grexit is the first time such a thing happened.

            Greece is not a basket case. This kind of question signifies something of confusion. There are rational concerns & costs about Grexit – but the ones brought up here – the ones that Tsipras stated today – simply aren’t. The world does not and cannot work the way that fear-ridden thinking thinks.

            Greece’s refining sector is about 2% of GDP. Greece imports crude in dollars and largely pays for it with dollars obtained from selling refined products. This isn’t going to disappear with exiting from the EZ – exporting has gotten bigger because austerity has drastically depressed internal demand. Similarly, Greece has recently had basically balanced trade overall, maybe even a surplus sometimes. In other words, it is paying for imports by exports, “bartering” overall. This makes exiting a currency union much simpler than if it were running a trade deficit.

            A currency is a unit of account, a unit of measurement of moral, social credit-debt relationships, obligations. Nothing else, nothing more. An enormous amount of writing and thinking on international trade and finance is – cuckoo for cocoa puffs. It sounds right – but makes things much more complicated than they really are if one patiently thought things through, read the right people. My three favorite recent sources are FDR, Keynes, Lerner.
            Unfortunately many Marxists like the one I mentioned above can fall into the other camp, of muddled thinking.

            A good comparison would be the metric system. A MetrExit would be significantly more costly than a Grexit. But many fearful arguments are tantamount to thinking that if France pushed your country out of the metric system it would make your ten meter high house collapse, because the French took their metres away! Would leaving the metric system lead to mass starvation? The real problems with Grexit are not in big transactions like the oil biz, like shipping, but in many small ones, as in fx-earning tourism.

            More particularly, for obtaining oil read: Greek refiner Hellenic’s darkest days over as oil options grow. At worst, Greece would go back to having to deal with Glencore & Vitol for oil – and pay a premium – not be shut out, not have a life-limb-agriculture- vital services threatening shortage.
            The basic point is that the Troika has been so brutal, for years, that many of the worst things that Grexit could quite temporarily do have already been done. They’ve shot their wad. If it’s big enough, if you pay a premium, financing is available elsewhere. Banks, international banks don’t have magical powers. Basically, they are charlatans – their only power is convincing people they have power – but they are very good at this for this is a dark age of economic understanding in academia – and immeasurably worse – in the popular mind.

  4. John,

    There was a concession caucus in the Syriza leadership, who believed that if you gave ground the Institutions would eventually meet the Greek government partway.

    Yanis Varoufakis was not party to that caucus, which was why he was sidelined from late March forward.

    We both saw from the beginning that the institutions were inflexible — and Yanis was told as much, directly and candidly, by Wolfgang Schäuble.

    I appreciate all the references to my work, but as evidence of my view of matters, let me link to one more: an article in The American Prospect explicitly entitled, “Bad Faith.”

    http://prospect.org/article/bad-faith-4

    JG

    1. The article from “The American Prospect” is from June 16. It provides important history, but much has happened since then, including significant changes in the IMF’s stance in relation to Germany.

    2. john.halle says:

      Thanks James, I suppose it must be a bit unfamiliar to be accused of insufficient skepticism, though now reading the Prospect piece, which I had somehow missed, I’ll admit to being a bit less inclined to level the charge.

      That said, I think you’ll agree that, on balance, the situation would be significantly healthier if you were in a position of defending the center from attacks by radicals such as myself and others as you did on this Real News segment where you assumed that role pitted against Marxist Leo Panitch, carefully addressing Leo’s arguments rather than dismissing them as beyond the pale (as has been done for generations in the profession).

      I particularly appreciate this aspect of your orientation. Maybe others sharing your basic perspective could manage to orient themselves similarly.

      Thanks for writing in.

      JH

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