Tag Archives: crisis

Dreaming dangerously

8 Jul

Slavoj Zizek’s response to the Greek referendum  apologises for a potentially fatal flaw in Syriza’s strategy.

For Slavoj Zizek a lesson to be drawn from Syriza’s referendum victory last Sunday is that:

‘The moment has come to move beyond the irrelevant debates about the possible mistakes and misjudgments of the Greek government. The stakes are now much too high.’

Zizek is right that we should take no notice of the criticisms of Syriza for not compromising enough with the European institutions. However, we need to be very alert to the fact that, notwithstanding the Syriza leadership’s charisma and elan, their pro-Euro strategy and rhetoric are a potential disaster for the Greek people and for the European left.

Zizek’s own argument throws up the key reason to continue to debate Syriza’s approach. He argues that in the face of ‘the technocratic status quo that has kept Europe in inertia for decades’:

‘only a new “heresy” (represented at this moment by Syriza) can save what is worth saving in European legacy: democracy, trust in people, egalitarian solidarity.’

He points out that ‘democracy, trust in the people, egalitarian solidarity’ is a program that is no more radical than that which was once put forward by moderate social democracy. But he also observes that Syriza, in promoting this moderate ‘heresy’ through its campaign to stay in the Eurozone, ‘effectively wants something that is not possible within the coordinates of the existing global system.’  But if that is right, then Zizek’s new heresy, as it is ‘represented by Syriza’, is really a fantasy, because Syriza, throughout the referendum campaign and since, has promoted the idea of a European Union characterized by ‘democracy, trust in people, egalitarian solidarity’, something that Zizek knows is not possible.

The reason it is not possible is that both the Euro and the wider European Union are technocratic projects that remove full political control of Europe’s economies from its national governments. In the Eurozone, control of policy is handed over to intergovernmental forums at European level, such as the Eurogroup of finance ministers that is presided over by Zizek’s ‘emblematic bad guy’ in the Greek drama, Dutch finance minister, Jeroen Dijsselbloem. In these European forums, national leaders technocratically impose the dictates of the market, insulated from the tawdry ‘ideological’ contestation of electoral politics (aka democratic accountability). In other words, the Euro is founded on distrust of the people, frustrating democracy and evading solidarity; these are its raison d’etre.

While Syriza has exposed and provoked Europe’s technocratic politicians, it has failed to understand that technocratic intransigence and democratic deficit are constitutional features of the Euro project. As a consequence of this failure, it has convinced the Greek people to vote for two mutually exclusive positions – No to technocracy and austerity, Yes to the Euro. This contradiction in Syriza’s strategy presents a serious danger to both Greece and European democracy generally.

Perhaps, when Zizek says that Syriza represents his heresy of ‘democracy, trust in the people, egalitarian solidarity’, he means that Syriza will now show its true colours. If Greece is kicked out of the Eurozone, Syriza can say to the Greek people: ‘we did everything possible to return the Eurozone to a moderate social democratic path, but it is just not possible. Now we must do something different.’ And no doubt Greek officials are working hard on technical contingency plans for Grexit. The problem is that Syriza appears to have done nothing politically to prepare either the Greek people or their supporters for such a radical change of direction, at least not in public. Syriza’s leaders have instead insisted that a No vote is a vote to stay in the Eurozone. If its true colours really are anti-Euro, then the Syriza leadership is waiting a dangerously long time to show them.

From the point of view of the Eurozone, ejecting Greece from the Euro would be a mark of the failure of the technocratic project of European integration. And that is giving Eurozone leaders pause for thought. Perhaps, given the growing evidence of the failure of their project, and their own resultant political weakness, the Eurozone leaders will throw in the towel and come around to the Syriza heresy. But just writing that down indicates how unlikely it is, which is why Zizek doesn’t believe it is possible either.

If Greece is forced out of the Eurozone, Syriza may find itself presiding over an economic collapse that it has claimed all along will not happen. In the medium-term, Grexit may be good for the Greek economy. But in the short run it will be very difficult indeed, and given that Syriza has not prepared its supporters or Greece for Grexit, executing such a sudden political U-turn in dire economic straits, will test the Greek left’s credibility, inventiveness, and coherence to the limit. The alternative to Grexit appears to be that Tsipras tries to sell a deal that is no better (or not much better) than the one they were offered before the referendum, which will be a political disaster for Syriza.

Neither of these alternatives seems likely to achieve more democracy, trust in the people or solidarity. Instead they each threaten only to reinforce the popular perception that even such a moderate program is no more than a fantasy of left-wing dreamers. The danger lies not in the moderate ideological content of Syriza’s demands as such, but in Syriza’s fostering of the illusion that these moderate demands can be met within the Eurozone. It is this problem that Zizek’s merely laudatory response to the referendum result obscures.

The unraveling of Syriza’s pro-Euro strategy risks further lowering political horizons in Europe, and stripping the radical left of its recently regained credibility at a time when mainstream politics also lacks authority. Further fragmentation in public life, especially in Greece, is in prospect. Debating whether Syriza’s strategy has been a good one seems anything but irrelevant. The stakes are much too high not to debate it.

Peter Ramsay

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Political Deleveraging and Our Hapless Ruling Class

21 Oct

Europe is leaderless. Its major figures cannot agree amongst a very narrow range of options to resolve a looming banking crisis. American leaders do worse than nothing. They impose austerity amidst massive contractions in private consumption and investment, even though public borrowing has never been cheaper. The ruling class is just not up to the task of governing during real economic turmoil. There is a reason for this, and it is connected to the economic conditions our rulers are called to manage. The past twenty years produced a ruling class used to manufacturing crises, but unsuited to the management of a real one.

The implicit social contract of the post-Cold War period, which underwrote the suspension of class conflict despite stagnating wages, has been uninterrupted debt-financed consumption. American households borrowed to buy cheap imports and expensive houses; the Europeans did the same, with the periphery buying German exports. The condition for this implicit bargain was a belief in the Great Moderation, and especially in expert management of risk, which allowed for a safe, but massive, expansion of financial activity and instruments – which itself was the condition for the expansion of debt-financed consumption.

Rising above this arrangement was a depoliticized form of rule: technocratic management by experts. It was thought that there were no fundamental, or even major, conflicts of interest in the global economy. At least there were none that could not be managed by the right group of experts possessing the requisite knowledge, and by minor regulatory changes at the margins that would set aright the relevant economic incentives. The managerial ethos of this period, though it went in the US with acrimonious culture wars, produced rulers who believed this order would continue to tick over so long as economic issues were depoliticized and handed over to the experts – heads of central banks and the math geniuses whose magic formulas for ‘risk-management’ lay at the heart of the financial instruments that we now know massively increased systemic risk. So long as this system appeared to be working, the ruling classes could continue to develop their depoliticized modes of international decision-making and technocratic ethos.

We know at least part of the economic problem this has created – massive overleveraging, or indebtedness, which is now leading to deleveraging, or efforts to pay back debts. This reduces private demand, which leads potential investors and lenders to park surpluses in cash and T-bills, rather than invest in new products that can’t be sold. But there is an analogous process happening in the political sphere. The ruling class, as it turns out, took out a massive loan of its own – a commitment to a particular political style, based on transforming economic and social conflicts into technical problems resolved in depoliticized national and international venues. This political system was relatively stable only if the implicit bargain, of increasing debt-financed consumption and growing social inequality, remained stable. That is to say, a certain kind of politics – of rulers and decision-making processes – has depended just as much on the free flow of credit as the economy.

The kinds of persons fit to rule that kind of a system are not ones able to deal particularly well either with increased pressure and conflict at the national political level or with the need to whip the very experts – bankers, central banks – they have primarily relied upon into line. This form of political rule is, in the language of economics, pro-cyclical. It exacerbates the problem by increasing unpredictability and attempts to flee from political problems. From Obama’s head-in-the-sands hope that consensus on austerity measures, to the frantic dithering of Sarkozy and Merkel, we are seeing a massive political ‘deleveraging.’ The political debt of the last twenty years is being called in – riots, general strikes, occupations – and nobody has a clue what to do. These are leaders prepared for one kind of rule, forced into another, and incapable of adjusting.

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