Look not to the peripheries

In recent weeks, Yannis Varoufakis, former Greek Finance Minister, has been under fire because of a secret group he ran, from February to June, whose purpose was to plan for a possible Grexit. Some have charged him with treason – primarily because his group hacked into the Greek Finance Ministry to acquire information they needed for the planning. Others defended him.

Whatever the stakes of this minor power struggle, it is a sideshow. In fact, Greece itself is not even the story. In this post-agreement moment, as the Tsipras government capitulates to the Eurogroup’s diktats, we need to grasp the dramatic failure of Syriza’s strategy in its proper context: the wider exhaustion of Left politics. The primary lesson is not (only) that Syriza failed but that the Left, across Europe, is politically exhausted. It is important to identify this weakness not only to acknowledge the limits of what Syriza could ever have done, but also to counter the emergent left-populist view that this is all about Germany.

To be sure, Tsipras deserves some blame. If the only planning for Grexit was happening in secret, on condition it never be made public and therefore never part of the bargaining strategy, then it was not just a pointless activity but a sign of Tsipras’ opportunistic willingness to use the Greeks as a stage army. They were there to vote, but never to have a real option granted. After all, for an exit to be a democratic act aimed at something like self-determination outside the Eurozone, it could not be a mere technocratic process of figuring out how to print and distribute notes, denominate payments, and sort out IOUs. It might have required seizing banks to prevent capital flight, nationalizing industries to prevent them being bought up by oligarchs who were hoarding euros outside Greece, rationing of certain basic supplies, even subsistence level economic production for a time. That is something the Greeks would have had to have been prepared for, something asked of them, and something which would have needed explicit popular backing. Tsipras made no effort in this direction and one has to think that he did not ultimately believe in his own people enough even to put the question to them.

Nevertheless, we should not lose sight of the extraordinary constraints that Tsipras and the Syriza government generally were under. They took power after Greece had already been through multiple rounds of austerity and seen roughly a quarter of its GDP evaporate. The financial thuggery by the European Central Bank, which engineered a quasi-bank failure in the last days of the negotiations by drastically reducing emergency funding, was illegal and extremely coercive. President of the Eurogroup, Jeroen Djisselbloem, doubled down on the threat, saying “we are going to collapse your banks.” It was clear that Schäuble wanted to turn Greece into something like debtor’s colony and was willing to take only that or let Greece go altogether. Even if Tsipras had, from the very beginning, made more effort to plan for the exit, looked for alternate sources of financing, pre-emptively printed drachmas, readied to seize the banks, moved to nationalize key assets, prepared capital controls, and taken the 50 other steps necessary to minimize the costs of exit, the democratic act would not have been a revolutionary step into a heroic, post-austerian future. It would have been a necessary, high-cost, step away from the clutches of the Eurozone.

The reason Greece was so limited in options is that Syriza had no meaningful support from the rest of the European Left. It had no support because the mainstream left parties, from the German SPD to the French Socialists, on through other Western European parties, have so fully committed themselves to the Eurozone and to some version of austerity that they were in no position to open the space within which a proper resistance to the Eurogroup’s divide-and-conquer sadomonetarism could be challenged. Syriza ran up against some world-historic limits that allowed someone other than the Left to dictate not just the basic terms but also the governing ideas of public discourse.

The best way to appreciate this is to note what could have been said but wasn’t. For one, it is striking how quickly the sovereign debt crisis of 2010 became pitched in nationalist terms, as a competition between creditor and debtor nations. In fact, the sovereign debt crisis had its origins in reckless lending by major French and German banks, which mirrored some of the profligacy and corruption of the Mediterranean spenders, and the majority of the money of the early bailouts was channeled into making those banks whole. This was true across the board but especially true in Greece. As Mark Blyth notes:

Greece was thus a mere conduit for a bailout. It was not a recipient in any significant way, despite what is constantly repeated in the media. Of the roughly 230 billion euro disbursed to Greece, it is estimated that only 27 billion went toward keeping the Greek state running. Indeed, by 2013 Greece was running a surplus and did not need such financing. Accordingly, 65 percent of the loans to Greece went straight through Greece to core banks for interest payments, maturing debt, and for domestic bank recapitalization demanded by the lenders. By another accounting, 90 percent of the “loans to Greece” bypassed Greece entirely.

The European people funded the bank bailouts, preserving their irrational financial system, and effectively nationalizing the debt through the Troika institutions. This could have been the start of more democratic control over the economy. Instead, the price of the bailouts was austerity for the southern countries, even less democracy (remember two elected governments, in Italy and Greece, were replaced by unelected technocrats), and worst of all the transformation of a conflict between the people and their economic system into a conflict between creditor and debtor nations. After all, once the majority of the debt was nationalized through the bailouts, the French, Dutch, other Northern Europeans, but above all the Germans, became creditors for the Italians, Spaniards, Portuguese and Greeks. The parties of the Left in these Northern countries could have tried to resist the nationalist impulse that coursed through the financial circuits of the European Financial Stability Facility/European Stability Mechanism, Emergency Liquidity Assistance, and other conduits of the bailout programs. They were, however, so thoroughly compromised by their commitment to the EU and the euro, not to mention their cooperation with what we now know as austerity, that there was no way out.

Consider the Germans. Any left-wing politician worth his salt could have pointed out that the way Schäuble talked about Greeks in public was likely how he talks about German workers in private. And, further, that Schäuble represented the interests of a fraction of German capital, not the German people as whole. Indeed, a German politician could have further pointed out that keeping Greece in but forcing it into deeper internal devaluation – namely, benefits reduction and wage repression – simply threatens to lower the wage floor for all of Europe, especially since the latest agreement also involved a direct assault on labor rights. However, the German SDP has been imposing wage stagnation on its own working class for the last two decades, most notably with the Hartz reforms of the early 2000s, imposed more or less in tandem with the rise of the euro. These reforms, pushed through when the SPD’s Gerhard Schröder was Chancellor, reduced benefits and contributed to wage stagnation. Even when the SDP lost to Merkel’s Christian Democrats, they agreed to be the junior partner in a governing coalition, in exchange for a few concessions, some lousy portfolios, and fealty to Merkel’s vision of Germany in Europe.

This has left the only significant party with any capacity for opposition utterly compromised. How do you tell workers whom you have been telling to accept wage stagnation and benefits reductions that they should now turn around and spend more money bailing out Greeks? Why save Greek benefits when your own are being chipped away? The SPD has no answers, no capacity even to generate answers, and even if it had generated answers, it could have never presented itself as a credible opposition, able to support the Greeks. That is why the whole affair looked like a unified, German hegemonic operation. Not because Germany really does have a national interest in dominating Europe – no working class has a stake in intensified nationalistic conflict – but because the expression of class divisions has been suppressed by the mainstream Left party itself.

A similar story could be told about the French Socialist Party. As already argued on The Current Moment, the French Parti Socialiste (PS) is not a working class party. Indeed, the abandonment of the working class by the French Left goes some way to explaining the popularity of the Front National amongst the young working class French. They rightly judge that the PS no longer represents them. Hollande’s tepid support for Tsipras soon after the latter’s election quickly turned into hostility. Hollande’s intervention at the last minute to stop Schäuble’s push for Grexit was a matter of French national interests, not of ideological or class solidarity. Hollande calculated that a German-provoked Grexit would make life in the Eurozone quite a bit more difficult, with rules ever more rigid. A similar calculation was made by Italy’s Matteo Renzi.

The PS’s commitment to European integration and monetary union stems from Mitterrand’s u-turn on membership of the European Monetary System (and the Exchange Rate Mechanism within it) in 1984. Whilst Mitterrand justified his decision to remain in the EMS in the language of Europe and peace, it fitted with his wider goals. He had become convinced of the need to reform the French economy through domestic adaptation rather than to use devaluations of the French franc as a basis for economic competiveness. The EMS was a rules-based framework that would help Mitterrand to pursue this strategy. De Gaulle’s attempt at internal reform failed with the general strike of 1968 and a devaluation in 1969. The Barre Plan of 1976 had also failed, which was why Mitterrand’s alternative of ‘Keynesianism in one country’ had been so popular in 1981. When he abandoned it a few years later, he brought the PS in line with the now established view about the need for an external monetary anchor to encourage reform internally. Mitterrand’s conversion to the power of external rules has become a core belief within the PS and there was no chance that Hollande, Valls, Fabius or Macron would challenge this by supporting Syriza. For them, as for the rest of the European Left, there is no alternative to this way of conducting economic policy.

The failure we see is, therefore, not just one of parties taking the wrong stance, or being compromised by their past commitments. It is also the dearth of alternative, left-wing ideas. Being anti-austerity is no longer enough, and it hasn’t been for a long time. It is one thing to say that turning Greece into a debtor’s colony, or undermining the European welfare state, is immoral. It is another to have some conception of and belief in the alternative. No doubt one reason that Tsipras and Syriza were afraid of what Grexit would take is because few found it credible even to consider nationalizing the banks. They only got as far as capital controls, very likely an example of how halfway can be worse than none or all. But the point is that, beyond outrage, there isn’t much in the way of a credible Left alternative to what gets shoved down the people’s throats each time the dollars or Euros run out. In such a political and ideological climate, there is little the Greeks could have done.

In fact, the degree of hope invested in Syriza by the wider European Left, especially around the time of the referendum, was the product of political displacement – not so dissimilar from left-wing support for the ‘Yes’ vote in the Scottish referendum last year. Unable to lead directly, the Left will project its needs and desires onto anything that looks vaguely oppositional, and Syriza had the added advantage of having some actual left-wing elements in it. If Syriza failed to lead, their failure only reflected the wider Left’s failure to imagine itself leading a popular movement that is willing to take responsibility for running society out of the hands of a bankrupt elite.

This is a failure not only of Syriza, but of the only other significant movements that have emerged out of the European status quo. Consider Pablo Iglesias, leader of Spain’s Podemos Party. In July Iglesias took pains to distance himself from Greece and to commit himself, if elected, to staying in the euro. He then openly professed that there is nothing he can do to resist the anti-democratic character of the EU – despite claiming the right to lead 45 million people. What better sign that it is not only the technocrats of Europe that are queasy about democracy. The peripheries and the core are constrained by the weakness of the Left everywhere.

Alex Gourevitch

What German Left? (Part 1)

Guest post by Phil Mader, researcher in sociology at the University of Basel, Switzerland, and an editor of the Governance Across Borders blog, www.governancexborders.com.

TCM’s launch article for this occasional series argued that today’s German Left was more German than Left. It would be hard to disagree. However, equating the German Left with the SPD (as the article mostly did) offers too narrow a picture. It’s not easy to say what’s Left (and left) of the traditional social/Christian democrat divide in Germany, so for the sake of a tour d’horizon, I’ll attempt an overview of the factional positions and various counter- and cross-currents rippling across the left-of-centre political spectrum in Germany. Marx and Engels bitingly remarked in the German Ideology that “The thoughts and actions of the foreigner are concerned with temporariness, the thoughts and actions of the German with eternity.” They were, of course, criticising their contemporaries, but the statement retains validity for both the tamer and the more radical elements of the German Left, the former being more concerned with the permanence of the German model than Europe’s present ailments, the latter preoccupied with more abstract matters than the current impasse. This first article deals with the moderate parliamentary Left: the Social Democratic Party (SPD) and the Green Party (Die Grünen). The next examines the leftier Left: the Linkspartei and the extra-parliamentary Left, including the trade union sector and the autonomous movement.

Overall – as in most parts of the Western capitalist world – the past thirty-odd years have shifted the general parameters of party politics in Germany to the right. However, the failure of the German Left to advance solidarity in the banking-cum-Southern European debt crisis has specific Germany-rooted causes. Partly of course economic profiteering plays a role, but ideologically for the vast majority (far into the Left voter spectrum) the only possible narrative of the Euro crisis is that of economic virtue versus immorality. Mirroring the overall rise of a new nationalism, for many in Germany southern Europe’s woes are a welcome confirmation of Germany’s own virtue. Its model for the past 20 years has been the astonishing, perhaps even historically unique, cumulative wage repression amounting to 79 percent of GDP (since 1995), while private debt levels remained among the lowest and steadiest in Europe.

German popular wisdom on southern Europe is embodied in the figure conjured up by Merkel of the proverbially frugal, economically savvy and morally virtuous “Swabian housewife” who knows that you can only ever spend as much as you have. Germany’s current relative economic stability in terms of high capitalization, continued export success, and moderate unemployment (7 percent officially; but 1.4 million Germans receive wage subsidies and 900,000 are temps) appears a late reward for this “wisdom”, while tabloid tirades against lazy, scheming “Pleite-Griechen” (“bankrupt Greeks”) offer rhetorical solace to a populace which has stolidly borne the clear-cutting of social insurance and creation of a new lumpen-precariat, publicly reduced to rummaging in bins for bottles worth 8 cents deposit. Given this combination of base and superstructure, political acts of solidarity with Southern Europe are risky enterprises for any force vying for power.

Not that, under normal circumstances, Germany’s social democrats would be too keen. Far more than Britain’s Labour Party or France’s Socialistes, the SPD has a history of organic alliance with conservative elites, supporting the national cause in decisive, difficult impasses: Lasalle’s anti-communism, the SPD’s “yes” to war bonds (1914), Ebert and Noske’s violent quashing of the revolution in 1919 and 1920. Since World War II, the SPD’s two defining moments in government were Willy Brandt’s rapprochement (conservatives labeled him a traitor yet reaped the later rewards of a smooth incorporation of the East) and the Schröder government’s early 2000s “Hartz” tax, welfare, and labour market reforms, which cut deeper through the social safety net in one electoral term than Kohl ever attempted in four.

At the ballots, the Social Democrats have fought a losing battle ever since, clinging to diminishing remnants of power. After the last election in fall 2013, Social Democrat leaders never considered a possible “Red-Red-Green” Left majority, quickly choosing instead to repeat their “grand coalition” with the CDU (and making Linke and Bündnis 90/Die Grünen the smallest opposition ever in the German Bundestag). One effect of the SPD’s preference for centrist coalitions has been that any political achievements it can show increasingly bear the CDU’s stamp. For instance, the two social causes it championed in the last election – a universal minimum wage and dual citizenship – are materialising as barely recognizable compromises. Over one third of employees who should have benefited from the minimum wage of €8.50 per hour (before tax) will be exempt, and those previously unemployed for over one year are additionally excluded. Dual citizenship will be restricted to Germany-born-and-raised children, bound by strict rules of residence and discriminatory clauses. Despite occasional back-bench grumbling, today’s SPD solidly remains in the hands of Schröder’s successors – foreign minister Steinmeier and a still-powerful Peer Steinbrück – and their political stepchildren, Sigmar Gabriel and Andrea Nahles. This leadership is committed to defending and cementing the turn-of-the-millennium reforms, the undoing of many of which would be conditional for any partnership with Die Linke.

The SPD has thus become a party without a cause, and though much the same may be said for Merkel’s CDU, the conservatives retain a final trump card: values. That, together with SPD cadres’ mortal dread of sharing anything – even opposition – with the Linkspartei, explains its hunger for “scraps at the table” (TCM). SPD stalwarts still resent the treason of the Lafontaine-led Left breakaway which created today’s Die Linke (more in the next article). Conservatives’ praise for Schröder’s and Fischer’s reforms, meanwhile, has been ample, nurturing a genuine, helpless affinity among Social Democrats across the centre aisle (“nobody except the CDU understands us”). More than once, lately, political commentators have sounded the SPD’s death knell; its aging faithfuls have kept its vote share between one quarter and one fifth, but its decline into insignificance is increasingly a real possibility. Neither going forward – devising or embracing more liberal reforms – nor back – recanting Schröder’s legacy and ousting his disciples – are emerging as practical options.

The Grünen, meanwhile, whose entire history since 1980 has been an intense identity struggle, are currently the most dynamic and growing political force in Germany (aside from the right-wing anti-Euro AfD). The Greens are rapidly eating into the SPD’s share of the vote, as well as attracting middle-aged, middle-class, socially and economically liberal voters from all camps; each successive shift away from its militant roots to the organic food liberalism of an eco-bourgeois party has rewarded internal “reformers” against the resistance of party “Fundis”. Die Grünen now even head the state government, of all places, in conservative Baden-Württemberg, ruling with the SPD as their smaller partner. Having won the election on a tide of popular outrage against a major railway infrastructure project (hardly their core ecological agenda) this geographic shift of the Green heartland south-west illustrates its programmatic metamorphosis. The change is personified by Winfried Kretschmann, one-time student radical turned proudly Catholic eco-libertarian schoolteacher, who heads the government. He embodies a transformation within the Green party as profound as the one once undertaken by Joschka Fischer.

The party’s recent change in leadership has cemented its trajectory towards the centre, further increasing the likelihood of a green-conservative love marriage after 2017, should the SPD flag as Merkel’s partner. The Greens supported the balanced budget amendment which enshrined austerity in Germany’s constitution with far less groaning than the SPD (only Die Linke opposed). A series of state-level coalitions (most recently in Hessen) have demonstrated the viability of such coalitions which on a newly-demarcated political centre ground.

Thus, for different reasons economic support for Greece or Portugal – let alone visions of a more thoroughly redistributive Europe – are not on the menu of the traditional centre-Left in Germany. Protection of the German economic model remains both the SPD’s and Greens’ priority, albeit with two different flavours, both oddly palatable to the conservative majority: first, a productionist economy of wage-moderated full employment in collaboration with national capital (the SPD/“Volkswagen” model), or a fiscally sustainable eco-libertarian economy of green technology leadership (the Greens/“organic growth” model). Neither envision overcoming Europe’s impasse by addressing the imbalances which Germany brings to Europe. The next article will explore the possibilities for such progressive politics further on the Left.

The next UK election: a contest in unpopularity

Continuing in our series of posts on the European Left, Andrew Gamble takes up the case of the United Kingdom and the prospects of the British Labour party in next year’s general election. Though opinion polls have consistently put Labour ahead of the governing Conservative party, Gamble suggests that behind this stability lies a more uncertain and volatile political landscape.  

Andrew Gamble is a professor of politics at the University of Cambridge. He is one of Britain’s leading political economists, and author of many critically acclaimed books, including The Free Economy and the Strong State: The Politics of Thatcherism, Hayek: The Iron Cage of Liberty, Politics and Fate, and The Spectre at the Feast: Capitalist Crisis and the Politics of Recession. Professor Gamble is joint editor of New Political Economy and The Political Quarterly, and a Fellow of the British Academy and the Academy of Social Sciences.

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British politics exhibits a puzzling stability. In the eleven YouGov polls so far in January Labour has had an average lead of 6 per cent over the Conservatives. Its share has fluctuated between 37 and 40 per cent, the Conservatives between 31 and 34 per cent. The other two parties also have been stable; UKIP’s share fluctuating between 12 and 14 per cent and the Liberal Democrats between 8 and 11 per cent.  It has been a similar pattern for a long time now. Labour’s lead has come down but only gradually and there is no sign yet of it disappearing. If this pattern persists, Labour will win the election in 2015 and Ed Miliband will be in Downing Street. Most commentators are perplexed. The recovery from the crash is now finally under way, four years later than expected, and there is good news almost every week; inflation is falling, unemployment is down, and growth forecasts are being revised upwards. The Government is loudly proclaiming vindication for its strategy of austerity and retrenchment. An improving economy is normally associated with increasing optimism among voters about their own financial situation and that of the economy, and greater willingness to vote for the Government. But the polls are not moving.

The Conservatives have also been busy creating clear dividing lines between themselves and Labour, setting traps for their opponents on the deficit, on welfare, on immigration, and on Europe. On all of these issues the Conservatives are more aligned with public opinion than is Labour, which has been forced on to the defensive and has failed to develop policies which are either clear or popular. When to this is added the greater resources of the Conservative party, the strident partisanship of a tabloid press which is strongly pro-Conservative and anti-Labour, and the consistently negative poll ratings of Ed Miliband as Labour leader, it is easy to see why many think Labour is a lost cause. The Conservatives have a winning hand and will surge past Labour in the run-up to the election and win a decisive majority. On this reading of British politics Labour has lost the political argument, and lost the political initiative. It is going down to a second defeat.

Except that is not what the polls are saying. Labour remains for the moment comfortably ahead, and nothing seems to dent its lead. There are several possible explanations for this. One is that Miliband’s personal ratings do not matter as much as many think. All the leaders have negative ratings. Nick Clegg is at – 50, Miliband – 30, and Cameron – 20. That still means that in the comparison between Miliband and Cameron as preferred Prime Minister, Cameron wins, and there is still a barrage of negative campaigning to come. But the Tories do not have an overwhelming advantage. The contest between the party leaders is a contest in unpopularity. Trust in politicians and their ability to deliver what they promise remains low in Britain. Negative ratings are clearly a handicap in an election in which there will be so much focus on the personalities of the leaders, but they will only be one of many reasons why votes are cast.

A second explanation is that Labour has begun to perform better and is making more impact on voters. Since Miliband’s Autumn conference speech in which he announced his plan to freeze domestic energy prices for fifteen months if Labour won the election, Labour has managed to dominate the agenda with its message that despite economic recovery there is a cost of living crisis, and most workers are suffering real wage cuts every year, because wages are rising more slowly than inflation. Asset prices have been protected by quantitative easing, and the average share portfolio has increased by 25 per cent in the last four years. But real wages have fallen, so few people are feeling better off. Miliband’s proposals on energy, and his more recent proposals on splitting up the retail banks, have attracted a lot of scepticism from commentators, experts, and interest groups, but the polls show that they are popular with voters. Some of the pledges may well be hard to implement in government, but Labour has begun to stake out new ground and prevent the Conservatives from dominating the agenda as they have been doing during the last three and a half years. Labour still does not excite much popular enthusiasm, and it is still struggling to regain its reputation for economic competence. But it has begun to do better.

Yet it is hardly doing well enough to explain its poll lead. Both the Conservatives and the Liberal Democrats may be seriously unpopular, but Labour is not far behind them. There has been no great surge of hope and confidence on the Left. One explanation therefore of Labour’s continuing poll lead is that it is due to the failings and divisions among their opponents rather than because of Labour’s positive appeal. Support for the Conservatives is fragile. They have not won a general election outright or polled over 40 per cent of the vote since 1992. They have tried since 2005 to broaden their appeal but have only partially succeeded. There are still parts of the country where voters who have deserted the Conservatives show no sign of returning. The modernisers in the party complain that the modernisation project has stalled and that in some policies the party has started going backwards, alienating the voters it needs to secure a majority. But the Right complains that the reason the modernisation project has stalled is because it has lost the party many of its core voters to UKIP. At the 2010 election UKIP had only 3 per cent of the vote. Its share of the vote over the last two years has been above 10 per cent, and in some by-elections and local elections much higher. It is expected to do well in the European Parliament elections in May. UKIP is increasingly taking voters from Labour, but the polling evidence shows that the majority of its support comes from the Conservatives. It is the loss of Conservative defectors to UKIP which, as Lord Ashcroft’s polling shows, is the biggest single obstacle to an outright Conservative victory at the next election. The party is now doing everything it can to win these Conservatives back, by banging on about Europe, immigration, and crime in the way modernisers deplore. But it is seen as the only way to put UKIP back in its bottle. If it fails it is hard to see how the Conservatives can win a majority at the next election.

All of this makes the next election extremely open and difficult to call. It may well turn into a four party contest as far as England is concerned, and given the vagaries of the first past the post electoral system, the outcome in many seats will be very uncertain, since it will increase the number won by very small majorities and minority votes. If both UKIP and the Liberal Democrats maintain their present level of support, no party is likely to win an overall majority, certainly not the Conservatives, who have the added disadvantage of the bias in the electoral system. Measures to reduce it were blocked by the Liberal Democrats when the Conservatives failed to deliver on Lords reform.

The Conservatives are waiting for politics to return to normal, with the support for third and fourth parties shrinking as the election approaches, and the improving economy brings their defectors back to the fold. They are confident that in a straight fight with Labour they will win. But just as the economy did not behave as expected after the financial crash, neither is the political system behaving as expected now. The kippers are on the march, and there is a sizeable body of Conservative MPs who sympathise with them, particularly on their call to withdraw from the European Union, and to impose much more stringent immigration controls. The disaffection of Conservative voters is proving hard to reverse, because the Conservatives cannot outbid UKIP in its populist stances on either the EU or immigration. Short of backing withdrawal from the European Union, and freezing all immigration, the Government can never satisfy UKIP demands. But unless they can find a way to reduce UKIP’s appeal in the next sixteen months, they will struggle at the next election.