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The Left After Leave

Edited version of the post below now up at Jacobin.

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Jacobin: Socialists and the EU Referendum

There’s a whole series of interesting articles and interviews on the EU referendum on Jacobin – includes contributions from Richard Seymour, Neil Davidson and David Renton. The series includes my article ‘There is No Left Exit’

Worth a look.

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RS21 summary of the ‘Alternative Strategies for the Left’ panel at HM

RS21 have a summary of three sessions focusing on the political situation in Britain at the recent Historical Materialism conference in London. It includes a report on the panel I was part of: ‘Alternative Strategies for the Left’. Seems a fair summary. I hope, in the near future, to write up the paper I delivered and publish it here (marking, teaching preparation and torrents of admin permitting).

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Corbyn and the Left

I converted the notes below into an article for Jacobin.

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Is Syriza Radical Enough?

First published by New Left Project

It would have been unthinkable just a few years ago, but a party of the radical left is on the cusp of power in an EU country. The latest opinion polls indicate that Syriza will triumph in the Greek national elections to be held on Sunday and although it may not win an absolute majority in parliament it would (assuming it can find coalition partners) certainly be the dominant force in any coalition government that emerged.

Unsurprisingly the imminent prospect of a left government committed to breaking with the brutal reign of austerity has alarmed the powerful within and beyond Greece. In a thinly veiled attack on Syriza, for example, the President of the European Commission, Jean-Claude Juncker, recently warned Greeks about electing ‘extreme forces’ into power and suggested, rather in the manner of a threat, that they ought to consider ‘what a wrong election result would mean for Greece and the eurozone’.

But what’s remarkable about this is that, for all the warnings of ‘extremism’, Syriza’s demands are in fact rather modest and indeed eminently sensible. At the core of its programme are pledges to negotiate the cancellation of 50 percent of Greece’s crippling debt, lift austerity and boost growth and employment through public investment. These proposals are accompanied by a range of measures designed to address what Syriza rightly calls the ‘humanitarian crisis’ in Greece such as promises to provide free electricity and subsidised meals and housing for the poor.

Given the economic and social catastrophe that austerity has visited on Greece—over 25 percent unemployment, an economy that has contracted by a quarter, wages and pensions slashed, soaring rates of homelessness, suicide and infant mortality—these are hardly outlandish or utopian proposals. They pivot on the simple, obvious truths that the national debt is unpayable, that austerity is generating nothing but misery and, further, on the rather basic ethical demand that every citizen should have enough to eat, decent housing and access to the basic resources that will allow them to live with dignity. There is nothing extreme about this—indeed, surely the real extremists are those who insist on further austerity, further hardship and humiliation for ordinary Greeks.

It is precisely the moderation of Syriza’s stance, however, that has attracted fierce criticism from other left wing groups. The Greek Communist Party (KKE) for example denounces Syriza for ‘opportunism’ while the Front of the Greek Anticapitalist Left(Antarsya), though much less sectarian than the KKE, refuses to combine forces with Syriza, arguing that the latter’s programme is insufficiently radical. Internationally too, there’s no shortage of left critics issuing dire warnings in relation to Syriza’s ‘reformism’, convinced that all it aspires to do is to manage, rather than seriously challenge, the system. Even among many of its supporters there is a general consensus that Syriza ‘is not as radical as we would want’ and that backing it in the forthcoming election represents a necessary reining in of the left’s political ambitions under current conditions.

These criticisms are mistaken, however, for three closely related reasons.

Firstly, it is not at all clear what serious alternative most of these critics propose. In fact, for many of them the underlying dispute with Syriza is not so much over the details of reform proposals as it is with the party’s very intention to form a government within the political institutions of the capitalist state. Such a strategy, they warn, leads inexorably to betrayal since any party that seeks to utilise capitalist institutions will become trapped within the logic of the system. But years of intense social struggles in Greece—including mass demonstrations, occupations of government buildings and more than 30 general strikes—have failed to stop austerity, much less usher in socialist transformation. It is clear that social mobilisation in itself is not enough and that the question of political power must be confronted. Greek workers require a political instrument to lead in actually implementing their demands.

In this regard many of Syriza’s Marxist critics invoke the need for soviet organs of workers’ power. The obvious problem here, however, is that in circumstances where such organs show little sign of emerging even after years of intense social struggle such invocation remains entirely abstract—it is, for the time being at least, wishful thinking rather than the identification of a serious, concrete alternative in the here and now. Indeed, typically, such critics cannot specify in anything but the most hand-waving and vague terms how such organs of workers’ power might possibly emerge. Syriza, however, grasps that the struggle as it currently is requires a government of the left that utilises existing political institutions and, for all the undoubted risks, problems and dilemmas that this will bring, are prepared to take on this responsibility. As such, only Syriza proposes a serious and concrete plan to confront the urgency of the situation in Greece. In comparison, many of its leftwing critics seem to me to offer little but evasive posturing which of course offers little of practical value to people currently struggling to feed their families and pay their rent—this, indeed, is one reason why the KKE and Antarsya will struggle to win more than derisory shares of the vote in the forthcoming election.

Secondly, Syriza’s proposed reforms correspond to the immediate needs and demands of ordinary Greeks—for jobs, better wages, affordable food and housing and so on. Indeed it’s precisely because of this correspondence that Syriza’s programme has resonated so successfully with Greek voters, bringing the party to the brink of office and thus putting imminent, real change on the agenda in a way that ostensibly ‘radical’ but wholly abstract revolutionary demands with little political traction never could.

Thirdly, it’s clear that, for all its sober pragmatism, Syriza’s manifesto is likely to bring it into direct confrontation with the forces of domestic and international capital. It’s certainly not a programme for the management of capitalism on capital’s terms. A Syriza government is likely to face intense hostility in the form, for example, of serious capital flight, bank runs, an ‘investment strike’ and threats of withdrawal on the part of multinationals together with various methods of blackmail and obstruction on the part of the EU. It will also face a dangerous struggle within the Greek state itself—not least in relation to an unreliable and hostile police force in which more than half of all officers voted for the neo-Nazi Golden Dawn in the 2012 national elections.

It’s likely, then, that on taking office Syriza will, very quickly, be faced with a stark choice: either to renege on its commitments in the face of powerful opposition or to press ahead, which will mean being prepared to take counter-measures to defend its initial reforms: cancellation of the debt, nationalising banks, expropriating closed factories. Of course there’s nothing inevitable about which of these two options Syriza will choose, but given the popular hopes generated by its promises, to retreat on its core commitments would certainly be to consign itself to future electoral oblivion. Much here would depend on mobilised mass support seeking to push the government on and to force it to stick to its promises—indeed a Syriza victory on Sunday will probably unleash a new wave of popular struggles.

The key point here is that determined, consistent implementation and defence of Syriza’s pragmatic election promises is likely to lead to measures that go far beyond the party’s current objectives. We could say that Syriza’s apparently modest programme conceals an inner dynamic of radicalisation.

The very possibility of this dynamic however is rooted in the moderation of the initial demands—in the way in which these articulate the everyday concerns of the mass of the Greek population. What anti-capitalist forces operating within Syriza grasp is that revolutionary social change must emerge from ordinary people’s collective experience of the way in which modest, common sense measures to improve their lives and defend their dignity run up against the limits of what the current order will allow. This experience thus reveals the system’s essential inhumanity—in a sense we might say its extremism—and demonstrates concretely, in a way that abstract declarations of ‘the need for socialism’ simply do not, the imperative to push beyond capitalist limits in order to secure the very basic conditions for a decent and humane society.

Ed Rooksby teaches politics at Ruskin College in Oxford and is a member of Left Unity.

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Why it’s time to realign the Left

First published in Socialist Review May 2013

Radical left parties such as Syriza in Greece and the Front De Gauche in France have made significant gains recently. But what about Britain? Socialist film maker Ken Loach has recent issued a call for a new left party to be formed here too. Ed Rooksby, one of the supporters of the call, explains why he thinks the time is right to launch such a party and what its aims should be. Socialist Review will respond in our next issue.

Radical left parties committed to fighting austerity and able to attract considerable popular support have emerged across Europe – most spectacularly in Greece. We are in desperate need of a similar party in Britain – one which is willing to take the risk of seeking to break the stranglehold of a social democracy that has long since capitulated to neoliberalism and present an unashamedly socialist alternative. Thankfully, for the first time in a long period, the conditions for the emergence of a broad left coalition of forces in the UK capable of attracting large-scale support seem ripe. These conditions have been generated and shaped by four major interconnected political and economic developments.

The first and most obvious of these is economic crisis and austerity. This has posed, in very immediate terms, the question of how best to defend jobs, living conditions and the healthcare, education and welfare reforms won in struggle decades ago, and which are now being stripped back in a determined assault. But it has also posed the question, again in immediate terms, of whether or not capitalism is in fact compatible, over any prolonged and sustained period, with decent welfare provision and conditions of life and work for the majority. For those who conclude that it is not, the further problem of how to build a more democratic and humane alternative is raised. The crisis and austerity confront us with fundamental and pressing questions in relation to organisation and strategy. It is in this context that the idea of the construction of a new organisation of the left has been put firmly on the political agenda.

The second development – one closely meshed with the first – is that it has become painfully apparent to many of the Labour Party’s erstwhile supporters and activists that Labour is not an effective political vehicle for the organisation of resistance to austerity (let alone for the implementation of a counter-offensive against capital). There has, over the past few weeks and months, been a pronounced acceleration of a longer-term process of disillusionment on the part of Labour’s core supporters and activist base and, correspondingly, a growing willingness among many of them to countenance the prospect of leaving Labour to join a new organisation – in particular, the Left Unity initiative associated with Ken Loach’s recent appeal.

Rise of Syriza

The third factor shaping this new conjuncture in the UK is an external one – the international influence and prestige of Syriza. The Syriza phenomenon has demonstrated that it is possible for a coalition of fairly disparate left forces to win mass support with a clear anti-austerity agenda and win such support very rapidly. More than this, Syriza has shown that it is possible for the radical left to challenge seriously for power. The morale-raising psychological impact of this on socialists across Europe should not be underestimated. This Syriza effect interacts with the loosening of Labour’s political hegemony – further contributing to the sense that it is possible to build an effective political force to the left of Labour. It has also created a renewed sense of possibility among more radical left groupings.

There is a fourth development which closely interacts with the third. This is the recent bust-up in the SWP. Whatever you think of it, this has clearly shaken up the political landscape on the left and opened up a new space for realignment. In interaction with the Syriza effect, this has created a very promising situation for building a new, broad coalition.

These are the main developments that together constitute a new conjuncture on the UK left in which a significant realignment of forces has become a definite and realistic possibility. The most exciting and promising development in this respect is the emergence of the Left Unity organisation which sees itself as the embryonic form of a new broad-church party of the left and which models itself in relation to Syriza and other successful groupings such as the Front de Gauche.

The classic strategic dilemma

One of the biggest questions that the conjuncture poses for us is the question of strategic orientation and the associated issue of the organisational form that a new coordination of forces should take.

Of course, here we start to encroach on one of the oldest controversies in socialist thought – the classic reform/revolution debate. Let me draw out (in what cannot be anything other than a very simplified way given constraints of space) the core problems with each of these approaches as they are usually conceived in order to provide the foundations for a different way of approaching the question of socialist strategy.

At the heart of the reformist approach is the idea that the process of transition to socialism can be a wholly evolutionary one of smooth, piecemeal change. The core problem (among many) with this strategy is that, when reformists find themselves in power, they also find themselves responsible for the management of a capitalist economy. Since radical measures aimed at the introduction of socialism must, by definition, endanger capitalist profit, reformist governments find themselves caught on the horns of an impossible dilemma; they require capitalist cooperation for a process of gradual transition to socialism, and yet the introduction of any measure which might lead very far in the direction of socialism would necessarily lose them the cooperation (and earn them the intense hostility) of capital. So, in opposition to reformism, it must be insisted that the transition to socialism cannot be a wholly gradual process but must involve some kind of revolutionary break.

The revolutionary socialist approach avoids the core problem of reformism but, as it is traditionally conceived, has its own particular deficiencies. Again, I cannot outline all of these here, so will focus on the main difficulty.

In one important sense at least there is no absolute dividing line between a strategy of reform and traditional revolutionary socialism. Most revolutionaries believe that the struggle for and winning of reforms increases the democratic capacities of the working class, raises its confidence and educates it politically. Furthermore, many revolutionaries (see, for example, Alex Callinicos’s An Anti-Capitalist Manifesto) appear to believe that revolution is most likely to emerge out of a (frustrated) movement for reform which probes the limits of what the capitalist state is willing to concede and which spills over into something more far-reaching – and so, to this end, the strategy is to seek to place demands on the state which can tip the balance of power in favour of the working class and popular forces.

The defining feature of revolutionary socialism as it is usually conceived, however, is the view that socialists must remain strictly independent of the capitalist state rather than seek to work within it. This, however, is where the strategy runs into a major problem. The first part of this problem is that, in countries such as Britain, with a long established tradition of liberal democracy and, indeed, a long established tradition of reformism, it is difficult to imagine a process of mass radicalisation in anything other than the electoral rise of a party seeking to form a radical government. That is, it is hard to see this process throwing up anything other than a movement committed to the formation of a “workers’ government”. This, indeed, is the way things appear to be working out in Greece.

The second part of this problem is that it is also hard to see how the sort of transitional reforms revolutionaries want to pressure the state to enact would be implemented by government representatives reluctant to do so, let alone deeply opposed to them politically and ideologically. Some concessions could be wrested from a pro-capitalist government, yes – but a whole series of radical reforms that seriously undermine the power of capital? It seems unlikely. The major difficulty in the traditional revolutionary approach, then, is in its rejection of the very idea of taking power within the political structures of capitalism.

The dialectic of change

So neither the traditional reformist approach nor the traditional revolutionary strategy seems adequate. We need, instead, a strategy that seeks to combine elements of both. In his book The Dialectic of Change the Russian theorist Boris Kagarlitsky seeks to elaborate just such an approach. Revolutionary transformation, he argues, can only emerge organically and dialectically from a process of radical reform set in motion by a socialist government. He calls this approach “revolutionary reformism”.

In Kagarlitsky’s view it is only when you grasp the idea that reform and revolution augment and condition each other that you can start to formulate a realistic strategy of socialist change. Kagarlitsky suggests that revolution should be “conceived as a definite and necessary stage, a qualitative leap, in the process of reform” – “revolution is a ‘break in gradualness’, a leap in development”. It is a stage of development which is necessary for the consolidation of the changes – new socialist social relations – which can be brought into being (in some embryonic sense at least) within capitalist society through reform.

Clearly, not all reforms intertwine organically with revolutionary change. Kagarlitsky’s favoured strategy of reform is based on a passage from The Communist Manifesto where Marx and Engels write of the implementation of a series of reforms which may “appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionising the mode of production”.

Marx and Engels indicate that the introduction of reforms which run counter to the logic of capitalism (and which therefore appear in themselves “economically insufficient and untenable”) may set in motion a dynamic of cumulative change – a kind of chain reaction. That is, these initial reforms destabilise capitalism and therefore necessitate the implementation of further reforms which themselves run counter to capitalist logic and, in turn, stimulate further changes and so on. It is in this sense that these reforms “outstrip themselves” – they unleash a process of change which goes much further than the initial effects of the primary reforms themselves. Kagarlitsky believes that the dynamic of cumulative change Marx and Engels sketch out here provides the basis for a strategy of radical reform today.

How could such a process be set in motion? It is the manner in which reforms are implemented that is the crucial factor. Firstly, Kagarlitsky suggests that each reform must be designed to stimulate further reforms which flow from it organically. This demands that each reform is integrated into a well-planned strategic programme. Secondly, he stresses that these reforms must be driven forward by a movement which unites mass mobilisation “from below” with pressure “from above” as revolutionary reformist politicians work within state institutions. Revolutionary reformists within state institutions must be subjected to constant pressure from below. There must be a mass movement outside these institutions, capable of controlling their representatives and forcing them on to implement the reforms they have promised.

Furthermore, “revolutionary reforms” must be designed to strengthen and empower this movement. The growth of popular power would develop the organisational capacity of the mass movement and this would open up opportunities for the further flowering of popular democracy. In this way it can be seen that the dialectic between mass movement and socialist representatives in office would contribute to the momentum of the revolutionary reformist dynamic of cumulative change. Socialist representatives are driven on to introduce reforms which deepen mass democracy which, in turn, encourages the mass movement to pressure leaders for still further changes and so on.

Transitional Programme

What reforms, more concretely, might such a transitional programme include? A few ideas can be suggested. It might begin in its initial stage with an ambitious programme of directed investment. Spending should be strategically targeted and designed to kickstart more sustainable growth, create jobs and reorient the economy away from its reliance on the financial sector. Priority areas for investment could include investment in green, low-carbon infrastructure – particularly in transport and energy.

Radicalisation of the process of reform might throw up further measures including nationalisation of major financial institutions under democratic control and the bringing into public ownership, of a string of industrial firms. Taking a large proportion of the financial sector into public ownership would enable financial resources to be allocated according to social and environmental criteria. Similarly, the nationalisation of industrial firms would allow their activities to be oriented increasingly towards socially useful and environmentally sustainable production. Radical forms of democratic planning could be explored within nationalised firms. Of course, democratic planning and control should not be confined to the narrowly “economic” sector. The entirety of the public sector – the education system, welfare system, NHS and so on – should be opened up to collective, democratic and participatory forms of management.

Of course, it is worth pointing out that such a strategy would depend for its success on the existence of allies implementing similar processes of transformation abroad. Certainly any country attempting to go it alone would- at least beyond a certain point – find itself hopelessly isolated in the face of hugely powerful international economic and political forces. But as we’ve seen with the “Syriza effect” – the process in which the rise of the radical left in Greece has kickstarted moves towards political realignment elsewhere – the emergence of a radical left government in one part of the world is likely to provide a boost to similar movements elsewhere.

Of course, this sort of strategy raises its own problems. Such a left government would certainly arouse the intense hostility of capital and would come under huge pressure to reverse its programme from day one. This pressure would only increase as the dynamic of any transitional programme gathered momentum – if, indeed, it did. But the argument I have developed above suggests that there does not seem to be any plausible alternative strategic approach. It is hard to see how the left in Europe can avoid the problem of taking power in a left government if it is serious about changing society.

Mark L Thomas’ response in the June issue of Socialist Review can be read here.

Paul Blackledge’s and Alex Callinicos’ recent articles in International Socialism Journal also responded, in part, to issues raised in the above piece.

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The European Crisis

First published in Oxford Left Review Issue 10 (June 2013)

In order to think realistically and creatively about matters of socialist strategy – how to resist austerity, how to defeat austerity and even more than this how to set about winning power in order to bring about fundamental change toward a more democratic, humane, equal and sustainable society – we need to be clear about the economic and political context in which we are seeking to operate. In the following I shall put forward some broad-brush observations in relation to the origins, development and trajectory of the current crisis of capitalism focusing in particular on Europe before drawing out tentatively, and giving brief consideration to, a series of possible ‘exit routes’ – two which might be imposed by capital and one which might be implemented by anti-capitalist forces.

Some General Points about the Crisis

It must be emphasised that the current global capitalist crisis is, precisely, a crisis of capitalism. That is, it is a systemic crisis. It is not simply a debt crisis. It is not about ‘profligate government spending’ as the neoliberal right have sought to present it – very successfully so, incidentally, given the way in which this narrative frames much of the debate in the political and media mainstream. It’s not even really about ‘greedy bankers’ or a ‘failure of regulation’ as the dominant narrative on the centre-left tends to suggest. The first of these two (complementary) elements of the centre-left story moralises the crisis in a crudely simplistic way and the second presents it merely as a failing of administrative/ managerial competence. Deeper, underlying structural and systemic determinants – the economic pressures driving risk-taking, profit-maximising behaviour (i.e. the driving logic of capitalism) and militating against the imposition of regulatory constraints on those behaviours (and thus on maximised rapid financial returns) – are ignored and entirely excluded from the picture. It must be insisted, against all this, that the crisis is rooted in the dysfunctional logic of capitalism and that, indeed, this is an extremely serious crisis from which it is very hard to see how capitalism has any immediate prospect of recovery. It is likely to drag on for years.

Just as for capitalist growth and expansion, capitalist crisis unfolds in processes of combined and uneven development. The close international integration of national economies means that a crisis emerging within one of them can be transmitted widely very rapidly. However, while this entails generalisation of the crisis internationally in some respects (and indeed the crisis takes on some specifically and irreducibly international/global features) the effects of the crisis are not evenly distributed and its intensity varies from state to state and from region to region. This unevenness is shaped by national (and in Europe to a certain extent by regional) specificities and ‘path dependencies’ – the relative weight and health of particular economic sectors, the particular configuration of political-economic institutions and the particular constraints and capacities that arise from them, and the specific policy responses to the crisis chosen by governments for example.

One important feature of this international unevenness is that the crisis tends to become concentrated at any given time in one or two particular locations. It is not just, then, that the uneven development of the crisis is expressed in differing levels of intensity from place to place, but that the crisis becomes focused and condensed within a particular economy or economies. Developments in those particular locations take on a general significance – the unfolding of the crisis in these places manifests a sort of concentrated expression of the international crisis in general. Certainly the development of the crisis internationally can turn very rapidly on developments in these locations. These sites in which the crisis is concentrated and condensed need not include the location in which the crisis first emerges – indeed the geographical epicentre(s) of the crisis can shift. In the current crisis the epicentre of global economic instability has moved from the US to Europe. It began as a crisis in the US mortgage market and has been transformed into a European sovereign debt crisis and a crisis of the institutions of the EU and Eurozone. Furthermore, this European crisis, which condenses the global crisis, has a particular focal point of its own – Greece. It is in Greece, then, that the global crisis is manifested in its most concentrated form and it is for this reason that whatever happens in Greece over the next few months – economically but also politically – is likely to have hugely significant international ramifications.

Dimensions of the Crisis in Europe

We’ve been told regularly over the past few months that the European crisis has ‘turned the corner’. Each time the proclamation has been proven wrong by subsequent events, only for the proclamation to be repeated a few weeks later which, in turn, proves to be mistaken – and so on. Recent economic figures show the seriousness of the situation. Eurozone GDP contracted for three consecutive quarters in 2012, following 0% growth in the first quarter of that year. The fourth quarter saw growth fall by 0.6%, following a drop of 0.1% in the previous quarter. Clearly things are not improving. The last quarter of 2012 also saw some of the worst GDP figures for major states in the EU: Italy minus 0.9%, France minus 0.3%, and even Germany saw its GDP decline by 0.6%. ‘Peripheral’ southern European economies such as Spain, Portugal, Cyprus and particularly Greece are, of course, suffering the worst effects of this crisis. In Spain, for example, unemployment currently stands at about 26% – youth unemployment at 52%. In Greece, which has seen a cumulative reduction in GDP by about 20% over the past four years and which is expected to have contracted by 25% by the end of 2014, the unemployment rate stands at about 27% – with youth unemployment at 61.7%. About a third of Greece’s population (that’s about 3.9 million people) are now thought to live in poverty.

The fact is that Europe is in a deep, intractable crisis and nobody really knows how it can be overcome. As we’ve seen, the crisis in Europe (the most acute, focal point of which is Greece) condenses the global crisis and so stagnation in Europe both manifests in sharp form, and also itself drives and reproduces, the great world recession.

How did we get here?

The current crisis represents the breaking down of a series of temporary solutions to a major crisis of capitalism that emerged in the 1970s. In effect, the international economy has gone full circle and returned, after a few decades of (largely debt-fuelled) growth based on various temporary fixes, to the relative stagnation in which it languished around forty years ago. In order to understand the crisis today, then, we need to examine the development of the global economy over the past few decades.

Robert Brenner1 has argued that the advanced capitalist economies entered a crisis of profitability at the end of the 1960s. Indeed, according to Brenner, these economies have suffered from relatively low rates of profit ever since. One major reason behind the crisis of profits that emerged in the late 1960s was that firms encountered increasing constraints on opportunities for profitable investment as the post-war boom petered out. The effects of this can be seen in the marked slow-down in rates of growth from the 1970s onwards compared to previous decades (the average rate of annual GDP growth in Western Europe from 1950-73 was 4.79%, while from 1973-03 it averaged 2.19%).

Capitalism responded to this crisis in several ways. It sought to ‘go global’ in order to seek out cheaper pools of labour and to open up new investment opportunities abroad. Under Thatcher and Reagan especially, it launched an assault on trade unions and pushed up unemployment in order to weaken organised labour and drive down wage costs at home. Finance was also, increasingly, deregulated in order to soak up excess capital looking for profitable outlets. Some of the initial solutions, however, soon created further problems for capital. Repression of wages, of course, drove down workers’ spending power and thus reduced the rate of effective demand. Capital’s solution to this problem was to extend the credit system and to ramp up debt-fuelled consumer spending. This strategy intertwined with wider moves to deregulate finance and with the rapid acceleration of ‘financialisation’. Credit-fuelled consumption, together with asset price inflation drove growth for a while. However, this solution, in turn, eventually became the source of serious problems for capitalism because it ‘ultimately led to working-class over-indebtedness relative to income that in turn led to a crisis of confidence in the quality of debt instruments’.2 The crisis that emerged in the US ‘sub-prime’ market brought into full view the extent to which major financial institutions had become perilously overextended and, indeed, the extent to which growth had been reliant on ballooning of debt.

What we saw, then, from the 1970s onwards was a series of temporary fixes to a deeper structural problem in which each fix raised further problems that had, in turn, to be temporarily solved with further fixes. Indeed Capitalism, as David Harvey points out,3 never really resolves its crisis tendencies – they are merely shifted around, postponed and held off. Capitalism finds a way of overcoming one crisis only to discover, sooner or later, that the terms of this solution, in turn, throw up new problems which develop into a new crisis.

It is worth noting that ‘financialisation’ represented a response to very real pressures on profitable accumulation – it was a way of soaking up excess capital given the weakness of profitability in the productive sector. The deregulation of the financial markets and the concomitant extension of credit and debt did not simply represent, as social democratic and Keynesian theorists tend to suggest, an ideologically driven, bad policy choice on the part of neoliberals. A solution to the problems we face then, cannot be as simple, as some sort of return to the post-war ‘Keynesian consensus’ in which financial regulation is tightened up and the financial markets put back in the box from which they escaped after the 1970s. The real structural pressures to which ‘financialisation’ was a response are still there and remain unsolved.

The Eurozone Dimension

The crisis in the Eurozone intersects with this deeper, wider crisis of capitalism more generally. The Eurozone crisis, however, has a number of specific features and emerged in a relatively distinct historical process closely bound up with particular effects emerging from the institutional architecture of the Euro. European Monetary Union (EMU) flowed logically from closer and closer economic integration among European economies and from the institutional/legal structures (such as the Single European Market) which reflected and accelerated this process. One of the key factors driving economic integration in Europe – from the mid-1980s especially, after a period of so-called ‘Eurosclerosis’ in the 1970s – was the intensifying global competition which set in after the petering out of the post-war boom as outlined above. Monetary Union, as the most advanced and ambitious form of economic integration in Europe, functioned as a joint strategy among European elites for defending and improving the global competitiveness of the region in the context of a general and sustained crisis of profitability. EMU was rooted in world crisis from the start then – it has always been, in a sense, an expression of this underlying crisis of profits. As the most recent in a series of successive fixes to this underlying global crisis (financialisation) broke down, however, EMU itself became a key source and driver of the global recession we are now experiencing.

The key weakness of EMU from the start was the ‘one size fits all’ approach embodied in its ‘discipline and convergence criteria’ for membership and perpetuated in its ‘stability and growth pact’. This yoked together economies as diverse as Germany, Greece, Finland, Ireland, the Netherlands and Cyprus in a deeply inflexible system. One of the key problems was that some of these economies are strong exporters and others are not. Inevitably major trade imbalances between national economies within the Eurozone emerged. Germany in particular ran huge trade surpluses (driven in part by sustained wage repression) while countries like Spain and Greece ran corresponding deficits. Further, the surplus from exporter economies (particularly Germany) was increasingly recycled into the property market in Spain, driving the speculative property boom there, and also into financing Greek borrowing to cover its trade deficit. For countries like Greece, then, a vicious cycle of debt emerged in which – unable to deploy the traditional instruments for rectifying trade imbalances (devaluation, allowing inflation to rise) because of the constraints imposed by EMU membership – it had to borrow more and more to cover its growing trade deficit and the more it borrowed to finance imports the larger this deficit grew.

It is worth making plain that for a several years this dysfunctional arrangement suited countries like Germany very well – after all it bound stronger and weaker economies together in an intra-European core and periphery relationship which helped to underpin export driven growth in Germany in particular. It was only after the eruption of the Euro crisis that, suddenly, Greek ‘profligacy’ was discovered and loudly denounced by German politicians and EU elites.

The ‘credit crunch’ of 2008 eventually brought these structural imbalances to the surface. As the effects of the sub-prime crisis in the US rippled outwards and deepened into global financial crisis the money loaned to southern Europe by northern banks suddenly looked very vulnerable. The crisis in Greece was finally precipitated in 2009-10 when, on coming to power, the new Papandreou government announced that the country’s debts had reached 300bn Euros and, shortly afterwards, announced that its 2009 budget deficit was four times the limit imposed by EU rules. The emergence of an acute sovereign debt crisis in Greece heightened fears about heavy indebtedness elsewhere in the Eurozone – particularly in Spain, Ireland and Portugal. The EU’s and IMF’s response was to insist on severe austerity measures in return for emergency loans and bailouts to stricken economies. It soon became clear that EMU (and perhaps even the EU itself) was in no small danger of disintegration and possible collapse.

Of course, the current crisis in Europe is not confined merely to members of the Eurozone – the current situation in the UK, for example, cannot be attributed directly to effects arising within the structures of EMU. Nevertheless the various sovereign debt crises that have emerged within the Eurozone are key drivers of the crisis in the EU more widely which is, in turn (since the economy of the EU as a whole is the largest in the world), at the core of the continuing global turbulence.

Austerity in Europe

Austerity has been implemented unevenly across Europe – but it is the favoured response of European political and economic elites to the crisis. It is quite clear, however, that as a strategy for economic recovery austerity is failing miserably and is, in fact, making the economic situation much worse. As Meadway explains, there is a simple mechanism at work here:

Cuts in government spending shrink demand in the economy. As demand shrinks, firms sell less. Firms that sell less cut wages and make redundancies. Demand falls still further, and a vicious circle of decline is established. Cutting spending to reduce a deficit leads to bigger deficits as unemployment rises and taxes fall. Austerity is self-defeating.4

The self-defeating logic of austerity is, of course, most plain to see in Greece where it has been implemented in its most vicious forms and where the economy contracted severely.

Why, given its clear failure, do states remain committed to austerity? The basic intention behind the austerity drive is to ensure that the costs of the crisis are shifted away from capital as much as possible and born, instead, by ordinary people. In the Eurozone this has, in addition, a key international dimension in that it is the loans of over-extended northern banks that ‘the troika’ is, in particular, seeking to protect and it is the ordinary population of the southern states who are being forced to pay the price. The determination to stick to austerity despite its dire effects reflects the determination of European elites to defend the banks come what may.

Nevertheless the fact remains that, plainly, austerity is not succeeding as a means of overcoming the crisis. This must be just as clear, now, to the political elites driving austerity as it is to those being forced to endure the suffering it inflicts. The determination to stick with this approach does not at all imply that European elites have any confidence any longer that it will work. Indeed, the current situation seems to be characterised by a certain ideological bewilderment on the part of those elites. They do not know how to end the crisis. They continue with austerity only because they have no idea what else they can do – they can see no other acceptable alternative. The strategy, such as it is now, is simply to keep going in the desperate hope that something turns up.

The Future

How might the crisis in Europe unfold over the next few years and what ‘exit routes’ might emerge? Of course no firm predictions can be made but it is possible to discern three distinct possible paths. The first of these – which is also, in my view, the most likely – is that the crisis simply drags on for several years. That is, Europe remains mired in a condition of relative stagnation as political leaders attempt to ‘muddle through’ the crisis in the hope that generalised austerity can squeeze wages and the ‘burden’ on capital presented by public spending enough to restore profitability to the point at which ‘normal’ rates of capitalist growth can return. Nevertheless it is quite hard to see how profitability can recover without massive destruction of overaccumulated capital – the underlying basis of the current crisis. In other words, capitalism probably needs a major slump in order purge itself of the dead weight which currently weighs it down – but, of course, the political and social costs of a severe depression would be so high that most governments are unlikely to let this happen. All of this raises the interesting prospect of the possible political ‘normalisation’ of capitalist crisis and stagnation.

A second path of development – something that has been mooted among EU elites – is some form of managed breaking up of the Eurozone as it is currently constituted and its radical reconstruction. This would involve the ejection of southern European economies from the Euro and the formation of a smaller and more tightly integrated Eurozone made up of core northern European economies. Full fiscal and banking union among these core economies would occur – responsibility for the banking system and for taxation and public spending would be taken away from constituent states and given to supranational institutions. This might be a way of abolishing the structural problems and imbalances within the Eurozone and ensuring that they do not re-emerge. This process might be accompanied by the break-up of the EU as it currently exists, too, or perhaps the emergence of a ‘twin-track’ EU in which the tightly integrated Eurozone states co-exist with a more loosely integrated ‘outer Europe’.

However, this would be a difficult path for the Eurozone to take for several reasons. First, it would put northern banks’ loans at great risk and the process of disentanglement as southern European economies left the Euro would be a pretty perilous process for all concerned. Secondly there are considerable political obstacles in the way of fiscal and banking union among core EU states – not least that many citizens in the states involved are likely to be hostile to the idea. A third problem is that this root and branch reconstruction of the Eurozone would take several years to organise – therefore, it could not provide a quick route out of the Eurozone crisis. The final problem is that this process of reconstruction would not necessarily provide any means of addressing the underlying crisis of profitability.

There is a third path, however. This is probably the least likely of all to happen – but it is the one that socialists must fight for. The point of departure for this route would be the breaking of austerity by mass resistance and the implementation of a series of reforms which would alter the balance of class power in favour of the working class and other popular forces and which would set in motion a process of transition beyond capitalism. What happens in Greece over the next few months is key to this process. We have seen that it is in Greece that the crisis of capitalism is condensed in its most acute form. This makes Greece the weak link in the contemporary imperialist chain – and a socialist breakthrough at this point would send shockwaves through the entire system. In the general election of June 2012 Syriza – the coalition of the radical left in Greece – narrowly missed (by 2.8% of the vote) becoming the largest party in the Greek parliament. A situation which would have been unthinkable a few years ago – a radical anti-capitalist party in Europe on the verge of winning power (in a country where the present governing coalition might fall apart at any minute) – has become a reality. If Syriza can take power and bring austerity to a halt in Greece it would provide an inspiring example to people elsewhere in Europe and help to deepen and radicalise anti-austerity struggles across the continent.

Of course, a party seeking to utilise the capitalist state apparatus to implement a radical left-wing programme of reforms would face many great difficulties and dilemmas. Here we start to encroach on one of the oldest controversies in socialist thought – the classic reform/revolution debate. It seems unlikely to me that there is any strictly reformist road to socialism, but it is also my view that there is no reason why revolutionary transformation should not emerge organically and dialectically from a programme of transitional reforms. In any case it is hard to see how a process of socialist transformation in countries with established parliamentary democratic institutions could entirely bypass these structures. One of the interesting things about the unfolding crisis in Greece is the way in which it maps closely onto the classical Marxist conception of a pre-revolutionary situation in all but one key respect. We can observe a certain level of decomposition of certain state apparatuses in Greece (demoralisation of the police for example and its increasing penetration by, and collusion with, far right forces), the collapse of the political centre and the increasing polarisation of social forces for example. However, there is little sign as yet of any proliferation of workers’ councils/soviets and nothing corresponding to the emergence of a ‘dual power situation’. The resistance of ordinary Greek people is finding political expression in the rise of a party committed to forming a united government of the left within (and against) capitalism. One of the most urgent tasks for the international radical left today is to return to, and rethink, the idea of the ‘workers’ government’, because it is in this direction that Syriza – at the vanguard of socialist struggle today – is heading.

1 Brenner, Robert (2005) The Economics of Global Turbulence (London, Verso)

2 Harvey, David (2010) The Enigma of Capital: And the Crises of Capitalism (London, Profile Books), p. 117

3 Ibid. p. 117

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