Bankruptcy threatens Greece: Let’s sacrifice capitalism!

What should a genuine socialist government do in the face of the severe economic and financial crisis that has hit Greece? The only real answer is a socialist programme based on the nationalisation of the banks and the commanding heights of the economy. There is no other way out. [This article was published in the latest issue of the Greek Marxist paper Marxistiki Foni, Marxist Voice, of the Marxists inside the Synaspismos party.]

Yesterday’s so-called “powerful Greek economy” is on the verge of bankruptcy. Yesterday’s so-called “mild adjustment” policies have unleashed the harshest attack against the workers in the last 35 years, with drastic cuts in the wages of the public sector workers and of the minimum pension, with an increase in the age of retirement, the abolition of the 14th month’s salary [an old long established tradition of an extra month’s wage], mass layoffs and a freeze on all recruitment programmes in the public sector.

What is leading Greece to bankruptcy? Should workers’ standards of living be sacrificed in order to save the country, as the ruling class is trying to persuade us? Can the government and the international capitalist institutions (EU, European Central Bank, International Monetary Fund) save the Greek economy? What should the demands of the Left and of the labour movement be on public debt and default? Let’s try to answer these critical questions for every worker.

The cause of default is capitalism

To those demagogic supporters of the capitalists, who declare daily in the media that the current level of bankruptcy was created by the so-called “insatiable tendency of the Greek people for wellbeing”, and also to the left leaders that tend to see national bankruptcy as “a conspiracy against the homeland”, we should clarify that the responsibility for all this falls solely on the shoulders of capitalism.

The fundamental contradictions of capitalism are the factors that have produced the crisis worldwide, which also push out the less competitive economies from the world market, such as the Greek economy. The corrupt institutions of capitalism that are beyond the control of the workers are what constantly produce waste, mismanagement, corruption and consequently debt, just as the clouds produce rain.

The current boom of speculation around the national debt – very irresponsible, even from a capitalist point of view ‑ and the provocative attempt to pass the whole burden of bankruptcy onto the shoulders of the working class and the poor, reveal the reactionary nature of capitalism and calls for the urgent victory of socialism in Greece and the whole world.

National debt: a creation of the ruling class

The gigantic national debt is solely the creation of the bourgeoisie and the current State that serves it. It was created by the state subsidies to the capitalists, tax-relief and tax evasion of the capitalists, the long-lasting protection the public sector offers to big private companies, the enormous public spending on defence, the huge waves of privatisations in the public sector which have deprived the state of income, the mismanagement and, last but not least, the scandals of the high-paid high-ranking civil servants.

Let’s look at some recent figures which show clearly who created the current giant public debt:

  • 67.5% of total tax income in 2009 went mainly towards the national and international banks and generally the parasitic holders of state bonds and Treasury bills, who have lent money to the state.
  • The 28 billion Euros bailout package which was provided to the banks, equal to 12.4% of public debt, which could have actually been used to buy these banks.
  • In 2004 the tax rate on corporate profits was reduced by 10% (from 35% to 25%), and meanwhile the profits of the 300 biggest companies increased by 365%. This means that tens of billions of Euros that could have been paid to the state have been given openhandedly to the capitalists.
  • Every year tax evasion in Greece accounts for 20 billion Euros of lost revenue, accounting for almost 40% of the state budget deficit. With today’s unjust taxation system, this amount never reaches the coffers of the state and most of it is absorbed by the owners of private enterprises. The newspaper Kathimerini has underlined the fact that in 2008, 15,300 enterprises did not pay any taxes.
  • The Greek defence budget for 2009-2010 has risen to 6 billion Euros.
  • The State has lost 2.675 billion Euros due to the three most recent government scandals, according to the bourgeois paper Kathimerini (April 19, 2009).

The result of all this waste and favouritism shown to the capitalists is today’s public debt, that according to a report of an enquiry committee, which was set up in October by the government, has gone over the 300 billion Euros mark.

The capitalist moneylenders and the concerns of international financial institutions

The huge public debt is a source of profit for the bankers that lend to the public sector. The government will borrow from them 55 billion Euros, in order to pay back debt. Just the interest payments come to 12.3 billion Euros. The lenders will profit by about one billion Euros more than what will be spent on state pensions, two billion more than the level of public investment, about double the amount for healthcare or education and a quarter more of the whole tax revenue for the whole year. Also 19.5 billion Euros will be given out in order to pay older debts. Of the 55 billion that the government will borrow, 32.5 billion will be given to the bankers...

Last year the Greek banks borrowed from the European Central Bank at a 1% interest rate and bought Greek state bonds that returned profits of 7.24%. In January 2009, the low and lucrative interest rate attracted a huge amount of lenders who lent to the Greek state 8 billion Euros at about a 6.2% interest rate. This returned a profit for the lenders of about 496 million Euros, twice as much as the funds that are needed in order to build 175 schools.

From all the above we can see that a large part of the working class and the poorer layers of society will be called upon to make huge sacrifices. And for what? In order to support the huge profits of the parasitic moneylenders to the Greek state.

What is of real concern to the EU officials and the most powerful capitalist countries is not only the catastrophic consequences this will have on the Euro, but also the consequences it will have for the banks that possess Greek bonds. The bourgeois newspaper “Vima” (February 14, 2010) has stressed the fact that, “the last thing that Europe needs is a Greek default, which could doom Europe to a general crisis”. The financial consequences of a Greek default for the European banking system would not be small, because European banks have invested about 300 billion Euros in Greek state and private bonds, especially the French, Swiss and German banks which have invested even more than the Greek banks. (Greek banks have invested 30 billion Euros in bonds). Thus the three-part aid package being provided for Greece and the promise to help and support Greece in case the state should fail to meet up to its commitments is the source of this concern. The sudden “solidarity” of France is not at all unjustified. The French banks are at the top of the lending list with about 80 billion Euros in bonds.

Will the harsh measures avoid default?

The government, the bourgeois parties and the spokespersons of the capitalists, are shouting hysterically that “the harsh measures are necessary in order to appease the markets and lower the interest rate”. However, this is nothing more than a huge lie. All the markets want is to cut salaries and pensions, in order to save money for their interests. The sacrifices made by workers are irrelevant to the cost of credit. Nothing can guarantee a reduction in the interest rates on the borrowing of the Greek State, no matter how many sacrifices the Greek working class accepts. The reason is that the world financial crisis, the capitalist crisis, and in particular the Greek capitalist crisis are what define the level of interest.

While the capitalist crisis continues and the world economy does not actually recover, public debt will be a pressing reality even for the strongest capitalist countries, leaving room for increased speculation. Neither the crisis nor the huge public debt are Greek phenomena. Bigger and stronger capitalist countries like the USA, the UK and France that have spent almost 15 trillion dollars from their budgets, have not managed to truly recover. Especially, in the US and Britain public debt has reached record levels, undermining their stability and endangering their currencies.

If the Greek economy were to enter a period of real growth, both the debt and the interest rates could be lowered. But, that is not the perspective. In reality, Greek capitalism faces a deep recession. The figures show a 2 percent decline in GDP during the last quarter of 2009. This merely represents the relatively mild attack on workers’ standards of living carried out by the former New Democracy government, compared to the full-blown attack which the new government has just started to implement. The drastic cuts in workers’ standards of living are bound to diminish purchasing power and prolong the recession. Thus, they can neither decrease public debt nor the State’s cost of borrowing.

This fact is being confirmed in Ireland, whose government implemented an austerity programme a year and a half ago. The wages of the public sector workers were decreased by 7%. There were also cuts in pensions and social spending was practically nullified. However, the only result was to sink the country into even deeper recession: GDP has decreased by 10.5% since January 2007! Thus, Ireland, despite the harsh measures, has a constant high “rate of interest”, and is therefore plundered by speculators together with Greece, Spain and Portugal.

Therefore, the real issue is not how to “appease the speculators”, sacrificing our standards of living, but how to disarm them. The real issue is to apply radical, revolutionary measures which are required in order to control and develop the economy, in favour of the working class.

What can be done to get the country out of the crisis?

It must be made clear that there is no solution in favour of the workers, which does not come into conflict with capitalism itself. Bankruptcy is the product of waste, corruption and speculation which are innate elements of capitalism. If the burden of bankruptcy falls onto the shoulders of the working class, it will produce mass impoverishment, misery within society, along with a prolonged recession. While the figures for Greek capitalism will continue to reveal stagnation, the bourgeois will still demand more “blood”. After the elimination of the 14th month’s wage, they will move to mass lay-offs, the elimination of unemployment benefit, the introduction of tuition fees in education, the full abolition of free healthcare, until every single one of the victories that made life for workers a little more civilised will become part of history.

The question is what could a truly socialist government, rather than the current capitalist-dominated PASOK government, do?

  • Instead of paying 32.5 billion Euros (roughly half of the State’s income) on interest and debt repayment this year alone, it would expose before the working class of Greece and Europe, providing facts and figures, the role of the bankers to, and in response cancel the debt repayments.
  • Helped by the bank workers’ trade unions, it would expose the fraud committed by Greek banks and would nationalise them without compensation, creating a state-owned central bank. Without controlling the financial and banking system, there cannot be any stability. In order to save the State from bankruptcy and millions of workers from poverty, the banks must be controlled by the State. Thus, 30% of the public debt which is currently owed to Greek banks would cease being a burden. Moreover, the state-owned central bank would immediately lower interest rates and abolish other measures imposed on households and small businesses, accumulating more and more deposits. Functioning under the control and democratic administration of the trade unions, it would transform credit into a tool for planning the economy and for growth in favour of the whole of society.
  • A truly socialist government, instead of trying to cover a debt of more than 300 billion Euros by saving 1.2 billion through the elimination of the 14th month’s wage and 650 million Euros through cuts in civil servants’ income and consequently massively impoverishing workers and sinking far deeper into recession, would immediately cut the defence budget and would turn against the capitalists, whose profits and wealth are more than enough to save Greece from bankruptcy. Then it would nationalise the immense Church property and impose the heaviest possible taxes on capitalist profits, large incomes and property, in combination with an extraordinary tax on profits and wealth in order to finance the pressing needs in healthcare, education, social care, and of course support workers against the crisis by exempting them from high indirect taxation on basic commodities and at the same time increase salaries, allowances and pensions.
  • Furthermore, they should impose drastic measures against tax evasion: by imposing workers’ control on businesses in order to reveal the real amount of tax evasion, and by nationalising the property and bank deposits of those who are guilty of huge tax evasion. Every big business that evaded tax would be nationalised under workers’ control and management.
  • Of course, implementing these measures would provoke sabotage on the part of Greek and foreign capitalists. In order to face this, it would propose a plan to nationalise the big monopolies, all the commanding heights of production, distribution and services and also transport, construction and mining businesses, under workers’ control and management. This plan could be imposed directly on every big business which sacks workers, evades taxes or social security contribution payments and its goal would be a democratically centralised planned economy. In order to secure its implementation, this socialist government would call on the workers and the urban and rural poor to organise themselves in every workplace and every neighbourhood while also calling for the self-organisation of the soldiers in order to stop any attempt to use the army in order to cancel the aforementioned socialist measures.

Proletarian Internationalism ‑ United Socialist Europe

In the final analysis, bankruptcy in Greece is a product of the global capitalist crisis. One of its most prominent causes is the limits which the nation state imposes on the development of production. The nationalisation of the commanding heights of the economy, which are currently threatened with destruction, cannot lead to real growth unless this programme spreads internationally. There cannot be a “socialist island” surrounded by a capitalist desert, and this is the case especially for Greece, the weakest economy in the EU and without a strong industrial base.

The international dimension of the crisis places on the agenda the need for a socialist victory internationally. The spectre of default threatens every European country. In every country, if these revolutionary measures are not implemented, the perspective is the same for all: mass impoverishment of the working people, the majority of society.

If the chain of submission to the market were to be broken in Greece by attempting to apply such a programme, it would clearly provoke a reaction by the EU and the international capitalist institutions. They would try to impose suffocating policies and economic penalties on every government that attempted to apply such a programme. However, in such a scenario the socialist government would have a powerful ally, the European labour movement and its all-powerful mass organizations. If this government were to address the mass of European workers boldly, asking them to prevent the implementation of those penalties then sooner or later this would become an example for the whole of Europe. This common struggle of the European labour movement and of the Left for support for a socialist programme would lay the basis for a United Socialist Europe, in contrast to today’s reactionary and speculative EU.

The demands of the Left

So long as the right-wing PASOK leadership continues to collaborate in these crimes being carried out by the international capitalists against the working people of Greece, the burden of providing a socialist alternative against the crisis falls on the shoulders of SYRIZA and the KKE. Unfortunately, the leaderships of these parties, instead of coming together in order to provide this alternative, are swirling around in a whirlpool of political confusion.

The KKE leadership sees the struggle against the crisis of Greek capitalism as a “patriotic duty”. Rizospastis, the KKE newspaper, in its front page of February 13, under the well-known Stalinist illusion of the “national road” against the crisis, as an alternative solution to the capitalist EU raised the idea of national “development in favour of the people” and not the struggle for a United Socialist Europe. In the epoch when the victory of socialism is the condition for the survival of the working class, the KKE leadership refuses to condemn the disastrous political heritage of Stalinism, the “two stage theory”, and continues to raise the idea of an intermediate “popular economy” and “popular power”. The KKE raises nationalisation and planned economy as abstract propaganda slogans, instead of conducting a campaign inside the labour movement to explain the urgent need of the implementation of these demands, while at the same time providing a concrete socialist plan. And last but not least, it refuses to abandon its dividing tactics within the labour and youth movement, thus undermining from the beginning every mass struggle which could threaten the foundations of capitalism.

The SYRIZA leadership is paralysed, proposing partial and insufficient solutions such as the elimination of the European stability programme and the demand for favourable loan terms within the current speculative system (public bonds funded by Greek workers or European funded bonds). SYRIZA also refuses to raise the demand for the nationalisation of the banks and the aim of a planned economy, combining with this every kind of self-imposed illusion concerning capitalism and the EU.

The SYRIZA and KKE leaderships must understand their historical responsibilities. They must use every power they have in order to support the united and mass struggles of the working class and prepare patiently the road towards the taking of power. The crisis and the threat of bankruptcy are rapidly destroying, one by one, the illusions of the masses in the present government, in the EU and in capitalism itself. Inevitably the masses will turn to the Left. Only the call for a SYRIZA-KKE government on a socialist programme, together with patient work in order to achieve this, combined with specific proposals to fight united with the European Left for the victory of socialism in the whole of Europe, can provide the workers with the necessary way out from today’s political and economic crisis of capitalism.