What’s going to happen in Greece? As I write this, the new left-wing Syriza government is trying to come up with an economic plan that will end the five years of hardship that has come with the austerity program that has been imposed on Greeks by the International Monetary Fund, the European Union and the European Central Bank. The previous Greek governments, by the right wing New Democracy Party and the social democratic PASOK party, surrendered control over their economy to the technocrats from the Troika. The result has been a steady decline in the economy, an enormous government debt, the rapid rise in unemployment to over 26%, and the imposition of draconian social policies that have devastated the working class, seniors on pensions and the poor.
Those on the political left have kept a close eye on what has been happening in Greece in recent years. In many ways the crisis mirrors what has happened to a whole host of underdeveloped countries who have experienced “structural adjustment” imposed on them by the World Bank, the IMF and the World Trade Organization. The Keynesian Welfare State is no more. Governments are not to create or maintain social programs that try to help the poor. Countries are not to have public ownership of essential public utilities. It is morally wrong for governments to tax corporations and the elite. Governments should not be introducing regulations to protect health, welfare and the environment.
The failure of previous Greek governments
We have heard for years that “Greeks don’t pay their taxes.” But as Christos Laskos and Euclid Tsakalotos point out in Crucible of Resistance, it is really the rich and powerful who don’t pay their taxes. During the boom period from 2004 to 2008, corporate profits increased by 35%, but at the same time taxes received from private firms fell by 2 percent. Corporate tax evasion is rampant. In 2010 the 900,.000 private corporations “contributed only about 4 percent of total tax revenues.” There is a long history of the upper classes hiding their income and wealth in tax havens and Swiss banks. Independent professionals, like doctors, lawyers, accountants, etc., only declare a small percentage of their income on which they are taxed. The same is true of the small business sector. The new Syriza government has pledged to change all this. We will see.
There were some attempts to impose the neoliberal model on the Greek population in the 1980s. But the big push for change began in 1996 with the election of a government under Kostas Simitis, the new leader of PASOK. He followed the trend of the social democratic parties in Europe, like those of Tony Blair in Great Britain and Gerhardt Schroeder in Germany. “Modernization” meant the repeal of the Keynesian welfare state. The new program of the social democrats emphasized “reform,” which in Greece included reduction of the taxes on corporations, the privatization of public enterprises and services, the implementation of “labour market reforms” and the liberalization of the financial system. The social democrats boosted casual and precarious labour in both the public and private sectors.
Nevertheless, the Greek economy produced higher growth rates than the European Union as a whole between 1996 and 2008. New industrial sectors were developed. Investment was high. Profits for the private sector rose steadily. The decline in remuneration for the working class was offset by a significant increase in household debt. Public sector employment was at the average for the EU. Employment in the primary and secondary private sectors was 33.2% of total employment compared to 28.7% in the EU.
Where Greece has differed from the EU is the extent of self-employment: in 2008 it was 35% in Greece compared to 14% in the EU. The high level of self-employment in the agriculture accounts for much of the difference. There are also many craftsmen and technicians who work on their own instead of with a business. Labour market “flexibility” has added to this number, the disguised unemployed.
The other major difference is the size of the small business sector. In 2010 only 15% of Greek employees worked in firms with over 50 employees; in the EU as a whole, this figure is 31%. Part of the persistence of small firms has been their ability to avoid paying taxes. Many of these small businesses have disappeared in the post-2008 crisis.
The debtor nation
The crisis of 2008, which was triggered by the collapse of the financial sector and the housing bubbles that had been created, revealed the extent to which the new capitalist system was linked on an international level.
The New Democracy government held on until the general election of October 2009, when it was defeated by PASOK under the leadership of George Papandreou. Greece was reprimanded by the European Community when its budget deficit rose to over 12%, The PASOK government responded with cuts to wages and salaries and “reforms” to pensions and taxes.
In May 2010 the Eurozone countries and the IMF provided a $110 billion loan, and PASOK promised to cut the budget deficit to 3%. In December the parliament voted for wage cuts for both the public and private sector. The second “bailout package” from the Troika came in July 2011. The government responded with spending cuts and tax increases, cuts in the public sector, cuts in pensions, and labour market “reforms.”
In desperation, Papandreou formed a new coalition government under the leadership of Lucas Papademos. More omnibus bills were passed boosting restructuring. In early 2012 there were two general elections, and Greece ended up with a three-party coalition government headed by New Democracy. More cuts and restructuring followed.
The popular left mobilizes.
Canadians could hardly believe the political changes that were taking place in Greece at this time. There was mass resistance from the victims of the economic crisis. It began in December 2008 with riots in Athens. The political leadership in parliament urged restraint. But the grass roots resistance spread. The new red-green party, the Coalition of the Radical Left (Syriza), actively supported all the grass roots political actions. The Communist Party (KKE) did not.
The trade union leadership was reluctant to take extra-;parliamentary action because “their party” (PASOK) formed the government. But the grass roots members demanded action. The first general strike was held on May 5, 2010. Through the end of 2012 there had been 30 general strikes and many individual strikes, 500 in 2011 and 700 in 2012.
In the fall of 2011 the Papandreou government imposed a new property tax which was tied to people’s electricity bills. Non payment would result in the loss of electrical power. There seemed to be no limit to what the social democratic government would do to try to placate the gnomes of Zurich.
The other major development was the rise of Syriza as a serious political party seeking government power. In 2009 it received only 4.5% of the vote. In the May 2012 election it received 26.9% of the vote. In the campaigns of 2012 the party stressed popular assemblies in local towns and neighbourhoods with strong public participation and debate. In this class struggle, PASOK collapsed as its working class members fled to Syriza. There was no increase in support for KKE, which refused to embrace the new politics of the democratic left.
In the election in January 2015. Syriza won 36% of the vote and under the strange Greek electoral system was able to form a majority government with the support of the Independent Greeks, which received 5% of the vote and 13 seats.
PASOK, the social democratic party, received only 4.7% of the vote and 13 seats. They had been abandoned by their trade union allies. As Laskos and Tsakalotos point out, in the era of neoliberalism there has been a convergence between the social democratic parties and the traditional parties which represent big business. Greece is the first instance where their traditional supporters, the members of the mainstream trade unions, had shifted in mass, to a party on the left.
What will Syriza do?
What will happen next? The leadership of Syriza confronted the Ministers of the European Union last Friday. The united front took a tough stand, forcing the new Greek government to surrender the major thrust of their political agenda, ending the control of the Troika over the Greek economy and the imposition of the disastrous austerity program. Syriza is up against the wall. Government funds were expected to be completely depleted by the end of February. They asked for a bridging loan for four months to work out their alternate plan. The EU ministers agreed, but only if Greece abandoned almost all of its election platform.
It is reported that there is great disappointment and anger among Syriza supporters and members of the parliamentary caucus. Commentators are suggesting that the leadership will not be able to get their agreement through the parliament. What will the grass roots movement do? The party leadership had insisted that Greece stay in the European Union, a position supported by 70% of the Greek population, as reflected in public opinion polls. But an exit from the EU may be the only alternative to complete surrender of sovereignty to the Troika. It is also the best hope of breaking out of debt bondage.
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