Tag Archives: socialism

Crisis, occupy protests and Newt Gingrich

In conversation with Jeff Santos of AM 1510 Revolution Boston:


Barbarism at the gates

Illustration by Manos Symeonakis

Politicians often say things during election campaigns that they later regret. Looking back on his first year as prime minister, George Papandreou must be wondering what possessed him ahead of last year’s October 4 poll to utter – with excruciating regularity – the words: “The money is there.” Unless, of course, by “there” he meant in the back pockets of pensioners, civil servants, motorists and most middle and working class families that are now footing the bill for Greece’s economic rescue effort.

The money was never there and everybody, including PASOK, knew it. This didn’t stop Germany’s Werkstatt Deutschland organization from awarding Papandreou the Quadriga Prize for “Power of Veracity” on Sunday. The award, named after the sculpture of a horse-drawn chariot that sits atop the Brandenburg Gate in Berlin, was in recognition of Papandreou revealing the truth about the state of Greece’s public finances, which seems a bit like giving a lollipop to a child who admits its part in smashing a vase but only after discovering there was nowhere to hide the broken pieces.

Nevertheless, the trip to Berlin may have given Papandreou an opportunity to contemplate one of the other regrettable statements he made before last October’s election. “Socialism or barbarism,” the PASOK leader had said, echoing Marxist activist Rosa Luxemburg, a late resident of the German capital who believed adopting Socialism was the only escape from an unjust existence. Papandreou spoke in a slightly different context, arguing that the global financial crisis was proof that the capitalist model was unsustainable and that a center-left structure, with more emphasis on regulation and the state, should replace it.

However, 12 months on, his dreams of 21st century Socialism have vanished into the same vortex that is consuming the billions of euros Greeks are paying to prevent their country from going bankrupt. In the meantime, the threat of barbarism has become very real.

Some of the measures taken over the last 12 months were undoubtedly necessary and long overdue but the manner in which they are being applied and the IMF/EU market-driven philosophy that underpins them is brutal. While all eyes are trained on safeguarding financial capital, little attention is being paid to the negative effect on social capital.

The recent liberalization of the road haulage sector set a dangerous precedent. Apart from the truck owners themselves, most people would argue that time had run out on the closed-profession privileges the truckers enjoyed for so many years. Yet, it’s unsettling that the forced end to their lengthy strikes – first with a civil mobilization order in the summer and then with legislation threatening truckers with jail sentences in September – should be met with such satisfaction within the government and among some of the public. After all, this was a failure of democracy and had a distinct totalitarian element to it. PASOK backtracked on its promises to the truckers, one of the many groups that have been pampered by successive governments, and then portrayed them as being unreasonable and obstructing progress. Unable to engage in debate and then formulate policy – functions of the democratic systems we uphold and the governments we vote for – PASOK rammed the liberalization through Parliament and down the throats of the truckers. The government’s heavy-handedness throughout the dispute does not bode well for the future.

Greece’s experience is being replicated in other European countries, such as Ireland, Portugal, Spain and Britain, where citizens are being presented with a fait accompli. Their governments, regardless of political hue, are telling them that austerity measures must be adopted without question. In doing so, elected politicians are not only perverting the very system that put them in power, they’re also sowing the seeds of deep discontent as people grow increasingly aggrieved with the impact of the austerity measures and the lack of alternatives.

The United Nations work agency, the International Labor Organization (ILO), warned last Friday that the global employment market, where 22 million new jobs are needed, would not recover from the crisis until 2015 and that this would only fuel social unrest. “Fairness must be the compass guiding us out of the crisis,” said ILO director general Juan Somavia. “People can understand and accept difficult choices if they perceive that all share in the burden of pain. Governments should not have to choose between the demands of financial markets and the needs of their citizens. Financial and social stability must come together. Otherwise, not only the global economy but also social cohesion will be at risk.”

While scenarios of popular revolution are pure fiction as far as Greece is concerned, the country is no stranger to social unrest. The longer that measures which impact on people’s viability are passed one after the other, with no discussion or effort to present a vision for a better future, the more resentment will fester and the threat of a backlash will grow.

The possible breakdown of social cohesion creates the conditions for another, even darker, reaction to austerity. While understandable to some extent, the glee some citizens and commentators expressed at the abrupt way the government dealt with the truckers is a tell-tale sign that, given the current circumstances, a larger proportion of the population than usual thinks the use of force – psychological or physical – is acceptable. The danger is that the longer the government depends on this tactic, the more people will become accustomed to it and start believing it’s a perfectly legitimate way to run a country and get things done. In Greece, where society has been fragmented for many years thanks to each group pursuing its narrow interests, the flourishing of this mind-set will lead to even graver polarization.

Hungary, which was discovered in 2006 to have been fiddling its economic figures and had until this year been applying the austerity measures prescribed as part of the rescue deal it signed with the IMF, offers a salutary tale for Greece. Earlier this year, the extreme right-wing Jobbik party won 850,000 votes in the parliamentary elections on the back of a campaign that targeted the Roma but also played up the failures of the traditional guardians of power in Hungary, the conservative Fidesz and the Hungarian Socialist Party (MSZP). “The main factor behind Jobbik’s rise has been its ability to make political hay out of popular demand for extremist policies,” writes Peter Kreko for the Political Capital think tank in Budapest. “The primary driver behind extremist sentiment is a decline in public morale: Many Hungarians feel they can no longer trust the political elite or their governing institutions. The other fact is a rise in prejudice, especially toward foreigners.”

So, as Greece takes stock a year on from when Papandreou made his foolhardy election campaign pronouncements, it can draw some timely conclusions from its own and others’ experiences. It’s clear that the money is not there, nor is Socialism. As for barbarism? It’s creeping through the gates.

This commentary was written by Nick Malkoutzis and was published in Athens Plus on October 8, 2010.

An accident waiting to happen

Illustration by Manos Symeonakis

London – The world’s most powerful financiers emerged last Sunday from a meeting in the cosy surroundings of the World Economic Forum at the plush Swiss resort of Davos after agreeing that maybe, just maybe, they would consider some reforms to the global banking system. The same morning, a small group of less influential people braved the cold to gather in a corner of Hyde Park, beneath London’s steely winter sunlight, to hear a man who thinks the banks’ irresponsibility has gone too far.

Speakers’ Corner is an enclave of free speech unsurpassed anywhere in the world. Here, in the northeast corner of one of the world’s largest metropolitan parks, anyone with a step ladder or a soapbox, a good set of lungs and a cause to defend can speak out. Naturally, this pulls in eccentrics and jokers but having been around since 1866, it has also attracted luminaries such as Karl Marx and Vladimir Lenin. Both would have been fascinated, if not surprised, to see an English singer-songwriter addressing an audience of less than 200 people about the unfairness of bankers’ excessive bonuses and the folly of capitalism.

Billy Bragg, a 52-year-old London-born musician, is not a natural choice to pick up the socialist baton from the founding fathers of communism but his presence at Speakers’ Corner on Sunday perfectly reflected the failure of our political system to display a social sensitivity as well as a financial one. “I am standing here today because there don’t seem to be any politicians willing to take up this cause,” said Bragg who refused to pay his taxes on January 31 in a bid to draw attention to a campaign that has attracted more than 25,000 supporters online.

Bragg wants to pressure the British government to limit the annual bonuses the Royal Bank of Scotland (RBS) pays its employees this year to 25,000 pounds (26,600 euros) per person. The reasoning behind this request is simple: RBS was on the brink of collapse last year when it was bailed out by the UK government thanks to an injection of 25.5 billion pounds (29.2 billion euros), which was a bigger financial package than the one Greece put together to prop up all of its banks. This cash bought British taxpayers 84 percent of RBS’s shares. As part of the deal, the government negotiated a veto on RBS paying bonuses of more than 25,000 pounds to any of its bankers.

So, unsurprisingly, Bragg and many others were incensed when they heard the bank’s chief executive Stephen Hester say that – thanks to the profits RBS has made on the back of state intervention – it would be paying its employees a total of 1.5 billion pounds (1.71 billion euros) in bonuses this year. Presumably, this is the sort of amount US President Barack Obama had in mind when he labeled some of the bonuses being paid to American bankers “shameful” and “obscene.” Bragg argues that as the majority stakeholder in the bank, the British public should be able to have a say in whether these bonuses are paid.

“I understand that the Treasury had little choice but to use taxpayers’ money to safeguard our savings and stabilize and restore confidence in the financial system,” the singer told his audience. “I also understand that we will all benefit if and when RBS becomes solvent again. What I don’t understand is why the chief executive of our bank thinks that the best way to restore the company’s fortunes is to indulge in the irresponsible behavior that got us into this mess in the first place, by paying excessive bonuses at the first possible opportunity.”

This is where Bragg’s campaign strays beyond just convincing British Chancellor Alistair Darling to exercise the veto he retains on RBS bonuses and into much broader themes, such as the viability of capitalism in the wake of the financial crisis. Hester’s response to critics of the bank’s planned payouts is that he is “a prisoner of the market.” In other words, if RBS does not offer these kinds of incentives, then it will not attract the best bankers and therefore won’t make the kind of profits that will allow it to pay back the public money that kept the bank afloat and in turn generate tax revenues.

It’s an argument that would deserve serious consideration were it not for the fact that the markets ceased to exist, in the form that we knew them at least, when they fouled things up so badly that governments around the world had to rescue them for fear of the whole financial system collapsing. Bankers may argue, with some justification, that practices which are now seen as reckless or greedy were once encouraged by governments looking for a tax windfall. But this does not change the essence of the situation facing us now: Market rules are being rewritten and the banking system, despite the procrastination of the financiers in Davos, is in need of urgent reform.

“Someone should explain to Mr Hester that when the government bailed out RBS they broke the biggest rule of the market – that when a business fails, it should cease to exist. Isn’t that how Adam Smith’s invisible hand works?” asked Bragg. “If the invisible hand of the market has to be replaced by the helping hand of the people in the form of taxpayers’ money, then the market system is broken and the whole free enterprise experiment of the past 30 years has failed.”

Perhaps this last statement from Bragg is too sweeping – although the invisible hand and helping hand have often pulled at each other, they have also worked together to make some things better during the last three decades. But he’s right to question whether we’ve learned anything from the mistakes made during years that led to the brink of financial meltdown. The lack of action on the political and financial front to ensure that the irresponsibility of the past serves as a lesson for the future illustrates that many governments and bankers are willing to play the waiting game when the game is already up. Obama’s plan to tax bankers’ bonuses in a bid to raise 90 billion dollars (64.2 billion euros) over the next 10 years and his call for them to invest their efforts in “meeting your responsibility” rather than fighting the measure was a small step toward setting up a new, fairer system.

In Davos, regulators and bankers failed to agree on how the amount of risk in the banking system could be reduced, so a global system of financial regulation is still out of reach. The closest the world’s top bankers got to making any concessions was discussing the establishment of a global financial insurance levy so the next bailout would be financed by the industry, not by taxpayers. But this is hardly a solution – it’s the equivalent of a chain smoker saving up money for the inevitable cancer operation rather than making an effort to kick the habit.

Although the archons of the financial system appear to be unrepentant, or at least unwilling to make the first move, Bragg plans to be on his step ladder at Speakers’ Corner again this Sunday to keep up the pressure on them. Perhaps, though, instead of delivering a speech, he might dedicate a few bars of one of his songs to those who face tremendous responsibilities but choose to shirk them: “Goodbye and good luck / To all the promises you’ve broken / Goodbye and good luck / To all the rubbish that you’ve spoken / Your life has lost its dignity / Its beauty and its passion / You’re an accident waiting to happen.”

This commentary was written by Nick Malkoutzis and first appeared in Athens Plus on February 5, 2010.