The Greek “Referendum” on Austerity

Flag DE [DE] Das griechische “Referendum” über Sparpolitik

The Greek popular vote on austerity is called by almost everyone a “referendum”. Supporters of the NO vote celebrate the result as a victory of democracy, opponents see it as yet another example showing that popular votes are dangerous and produce bad results. There is criticism of the “shambolic handling” of the procedure, but the procedure as such is rarely analyzed.

The Greek “referendum” on July 5, 2015 asked the voters whether they accept the austerity proposals presented to Greece in the Eurogroup on June 25, YES or NO? The answer of the voters was overwhelming and clear: 61,3 % voted NO. The decision to hold a popular vote was made by the government, announced by Prime Minister Alexis Tsipras on June 27 and ratified by Parliament on the following day. The government recommended and campaigned for a NO vote. However, a few days after the popular vote Tsipras turned around and accepted even tougher measures than the ones the voters had rejected as a precondition for opening talks on a third “rescue package” of €86 billion.

Greece ballot questionThe Ballot Question

Should the proposed agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup of 25.06.2015 and consists of two parts, which constitute their unified proposal?

The first document is entitled ‘Reforms for the Completion of the Current Program and Beyond‘ and the second ‘Preliminary Debt Sustainability Analysis‘.

Timeline Greek Debt (click to open in new window)
This is how Yanis Varoufakis presented the “referendum” in an interview with Paul Mason: “[W]e have lit a beacon on a hill, we have made hope return back to Europe, we have re-introduced the concept of democracy, which was actually quite forgotten within the Eurogroup.” (Click to see the video of the interview)

There is some truth in what the then Greek Finance Minister said. I will come back to this in a moment. However, by looking at the popular vote procedure we can see that the so-called “referendum” was in actual fact a plebiscite. The Greek constitution defines two popular vote procedures: a plebiscite on “important national matters” and a plebiscite on “important social matters” (Art. 35.3 and 44.2).

Greece austerity plebiscite
A plebiscite is made as an instrument of power in the hands of the ruler, to be used sparingly and in extraordinary situations as was the case also in Greece. Plebiscites, which are government driven, are not primarily about exercising democracy, but citizen-driven referendums are. A democratic process is controlled by the citizens and does not take place only occasionally and on behest of the government.

Let us remember what plebiscites are for: Plebiscites give ruling politicians additional power over citizens. They are used to evade responsibility for controversial issues, which have become an impediment, they are used to provide legitimacy for decisions those in power have already taken, they are used to mobilize people to support government, and they are used by an authority to bypass another representative authority. The aim of a plebiscite is not to implement democracy, but to reinforce or salvage those in power with the help of „the people“.

As a rule representative governments use plebiscites only as a last resort to defend and enforce their interests. So the Greek plebiscite originated in an emergency situation; the government of Tsipras found itself in an blind alley and its very existence was at stake. “We had no other choice; we opted for the path of democracy and let the Greek people have their say.”(Interview with Alexis Tsipras) For Tsipras the function of the plebiscite was to strengthen the negotiating position of his government. Notice how he puts it: We, the government, opted for democracy, or as Varoufakis said: “We gave the people who live under the worst depression a chance to consider their options. We tried democracy as a means of breaking a deadlock. And we did what it took to give them a few days to do so.” As if democracy was something a government gives to the people at one moment, taking it away the next.

Plebiscites involve risks and are not completely controllable. There is the risk that the result of the plebiscite is not what the government wanted. For example the negative outcome of a plebiscite led to the resignation of the French President, Charles de Gaulle, in 1969. There is also the risk that the plebiscite process gives rise to democratic expectations, it may even trigger a democratic movement, only to then disappoint all the democratic hopes precisely because the plebiscite is not designed to foster democracy and more is needed to maintain a democratic process. The French and Dutch plebiscites on the Treaty establishing a Constitution for Europe in 2005 provide examples of this and so does the Greek austerity plebiscite. In each instance people were mobilized, setting in motion a process of democratic will formation, resulting in a clear rejection of the proposals put to them, and in each case those in power reacted with disregard for the popular will. The experience with the Greek plebiscite confirms once more that the expression of political preference in the form of a plebiscite has little consequence if it runs counter to the interests of the powerful.

It is clear, that what is being attempted is the obliteration of both the government and the parliamentary groups that support it, through blackmail. It is clear that what is being put directly into question is democracy in our country. (Source: Zoe Konstantopoulou. The politics of coercion.)

The day they buried democracy

Yanis Varoufakis talks to the weekly news magazine Stern (click to read the article in German):

Stern: I’ve brought you a snapshot that shows Wolfgang Schäuble and the chief of the Eurogroup, Jeroen Dijsselbloem, shortly after your Prime Minister has accepted the bailout package.

Yanis Varoufakis: It’s not a bailout! It’s a diktat! Please show me the picture. My God! I have never seen this, I must make a copy of it. That’s incredible, how happy they are! It is Monday, July 13. Greece is hanging on the gallows.

Greece Demokratie beerdigen

If it were a referendum, not a plebiscite

However, it is premature to conclude from the futility of plebiscites that direct democracy is futile as well. Let us suppose that the agreement between Greece and the creditors would be subject to a citizen-initiated referendum. In that case on the request of a specified number of citizens, say 50 000 (by giving their signatures), the voters would make the final decision at the ballot box, they would decide whether parliament’s agreement to the treaty is adopted or rejected. It could also be that the agreement between Greece and its creditors would be classified as a matter that is subject to an obligatory referendum. Also in this case the final decision on the agreement would have to be made by the people at the ballot box.

Actually the bailout agreement violates not only the Greek constitution and the principles of representative democracy, but also the basic values and democratic principles that the European Union loves to adorn itself with (see Zoe Konstantopoulou. The politics of coercion in Greece). It is remarkable that a decision of such scope, discarding even the semblance of democracy, can be made by the government over the head of the people who have no voice and no right to intervene decisively precisely because they lack instruments of direct democracy (initiative and referendum).

Both, a citizen-initiated (optional) and an obligatory referendum on international treaties exist in Switzerland. For example membership in the European Union as well as in the European Monetary Union have to be decided by an obligatory referendum. Both instruments are defined in the constitution and the corresponding articles read as follows:

Referendums on international treaties

Imagine there were a Greek referendum on the austerity agreement, how would it compare with the actual plebiscite?
Greek referendum vs plebiscite

The above table describes the two procedures step by step. It shows that there are significant differences between the two procedures. The power balance between the government and the people changes its quality when we move from a plebiscite framework to a referendum framework. It is a transition from oligarchy to democracy and has profound implications for the political process, imagination and subjectivity (habitus formation). I have dealt with this in previous pages (What does Democracy mean? and The Creation of In/Competent Citizens). In a referendum process the final decision is made by the citizens. In contrast, the Greek plebiscite was merely a consultation of the people on austerity but the final decision was made by the government.

If the citizens have the right to referendum on international treaties, the negotiators know that the final word lies with the people (demos) and that the citizens may exercise their right to call a referendum in case they are dissatisfied with the result of the negotiations. This would certainly change the nature of the political process. The negotiators would have a motive and feel the pressure to inform the public. What would have been the outcome of such a process in Greece is a matter of speculation. But I think it is safe to assume that the interests of the majority of the Greek population would have been served better.

The Greek Crisis in Context

What happens in Greece is situated in the wider context of a transformation of capitalism and European integration. Industrial (real) capitalism has been replaced by financial capitalism, giving rise to ever increasing inequality and poverty. Fiscal policies (shifting the tax burden by taxing labor, consumers and the real economy and un-taxing rentier revenues) and the monetary system (money as debt created by private banks) contribute to the concentration of wealth and power in the hands of very few people and corporations. The erosion of the welfare state and the dismantling of representative democracy is happening not only in Greece but in Europe as a whole and elsewhere. Austerity means using public debt as a lever to privatize public goods and services; it makes economic sense not for the people in Greece and Europe who suffer from it but for those who benefit from it: for example, the company Fraport, which is controlled by the German state of Hesse and the Frankfurt city utility, taking over 14 Greek airports.
Labor Real capital Finance Capital

Source: Stephan Schulmeister. 2014. European Governance – Do We Need a New Navigation Map?

Politically, the intransigence of the creditors served as an instrument to block the idea that there is an alternative to austerity for which Syriza and Alexis Tsipras had become a symbol. Syriza had to fail in order to discourage alternative forces and parties elsewhere. However, in Syriza there were two currents, one reformist and the other transformist. Prime Minister Tsipras and his Finance Minister Varoufakis thought it would be possible to arrive at a “honourable compromise” within the framework of the EMU. Five months of struggle proved them wrong. Costas Lapavitsas stands for transformation and an alternative economic programme, which “will include writing off the debt, lifting austerity, nationalising the banks, a strategy of public investment instead of more privatisation and a thorough restructuring of the state”. (Click to read the interview with Lapavitsas) In this view Greece has no future if it remains a part of the monetary union.

For the minority tendency of Syriza, the issue of the break with austerity politics was non-negotiable (Tariq Ali interview with Stathis Kouvelakis) and the decision to hold a popular vote signified a rupture with the present form of European integration (Panagiotis Sotiris). But for Alexis Tsipras and the majority of Syriza, the plebiscite was about reinforcing the negotiation position of the government and Tsipras obviously was ready from the very beginning to negotiate about austerity. Interestingly, the Eurogroup under Schäuble agreed completely that austerity was non-negotiable, only for them it meant that Greece hat no other option than to accept it in the terms dictated by the creditors. Showing nothing but contempt for democracy and fear of it, they did not for a moment consider that the result of the plebiscite would give Tsipras a stronger mandate.

Austerity policies Plebiscite means Monetary union
Creditors (ECB, EU, IMF) Must be followed Rupture Maintain the Euro
Minority of Syriza Must be rejected Rupture Exit from the Euro
Majority of Syriza Should be negotiated strengthening the negotiating position Keep the Euro
Takis Fotopoulos has criticized Syriza’s reformism and he correctly predicted that Syriza would have to follow the same economic policies as the governments before it. He argues that the main cause of the present economic disaster is “the full integration of the Greek economy into neoliberal globalization, through its accession into the EU”. The basic design of the Eurozone is not the main problem, nor is it austerity, which is an effect and not a cause of the crisis. Greece has a problem of development: within global capitalism the South of Europe is not competitive and cannot create a strong productive base which is needed to be self-determined. Earlier experiences (Mitterand in France) have shown, that as a member state of the EU it is difficult to resist neoliberalism, which is institutionalized in the treaties of the EU. Therefore Greece should exit from the Euro and the European Union. Only a country that pursues a policy of self-reliance, breaking away from the internationalized market economy, can gain the necessary degree of autonomy so that the political-economic process can be determined democratically, by the people, and not by global finance and transnational corporations.

An eventual breakaway from the EU must be backed by the people and it would also need the support of like-minded states that are aiming at an alternative to the neoliberal world order. Fotopoulos speaks of the necessity to form popular fronts for social and national liberation and presents a strategy to create a democratic world order from below. This scenario would also include a change in the geopolitical dimension, that is exit from NATO and application for membership to the Eurasian Union.

However, at present there exists no social basis for the pursuit of autonomy and economic self-reliance and it is easy to concur with Streecks view that “there is no prospect in the foreseeable future of a re-nationalisation of monetary sovereignty. Nor is there any movement toward a de-nationalisation of political and fiscal sovereignty, with political union complementing monetary union. (…) European life under monetary union will be brutish and nasty, and unfortunately not even short.”

In my more general reflections on the present global situation I distinguished three kinds of scenarios, based on the degree of democracy: domination (no democracy), reform (representative democracy), and transfomation (real democracy). (For more see The Place of Direct Democracy). These three programmatic positions can be found also in the Greek case. The creditors under the leadership of the German finance minister Wolfgang Schäuble represent a policy of domination by financial capitalism, which is incompatible with democracy. Tsipras and the right wing of Syriza stand for a reformist (social democratic) position which does not challenge the existing institutional framework (EU and EMU). Lapavitsas and the left wing of Syriza represent an emerging policy of transformation that rejects austerity and seeks an alternative to financial capitalism, shifting the balance of power in favor of labor and of the popular classes as well as exiting NATO. A comprehensive and decidedly transformative scenario is presented by Takis Fotopoulos in his many writings.

And in the face of the Greeks, they are attacking the social and democratic conquests of all Europeans after their victory in 1945 against fascism, if not after the French Revolution. (Dimitris Konstantakopoulos. The Future of Greece Without Illusions)

What happens to the Greek people concerns us all, it is happening to people in other countries and in the whole of Europe. A new colonialism in the form of financialization permeates every aspect of our life and trumps democracy. To reverse this development strong democratic movements are needed. My hope initially was that the likes of Syriza and Podemos would promote such movements. But now it turns out that at least Tsipras and with him the majority of Syriza was not ready to take this road. The victory of the NO vote could have been the beginning of a serious attempt to build real democracy from below and to develop alternatives to the prevailing market fundamentalism. Reforms within the existing power structures are not sufficient, institutional change is needed. To my knowledge the only place in Europe where this actually happens is in Barcelona and other Spanish “Cities for the Common Good”. In their own view, it is the beginning of a democratic revolution which has only just begun. (For more see Housing struggles in Spain).

Truth Committee on Public Debt

“All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

It has also come to the understanding of the Committee that the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.

Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure.”
The drastic adjustments, imposed on the Greek economy and society as a whole, have brought about a rapid deterioration of living standards, and remain incompatible with social justice, social cohesion, democracy and human rights.
Having concluded its preliminary investigation, the Committee considers that Greece has been and still is the victim of an attack premeditated and organized by the International Monetary Fund, the European Central Bank, and the European Commission. This violent, illegal, and immoral mission aimed exclusively at shifting private debt onto the public sector.

The outcome of the Memoranda has been a deep economic recession, coupled with a terrible social regression. (…) The “rescue programmes” were based on patently wrong assumptions and its unsustainability was predictable. However, the main goals were the rescue of private creditors and the forced imposition of neo-liberal reforms in Greece. (…) An ecologically and socially sustainable economic development is incompatible with the existing austerity policies. For this reason, the Greek public debt can be considered as totally unsustainable at present.
The Troika’s bailout programme enforced government measures that directly impacted living conditions, thereby violating human rights legally protected at the domestic, European and international levels. (…) The burden of adjustment is shared unfairly, its impact being particularly severe for the most vulnerable: the poor, pensioners, women, children, people with disabilities, and immigrants.”

Source: Truth Committee on Public Debt. Preliminary report. 2015.
Click to read the executive summary

Greece: Why Capitulate? Another Way is Possible

Eric Toussaint | 10 September 2015
– The Citizen Audit Commission of 2011
– The position of SYRIZA’s leadership regarding the citizen audit committee of 2011
– SYRIZA’s program in the legislative elections of May-June 2012
– Late 2012: SYRIZA’s leadership moderates its positions
– October 2013: Alexis Tsipras calls for a European conference on public debt
– SYRIZA becomes the leading party in Greece with the May 2014 European elections
– The January 2015 victory
– The fatal agreement of 20 February 2015 with the institutional creditors
– A different policy was desirable and possible
– The Truth Committee on the Greek Public Debt is launched
– The Greek government refrains from making use of the audit
– From the referendum on 5 July to the agreement of 13 July 2015
– The lessons of the capitulation of 13 July 2015
– A parallel currency as part of “Plan B”

What if the Greek government had heeded the Truth Committee’s recommendations? (click to read the article)

Eric Toussaint | 10 October 2015

Greece : Ignoring the result of the referendum is an aggravating circumstance. (click to read the article)

Éric Toussaint comments on election results, the various debt audit initiatives in Europe and the Third Memorandum that was signed by Alexis Tsipras.
21 October 2015

Zoe Konstantopoulou at the European Citizens’ Assembly On Debt

Brussels 16 October 2015
In Greece as everywhere else, debt is an instrument to subject the people to the interest of the wealthy. In the name of debt, the Troika and the Eurogroup have forced Greece to continue to implement austerity policies. However, many movements throughout Europe refuse to bow to the blackmail, and are now looking for alternatives. Debt audits already took and are taking place in several countries, and we now need to compare and disseminate their results.
During this Assembly on Debt, Zoé Konstantopoulou looks back on how the memoranda were imposed to Greece and the reasons why it is urgent to build alternatives to face to neoliberal policies undertaken by Europe and the Troika.

Takis Fotopoulos. 2015. The sell-out of Greece by SYRIZA and the bankruptcy of the globalist “Left”.


Awakening the European Left. An interview with Greek MP Costas Lapavitsas on Popular Unity and the case for a progressive Grexit. 09.09.2015

Fabian Scheidler. Kalkulierter Wahnsinn. Wie EU-Kommission, Bundesregierung und IWF Europa in den Ruin treiben. 30.6.2015 [DE]

John Holloway. Interview: Pascal Jurt. Jungle World Nr. 30, 23. Juli 2015 [DE]

John Holloway interviewed by Amador Fernández-Savater. With left parties on the rise in Spain and Greece, John Holloway reflects on his influential 2002 thesis: can we change the world without taking power? September 29, 2014. Translated by Richard Mac Duinnsleibhe and edited by Arianne Sved of Guerrilla Translation. [EN]

Éric Toussaint. Ein alternativer Vorschlag zur Kapitulation vom 15./16.Juli 2015. SoZ Nr. 7/2015 [DE]

Éric Toussaint. Au Sud comme au Nord, de la grande transformation des années 1980 à la crise actuelle. 8 septembre 2009 [FR]

Joseph Vogel. Interview: Sebstian Gierke. Krise in Griechenland “Die Politik hat sich ins Gefängnis der Märkte begeben”. Süddeutsche Zeitung | 30. Juni 2015 [DE]

Oxfam Briefing Paper: A Europe for the many, not for the few. 9 September 2015 [EN, ES, FR]

Oxfam Deutschland: Ein Europa für alle. 2015 [DE]

Michael Hudson. The Delphi Initiative, June 20-21, 2015

The topic of the session here is on the alternatives to neoliberalism, and what really is it. It’s what Margaret Thatcher said: TINA. But the alternative to what? I think, no alternative to finance dominating the economy and shifting the central planning out of government into the hands of the financial centers. So the key is, what do the financial centers want.

In the 1960s I was the balance of payment analyst for Chase Manhattan bank and my job was to calculate who much Argentina, Chile, Brazil could borrow. We calculated how much they could export, how much they could earn in foreign exchange, and the idea was their entire economic surplus could be spent on debt service to Chase and other banks.

So, the answer is, the financial planning wants all of the economic surplus to be paid as interest on foreign debt. Now what happens when this strips an economy and makes it unable to pay? Well at that point finance goes into the second stage and that’s the neoliberal stage. And I think it’s best to think of finance as the new mode of warfare. The financial sector wants exactly what a military invasion wanted in the past. They want your land, they want your raw materials, they want your gaz rights, and they want your public utilities. So this is the foreclosure phase. They want to lend you enough money so that the governments do not pay and then when the governments cannot pay they want you to privatize the public domain, turn it over to the financial sector, and as explained earlier, once you privatized the public utilities the government not only loses them, it loses the revenue from it.

Now the question is, how does it get countries to go along with this? If you waged a miitary war people would fight back. How do you prevent a country from fighting back against the financial warfare that’s in them today? Well, the answer I think you find from biological parasitism. Many people have called finance a parasite for hundreds of years. But it’s not that the parasite takes the blood and the income from the host, to do that it takes over the host’s brain. The parasite (…) makes the host believe, the parasite is part of the body and has to be nurtured. And that’s what finance does.

The prime center of neoliberal economics is that all debts can be paid and that paying a foreign debt doesn’t cause any problem at all. The original formulator of this was David Ricardo. And his ideas are still being reproduced by the Chicago school. His statement was that any foreign debt is automatically reflected in a demand for exports from the debt paying country. At the same time he was formulating this, it was called the bullionist position in Britain. Ricardo had two brothers and they underwrote Greece’s first loan, in 1824, when it had achieved its independence from the Ottoman empire. The loan was issued at a sharp discount, the loan was so heavy that it is just about as bad then as the loan to Greece is now, stripping the country. So while Ricardo’ theory was saying that all debts can be paid without changing any of society his brothers were loading Greece down with debt that stripped it and had to be refinanced again and again for a hundred years. Now later, the neoclassical economists had yet another theory, that all foreign debts can be paid, all you have to do is devalue enough so the price of labor will go down. When a country is devalued, there’s a common world price for gaz, for raw material, for capital goods, when you devalue a country what is reduced is the price of labor.

So all of the economic models that are taught at the universities and applied by the IMF are basically an anti-labor theory. The idea that when a country has difficulty paying the debts labor should be reduced. And they have very complicated mathematics, I’m almost embarassed to tell you how international trade theories are taught in the schools because it’s so silly, I believe you wouldn’t believe me.

But fortunately there is an alternative. In the 1830s in Britain the anti-bullionists completely disproved Ricardo. And in the 1920s Keynes argued over the German reparations debate exactly the position that I think Greece should take today. Keynes said that if a creditor demanded money from Germany or other countries it had to say how will you pay, here are the exports from you that we are willing to pay. Europe is not going to Greece and say here are the agricultural goods and the other goods that we will take from you. In fact when Greece joined the European Union it did not benefit from the common agricultural policy as much as France and Germany and the other countries, in fact it had to stop producing many of its agricultural goods, and the result was, you could summarize it as “do as I say not as you do”. So Keynes had developed an analysis of the capacity to pay. When the German reparations and interally debt system broke down, the Bank of International Settlements (BIS) was created in 1931 explicitly to make calculations of how much a country should pay and to limit the debt service of Germany to that which could be paid without having to sell off its patrimony, without having to part with its capital, and the result was a scale-back and then of course the moratorium finally. No similar institution has been proposed today, but what is in the BIS now is a meeting place for the world’s central banks which basically are representing their constituency, the commercial banks, whose philosophy again is an anti-labor philosophy, that all you have to do is reduce the price of labor.

Now, the alternative to this theory was developed long before Adam Smith. The mercantilists in the 18th century, James Stewart, José Tucker, pointed out that in order to raise labor productivity you needed wages to rise, and that there was a positive feedback between productivity and wages. They also said, when wages go down there’s emigration and the population goes down. So already in the 18th century there was a very clear understanding that paying foreign debt service, at that point mainly to bond holders that held war debts, were going to have to suffer emigration, and they developed basically a theory that rising wages is the way to lower the price of exports and to be competitive. This is a theory that underlay American development after the civil war. Again, they’re saying exactly the opposite to the rest of the countries than what they actually did.

So what is needed today is an alternative to the IMF and the BIS in the sense of an alternative economic philosophy. It needs to be an international organization based on the principle that no country should have to pay foreign debt to the point of destroying its economy, reducing its labor force, parting with its basic assets, and its national patrimony. This, as I pointed out earlier, is a principle of international law.

I think that one of the best things that could come out of this conference would be for a development of a kind of strategy that deals with what is the financial and the rentier objective, what is it trying to do in Greece? Much of the left has always talked about as Lenin said “who whom”, but they talked about the whom, they talked about the victims, there’s been very little analysis of the perpetrators, the financial sector, the rentiers, there’s been very little discussion of finance, insurance, and real estate, or rent-seeking. The fact is that international lending, much like banks in the US, do not lend for capital formation, they don’t lend to invest in new plant and equipment or for new hiring, almost all of this is done by retained earnings or by stocks. Banks lend to transfer ownership of property that is in existence, 80% of bank loans in America and I think in Europe too are mortgage-loans to transfer ownership of real estate, and in terms of the Greek problem now: Greece is being faced with a demand to transfer the ownership of whatever resources it has that can generate an economic surplus to be privatized, and the gaz rights and other rights. There has to be a logic developed based on what is already been developed, you don’t have to reinvent the wheel, all of these things were discussed in the 1830s to counter Ricardo, they were discussed in the 1920s to counter the hardliners regarding German reparations, and then they sort of fell out of discussion but they are all there. I have summarized the discussion in my textbook on trade development and foreign debt, but this is not the philosophy that’s followed by the IMF.

Even the IMF realized, as James Galbraith said earlier, they realized in 2010 and 2011 Greece’s dept couldn’t be paid, all of their analysts found this, and yet they went along with the European central bank and became part of the bailout loan and they were very ashamed of it, the European analysts of the IMF quit and blew the whistle and wrote a mea culpa report. Unfortunately they do this again and again. They made a similar awful loan to Argentina in 2001, and they passed a ruling in the IMF saying we will never have another Argentina, they had that and the Greek loan. So Greece is in the same position that Argentina has been, and are reduced to debt peonage essentially by the financial interests.

The left has not been prepared to cope with this, and I think largely it’s because Marx and other left leaders were optimists. They believed that industrial capitalism was so strong that it would somehow industrialize banking. But instead of industrializing banking, the opposite has occured, finance has financialized industry and made industry part of the financial extractive system. So what you’re dealing with, I think, now in Greece is the need to put an alternative financial system to an extractive one. For that you need a real central bank and that essentially would be your treasury, acting as a central bank; the purpose of a treasury is to run a budget deficit, budget deficits are what pump money into the economy, budget deficits are what provides the economy with money. And if there is no budget deficit then the economy is entirely dependent upon commercial banks. And commercial banks will extract interest and they don’t lend for the same things as government spending is for, they lend, as I said, for the takeover and the extractive. So what you need to do is much more than to renegotiate the current loan you need to put in place a treasury-based productive financial system that will finance growth rather than asset stripping.

John Holloway: Talk at the University of Leeds on September 7, 2015

Yes, we are the crisis of capital [insofar as we do not follow its rules], and proud of it. We are proud of it, because the crisis of a system built upon debt and destruction is the only hope for the future of humanity. … and I think that’s really my main conclusion: it is really that we must have the courage, not “the courage of hopelessness“, but the courage of our own absurdity, the courage of saying: yes, we don’t fit in, the courage of saying: well, NO our conception of the future of the world is not entirely some faster rates of growth each year, our idea of the future and the way we would like to do it is something completely different and if we are not sure what it is, then that doesn’t matter because we will all sit down together and think about how we shape the world. So our sense of the future of the world is not a democracy that exists actually at the moment that has made just total nonsense of an object of delusion and mockery by the agreement of the 13th of July. We must, I think, have the courage to say, here in the Universities, what we are trying to work out, what we are trying to think through, what we are trying to teach, is confidence in our own absurdity, because that is the only possible way forward.

, which he presented at the Direct Democracy Festival in Thessaloniki on September 4, 2015. It is basically the same text as the one above presented a few days later at the University of Leeds: “No, No, No. Three No’s. Three dates: July 5, 2015; December 6, 2008; September 15, 2008. Three ruptures.”

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created 14.08.2015
last update 18.12.2015