The Greek Crisis: Causes and Alternative Strategies

chapter 1 The Greek Crisis: Causes and Alternative Strategies

Stavros Mavroudeas

Introduction

The Greek crisis is a major incident of the wider EU crisis. Despite the rather small size of the Greek economy, its connections and the timing of its crisis have asymmetrically big repercussions not only on the EU but also on the world economy. This chapter evaluates the competing explanations of the Greek crisis and the alternative strategies – roughly associated with these explanations – proposed in order to surpass this crisis. This evaluation is conducted from the ‘partisan’ perspective of Marxism. The structure of the chapter is the following. The first part reviews the analytical and empirical arguments of the competing explanations. These are categorised into three main groups: Mainstream, Radical, and Marxist. It is argued that the Marxist explanations (associated with the Tendency of the Rate of Profit to Fall (TRPF)) have analytical and empirical superiority against their rivals. In particular, they can better grasp the deep structural character of the Greek crisis. The second part presents the basic alternative economic strategies. These are categorised into two main groups, which are also subdivided into two versions each. The first strategy aims to surpass the crisis within the auspices of the EU and the EMU (European Monetary Union). It basically follows the fun- damental Greek and European bourgeois prerogatives. It is subdivided into two versions: (1) a strategy of more or less faithful implementation of the IMF-EU- ECB Economic Adjustment Programmes (EAPs), and (2) a strategy of renego- tiation of the EAPs towards a less pro-cyclical and less austere policy mix. It is argued that the first version is an overambitious bourgeois strategy that flirts with endangering the political and social stability of the system. The second version is a non-autonomous strategy in the sense that it depends upon the (at least) partial success of the first version. This makes it an incoherent and unreliable strategy. The second strategy questions either part or the whole of Greek capitalism’s strategic choice of participating in the European integration. It is also subdivided into two versions: (1) a strategy of leaving the EMU but remaining within the EU, and (2) a strategy of complete disengagement from the EU (i.e.

© koninklijke brill nv, leiden, 2018 | doi:10.1163/9789004280892_003 14 mavroudeas leaving the political structures, the common market and the EMU). It is argued that the first version is a middle-of-the-road approach that does not offer a coherent alternative to the bourgeois strategies since it disregards the deeply structural character of the Greek crisis. Finally, it is argued that the second version offers a coherent alternative strategy answering the problem of the crisis from the perspective of the working class.

1 Competing Explanations of the Greek Crisis

Since the eruption of the Greek crisis, several analytical streams have competed in order to explain its causes and to suggest relevant solutions. Rather unsur- prisingly, the different explanations of the Greek crisis offered fall within the main camps of economic analysis today. That is, they belong to Mainstream economics, Radical Political Economy, or Marxist Political Economy. Mainstream economics is the dominant tradition in economics. It stems from the neoclassical economics that dethroned Political Economy in the be- ginning of the twentieth century, subsequently becoming the economic orthodoxy. It is essentially a supply-side, value-free and micro-based economics that considers economic crisis an abnormality created by chance events and not caused by systemic problems. After the Keynesian challenge of the interwar and postwar years (that proposed a demand-side analysis and a possibility crisis theory), Mainstream economics morphed into Hicks’s post-Keynesian neoclassical synthesis (which merged neoclassical methods and Keynesian macroeconomics). With the neoliberal onslaught of the 1980s (as expressed by Monetarism initially and New Classicals thereafter), Mainstream economics became even more conservative. The bulk of Keynesians (as exemplified by the New Keynesians) followed suit by adopting most of the neoconservative agenda. This realignment led to the New Consensus Macroeconomics, which is a merger of neoliberal economics with New Keynesianism. New Consensus Macroeconomics constitutes the current economic orthodoxy and dominates all the influential centres of economic policy making. Mainstream economics does not need a crisis theory. Neoclassicism argues that capitalism is a perfect system that, under normal circumstances and agents’ behaviour, will not face crises. Disequilibria can occur only when some agent acts irresponsibly by violating perfect competition and inscribing rigid- ities in the system. Consequently, an economic crisis does not have deep structural causes; rather it is the chance outcome of some abnormal intervention. New Keynesianism, on the other hand, dropped Keynesianism’s possibility theory of crisis and also maintained that crises stem from policy errors. The