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No! But what now? Michael Roberts blog, July 5 <https://thenextrecession.wordpress.com> . . . How can the Greek economy be made to grow? There are three possible economic policy solutions. There is the neoliberal solution currently being demanded and imposed by the Troika. This is to keep cutting back the public sector and its costs, to keep labour incomes down and to make pensioners and others pay more. This is aimed at raising the profitability of Greek capital and with extra foreign investment, restore the economy. At the same time, it is hoped that the Eurozone economy will start to grow strongly and so help Greece, as a rising tide raises all boats. So far, this policy solution has been a signal failure. Profitability has only improved marginally and Eurozone economic growth remains dismal. The next solution is the Keynesian one. This means boosting public spending to increase demand, introducing a cancellation of part of the government debt and leaving the euro to introduce a new currency (drachma) that is devalued by as much as is necessary to make Greek industry competitive in world markets. This solution has been rejected by Troika, of course, although we now know that the IMF wants ‘debt relief’ at the expense of the Euro group (ie Eurozone taxpayers). The trouble with this solution is that it assumes Greek capital can revive with a lower currency rate and that more public spending will increase ‘demand’ without further lowering profitability. But the profitability of capital is key to recovery under a capitalist economy. Moreover, while Greek exporters may benefit from a devalued currency, many Greek companies that earn money at home in drachma will still be faced with paying debts in euros. Many will be bankrupted. Already over 40% of Greek banks loans to industry are not being serviced. Rapidly rising inflation that will follow devaluation would only raise profitability precisely because it will eat into the real incomes of the majority as wages failed to match inflation. There would also be the loss of EU social funding and other subsidies if Greece is also ejected from the EU and its funding institutions. Eventually, perhaps in five or ten years, if there is not another global slump, either the first or second solution can restore the profitability of Greek capital somewhat, on the back of a Eurozone economic recovery. But it will be mainly at the expense of Greek labour, its rights and living standards and a whole generation of Greeks will have lost their well-being (and their country as they go elsewhere in the world to make a living). Both these solutions mean that Greek labour will still be poorer on average in 2022 than it was in 2008. The third option is a socialist one. This recognises that Greek capitalism cannot recover to restore living standards for the majority, whether inside the euro in a Troika programme or outside with its own currency and no Eurozone support. The socialist solution is to replace Greek capitalism with a planned economy where the Greek banks and major companies are publicly owned and controlled and the drive for profit is replaced with the drive for efficiency, investment and growth. The Greek economy is small but it is not without an educated people and many skills and some resources beyond tourism. Using its human capital in a planned and innovative way, it can grow. But being small, it will need like all small economies, the help and cooperation of the rest of Europe. The no vote at least tells the rest of European labour that the Greeks will resist the demands of European capital. That could encourage others in Europe to throw out governments in Spain, Italy and Portugal that continue to impose austerity at the dictate of the Troika. That, in turn, could bring to a head the future of the Eurozone as a Franco-German project for capital. _________________________________________________________ Full posting guidelines at: http://www.marxmail.org/sub.htm Set your options at: http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
