by Mark Ellingsen
A class war has broken out in Greece, and there is a palpable fear amongst the international ruling class that workers will not submit to paying for the bailout of financial institutions. Stock markets tumbled during a week in which public and private sector workers in Greece went on strike and only recovered when the EU agreed an emergency fund to defend the euro. But even now doubts still linger amongst investors as to whether this will actually resolve the underlying problem of state debt.
The turmoil in Greece has seen protestors storm the Acropolis unfurling banners appealing to Europe to rise up; teachers interrupting an interview with the Education Minister on state television; and a general strike on 5th May with a demonstration of at least 100,000 in which some workers tried to storm the Greek parliament.
However, the strike was marred by the death of three bank staff who had been working inside a bank when it was petrol bombed. In protest at the deaths, bank workers went on strike the following day, but notably they also condemned the government for its austerity measures and declared their support for workers fighting back. In a worrying development for the government, 150 armed forces personnel staged a silent protest in Athens against having their bonuses cut.
This was the backdrop to the vote on a new round of austerity measures which the social-democratic PASOK government pushed through parliament. The measures included pay cuts, tax rises, the reduction in state pensions and a slashing of the minimum wage from 700 Euro a month to 560, as part of an attempt to reduce the budget deficit from 13.6% to just 3% by 2014. In return the EU and IMF have agreed to a £95bn package to help the Greek government pay its loans. Interestingly, most of the political elite across Europe were publicly blaming the government’s debt problems on the profligacy of the Greek state. Greece’s debt-to-GDP ratio is 115%, compared with Spain’s which is just over 52%%.
However, this belies the seriousness of the underlying global crisis which the political elite and ruling class understands only too well. The underpinning and nationalisation of private debt by the state as part of the bailout of financial institutions has merely shifted the problem. Rather than financial investors being concerned about the ability of private corporations to pay their debt, the concern is now focused on governments. Markets are now concerned about defaults on sovereign debt.
But underpinning government debt are the banks that stand to lose a lot of money yet again if governments fail to pay. It is this which underpins the fear that ‘the contagion’ drowns other countries including Portugal, Spain, Italy, and Ireland and possibly even the UK. Pretending that crisis has mainly been caused by previous Greek governments is a convenient way of politically masking the truth. However, national political elites are not united – witness German chancellor Merkel’s fury at having to spend German state funds bailing out Greece.
Greece is at the leading edge of an economic and political hurricane which threatens to bring depression, the collapse of existing states and revolution. Somehow the political elite have to steer a course which avoids turning a recession into a depression, while at the same time saving private capital from itself by not only underpinning its debt but by guaranteeing a return on investment on financial capital.
If workers would only accept unemployment, poverty, broken homes, lack of health care and education then maybe capitalism can return to health. But this asking a lot, not only because workers stand to lose their livelihoods, but because of the unwritten agreement between the institutions of capital, labour and the state, which emerged in Europe after World War II, that workers would see the benefits of economic growth, by accepting capitalism and eschewing class war. This understanding was dented in the 1980s as industrial capital became less profitable: but today with the profitability crisis no closer to being resolved and now the instability of financial capital, this unwritten agreement is close to collapse. However, the ruling class is not a homogenous political or economic bloc and there are those who fear the consequences of a sharp turn to austerity and urge caution in cutting state expenditure, both for humanitarian reasons and because of the inevitable backlash from workers. But as the markets circle around governments their room for manoeuvre has dramatically narrowed.
Workers’ actions are always an unwelcome intrusion into the comfortable relationship between the political elite and ruling class. Normally, this can be dealt with by a confident combination of repression and incentives. The strikes in Greece at a time of global economic turmoil have given rise to an anxiety amongst our rulers which hasn’t been seen in a long time. It is certain that this struggle won’t be the last and it is likely to spread to other European countries faced with similar state dept problems and the imposition of neo-liberal economic policies. As we went to press, the ADEDY and GESEE union federations had called for further demonstrations in central Athens and all other major Greek cities.