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  February 10, 2015

Capitalism at the Root of Greek Economic Crisis

Costas Panayotakis, author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy, says Greece's economic woes stem from the capitalist mismanagement of the Greek economy
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Costas Panayotakis is an Associate Professor of Sociology at the New York City College of Technology of the City University of New York and author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy among other works. He has been published in The Monthly Review, Review of Radical Political Economies, and Capitalism Nature Socialism, amongst other journals.


SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I'm Sharmini Peries, coming to you from Baltimore.

The newly elected Greek government is trying to get its house in order. To end austerity measures, the new government unveiled proposals on Monday for the ending of confrontation with its creditors, the troika. They're suggesting that they swap outstanding debt for new growth-linked bonds and running a permanent budget surplus and targeting wealth tax for wealthy taxpayers for tax evasion.

To discuss all of this, we are joined by Costas Panayotakis. He is the author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.

Thank you so much for joining us, Costas.

COSTAS PANAYOTAKIS, ASSOC. PROF. SOCIOLOGY, CUNY: Thank you for having me on your show.

PERIES: So, Costas, your book essentially is right on the mark in terms of its dedication to the very issue that we're trying to tackle right now, looking at the case of capitalist mismanagement of the Greek economy and the fact that they now have to switch to a more democratically led economy. What does that really mean?

PANAYOTAKIS: Well, one of the problems with capitalism is that it gives a lot of power over the economy to a few people, the people that are basically the capitalist class. And because of the economic power they have, they have oftentimes almost a veto power on democratically elected governments. They can use their wealth to shape public opinion.

And this is something that has happened in Greece. I mean, we saw that more broadly with the 2008 crisis. Basically, in Greece what has happened is that there is a small oligarchy that has basically had the political system under its control for a long time. They control the media. And after the recent election, coming after the recent election, they were using scare tactics to try to get people to vote for the parties that have always been there to serve their interests.

But things have become so bad that even the control of the media was not enough to basically make people go the old way. So people have said enough is enough, and the hope is that SYRIZA will follow a different route. But, I mean, even the new SYRIZA government, of course, is facing lots of constraints from Europe, and some of the European agreements, for example, about balanced budgets, are a real impediment. I mean, they're very conservative policies, because, as we know since, gains at a time when an economy is in the midst of a big crisis, Greece has lost 25 percent of its GDP. Its economy has shrunk by 25 percent in the last few years. There is over 25 percent unemployment. This is not the time to balance the budget or run a surplus. And yet SYRIZA, even though it talks about ending austerity, it basically--the alternative plan, which is preferable to what existed before, still involves balanced budgets and even budget surpluses. So in a certain way, Greece, both what existed before the SYRIZA election and SYRIZA's attempt to navigate the new environment illustrate this tension between capitalism and democracy.

DESVARIEUX: Right. Costas, now, we know that one of the constraints placed on Greece by the troika, by the lenders, is that it cannot go into a huge deficit. In fact, it puts a limit of 3 percent of a deficit. Now, one of the things that this government needs is lots of money to spend in Greece in order to end austerity and stimulate the economy and actually spend themselves out of this crisis. This is what they need to do. But they are constrained by the troika in doing so. So how are they going to raise the money necessary to end austerity?

PANAYOTAKIS: Yeah. I mean, it is--SYRIZA found itself in a very difficult position. Ultimately, I mean, that's probably the reason they got elected to begin with, because things went so bad that they got a chance to be elected. But, I mean, some of the things that they have promised, one of the things they have promised to do is to try to stimulate demand by raising the minimum salary, which was drastically reduced as a result of the austerity practice.

The second thing they want to do is to renegotiate the debt so that Greece does not have to run the huge budget surpluses that the agreement would [incompr.] very recently. So they can have some money that they can use for stimulating the economy. And they also are supporting both excluding public investment funds from the 3 percent limit that European rules require.

So, I mean, again, it's--their sort of promise to reverse austerity should not be overdrawn. I mean, it's a positive change, but they find themselves in a really difficult situation. I mean, one of the things they said before the election is, when they presented their problem that they were basically presenting not what they wanted to do, but what they could do, given the limit.

So, basically it's a delicate balancing act that they have to deal with. And the negotiation in effect has already begun.

PERIES: Right. And, according to your book, Costas, now, what does democratization of the economy means when it comes to Greece? Is it--mean sort of nationalizing and also getting more productive enterprises going that people locally are a part of?

PANAYOTAKIS: Well, the idea of economic democracy discussed in my book is that basically all people within a society should have as much as possible an equal say over the functioning of the economy in which their subsistence depends. So the concept of economic democracy encompasses many different things. Anything that promotes economic and political equality is consistent with a concept of economic democracy. So in the case of [incompr.] restoring labor rights and collective bargaining rights that have been destroyed, liquidated as a result of the austerity packet, is consistent with economic democracy. Trying to break the power and the hold of the Greek oligarchs over the media would be consistent with economic democracy, trying to restore a sense of justice, where, again, Greek oligarchs pay their fair share of taxes, which they have not done. So economic democracy refers to any move towards equalization of the say that ordinary people have over the priorities in the functioning of the economic system.

PERIES: And part of it must also be to perhaps engage the people in resolving the economic issues of the country, which means more participatory economy. And what kind of such ideas currently exist in Greece that could be put into motion?

PANAYOTAKIS: Yeah, I think this is one of a type of initiative that SYRIZA has talked about and favors, the idea, for example, of--there are some examples, not as common as in Argentina, for example, but examples of companies in Greece in recent years that have developed that are democratically controlled by their workers. And they, some of them, are sort of stores. Others, there is a factory [incompr.] There is even a major newspaper in Greece. So that would be one example. There are also other kinds of initiatives, like consumer calls. I was in Greece just a few days ago. The neighborhood where I grew up, there is a consumer cooperative that has developed in the last couple of years as a way of helping to call people with the difficult situation that they live in.

So, yeah, certainly participation is an important component of economic democracy. And when it comes to participation, for example, in economic endeavors, it also [incompr.] political democracy as well, because it gives people, you know, knowhow and confidence and sort of technocratic management skills that they can use when they evaluate political debates. And, of course, economic debates are paramount in Greece nowadays because of the crisis. So, yes, participation is a very important element of economic democracy. And one of the things that SYRIZA has said is that they recognize that what they want is to go against the logic of a presentation, where the voters elect them and then they sit back and they look at the politicians, Tsipras or Varoufakis or the other ministers, and see what they achieve. Their argument is that they need the people next to them to push with them for the necessary changes that have to be made, not just in the relationship with Europe, but internally as well, domestically as well.

PERIES: Right. And one very curious question is: where is the labor unions in this movement of SYRIZA's? Is there active labor unions in conversation with SYRIZA at the moment?

PANAYOTAKIS: Well, the labor movement in Greece historically was dominated by the Socialist Party and the conservatives. And the Communist Party as well has had a lot of influence historically. SYRIZA was not quite as strong in the labor movement.

More recently what has happened is many of the--much of the base of the Socialist Party has moved to SYRIZA. And that includes some of the labor leaders who used to be socialist in their part of SYRIZA. And then, of course, you have more recent grassroots labor sort of movement initiatives, new forms of labor unions that have been bubbling up. But, I mean, the labor movement in Greece has been under very heavy and ruthless attack in the recent years, and it seems like even though there were many--there was some fightback by Greek workers, it was clear that the labor movement in Greece, the way it historically developed, was not ready for this kind of assault. They were not used to hobnobbing with people in power. And when [incompr.] in with the economic crisis, they were completely unprepared.

So, I mean, one of the hopes that activists that they talk to have is that the election of SYRIZA will basically embolden people and will rejuvenate the labor movement and sort of give a further push to SYRIZA and put some pressure on SYRIZA to make sure that SYRIZA delivers on its promises.

PERIES: Right. Costas, I want to thank you so much for joining us. We're going to be writing this story for a long time to come. So I hope you join us again.

PANAYOTAKIS: I will be happy to. Thank you for having me on your show.

PERIES: And thank you for joining us on The Real News Network.


DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.


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