Yet Again, It's Crunch Time

A pivotal moment. It's  almost crunch time. The endgame approaches. The longer these negotiations go on, the more casually recycled this apocalyptic language feels. Nevertheless times are serious in Greece.

The people of Greece, living under this constant cloud of uncertainty, must surely be going mad. Many want an end to the stalemate, no matter the cost. Who can blame them? Anything would be better than this.

Channel 4's Paul Mason has been writing consistently insightful journalism on the Greek crisis for years now. His most recent post makes two things clear: the latent appeal of default for sections of Greek society (including the radical left, parts of the right, and some 41% of the population) and the embeddedness of Syriza politicians in their party membership. Thus, Syriza is wedded to the euro far more strongly than might have been necessary had it, in the past, taken an opposite internal path and made opposite moves in its engagement with the Greek public. But that avenue - perhaps available during their meteoric rise after 2011 - is surely now closed. Syriza - including, at times, the party's Left Platform - set continued euro membership as a priority a long time ago.

Here's that link: http://blogs.channel4.com/paul-mason-blog/greece-crunch-time/3882

My hunch is that Syriza will cave more or less fully to the austerity demanded by the troika, probably at some time in the next week. The leadership will do so partly because of the exhaustion of the Greek people, their threadbare faith in the government, and the near collapse of the country's banks. But more importantly the collapse of the government's bargaining position was secured for the troika by the Syriza leadership itself well before the election. By insisting that the EC, IMF and ECB would compromise, they assured everyone that they could remain within the euro and end austerity at the same time. No such thing was ever possible without the threat, at least, of default and, by extension, coordinated exit.

It is harder to say what will happen next. What will the depth of an already extensive demoralisation be when Syriza surrenders to the maximum budget surpluses demanded by the troika? How deep into the soul of the nation will the sense of defeat sink? And then what, if any, kind of emotional and intellectual recovery can take place? The relief of six-months' funding will be brief, the social effects of renewed austerity catastrophic.

It is clear that the modest Keynesian reflation promised in Syriza's Thessaloniki programme has been routed by the imposed legality of the treaties, the precedents set by the memoranda, and the financial and fiscal limits of the Greek state. A different path might once have been possible. A new path will require the mobilisation of the Greek people on a scale not seen since 2011-12. Only the Greek people could in theory drive Syriza - the political force which has come to represent Greek society more than any other since the onset of the crisis - towards new and more creative forms of opposition and rebellion in the years of austerity ahead. The situation remains open, but there is little cause for optimism. The future will be testing to the extreme.

The Greek people have been heroic enough to defy austerity, even in the pit of exhaustion. We owe  them a cool, critical assessment of the government. And our support if they find some hidden resources to continue.

Britain Has a Debt Problem - All the More Reason to Fight Austerity

The British state has a debt problem and this makes rejecting austerity all the more important. The conjunction between the two statements here is by no means contradictory. It is customary on the left to deny the fiscal crisis of the state, but there are real limitations to its capacity to sustain social expenditure given the pronounced power of capital. The march against austerity in London today might be the first step to concretising the belief that much more needs to be done than establishing popular support for the state in its current form.

Across the advanced economies of the capitalist world deep public indebtedness has become the norm (rising sovereign debt characterises the thirteen advanced economies in this IMF paper). What is the result of rising public indebtedness? Almost always the response of the capitalist state to fiscal strain is contraction. The result, in turn, of that contraction, is further unbinding of the already frayed tethers of social solidarity between groups in capitalist society.

What does it really mean to talk about a fiscal crisis of the capitalist state? In the abstract it means very little. We need to be more specific: which capitalist state, at which level of indebtedness, and in which period of historical development? We can loosely measure these changes by looking at the institutions of both the state and what is commonly called "civil society." Since the 1970s the political economies and societies of the advanced capitalist west - although especially the USA and Europe - have undergone astonishing changes. At every level the embededness of capitalism in domestic economies has been eroded, as capitalist firms have become increasingly willing to internationalise their activities. At the same time the various mediating institutions between capital and labour have seen their influence either shrink to a core (as in Germany) or become downgraded altogether (as in the Anglo-Saxon economies of the USA and the UK). This has necessitated a change in priorities for trade unions and works councils, from a macro, sectoral focus to a micro, firm-level focus of collective bargaining and worker protection. Precariousness and peripheralisation have become the norm outside of key sectors. Additionally, and crucially, the states of these countries have struggled to keep their social commitments, coming under increasing pressure to lower taxes, whilst at the same time having to shield populations from the ravages of growing unemployment and redundancy. Inevitably, given the balance of social and political representation in the state, it is social commitments that are downgraded. These long-term, secular developments are co-determining. As the influential sociologist Wolfgang Streeck argues¹, there is no single class or sectoral driver to these changes. These processes are driven, of course, by the social actors of capitalism, but they are mutually reinforcing and equally unbalancing.

It follows from Streeck's argument that rising public indebtedness is a symptom of the steady decline of government tax intake and the growing instability of employment in contemporary advanced economies. Moreover, as the economist James Galbraith argues², there may be no return to high growth, which would increase employment despite the fiscal binds on the state, because of resource cost volatility, financialisation and the exhaustion of the technological and productivity-increasing means of job creation. We may now be living in a low-growth world, where what little growth there is does not fuel job creation on anywhere near the necessary scale.

This paints a very bleak picture for the Keynesian prescriptions that are the common alternative to fiscal contraction - in other words, austerity - and labour market liberalisation. Keynes's argument was one based on psychological assumptions very different to those of classical and neoclassical economists. He described how the proportion of income not given over to consumption would become savings and was in aggregate identical to investment. This was the key to continuing growth in employment, the conclusion being that a shortfall in demand - in the form of goods for consumption and new investment - could prevent growth in employment. Economies could stagnate - and unemployment remain above its potentially lowest point - because of an absence of demand.³ By stimulating demand - primarily in the form of deficit spending, but also tax cuts and lowering interest rates - the government could create new employment, growing income/output, and therefore economic growth. In theory it remains possible for the state to do this (after all, there are no absolute limits to capitalism only relative ones). The argument against a purely Keynesian policy program is the institutional, social and political context. Even if the institutional capacity for a Keynesian revival led by the state exists (as perhaps it may in the United States), the kind of technological take-up characteristic of the ensuing boom would not necessarily drive job creation. Service economies, no matter how high-tech, do not produce the same kind of mass employment as heavy industrial economies. Moreover, with ongoing financialisation of capital and the internationalisation of regulatory structures (including the US state and its many free trade agreements, the EU and its many treaties, the IMF and so on), it is not at all clear that the reduced power of national governments could sustain a reverse course for very long. This argument applies especially to the UK with its heavy reliance on financial services, its low productivity growth, its high degree of de-industrialisation, and the pronounced weaknesses of the tax system.

None of this proves the fiscal moralising of the deficit hawks right, however. The theory of contractionary expansion has long been proved a delusion, if it really ever held intellectual water. Keynesian stimulus can be part of a broader alternative to austerity - but it cannot be the only pillar, since it relies somewhat narrowly on the short-term psychological expectations of investors and the underlying belief that any animated "animal spirits" can generate the right kind of growth. The Keynesian policy toolkit is just that - a set of instruments which needs to be put to the right political uses.

What, if not growth alone, would amount to an adequate challenge to austerity? Only a concerted effort of the social will can begin - slowly - to reverse the decades-long evolution of advanced capitalism. Because these secular tendencies are multi-layered, only a multi-faceted effort - working at every institutional level of the state and civil society - can begin this work. Society does not have infinite resources for this task, and defeat is a possibility if not quite a likelihood. However, it is vital that we use our efforts to build concrete institutional powers. Protest is a high-visibility response, but it can sometimes leave no lasting trace. Our presence needs to be felt in institutions - primarily the staid "core" union structure, as well as in the new "peripheral" unions that seek to protect the more precarious sectors of the economy. Struggles need to be built around housing and immigration; urban destruction and resource exploitation; feminism and minority rights. It is a tall order, but happily this multi-faceted opposition - stretching well beyond the state - reflects already the political logic of austerity capital, which outsources "creative destruction" onto the different levels of the social fabric.

We cannot win by opposition to cuts alone - since that leads to a tunnel-vision focus on state power and the Keynesian alternative to austerity. Instead, opposition to austerity capitalism and what Streeck calls the "consolidation state" must stretch across society, identifying its own causes - anti-racism, feminism, social solidarity - with the continued existence of the very fabric of society. At present capitalism and the capitalist state are wrecking society. The opposition must, in the end, seek to hegemonise society and direct it against the power of capital.

1See: Streeck, Re-Forming Capitalism: Institutional Change in the German Political Economy (2010). In the German case he says: "The liberalisation of the postwar German political economy was not an act of strategic institution-building governed by business in alliance with a competition-conscious nation-state. Rather it took place in a steady process of disorganisation... in the form of a gradual decomposition... from below." (p.255)

2See: Galbraith, James K., The End of Normal (2015) He says: "There will be no full recovery of demand. And even if there were, price volatility in the resource markets and the development of yet more labor- and capital-saving technology would soon choke it off." ( p.241)

3See: Keynes, The General Theory of Employment, Interest and Money (1936) where he argues: "The mere existence of an insufficiency of effective demand may, and often will, bring the increase of employment to a standstill before a level of full employment has been reached." (Kindle Loc: 396-98)

Is Osborne Preparing for a Low Growth Capitalism by Legislating against Public Debt?

George Osborne is probably right about UK public spending - albeit for all the wrong reasons. He wants to lock the UK into more or less permanent budget surpluses, with deficits allowed in only extreme circumstances. It is a policy that amounts to enshrining the theory of austerity in law. It is also, from the perspective of the wealthiest and also of the UK state, the only pro-capitalist response available to long-run evolutionary changes between the capitalist state and the market it helps constitute. It may also have one eye on the consistently low rates of growth of the world economy since the 1970s, especially in the western world. It is only possible to run rising public deficits, after all, in a world of reliably high investment and rapid growth.

Despite the moralising, penny-pinching philosophy that has brought the Conservative Party to the conclusion that growth of public debt must be permanently constrained, they have very much "tuned in", not to social needs but to the long-term evolutionary path of capitalist society. The two, of course, are not identical, though the government's power rests partly on its ability to identify them with each other.

Before I am accused of "doing a Hitchens" and going all weak at the knees over capitalism  ("oh, that dynamic force!"), allow me to explain. The standard liberal and left-of-centre critique of austerity is Keynesian. It states that when fiscal contraction reduces demand, it causes a general deepening of recession unless "supported by external demand, devaluations, and cooperative labour organisations." (Blyth, Austerity: History of a Dangerous Idea). Paul Krugman dismissed the neoclassical theory that rational expectations of investors would fill the space of the retreating state and make use of declining wage costs as faith in a "confidence fairy." Austerity was, they argued, just bad economics fuelled by political myopia or worse vicious ideology.

Austerity is a faith - but insofar as it meets a profound need of the political elites of cash-strapped western states, it is an efficacious one. We misunderstand belief if we think for a moment it must accord with the facts to do its job.

Detailed micro-level analysis of the historical evolution of capitalist social institutions, undertaken by Wolfgang Streeck in his book Re-Forming German Capitalism, tells a story that, while very different to Osborne's neoclassical and neoliberal fiscal moralism, nevertheless contradicts the Keynesian belief that state fiscal constraints can be simply shrugged off under capitalist market conditions. 

In Streeck's analysis, the cost of the postwar social state became increasingly burdensome for a previously domesticated capitalism, as unemployment grew and the German federal state, along with workers' organisations turned to early retirement to shield the workforce from the effects of unemployment. "Internal accumulation of tensions and dysfunctions... coincide with external political and technological developments [resulting in] a wave of liberalisation... In the form of further advancement of economic internationalization in new directions and in new forms." (P.202) 

Meanwhile, both capital and the German national state turned to internationalisation of capital and goods markets, as well as deepening the role of transnational institutions (like those of the EU), to relieve these social costs and the fiscal burden on the state. Streeck has since introduced two key concepts into the language of this kind of analysis: first, the "debt" state which results from the rising burdens of the old soci settlement; then, its evolutionary successor, the "consolidation" state, which seeks to re-form the old social contract, significantly curtailing those burdensome social costs.

Streeck significantly makes time a factor of his analysis, and he does so at two levels: on the one hand, chronological time allows the different institutional paths to be registered at different moments  of development. On the other, historical time allows him to conceptualise periods of temporary and provisional equilibrium, which always precede breakdown and transformation. Streeck argues for a tipping point, wherein one period of historical-institutional development is tangibly succeeded by another, even though the rate of institutional change is constant and gradual. Developments in German large and small firms, in organised labour and capital institutions, industrial sectors and the federal state, and so on all fed this change. The key difference between Streeck and the neoclassicals is that he does not view change as "efficiency-enhancing" or tending towards "equilibrium." As he says: "The liberalisation of the postwar German political economy was not an act of strategic institution-building governed by business in alliance with a competition-conscious nation-state. Rather it took place in a steady process of disorganisation... in the form of a gradual decomposition... from below." (p255)

Though the institutions of British capital were never "organised" in the same way as the German, their contemporary "disorganisation" is no less complete. Paradoxically, as the LSE economist Anke Hassel has observed, more coordinated capitalism is better at liberalisation than other, less coordinated kinds. "Liberalisation was accepted as a precondition for sustained coordination." The German market was liberalised to sustain jobs at lower wage growth, not to destroy them.

All of this creeping gradualism suggests that Keynesian-style, counter-cyclical measures cannot be revived because the institutional capacities of the postwar era no longer exist. It would take much more than political voluntarism to put something like that unique coagulation together again. 

Though far from a flawless account of capitalist dynamics (attributing change to a Schumpeterian "restlessness " of the generic entrepreneurial type, rather than it stemming from dependence of social actors on the coercive power of the market), Streeck's analysis  is highly beneficial for understanding the historical interactions of capitalist institutions. As he points out, these processes of liberalisation are universal, present in different forms and in different combinations and stages of development in all capitalist political economies today.

Streeck makes it clear that the postwar settlement was a historical stage of capitalist development, which has now been visibly overcome by a distinctive new period. After the war embedded capitalism and the social state were the means by which elites ensured domestic social peace. Today they use liberalisation to insure themselves against the breakdown of that social peace, in the wake of capital's increased unwillingness to pay for it (either directly through taxes or indirectly through the losses sustained on long-term lending to "inflation-biased", low-interest paying governments).

From a very different perspective, the American economist James Galbraith finds that, since the 2000s, "public provision of credit has been stymied, while the private provision of demand via new credit has not occurred." Against both Keynesians and neoclassicals he argues: "There will be no full recovery of demand. And even if there were, price volatility in the resource markets and the development of yet more labor- and capital-saving technology would soon choke it off." (Galbraith, 'The End of Normal', p.241) Like Streeck Galbraith introduces periodisation, though he dates it and determines it differently. Liberalisation retains its key role, however - especially in terms of internationalisation of financial markets. But where Streeck prefers a "thick" institutional description of overlapping, internal changes from one type of system to another, Galbraith does not shy away from naming the directions of causality. To be specific, these are growing resource cost volatility and the exhaustion of the job creating potential of waves of capitalist technological innovation. It is easy how the exhaustion of the key pillars of postwar embedded capitalism - the domestication of financial markets, the era of high employment and cheap oil - would likewise lead to the bankruptcy of the postwar social state. 

If the capitalist state is to survive it must continue on a path of "consolidation", in which it curtails its indebtedness and significantly shrinks its activities. This will not come without significant threats to its legitimacy and indeed its unity. The Conservative government is increasingly confronted with a breakdown of the social and political postwar "regime" of the British state. The party and electoral systems are fast eroding, while nationalist forces increasingly reject the centre. For George Osbourne, then, the era of low growth and fiscal consolidation will be less a Conservative honeymoon than a race against time.

Everybody has an opinion about Europe

Anti-Troika protesters in Greece, 2011

Just a few years ago liberal and left-of-centre opinion was unanimous in its adoration for the 'European project'. The titles of trash political literature from that time are testament to a near cosmic hubris, with such adoring tracts as 'Why Europe Will Run the Twentieth Century' springing up left, right and centre. Following 1992's Maastricht Treaty, an age of post-heroic certainties dawned.

Friedrich Nietzsche - a self-styled "good European" of less tedious stock - once damned precisely this kind of triumphalism: "'We have discovered happiness,' say the Last Men, and they blink." Since the sovereign debt crisis (how prosaically was the forward march derailed!) a turn to excoriation in those self same circles cannot conceal the stream of melancholy that underlies it. The insistence is still, however, that a deeper commitment to the old model of unification along either neo-functionalist or intergovernmental lines will save us all. The creepily sterile lust for deeper "consolidation" (implying there are any real gains to consolidate) hinges on the idea that eurozone policy has been too "ad-hoc" and has lacked vision. What should a substantial vision propose, according to post-enlightenment European gladiators like Jurgen Habermas? Integration, of course, to combat finance! "The justification for taking a major step forward on European integration does not derive solely from the current eurozone crisis, but also from the need to curb the evil practices of the shadowy parallel universe that the investment banks and hedge funds have built up alongside the real economy of goods and services," he and his co-writers suggest. Thus, there is the good old productive economy and the separate - in fact, "evil" - realm of finance.

This Europe of liberal, post-political fantasy never really existed - and the sooner we dispense with that fantasy, the easier for an internationalism of substance to replace it.

The modern European Union - and the eurozone which is its offspring - owe their institutional form in more ways than one to the USA. Of course, there was the Marshall Plan. But there was also the financial and monetary shape of the global economy. When repeated bouts of financial instability and inflation prompted investors to flee the dollar, it was to Germany they flocked. Eichengreen again: "Whenever doubts about the dollar and funds flowed out of the United States, they ... flowed mainly into Germany."¹ Germany's periodic bouts of currency strengthening against the French franc - which, it must be said, the Bundesbank's Ordoliberals did little to challenge too deeply - made the security blanket of a shared currency more appealing. The euro evolved out of financial and monetary instability following the end of Bretton Woods. The commitment of the European Central Bank to combating inflation (and nothing else) of course reflects a Greman Ordoliberal prejudice, but also the economic reality of Europe's sole heavyweight economy. Though the euro, when launched in 1999, was an incipient challenger to the dollar, it was in other ways a prisoner of the world system founded on dollar power. The rigidities of the eurozone institutions were as much a result of Europe's contradictory developed-subordinate status in the postwar economy as they were the German ideology.

Underlying the fixation on inflation combat were other policies: essentially the dominant European classes were committed totally to a form of fiscal and monetary restraint in order to maintain export competitiveness. Many have claimed Germany takes this position because of the hyper-competitive Chinese productive economy. I suspect it has more to do with the shaky US source of demand for German goods. The eurozone was, in the end, a monetary and fiscal straitjacket for peripheral European economies (the United States is Germany's second biggest export destination after France). The euro allowed Germany to benefit from declining transaction costs while trade union deals allowed the Germans to control wage growth and undercut ECB inflation targets. For export-oriented economies like Germany, wage restraint meant gaining competitive advantages over those who allowed wages to rise. By tackling inflation, the euro was kept strong and this meant exports could be sustained despite growth. However, major differences opened up between export and import dominated countries inside the eurozone. Add to this the growth of credit - with flush German and French banks loaning to the European periphery, especially Greece - and you have a deeply precarious and lopsided "unification."

Following the 2007-8 financial crisis (itself the progeny of the US real estate sector), Europe's rule-based rigidity really came into its own. Peripheral economies, which had allowed wage increases and the credit expansion to fuel consumption, could not benefit from depreciation. German and French banks, heavily exposed to the US subprime crisis, stopped lending. Governments bailed out the banks. The liquidity freeze led to growing unemployment and steep increases in sovereign debt. Bond yields in the periphery rose, with the result that peripheral economies - like Greece - were locked out of bond markets. The rest is the widely catalogued history of harsh European austerity and deflationary measures inflicted on the unwitting southern Europeans. As Mark Blyth puts it in his book Austerity: The History of a Dangerous Idea: "If states cannot inflate their way out of trouble (no printing press) or devalue to do the same (no sovereign currency), they can only default (which will blow up the banking system, so it's not an option), which leaves only internal deflation through prices and wages - austerity. This is the real reason we all have to be austere. Once again, it's all about saving the banks."²

The natural argument of many on the left and on the liberal wing of the mainstream has been reform of the eurozone from within. Yet the institutional and legal framework of the eurozone has cemented a very stable power bloc in Europe. German big and medium capital benefits from the lowering of transaction costs across the economy while banks profit from the deflationary consequences of the euro on borrowers. It may be a harsh form of neo-mercantilism, but it does the job of feeding global consumption on the back of German exports. There will need, then, to be a significant deterioration of the domestic German position along with the continued success of peripheral, left-wing politics if the grip of deflationary Europe is to be undone. What Costas Lapavitsas and the German Keynesian economist Heiner Flassbeck call "confrontational exit"³ from the eurozone by Greece may possibly precipitate just such a crisis.

1Eichengreen, Exorbitant Privilege:, 70

2Blyth, Austerity: The History of a Dangerous Idea, 87

3Lapavitsas & Flassbeck, Against the Troika, Kindle loc 1466: "A Left government should be prepared for confrontational exit... The first step of this process would probably be a declaration of default on the debt... cessation of payments of interest and capital and a unilateral call for negotiations on what will be paid and how... [requiring] popular mobilisation, a Debt Audit and strong legal support."

Why Labour Effectively Has to Turn Right

In social-democratic fantasy land there is a strange lingering belief: Labour should turn left, seizing the narrative space now occupied by the Tories on austerity, and remoulding the electorate's views on extreme wealth. The actor Michael Sheen argues for something like this in the New Statesman this week. Labour didn't do this last time, and there is no reason to think they will change now.

It is not just ghoulish characters like the Bond villain-esque Peter Mandelson who command the future direction of the party. String pullers there may be, but they wind up  in power as a result of institutional structures not individual quirks. The electorate, meanwhile, is not particularly far to the right either. The notion of a homogenous electorate uniformly shifting this way or that with the winds of history is a construction. Popular perception is highly mediatized, and media space is in the end contestable. Moreover, arguments about the changing beliefs of society assume a generic uniformity to society as a whole, when the reality is that society is divided according to social position, wealth, privilege and so on. Arguments that claim groups with very different interests are moving together in one direction or another should be met with scepticism.

So what is eating the Labour vote? Why, effectively, does Labour have to turn right? The simple answer is, those who do vote in our democracy, tend to the right. Those who do not, tend to the left. This is the real, hardly mentioned story of recent elections. After the Thatcher revolution and Labour's internal splits and reforms in the 1980s, voter participation in elections collapsed. Since the mid-80s voter turnout has struggled to reach much more than 65%. At the most recent election this trend was re confirmed. A 66% voter turnout gave a parliamentary majority  to the Conservative party.

Here is the Guardian on the social composition of the 2015 vote:

"Labour only had a clear lead over the Conservatives among 18- to 34-year-olds, voters in social class DE (the “semi-skilled and unskilled manual occupations, unemployed and lowest grade occupations”), among private and social renters, and black, Asian and minority ethnic (BAME) voters.

But among all these groups, turnout was lower than the overall level of voter turnout (66%).

To make matters even worse for Labour, the party’s vote share actually fell among those aged 65 or above. Within this age group, Miliband’s party won 23% of the vote – down eight points on 2010."

So Labour is, by default, the party of the low-paid, students, and ethnic minority groups. Not a bad thing to be by any means. But those groups vote in lower numbers than the white and older voters who turn out consistently for the Conservatives. Unless Labour wants to challenge the alienation of anywhere between 30 and 40% of the electorate who don't vote, they are stuck chasing ageing Tory voters.

Why do these voters turn out less than their Tory counterparts? There is no widely accepted single answer, but it is reasonable to think that politics as it is currently undertaken leaves them out in the cold. Westminster discourse is, like so much in our democracy, marketed firmly at homeowners. More so since Thatcher than ever before in the age of democracy.

Labour will not challenge the diminishing democracy of the UK. It is, less than a true "movement" as it likes to claim, a parliamentary electoral machine. It is locked institutionally and psychologically into the state. So many injunctions to just vote will not convince the many who see Westminster as unrepresentative of them that it is worth doing. Labour will move right because, short of a sustained attack on the institutions and mode of organisation of the British state (electoral reform, Scottish independence, a total rejuvenation of the welfare state), it cannot reach the absent, non-voting thirty percent. Labour obeys a "state logic" - its instinct is to preserve the normal running of things, which is after all the condition of its existence as a parliamentary party.  Non-voters will not start voting any time soon.

So, farewell to the Party of the Working Class. And a warm welcome to its no doubt short lived successor: The Party of the Anxious Middled-Aged White Person Who Is Marginally Less Comfortable About Greed Than The Average Tory.

Greek Myths

"Pantomime villain" Wolfgang Schauble, the German Finance Minister, with German Chancellor Angela Merkel

A cheap title, I know. But how else to label this typically storied European drama? The Greek people voted for an anti-austerity government of the left in January, and European leaders have been grappling with this alien concept ever since. In secret, I imagine, they see it as the primest vulgarity. But of course nicety prevents them saying that. So how have European leaders chosen publicly to address their Greek "partners"?

Thus far the Syriza government in Greece has made every payment it promised. It has been honest about the fact that its upcoming June payments are simply unaffordable under current conditions. It has stated clearly its intention to put Greek salaries and pensions ahead of debt repayments. This is a fairly straightforward, practical commitment that Syriza leaders have made repeatedly. Little they have done has suggested uncertainty on this and other red-line issues. And indeed what creditor could reasonably expect otherwise?

Why, then, do magazines like the Economist so love to report Syriza's apparent flightiness and naivety. "They are living in cloud cuckoo land," one typically anonymous Brussells official lamented. Having damned them from the start, the Economist now relishes Syriza supposedly throwing their chance away. The stated problems are always inexperience and the supposed misplaced idealism of radicals: "A few years ago many of the men now in charge spent their time discussing the contradictions of capitalism over coffee and cigarettes. Few had ever run anything, let alone a government." This assumes experience of past Greek governments should somehow recommend you be allowed anywhere near a new one. 

European Central Bank head Mario Draghi - the humane face of the Troika - often pops up to remind us how unbearable the situation has become for Greece and how dangerous events are for the world economy. Draghi refuses to contemplate a Greek default, whilst reassuring us it is "up to Greek leaders to do as they want." Meanwhile, the world largely forgets it was his organisation that disabled the cash to finance Greek borrowing a few weeks after Syriza's election victory (leaving the state reliant on more expensive emergency liquidity). By what interpretive flourish can the central bank of a currency union opportunistically strangulating liquidity in its most troubled country be conceived as unbiased? And this at the very moment ECB liquidity became free to slosh around the rest of the deflationary eurozone in the form of much-belated quantitative easing. No such monetary laxity for Greece though: they were cut off from these funds, as they are forcibly cut off from markets by eurozone policy in general. The virtues, then, of a famously "rule-bound" system are somewhat undermined when those rules happen to be deeply unfair.

Syriza's leadership has occasionally pinned its hopes on German Chancellor Angela Merkel, who, it was hoped, might intervene like some benign monarch against her petty technocrat-courtesans and for the wronged Greeks. In pre-political life Finance Minister Yanis Varoufakis once hoped Merkel would look to her legacy as a Kohl-like unifier. Instead she spins homely truisms about compromise when she does not stay silent altogether. “It was a very friendly, constructive exchange, but it’s clear that there is still a lot of work to be done with the three institutions,” Merkel said recently of a "gate crashing" Alexis Tsipras, the Syriza Prime Minister. “France and Germany are always willing to give help…but the agreement must be sealed with the institutions and some very, very intensive work has to be done.” What intensive work can possibly be left? Syriza has ditched its promises on debt a write-off - the very thing that supposedly represented such a threat to European order. The effective remainder of its Thesaloniki program amounts to not re-firing 4,000 civil servants and continuing to make pension and wage payments at current rates. Perhaps it would be worth asking the partners if they could live on a Greek pension at the present rate, let alone following the cuts they are determined to inflict.

France and Italy, meanwhile, were meant to be left-of-centre allies. Here, I will admit, is evidence of Syriza's naivety: Europe is a continet that has long since proved that, on questions of basic human welfare, it speaks with one stern voice. Some things - an ever broadening spectrum, in fact - go "beyond left and right." Initially there were murmurs from French President Francois Hollande about Syriza's "unique responsibility." Not one to buck dwindling trends, however, Hollande fell quickly back into line. “We all have the same stance which is that Greece must stay in the eurozone," Hollande recently said. 

Here really is the rub. Greece must stay, as much for the total humiliation of Syriza the staying implies as any commitment to eurozone stability. For if anybody currently leading the eurozone was really committed to the Ordoliberal-lite that passes for common sense, the whole farce would have choked itself to death a long time ago. Instead their commitment is to the preservation of the peculiar domination European monetary union gives them. This, in the end, is all about politics.

The pantomime villain of the piece has to be German Finance Minister Wolfgang Schauble, a rabid and unreconstructed austerian who considers the thrift of Swabian housewives the model of macro-economic prudence. Schauble has the nasty whiff of a man totally unused to authority being questioned; the type to fight unexpectedly dirty when he sense the tables turning. The viperous, cloak-and-dagger air of negotiations - especially towards Yanis Varoufakis - seems to have come especially from him. The ennobled technocrats of European order may have a cruel streak, but few are so bullish with it. "Elections change nothing. There are rules," Schauble once said. Why, then, does Germany get to undercut the ECB inflation target year after year, while its trade surpluses run dangerously high? The truth is Schauble could not give a damn about any rules that do not suit his view of German success. Elections will indeed fail to change anything if he is allowed to continue punishing whole countries for the actions of his own banks. 

"The Greeks will have a hard time explaining this to their people," Schauble scoffed after the February deal, ever the diplomat. The problem, of course, was that this was a bridge agreement to buy the parties more time. A classic European fudge, energetically spun by both sides. The surprise was simply that Schauble was so blatantly using the deal not to sell compromise - or indeed an honourable defeat of his Greek "partners" - but as pure humiliation. If anyone is sanguine about Greece getting off his back, it is Schauble. But we should nevertheless conclude, given the tolerance of his antics by the Europeans, that his aggression fits well enough with the over all strategy.   

In response to Schauble's constant maneuvering, Vaorufakis deftly opted for a statement of the obvious: "[He] has told me I have lost the trust of the German government, I told him I never had it. I have the trust of the Greek people."  

The list of villains goes on. European Commission Jean-Claude Juncker warned the Greeks there could be "no democratic choice against the European treaties." Thus the default of position of European elites towards integration - past and present - was baldly stated. Later he remonstrated with them: there was more than one democracy in Europe to consider. Not if this career-long devotee not only of the high architecture of EU treaty-formation but of Luxembourg's power to make economies less equal and more secretive has anything to do with it. Juncker spent much of his tenure as Luxembourg's prime minister ensuring its became Europe's foremost tax haven, fit even for the likes of Bernie Madoff. Juncker is in no position to lecture anybody about the balance of democratic interests. Let us say, however, that if it is Greeks who are asked to bear the burden of extortion over debts they never asked for, their democratic voice might count for more than, say, the priggish, surplus-endowed Dutch.

The crux of the matter has something to do with surpluses. For it is neither European Union principle nor cold economic reality that repudiates Syriza's efforts. In a past age the Greek plan to cheapen government borrowing by the central bank; to encourage private activity via public investment; and to lessen the load of recovery through tax cuts would not simply have been acceptable but expected. To not follow such basic economic common sense would have been thought madness. But times change. 

The eurozone is a product of the peculiar position of Germany in the global economy, a position that combines both elements of subservience (to the dollar and to the whims of American consumption) and of dominance (in the form of the power of its exports, its low inflation and now long-term balance of trade surplus). In the end the German position forces German workers to bear the brunt of wage repression while private firms benefit from the lowering of transaction costs across the currency union and the boon to exports that is a gift not of productivity growth but of "internal devaluation." Germany systematically undercuts ECB inflation by repressing wages. The results are profits that can be retained and recycled into poisonous forms of credit, subsequently dumped on the periphery. French banks have long since been active in this too. Hence it was these banks that needed bailing come 2008; and they who stopped lending, drying up liquidity to vulnerable countries like Greece, who were now trapped in the single currency and could not devalue to regain competitiveness.

This arrangement - especially for the surplus countries of northern Europe, but also for France - has cemented the position of a very stable power bloc. German medium and big capital and its political wing - Merkel's Christian Democratic Union - have had an unprecedented run of stability and profitability. Financial capital, meanwhile, benefits from the toll taken on debtors by the deflationary eurozone and the strict rules it imposes on borrowers. Germany exports not only goods and services, but the German export-competitive model - a harrowing neo-mercantilism - to the periphery, whether they want it or not.

Syriza's position in the negotiations has faded not because of their inexperience, but because of a failed war of attrition in which the other side will not budge. Meanwhile, European leaders and their phalanxes of officials and media acolytes call for further compromise from the Greeks. However, it is not the Syriza position that is beset by contradictions. They have made a very simple moral and practical argument: the debt is unpayable under present conditions and they will not forcibly starve their own people. It is in fact the worldly-wise and supposedly disillusioned Europeans who are full of fantasy and, underlying this, contradiction. For in their efforts to export the model by which they have tightened their grip around Europe's throat, they are destroying their own "rules-based order." This along with countless lives. In the end, their attempts to keep power will be revealed for the class warfare they are.

They may yet strangle this challenge; but Europe will not return to normal.              

Stop exploitation of unskilled labour... by confiscating wages!

I am sure plenty of people who didn't vote Conservative have had this feeling in the last fortnight, but then perhaps not. It is like having your head slowly but firmly submerged under water as you nod glassy assent. Dim and distantly through the water, dull Muzak further soothes you, an affectless, martial swing burbling interminably. You think vaguely of twisting or writhing, but there's nowhere really to turn.

It was that feeling that came over me today as David Cameron talked warmly across all news outlets about a few little things he plans to pop into the Queen's speech this year. Just a few treats as thanks to the public for his surprise majority.

The government would, he promised, tighten up the law - hardly lax now - on illegal earnings. Illegal in the sense of being earned by people without legal work permits, mind. Nothing about tax. That can wait. These illegal earnings are made by the dreaded "unskilled" - those sleepless undead yawning out of the scorched Krajina and intent on devouring our beleaguered benefits system. Fortress Welfare looks on and trembles.

Cameron will provide the police with sweeping powers to confiscate the wages of the lowest paid and most vulnerable people in the country. Never mind the gang masters. Never mind the traffickers. Never mind decent labour market regulation or the living wage. We need to "make Britain a less attractive place to work illegally." It will soon be such a noxious swamp that he might just get his way.

The logic of Cameron's position is basically simple: there is nothing you can do about employers, but you can punish workers. In his experience, the poor saps will basically take any shafting he can throw at them. It is probably mildly bemusing, but he is hardly going to question it. The PM has also had alarming fits of economic illiteracy in the past - like the time he politely suggested all indebted Brits pay off their credit cards at once. Never having wanted for much, perhaps it doesn't occur to him that demand is something that can be effectively stamped out when people have no cash. Here it is similar: apparently immigration puts a strain on welfare. No, it doesn't. Immigrants - like them or not - contribute more than they take out, by the billions. Unemployment and low wages put a strain on welfare because both reduce the government's tax intake.

Surely the Queen - lovely old dear that she is; that definition of haute bourgeois civility - won't swallow it? But what if even the Queen wants to send them home?

This nasty consensus is not just nasty - it is also a farce. Attacking immigrants and/or the 'elites' who cater to them is a sort of wilfully blind fury, in which everyone gets to be angry and at the same time avoid taking real action. It is a fetish. Belief that immigration is an apocalyptic force allows people to simultaneously conceal and revel in their own political impotence. It is nihilism dressed up in vaguely Chiliastic, cultish frenzy. And I suppose that dull ringing in my ears stems from the same place.