The Greek Job

(or: No war between loan-sharks, no peace between debtors)

The current crisis in the European Union is perhaps the greatest in its history. It is also exposing flaws in the basic principles of capitalism, one of them being that it degenerates into chaos whenever it is allowed to ramble on without the strong intervention of political bodies. At the moment, the main battle line in the Greece Affair is whether the Republic should honour its obligations to its creditors to the letter, or whether there should be some leeway in repayments.

A while ago, in his essay “A Few Notes on Culture”, Iain (M.) Banks wrote : “(The free market) might provide a perfectly morally satisfactory resource-management system so long as there was absolutely no question of any sentient creature ever being treated purely as one of those resources. The market, for all its (profoundly inelegant) complexities, remains a crude and essentially blind system, and is intrinsically incapable of distinguishing between simple non-use of matter resulting from processal superfluity and the acute, prolonged and wide-spread suffering of conscious beings.” Without question, what is happening today is one of the bluntest and most exemplary illustrations of Banks’ claim: if we considered human labour, human beings and their destinies to be just another resource, eligible for exchange for other resources, this would be a non-issue. Simply, money has been loaned and spent and a payment plan has been agreed to. What the Greek government is asking is a dangerous precedent to the stability of the monetary system that represents the basis of modern Western – and not only Western – civilization. Some leniency has already been shown and, if more is given, every major debtor in the future will be able to point at this example and ask for the same treatment. Those billions weren’t slurped by some anonymous bunch, they were received and spent by the legitimate government, elected by the people, with the full authority of the State and subject to regular rules of the game, rules that have been written down and acted out for centuries.

Or was this really how it happened?

One point made in a paragraph described above is definitely true and nobody can argue about it: that the money changed hands according to the several-centuries-old rules. However, different people may disagree about which rules exactly have been applied: of straight international finance or of bribery and racketeering.

Formally and legally, the loans were made by the Republic of Greece. Therefore, it is only natural that the Republic of Greece returns this money. However, if inspected a bit more thoroughly, the whole case shows strong elements of an elaborate high-level scam. To reveal beyond any doubt whether this has indeed been a scam or not, some very detailed analysis should be performed. However, this goes far beyond the scope of a transient blog post, so, instead, I’ll simply ask some questions. For example:
– For what purpose were the loans made in the first place?
– Where did the money go? Namely, was all of it used for the specified purposes or did some of it take a slight detour to private accounts?
– Was there a serious – or any – risk-benefit analysis done by the creditors? Did they really make any projections about the likelihood of getting their money back or did they rely on the international financial and political mechanisms to force it out of the debtors, no-matter-what? Were they aware that Greece has been in serious debt more or less forever and that loaning further money would only increase the improbability of getting a return – ever?

If we look at all these issues more closely, it turns out that there is no real difference between those international creditors and local loan-sharks who give you a loan, knowing that you desperately need the money and that you won’t be able to repay it, only to take your house away from you and, in the end, make a juicy, fat profit. This is especially clear if we take into account the fact that a quantity of those loans were spent not on any kind of economic and socialdevelopment projects, but on actually buying military equipment from those same creditors. Additionally, it was clear that it wasn’t the administrators who arranged those loans from the Greek side who will have to repay them, but some hypothetical government in the future and, in the end, the people.

If that doesn’t have “scam!” written all over, I don’t know what does.

An additional question remains to be answered: is it possible that, somewhere among all those billions changing hands, some of them were used to grease some palms in order to soften the deal? We know that the Brussels administration is not known to be the most honest in the world, huge military equipment sales bribes have been a matter of court investigation in at least three EU countries in the last few years and, as is usually the case with corruption, whatever is uncovered at any time, is always only the tip of an iceberg. It will probably never be known what proportion of “bad loans” made to Greece were only a result of simple mismanagement, how many were the result of plain corruption, and how many the result of greedy investors seeking to increase their capital regardless of risk. What is definitely true is that the Tsipras government is going in the direction that is one of the few modern acts of rebellion against the inorganically cold global system that worships the rules when they preserve its interest, but cries for exemptions, activation of political safeguards and government help when its own short sightedness sends it to the brink of the abyss. Furthermore, the creditors’ stubbornness about insisting on the repayment of the debt (not applicable in some other cases) and their intrusive demands on the Greek social welfare system show that they are indeed the representatives of the “crude and essentially blind system” that needs to be controlled.

Roughly one and a half century ago Karl Marx predicted that capitalism will, first, cause the demise of the middle class and, after that, end up in a general collapse while trying to devour its own tail. During the second half of the 20th century this prediction was cited as a proof that he was talking rubbish because, as was obvious, the middle class was flourishing. However, capitalist ideologues failed to recognise that the absence of this middle class decline was due to political measures aiming to stave off the attractions of communist ideology. However, when the Eastern Bloc fell, this Spectre of Communism disappeared, the political will to control the forces of capitalism faded, allowing “natural processes” to take their course. It didn’t take long for Marx’s prediction to start coming true and, in its next stage, for the capitalism to start devouring itself, beginning at the edges. In this context, the Greek Job is a logical outcome with logical consequences: the snake may want to swallow its tail, but if the tail does not want to be swallowed, a conflict ensues, at this particular moment leaving the economy of both Greece and, to a much lesser extent for now, Western Europe, teetering like a bus on the edge of a cliff.

What is abundantly clear is that this crisis will not be solved by blindly following the repayment conditions (because that didn’t work in the past few years) nor by the economic reform (because it would impose a strain the population would not be willing to accept, even if successful, which is far from guaranteed), but by some strong political decision making. The destiny of the West depends on those decisions: if Greece is forced to succumb, the snake will continue its swallowing forward until some other, stronger part decides to resist. What remains to be seen is how much damage will happen by then. It would be best for all that the transition to post-neoliberal capitalism happens as soon and smoothly as possible, without the need for a systemic collapse as the spur to action. But if that doesn’t happen, the chaos that is unravelling in a small country at the edge of Europe today may come knocking on everybody’s door tomorrow and then we will be able to fathom the true meaning of the term interesting times.

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