By Michael Burke and John Ross
The Greek people have inspired every progressive force in Europe, and beyond,
by electing the first anti-austerity government in Europe. Syriza has similarly
inspired every progressive person with the great political skill with which it
outmanoeuvred the forces in Greece and Europe who attempted to scare the Greek
people into not voting for it. As Alexis Tsipras said immediately after its
victory Syriza has opened up hope for the Greek people – and many others as
The key question now is how to turn hope into reality.
Syriza has outlined clearly its orientation – which should be supported by
every progressive force. Syriza has said it is not seeking to exit from the
Euro. It wants Greece’s unpayable and unjust debt renegotiated. The immediate
priority of the left throughout Europe must be to organise support for this
demand of Syriza during the coming negotiations. It is to be welcomed that not
only the political left but also far wider groups arguing for a rational
economic policy support this course – including eminent figures in their
profession such as Nobel Prize winners in economics Joseph Stiglitz and Chris
Pissarides. All efforts must be redoubled across Europe to gain support for the
renegotiation of Greece’s debt – a course which corresponds not only to the
interests of the Greek people but to the interests of rational economic policy
across Europe, and therefore to the interests of the people of Europe.
Whether or not these negotiations succeed, however, the new Greek government
is faced with key choices in economic policy. This is even more the case as, if
the economic policies of the new government do not succeed, sinister forces that
failed to win this election will seek to turn Greece backwards.
The first and immediate priority, of course, is to reduce and eliminate the
appalling humanitarian suffering imposed on the Greek people by the austerity
policies. Creating jobs, raising wages, restoring pensions, recreating the best
possible social security are the top priorities. As always politics must take
precedence over economics.
But to sustain the improvement in the living standards of the Greek people it
is necessary to relaunch economic growth. And the key to economic growth is
necessarily investment. Without rising investment an economy cannot grow.
Under the conditions of Greece it is even more unrealistic than normal to
rely on the private sector for investment. It is the collapse in private
investment which has driven economic collapse in Greece and economic recession
across Europe. Since 2007 Greece’s GDP has fallen by €57bn of which the bulk is
the fall in investment at €36bn. The only way to secure economic growth is
therefore to embark on a programme of state investment. Those countries which
have used state investment as their key instrument to promote growth have
enjoyed outstanding success – for example Ecuador, Bolivia and China.
In a country such as Ecuador, which has enjoyed 5% GDP annual average growth
over 10 years, real incomes per capita have risen by over 2% a year, and 10% of
the population has been lifted out of poverty. This has been driven by state
investment which has now reached 15% of GDP.
Economic growth, led by state investment, will in turn create the conditions
under which the private sector will begin to invest again.
A key economic task is therefore to assemble the finances and practical
programmes which can begin such a programme of state investment. State spending
to improve the immediate living standards of the population is necessary but if
it is not accompanied by measures to increase investment it will not lead to
economic growth, making it increasingly difficult to sustain the popularity of
Under normal circumstances the immediate resources for such an investment
programme could come from borrowing – which can be cheap in the present interest
rate conditions in Europe. A budget deficit divided between immediate measures
of social welfare and measures of state investment would be financed by this
borrowing. But the agreement with the Troika prevents the Greek government
turning to public borrowing. A key goal in any negotiations must therefore be
for the Greek government to regain the right to borrow not only for social
welfare but for investment.
While borrowing is the rational way to speedily launch social welfare and
state investment, it is entirely possible to finance these programmes through
overturning Greece’s corrupt and inefficient taxation system – one designed
solely to prevent the rich paying their proper share of Greece’s taxation. As
rapidly as possible a fair and efficient taxation system, capable of funding
both social welfare and investment, must be created. Borrowing would be the
transitional measure until the time such a taxation system can be put in place.
These measures will become even more necessary if, as is very possible,
forces within the EU and IMF attempt to block Greece getting the debt reduction
which is required for any rational economic policy. The obstruction of these
forces will be all the greater because they will consider not only the situation
in Greece but they fear the risk of ‘contagion’ – that debt relief for Greece,
and success in its anti-austerity policies, will inspire others in Europe to
challenge the policies of austerity which have led Europe into a dead end. Here
the British government plays a wholly negative role with Cameron and Osborne
both criticising Syriza’s victory. As politicians who rely most on the finance
sector, this role is hardly surprising.
Very difficult choices will of course be faced by the new government in
Greece in the negotiations, in its economic policies if the negotiations are
successful, and in the case that forces of reaction in Europe block the
successful outcome of these negotiations. All the skill which Syriza has shown
achieving the support of the Greek people, without which nothing can be
achieved, will have to be shown even more in carrying out the necessary economic
policies. If the immediate welfare of the people is not secured, and if state
investment is not created to restart economic growth, a way out will not be
Studying the economic policies of Ecuador, Bolivia and China will give ideas
as to how aid in constructing such programmes.
Before all else, while the new government of Greece deals with key economic
and other issues which confront it, the widest possible forces across Europe and
the world must campaign with all their strength to ensure that the legitimate
needs of the Greek people are met in the coming negotiations. The greater the
success of this campaign the greater will be the chances of success for Syriza
and the hope it represents first of all for the Greek people but also for every
progressive person in Europe.