Chris Hedges and Leo Panitch: We are All Greeks Now

Yves here. While there is a lot of good material in this interview, I take issue with a few of the remarks. There’s a tendency to place the Syriza government in a Manichean frame, as the aspiring heros who fought the evil Germans. In keeping, Leo Panitch depicts Syriza as a sharper break with past corrupt government than it proved to be. Syriza could have cracked down on the medial oligarchs virtually as soon as it assumed office but failed to do so. Informed sources say that the new government held off because the media outlets started giving the party favorable coverage. Syriza was similarly unwilling to take on another powerful domestic organization, the military, refusing to cut the armed forces budget until the IMF pressured the ruling coalition to do so. Similarly, Panitch says that a humanitarian relief program that Syriza implemented over Troika opposition has done a great deal of good. That may be true, but the government did not move quickly with implementation. Panitch gives the impression the program started in February. In fact, it was passed in March and the government was still accepting applications in May.

The flip side is both Chris Hedges and Panitch stress points we made often as the negotiations were underway: that Greece had limited national sovereignity and had chosen to cede some of its powers to EU and Eurozone institutions, and that it was in a weak bargaining position by virtue of needing certain critical imports, namely, food, pharmaceuticals, and petroleum.

CHRIS HEDGES, HOST, DAYS OF REVOLT: Hi. Welcome to Days of Revolt.

We’re filming part two of our discussion with Professor Leo Panitch, who wrote The Making of Global Capitalism here in Toronto. And we’ll be looking at the political war that is being waged by the international banking system and the neoliberal elite against all of us, but in particular Greece, because Greece is on the front line, and much of the mechanisms that have been used to control Greece from the outside are mechanisms that are intimately familiar to the rest of us.

Professor Panitch, thank you.

LEO PANITCH: Hi, Chris. Glad to be here.

HEDGES: So July 16, the Greek Parliament–I know that you will take issue with Tariq Ali’s assessment of this, but in his words, gave up its sovereignty to become a semi-colonial appendage of the E.U.

PANITCH: I was there on July 16. I think that’s misleading, insofar as Greece did not have full sovereignty before July 16, and I’m not sure what states do, perhaps except the American Empire, and to some extent Germany within the European Union. You can even say Greece hasn’t had full sovereignty since the defeat of the left at the end of World War II.

HEDGES: Right, with the Greek Civil War.

PANITCH: And not that it would have had, had it become a part of the Russian Empire, either.

HEDGES: Right.

PANITCH: It’s obviously the case that every state within the European Union, especially the European monetary system, has given up a portion of its sovereignty, of course, give the balance of power within the European Union. That means a lot more for states in the southern periphery, and that was most evident for Greece after the crisis of the euro erupted in 2010. So, no, I don’t feel that they gave up their sovereignty suddenly as of that day, and I think that the new government elected at the end of January was well aware in the strategy it was attempting to see through successfully that it could only be successful insofar as it could achieve its end is within this shared sovereignty that is the European Union.

HEDGES: But it is a kind of extortion, in this sense. The international banking system and the E.U. know that they could destroy, easily destroy Greece, which imports hundreds of tons of food–I don’t know why–from Western Europe. They should be able to grow their own. They owe European drug companies $1.2 billion, which meant that if they walked away from the euro, they would essentially not have credit. They wouldn’t be able to get–they already have drug shortages in hospitals. Sixty percent–people are saying 50 to 60 percent unemployment among the youth. Pensioners have had their pensions cut by 27 percent. I mean, physically Greece is disintegrating, Athens is disintegrating.

And what they really–the message that was delivered–and it’s why I have a certain sympathy, and as I think you do, for SYRIZA–is that if you walk away from this deal, you’re going to end up like Allende in Chile or Fidel Castro in Cuba, which is fuel shortages, bread lines, power outages. Those are the weapons they have. And this has led the former finance minister, Yanis Varoufakis, to say that in essence the banks function in the same way that tanks did in the 1967 military coup.

PANITCH: As a general proposition, I think that’s absolutely correct, and I think that, as we were discussing in our last conversation, the nature of imperialism today is such that it is financial power and the state institutions that manage financial power that is actually more important.

HEDGES: Well, that’s the point of your book.

PANITCH: And I think Greece shows this.

HEDGES: Right.

PANITCH: What has taken place in the Greek case is that the enormous debt that the Greek state owed to German and French banks primarily was paid off to those banks with loans that were made to Greece by the institutions, by Europe, and by the European states.

HEDGES: Well, let’s go back, though, a little bit, because–.

PANITCH: It looks like that money came to Greece and would be used by Greece, but of course it didn’t.

HEDGES: It didn’t. [crosstalk] It circulated. Right.

PANITCH: What happened was that in the American case TARP was used to bail out the Wall Street banks directly. In the European case, with the Germans’ false propriety around moral hazard, they weren’t going to bail out the banks directly. They forced Greece to bail out the banks. And they were carrying the burden of the debt by virtue of bailing out the Deutsche Bank.

HEDGES: Right.

PANITCH: This is scandalous, of course. In ethical terms, it’s appalling. But–and this is what also SYRIZA needs to be congratulated for is that SYRIZA understands very well that the corrupt and clientelist Greek state, for the most part run by a social democratic party at the time that did this, the PASOK Party, got Greece into this situation. They joined the euro. It got into the type of arrangements in the European Union, the equivalent of NAFTA, whereby on the basis of very dubious projections, Greek agriculture got integrated into European agriculture. We now have mountains of peaches rotting in Greece. Right?

HEDGES: Right. Well, this was Goldman Sachs, who comes in and helps the former Greek government cook the books.

PANITCH: Also cook the books.

HEDGES: So that they can get into the euro. And also I think what’s often overlooked is the deep corruption that was running between the former Greek government and European–in particular the arms industry. So they were spending, I think, 3.5 percent to import all sorts of mechanized units that they didn’t need and taking all sorts of kickbacks. So there was a collusion–

PANITCH: Of course.

HEDGES: –between a very, very corrupt Greek government and a very corrupt financial and corporate concerns in Europe that got Greece into this mess. And it was masked or hidden by Goldman Sachs.

PANITCH: Yes. But if I may say so, Chris, there’s a deeper problem than the corruption that Goldman Sachs or the arms industry are involved in. The deeper problem is (A) that the Greek state has been clientelist and corrupt going back to the 1830s. Secondly, that Greece got involved, as all of our states have, in the development of free trade and free capital movements over the last 20, 30 years.

So the result of joining the European Union, leave aside the euro, the result of joining the European Union is what you pointed to, the irrationality, right, of specializing in peaches rather than diversifying an agriculture to meet the food needs of the Greek people.

HEDGES: This is what’s happened in India.

PANITCH: They’ve lost their furniture industry. You have a hotel industry that serves tourism. It’s its largest export, larger than olive oil and wine. Well, the furniture industry used to provide the furniture to Greek hotels. That furniture industry was wiped out through the European Union. So when people simply say the problem is getting out of the euro and going to the drachma, they are feeding an illusion that economy could not survive with the drachma. It would need the kinds of protections, the import controls, the capital controls, etc., that would allow a broad-based type of reconstruction of production and consumption inside Greece to take place, which cannot take place within the common market of the European Union.

HEDGES: And this is by design. So, I mean, you’ve designed a system that, as you correctly point out, cannot sustain itself–

PANITCH: That’s right.

HEDGES: –unless it gets this kind of infusion.

PANITCH: Right. The difficulty is that unlike Cuba, where the majority of people were subsistence peasants in 1959, the vast majority of Greek workers had rising standards of living during the 1990s, and indeed the first decade of the 2000s, and they became full–I remember lineups of masses of people trying to get into the stock market when it was opened up.

HEDGES: Right, but it was an artificial wealth.

PANITCH: Of course. I mean, this is the nature of the problem. But the degree of integration is such that if you try to pull out of this system now, most people aren’t sure that they want to take that risk. And this makes the politics of this so very, very difficult.

HEDGES: Well, there’s no question that ultimately this is not sustainable. I mean, there’s no dispute about that.

PANITCH: No, they all know this. They all know this isn’t going to work. And in fact not only the IMF says this very openly–Schäuble, after all, the very right wing German finance minister, came to that last set of meetings and said publicly what he felt all along, which is that Greece should be out of the euro.

HEDGES: Well, didn’t they try and–.

PANITCH: He had said to Varoufakis, how much do we have to pay you to get out?

HEDGES: Was it 50–wasn’t it $50 billion they were going to give him to walk–.

PANITCH: To get out.

HEDGES: To get out.

PANITCH: Right? Now, the Germans are mainly concerned that the European Central Bank act like the German Bundesbank, that is, treat inflation as the only problem, unemployment as no problem, and above all protect the euro as though it was the Deutsche Mark. So it’s designed to facilitate German exports. That’s their main concern. So if Greece is in the euro and it’s causing a problem in that respect, they want them out. The deal that was done that terrible weekend after they won the referendum was based on this.

Finally, the social democrats around the table, above all Hollande, said, okay, we ought to give Greece a little more room for maneuver. Obama was finally putting pressure on–he should’ve put way more on than he had. Schäuble came to that meeting and said, we want the Greeks out. And instead of the negotiations being around how much room will we give them to maneuver, the negotiations became around how do we keep them in and what form of draconian words in the memorandum became the way they bridged that difference.

HEDGES: But why? I mean, if it’s not sustainable–and I think there’s almost no dispute that this ultimately is not a sustainable arrangement–what’s going to happen? Why keep them in?

PANITCH: Well, it’s moral hazard. It’s designed to show, as most IMF structural adjustment programs, which also never really work, are designed to show that people need to subject themselves to the discipline of financial capital, as you were describing it.

HEDGES: Right.

PANITCH: That doesn’t say it’ll actually get implemented, but it sure puts the fear of hell into people.

HEDGES: Well, is this done in essence to send a message to Portugal and Ireland and Spain and–?

PANITCH: And it has the effect of dividing SYRIZA, one of the most impressive new parties of the left that’s emerged over the last 20, 30 years. That’s very much intended.

HEDGES: Well, in that sense what’s happening in Greece has nothing to do with economics. Isn’t it a political [crosstalk]

PANITCH: Oh, absolutely, it’s absolutely political, although a lot of the people who are doing it think like accountants and they see that the state system is structured in capitalist ways. But they don’t think of them as capitalists. So if you say I’m going to tax profits rather than food, they say, well, I’m not really sure you’re going to be able to get enough revenue out of taxing profits. We don’t know what the rate of growth is going to be. They can hire accountants and lawyers to get out of paying taxes. We know that people need to eat. So put the tax on–a sales tax on food.

HEDGES: Right. Well, that’s–Ward Churchill called them little Eichmanns, I think.

PANITCH: Yeah, exactly.

HEDGES: It’s just about making the system work.

PANITCH: Yeah. Hannah Arendt understood it in a lot of ways.

HEDGES: Right. It has nothing to do with whether people actually are malnourished or not,–

PANITCH: Exactly.

HEDGES: –which–I can’t remember the figures, but, I mean, the number of–at this point we’re talking about malnourishment as a real phenomenon within Greece.

PANITCH: Yes. And one should remember that–and I don’t think that they will renege on this, although the memorandum requires them to–the left is screaming they have already; they have not, and I don’t think they will. The humanitarian stuff they introduced immediately in February, right after they were elected, has not been pulled back, and it’s had an enormous impact on the people who are suffering the most.

HEDGES: What does Greece tell us about the world we live in?

PANITCH: I think it tells us that reform in the 21st century, in terms of the old debate about reform versus revolution, is probably no longer possible within capitalism. Those who had an ambition of humanizing capitalism–and most of the American left, the more North American left, including the Canadian left, has had the impression that Europe represents a more humane variety of capitalism.

HEDGES: Let me just interrupt there to say an important point that you’re well aware of is that the representatives of the left, including the NDP, which may win the Canadian election, were entities that were created to supplant the radical left, just as the NAACP was created to counter the Communist Party and that much of what represents the left within the United States, and even in Canada, is already an accommodationist–

PANITCH: Yes, obviously.

HEDGES: —entity.

PANITCH: But the NDP gives the impression–and runs on this–that the European Union is evidence of a viable, humane, egalitarian capitalism that can be both competitive and just, that can meet the neoclassical standards of capitalist efficiency and be egalitarian. This is an illusion. It cannot. It’s not been true of the European Union. The claims about it that are made by the left in Europe and in North America are incorrect. The European Union is on the same neoliberal track. It has neoliberalism in its DNA. And this means that the room for reform, as it was understood in the 20th century from the New Deal on, from the welfare state on, the room for that is very, very limited.

HEDGES: Well, you make the point in the book that the–if you want to call it the humanization of neoliberal economics was caused by fear, fear of a revolutionary movement. And as we said in the first segment, you quote Roosevelt, who uses the word. And the eradication of that counterweight essentially allowed neoliberal economics to become purely predatory and destroy the liberal mechanisms that once made piecemeal and incremental reform possible, because I think, as you very correctly say, without that counterweight, there’s no impetus for any kind of reform.

PANITCH: Yes. But the situation now is actually more problematic. Because of the strength of labor movements and because of their support for social democratic parties and the Democratic Party for a certain period in the United States, where it had some effect, you won those reforms, but those reforms ended up screwing up capitalism. It is indeed the case that when workers aren’t fearful, when they live under conditions of full employment, they make demands which do impinge on the dynamism of capitalism and on its efficiency.

Now, so it isn’t just a matter that bad guys didn’t like this, unethical people, immoral people didn’t like this; the system wasn’t working by the crisis of the ’70s. And insofar as it wasn’t working and the left wasn’t able to move beyond those reforms, including all the unions, to get beyond those reforms, which where accommodations to capitalism, as you said, to actually a new set of social relations, a new way of producing and consuming through democratic economic planning, sure, the room was then opened for those are saving the system.

HEDGES: Right. But it was the capitalists that created those quote-unquote reformist [crosstalk]

PANITCH: It was capitalist-created, but it was also the left’s failure. And it is the left’s problem today that when we say there isn’t room for reform, well, what does it mean to say we need a revolution in the 21st century?

HEDGES: Well, that’s a good question, because we’re all Greeks now and we’re all having austerity rammed down our throat. We’re reconfiguring the global economy into a kind of form of neo-feudalism. So what does it mean to have revolution?

PANITCH: Well, that’s why I think that those of us outside of Greece should be very modest about attacking SYRIZA for having caved, betrayed, etc., etc. This is damnedly difficult. We need a lot of modesty. We need a lot of careful thought. We need to build–it took 30 years to build what SYRIZA became. We need to have the kind of long-term perspective to build the types of organizations that need to go beyond what SYRIZA is.

HEDGES: But you’re talking about revolutionary organizations, right?

PANITCH: Yes, but I don’t know that that necessarily has to mean insurrectionary ones. One of the things that the left needs to learn from the 20th century is that the way the left beat itself up then over reform versus revolution often meant insurrection versus parliamentarism, rather than–and insurrection didn’t necessarily lead to anything all that damn good either. So I think we need to get past that old debate and reformulate it in new ways. That’s a topic for another interview, probably.

HEDGES: Well, what does that look like?

PANITCH: Well, I think, as opposed that old debate, I think we need to try to find ways of doing electoral and parliamentary politics which have revolutionary implications. I think that means linking up, is SYRIZA did, to the social movements in a way that overcomes what has been the anarchism of the social movements, the anti-party orientation of the social movements.

HEDGES: Right. Well, you build movements. I mean, revolutionary movements traditionally build movements that have a political expression.

PANITCH: Yes. And–.

HEDGES: But the movements are paramount.

PANITCH: I think that’s right, although what was the case at the beginning of the 20th century, when syndicalists and anarchists were very anti-party and had a notion that what revolution was about was doing away with state, you saw that again at the beginning of the 21st century, after the–given the disappointments with the communist parties and the social democratic parties and the Democratic Party. You saw a strong anarchist current on the left, which was oriented to street protest. And while I think that was marvelous and impressive, you can protest forever and you won’t change the world, unless you get into the state and transform it.

Therefore we need the type of left that puts a lot of thought and a lot of preparation into how do we democratize the state, how do we build up people’s capacities to link up with that state, to change in their local communities the ways that they relate to each other in production and consumption. One of the defects of SYRIZA, the main one, I think, is that they weren’t organizing with the solidarity networks to develop alternate plans for, say, transforming Greek agriculture so you didn’t have the mountains of peaches and you weren’t dependent on your European food subsidies that produce these mountains of peaches. That I think was what SYRIZA needed to develop much much more. And that’s what I criticized the before.

HEDGES: And that is true, for instance, within the United States or Canada or anywhere else, where it is about returning to a kind of local autonomy–you see it with the food movement–so that you can in essence break the back of these centralized forces that distort the economy to create particular cash crops and mono crops and everything else. And so, in many ways that’s the big question: does it really begin almost at the grassroots, where you transform your own town, your own society, your own village, local currency, and then does it drift upwards?

PANITCH: I don’t think so. I think one needs to look at it, if I may use this word, more dialectically. I think that can’t take place without at the same time changes being made at the national level, because for one, certain local areas that have more resources than others will be better positioned than others. But secondly, very little can be done at a local level unless changes are simultaneously made at higher levels, given the degree of integration of the local into the global. So I think it’s a simultaneous thing. Moreover, I don’t think that the type of politics, depth of politics we’re talking about is generated just at the local level. I think it requires national political parties who take the responsibility of developing at the local level the capacity to think of alternate ways of production at that local level, which is not merely selfish, and think of forms of representation from the local level to the regional level to the national level where the inequalities that exist and will exist amongst the different localities, given their different resources, capacities, etc., will inevitably have to be bargained, ameliorated, etc.

HEDGES: I mean, you can say this because you’re a Canadian and you don’t live in a closed political system, which we do within the United States. I mean, there still is a possibility for third-party movement. There’s still–and I think, unfortunately, at the national level we’ve been as citizens completely frozen out. But every country has to respond to its own reality.

PANITCH: Well, I’m of the view that until the American left gets, if I may use this word on camera, its shit together, whatever we do outside of the United States will be highly constrained. So you guys better pay attention to what you can do at the national as well as the local level from our own perspective.

HEDGES: Well, hopefully we won’t bring you all down with us.

Thank you very much, Leo.

PANITCH: Good to be with you, Chris.

HEDGES: And thank you for watching Days of Revolt.