Capital versus democracy

More than twenty centuries ago, Greeks invented the idea of democracy. Last night, Greece and democracy were dealt a devastating blow by the force that really rules the world in the twenty-first century: capital.

On Monday I woke up to the news. The gist is that overnight the European financial powers, led by Germany, brought Greece to its knees through coercion and threats and forced it to submit its economy and politics to European control and supervision.

However, the deal agreed to by the Greek executive will be finalized only if approved by the parliament (among other conditions exacted by the European powers), which may or may not accept the country’s humiliation and the economic death spiral that is very likely to ensue as austerity feeds upon itself and decreases the country’s ability to pay its debt.

But there is still a chance for the Greeks to stand up and hold up the middle finger to the bankers and their partners, the major European powers. To say, “we know now you will try to crush us but we will fight to survive, to thrive again the way Argentina did after it said it would not cooperate in starving its own people and defaulted on its debt. We know without being reminded by the Miami Herald’s resident sage Andres Oppenheimer that Greece is not Argentina and that we may not succeed. But in any case, we want to say to the Germans and the others: we would rather die than lick your boots. We have proved this before.”

If by now you detect that this column is not written with the usual academic or journalistic detachment, you are right. For months, while negotiations went on between the rich countries of Europe and Greece – a lop-sided fight indeed – I became increasingly irked, annoyed and finally angered by the moralistic, self-righteous tone assumed by the lenders regarding the Greek debtor. “EU to Greece: Get Serious” and similar headlines showed an irritating condescension and arrogance.

The issue of national or collective guilt and collective virtue is a complex and controversial one. What is very clear in this case is that not only the global financial institutions like the IMF and other lenders like France, but the German government and the German people especially, regard the Greeks as the party morally at fault. Irresponsible, corrupt, lazy spendthrifts who want to live by sucking the milk from the German cow’s very productive tits. That’s a caricature of the picture painted of the Greeks in Germany, an exaggerated portrait no doubt, but one that reveals the essential German attitude less accurately but more truthfully than a poll.

At heart, what kept turning in my head, what really, really outraged me, was this question: The Germans, sitting in moral judgment…of anybody. Really? And, what more generous bailout than what they got from the victors when their country lay in ashes after destroying a good part of Europe and trying to eradicate entire human populations?

There are far too many things to say about all this for one column, and I will say as much as I can before I close, but before that let me get to details, where the devil dwells, so we know exactly what we are talking about. From the UK newspaper The Guardian:

“Greek PM Alexis Tsipras (in photo above) conceded to a further swathe of austerity measures and economic reforms after more than 16 hours of negotiations in Brussels. He has agreed to immediately pass laws to further reform the tax and pension system, liberalize the labor market, and open up closed professions. Sunday trading laws will be relaxed, and even milk producers and bakers will be deregulated.

The Financial Times has dubbed it: “the most intrusive economic supervision program ever mounted in the EU.

“Greece was forced to accept these measures after Germany piled intense pressure, as a price for a new deal. EU officials told us that Tsipras was subjected to “mental waterboarding” in closed-door meetings with Angela Merkel, Donald Tusk and Francois Hollande.”

British commentator Paul Mason had this to say:

“Last night the eurozone leaders presented Greece with an ultimatum that shredded all vestiges of control the government has over the economy going forward, and reversed every law it has put through parliament since being elected with 36 per cent of the vote in January.”

He had to say this about the Greek people’s reaction, across the political spectrum:

“If you doubt how it might play on the Greek streets, consider the headline of Dimokratia, a conservative tabloid: “’Greece in Auschwitz: Schauble {German Finance Minister} attempts eurozone holocaust’”.

The reaction of social media also was harshly unfavorable to the lenders. #ThisIsACoup appeared on Twitter and went viral. The title is more than apt. Mason again:

“The big powers of Europe demonstrated an appetite to change the micro-laws of a smaller country: its bakery regulations, the funding of its state TV service, what can be privatized and how. Whether inside or outside the euro, many small countries and regions will draw long-term negative lessons from this. And from the apparently cavalier throwing of a last-minute Grexit option into the mix by Germany, in defiance of half the government’s own MPs.”

Finally, comparing the disasters that followed earlier attempts to extract blood from a turnip–such as the 1918 Treaty of Versailles that imposed war reparations on Germany that it could not possibly pay, which in turn created economic disaster and the witch’s cauldron from which emerged Adolf Hitler–Mason has this to say:

“But the debacles of yesteryear were different. They were committed by statesmen. People who knew what they wanted and miscalculated. It was hard to see last night what the rulers of Europe wanted.

“What they’ve arguably got is a global reputational disaster: the crushing of a left-wing government elected on a landslide, the flouting of a 61 per cent referendum result. The EU – a project founded to avoid conflict and deliver social justice – found itself transformed into the conveyor of relentless financial logic and nothing else.”

Conventional wisdom holds that democracy and capitalism go together as, in the words of an old song, “love and marriage, you can’t have one without the other.” That’s a fallacy that was clear to the Founders of the American Republic, who built into the framework rules to safeguard against democracy, and most especially, any kind of democratic threat to property. (To be fair, they also created barriers to populist threats to individual rights). In the Federalist Papers, Madison makes the intention to make property safe from democracy crystal clear.

Democracy and capitalism go together like oil and water. There is an inherent conflict between an economic system that privileges a tiny fraction of the global population and a political system where everyone is supposed to have the same rights. The attempt to finesse that contradiction–social democracy, a social Europe–was a noble one. Why it failed is more complex than the fact that leaders like Margaret Thatcher and Angela Merkel have driven a stake through the heart of what for them was a vampire.

But fail it did. Could there be further confirmation than what has just happened? On Sunday capitalism and democracy clashed as openly as ever. Capitalism won and democracy lost. Yet it’s not the final battle.