Monday, February 02, 2015

Yanis and the Beanstalk

1. Shortly after his cordial meeting with Eurogroup president Jeroen Dijesselbloem  Greece's new finance minister, Yanis "Killer Joe"  Varoufakis appeared on the BBC show "Newsnight."

BBC interviewers fancy themselves to be a hard lot, equal parts DCI Jane Tennison, Jack Spot, and Reverend John Russell's terriers; always ready to interrupt when the answers don't fit the script; always ready to interrupt because that is the script; Savile Row rather than Dr. Martens but with the same threat to stomp. 

And Yanis? Academic, VIB (very important blogger), self-confessed advocate of saving European capitalism from the stupidity of its ruling class, expert in game theory, and a serious self-aggrandizing slickster.  In short the perfect person to play the role scripted for him as if it were unscripted. 

Who knew what might happen?  Hadn't Dijesselbloem, taken aback by the candor of Yanis' remarks, simply removed his earpiece after hearing the translation and left the stage with the whisper "You've killed the Troika"?  And hadn't Yanis, taken aback by Dijesselbloem's exit line, responded with a simple "Wow"?  Wow, as in "did I really say that?"  As in, "is that all it takes?"  Wow, as in "you thought I was serious?"  Wow as in, "this is fun!"

2. Who knew?  Maybe the BBC interviewer Emily Maitlis would ask a really hard question about how Greece intended to maintain its imports and exports if banks would not or could not extend letters of credit guaranteeing the trade?  Maybe Yanis would cough up a really slick answer that the government would guarantee the continuity of trade arrangement with its gold reserves.

Maybe Emily would ask a different hard question about military budgets vs. social security benefits, and Yanis would provide a slick answer explaining how Greece's military could be a revenue generator.  A la Morales, the government was willing to sub-contract its military out as part of UN missions for the occupation of impoverished countries.

After all, keeping the generals busy in Haiti, or Somalia was better than having them accept full time positions working for Herr Schauble and Frau Merkel, nicht wahr?

Dream on, children.  Dream big.

3.  Between the  interruptions of the finance minister, there were the interruptions by the finance minister.  As a matter of fact, the interviewer was being out-interrupted in the interview by the interviewee.  Clearly, his stage presence, honed by his years impressing graduate and undergraduate students had prepared him for this moment of melodrama.

In between the protests, corrections, complaints about the equipment, etc.  a couple of real jewels dropped from lipster's slicks-- correction, I mean slickster's lips.

The Cullinan diamond of those droppings, one that threw a shiver into the not-quite-yet dead bodies of the Troika members, the European Commission, the ECB, and the IMF, was Yanis' assertion that the Troika has been handling a condition of insolvency, bankruptcy, as if it were a problem of liquidity.

The interviewer did not ask the interviewee to repeat that, but Yanis did more or less, which after all is how economists do everything-- more or less.  He stated that it was time to end the game of "extend and pretend."

The interviewer did not ask him to repeat that either.  Of course not, Jack Russell terriers were trained to not draw blood, particularly when it might be their master's blood.

4.  Obviously you don't have to be a  Marxist,  which Yanis confesses he is not (but always while winking, nodding as if we're all "not Marxists"), to know that Greece's predicament, the predicament of banks and governments, the predicament of  European capitalism is a condition of insolvency and not a problem of liquidity.  Back in the day, Mervyn King, then guv' of the Bank of England said exactly that in those words regarding the general predicament of Europe. 

Any number of newspaper columnists, pundits, prize winners of one sort or another have pointed out the game of "extend and pretend" that has been the policy of the ECB before and with Draghi.  After all, what was the Long Term Refinancing Operations before Draghi but a short-term extend and pretend?  And what has it been with Draghi except an extension of the terms of pretending that  increased liquidity was a solution for the devaluation to zero, the insolvency of the entire mode of accumulation?

Draghi took the LTRO program into a new dimension of space and time, where loans to banks were essentially unlimited, free, and with credit rating requirements waived  for the Irish, Portuguese, and Greek sovereign debt posted as collateral by the participating banks. 

Wait, let me channel the BBC and interrupt right here.  Is that right?  Credit rating requirements waived for Irish, Portuguese, and Greek sovereign debt posted as collateral for long-term, free loans to banks?  

Bull's-eye, catnip!  That's exactly what the terms were.  For a short-period, the ECB refused to accept the sovereign debt of Greece when S&P rated that debt as being in "selective default," but that restriction was quickly relaxed.

5.  So what gives?  Why the relaxed, nonchalant, "I'll pretend not to notice you're insolvent, and you'll pretend you're able to repay me" policy of the ECB towards banks; but the "pay or die"-- actually pay and die  policy towards Greece?  Actually, it's not a pay and die policy towards Greece.  It's a pay and die policy towards the people of Greece.  And not just any old amorphous people of Greece, but towards the workers of Greece and their children, towards the poor of Greece and their children, towards the elderly of Greece.

The LTRO of the ECB and the austerity of the Troika are the two sides of the coins of the realm-- the heads I win, tails you lose-- cents of Euro.  Both the LTRO and the Troika are designed to preserve the property relations that take their most condensed, compact expression in debt.  Debt is made the responsibility of the "public,"  it is the claim on property by property in order to liquidate the labor already accumulated in the means of production. 

Refinancing the banks in the LTRO, the application of liquidity to insolvency, preserves the banks' and the states' ability to demand, impose, and execute that liquidation. 

6.  When Dijesselbloem put down his earpiece and walked away from the table after Yanis had shaken the Troika's beanstalk, he was voting with his feet.  Yanis had let the dead cat out the trick bag that had been constructed by the famous Memorandum of Understanding between Greece and the loan sharks of the Troika.  Dijesselbloem knew it was time to take a walk. 

The Memorandum was not about placing the economy of Greece on the path to recovery; it had nothing to do with relieving the debt.  The Memorandum was then and now simply a program of the European bourgeoisie, and its cohorts in Greece, to preserve the bondholders, to liquidate assets, to strip the economy, and torch the workers and poor.  The flood of money provided by the ECB to banks in the LTRO is not simply "pointless" or "excess liquidity."  It is pointless and liquid like pouring gasoline on a fire is pointless and liquid.  It's not pointless when you want to supply the arsonists; when you want to burn the house down; when you want to  reduce the residents to ash.

Dijesselbloem knew the cover had been blown.  Varoufakis on the other hand was, and is, quite literally playing his game theory.  He thinks he can game the EU into debt reduction, with payments pegged to "growth."

The EU, the ECB, and the IMF know--well maybe not know, maybe fear-- that a growth rate adequate to service the debt is unattainable, as the cause of the predicament is in the actual accumulation of capital.  The cause is in the massive global overproduction that has overwhelmed the ability of capital to exploit labor at an intensity sufficient to expand markets, at a rate capable of re-valorising the commodities dumped into the markets.  Capital's way forward is the path backwards, by devaluing itself, destroying production and driving the price of labor-power below its value, below its cost of reproduction.

7.   Capital is and is not acting irrationally, ignorantly, or blindly.  It is and is not acting responsibly, with (malice of) forethought, with deliberation.  It is acting as capital must act in defense of its property, its property form that encapsulates production; its need to exist as capital. 

The issue is not one of "crisis" or "fictitious values" or "national sovereignty."  The issue is quite simply has Greece, and Europe, entered a period where the means of production are in conflict with the dominant social relations of production, with the mode of organization of social labor?  The answer is yes, and the answer means that Greece, and Europe, confronts a revolutionary condition, and a revolutionary struggle.

"Killer Joe" Varoufakis quite clearly opposes any such conclusion.  It his belief that the workers are not "ready" for the conflict and cannot be victorious.  The problem is, of course, that a revolutionary condition in society is not determined by the working class  pre-existing level of preparation for such a condition.  Indeed, how could the workers and poor of Greece, of anywhere, be prepared for the condition, before the moment, the conjuncture erupts?  To examine that question reveals the fundamental idealism of the "not yet ready" partisans.  

The eruption of a revolutionary condition does not mean the workers are ready to assume power.  It does mean that the class has to teach itself the methods of composing itself as a class  It does mean that the class has to develop its own organs of power, outside and in opposition to the existing structures of capital:  outside and in opposition to  its parliaments, outside and in opposition to its executive, outside in opposition to the half-measures of "mitigation"  "relief"  "adjustment."  

For these tasks, the Syriza government is more than inadequate, it will become an obstacle.  For these tasks, no "erratic" "confessing" self-aggrandizing slickster is needed.

This ain't no game. 

February 2, 2015


  1. Can you add a social media share button to your blog Wolf?

  2. What is a "social media share button"?

  3. uh...clem12:18 PM

    a "social media share button" is a clickable way for a reader to share on one or more of the social media, e.g., FB or twitter, the two biggest ones. there are several others out there in cyberspace besides. Google it. It is probably very easy to include on The Wolf Report and could be placed just below your "complete profile".