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Tag Archives: IMF

Before reading watch and listen to Yanis Varoufakis in this Youtube clip. He’s not talking revolution. He’s not even talking socialism. Indeed he’s on about that most liberal of fashions, value free, “evidence based” policies. How this could lead to a crisis requires explanation.

Ok, that was the former Greek Finance Minister making a persuasive case for old fashioned, liberal Keynesianism. This was a view that was growing in popularity in the public press and on-line in the months before the Greek election. Reading and listening to Syriza before the election it seemed that they were just doing the routine, familiar, populist anti-austerity pitch for votes. After the election they changed to an emphasis on negotiation and the sort of position outlined in this video. It was a very encouraging development and it raised the hope that Syriza might strengthen or lead the emerging consensus. That consensus was certainly not socialist or even mildly egalitarian but rather the creation of a functioning liberal economy – yes, ripe for leftward reforms but the left would defer that until a reasonably stable and prosperous liberal economy had developed. Clearly it would be difficult if not impossible to get a liberal deal of this kind through the Greek parliament without the support of the older centre-right and centre-left parties. However, somewhere during the months of negotiation the Keynesian position disappeared. Towards the end the German Chancellor insisted that any deal would have to be approved by the Greek Parliament. In doing so she inadvertently hastened the end of negotiations and saved Syriza’s unity. In the week before the IMF payment was due there were two sets of proposals: the creditors’ ultimatum and Syriza’s.  As the Greek Finance Minister insisted, there was nothing much between them. Then the P.M. decided on a referendum to accept or reject the ultimatum. There needs to be an enquiry into these negotiations because it is simply not plausible that the argument advanced by Yanis Varoufakis in this video caused a crisis.

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There is a Labour Party members’ meeting tomorrow to consider “What way out of the Economic Crisis? Can the EU/IMF deal work?” I wish I could attend. Here are some basic thoughts that I would have liked to put to the meeting.

Two points are worth making at the outset. Firstly, I’ve no great expertise in economics and such expertise is not necessary to participation in the controversy. Secondly, I’m concerned that the Labour Party might tear itself apart, leaving no large coherent left voice.

Agreement

  • Absolutely everyone agrees that Ireland is in an extraordinary mess and cannot pay off all of the debts.
  • Absolutely everyone agrees that i) the domestic economy needs to be primed and ii) “industrial” development is urgently required.
  • Absolutely everyone accepts that cuts to private income and services together with massive repayments are incompatible with i) and/or ii).
  • Absolutely everyone thinks it wrong that as regards the banks, public money should be used to pay private debts.

Disagreement

  • The government – aware that public service wages and welfare payments depend on the fortnightly delivery of European money – think it prudent to stay on very good terms with those who for now have the upper hand and to try to make progress slowly towards somewhat less of a mess which has a possibility of resolution in the long term.
  • Leaving liars and poseurs aside, thoughtful opposition to this approach comes from essentially two quarters, one of which believes that failure to play ball with international capitalism will have no real consequences and the other which believes there would be welcome consequences with revolutionary potential.  These opposition approaches can be summarised as a) “We can default and nothing much will happen; we can be like Iceland.” And b) “We can default, there will be crisis leading to revolution and eventually a socialist society. “
  • The FG part and very likely some of the Labour part of government, and the a) defaulters share an objective: the restoration of a prosperous, unequal society.
  • The a) and b) defaulters share an unwillingness to face up to the risks of what they propose, i.e. they won’t talk about the chaos and suffering which would follow a crisis of capitalism.

Taking sides

I’m with the government because I fear crisis. I know damn well that it will be the poor who will suffer most if the crisis happens.

This does not mean acceptance of a grossly unequal society but this is an argument for another day: https://colummccaffery.wordpress.com/2011/12/01/irish-sovereignty-may-be-reduced-but-the-power-to-prioritise-remains/