Show Hide image Economy 23 July 2015 Greece and the birth of fiscal colonialism Greece is caught in a vicious debt cycle that leads to a perpetual need for stimulus. Print HTML It is often noted that Athens is the birthplace of democracy. The city is less often credited as the cradle of the market economy. Maritime trade linked the port towns of the ancient Mediterranean, between which cargo was transported according to an insurance system beyond political control. Over time, Athens became dependent on imported food for survival. Regulations were brought in to stem rising inequality, including restrictions on usury, fixed prices for bread and constraints on property sales. And yet inequality increased. As the volume of maritime trade grew, so did the wealth of its merchants. The link between the maritime economy and territorial democracy was debt. Free citizens lost their oikos, or family home, and became indentured slaves. Power, land and wealth was concentrated among a group that the Greeks called oligarchs. To this day, there is a constitutional guarantee that the Greek state will not tax shipowners on their earnings. The origins of globalisation – the face-off between territorial democracy and international capital – are to be found in Athens. This power struggle intensified under the Roman empire. The sea lanes were every bit as important in the formation of the imperial system as the Roman roads. Yet, as the nation state ultimately replaced the city state, free-flowing capital remained difficult to domesticate. This underpins the left’s enthusiasm for the European project, which developed in the 1980s as a transnational means to constrain promiscuous capital. It has not worked out that way. There is something degenerate about the politics of Greek debt. It is as though nothing has been learned in 2,000 years – as if the left had forgotten the powers of capital and imperialism and the right cannot make a distinction between the financial economy and productivity. We are being asked to choose between two failed dogmas: debt-based socialism and market utopianism, neither of which is capable of generating value, neither of which resists the reduction of human beings to commodity status by developing labour value and the virtues of loyalty and trust essential to any relationship. The narrative that suggests that fiscal discipline was the cause of German economic success after the Second World War, without reference to workers on boards, a vocational labour market, self-governing cities and regional banks, is a distortion. Germany has not established its system of democratic vocational and corporate governance practices. In Gramscian terms, it is dominant without being hegemonic. Unsustainable contradictions are now in play. Without a recognition of what was wrong with the formation of the euro and the overall direction of the EU, there will be no resolution to the conflict between debt and democracy. Political violence and mass unemployment are now possibilities in Europe. Fascism is the logical next step. Market utopianism supposes a price-setting market in human beings without a society. Welfare statism, which is what left politics has become, has no place for society or capital. Both are bankrupt. Permanent Keynesianism and limitless debt spending are a nasty place for a political economy to be, in permanent bad faith and servitude. There is a double tragedy here. Since joining the EU, Greece has become an entirely monetised economy and so the value of its currency is of fundamental importance. In other words, it has become dependent on subsidies and imports. Outside the EU and the euro, it would have a standard of living closer to that of Bulgaria than of Belgium. Syriza has pursued an entirely incoherent strategy of simultaneous resistance and surrender. Greece is caught in a vicious debt cycle that leads to a perpetual need for stimulus. The result is what we now have: fiscal colonialism without political reciprocity. The wiser strategy would have been to surrender a semblance of national democracy in favour of the German social market system. The German system is pro-worker; its foreign policy is not. This is what the UK Labour Party should be challenging. After the Second World War, the British occupying power in North Rhine-Westphalia, under the supervision of Ernest Bevin, the Labour foreign minister, was a crucial force in brokering free and democratic trade unions, worker representation on boards and a vocational economy that defined the social market economy. It promoted labour value rather than debt in its political economy and a social democracy rather than an administrative state in its politics. Where is that British Labour Party now? › Jill thought she knew best for her father so she kept the morphine coming Subscribe This article first appeared in the 16 July 2015 issue of the New Statesman, The Motherhood Trap More Related articles A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess Sunjeev Sahota’s The Year of the Runaways: a subtle study of “economic migration” Why is the government charging more women for selling sex but turning a blind eye to buyers?