Greece under the Troika

Wolfgang Däubler

An interview with Professor Wolfgang Däubler, conducted by Ciaran Cross, researcher for the International Centre for Trade Union Rights (ICTUR).

Professor Däubler, could you first explain a little about the situation faced by the Greek economy after the 2008 financial crisis?

The crisis made the problems already existing in Greece even more urgent. And, due to the competition between the different countries in the Eurozone, Greece had limited options. When Greece had its own currency, the drachma, there was a possibility of devaluation – one could devaluate the currency if the country was unable to face the competition. But this possibility no longer exists if you are a member of the Eurozone. And therefore Greece had to look for another form of devaluation – internal devaluation. That means they were economically forced to reduce wage costs.

This was done in a very brutal way. Of course, Greece did not choose this of its own will, but under the influence of the so-called Troika [the European Commission, the IMF and the European Central Bank]. By 2012, they had demolished the whole system of collective bargaining and reduced the minimum wage. Today wages are at 75% of the level before 2010, and unemployment is around 24% to 25%. Among young people under the age of 25, unemployment is 50%. That's a catastrophe. 

Global crisis, Neoliberalism, and left alternatives

Alfredo Saad-Filho

The certainties that turned neoliberalism into the “common sense” of our age are melting into the air. Tried and tested policies such as privatisation, marketisation, financialisation and trade liberalisation have lost traction, and established political systems haemorrhage legitimacy. Mass protests spring in unexpected places and take new forms. Even the steadiest political hands have lost their grip on the levers of power, which, themselves, increasingly lack effectiveness. The economic turmoil in global neoliberalism is morphing into a wholesale political crisis.

A dysfunctional economy…
Neoliberalism created conditions favourable for capital accumulation that were unprecedented since the early 1980s. The ensuing economic growth supported a steep concentration of power, income and wealth, in which unparalleled prosperity for the wealthy coexists with old and emerging patterns of poverty and exclusion. Yet accumulation in the “core” countries of the Organisation for Economic Co-operation and Development (OECD) face declining rates of investment and Gross Domestic Product (GDP) growth, mounting instability, and increasingly frequent finance-driven crises, culminating in the deepest and longest economic contraction since the Great Depression. Recoveries have also become increasingly sluggish: a Great Stagnation now engulfs the world economy, with no end in sight.

Reflecting on electoral catastrophe: What lessons can we take away from the victory of Trump?

Peter Evans

Trump’s minions have already made it clear that organised labour will be among their immediate targets. Public sector workers, who are the main pillar of organised labour’s strength, will be attacked early. Turning the National Labor Relations Board into a thoroughly anti-labour organisation will make union certification, via officially sanctioned elections, close to impossible. Another obvious agenda item is a national ‘right to work’ law which will remove the requirement that workers represented by a union pay membership dues. I will not try to exhaust the list of likely attacks here, although projecting the disastrous details of Trump’s regime will be a crucial part of figuring out how to mount some kind of defense.

Trying to think about how it might be possible to change the political landscape is a different sort of task. It requires a careful debate on the structural circumstances that produced so many Trump voters. Theories of ‘The Trump Voter’ abound, and sorting them out will require a careful analysis of exit polls that has yet to be done. But two preliminary themes have already emerged. 

Trump and the Losers of Globalisation and Modernisation

Thomas Greven

Donald Trump clearly lost the popular vote and will only inhabit the White House because of the anachronistic and undemocratic institution of the Electoral College, once specifically designed to foil populists like him. Contrary to claims that he somehow ‘hijacked’ the Republican Party, I argue that he simply used the traditional Republican playbook to the extreme - dividing the population along racial, ethnic, and religious lines as well as exploiting anti-elite sentiment – to sell economic and social policies that will hurt the majority of Americans. This got him support from right-wing extremists in the Alt-Right movement as well as the white working class – Americans without a college education – and surprisingly also from white working class women, given that he tried very hard to offend all women. This latter group of voters, previously either non-voting or marginally part of the Democratic coalition, was the key group for Trump’s success in the old industrial heartlands now called the rust-belt states. It is necessary to ask why this group supported him.

Antonio Gramsci and Britain’s Corbyn moment

Camila Bassi

Introduction

From the mid-1990s, the British Labour Party explicitly oriented to free market capitalism and adopted a new version of Clause IV of the Party constitution, which decisively turned away from the original promise to ‘secure for the workers by hand or by brain the full fruits of their industry’ (cited in Gani, 2015). New Labour, as it was branded, pushed politically conservative discourse and policy on social justice (in contrast to redressing poverty and inequality), on workfare (as opposed to welfare), and on crime and immigration, and it implemented public-private partnerships and private finance initiatives to dismantle the public sector and welfare state. New Labour’s landslide electoral successes in 1997 and 2001 indicated its firm hegemony of the Party and the labour movement base: a swing in the Party’s basic contradiction, as a bourgeois-workers’ party, to its right-wing pole.

A majority on the British Left regarded such changes as irreversible. No one predicted that in the Labour Party leadership race of 2015 the socialist candidate of Jeremy Corbyn would win, and with a huge mandate. Corbyn’s election manifesto included demands for growth not austerity, public ownership of the railways and the energy sector, a large-scale public and private house-building programme and rent controls, reinvestment in the welfare state, the abolition of zero hours contracts, and the right of trade unions to organise collectively to redress workplace injustice. While arguably not going far enough, notably, in failing to promise that Labour Party MPs will not implement existing Conservative Government funding cuts to the public sector, Corbyn nonetheless stands in stark opposition to unbridled capitalism.

Self-Managed Class-Struggle Alternatives to Neo-liberalism, Nationalisation, Elections

Lucien van der Walt

The 1970s-plus rise of neo-liberal policies profoundly destabilised Left currents that sought social change through the state. Old statist roads – the social democratic Keynesian welfare state (KWS), Marxist central planning as exemplified by the Soviet Union (USSR), and post-colonial nationalist import-substitution-industrialisation (ISI) – had some achievements.

But all had, on the eve of neo-liberalism, entered economic and political crises, and inherent flaws.

The subsequent neo-liberal victory entailed more than shifts in ideas and policies. These were part of a deeper shift in capitalism that reflected and reinforced the historic failure of statist roads. To follow the old routes today, whether through new Left parties, or efforts to win state elites to defunct policies, is futile.

What is needed is a working class Left approach freed of the failed statist past, resolutely opposed to capitalist and nationalist solutions, and rooted in historical anti-statist, libertarian Left traditions. While the Left remains statist, it is crippled by past crisis and current powerlessness, under intellectual and political siege.

Austerity policies and trade unionism: A glance at Portugal

Hermes Augusto Costa

Elísio Estanque

Wage labour played and continues to play a central role in Western industrial societies, not just on the economic plane but above all as a vital support for social cohesion and the rule of law. The main advances of the last 200 years including the building of the welfare state and its important gains in the field of human rights (e.g. dignified work and social rights) are examples of the importance of struggles waged by organised wage labour. The major problem, however, is the imminent civilisational regression in which we find ourselves, teetering on the brink of a new cycle of mercantilist barbarism similar to the times of Marx (Estanque and Costa, 2013). In fact, the Portuguese labour context has in recent years been battered by austerity policies, formally with the entry of the Troika (International Monetary Fund (IMF)/ European Central Bank (ECB)/ European Commission(EC0) in May 2011 and even beyond its exit n May 2014.

In this text, we initially identify some internal challenges put before unions and the external threats underlying austerity policies. We also set out some tasks for trade unions.

State Funding of Research and the Narrowing of Economics in the United Kingdom

Frederic S. Lee

In 1986, the United Kingdom instituted an exercise through which the allocation of state research funds to universities and their departments was based on the quality of the research they produced. While the official justification for the exercise was the need to be selective in the allocation of limited research funds, the non-talked about agenda behind the exercise was to reduce the number of research universities to a manageable number and to ensure that these elite universities conducted research and carried out teaching that was consistent with the interests of the economic and political elite which control the state. Consequently the ensuing research selectivity exercise known as the Research Assessment Exercise (RAE) was and is popular with the Tories, New Labour, and anybody else who believes that the State should have quasi-direct and complete control over the thinking and research activities of its citizens.

Most academics initially thought the exercise would be a fair way of allocating state research funding when the state decided to reduce its commitment to higher education. However, in some disciplines, such as economics, it became evident by the mid-1990s that the exercise was also being used to cleanse economic departments of heterodox economic ideas that did not conform to mainstream (neoclassical) economic theory and with the neoliberal, pro-market policies based on the theory and which the state approved of. But the precise manner through which the cleansing process operated was not clearly understood. The rest of the article deals with the cleansing process, its consequences for UK economics, and what can be done about it.

The Crisis, Structural Reform and the Fortification of Neoliberalism in Europe

Christoph Hermann

The European Commission President, Jose Manuel Barroso, recently made the recommendation that fiscal consolidation (read “austerity”!) must continue in Europe, and that the European Union (EU) member states “should now intensify their efforts on structural reforms for competitiveness”. He specifically highlighted the need for comprehensive labour market reforms as “the best way to kick-start job creation”.[1] The call for structural reform to supplement austerity policies is not new. A number of EU member states have introduced far-reaching institutional reforms during the crisis – several of them under pressure from the European Central Bank, the European Commission and the International Monetary Fund. Structural reforms differ from regular austerity measures since their main goal is to change the country’s institutional framework to allegedly boost economic growth.

In the following paragraphs we summaries major structural reforms that we have found in eleven EU member states that were strongly affected by the crisis.[2]

Italy from Recession to a new Socioeconomic Identity

Paolo Borioni

The historical sources of the Italian crisis[1]
The Italian economic crisis has global as well as domestic roots. As Italy depends on industrial exports, the country has been deeply affected by the global crisis, and even more so by the depressive results of the EU’s austerity measures.[2]  Mario Monti’s technocratic government has also added to depressive austerity: the Italian internal market shows a negative growth, below -2% in 2013, adding to Italy’s need for exports.

Italy was one the fastest growing industrialised European countries between 1950 and 1990, performing better than Germany.[3]  This was partly due to its newcomer identity characterised by low wages which helped competitiveness at the beginning of this period. The economic landscape was further marked by the presence of a few major enterprises (including Fiat, Pirelli, Olivetti) and big state-owned enterprises (Ansaldo-Breda, Fincantieri, Eni, Enel, etc.). Large companies provided long-term investment and innovation, facilitating the emergence of plenty of successful Small and Medium-Sized Enterprises (SMEs)[4]  in the so-called “third Italy”. The success of SMEs was founded on their embeddedness in a dynamic economy dominated by large firms, whose investment in research and technology also benefited SMEs.

Constructing an Anti-Neoliberal Analysis to Arrive at Truly Alternative Alternatives

Salimah Valiani

The instance of nursing labour market restructuring

For the past few decades, the world economy has been shifting through radical restructuring and reorganisation. Within this context, the "anti-globalisation”, “anti-WTO”, “anti-neoliberal,” and other such movements are an important field within which to identify the thinking behind the action. For Antonio Gramsci (1971), questions of theory and practice are raised particularly when the “movement of historical transformation is at its most rapid”. The point of such questioning, as Gramsci says, is to make the “practical forces unleashed” more efficient and expansive and the “theoretical programmes” more realistically justified. Taking inspiration from this, the aim of this column is to provide methodological direction in analysing and responding to changes of the neoliberal era using the instance of the global restructuring of nursing labour markets.

Where is decent work in DfID policy? Marketisation and securitisation of UK international aid

Phoebe V. Moore

Nothing is spared. Even international development policy is marketised and securitised in the United Kingdom (UK). Outreach to areas of the world suffering from tsunami-related devastation has not disappeared, but recent government decisions reveal significant shifts for aid spending to prioritise future conflict prevention in areas facing high levels of unemployment and lacking welfare protection, and to manage future financial impacts of terrorist attacks. Controversially, UK aid spending is increasing in areas where crisis-driven unemployment can be linked to rising social unrest, even as cuts are made to the organisation most dedicated to advocating workers’ rights, the International Labour Organisation (ILO).

DfID securitises, marketises international aid
In March 2011 the Department for International Development (DfID) published the ‘Multilateral Aid Review: Ensuring maximum value for money for UK aid through multilateral organisations’ (DfID, 2011). The UK’s newly-elected coalition government in 2010 decided to increase development aid to 0.7% of gross national income (GNI) by 2013, which is, in cash terms, an increase from £7.8 billion in 2010–2011 to £11 billion in 2014–15. In that context, DfID, in cooperation with then Secretary of State for International Development Anthony Mitchell reviewed 43 multilateral aid organisations previously used to channel funding using a specific methodology designed to measure organisations’ aims and objectives, value for money and cost effectiveness. UN-HABITAT, UNIDO, UNISDR[1], and the ILO, did not meet these marketised development objectives, so DfID decided to withdraw core funding to established partners. Market-oriented judgements such as these are part of the wider strategy of securing the dominant status of neoliberalism as an expansive global framework for economic and social policy.

The Hobbit: An Unexpected Outcome?

Carol Jess

The film industry is an important part of New Zealand (NZ) culture and source of patriotic pride, particularly since the successes of Peter Jackson and Weta Workshop with The Lord of the Rings films (LOTR). It is also economically significant; in 2004, 150 000 foreign tourists gave the Lord of the Rings as one of the main reasons for their visit to New Zealand. Globally, LOTR is the highest grossing motion picture trilogy of all time, and the joint record holder for the number of Oscars.

For the premiere of “The Hobbit – An Unexpected Journey”, a prequel to LOTR, on 28 November 2012, New Zealand is going Hobbit mad. Wellington will be turned into “The Middle of Middle Earth” and international visitors will receive commemorative immigration stamps.[1]

For many in the New Zealand trade union movement though, the opening of The Hobbit will not inspire pride or excitement. Instead, the film serves as a reminder of how fragile our rights are when under assault from the fear of capital flight.

Europe at the Crossroads

Steffen Lehndorff

Looking at Europe these days some people (at least of my generation) may remember the lyrics of a famous song of the rock band AC/DC from the late 1970s: “I'm on my way to the Promised Land — I'm on the highway to hell.” More and more countries of the Euro zone are drifting into another recession, and some Southern European countries have been driven into an ever deepening economic depression which has lasted for four years already. The stranglehold of cutting public expenditures is not just blocking the road to economic recovery; this obsession with austerity makes it increasingly difficult to draw lessons from the economic policy failures in the pre-crisis period. These lessons, however, are desperately needed for any re-orientation of socio-economic models (or “growth models”) in the crisis-ridden countries, but equally in the allegedly “healthy” economies. Moreover, European countries are being directed politically into national egoisms which are about to drive the European project to the brink. Europe is being forced into a fiscal dictatorship which suffers from a fundamental lack of democratic foundations for economic governance at the European Union (EU) level and has already begun to interfere with fundamental democratic rights within member states. The complexity of the challenge to find a way out goes well beyond a more appropriate macroeconomic policy.

Trade Union Activists are in Jail in Turkey, but why?

Zeynep Ekin Aklar

Gaye Yilmaz

(written by  Zeynep Ekin Aklar with contribution from Gaye Yilmaz)

The repression of opposition movements, particularly trade unions, has been increasing in Turkey since 2008. Today more than 6000 people are in jail as a result of having different opinions from the Turkish government. More specifically, since the end of March 2012, more than 100 journalists and artists, 40 trade union activists, 1000 children, 600 students and academics and thousands of activitists from the Kurdish movement have been held in prison for months without trial. As recently as 25 June 2012, 71 Kurdish trade union members of the Confederation of Public Employees’ Trade Unions (KESK) were detained. For the first time since the 1980 military intervention, Mr. Lami Özgen, a leader of a trade union confederation was detained.

What Europe can learn from the South

Nicolas Pons-Vignon

After having caused a massive increase in inequality throughout the world, which led to the build-up of politely called “imbalances” and which fireballed into a financial, then economic, crisis, neoliberal policies are threatening to push many economies into a precipice with unknown political and social consequences. Yet, the European countries at the heart of this turmoil are showing little sign of resistance; the growing social movements opposing bailout and austerity have thus far failed to influence dominant parties and national policies. Instead, it appears that the very same policy mix of austerity and privatization which shattered African, Latin American and ex-communist countries in the 1980s and ’90s is being inflicted on Europe. The irony lies in the fact that most economists now agree that these policies have indeed had disastrous consequences. The belief that what led to a growth collapse and social disaster elsewhere will have positive consequences in Europe is an illusion which is sustained by the mainstream media and by powerful interest groups. Lambert (2012) thus highlights the French media’s predilection for consulting a coterie of economists who are closely linked to (or rather remunerated by) financial interests, and who invariably play down the responsibility of banks in the crisis and the usefulness of taxing finance rather than, say, ordinary citizens through increased value added taxes. In Italy, the “structural reforms” supposedly aimed at boosting growth focus on accelerating flexibilization of the labour market, in a context already marked by very high levels of precariousness.

From Financial Crisis to Stagnation: The Destruction of Shared Prosperity and the Role of Economics

Thomas I. Palley

Marshall McLuhan, the famed philosopher of media, wrote “We shape our tools and they in turn shape us”. His insight also applies to the economy which is shaped by economic policy derived from economic ideas, and it is the theme of my recent book which argues the global economic crisis is the product of flawed policies derived from flawed ideas.

 Broadly speaking, there exist three different perspectives on the crisis. Perspective 1 is the hard-core neoliberal position, which can be labelled the “government failure hypothesis”. In the U.S. it is identified with the Republican Party and the Chicago school of economics. Perspective 2 is the soft-core neoliberal position, which can be labelled the “market failure hypothesis”. It is identified with the Obama administration, half of the Democratic Party, and the MIT economics departments. In Europe it is identified with Third Way politics. Perspective 3 is the progressive position which can be labelled the “destruction of shared prosperity hypothesis”. It is identified with the other half of the Democratic Party and the labour movement, but it has no standing within major economics departments owing to their suppression of alternatives to orthodox theory.

The Microfinance Delusion

Milford Bateman

The optimistic beginning

Thirty years ago, it was widely thought that the perfect solution to unemployment and poverty in developing countries had been found in the shape of microfinance, the provision of tiny microloans used by the poor to establish an income-generating activity. Microfinance is most closely associated with the US trained Bangladeshi economist and 2006 Nobel Peace Prize recipient, Dr Muhammad Yunus. By celebrating self-help and individual entrepreneurship, and by implicitly discrediting all forms of collective effort, such as trade unions, social movements, cooperatives, public spending, a pro-poor ‘developmental state’ and – most of all – collective moves to ensure a more equitable redistribution of wealth and power, neoliberal policy-makers in the international development community fell in love with microfinance. The World Bank, USAID and other agencies began to aggressively push forward the concept and, in order to reduce the need for subsidies, also insisted microfinance be turned into a for-profit business. Microfinance soon became the international development community’s highest profile, most generously funded and supposedly most effective economic and social development policy.

The Crisis: the Response of the European Trade Unions

Bernadette Ségol

The unanimous political response to the crisis across Europe today is that of austerity and budgetary discipline. Cutting pay and social welfare, attacking bargaining mechanisms and making employment contracts ultra-flexible: that is the current paradigm, the Berlin/Brussels consensus, offered as the only way forward.

This solution is not working and will not work. It stifles growth and blocks the way to job creation. We can no longer ignore its disastrous social consequences and the rise of nationalism in many European countries bringing into question our essential values based on solidarity.

We need to change the narrative.

Official voices are increasingly being raised against austerity, but mainly from outside Europe. The Organisation for Economic Co-operation and Development (OECD) and the International Labour Organisation (ILO) say that austerity without growth is a dangerous dead-end. International Monetary Fund (IMF) managing director Christine Lagarde has expressed concerns on behalf of the IMF. Even credit rating agencies – self-serving oligopolies that they are - have joined in the chorus.

But the message isn’t getting through to the finance ministers. While lip service is being paid in the European Council to the need to foster growth and employment, concrete proposals commensurate with the disaster we are facing are missing, in stark contrast to the sharp minutiae of the fiscal plans before us. The ETUC is for sound budgets. But the fiscal compact calls for a balancing social contract.

Building Progressive Alliances

Asbjørn Wahl

The social conflict in Europe has intensified strongly over the past couple of years, in the wake of the financial crisis. The labour and trade union movement has been on the defensive ever since the neoliberal offensive started around 1980. The balance of power in our societies has thus shifted enormously over the past 30 years - from labour to capital, from democracy to market forces. Time is ripe, therefore, to fight back, to build broad social alliances and to reassess our strategies and tactics.

In this article I will take a closer look at the current situation, address the question of alliance building and particularly summarise some of the experiences we have had in building alliances in Norway. My point of departure is that social development is a question of power, social power, and strength. If we are not able to mobilise sufficient social power behind our many excellent demands, they will only end up as wishful thinking.