What would Europe Win from a Grexit? ‘Peace and quiet. (Pause…) For a period’

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clTwo recent interviews with Marxist economist, and now Greek MP Costas Lapavitsas are worth have a look at, particularly as they outline his view of the strategies that Syriza need to follow during the engineered ‘breathing space’ created by recent negotiations with the European institutions.

He also outlines how a strategy he has long advocated, a Greek exit from the Euro, should be managed.

The first, published on the 12th of March in Jacobin magazine. The interviewer was Sebastian Budgen, an editor at Historical Materialism.

And Varoufakis himself explicitly located his position within a kind of Keynesian framework, and is allied with people like James Galbraith who are openly Keynesians.

Let me come clean on this. Keynes and Keynesianism, unfortunately, remain the most powerful tools we’ve got, even as Marxists, for dealing with issues of policy in the here and now. The Marxist tradition is very powerful in dealing with the medium-term and longer-term questions and understanding the class dimensions and social dimensions of economics and society in general, of course. There’s no comparison in these realms.

But, for dealing with policy in the here and now, unfortunately, Keynes and Keynesianism remain a very important set of ideas, concepts, and tools even for Marxists. That’s the reality. Whether some people like to use the ideas and not acknowledge them as Keynesian is something I don’t want to comment upon, but it happens.

So I cannot blame Varoufakis for that, for associating himself with Keynesians, because I’ve also associated myself with Keynesians, openly and explicitly so. If you showed me another way of doing things, I’d be delighted. But I can assure you, after many decades of working on Marxist economic theory, that there isn’t at the moment. So yes, Varoufakis has worked with Keynesians. But that isn’t really, in and of itself, a damning thing.

“This is going to be a very, very tough period for the government and for Syriza. A very tough period. Of course, that’s the outcome of the compromise struck at the negotiations. Basically, the lenders and the EU have hemmed Syriza in as decisively as they could at the time. The government is going to have constant pressure to meet fiscal targets and to meet fiscal requirements.

In March, there are very heavy debt repayments, which are already creating a very major problem, because the tax system is collapsing. In April, the government will have to complete a review of the existing process, which is a delayed review of the existing program, and that’s going to be a period of hell, because, obviously, the monetary institutions will be tough.

And then in May, the government will have to get itself ready for the negotiations that will come in June for a new, longer-term agreement that will somehow deal with the financing of the debt and achieve the reduction of the debt that Syriza promised to the Greek people. The time between now and June will fly past, and it will be a time of constant friction and constant struggle to avoid a crisis, or rather a period of dealing with crisis, on a daily basis.

Now in that context, the government, from my perspective, has only two real options if it is to survive and if it is to do what it was elected to do.

The first is to begin to apply its program as much as possible. It’s absolutely paramount that legislation goes through the parliament that begins to show to ordinary people that we meant what we said and, even within the confines of the deal, we can deliver things, sometimes breaking out of these confines if we can.

The second thing the government must do is, of course, learn the lesson of the failed strategy that resulted in the dirty deal in February and begin to prepare for a different approach in the negotiations in June. Because if it approaches those negotiations with the same strategy, it will have the same result.”

The second was published yesterday in Press Project International.

So there is no middle way?

There is no middle way. The Eurozone will not allow it. Do I think the leadership was surprised? Yes, I suspect they were to a certain extent. Because my reading of the situation is that the leadership genuinely believed that you could change the political alignments, you could change electoral arithmetic, and on this basis change Europe, change European policies.

So what should the Greek government do in your opinion?

Greece needs to consider the true alternative path which is to leave this failed monetary union. It is clearly the only way that was there from the beginning – which is basically exit. If you are going to apply such a programme, as Syriza has proclaimed, which is not radical – Syriza’s programme is just moderate Keynesianism -, you need to think seriously of how you are going to get out of the confines of the Eurozone.

Do you think Syriza has the mandate for it?

A straight answer is no. Syriza has a mandate to fulfil its programme. Indirectly, not directly, it has a mandate to keep the country in the Eurozone. But this question was never openly posed to the Greek people.

Is the solution a referendum?

The first thing to do is not so much discuss the idea of a referendum but actually that of the alternative strategy. There has to be a genuine public debate at last. That’s not easy because for five years this country has been subjected to the most incredible misinformation and scaremongering campaigns. So the atmosphere has been very badly poisoned. It is not impossible to have this debate now but it is much more difficult than a few years back.

In my judgement, the best strategy right now is what I call a consensual and orderly exit. Not a contested exit.

Can you elaborate on that?

I think Greece should set a target for itself to negotiate an exit basically without rupture, without falling out, without fighting, without unilateral actions. This would mean: Exit takes place and Greece seeks deep debt restructuring.

Q: Why would the EU-partners accept? This exit has two elements that the EZ doesn’t want: the exit itself and the debt restructuring.

I am not entirely certain the EZ doesn’t want exit. I suspect that it does. And in my judgement if a country asked for a negotiated way out, it might as well receive in it. Germany, Schauble, back in 2011 was in favor of a negotiated exit.

The price for the EZ should be debt restructuring. But they are two more very important elements: the protection of the exchange rate and protection of the banks. These are essentially costless for the ECB because Greece is a small country.

What would Europe win out of it?

Peace and quiet. (Pause…) For a period.