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Frédéric Lordon: The euro, or hating democracy

Frédéric Lordon30 June 2015

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"As always," Frédéric Lordon writes, "institutional orders reveal their true essence when they are at their limits, in conditions of extreme crisis." For Lordon, the actions of the troika over the past few days have shown, beyond any doubt, that the essence of the European institutional order is inimical to democracy, and that its punitive will against whoever decides otherwise knows no limit. Translated by David Broder; read the French article here.

By Frédéric Lordon, 29 June 2015

Well, that certainly shut them up. Playing the democracy card is now so far outside of their understanding that when you do it they are left stunned, staggered, destitute. You’d really have loved to see their faces, their jaws hanging wide open like a chest of drawers that’s just been burgled: Sapin, Hollande, Moscovici, their organic intellectuals, their propaganda journalists, all those who have nothing on their lips but "modernity" and have so constantly worked to get rid of the people, the troublesome demos, troublesome democracy, whenever the idea enters its head that it ought not content itself with submitting to what has already been decided on its behalf.

But it’s a nemesis, and there’s nothing to be done: there always comes a moment when the policy that has been chased out of the door comes back in through the window. Indeed, the more doggedly it has been chased out, the more powerfully it returns.

The referendum; or, the return of the repressed

And it is truly the return of the repressed in all respects: including that of the guilty conscience. It’s not easy to wear democracy on your sleeve, producing illuminated charters or odes to joy in its name, offering it to the world as a model (sometimes even by airstrikes), and then trample on it at home to this extent.

Indeed, to utter the word "referendum" inevitably reawakens the spectre of the 2005 Constitutional Treaty vote: of the insistence that we must say Yes, or the bypass route that’s taken if we persist in saying No. And also the spectre of the putsch, in the image of the 2011 offloading of George Papandreou, an ordinary right-wing socialist who was not truly malicious in intent but ended up realising that he was approaching the levels where macroeconomic inflexibility and political tyranny become dangerously indistinct. Feeling the need for a legitimate mandate, he wanted to submit the Memorandum to his people’s judgement… by referendum. Applying a doctrine that in fact took shape long ago – one intrinsic to the European Monetary Union itself, but whose fully explicit formulation had to wait until 2015 and the ineffable Juncker: "there can be no democratic choice against the European treaties" – all it took the European institutions to unseat the imprudent Papandreou was a little behind-the-scenes pressure, before directly naming the central banker Papademos the Prime Minister! It was so much simpler that way – and what’s more, Papademos was at the head of a coalition that allowed an overtly extreme-Right party into government for the first time since the colonels’ regime, a particularity that did not much move the institutions’ journalistic accompaniment at the time (whereas there was no lack of shrieking over Syriza making an alliance with ANEL, of the sovereigntyist Right).

This whole weighty past – and also this weighty debt – is wrapped up in the word "referendum", the dirty little secret of a whole institutional construction that feels no duty toward democracy other than that of a simple verbal oblation, venerating it in words, with no real project for it other than its methodical extinction.

Just as we find people still determined in saying that the treaties give Europe the character of a neoliberal body, we also find those pig-headed enough to deny that these treaties entail the slightest loss of sovereignty – as I recently experienced in a chance meeting with a Socialist MP, whose name I won’t mention, out of Christian charity. This is inherent to the treaties themselves, whose first characteristic, let’s remind ourselves, owes to the (monstrous) fact that they constitutionalised the substantial contents of economic policy; and for these people not to have seen that it’s inherent to the treaties, they must not be too aware of how the negotiations have played out since 2011, and particularly over these last few weeks. After all, the Troika was not happy just to impose a delirious macroeconomic framework, but was also hell-bent on imposing its specific details – and itself deciding on the finer points of tax rises and spending cuts; that is, on directly taking command of everything.

It was not enough that the Syriza government – flying in the face of its own electoral commitments – accepted getting bogged down in the logic of the Memorandum and playing the game of budget adjustments; the Troika was not just insisting on an overall objective, but also on the manner in which it should be achieved. It’s not enough for Greece to tighten its belt by a further 1.7 percent of GDP; this has to be done in the necessary way. For example, the Troika rejected the increase in corporation tax from 26 to 29 percent, as well as the exceptional 12 percent tax on profits over €500,000, on the grounds that such measures… would kill growth! – the strangler warning his victims off wearing a scarf.  However, the Troika was intent on getting rid of the small solidarity payment helping the poorest pensioners – the lowest decile lost as much as 86 percent of its disposable income from 2008 to 2012 [1]… that is, all of 14 percent is left: what excess! The Troika rejected the Greek proposal to tax online gambling, but demanded an end to the subsidised diesel for farmers: loaded, they are. And all the rest.

The institutions of political hatred

We could get bogged down forever in these details, which all speak to an ideological delirium combined with murderous social instincts – in the almost literal sense of the term, since breaking with the curse of government-by-macroeconomic-abstractions demands taking stock of the concrete conditions of the Greek population’s existence in the age of austerity; from the fall in life expectancy to the explosion in the suicide rate, the collapse in the quality of healthcare, etc. [2]. So, yes, we can say all that, but we won’t have said the essential thing. Which concerns a form of political hatred, just like the religious hatreds of old; but the unprecedented thing is that this is an institutional political hatred, a hatred borne by institutions. Since the first day of the Syriza government, the European institutions have had no project other than to make sure that it bites the dust, with an exemplary punishment that will make it into a lesson to think about for any other government that might get the idea of not just capitulating; as if it were necessary to erase any trace of the first authentic change of power in Europe for decades.

Every political system – even one whose mouth is full with talk of democracy – has its "unthinkables", its formal prohibitions and categorical exclusions. So-called "parliamentary democracy", with its pledge to debate everything, is in fact constituted as the political system for the defence of the private property of capital (and all the prerogatives attached to this); that is why it accepts debate over everything except for the private property of capital (and all the prerogatives attached to this) [3]. And history has given sufficient evidence of what "democracy" is capable of when the common folk get the idea of taking on the reign of capital. Yet within this perimeter there did remain some limited space that could be explored. That was still too much for a neoliberal construction like the European Union, which seized a once-in-a-generation opportunity to reduce the limits of the debateable as much as it could. The forms of internal competition, the status of the central bank, the nature and targets of monetary policy, the direction of budgetary policy, the relation to the financial markets: all these things were irrevocably resolved by their inscription in the constitutional treaties, precisely for the purpose of definitively closing the debate on these subjects.

Why be shocked that such a congenitally neoliberal construction would endow itself with institutions that reek so strongly of hatred for all that is progressive? Syriza could not be a partner: from the outset, very logically indeed, it was considered an enemy. The enemy, here, is whoever wants to force you to re-discuss what you have already decreed to be above any debate. Both the referendum (supposing it still counts for anything by next Sunday) and the imminent possibility of Grexit are declarations of the right to discuss things again: affirmations of democratic principle.

The right to discuss things again comes at a high price indeed in the European Union. With its miserable manoeuvres – compounding what you might have thought of it already – the Eurogroup (an informal body of uncertain judicial standing) has devoted all its efforts to making such discussion as costly as possible. But in reality a whole institutional construction is responsible for what is now happening: ultimately it is the European Central Bank (ECB) that will deal the decisive blow, in interrupting the refinancing of the Greek banks.

They must really detest popular sovereignty, for them not even to agree to extend the aid plan until the date of the referendum… It says it all, when the European anti-democratic passion foams at the mouth so much that it does not even manage to stick to its own legal order: after all, it is the ECB’s duty, written in treaties, to refinance the banks, Greek or otherwise, and its fulfilment of this mission is unrelated to the vicissitudes of this or that order – even those of an aid package.

The legality of the termination of the aid plan on Tuesday 30 June being accompanied by the shutting-off of the Emergency Liquidity Assistance (ELA) payments – on which the Greek banking system’s survival depends – is all the more dubious when we consider the autonomy of the ECB’s refinancing responsibilities. (You’d really have to call in the augurs to get to the bottom of the communiqué published by the ECB on Sunday 28 June, whose announcement of the continuation of the ELA programme did not feature any mention of an end date… such that it could be interrupted at any moment. However, despite its heavily implied threat of cutting off the ELA upon the stopping of the salvation plan on 30 June, it could be politically rational for the ECB not to get stuck into the dirty work in advance, and to keep its dispenser open till the date of the referendum: in the European institutions they must be counting a lot on the capital controls introduced on Monday 29 June being an electoral turn-off, with the restriction on account holders’ access to their cash savings being the surest means of spurring on the "Yes" vote).

In any case, as we know, the simple fact of having excluded the Greek banks from ordinary refinancing procedures, limiting them to emergency payments from the ELA, had no other goal than making them feel their state of extreme dependency, and making them see the discretionary powers through which their survival is renegotiated on an almost day-by-day basis: that is, the possibility that the thumbs-down will come at any moment. As always, institutional orders reveal their true essence when they are at their limits, in conditions of extreme crisis. Here all the juridical sophistication of European construction is brought back down to a thumbs-up or a thumbs-down. And the comedy of law reveals the naked power relations that it ordinarily hides.

The moment of chaos

Technically speaking, in any case, we can be certain that the shutting-off of the ECB refinancing, whether it comes on Tuesday 30th or later, will bring down the Greek banking system the same day, and will effectively compel the rearming of the Greek Central Bank as a leader of last resort, that is, issuing a liquidity that will not be recognised by the ESCB (European System of Central Banks). That is, the drachma.

Carried out with such urgency, Greece’s exit from the euro will not be able to avoid the moment of chaos – for reasons for which Syriza shares part of the responsibility. The worry is that the government’s refusal to envisage an exit from the single currency from the outset, and indeed its refusal to make this into a threat that would add weight to the Greek position in the test of force, today leaves it in a state of total unpreparedness. The possible strategic sense of the agreement made with the Eurogroup on 21 February, buying more time, should have been to make use of the last four months to prepare for exit, both politically and logistically.

Now it is doomed to exiting in the worst of conditions. It is impossible to carry out the technical adjustment of the payments system and the conversion of hard currency as quickly as this. So seems that there will be a bizarre moment of dual circulation, during which the cash issued by the Greek banking system will have all the semblances of the euro, but will nonetheless be drachma… a currency which will not, in principle, be recognised as euros abroad, even though they will look just alike, like two peas in a pod!

It has not made preparations in order to avoid a bank run, which is already well on its way: there have been some €130bn of withdrawals since January. If people take out cash for their own peace of mind, that’s no problem, at least for the banking system [4]: once the situation stabilises, these funds will move back in the opposite direction, and in the meantime the Bank of Greece will take over from the ECB in keeping the banks solvent. The problem is this money disappearing: so drastic capital controls, and contingent controls on withdrawals, are the immediately necessary measure, right from the first few hours (and this measure has already been taken).

With the fierce devaluation that would follow the reintroduction of the drachma, would Greeks lose purchasing power, internationally? Yes: that is how it will have to be. By definition, conversion is a purely nominal operation that leaves domestic purchasing power unchanged… apart from imported inflation. Certainly, this inflation will be significant, in the face of a rapid devaluation of the drachma: the Icelandic krona, which lost close to three quarters of its value relative to the euro, left behind some 18 percent inflation in 2008. But the first fluctuations are always wild, and will necessarily adjust themselves in a more reasonable sense in the medium term: the krona rapidly stabilised at 40 percent below its 2008 value, and inflation fell back below 5 percent in mid-2009, before now reaching close to zero. It seems likely the same will happen with the drachma.

In the meantime, perhaps it is necessary to add a measure of targeted protectionism in the markets for goods and services, in addition to capital controls. Greece’s current account will very quickly head into deficit. But the interruption of any incoming financial flow will forbid its financing by the "capital account" part of the overall account, and Greece’s net external position will worsen. So it will be necessary to reduce rising imports; and the effect of their prices increasing will initially count for more than that of the contraction in their volume. Obviously it is of vital importance that businesses continue to have free access to foreign equipment or intermediate consumer goods. So the protectionist mechanism will have to be targeted at (certain) consumer goods (not including energy) up to the point that exports "react" to the devaluation of the drachma: generally to be expected within 12 to 18 months. (From this point of view, the euro exit is happening at the worst possible moment, because it is too late for tourism – the most dynamic sector of Greece’s international trade – to register its effect, and it will be necessary to wait for the next high season to draw benefits from this). The enormous uncertainty will end up putting a lid on the little remaining investment (with the investment rate falling to 12 percent in 2014  [5]…). All these effects, added to the initial disorganisation, promise a collapse in Greece’s growth. We must have the courage to say it: at first it will be a difficult challenge.

This test makes sense economically speaking only because it also opens up new opportunities and restores many degrees of freedom that were absolutely shut down within the framework of the euro institutions. In the first place it allows a break with austerity, which the new measures offer no respite from: Greece is enjoined to achieve a primary surplus of 1 percent of GDP this year, 2 percent in 2016, 3 percent in 2017 and then 3.5 percent in 2018! It will also be relieved of the €26 billion due to its creditors by the end of 2015 [6], such that it will be able to give a resounding "fuck off" to €26 billion of debt – which amounts to close to 15 percent of its GDP!  So this is what Greece has been bled dry for, all these years: paying a debt that everyone knows is unsustainable despite all the rescheduling, and, moreover, for which it is not to blame! The debt picked up since 2008, amounting to 80 percent of GDP, is not – as the autopilot editorialists always repeat – "Greece’s debt": it is the debt of European incompetence, the debt of the most gigantic economic policy error in the history of capitalism, the debt of ideological stubbornness, and, to put it more briefly, the eurozone’s debt – so it’s only fair that the Eurozone should stick the debt up its arse.  

The true face of "friends in Europe"

Writing in January that Syriza faced a choice between capitulation and open sedition [7], and that there was no third choice – and in particular that the idea of getting anything from the European institutions, or even worse of committing to transforming them from within, was a total fantasy – I have to admit that I was not ready to bet much on the chance of open sedition, hic Rhodus hic salta [8], as the Latin adage puts it. And that’s where you see real politicians. Despite all the strategic errors that he has committed thus far, you can truly say that Tsipras is a real politician. It takes a hell of a lot of determination to deal with the mix of perils and opportunities offered to him today – offered to him?... No, rather, the opportunities that he has brought about, by holding as closely as possible to the essence of politics: a proposition to the people, to be decided on in a sovereign manner.

Just as Roosevelt in 1936 declared his pride at becoming the object of the capitalist oligarchy’s hatred after he decided to openly defy them, Tsipras can be proud of the wagonloads of insults directed against him by an oligarchy of another type; the mass of infantrymen for an era that is now coming to an end, who will also fall to the same fate: a historical disgrace. The first thing that Jean Quatremer of Libération newspaper thought it worth tweeting consisted of photos of people queuing for cash machines. And he declared with a cruel joy: "So Greece will be bankrupt by midnight on Tuesday. Brace yourselves!"

It would be nice if some talented archivist, conscious of the historic significance of what is currently at stake, devoted herself to recording everything that is being said and deserves to be remembered; everything that the oligarchy does and says when, tested by a moment of critical importance, it finally throws of its mask. And this time the mask really has been thrown off. "Greece is finished", read the headline of the 28 June Journal du Dimanche, directed by Denis Olivennes, one of Les Gracques [9], the tribunes whom we have to thank for the quasi-psychiatric column published in Les Echos where we learn about the urgent need "[not to let] Mr. Tsipras hold up the banks" [10]; that’s literally how they put it, though the refusal to restructure Greece’s debt up till 2012 in fact had no purpose other than to save the German, French etc. banks. That is, precisely the banks where the Gracque vermin proliferate; and it is they who are the real vermin of French society, not the racaille invoked by Sarkozy. These are the "former top Socialist officials", as they like to present themselves, who really tell us a lot about the true state of French "socialism" – for those who still hadn’t understood.

Bloomberg is already kicking up a fuss over the notion that you could "try getting Grandma to vote" on the Troika’s "highly technical documents". It’s true – what kind of weird idea is that? Real democracy is that which contents itself with following the opinions of the specialised journalists and economists of Bloomberg. Or of Libération. As with all historical events, Greece’s exit will be a Rorschach test of truly grand significance, a high-powered photo-processing bath.

We can say it already, because the great evacuation has already begun: the unhinged oligarchy is going to show its true face and speak its true language. Jean-Louis Bourlanges on France Culture spoke of Tsipras as a "revolutionary terrorist" [12]; while Quatremer, foaming at the mouth, relayed the meanderings of Kathimerini, a right-wing Greek daily that characterised the referendum as a "Bolshevik coup d’état". It is a formidable moment of truth where we plainly see who is who and who says what. Yes, we would really like all this to be meticulously recorded, so that people will know what became of "democracy" in Europe in the age of the single currency. And for this fine collection to produce the effect that it is doomed to produce: that of ridicule mixed with ignominy.

And us?

Through a paradox that owes entirely to the blows struck by the whip of adversity, it could be that this avalanche of hatred – there’s no other word for it – will be the best cement of the European Left, and its most powerful motor. The ideological war has been declared. And it will indeed need this state of mobilisation and anger in order to bear what it will have to bear. Let there be no mistake: unless the euro as a whole breaks up into pieces – which is certainly not impossible, but nor is it the most likely outcome – the bloodshot eyes of today will soon give way to the disgusting, triumphalist laughter of the Versaillais, when Greece falls out of the bottom of the hole. And it will do so. It will fall out at the worst possible moment, when the Spaniards and the Portuguese, themselves about to vote, will be offered the spectacle of the "Greek disaster" as the image of their own fate should they dare to challenge the order of the single currency. It will be a transitional but terrible moment, where the economic data of the situation will offer no succour at all, unless people are able to adopt a medium-term horizon; only anger and indignation will allow people to get through the adversity that lies in store for them. That is, before the economic – and even more so, political – benefits of the sovereign gesture eventually manifest themselves.

As for those of us who aren’t Greek, what can we do in the meantime, in order to escape from our impotent rage? Since February we have seen the flowering of solidarity initiatives in which the heartwarming battles it out with the derisory: the Brigades Internationales’ version of KissKiss BankBank has mainly had the effect of saying something about our age… In reality this event offers perhaps the best opportunity to rediscover – and for some, simply to discover – the fact that real internationalism consists less of the imaginary overcoming of nations, than of the international solidarity among national struggles. And of the consequences that they have for one another. The Greeks have reached the point of defying the neoliberal order’s principal institution: the European single currency. For those of us who suffer from the powers that have entirely sold out to this order, to reach the same heights as our Greek guide demands nothing less than turning against our own governments.


[1] Philippe Légé, "Ne laissons pas l’Europe écrire sa tragédie grecque", Note des Economistes Atterrés, 30 April 2015.
[2] Sanjay Basu and David Stuckler, "Quand l’austérité tue", Le Monde Diplomatique, October 2014.
[3] Worthless here to argue about episodes of ‘nationalisation’, which have always been very partial and never challenged the essential thing, namely social production relations, which are unchanged even in the enclaves of state capitalism.
[4] It is a problem if this money taken out of circulation stops driving market exchange.
[5] In 2008 it stood at 26 percent…
[6] An agreement with the Eurogroup would have covered just €15bn of this, not to mention its splitting into tranches of €7.5bn, planned precisely in order to activate a review clause on each occasion.
[7] "Syriza faces a choice between capitulation and open sedition", Verso translation of a blog from Le Monde Diplomatique, 19 January 2015.
[8] "This is where you jump!"
[9] [The Gracques are a social-liberal thinktank, named after the Gracchi brothers, radical tribunes of the people of Rome in the second century BC. Lordon’s French text features an untranslatable pun; "tribune" is also French for "newspaper column" – DB]
[10] Les Gracques, "Grèce: ne laissons pas Monsieur Tsipras braquer les banques", Les Echos, 15 June 2015.
[11] "Tspiras Asking Grandma to Figure Out if Debt Deal is Fair", Bloomberg, 28 June 2015.
[12] "L’esprit public", France Culture, 28 June 2015.

Filed under: greece