You are here

Why Paul Krugman is Wrong, and the Greek Syriza-led Government Will Fail

Why Paul Krugman is Wrong, and the Greek Syriza-led Government Will Fail By Michael Rectenwald, Ph.D. | 1 Feb 2015 |

In his recent nostrum for the EU upon the election of the Syriza government in Greece, Paul Krugman is both right and wrong. Usually he's merely wrong. But here he is partly right, because the situation involves debt and credit within a putatively democratic union of sovereign states. Within that supposed union, the question is whether the larger whole will pay a greater price for the survival of a member (Greece). If not, the democracy of the EU is a farce, as is the election in Greece of national leadership opposed to austerity. So far, so good.

But Krugman is wrong when he fails to notice that the Central Bank of the EU is subject to the same crisis of capitalism that is plaguing the global economy. And here Krugman is egregiously mistaken. A typical neo-Keynesian, he takes the crisis of capitalism to be the effect of national and international policies. But the fact is that the policies that governments enact do not cause economic crisis, but rather are result of the crises of capitalism. Those crises, the proximate causes for which are debatable even among Marxist economists, are based on the contradictions of capital, which cannot be obviated by policies, but only, in some cases, slightly mitigated by them, while in many others, exacerbated.

The issue is that the current crisis of capitalism may be a "permanent" one, in that the Keynesian and neo-Keynesian nostrums are not working and will not work. The crisis sees no prospect of resolution or substantial mitigation. The reason for this seeming permanence is likely that the possibilities for primitive accumulation have either been completely exhausted, or they are not likely to be found soon. Primitive accumulation refers to the prospects of finding new resources, usually expropriating them via imperialist war, or finding new labor markets for exploitation. As it is, there is nothing in sight to offset the internal crisis, which is probably the crisis in profit resulting from the law of the falling rate of profit identified by Marx.

Subject to the crisis of capitalism, the Central Bank simply cannot afford the policies of the recently elected Syriza party. Thus, of the two options -- the continued repayment of EU loans at the current rate, and a reduction in said payments soon to be proposed by the Syriza led government -- only the choice of continued austerity is possible. The effective welfare system proposed for Greece by the Syriza-led government in Greece is a policy that the EU Central Bank cannot afford. Thus, the new Greek government will necessarily fail.

Only a revolution that overthrows the system of profit itself will obviate austerity, and only a union of the vast majority (the working classes) of Europe, with the help of workers in the US, China, India, and elsewhere, can bring about such a revolution. -- Michael Rectenwald

Michael Rectenwald at Highgate Cemetary, London

Michael Rectenwald at Highgate Cemetary, London

Michael  Rectenwald, Ph.D., is the founder and chair of Citizens for Legitimate  Government. His writings for CLG can be found here and here. He is a professor in Global Liberal Studies at New York University. His articles  have appeared in several journals and anthologies, including the British Journal for the History of Science, Endeavour, College Composition and Communication, George Eliot in Context (Cambridge UP), the International Philosophical Quarterly, Insurgent Notes, the North Star, The Victorian Web, and others. He is the author of the writing-across-the-curriculum textbook, Academic Writing, Real World Topics, forthcoming from Broadview Press in April 2015. He is the editor of the anthology Global Secularisms in a Post-Secular Age, forthcoming from De Gruyter in June 2015. And his monograph, Secularism, Science, Literature and Religion is under contract with Palgrave Macmillan. His newest work reflects a revision of our understanding of Secularism in connection with Charles Taylor's reconceptualization of secularity.

Subscribe to the CLG Newsletter.