VICTORIA WHITE: It's time to reorder the global economy instead of undermining capitalism

People may not like bankers or capitalism, but they like being better-off and won’t vote to be poorer, says Victoria White

It’s a good day for the populist opposition in Greece, and a better day for Alexis Tsipras’s opponents within Syriza.

“Traitor!”, they cry. “You signed an agreement in which you did not believe!” What can Tsipras do but wearily explain that he chose the lesser of two evils: sign or Grexit?

Sign or chaos? Sign or still more austerity? After a political lifetime denying that the life-blood of his economy runs through the capitalist system, in the early hours of Monday Tsipras was forced to the horrible admission that it did.

There’s vindictiveness in the terms of the proposed bailout for Greece. Certain measures seem counter-productive, such as increasing the top Vat rate to 23%, when Vat is a regressive tax that stunts economic growth. One can only wonder at the wisdom of a hike in corporation tax in a country in which no-one wants to invest. The possible forced privatisation of blocks of Greek national security, such as airports, ports and utility companies, seems deliberately provocative, even if the investment of some of the gains in the Greek economy is welcome.

But these simple facts are working their way through Tsipras’s digestive system: exit from the euro and a return to a national currency would result in massive devaluation.

This would mean all imports, particularly oil and gas, would probably double in price. That would eviscerate what is left of the Greek economy and perhaps Greek society.

Further, no one would trust a country that had defaulted by so much and in such a chaotic and spectacular fashion. Modern economics are not simple matters of profit and loss, but are built on multiple international relationships and these have to be founded on trust. Cut off from these, Greece would wither.

This is why our own Anti-Austerity MEP, Paul Murphy, is no longer ra-ra-ing for Tsipras, whom he now considers, rather hilariously, to be on the “right wing” of Syriza.

Murphy has a simple plan to sort Greece out: default, or rather, “repudiate” your debt. Revert to a national currency. Take all banks and industries into national ownership. You have a balance-of-payments surplus, so what’s the problem with Grexit?

Poverty is the problem, Paul. People don’t like it. The entire economy of the Western world has been built up over centuries through capitalist trading systems and based on capitalist banking systems.

And while people may not like bankers or even capitalism, they like being better-off.

People won’t vote to be poorer, which is probably why Syriza is still polling well this week. If you want to dump the capitalist system, you must dump democracy first. Dump democracy and you get some form of dictatorship, which might be benign, but probably wouldn’t be.

If we stick with democracy, we’re stuck with some form of capitalism. The key is regulation. Because I’m a left-winger, I’d vote for stringent global and national regulation of the banking system, and stringent global and national environmental regulation. I’d vote for serious redistribution, not just of income, but also of wealth and the best social services that money can buy.

It will still be difficult to stop the planet incinerating itself with greed. But if you’re asking me if I want to reorder or collapse the global economy, I’d vote for reorder.

That forces the recognition of certain facts: Because a small national currency finds it hard to survive in the developed world, we have joined a big currency. That big currency has rules, because the other people who use it don’t want the value of their notes questioned.

This is why a further ‘write-down’ of Greek debt — which is both necessary and inevitable — is so difficult for the European system to achieve.

Eurozone leaders are worried the euro will develop the reputation of a currency that isn’t honoured. They made the calculation that Grexit was cheaper for the Eurozone than an up-front write-down of Greek debt, and that is how Tsipras was forced into a corner. Post-war debt write-downs carried no such risks.

These realities have been constantly denied by the populist left-wing in the developed world, in the course of the financial crisis. This is ironic, when you consider that most of vocal members of the populist left-wing, including Alexis Tsipras, are in the pay of the very capitalist system they despise. And, since the 1960s, when many of the currently influential people among the left-wing had their political awakening, the capitalist system has been generating a lot of cash to pay them.

Our left-wing broadcasters, academics, teachers, politicians, and journalists — including yours truly — have largely approached capitalism like a hole in the wall that endlessly dispenses cash. They have not bothered much to enquire what was going on behind the wall. This has made them hopelessly incapable of intelligent criticism of the capitalist system.

Nowhere has this been more true than in Ireland. In the run-up to the crash, when did any of our prominent left-leaning commentators mention banking regulation? As for attempting to understand the euro, what membership implies, and what exit would mean, did any of them get it?

I remember journalist Olivia O’Leary’s announcement, on RTÉ Drivetime in 2010, that the very idea that any country would be forced to leave the euro was “rubbish”. She quoted UCD academic, Karl Whelan, as saying that there was “no mechanism for any country to leave the euro”.

Alexis Tsipras could set him right on that one. His public humiliation has sent out the message, loud and clear, that the eurozone is not to be messed with.

I hope the European powers don’t ram it home. I hope the TV cameras move away and let some vestige of Greek government start to implement this deal.

Only then, through tireless negotiations in back rooms, can successive Greek governments start to get effective debt relief by extending and pretending, then forgetting and obliterating. I would be proud of an EU that attempted to hasten Greece’s recovery with targeted humanitarian aid and imaginative investment programmes.

But Greece will not recover under the stewardship of a left-wing that does not understand, or even recognise, the financial system that funds it. Nor will we. And capitalism will not be made to serve us, the Greeks, or anyone else, if the powerful people paid to criticise its massive failings, and to find new ways forward for humanity, pretend it can be done away with at little cost to the less powerful.

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