Is growth returning to Greece?

 Diamantis  Diamantopoulos, "Catharsis" Diamantis Diamantopoulos, "Catharsis"
Dimosthenis Papadatos-Anagnostopoulos

Since autumn,  and with increasing urgency during the last weeks,  the Greek Prime Minister claims that now is the time for the sacrifices of the Greek people to  be vindicated. The view that this will happen in the second half of 2016 is mentioned in the European  Commission economic forecast for Greece, published in May 2016. More specifically, according to the EC a GDP growth to Greece is expected to resume due to an acceleration of domestic demand.

But how would you combine  indirect taxation, the “automatic expenses  and salaries mechanism cut”, the abolition of low income benefit (EKAS) and other austerity measures imposed by the latest  omnibus,  with  strengthening  of domestic demand and consequently with the recovery of economy the next months?

Minister of Finance Efkleidis Tsakalotos himself admits that the above don’t match:
“I fully understand  those we claim that even if we succeed something regarding debt relief, this doesn’t help directly the poor who are already in difficulty, since we impose heavier taxation at the same time[…] This is true. On the other hand, if we succeed something on the debt issue  […] this will be a signal for the markets  that the Greek economy can cope with it and so investors can invest long-term. This can itself offset the recessionary measures that we take.”

From the above statement we don’t  deduct  that the estimated return to growth will come due to the acceleration of demand. According to the Minister,  growth will be the result of the debt settling, which will bring investment. Where is this estimation based?

Investment without a profit guarantee?
Since 2008, the percent of GDP gross investment is constantly falling , with the exemption of the second semester of 2014 and the first of 2015. As usual, the neoliberal explanation ,but also the government’s latest argument , for this decline is political uncertainty in Greece. However, reality is different.  According to Workers General  Confederation Institute ‘s (INE-GSEE) annual report for 2016,  the undistributed profits - particularly since 2013-  are in a higher level comparing with  funds invested: businessmen prefer to keep their profits instead of investing in “real economy”.

This is not a Greek specific. OECD forecast for 2016, published in February, refers to  subdued investment in Eurozone, in addition to high unemployment rates. Political instability has not always been a fact in Greece and certainly is not in other countries;  the point has always been  who do we secure this stability for.  On the contrary, what has been always the case was uncertainty regarding the expected earnings.   Investors are not usually motivated by their will to offer to the society.

Growth means the end of the crisis?
Neoliberal financial analysts as much as the Greek  government  wait for the growth together,  planning as if the global economic crisis is over.  As if labour exploitation by the capital –as described by Marx- up to the level  that “healthy” growth of the capitalist production procedure can be secured  is no longer the case. On the contrary, it is this crisis that accelerates a series of mechanisms to prepare the new phase of “growth”, i.e. capital accumulation.

Some of these mechanisms are familiar:
I. The liquidation of inadequately exploited capital , the cessation of small or large production units, the concentration of capital. From 2008 to 2015, 244.712 enterprises have stopped their operation or moved from Greece.  This is not due to the “anti-capitalistic campaign of the Left and the Unions”, as argued by the  mainstream media. This year’s report  of Greek General Confederation of Labour Institute (INE-GSEE) reminds us that with the liquidation of the weakest funds, the current demand moves from the companies that closed down to the ones who persevere until now. During a crisis, some mourn and some thrive.

II. The increase of long-term and mass unemployment, the reduction of purchasing power,  intensive discipline and transformation of terms in selling labour.  During 2010-2015, Greek GDP shrunk by 24.2% and unemployment exploded: 12.7% (2010), 17.9% (2011), 24.4% (2012), 27.5% (2013), 26.5% (2014) and 25% (2015). The increase of employment by 222.834 jobs in the beginning of 2016, is characterised by “flexibility”. The general trends in the labour market are:   the substitution of  full-time employment to part-time,  no obligation for reimbursement for  temporary employment when someone gets redundant, no payment for overtime. 

During the same period, the actual salary has decreased by 28.1%, while the dropping of purchasing power of the lower salary is not comparable to any other country in Europe : -24.7% for all, and -34.3% for youngsters under25 .
Growth? Maybe, but for who?
It is against this background,that the growth will eventually happen, if ithappens. During the crisis a redistribution of income against the employment was imposed in order to secure“normal” growth,which has not been feasible. So, this redistribution is going to continue, and now we have a new weapon to support it, the automatic mechanism of cutting expenses.In this case the parliamentary majority will not be under pressure.
David Harvey names this condition accumulation by dispossession”  and De Angelis “new enclosures». The much –awaited investors will come only if the Greek government guarantee profits for them, and this guarantee means the concession of public resources and strategic corporations, through  a new privatisation fund.
Under these terms, the Greek economy might warm up, but in reality will be stabilised in a much lower lever than before the crisis. What would this “achievement” mean for the society and the environment? The “red growth” propagandaavoids any reference to that.That’s because the “red” growth is similar to the “blue”with only one difference:in the first case the political party that demanded writing-off the debt, high taxation of the rich (wealth),major public investment and strengthen of the workers’poistion in production, is the same party that calls social cannibalism a “march forward”.

Translated by Caterina Drossopoulou

First published in Greek on RedNotebook, 24.5.2016

  • Translated by: Caterina Drossopoulou
  • The original text was first published on: RedNotebook, 24.5.2016