Economic policy undermines political hegemony
In the streets of Greece demonstrators are again facing police forces. This radicalisation is due to an erosion of the neo-liberal hegemony: a dramatic rise in profitability followed by persistent unemployment and threatening poverty means that the bourgeoisie can no longer convince the labouring classes that their economic policy promotes the "general interest" . Anticipating the rise of social unrest and agitation, the government is gradually shifting its policy from ideology to violence. Elias loakimoglou* The political hegemony of the bourgeoisie depends on its ability to convince the other social classes that its own particular interest is the interest of the population as a whole: the "people's" interest, the "national" interest, the "general interest" This hegemony is destabilised if, over a period of time, the bourgeoisie's economic policy clearly fails to increase the "general welfare"
In Greece, since 1986, economic policy has abandoned the targets of full employment and sustained economic growth and has concentrated its efforts on monetary targets. During the '90s, increased profitability has been accompanied by persistent and rising unemployment, thus making it more difficult for the ruling class to present the particular interest of the capitalists as the "general interest" Left Keynesians in power (1981-85)
From 1981 to 1985, the ruling socialist party (PASOK) successfully argued that social policy and economic growth are two aspects of the same process: the former (reduction of capitalist exploitation, increase in State social spending, the fight against poverty...) is a condition of the latter (economic growth).
PASOK policies during these years gave the labouring classes the opportunity to challenge the bourgeoisie's hegemony. Left Keynesian theory, frequently expressed in a Marxian-like glossary, helped express working class interests.
Since 1986, the bourgeoisie has been imposing the idea that falling wages and rising profits, public deficit reduction and the weakening of the welfare state contributes to the progress of "general interest"
Today, PASOK is a defeated party of 10 International Viewpoint #303 the labouring classes, a party that can no longer challenge the bourgeoisie's hegemony. "Social sensitivity" (1986-94)
The radical change in PASOK's economic policy from left keynesianism to mild monetarism in October 1985 opened a new period in the class struggle. From the beginning of 1986, the balance of power shifted dramatically, at the expense of labour.
PASOK's new economic policy mirrored the policies that dominated in all OECD countries during the 1980s, supplemented by "social sensitivity" , meaning some consideration for the social consequences of economic policy.
In this period of "social sensitivity" PASOK kept the support of the most vulnerable classes of the population. "Social sensitivity," combined with Prime Minister Andreas Papandreou's unpredictable character, created in the masses the feeling that a historical surprise, an unexpected "turn to the left" was possible. In other words, PASOK remained the party of the Social-democratic Contract - even if it was a contract in suspension - right up until 1994. This enabled PASOK to accelerate the modernisation of Greek capitalism, while efficiently and effectively managing the resulting social conflicts and problems. Deception and Instability (1995-98)
During the last three years, PASOK leaders have tried to convince the labouring classes that the immediate interests of Capital coincide with the general interest. The increase of profitability - by any means necessary - is supposed to be the precondition for general prosperity. And, secondly, the labouring classes should accept voluntarily all the necessary sacrifices. The government of Papandreu's successors has revoked even the last existing element of "social sensitivity" that could allow the maintenance of even a weakened relationship of representation of the labouring classes by PASOK.
In other words, Prime Minister Simitis' government is a weak government: firstly, because it abolishes even the minimum conditions by which the labouring classes could believe that PASOK represents them. Secondly, because it is a PASOK government that undertook the task of convincing the dominated classes that the Capital's specific interest is identified with the general interest (general prosperity in the future). The incredible thing is that a socialist government is doing this at a time when the economic policy is loosing its credibility among the citizens! It is loosing its credibility because, in Greece, over the last 10 years, profitability has increased, while unemployment has reached unbearable levels. In spite of its success in controlling certain monetary variables, economic policy in Greece has had less than mediocre results in terms of unemployment, productivity, international trade, and investment.
Moreover, the government has adopted a "tough guys" policy. It is intervening directly to further reduce real wages, unit labour costs and the public deficit, to impose flexibility in the labour market and reduce trade union power.
As a result, the conditions for an exasperation of the contradiction between Labour and Capital are gradually concentrating. Abandoning full employment
Economic policy in Greece has abandoned the "traditional" Keynesian hierarchy of targets, accepted by most economists between the end of the Second World War and the beginning of the 1980s. The most important targets of this policy were economic growth and full employment. Of course, price stability, the control of the current account deficit, and low public debt were also targets of economic policy. But they had the status of secondary targets, of additional conditions for growth and full employment.
Since 1986, Greek governments have accepted to reverse the hierarchy of economic policy targets. Other European Union countries had already made such a shift. The fall in the unemployment rate is no longer an central economic policy target. Instead, it is a target of relatively autonomous "Employment Policies" ", inspired by the ideology of Labour Economics. Employment Policies act within the limits defined by economic policy. This relation of subordination is based on the assumption that the stability of prices, the reduction of the public debt and public deficits are the best ways to reduce unemployment in the long term.
This change in the targets of economic policy affects the ideological system of capitalist hegemony. The fact that economic policy in the past declared full employment as a target gave the dominated social classes the possibility to identify their own direct interests among the stated goals of the economic policy makers. Today's economic policy has removed this possibility: not one single interest of the labouring classes is represented in economic policy. As a result it becomes more and more difficult for Capital to present its own interest as the "general interest" Increasing profitability does not lead to decreasing unemployment
After years of monetarism in its various forms, we can clearly see that the fall in unit labour costs and the increase in profitability has not lead to a significant increase of investment as a percentage of GDP and, therefore, in a decrease of un-
employment. The promises of governments during the years 1986-1997 have not come true.
To understand this, let us look at Greek companies with more than 10 employees. Until the mid-80s, gross fixed capital formation, calculated as a percentage of gross value added, shows fluctuations which follow, approximately, the changes in profitability (measured as the rate of return on fixed capital). But since the mid-80s, the two variables are no longer correlated and investment follows the variations of demand
The only kind of investment which shows a significant - though mild - increase is investment in machinery. And this affects employment in a contradictory way. On the positive side, it enlarges the capacity of production, but on the negative side it replaces human work with mechanisation.
Economic policy is based on the theory that unemployment will fall as a result of the reduction of labour costs, and an increase in competitiveness, exports, profitability and investment. This theore-
Iceland
New directions for the This summer has seen much upheaval in left politics in Iceland. The mainstream left parties are moving towards closer co-operation and greater moderation, and a new group on the far left is striving to unite those who oppose this rightward slide. Einar Olafsson reports.
Suprisingly, perhaps, it is younger members who have been most active in the movement for greater cooperation between the left parties in Iceland, the social democratic People's Party (Althyduflokkurinn), the socialist People's Alliance (Althydubandalagid) and the feminist Women's Party (Kvennalistinn).
In the 1994 municipal elections, an alliance of these three parties and the centre-ground Progressive Party (Framsoknarflokkurinn) won the majority in the
Reykjavik city council. Apart from a fouryear period in the seventies, the capital has been dominated for many decades by the right-wing Independence Party (Sjalfstaedisflokkurinn), Iceland's biggest political party.
Until 1995, the Independence Party and Social Democrats ran a coalition government. After elections that year, the Independence Party switched partners, forming a new government with the Progressive party.
In the municipal elections in May 1998 the left coalition held the majority in Reykjavik and in many other places there were left or left-centre coalitions, but their success was very variable.
The idea of this movement is a coalition in the parliamentary elections in 1999 with the eventual aim of unification.
Not everybody in the left parties agrees tical prediction is not confirmed by the facts. Unit labour cost in Greece is low compared to all other EU countries (except Portugal) and the relative decline is continuing. Profits are increasing, as the table shows. But investment is sluggish. In other words, the dramatic increase in profitability based on the reduction of labour costs has not led to an increase in investment or a decrease of the unemployment rate. A revival of struggle
Not surprisingly, the main elements of economic policy no longer inspire the same credibility among the labouring classes. It is increasingly clear to citizens that economic policy has nothing to do with the interests of the labouring classes, and that unemployment will continue to rise in the coming years, despite improving monetary targets and rising profits.
This credibility problem will make it increasingly difficult for the dominant class to present labour market flexibility, lower labour costs, privatisation and cuts in public services as necessary means to left with this strategy. Many militants would prefer that the parties go to the elections with their own programmes, but make a statement that they would cooperate in a government after the elections.
In 1997 some members (and one Member of Parliament) of the Women's Party (which do not recognise the term "left" and "right" in politics) left the party after it agreed to participate in a left coalition.
There have recently been defections from the People's Party, which approved the coalition at a special congress in July. Two Members of Parliament are among those who have left.
Partly in response to this growing cooperation between the mainstream parties, on an extremely moderate programe, a group of independent leftists came together in May 1998 to form Stefna (Direction). The group includes activists and leaders of the organisations of municipal and state workers, teachers and students and former members of Trotskyist and Maoist groups. The organisation's aim is to resist the neoliberal policy of the government and the neoliberalism that is more and more dominating the whole society including the left. Stefna hopes to become a broad organisation for left-wing people. The group is opposed to the privatisation and the marketising of the social services and will fight for the protection of the environment and for human rights, justice, equality and social security.
Although it is not directly said in the programme of Stefna, the group does not support the coalition policy of the left improve the condition of the working people. The government governs against the labouring classes and most people now know it. That is why, in Greece, working people are increasingly taking to the streets in protest, and why they increasingly face the police when they do so. *
*The author works at INE, the Research Institute of
Greece's general trade union federation GSEE.
Profitability and Unemployment in Greece
RETURN ON CAPITAL UNEMPL
IN THE BUSINESS SECTOR 27% MENT 12%
Unemployment 10% is rising
25%
8%
23% 6%
...despite increasing 4%
21% profitability
2%
19% 0%
1981 1983 1985 1987 1989 1991 1993 1995 1997 Sources: OECD, National Statistics Service of Greece parties.