Dimitris Pavlopoulos and Yiorgos Vassalos published a wonderful evaluation of the garrotting of Syriza’s revolt in the New Left Project website (click here). It explains how and why the Eurogroup and Germany have come down hard on Greece seeking to destroy any attempts to challenge orthodoxy. They talk of a neoliberal straightjacket that has been a theme of mine for a while (see here). I very much agree with their analysis.
The main preoccupation of international institutions like the “ex” Troika in Greece is the sustainability of market friendly reforms. It is at this point that a fundamental rift between market promotion and democratic development becomes apparent. If in a democratic society the public has the power through the electoral process to challenge all aspects of economic organisation and policy, then the reform process could in principle be modified or, indeed, reversed by the election of governments with less faith in markets (like the Syriza government for instance). The only way to avert this danger and cement reforms is by limiting the reach of the political process; by immunising the economy from political interventions. One of the ways this is achieved is via efforts to decommission the political arms of the State in an expanding zone of policy and regulatory activities. According to Rittich (Rittich, K. The Future of Law and Development: Second Generation Reforms and the Incorporation of the Social (Fall, 2004) 26 Michigan Journal of International Law 199):
‘The motivation is to bind the State into the future so that reforms agreed to at one point in time with one administration cannot be undone, at least without considerable expense and effort, at a later date. The (World) Bank has now concluded that the answer to the problem of states credibly committing to “good” policies may be the delegation of a range of functions typically associated with the State to either independent agencies or external, international institutions. Taking a cue from the independence of central banks, the Bank proposes that tasks such as tax collection and trade policy might be taken out of the political or legislative arena as well.’
This process has been described as involving the constitutionalization of reform and operates by placing market norms beyond the reach of political institutions. This is achieved by placing the sanctity of property and contract, together with definitions of human rights that include the unassailability of individual property rights, in constitutional structures that are impossible or near-impossible to amend. The market protective framework is then completed by the subsequent creation of politically independent courts that can overturn government legislation that violates those rights. The most obvious example, perhaps, is the Supreme Court of the United States which has the power to declare legislation unconstitutional on grounds that it violates constitutional rights. This legal/ institutional framework safeguarded by a pro-market bench means that state policies with social objectives and redistributive aims are very difficult to implement if they offend the basic pro-market politico-economic status-quo. In short, the ideological and methodological straightjacket of neoliberalism is leading to the adoption of a policies and, more importantly, to a framework of rights which will make it very difficult to broaden the development/transition agenda to include social and distributive concerns.
What is clear is that as democratic societies we still have not found the strength to identify the underlying reasons that guide our policy impulses. So long as we do not find the confidence to say, we do not like austerity because it is incompatible with a shared vision of a healthy society, and we hide behind technical language and rationalisations along the lines of moral hazard, we will never manage to change the way markets see themselves and the way market players behave. Yet, in order to make an argument based on visions of an appropriate and good society, we need to find a way to define what is good. Accepting the de-politicised nature of markets means we cannot use our democratic structures to define social goods. We are doomed therefore to repeat the past, to lose sight of what is important and to remain vulnerable to arguments based on the most ‘efficient’ ways to achieved ill-defined outcomes. I do not see in the latest Eurogroup negotiations (and much more besides) reason to be very optimistic that we are leaving financialised capitalism and its excesses behind. So long as we do not break out of the neoliberal straightjacket that has contained thinking about the state market-relationship for the last three decades we will not be able to chart a route to a different future.