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Thursday, June 4, 2015

Grexit, Euro, Drachma, and Global Geopolitical Economy

I'll make this very brief. A few basic points.

1. It may very well be advantageous for Greece to abandon the Euro and return to the Drachma. By re-gaining sovereignty over the currency, the government will be able to use a host of measures, including exchange rates vis-a-vis key foreign currencies, to make a step toward achieving fiscal balance.

2. If that is the case, it will show up the Euro as a currency--more important, the European Central Bank and, along with it, the entire political and fiscal mechanism that stands behind the Euro--as a tool that refuses to cover the costs of the "catching-up" of one of its less wealthy states. In other words, the Euro will be shown up, in sharp relief, as a quintessentially neoliberal instrument, serving the purpose of maintaining the global strength of west European large capital, with zero interest in the living standards, life opportunities, etc. of the societies that make up the EU. (Keep in mind, BTW, that Greece is not particularly large, and by far not the poorest member of the EU, i.e., the task of "saving it" would be nothing in comparison with, for instance, the subsidies west European economies received throught the Marshall Plan, etc.) Nor is the EU, and the fiscal mechanism that keeps it together, comparable to a state that has, conventionally speaking, a certain responsibility for subsidizing its poorer regions, the economically more marginal segments of its population, etc. Nothing like that. The EU(ro)'s message to its poorer, less well managed, etc., member states is, "swim or sink." The unelected officials of the ECB, the IMF, and the nationally elected leaders of the most powerful EU-member states whose most important tasks involve the suprastate, supranational exercise of power can, and obviously do, act in complete impunity vis-a-vis the societies of the smaller and less wealthy member states. Greece's "big sin" is that it has introduced welfare state provisions on par with those in the wealthy north European states. In other words, over the last decades, the Greek governments acted as if they didn't know "what Greece's proper place is." Wealthy northern Europe will not stand for that.

3. If the Euro and the technocratic elites behind it see it as their job not to help out a member state that is in fiscal doldrums, the next logical question is, "What is the point of the Euro, then?" My tentative answer based on what we can see now: It is, first and foremost, a tool of size-making for west European capital, an instrument to "share and pool" the global financial weight of western Europe's, on an individual basis, chronically weight-impaired, and endemically unable-to-grow, capital and their associated bureaucratic and state elites.

In other words, a Greek exit from the Euro would reveal--perhaps a tiny bit more than it already has--the global geopolitical-economic essence of "European integration." (For more, please see my book on the topic of just what the EU is, and why that matters.)

BTW, the fact that the EU(ro)'s character would be more clearly revealed doesn't mean that it will, in the long run, succeed in saving / promoting west European capital. But it does suggest that we are looking at a potentially very significant increase in geopolitical-economic uncertainty and re-organization: In geopolitics, there is no such thing as a peaceful vacuum.

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cover page of the book

cover page of the book
image used for the cover design by Anannya Dasgupta