“Neoliberal restructuring and primitive accumulation in Greece”

Workshop on marketization and neoliberal

restructuring in Europe 22-24 September 2014

Konnevesi, Finland

Lefteris Kretsos University of Greenwich

L.Kretsos@gre.ac.uk

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mailto:L.Kretsos@gre.ac.uk

Primitive Accumulation process

• the commodification and privatization of land and the forceful expulsion of peasant populations;

• the conversion of various forms of property rights (common, collective, state, etc.) into exclusive private property rights;

• the suppression of rights to the commons; • the commodification of labour power and • the suppression of alternative (indigenous) forms

of production and consumption; • colonial, neo-colonial, and imperial processes of

appropriation of assets (including natural resources);

• the monetization of exchange and taxation, particularly of land;

• the national debt, and ultimately • the credit system.

FINANCIALIZATION (From From Glass-Steagall Act (1933)n to the Commodity Futures Modernization Act 2000)

From corporate looting spree…

Between fourth quarter 2004 and fourth quarter 2008,the companies in the S&P 500 paid out USD 900 billionin dividends and bought back 1.7 trillion of their ownshares – 2.6 trillion dollars returned to shareholders onearnings of 2.4 trillion.

To corporate investment strike

Corporations in the U.S., the euro zone, the U.K. andJapan currently hold $7.75 trillion in cash, or nearequivalents, an unprecedented sum.

Why adjustment was needed in the case of GREECE?

Government Expenditures and Revenues, 1980-2012 (% of GDP)

Upper line expenditures, lower line revenues (IMF: World Economic Outlook Database, April 2011)

5 20

25

30

35

40

45

50

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Eurozone Government Deficits and Debt, 2009 (in percent of GDP)

Budget Deficit Public Debt

Austria -3.429496 66.5

Belgium -5.976824 96.8

Cyprus -6.07028 56.2

Germany -3.298853 73.2

Finland -2.153582 44.0

France -7.546907 77.5

Greece -13.618028 115.1 Ireland -14.277591 64.0

Italy -5.312749 115.8

Luxembourg -0.735442 14.5

Malta -3.816527 69.1

Netherlands -5.298067 60.9

Portugal -9.412353 76.8

Slovakia -6.773827 35.9

Slovenia -5.48805 35.7

Spain -11.19059 53.2

Source: ECB

Debt Spreads to German bonds, 2009-2012

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And the remedy? Memorandum Agreements

• A DOUBLE TARGET – Sustainability of the Greek public debt

– Increasing competitiveness

• DIAGNOSIS – A large public sector

– An inflexible labour market

• PRESCRIPTION – Internal devaluation

• A radical reduction in the public sector

• Wage reductions leading to price reductions

After all the adjustment so far, Greek debt still being insolvent

Expected assistance and debt/deficit reduction from the various adjustment programs

2010 (Actual) – 2020 (Forecast)

2010 Assistance 2010-2020 2020

Debt €329 bl

145% GDP

€110 bl

€109 bl

€30 bl

€106 bl

€355 bl

EC/ECB/IMF agreed in May 2010

EC/ECB/IMF agreed in July 2011

EU direct contribution agreed in Oct 2011

PSI 53% haircut, agreed in Feb 2012

TOTAL

€300 bl

120% GDP

Deficit 11% GDP Less than

3% GDP

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Proud to hand out the last slice of your bread to financial speculators and bankers?

For the years 2010-20124, from the

236.8 billion euro bailout money and the 25.5 billion euro from

privatizations, only 1.6 percent benefits the state and the economy.

98.4% is allocated for obligations to creditors

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Devastating economic performance

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A Dramatic Economic Contraction…

13 Sources: IMF; World Bank; Eurobank Global Markets Research, INE/GSEE

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GDP per capita is stuck to the levels of 2000

Labour Unit Cost and Exports prices, 2005-2013

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Minimum Wages (%), 2010-2013

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Prices have not been as flexible as wages

By how much do recent government measures lower family income?

Loss

Example: Someone

who earns €2,000 as net equivalent monthly salary while his wife’s net monthly salary is

€1,400=3,400 They live in an apartment of 100m2 in New Smyrna, which they bought with a mortgage loan of €150,000, with a duration of 20years and a monthly payment of €792. They also pay €319 per month for a consumer loan which they used to buy a 1,600cc car

Because of the reduction of 12% of the Benefits in the Public Sector the couple lost: €108 the husband and €48 his wife € 156

Due to the reduction (last year by 50%) of Christmas and Easter gifts, as well the reduction of the absence benefit, with a ceiling of €1,000: the couple received only €2,000 out of €4,000 they used to receive every year

€ 167

Due to the Solidarity tribute the couple lost: €500 the husband since he has an income of €25,000 (2% rate) and €178 his wife since she receives an income of €17,800 (1% rate)

€ 57

Due to the unemployment tribute of 2%that all workers in the Public Sector paid the couple lost: €26 the husband (€1,300 x 2%),€24 his wife (€1,200 x 2%)

€ 50

Due to the increase in the vehicles tax the couple lost: €25/year € 2

Due to the single Property Tax: €800/year. (The zone price is €2,450m2 and the coefficient is €8/m2.) € 67

Decrease of nontaxable income from €12,000 to €5,000 (assuming that the difference of €7,000 will be taxed by 10%): €700 each. Total yearly loss €1,400.

€ 117

Due to the decrease of salaries by the uniform payroll system the couple loses: €500 of the husband’s salary, a decrease by 25% and €280 the wife’s salary. A decrease by 20%

€ 780

Total Loss The amount of the total loss is 41% of the €3,400 which was the total net income of the couple before the establishment of the austerity measures

€1396/month

Public sector pay reforms are regressive

Income tax reforms are also regressive

(Average income tax rates on monthly income for a family with one child)

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600% increase

Lucky to have a job situation…

Lucky to have a job situation…

Scary demographics: Declining share of Youth (%) in the population

Less than 20% of the Unemployed on the dole!

IMF (June 2013) “… assuming that the authorities can generate 22bl from asset sales through 2020, down from the 45bl assumed at the start of the program”

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Privatisation to state-owned companies?

Group Home Sector State owned

GdF-Suez (inc. Suez Environnement)

France Water, gas, electricity

37% Bidding for Thessaloniki water EYATH

Mekorot Israel Water 100% Bidding for Thessaloniki water EYATH

Gazprom Russia Gas 50.01% Possible bidder for gas company

Socar Azerbaijan Gas 100% Bid for gas company DESFA

Deutsche Bahn Germany Transport 100% Possible bidder for railways

SNCF France Transport 100% Possible bidder for railways

COSCO China Shipping 100% Concession to run Piraeus container terminal

Re-municipalisation across Europe Sector Process Countries Factors

Water Municipalisation of services France, Hungary,

Germany, Italy

Private failure, cost, control,

contract expiry

Electricity New stadtwerke, purchase of

private companies (>€9bn);

nationalisation

Germany,

Hungary,

Lithuania

Private failure, cost, control,

contract expiry

Public transport Municipalisation of contracts

and concessions

UK, France Cost, private failure, public

objectives, control

Waste management Contracts brought inhouse,

inter-municipal incinerators

Germany, UK,

France, etc

Cost, control, contract expiry

Cleaning Contracts brought inhouse UK, Finland Cost, employment, contract

expiry

Housing Contracts brought inhouse UK, Germany Cost, effectiveness

Healthcare Slovakia plans to renationalise health insurance Reuters Oct 2012

Source: Re-municipalisation in Europe Nov 2012

http://www.reuters.com/article/2012/10/31/slovakia-health-idUSL5E8LV7ZB20121031http://www.psiru.org/reports/re-municipalisation-europehttp://www.psiru.org/reports/re-municipalisation-europehttp://www.psiru.org/reports/re-municipalisation-europe

IMF/World Bank in the 1980s Structural Adjustment

• Shock therapy approach • Fiscal, not economic, adjustment • Ignored the invisible economy • Ignored implementation capacity (corruption) • Ignored drivers for growth

Results: no “trickle down, no growth Insolvency, human misery

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(Public sector) Corruption perceptions index, Europe, 2012 (98% of respondents in Greece consider corruption a major problem, the corresponding figure

is 19% in Denmark)

http://cpi.transparency.org/cpi2012/

9.4

6.5

3.4

0 1 2 3 4 5 6 7 8 9 10

Denmark

Finland

Sweden

Norway

Netherlands

Switzerland

Luxembourg

Iceland

Germany

Austria

United Kingdom

Belgium

Ireland

France

Average

Estonia

Cyprus

Spain

Portugal

Slovenia

Malta

Poland

Lithuania

Hungary

Czech Republic

Latvia

Slovakia

Italy

Romania

Greece

Bulgaria

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For how long things will be going down?

More than double

More than double Exceeded

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Exceeded

Resistance? Philanthropy? Syriza?

Schools and governments for scandals