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left-Europeanism
The crucial question of the Habermas-Streeck debate on the crisis in Europe was:
should the political forces resisting the de-democratization of capitalism strive for
renewal of the EU through its deeper integration, as per Habremas, or for peaceful
dissolution of the EU and a retreat to a national state, as per Streeck? In this paper,
the arguments of each author are examined against the background of the left-
Habermass views. Thirdly, Syrizas sudden rise to power as well as its subsequent
Introduction
Even for those who share the ground belief that national questions supervene on social
ones, the waves of intra-European neo-racism that flooded the European Union (EU) in
the aftermath of the 2008 Atlantic financial tsunami came as a surprise. When an old
monster returns in such a palpable form, we should be grateful that it is promptly tackled
at the theoretical level by two intellectual giants who, fueled by common concern over
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the dangers that lurk behind, tend to reveal the nationalistic apparition for what it truly is:
a toxic fume originating from the decay of European welfarism. This insight marks the
starting point for the debate between Jrgen Habermas and Wolfgang Streeck which,
prompted by Habermass review (2015b) of Streecks Buying time: The Delayed Crisis
forces of Europe face today: should the Left push for renewal of the EU through its deeper
urgency with the opening of a new historical shift that changed the outlook of European
politics in the last three years this being the surge of the populist radical Left across
reality, it is even rarer to then have the opportunity to observe the tectonic plates of history
moving along trajectories traced by the main argumentative lines of two so similar yet so
different political visions, in such a way that could vindicate one of them in a decisive
manner. Thus the intention of this paper is to reconsider Habermass and Strecks
respective views about the EU against the background of the rise and fall of Syriza, the
Greek radical anti-austerity party which led the first left-wing government in Europe since
In the first section, we will examine Streecks claim that the post-2008 EU
represents a victorious culmination of the 40 years long class struggle of the rich for the
liberation of capitalism from democracy, and that hence the egalitarian politics in Europe
requires national institutions. The second section will focus on the reasons why
Habermas, from a related judgment about the current state of affairs between democracy
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and capitalism in Europe, draws the opposite conviction that a reformation of the EU is
possible as well as necessary. In the third and fourth section, the positions of the two
authors will be analysed against the background of facts concerning Syrizas ideological
development and political behavior throughout the Greek eurocrisis from its national-
populist phase in the opposition, through its Habermasian period in power and during the
debt negotiations with the EU, to its latest left-wing TINA (there is no alternative to the
EU) incarnation shaped after Greeces agreement with creditors. On the basis of the
results thereby obtained, in the fifth section it will be argued that Streeck has been proven
right.
Streecks analysis of the worldwide economic and political crisis that escalated after the
financial collapse of 2008 is essentially a historical autopsy of the welfare state. In this
Western hemisphere after the Second World War (Streeck 2014a: 24). At that time, a
concurrent pressure of the fresh Great Depression trauma, Soviet threat abroad, and rising
communist parties on home turf, forced the capital owners in the West to make substantial
concessions to the popular classes. The compromise then reached included politically
guaranteed full employment, job security, redistribution of wealth and life chances to the
dispossessed, and the spreading of wide social safety nets for all citizens in the form of
strong trade unions and an all-encompassing welfare state. However, as Streeck notes
(2015a: 54), the project of striking a balance in the class relations was from its inception
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troubled by an intrinsic conflict between the exclusionary profit-seeking logic of capitalist
reap the collective benefits of private capital accumulation, it is put at risk by the
very same policies that are needed to make private capital accumulation socially
acceptable; and while a political equilibrium is needed to generate consent also with
equilibrium.
The theme of capitalisms inability to make itself socially acceptable is familiar from
Habermass early work (1975) on the legitimation crisis. Under the influence of then
markets, Habermas claimed that the class conflict was being transformed to a process of
political and cultural hollowing out of the Western capitalist order this in consequence
of the states inability to take from the capital owners enough to satisfy the rising demands
of citizens for ever better life conditions, and therefore to plausibly justify the social
constrains of markets that it enforces. However, Streeck argues (Streeck 2014a), because
mechanism for producing wealth, Habermas lost sight of the basic Marxist insight that
capital is a social actor seeking to reorganize the whole of social life in accordance with
its logic of profit.1 Hence, he did not expect that the capitalist class, and not the masses,
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Breakdown of the post-war settlement begun in the 1970s, when the decline in the
growth and profit rates triggered the renewal of the Klassenkampfe, and the neoliberal
counterrevolution aimed at unloading the weight of popular demands from the staggering
forces of the free market. Streeck (2014a: 32) argues that the renaissance of capitalism
has been rendered possible by governments policies that bought time for the illusion of
socially sustainable growth to live on. First through inflation during the 1970s, then
through accumulation of public debt during the course of the 1980s, and finally through
the explosion of private debt in the 1990s, the governments of the West used fiat money
Nevertheless, for the magic of the fiat money to work, it was necessary to obscure
the fact that the working classes have been paying the price for each new bid at keeping
the crushing of trade unions, the rise of income inequality, the reduction of social rights
that was the ugly face of unleashed capitalism in desperate need for some kind of
culture as a product of the 60s social movements, turned democratic politics into public
entertainment by gradually giving away their regulatory power over the economy to
independent central banks and international financial and trade institutions supposedly
neutral technocratic entities, which are authorised to enact natural market laws, and thus
have to be legally sheltered from the irrational inclinations of the masses (Streeck 2014a).
And while the neoliberal politics of depoliticization had already produced a TINA (there
is no alternative) consensus on capitalism during the credit expansion era, it has reached
its logical peak in the post-2008 world. For, after the spell of cheap money growth was
finally broken, there was no other way for the ruling classes to protect the markets from
the people except by formally divorcing capitalism from democratic control, while
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continuing to rely on electoral competition to produce legitimacy for the outcomes of free
In Streecks judgment (2014a: 117), the neoliberal Chinese wall between the
economy and politics was most effectively erected in the heartland of welfare state:
Europe. His master thesis is that the true content of the European integration is capitalism
and not post-national democracy. The key evidence he presents concerns the
integrationist reforms of the EUs fiscal space carried out in the wake of the 2010
eurocrisis, which, Streeck claims (2014a: 107-108; 2015b: 14-19), stand for the
thinks that the euro lays at the heart of todays continental social and international order,
Streeck organizes his argument around the analysis of the European Monetary Union
(EMU).
The story of the common currency goes as follows. The EMU is a child of its time,
bearing the marks of 1990s Third-Way politics of slashing discretionary state spending.
As Streeck explains (2014a: 112), governmental resolve to reduce public debts accrued
during the Reagan-Thatcher era and save significant budget resources was meant to
reassure the financial markets that in case of doubt their claims can and will have priority
over those of citizens. Due to the strength of the European social-democracies, therein
fiscal consolidation policies took the form of an international monetary union. According
to the Maastricht Treaty of 1992, the founding document of the EMU, the member states
maintained their budgetary sovereignty, but were limited to fiscal deficits of no more than
3% of Gross Domestic Product (GDP), and accumulated debt of no more than 60% of
European Central Bank (ECB), responsible neither to voters nor national governments,
but solely to the goal of price stability. Finally, the no bailout rule, which forbids the
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mutualization of debt between member states, was instituted in order to secure the fiscal
prudence. For the working classes, the writing was on the wall: what more could the
capital owners have wished for than a politically unconstrained common market of
supposedly sovereign states, which had permanently removed the option of currency
devaluation from the national repertoire of social and economic policies (Streeck 2014a)?
Nevertheless, at the time, one proposition had been enough to saturate the public
discourse and silence those lacking enthusiasm for the euro: that monetary completion of
the single market would bring the countries involved closer together in terms of
Aside from the limits of credit-driven growth and the fragility of the global
capitalist system, the Great Recession has exposed deep flaws in the construction of the
EMU. Surprisingly, Streck locates the crux of the problem in the very plan to impose a
single currency on national states that have highly heterogeneous economic cultures and
corresponding social settlements on ways of living with capitalism, rather than taking the
underdevelopment, meaning by the lack of political umbrella matching the EMU (Streeck
Drawing on the varieties of capitalism approach (Hall and Soskice 2001), Streeck
distinguishes two ideal types of political economies in the eurozone. In the capitalism one
finds in the European North, especially Germany, growth is driven by foreign demand,
i.e. exports. Consequently, those economies are hostile to inflation, and are in no
structural need for devaluation of their currencies. Since the imperative of keeping the
with those of the capital owners, the class conflict in these countries has a low intensity
(Streeck 2015c). On the other hand, in the European South, the growth depends upon
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domestic demand backed up by budget deficits and inflation, with the latter eroding the
public debt, and so enabling government borrowing. The southern model of democratic
capitalism includes a substantial public sector, militant trade unions, and manufacturers
mainly oriented towards the domestic market (Streeck 2015c). As a result of these social
competitiveness even before the formation of the EMU. Still, having their own currencies,
they could compensate for that loss by periodic devaluations, which made the foreign
imports more expensive and their exports cheaper. So the monetary sovereignty enabled
for a rough and ready balancing of the continental economy without infringing upon the
Obviously, the EMU was tailored to suit the needs of the northern economies. Tight
Bundesbank and the German growth model, while abolishment of the possibility of
devaluation opened the southern economies for the northern exporters and banks (Streeck
2012; 2014a). As for countries of the European South, they were bereft of any way to
keep pace with their more competitive trading partners from the North, except by the
lowering of the wages and citizens entitlements (Streeck 2014a). Nevertheless, in the
early days of the EMU, its flaws were hidden by large capital flows, primarily in the form
of bank lending, from the North to the South. Because nominal interest rates dropped to
German levels across the eurozone, real interest rates went down in the countries with
higher inflation rates. As a result, goods from the North had been made available to the
middle classes in the South, thus seemingly confirming the official prognosis regarding
In 2008 the crisis hit; sources of cheap credit dried up; private debt was transformed
to public debt because governments saved their bankrupt banks, and economies,
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particularly those dependent on capital imports, fell into recession. Soon after, due to the
unwillingness of freshly rescued banks to finance what they had started considering as an
untenable debt of the deficit countries, the economic crisis in Europe turned into a crisis
of the euro.
Of course, the euro had to be saved, even if that meant the breaking of Maastricht
rules on the mutualization of debt. German and French banks were heavily exposed to
peripheral debt, while the German export industry was vitally interested in preserving the
internal market of the eurozone and the undervalued real exchange rate of euro, which
would be jeopardized if deficit countries were to leave the EMU (Streeck 2014b). Thus
the rescue credits were imposed on deficit countries, on the condition that they reform
lenders placed the burden of debt largely on the shoulders of southern nations by
enforcing on them the politics of extreme austerity deep reduction in wages, public
To neutralise the popular resistance, which was growing chiefly, but not
exclusively, in the periphery, the neoliberal elites in 2012 inscribed the austerity in the
very constitutions of eurozone countries, with the help of the European legislative
measures known as the Six-pack, the Two-pack, and the Fiscal Compact Treaty. In
control, gained full authority over the budgets of the member states, and so thereby
obtained the power to mold the lives of European peoples in accordance to the interests
of the markets.
Hence, Streeck concludes (2014a: 189), the progressive forces of Europe should
regroup around the only remaining pockets of resistance to the EUs neoliberal reign,
which reside in what has remained of the popular sovereignty at the national level. In
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particular, the European Left should push for peaceful disintegration of the EMU and
return to national currencies because the euro is nothing but an instrument for subjugating
of the popular classes throughout Europe, preeminently in the indebted South, with the
effect of pitting one nation against the other (Streeck 2014a). By no means a final solution
for the crisis of democratic capitalism, a retreat to the nation state is a way to prevent the
impending disaster, and a necessary starting point for the rewriting of the social contract
in Europe. It is precisely this appeal to national sovereignty that Habermas finds highly
Habermas (2015a: 87-88) concurs with Streecks diagnosis inasmuch that he too
transforming the EMU into a technocratic regime of executive federalism that is fully
committed to the market interests. Likewise, Habermas (2015b: 32) acknowledges the
fact that pre-existing economic imbalances in the eurozone are aggravated by deflationary
implications of neoliberal structural reforms attached to rescue funds. What worries him
most, though, is that, being insulated from the popular will, the current intra-European
recipient countries. But, in difference to Streeck, Habermas (2015a: 100-101) thinks that
the reason for both the technocratic denial of democracy, and the growing of the hatred
among the European peoples, is the political fragmentation of the eurozones fiscal space,
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not its ongoing austeritarian integration. Therefore, the cure for the malady is to be found
over national states have reached a decisive magnitude over the past forty years, as
Streeck seems to do, then, Habermas argues (2015a: 89-91), the solution for the crisis
must be in democratic extension of the EMU (and the EU) undertaken in order to restore
the balance between politics and markets on a transnational level. What is needed is a
construction of the Europen public space for asking and giving reasons, where the
collective deliberation on the economic and political issues troubling the citizens of the
imaginary root identities so as to give the unforced force of the better argument
(Habermas 1996: 305) a chance to prevail over the technocratic rationality of Brusselss
crisis management. For, it is only by mediation of this public reasoning through the law-
making process in the European Parliament, divided along social and not national lines,
that the interests and the political will of the European majority can be properly expressed
2015a).
But, for the democratic re-founding of the EU to happen, the European politicians
must first discard their narrow national perspectives and rise to the historic occasion
created by the crisis. On pain of repeating the catastrophic mistake from 1914, when it
had baulked before rightist demagoguery, the Left should resolutely reject the ominous
calls coming from the false gods of nation, and through a common European effort strive
for profound changes of the Lisbon Treaty. Those constitutional reforms should give birth
homogenization of the continents social and economic space whose competences are
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to be legitimized by the newly empowered European Parliament, the highest political
stand today, it is up to Germany, the richest country in the Eurozone and its biggest
beneficiary, to relinquish its parochial self-interests and lead the way in the creation of a
generalized We-perspective of the EU citizens (Habermas 2015a: 94), across the whole
of Europe.
for the crisis of European democratic capitalism. One regards the transient role of national
state in the evolution of the European project, whose assumed finalit the establishment
embodiment and historical justification of the very idea of Western modernity. The other
assumption regards the contingent nature of the present neoliberal outlook of the EUs
overturned in Europes quantum leap towards democracy. Together these claims make up
the backbone of Left Europeanism, a vision of Europes future that until recently
prevailed among social forces opposed to the austerity. In order to elaborate them further,
we need to consult the rest of Habremass interventions on the fate of the EU.
Even before the crisis, and especially after its onset, Habermas has persistently
defended the position that the EU represents a privileged terrain for engaging
neoliberalism in Europe (Habermas 2001, 2009, 2012, 2015a, 2015b). The need for
transcending the political framework of the national state stems from the historical logic
of capitalist modernization:
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[A] capitalist dynamics...can be described in terms of periodic interplay between a
consequences for individual citizens; but each of these breaches has been followed
For Habermas, the problem of modernization is that, if not constrained by the public use
capitalist subsystem is bound spill over into the rest of society and degenerate into a
calls for the internationalization of politics. Those who argue against the possibility of
forget that the nation itself is a highly artificial form (Habermas 2015a: 98) of social
consciousness, which was invented in the 19th century for the cushioning of industrial
utopian in the appeal to European identity if we conceptualize its ethical substance purely
between political economies and historically shaped national identities, and turning them
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into an irreproachable organic phenomenons, which are normatively immune to the
course of European modernization and its cosmopolitan proclivity. Yet the nation state,
morally compromised by the war catastrophes of the short 20th century, tamed by the
international law and temporarily resurrected in the form of welfare state during the
bygone Bretton Woods era, has been irrevocably overran by the economic forces of
based social democracies, and corresponding solidarity relationships, have driven the
process of European integration, which started as a peace project founded on the belief in
the civilizing power of the economic cooperation, to the turning point where the only
possible way out of the current crisis is more Europe. Thus, [t]o renounce European
unification would also be to turn ones back on world history (Habermas 2015b: 17).3
And what about neoliberalism? Well, in Habermass mind, capitalism does what
capitalism does, and it is upon politics to stop the markets from subjugating the whole of
social life to the demands of profit maximisation. After all, the fatalism of Streecks
narrative regarding the end of the welfare state, and his scepticism concerning the
European project, both come from situating the crisis dynamic squarely on the side of
fundamental driver in Streecks explanation of the crisis, then his diagnosis can only
governmental practice of promoting the domination of the markets over people, stems
from convictions entranched in the European political elites from the 1980s onwards,
rather than being an inalterable structural property of the EU. And that austerity currently
ravaging the societies of Europe is just German nationalist politics in the form of an
Accordingly, to regain their long lost momentum, political parties and grassroots
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movements fighting the austerity throughout the Europe have to appreciate the choice the
cunning of economic reason has confronted them with at this juncture: to win over their
political foothold at the European level, where the relations of power can be changed in
favor of the working classes, or to unwittingly play into the hands of the enemy, by
The sequence of events which led to Syrizas first electoral victory is very well known by
now, so I will repeat it only shortly. In October 2009, the incoming socialist (PASOK)
government of Greece announced that the countrys actual deficit was over 12% of GDP,
rather than 6,5% , as claimed by the previous centre-right (New Democracy) government.
At once, the interest rates Greece had to pay on funds needed for servicing its debt began
to rise rapidly. Investors unexposed to Greek debt started massively buying insurance
policies on it, expecting that the factoring of soaring risk premiums into the debt would
push the country towards bankruptcy and provide them a handsome profit (Aglietta 2012).
In early 2010, the prospect of Greeces default threatened French and German banks,
which had owned the largest portions of Greek debt, while fears over a chain reaction in
other southern European countries called the continued existence of the eurozone into
question. On the 8th of May 2010, when the EU leaders convened in Brussel to decide
the future of the common currency, the wheels of history turned. Although she had been
until that moment resolutely averse to the idea of a fiscal union, German chancellor
Angela Merkel accepted joint liability for the debt. However, the responsibility for the
underlying economic imbalances was pinned entirely on Greece and its alleged
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profligacy. Accordingly, in return for the new loans, and supposedly in order to improve
its competitiveness as well as reduce its debt, Greece was forced by the Troika of
creditors, made up of the EC, the ECB and the International Monetary Fund (IMF), to
As the result of wages and pensions cuts, and regressive tax hikes and public sector
layoffs, the aggregate demand collapsed, and the Greek economy plunged into a profound
recession whilst government revenues dropped. After five years of austerity, the Greek
GDP had shrunk by 25%, unemployment soared to 26%, and real wages fell by 30%
(Maass 2015). Moreover, Greeces public debt, which was to be rendered sustainable by
the reduction in state spending, went from 130% of GDP in 2009, to 177% in 2014
(Flassbeck and Lapavitsas 2015). In January 2015, Greeks responded by voting Syriza,
the anti-austerity party of the radical Left, into government. The first question I would
like to consider is how do Streecks and Habremass respective arguments regarding the
importance of the national context for progressive politics in Europe fare with the story
Let me start with an obvious fact: the advance of the Left in Europe took place
within a national framework. Insofar as the balance of class forces in the EU even slightly
changed on the 25th of January 2015, this did not happen because Germany began
questioning its economic politics out of enlightened self-interest for the continental
unification, as per Habermas. On the contrary, the change was brought about by the Lefts
ascension to the nation states level of power in the subaltern country most hit by
austerity.
Furthermore, this long-awaited development would not have been possible without
Syrizas programmatic call for the restoration of the Greek national sovereignty
(Kouvelakis 2015b), which anchored the partys political message since Troikas
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imposition of austerity. Using the conceptual framework of Ernesto Laclaus theory of
politics (Laclau 2005), which confers the essence of democracy on the articulation of
social antagonism between the people and the establishment, Yannis Stavrakakis and
Giorgos Katsambekis (2014) convincingly argue that the populist turn in Syrizas
discourse was a decisive moment for its breakthrough from a marginal leftist party,
backed by 4,6% of the votes in the 2009 elections, to a major anti-austerity force that won
26, 89% of the votes in June 2012 election. They point out that the notion of the people,
almost absent from the 2009 campaign, occupied a central position in Syrizas 2012
partys president. In line with the populist logic of splitting the political space into two
counterposed sides, the purpose of its introduction was to form a chain of equivalence
among the demands of various social groups stricken by austerity through underscoring
their common opposition to both Greeces international creditors and the domestic
Even more importantly, Syrizas populism was not just a pragmatic method for
gaining electoral support from the conservative segments of the Greek society and the
dynamics of the eurocrisis, whose strategical implications for the Left in Europe are
regulary overlooked by the advocates of the transnational approach. The guiding thought
of that analysis about the causal link between the EMUs austerity agenda, and the rapid
erosion of democracy in the periphery, was clearly stated in the resolution of the first
Congress of Syriza from 2013, The euro is being treated mostly as a vehicle of the
German policy, deepening inequalities between countries and between classes, while
Asian models are applied in European societies in favor of capital (Syriza 2013). The
political course thereby entailed was encapsulated in Syrizas oppositional rallying cry
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no sacrifice for the euro (Syriza 2013); a cry which apparently upset Habermas at the
time due to its sovereignist posture.4 Hence, in order to appreciate Syrizas interpellation
of the people, we have to expand upon Streecks explanation of the way the EMU has
shaped uneven economic and political effects of the Great Recession on European
societies.
hegemony in the EU, and de-sovereignization of peripheral eurozone states, most notably
Greece, are political phenomena organically interwoven into the precise logic that drove
the neoliberalism to confront its crisis with the European brand of austeritarianism
arises here is: why did the capitalism in Europe acquired an internal imperial dimension,
with Berlin enforcing the austerity on the eurozones periphery not just with brutal
disregard to the majoritarian popular will, but with neglect for the political legitimacy of
the domestic ruling classes, whose opposition to the existential interest of their own
people and subservience to the European neoliberal order led by Germany were exposed
The reason why horizontal differences between two equally economically virtuous
types of growth regimes, and their matching social contracts, turned during the crisis into
a vertical hierarchical divide, is the class nature of the euro, which expressed in two
complementary yet conflicting senses the interest of European capitalists in the age of
financialization. On the one hand, the euro was constructed to rival the dollar in the role
of an international reserve currency (Lapavitsas 2012; Georgiou 2010). Since the collapse
of the Bretton Woods gold system, the fact that the dollar served as the main means of
payment in international commerce, and functioned as a safe haven for capital, enabled
the US to rule the world economy by placing the burden of adjustment to its own trade
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imbalances first on Europe and Japan, and then on the rest of the globe (Cafruny 2003;
American dollar unilateralism, and to enhance the expansion of European industry and
banks on external markets, the European ruling classes realigned behind the
federation predicated on the maintenance of low inflation and strict fiscal discipline,
which were essential for the credibility of the common currency (Gowan 1999; Lapavitas
2012). On the other hand, the euro, and thus German leadership, [has been] accepted
integration, the competitiveness of member states in the internal market depended largely
on labour costs, which spurred a race to the bottom in wages and working conditions
between the constituent national economies. Since the fiscal federalism would have
opened the institutional space for a supranational system of redistribution and could
thereby potentially distort the free play of market forces, the budgetary sovereignty was
Given the contrasting features of their economic models and uneven productivity
levels of the member states, and because Germany used its starting advantage to obtain
wages, the split between the core and periphery in terms of competitiveness drastically
widened after the euro was introduced (Lapavitsas 2012; Lucarelli 2011; Mahnkopf
2012). If not for the EMU, Germanys devaluation of the domestic labour would have
backfired through appreciation of the countrys currency in response to its rising current
account surplus (Bagnai 2015). Instead, since the EMU has removed the exchange-rate
buffer, and had thereby tied together economic policies of the member states, Germany
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triggered a process of competitive destruction of national class settlements across the
imbalances within the eurozone in fact functioned as an integrational force. Like the rising
private indebtedness substituted for reduced public spending in the rest of the world as a
generator of growth from the 1990s onwards, cross-border borrowing inside the EMU
the peripheral countries for the loss of competitiveness they subscribed to by joining the
economic model to the relationship between two capitalist traditions mashed inside the
eurozone, German and French banks turned the trade surpluses of core countries into
loans to peripheral households, which then purchased the goods produced by exporters
from the core (Mahnkopf 2012). Moreover, due to the belief that default is impossible
inside the EMU, money capital continued to flow into periphery even after the crisis broke
out (Lapavitsas 2012). These loans bought some time for the peripheral governments,
whose budgets suffered as a result of the downturn in their economies and costly rescue
of respective national banking systems. So, in 2009, when the financial markets finally
lost confidence in the sustainability of the eurozones capital recycling mechanism they
themselves had helped forge and subvert, the European Great Recession morphed into
sovereign debt crises in peripheral countries, and then into the eurocrisis.
What happened afterwards laid bare the neoliberal and imperial nature of the EMU.
In order to save its banks once again, and to preserve the institutional framework which
facilitated its export-based hegemony in Europe, Germany had to prevent the defaults of
peripheral countries, while simultaneously hiding the real agenda from its citizens, who
were already wearied by years of austerity. Because the inflation would diminish the
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value of the euro in international markets, and thus endanger the European financial
industry, the relaxation of fiscal discipline and demand-side policies were out of the
question (Lapavitsas 2012). The logical solution was to socialize the losses of banks from
the core countries by imposing the harshest of austerity policies on the peripheral nations
of French and German banks (Fazi 2015), the money of taxpayers from the core went to
the indebted countries, and then straight back to their private and public lenders but not
before the irresponsible borrowers have paid the political price in pursuing the structural
reforms. Especially in Greece, the weakest eurozone economy, where the stop in capital
inflow had undercut the political hegemony of the domestic ruling class (Katsourides
2016), the task of implementing austerity had to be taken over by foreign lenders, who
are by their nature immune to electoral pressure. As Streeck notes (2012: 64), the true
meaning of this development for democracy was vividly displayed in 2011, when Greek
under European threat with national bankruptcy, he quickly resigned and was replaced
with Lucas Papademos, a former president of the Greek national bank and trusted agent
of international finance.
Therefore, for the peoples of the European periphery, and in contrast to their
counterparts from the core, the austerity is not the outcome of the class struggle
unraveling within weakened yet still minimally valid national democratic institutions.
Rather, it is an international political-economic order that was imposed from the outside
by what was, in effect, a canceling of national sovereignty, precisely because the crisis
has deprived the ruling classes in the indebted countries of the way to manage the internal
Syriza rightfully characterized the antagonism between the people and the pro-Troika
21
elites in Greece as the result of a proxy conflict between creditor and debtor nations inside
version of the Left (Habermas 2012: 127), in countries where the European institutions
policies from the electoral process, the class struggle against austerity is the popular
struggle for taking back the national sovereignty, without which one cannot sensibly talk
For all intents and purposes, the negotiations regarding the Greek debt between Syrizas
government and the European institutions, that took place during the first six months of
2015, represent a crucial piece of evidence in the Habermas-Streeck debate. What makes
this so is the fact that upon winning the January 2015 elections Syriza completely
abandoned the sovereignist line, which elevated it into a major anti-austerity force during
the Greek crisis, and decided to place a Habermasian wager on the possibility of changing
revision of their previous euro-sceptic position being at the center of their rightward drift
(Katsourides 2016; Kouvelakis 2016).6 The imperative of finding the least common
denominator in the fragmented Greek society somewhat explains the partys realist turn.
For reasons having to do with Greeces traumatic Cold War history, the countrys
accession into the EMU was heartily accepted by the middle classes, in the broadest sense,
as being symbolic of the nations definitive return to the Western European world
(Kouvelakis 2015a; 2016). Be that as it may, the realism of political calculus that factors
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in the weight of symbolic meaning the euro has had in Greece does not help decipher the
strategical naivet of the Syriza government.7 Rather, what comes to mind is the
ideological proposition either EU or fall back to the barbaric nationalism seen in 1930s
which the Left in Europe has embraced as its own political horizon since when it
abandoned the socialist dream.8 With the benefit of hindsight, we can say that, although
a creative ambiguity has been featured in Syrizas stance regarding the irrevocability of
the Greek membership in the EMU even after the 2012 moderation, with the no sacrifice
for the euro slogan still figuring in the party manifestoes and resonating among its rank
and file, the leadership itself had already turned to Left Europeanism. Whereas in June of
2012 Tsipras declared that the euro is not a fetish(cited in Vasilopoulou and
Halikiopoulou 2013) and that the country should not remain in the EMU at any cost, in
October of 2013 he revealingly stated that, in spite the euros fundamental flaws, Greece
should not exit the eurozone [because that] would be a disaster for Europe
(ThePressProject 2013).
Syrizas Habermasian wager, the good euro strategy, was based on the hypothesis
that it is possible to reverse the politics of austerity within the EMU by winning elections,
by changing the balance of political forces in Greece and in Europe (Lapavitsas 2015).
This strategy relied on two propositions, both originating from the main tenets of lef-
Europeanism. First, that the Greek crisis is a European crisis and thus needs European
solutions, i.e. the progressive reforms of the EU and the EMU (Tsipras 2012). Second,
that the social and economic devastation of Greece, along with the fact that its public debt
had risen instead of falling during the fiscal consolidation period, has proven austerity to
be irrational even when considered from the creditors standpoint (Varoufakis 2015).
Accordingly, Syrizas leaders expected that the European institutions would allow as well
as fund the implementation of the partys 2015 pre-electoral Thessaloniki program, this
23
being a set of modest Keynesian measures for stimulating the growth and alleviating the
austerity. And they also expected that, in an independent process, the negotiations on the
Greek debt could be reopened, with the lenders agreeing to write off a substantial part of
it, while making the repayment of the rest dependent on the future recovery of the
Syrizas overarching vision, shared by the whole of the Europeanist Left, was that
Tsipras once put it in an interview to The Guardian (Milne, Maynard and Gallagher
2013). With no more than a pinch of good faith in the project of Social Europe, one
could reasonably hope that Spanish, Italian and French government, also disgruntled by
German policies, would help Angela Merkel bring itself, and the market people she
Consequently, a German-led Marshall plan for the EMU would spring from Greeces
Initial reactions from the European establishment to the news of Syrizas victory
condemnation of the monetary union, Jean Claude Juncker, the President of the European
Commission, declared that there can be no democratic choice against the European
treaties (Hewitt 2015). Even more direct was Wolfgang Schaeuble, the German finance
minister, who bluntly stated, Elections change nothing. There are rules (Hewitt 2015).
And on the 5th of February, just ten days after the Greek elections, the said words became
deeds.
willingly compelled to depend for money supply on the neoliberal Euro-institutions, the
24
ECB limited the liquidity available to the Greek banking system, making it conditional
on reaching the new debt deal. With its back against the wall, facing bank runs and the
possibility of complete financial collapse, Tsipras was coerced into signing the
transitional agreement with the creditors, through which the Syriza government
renounced applying not only the entire economic policy that it had promised prior to the
elections, but even the policy of the New Democracy (ND)-PASOK coalition government
that preceded it (Moschonas 2015). There was no mention of the debt canceling, and the
restoration of minimal wage and pensions to pre-austerity levels; and there was no more
privatization. On top of that, for the message sent to be loud and clear in the ears of
Spaniards considering voting for Podemos, the agreement from 20th of February 2015
contained strict constraints forbidding the use of fresh money supplies for the
In the months that followed, the slow financial strangulation of Greece by the hands
of Berlin and Brussels forced the Syriza government to cross all of its red lines in a vain
hope for what was named the honorable compromise. This, however, turned out to be
not even austerity with a human face, but a historic defeat of Left. Tsiprass signing of
the most onerous austerity agreement the eurocrisis has produced, and Syrizas ensuing
provisions of the EUs Greek debt deal. Firstly, the executive control over the Greek state
finance was given to two European implant institutions, the General Secretariat of Public
Revenue and the Council for Fiscal Discipline, which act independently of the elected
government and without any democratic accountability (Kouvelakis 2016). Secondly, all
of the Greek state assets were given at disposal to an autonomous privatization fund, in
25
reality run by the lenders, for a period of 99 years, with the purpose of eliminating the
ever growing public debt through a mass sale of everything in public ownership (Portaliou
2016). Finally, the transfer of property from the Greek people to international financial
players, multinationals and other national states, was protected from the possibility of
democratic interference by the clause saying that the Greek government must agree with
the Institutions on all draft legislation in relevant areas with adequate time before
The most striking aspect of Syrizas capitulation is that the decision to cave in under
the pressure of the EUs medio-political and financial violence was announced
immediately after the highest point of popular resistance was reached on the 5th of July.
On this date, in the referendum about the Troikas bailout conditions, an overwhelming
majority of 61% of Greeks rejected the European ultimatum this being to either
surrender to more austerity, or go bankrupt and leave the eurozone. While Tsiprass
reasons for calling the referendum just to have the result he himself campaigned for
repealed are at best moot, the repercussions of Syrizas salto mortale are clear.
Though the party remained in power after wining the snap election held in
September of 2015, its outlook had changed all together. Syriza traded their anti-austerity
politics of public debt which reduces the functioning of the state to a strict following of
legislated economic rules mustered according to the foreign creditors interests, at the
cost of living conditions of the people. In an apology for Syriza and itself, the Europeanist
Left crafted a left-wing TINA argument an ideologem purporting that since there is no
alternative to the EU however wrong its neoliberal direction is, it is better to have the
government of the Left than of the anti-Europeanist Right at the drivers seat, with the
former steering and softening the course of austerity.9 Yet, even on its own terms, not to
26
mention the absurdity inherent in the very idea of a leftist austerity, this nihilistic
explanation fails. For it was precisely Syrizas political mutation to a TINA party that
caused the weakening of the radical Left in Europe, as witnessed by Podemoss aborted
rise to power, which in turn led to the strengthening of the radical Rights retrograde
opposition to the EU, as the success of the racially intoned Brexit campaign proves.
If we consider Syrizas Habermasian wager the only rational way, starting from the fact
that the European elites have themselves both publicly and unambiguously declared the
irrelevance of democracy for the workings of the EMU, and then ruthlessly used the
currency weapon to show that they mean business, three conclusions about its failure can
be drawn, all of which confirm Streecks thesis concerning the European integration.
was the Habermasian illusion regarding European politics resting on a reasoned and
uncoerced deliberation among equal interlocutors (Douzinas 2016, Kouvelakis 2016: 54).
As confirmed by Yanis Varoufakis and Euclid Tsakalotos, who were Syrizas successive
finance ministers in charge of the negotiations with the Greek creditors, Tsipras and his
team thought that, because they had reason on their side, every well-meaning European
sitting across the table would start to see the solution for the crisis in their way as the debt
talks progress.10 What they completely disregarded the relations of power the actually
existing politics in the actually existing EU, which includes the neoliberal elite
spearheaded by the German ruling class, who come with both their opposing interests and
concomitant reasons, and the means to enforce them. This leads me to the second
important point.
27
In Habermass modernization narrative, the EUs current neoliberal course appears
incapability to elevate democratic procedures beyond the national level leaves the void in
the European decision making process filled by the Brussels technocracy. However, by
the same token, todays EU also appears to be just one step away from becoming the
Hegelian justification of the reason in history and market economy, the latter on account
when it becomes endangered by its own predatory impulses. From this perspective,
Germanys refusal to change its neo-mercantilist model and carry the burden of financial
decision, which risks the fate of democracy as well as capitalism by ignoring the
Europeanist predilections of economic reason. In arguing for the same conclusion from
an economic viewpoint, Syriza and the rest of the Europeanist Left have claimed that
austerity is irrational because it exacerbates the problem it intended to solve. The official
austerity wisdom professed that: fiscal consolidation will help stabilize the financial
markets, regain the confidence of investors and consumers, and thereby reinvigorate the
economy. But, the exact opposite has happened: the cuts in public spending eroded the
demand and deepened the recession, while, in consequence, the state debts continued to
rise, which strained the banking system further. Therefore, so goes this explanation:
austerity is actually bad for the capitalism itself, not just for the working classes. Nothing
more than textbook common sense is required to understand that a struggling economy
cannot pick itself up if the majority of people spend less, but only if they spend more.
Accordingly, in order to instigate economic growth, governments must stimulate the mass
consumption, which calls for the redistribution of wealth and presupposes democratic
correction of market outcomes. In the context of the eurocrisis, this means that the
28
European transfer union with Keynesian policies, legitimized by the democratically
solution. Hereof, in the eyes of the Europeanists Left, the economic irrationality
argument against austerity is the key to the political argument for the rationality of the
The two problems with the irrationality argument and its conclusions are that
austerity, when considered from the side of the ruling classes, is not irrational; and that
European capitalism and its German hegemon need the international political frameworks
of the EU and the EMU to constrain the democracy rather than themselves. The austerity
is not designed to spur the growth and solve the crisis of democratic capitalism, it is
designed to use the crisis (Krugman 2012). The official tale decrying the irresponsible
social spending of governments for the explosion of fiscal deficits, even though it was
evident that the bank bailouts were to blame, served as a pretext for the restoration of
capitals profitability through the destruction of the popular classes living conditions
(Dunn 2014; Milios 2015). Thus, austerity is what David Harvey defines as neoliberalism
in practice (Harvey 2005): a class driven policy of asserting the capitalists power, which
in fact quite reasonably reacted to the crisis by enforcing the socialization of banking
What immediately follows is that the advent and persistence of austerity policies in
the eurozone, in spite of the disastrous consequences they predictably produced, is not
market and currency is set in place, a downward spiral of wage and social dumping
unfolds by virtue of a logical necessity, not of political choice (Bagnai 2015; Schrapf
2014). By the same token, there is no construction fault in the eurozone it was supposed
to be a market competition game between national capitalist classes played by the rules
29
of the German deflationary model at the expense of wage-dependent population across
the continent. When observed against this background, the fact that the austeritarian social
order is anti-democratic in its very essence because the majority of people live off their
work and thus tend not to vote for the policies which are patiently devastating to them
the point of no return in the European integration process, the abolishment of monetary
sovereignty was actually an important strategic step in an attempt of the European ruling
classes to permanently remove the very obstacle they have been evading since the
to pursue expansionary fiscal policies, or resist the budget cuts, in response to electoral
pressure, that has been the source of the market distortions and the reason for the
denationalization of money (Storey 2014). The nature of euro was clearly expressed in
Greece, where it served as the weapon for the European financial coup, which introduced
the forthrightly authoritarian phase of the capital accumulation process in the ever closer
union. That is to say that Habermass equation more Europe = democratic Europe has
Merkel made after the Fiscal Compact was agreed, The debt brakes will be binding and
valid forever. Never will you be able to change them through a parliamentary majority
(Traynor 2012). In effect, the eurocrisis did incite the fiscal and political integration of
Europe, as Habermas hoped it would. But it is more Europe of the permanent austerity
in which the separation of capitalism from democracy has been officialized, precisely as
Streeck claimed it would be. And this matter pertains to a basic theoretical and diagnostic
disagreement between the two authors: for Streeck, who understands the natural laws of
economy as projections of social-power relations (2015c: 10), and not like Habermas,
30
as neutral rules of the capitalist machine for producing wealth, the EUs technocracy is
not the void in European politics it is the European politics of class power masquerading
as a disinterested expertise in finding rule-based solutions for the economic problems that
To be sure, Habermas is right that the re-launching of the European project in the
1980s corresponded to a sharp shift in the relations of class forces at the national levels,
governments around Europe. In addition, it is also true that the same thing happened
throughout the rest of the advanced capitalist world, and thus it cannot be pinned
exclusively on the EU. However, it would be quite wrong to conclude from this that the
neoliberal elites kidnapped the Europe that existed in the hands of the popular classes
and turned it into its opposite. Already the EEC Treaty of 1957, the birth certificate of the
European integration process, proclaimed the four freedoms of people, goods, services
international terrain for the free play of market forces through the draining of the
economic sovereignty out of member states (Pollack 2000: 271-273). To this testify the
words of Walter Hallstein (1965: 11), a German jurist and first President of the European
Commission:
[EC] grows out of the fusion of markets and much more important out of the
Member States is merged. It has been put into the hands of Community institutions.
31
The conclusion to be drawn is that, in the post-War gambit, the continental elites have
sacrificed the social autonomy of the capital accumulation process to the advancing
masses at the national level, to which the class compromise pertained; and then tried to
Werner Bonefeld (2002:130) explains, the European project from its start reads like a
force the government to moderate its aspirations through welfare and employment
guarantees. Thus, Keynesian federalism was never on the cards in Europe, except as an
Ironically, Habermas, a fierce enemy of the German nationalism if there ever was
one, runs the risk of inadvertently providing the German hegemony with an Europeanist
irrespectively of its social content, with progressive politics. On this point, it is telling
that when he finally passed his judgment on what transpired in Greece, Habermas oddly
portrayed Syrizas call for popular mobilization against Berlins financial carpet-bombing
as a lopsided and shortsighted clash between two equally nationalistic perspectives on the
(Habermas 2015d). Of course, one should never underestimate the destructive potential
of nationalism in Europe. But, as Streeck points out in his most recent contribution to the
debate (Streeck 2016), a highly polemical review of Habremass latest book on the EUs
crisis, The Lure of Technocracy (Habermas 2015), the reason for the surge of nationalism
across Europe is not technocracy, but what drives the de-democratization of capitalism
32
and that is, as Habermas fails to see due to his functionalist presumptions, capitalism itself
As long as the German ruling classes continue to support the euro with the
collaboration of the dependent modernizing elites from the South, the divides inside the
EMU will only get deeper. In consequence of austerity and prolonged recession, the core
states will have to subsidize the periphery just to keep it afloat in the eurozone, and they
will demand political control over debtor states in return, not least to appease their own
electorates agitated by the fact they have to pay the price for maintaining the monetary
2016). If so, nationalism will follow from this centrifugal movement, picturing Europe as
fiscal solidarity with the periphery lacks realism. Habermas imagines the Europeanist
revolution in the German political economy happening without a major class conflict, in
which the lines of divide concerning the common currency are all but certain. For, the
substantial relaxation of fiscal and monetary discipline in the EMU would harm the
ordinary Germans the most, first as taxpayers, and then as a redundant work force in an
export dependent economy which is losing competitiveness due to the rise of wages.
Hence, there is no reason to suppose that the German elections will give Habermass
preferred answer to the European question in the foreseeable future. Even more
importantly, while Germany is strong enough to continue imposing the austerity in the
EMU, it lacks the resources for assuming the role of a benevolent creditor in Europe
(Cafruny 2015). According to Jacques Sapirs calculation (Sapir 2012), for fiscal transfers
from the eurozones core to have a long-term developmental effect in the periphery,
33
Germany would have to contribute around 9% of its GDP for a period of 10 years, which
Let us conclude in agreement with Streecks basic argument: since the de-
the neoliberal drive towards the insulation of markets from the popular control, the fight
against austerity in Europe must start with the re-nationalization of decision making
prerogatives in economic and monetary affairs. However, not every assertion of national
sovereignty will be progressive. If the Left makes the fatal strategic mistake of
surrendering the ideological licence to criticize the EU to the extreme Right, the politics
scapegoating societies. In the days to come, as fractures in the EU continue to grow, and
an alternative to the crumbling order is not established, much will depend on the ability
of the European Left to break free from its politically debilitating Habermasian illusions,
1
It is true, as an anonymous reviewer pointed out, that the colonization of the entire life-
world by capitals technical form of rationality is the central thesis of Habermass (1985)
The Theory of Communicative Action. However, the problem with Habermass concept of
capitalism remains because, Streeck contends (2015c: 9), in his critical reappropriation of
emphasis on efficiency. What stays forgotten is that the natural laws of the economy, which
34
appear to exist by virtue of their own efficiency, are in reality nothing but projections of
For a useful overview of economic expalanations for the eurocrisis see Nlke 2016.
3
Admittedly, it would be fair to argue that, considering Habermass intellectual background in
the Frankfurt School, his internationalism, rather than simply expressing free trade
cosmopolitanism, draws on the Austro-Marxist debate on the national question, in which the
national liberation movements of the non-German speaking peoples in the late Habsburg Empire
were dismissed as regressive because of assumption that larger economic units provide a
favorable terrain for the capitalist development and thereby for the socialist revolution. Even so,
Habermass firm belief that globalization is as much inevitable as it is progressive differes litle
from what Otto Bauer (2000), a foremost contributor to the debate, had called nave
cosmopolitanism when talking about the failure of the early 20th century Left in the advanced
capitalist countries to appreciate emancipatory meaning of the national struggles for the working
impetus to the idle talk of a Plan B (Habermas 2015c: 68). Considering that Plan A is the
Lefts name for the reform of the EMU, and Plan B for its dismantling, and that Syrizas
rise to power begun precisely on May 2012 elections, after the party put the Grexit option
(Habermas 2001) that the support for the euro resided on, but on a Greek constellation of various
historical, political and economic conditions that made the euro into a symbol of regained national
pride. In its anti-Habermasian point about national states joining the European integration in order
35
to strengthen and not weaken their sovereignty, the example of nationalist aspiration to share the
share the same money with Northerners (Bagnai 2015: 121) in the South corresponds to Streecks
example of Ireland or Baltic states, which saw the membership in the EU as a way to secure their
finance minister and the broker of the agreement Syrizas first government eventually reached
with the European institutions, said that a very nasty politics of Weimar Europe would emerge
the rational debate on the economic rules they follow and answer his arguments with rules-are-
rules mantra, in spite of a wide intellectual support for social criticism of the EUs blind
allegiance to austerity. Before him,Varoufakis described the same experience in an interview with
New Statesman, You put forward an argument that youve really worked on to make sure its
logically coherent and youre just faced with blank stares. It is as if you havent spoken. What
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