Syriza’s success marks not only a left rebellion but an economists’ one as well

The new Syriza-led Greek government has started with a bang. Pledging not to repudiate its debts, stopping privatisations, restoring the minimum wage, rehiring public sector workers, scrapping fees for prescriptions and hospital visits – these are heavily symbolic actions revealing its political priorities and appealing to its core supporters.

It is understandable in the light of the social catastrophe about which Alexis Tsipras spoke in his victory speech – youth unemployment at more than 50 per cent (26 per cent overall), gross domestic product down 26 per cent on 2008 and spending down by 40 per cent.

Catastrophe comes from the Greek words for turning and down, crisis from the word to decide. The party’s slogan in the elections was “Hope is on the way” promising “a new beginning, justice and equality, an end to the humanitarian disaster that austerity has created, a new Europe and a future with dignity”. It wants this to be a turning point towards recovery.

The domestic social measures depend crucially on external agreements on its public debts, which are 175 per cent of GDP. Since most are owed to other euro zone states, it makes sense to deal directly with their leaders, not with troika officials.

Other governments will recognise the imperative to fulfil a democratic mandate. They may also understand Tsipras’s argument that the alternative to dealing with radical left governments is to deal with far right ones. The message is pitched directly into European politics to change assumptions that there is no alternative to structural “reform”, meaning only dismantling welfare and cheapening labour.

Positive reception

His European internationalism can be a material factor if it encourages support for similar policies in Spanish, Portuguese and Irish elections. It could stimulate the French and Italian governments to demand new macroeconomic policies favouring growth and investment throughout the euro zone. Such coalitions and alliances can change European politics and economics.

The macroeconomic dimension reminds us this is a not only a left rebellion but an economists’ one as well. In a most unlikely combination the Syriza programme has had a remarkably positive reception from prominent economists and analysts, such as Paul Krugman, Paul de Grauwe, Charles Goodhart, Joseph Stiglitz, Kevin O’Rourke, Wolfgang Streeck, Martin Wolf and Wolfgang Munchau. They are critics of German ordoliberal orthodoxy on austerity and structural reform. Speaking in Dublin this week even Bank of England governor Mark Carney backed calls for Germany to accept the need for redistributive transfers in a currency union and to provide more efficient mechanisms for circulating savings throughout the euro zone.

Structural reforms

They recognise that substantial relief of debts, economic stimulus and growth are essential ingredients for real structural reforms. They see a direct relationship between Greek and European macroeconomic requirements, in a denial of Greek exceptionalism. That could make Syriza the agent of real reforms that eluded previous governments, since they can be relied on to tackle oligarchic corruption and tax evasion. These are not the only sources of Greece’s underdevelopment, but they are barriers to change.

A video of new deputy finance minister Euclid Tsakalotos, in charge of negotiating with international partners, sees him making such points at the launch last year of his book Crucible of Resistance: Greece, the Eurozone and the World Economic Crisis. He says Syriza has been the main opposition party since 2012, when it captured 27.8 per cent of votes compared with 36.3 per cent this time. So newer intellectuals like him have a lot of political experience.

He insists on the importance of alternative ideas in breaking with the past. The task he faces is to create the fiscal space in Greece for progressive structural and egalitarian change. That means staying in the euro zone and finding compromises on debt repayments alongside the intellectual and moral impact of this election, which carries political weight by creating precedents and solidarity. A key idea is to link future elongated repayments of loans to growth levels in the real economy. A European debt conference awaits more support.

Official Ireland has looked more like a northern creditor than a southern debtor in reacting to these historic events. Older diplomats recall Ireland’s role in Greece’s accession to the EEC in 1981. However desirable it is reputationally to associate with the northern liberals in this debate, Ireland has a lot to gain from the reconfiguration of European politics and economics now under way. pegillespie@gmail.com