The Habermas-Streeck debate revisited: Syriza and the illusions of the

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-

wing Syriza partys challenge to European austerity in Greece. Three conclusions

are drawn. Firstly, Syrizas nationally charged populism in opposition coinsided

with Streecks considerations. Secondly, Syrizas governmental strategy reflected

Habermass views. Thirdly, Syrizas sudden rise to power as well as its subsequent

failure to reverse the austerity substantiate Streecks thesis that re-nationalization

of decision making prerogatives in economic and monetary affairs represents a

condition of the possiblity for egalitarian politics in Europe.

Keywords: Wolfgang Streeck; Jrgen Habermas; EU; democracy; capitalism;

Syriza; Greece; left-Europeanism

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

of Democratic Capitalism (2014a), sharply outlined a crucial dilemma that progressive

forces of Europe face today: should the Left push for renewal of the EU through its deeper

integration, as Habremas adamantly claims, or peaceful dissolution of the EU and retreat

to a national state, as Streeck alternatively argues?

Valuable on its own, the Habermas-Streeck controversy gained additional empirical

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

Europe, primarily in the southern eurozone countries devastated by austerity. As rare as

it is to witness timely dialogue between two masterful vivisections of an opaque social

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

the end of Cold War.

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.

I Streecks diagnosiss: EU or democracy?

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

analysis, the deceased is understood as a shotgun marriage between democracy and

capitalism born of an unprecedented change in the balance of class-forces throughout the

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

3
troubled by an intrinsic conflict between the exclusionary profit-seeking logic of capitalist

economy, and the inclusionary egalitarian logic of democratic politics:

Capitalism and democracy seem to simultaneously support and undermine one

another: while an economic equilibrium is necessary for a democratic society to

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

capitalism, it is threatened by the policies that are required for economic

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

prevalent Keyenesian optimism regarding the economic rationality of state administered

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

of his understanding of capitalism as an instrumentally rational and normatively colorless

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,

will withdraw its support to the welfare state.

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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

as a tool for the management of distributional conflicts.

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 facade of democratic capitalism believable. Structural unemployment, job insecurity,

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

legitimizing makeup. In response, the governments, besides promoting the consumerist

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

5
continuing to rely on electoral competition to produce legitimacy for the outcomes of free

markets shielded from egalitarian distortion (Streeck 2015a: 51)

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

constitutional immunization of neoliberalism from democratic deliberation. And since he

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

GDP. Furthermore, the newly introduced currency was to be administered by the

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

6
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

prosperity, and eventually lead to the formation of a full-fledged political union.

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

crisis of the euro to indicate a good idea temporarily compromised by its

underdevelopment, meaning by the lack of political umbrella matching the EMU (Streeck

2014a; 2014b; 2015c).2

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

exporters competitive in international markets effectively aligns the interests of workers

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

7
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

arrangements, Mediterranean economies suffered from a loss of international

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

living standards of working classes (Streeck 2014c).

Obviously, the EMU was tailored to suit the needs of the northern economies. Tight

fiscal constraints inscribed in Maastricht convergence criteria emulated the policies of

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

the common currency as an engine for joint prosperity.

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,

8
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

themselves so as to improve their performance in international markets. In reality, the

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

spending, and labour protection.

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

consequence, the European Commission, a technocratic executive shorn of democratic

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

objectionable in his otherwise favorable review of Streecks book.

II Habremass criticism: More Europe!

Habermas (2015a: 87-88) concurs with Streecks diagnosis inasmuch that he too

recognizes a systematic tendency in the European institutions to counter the existential

crisis of common currency by discarding democracy at the national level, and

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

policy of trading cross-border transfers to indebted periphery for creditors political

control over debtors is bound to fuel nationalistic resentment in donor as well as in

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,

10
not its ongoing austeritarian integration. Therefore, the cure for the malady is to be found

elsewhere, not in the obsolete confines of national state.

If we acknowledge that the organizational advantages of the global financial system

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

EU as a whole could be conducted unhampered by the unreflective allegiances to

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

and successfully protected against the mischiefs of financialised capitalism (Habermas

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

to the European transfer union a transnational redistributive mechanism for the

homogenization of the continents social and economic space whose competences are

11
to be legitimized by the newly empowered European Parliament, the highest political

body of a future supranational European democracy (Habermas 2015a). And, as things

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.

Two important points frame Habermass criticism of Streecks proposed solution

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

of supranational political formation on principles of democracy and social justice is

understood by Habermas as the distinctly European End of History, or an earthly

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

institutional edifice, including the common currency itself, which is waiting to be

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

functionally driven opening followed in each case by a socially integrative closure

at a higher level... Expanding markets and communications networks have always

had an explosive force with simultaneously individualizing and liberating

consequences for individual citizens; but each of these breaches has been followed

by a reorganization of the old relations of solidarity within a more comprehensive

institutional framework (Habermas 2012: 113-114).

For Habermas, the problem of modernization is that, if not constrained by the public use

of reason channeled in suitable political formations, norm-free instrumental rationality of

capitalist subsystem is bound spill over into the rest of society and degenerate into a

technocratic regime of governance. Therefore, the internationalization of the markets

calls for the internationalization of politics. Those who argue against the possibility of

European democracy by pointing to the absence of shared sense of common identity

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

capitalisms modernizing pressures (Habermas 2009). On the contrary, there is nothing

utopian in the appeal to European identity if we conceptualize its ethical substance purely

in terms of reflective allegiance to the consensus-seeking democratic procedures and the

binding force of the self-imposed law, instead of in terms of pre-modern attachments

comparable to the ethnic sense of belonging (Habermas 2001).

According to Habermas (2015a: 97-98), in believing that intra-EUs economic

disparities by themselves prove an insurmountable incompatibility among heterogeneous

collective ways of coping with capitalism, Streeck is hypostatizing the similarities

between political economies and historically shaped national identities, and turning them

13
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

neoliberal globalization (Habermas 2001). Consequently, the breakdown of nationally

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

capitalist commercial interests (Habermas 2015a: 92). However, if class politics is a

fundamental driver in Streecks explanation of the crisis, then his diagnosis can only

support Habermass optimistic assertion that neoliberalism, as an ideology and as the

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

irrational economics, which precludes any possibility of growth in the eurozone.

Accordingly, to regain their long lost momentum, political parties and grassroots

14
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

opposing the formation of the European political union.

III The rise of Syriza and the role of national context

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

15
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

implement draconian austerity measures.

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

about Syrizas rise to power?

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

16
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

discourse, appearing up to 50 times in closing campaign speech of Alexis Tsipras, the

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

oligarchy (Stavrakakis 2015; Katsambekis 2016).

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

impoverished middle classes. Rather, it primarily expressed a correct analysis of political

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

17
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.

As a number of authors have pointed out, the rise of German geo-economic

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

authoritarian imposition of austerity by international institutions.5 The key question that

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

in an utterly damning way?

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

18
imbalances first on Europe and Japan, and then on the rest of the globe (Cafruny 2003;

Gowan 1999; Parboni 1988). Therefore, in an attempt to avoid detrimental effects of

American dollar unilateralism, and to enhance the expansion of European industry and

banks on external markets, the European ruling classes realigned behind the

Grundnormen of Deutsche mark nationalism (Habermas 1990) by creating a monetary

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

because the bill is paid by labour (Carchedi 1997:100). In consequence of monetary

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

preserved inside the EMU (Bonefeld 2005).

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

huge surpluses in intra-eurozone trade by relentlessly suppressing the growth of domestic

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

19
triggered a process of competitive destruction of national class settlements across the

eurozone (Schrapf 2014).

However, in the heyday of privatised Keynesianism (Crouch 2009), 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

served as a demand booster and, instead of fiscal transfers, as an ersatz compensation to

the peripheral countries for the loss of competitiveness they subscribed to by joining the

common currency (Streeck 2014a). In a dynamics transposing the global debt-fueled

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

20
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

under the auspices of solidarity conditioned by fiscal prudence. In a backdoor bailout

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

Prime Minister George Papandreu announced the possible referendum on austerity

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

distributional conflict with even a pretense of democratic legitimacy. In that respect,

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

the EMU. Notwithstanding Habermass condemnation of the blinkered nationalistic

version of the Left (Habermas 2012: 127), in countries where the European institutions

reacted to the breakdown of a debt-based social compromise by removing the fiscal

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

about egalitarian democracy or progressive politics at all.

IV Syrizas Habermasian wager and its failure

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

the EMU the from the inside.

Syrizas deradicalization actually began in the summer of 2012, with a gradual

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

22
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

countrys economy (Kouvelakis 2015c).

Syrizas overarching vision, shared by the whole of the Europeanist Left, was that

of Greece sparking the flame of democratic resistance to austerity across Europe, as

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

represents in Europe, to see the light of economic reason in Syrizas proposals.

Consequently, a German-led Marshall plan for the EMU would spring from Greeces

constructive opposition to the Troika, thus ultimately realizing Habermass dream of a

single unified European social-democracy.

Initial reactions from the European establishment to the news of Syrizas victory

provided a taste of the things to come. As if he was trying to rehash Streecks

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.

In a development demonstrating the futility of electing a left-wing government

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

talk regarding either the reintroduction of collective bargaining, or the end of

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

implementation of humanitarian measures of the Thessaloniki program.

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

humiliation, together represent a constitutive political moment in the institutional

maturing of intra-European imperialism, which is best exemplified by three salient

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

submitting it for public consultation or to Parliament (Euro Summit 2015: 5).

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

struggle for a post-left managerialism (Chatzistavrou 2016: 41), nominally left-wing

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.

V The Habermasian illusions

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.

To begin with, an implicit yet fundamental supposition behind Syrizas strategy

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

as a symptom of imbalance between internationalized capitalism and politics, whose

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

of capitalisms ability to let itself be constrained by ever expanding political frameworks

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

responsibility for the eurocrisis is a nationalistic and fundamentally irrational political

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

expressed will of Europeans to end neoliberalism, is the only economically reasonable

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

Social Europe project.

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

losses and privatization of public wealth.

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

accidental. For, when an international system of competitive states framed by a common

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

betrays the designers purpose in creating of the eurozone.

Advertised by the Brusselss ideological apparatus in the media and academia as

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

beginning of welfarism democracy. For, it is the propensity of European governments

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

been falsified in Greece by the European institutions delivering on a promise Angela

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

are too complicated for the ordinary people.

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,

as manifest in neoliberalism becoming the dominant practice and Weltanshaung of the

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

and capital; thereby it clearly expressed the underlying intention of building an

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

amalgamation of economic and social policies. Government influence on market

operations in particular and on economic and social matters generally in 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

compensate for this reluctant retreat by forming a European level of economic

governance, where market justice could be delivered without popular impediment. As

Werner Bonefeld (2002:130) explains, the European project from its start reads like a

pre-emptive counterrevolution against the democratic majorities, whose

supranationalism is designed as a device that would disempower the working class to

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

ideological bait for the Left.

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

excuse because he succumbs to the fallacy of equating any form of internationalism,

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

nature of the eurocrisis, both entrenched in their respective anti-European positions

(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

or, to be more precise, capitalisms institutional incarnation in the EMU.

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

competitiveness of national exporting champions (Streeck 2015c; Streeck and Elssser

2016). If so, nationalism will follow from this centrifugal movement, picturing Europe as

a political battlefield between lazy Southerners and the German occupier.

Habermass appeal to Germany to relinquish its economic nationalism and promote

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

is something no country can economically and politically endure.

Let us conclude in agreement with Streecks basic argument: since the de-

nationalization of economic policy through the European integration in fact materialized

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

of national homogeneity is likely to capture the impulse of popular resistance to the

European de-democratization of capitalism and thereby re-embed neoliberalism in

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,

and oppose the rise of volatile nationalistic neoliberalism by advancing international

solidarity among national struggles against neoliberalism.

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

systems theory, he accepts a technocratic claim to dominance over certain sectors of

society and thus depoliticizes the economic, narrowing it down to a unidimensional

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

social-power relations which present themselves ideologically as technical necessities

(Streeck 2015c: 10).

2
Along the same lines argue, among others, Bagnai 2015, Blankart 2013 and Hall 2012, 2014.

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

classes of stateless or otherwise subjugated peoples.

4
In an interview for Die Furche, he said: The recent Greek elections in May 2012 have lent

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

on the table, it seems clear what Habermas is talking about.

5
See Becker, Jger and Weissenbacher 2015; Cafruny 2015; Durand 2014; Georgiou 2014;

Kouvelakis 2012; Lapavitsas 2012; Mahnkopf 2012; Streeck 2015b.

6
On Syrizas origins and development see Kouvelakis 2015a and Katsourides 2016: 45-115.
7
Interestingly enough, it was not on Greek allegiance to a European post-national constellation

(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

national independence (Streeck 2014a: 221).

8
In an interview he gave during the critical days of the negotiations, Euclid Tsakalotos, Greek

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

if Greece exited from the euro (Channel 4 News 2015).

9
See, for example, Balibar, Mezzadra and Wolf 2015, and Gindin and Panitch 2015.
10
In a recent article, Tsakalotos (2016) lamets the tendency of European institutions to eschew

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

you say is independent of what they say (Lambert 2015).

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