Two Peas in a Pod: Lapavitsas & Husson on the Eurozone Crisis

Editor’s Note: “Two Peas in a Pod” is the English version of “Perspektive socialistične Evrope,” published in the Slovenian journal Borec (The Fighter) in Jan. 2013. A Greek translation is available here.

Two Peas in a Pod

by Andrew Kliman and Anne Jaclard

We were reminded of the expression in our title when we read Michel Husson and Costas Lapavitsas, two radical economists, debating the future of the euro last year in International Viewpoint.[1] Husson wants to save the Eurozone while Lapavitsas recommends that debt-ridden peripheral countries leave it. But in other respects, their views are almost identical.

Both of them want at least a large part of Eurozone governments’ unpayable debts to be written off. Both oppose austerity. Neither thinks that holding the Eurozone together or exit from it constitute real solutions to the crisis faced by Europe’s working people. So both of them also call for income redistribution, capital controls, regulation, and at least partial nationalization of the financial sector.

Yet both of them clearly recognize that their policy proposals are wholly unrealistic. As Husson puts it, euphemistically, his proposals are ‘neither further [n]or closer away than an ‘exit from the euro’ [of the kind that] would be beneficial to working people.” Short of social revolution, what will determine whether the Eurozone stays together or breaks apart are prudent cost-benefit decisions made individually by the governments and dominant capitalist interests in Germany and the debt-ridden countries, not the recommendations of two radical economists. And whatever the outcome of the Eurozone crisis will be, the social-democratic reforms they propose won’t be part of it.

With regard to the most important immediate issue––the sovereign debts of the peripheral Eurozone countries––neither Husson nor Lapavitsas has much to offer. They call for the repudiation or writing-off of debts, but fail to grapple seriously with the consequences of this. Lapavitsas argues that the costs imposed by financial markets on countries that default on their debt “do not seem to be very substantial.” This is true in the very narrow sense that lenders’ willingness to lend, and the interest rates at which they’re willing to lend, depend on countries’ current economic conditions and future prospects, not on the fact that they defaulted in the past. This is very cold comfort to countries like Greece. ­­In order to gain access to private-market loans in the future, it would have to forego social-democratic reforms of the kinds that Husson and Lapavitsas propose and impose on itself the same conditions that the Troika is imposing on it––or more stringent ones.

We will discuss their other proposed reforms below. First, however, we want to ask: Why do Husson and Lapavitsas put forward rather detailed reforms that they themselves regard as unrealistic? Part of the answer is that both Husson and Lapavitsas regard their proposals as “strategic” rather than practical. They both seem to think that their job is to propose a strategy, specifically a strategy for “the left.” They both seem to think that the left’s job is to use such a strategy in order to gain popular support. And for both of them, the goal of all this is to change “the balance of forces.” This last notion runs through both of their articles and dominates their thoughts.

For Husson, the forces in question aren’t capital vs. the working people. He welcomes the grassroots “struggle against the austerity plans” and popular calls to “refus[e] to pay the debt,” but he regards them as only “the launch pad for a counter offensive.” For the counter offensive to take off, “[w]e” are the ones who “have to make sure that the resistance is strengthened,” by “arguing for an alternative project and work[ing] out a programme.” So the changed balance of forces he has in mind is apparently a changed balance of political power within the present socioeconomic system. His goal is evidently to increase the political power of “the left” (probably left electoral parties and unions that support them), to the point where it can implement this alternative project and program “at the European level.”

Similarly, Lapavitsas wants to “mobilise[ social forces] to support” a strategy like his in order to “creat[e] better conditions to resolve issues of distribution, growth and employment.” “[I]mproving the social and economic conditions of workers” in this way “would create a favourable environment for socialist change.” Unlike Husson, he mentions socialism––but this difference is more apparent than real, since Lapavitsas’ references to it are empty. In an essay of almost 4000 words, he never says what he means by “socialism.” Since the term has often been used to refer to its antithesis, above all by Stalinists, this is not a minor omission. In any case, we are left wondering what Husson and Lapavitsas are really for. And we are left wondering why they think that people will, or should, rally round strategists who don’t reveal their aims.

But it seems pretty clear from what they do write that their perspectives are rather distant from those of the First International, which held that “the emancipation of the working classes must be conquered by the working classes themselves.” Their proposals are all about what the left can do for the working class––policies that are “favourable to the working class” and that improve their conditions––not what the working class can do for itself. Its actual struggles against attempts to resolve the Eurozone crisis at its expense, which have been considerable and courageous, are all but dismissed as a mere “launch pad for a counter offensive.” They aren’t regarded as the start of that counter-offensive itself, which the left can assist.

How do we think the left can assist the grassroots struggles? Not by trying to steer them down particular paths in order to elect left governments, and certainly not by trying to narrow and confine working people’s self-activity and alternatives within the framework of bourgeois politics. In both Husson’s and Lapativsas’s articles, there is far too much subordination of working people’s interests and activity to those of “the left,” rather than the other way around. This is an ethical issue, but also a practical one. As Eugene V. Debs, the great American trade union and socialist leader, used to say, “Too long have the workers of the world waited for some Moses to lead them out of bondage … if you could be led out, you could be led back again” (emphasis added).

The transformation of the Russian Revolution into its opposite and the transformation of the European labor parties into bourgeois parties—even Husson refers unfavorably to “[t]he ‘left’ governments of Papandreou in Greece and Zapatero in Spain”––make clear that Debs’ warning was prescient. Working people need to trust their own ability to run their lives themselves and re-establish society on new, human foundations. Attempts to get them to put their fate in the hands of bourgeois politicians, even those of the left, only serve to demobilize them and make them unprepared to confront transformations into opposite. We are aware that much of the European left has long regarded U.S. workers as backward because they lack “their own” political party. The Marxist-Humanist tradition founded by Raya Dunayevskaya, of which we are part, has long said the opposite: the absence of a party that mediates between their interests and the interests of capital is a great advantage that American working people have. They already profoundly distrust both parties, and all politicians, and don’t expect the parties and politicians to solve their problems. This isn’t all of what’s needed, of course, but it is an advantage.

So how can the left assist people’s ongoing grassroots struggles against attempts to solve the crisis at their expense? Not by trying to lead them or use them, but by assisting them. Engaging with them theoretically in a genuine two-way dialogue is particularly crucial in order for working people to develop themselves to the point where they can run society themselves and re-establish it anew. In this particular respect, Husson’s call for a program that includes “a general explanation of the class content of the crisis” offers too little rather than too much.

Unfortunately, it also seems pretty clear that the reason why he and Lapavitsas stress changing the balance of political power within the existing system is that they don’t think that society needs to be re-estabished on wholly new, human, foundations. The economic content of their long-run alternatives seems to be a capitalist system reformed along the lines they suggest in their articles, albeit to a much greater extent. Neither of them says anything that even hints at the idea that, in order to prevent crises like the present one from recurring, we need to overcome the economic laws that govern capitalism and the system’s drive to expand “value” (abstract wealth). Although Husson and Lapavitsas understand that their policy proposals aren’t politically feasible at this time, they seem to think that these proposals would work if only they could be implemented, and that capitalism can turn into a different society by means of sufficiently deep and broad reforms of the kinds they propose.

We do not have the space here to challenge this last notion. We can only briefly indicate why we think their proposals wouldn’t solve the economic crisis or prevent future ones if they were implemented. A book by one of us (Kliman) on the underlying causes of the Great Recession argues that upward redistribution of income is not a cause of the crisis and that downward redistribution that reduces profitability even further would tend to make capitalism less, not more, stable.[2] This is because capitalism is a profit-driven system; profit is the “fuel” on which it runs. What underlies the present crisis isn’t a high rate of profit, but a rate of profit that fell and never rebounded in a sustained manner.

The book also argues that nationalized banks cannot “reflect broader social interests,” as Lapativsas wishes them to do. Even nationalized banks must attract funds from private investors in order to function. To attract these funds, even nationalized banks must invest in ways that try to maximize profits, not ways that reflect broader social interests.

And the book argues that regulation of capital is ultimately ineffective––partly because capitalists always find ways to circumvent it, and partly because regulation has itself led to financial crisis. For Lapavitsas, “protecting depositors[ and] avoiding bank runs” are major reasons why banks should be placed under public ownership and control. But one of the biggest bank runs and banking crises in history took place in the 1970s and 1980s in the United States––precisely because of extremely strict regulations on the interest rates that banks were allowed to offer and charge, as well as the impotence of “Keynesian” policies in the face of accelerating inflation. Ultimately, half of the country’s savings and loan industry collapsed and a huge bailout of depositors took place.

It is time to look outside of traditional political channels and the current socioeconomic system for solutions. We think that the left’s main task is to help working people think through what exactly must be changed in order to overcome the economic laws that govern capitalism and establish a free, and economically viable, society that doesn’t have to submit to these particular economic laws. Answers will not be found in left party programs that try to make capitalism serve workers’ interests.

[1] Michel Husson, “A European strategy for the left?,” IV Online magazine : IV432, January 2011, www.internationalviewpoint.org/spip.php?article1981; Costas Lapavitsas, “A left strategy for Europe: A reply to Michel Husson,” IV Online magazine : IV435, April 2011, www.internationalviewpoint.org/spip.php?article2091.
[2] Andrew Kliman, The Failure of Capitalist Production: Underlying Causes of the Great Recession (London: Pluto Books), 2012, chaps. 8 and 9.