Published in Capital and Class; https://doi.org/10.

1177/0309816818815257

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 party’s challenge to

European austerity in Greece. Three conclusions are drawn. Firstly, Syriza’s nationally

charged populism in opposition coincided with Streeck’s considerations. Secondly,

Syriza’s governmental strategy reflected Habermas’s views. Thirdly, Syriza’s sudden rise

to power and its subsequent failure to reverse the austerity both substantiate Streeck’s

thesis that at the present juncture re-nationalization of economic policy represents a

condition of the possibility for egalitarian politics in Europe.

Keywords: Wolfgang Streeck; Jürgen Habermas; European Union; democratic

capitalism; Syriza; left-Europeanism

Introduction

Even for those who share the basic 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

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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 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 welfare state. This insight marks the

starting point for the debate between Jürgen Habermas and Wolfgang Streeck which,

prompted by Habermas’s review (2015) of Streeck’s Buying time: The Delayed Crisis of

Democratic Capitalism (2014a), sharply outlined a crucial dilemma that anti-austerity

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. Thus the

intention of this paper is to reconsider Habermas’s and Streck’s respective views about

the EU against the background of the rise and fall of Syriza, the Greek 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 Streeck’s claim that the post-2008 EU

represents a 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 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 Syriza’s ideological development and political

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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 Greece’s 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.

Streeck’s diagnosiss: EU or democracy?

Streeck’s 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; p. 24). Streeck’s thesis

is that the project of striking a balance in the class relations was from its inception 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. (Streeck 2015a, p. 54)

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The theme of capitalism’s inability to make itself socially acceptable is familiar from

Habermas’s 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 state’s 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 political actor seeking to reorganize the whole of social life in accordance with

its interests. Hence, he did not expect that the capitalist class, and not the masses, will

withdraw its support to the welfare state.

By his own admission, Streeck ‘travel[s] light in terms of theory’ (2014a, p. xv),

so that his notion of state remains underdeveloped. In consequence, Streeck’s account of

neoliberalism at times appears to slide into the ‘rollback of state intervention’ (Streeck

2014a, p. 28) narrative, thus arguably obscuring the active role of what in fact was, and

had to be, a strong state in ‘the return to the market’ order, as Werner Bonefeld (2017)

convincingly argued most recently. On the other hand, I think, his overall argumentative

strategy actualy suggest as much. For, Streeck starts with and departs from the Frankfurt

School’s structuralist conception of the welfare state as determined by, and torn between,

its accumulation and legitimation functions in interpreting its crisis as an economic one,

both cause and consequence of the class struggle. According to him, the capitalist class

revolted against the democratic empowerment of the masses when the growing conflict

over distribution began to erode the social relations in the sphere of production, as during

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the strike waves from the late 60s onwards. Whence Streeck explains the transformation

of capitalism in the last forty years as a ruling class project of its de-democratization

through separation of politics from economy, while highlighting that the markets were

liberated ‘not from governments on which they still depend in many ways, but from the

kind of mass democracy that was part of the regime of postwar democratic capitalism’

(2014a, p. 46).1

The breakdown of the post-war settlement begun in the 1970s, when the decline in

the growth and profit rates triggered the neoliberal counterrevolution aimed at unloading

the weight of popular demands from the staggering forces of the free market. Streeck

(2014a, p. 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 keep 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 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

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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

broken, there was no other way for the ruling classes to protect the markets from the

people except by formally divorcing capitalism from democracy, ‘while continuing to

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

shielded from egalitarian distortion’ (Streeck 2015a, p. 51)

In Streeck’s judgment (2014a, p. 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 EU’s inherent class logic is that of liberalization of

capitalism through de-democratization of politics by the way of de-nationalization of

economy in general, and money in particular – a view long shared by different Marxist

critiques of the European project (see Bieler 2005, Bonefeld 2002, Jessop 2006). The key

evidence Streeck presents concerns the integrationist reforms of the EU’s fiscal space

carried out in the wake of the 2010 eurocrisis, which, he claims (2014a, pp. 107–108;

2015b, pp. 14–19), stand for the constitutional immunization of neoliberalism from

democratic deliberation. And since he thinks that the euro lays at the heart of today’s

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.

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 three per cent

of Gross Domestic Product (GDP), and accumulated debt of no more than 60 per cent of

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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

mutualization of debt between member states, was instituted in order to secure the fiscal

prudence.

Besides the limits of credit-driven growth, 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 with highly heterogeneous

economic cultures, rather than taking the eurocrisis 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

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, Mediterranean

economies suffered from a loss of international competitiveness even before entering the

EMU. Still, having their own currencies, they could compensate for that loss by periodic

7
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. The 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 eurozone governments saved their bankrupt banks; and economies,

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

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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). 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 reductions in wages, public

spending, and labour protection. Moreover, to neutralise the popular resistance, which

was growing chiefly, but not exclusively, in the periphery, the austerity was in 2012

inscribed in the very constitutions of eurozone countries through the European legislative

measures known as the Six-pack, the Two-pack, and the Fiscal Compact Treaty. In

consequence of these acts, the European Commission, a technocratic executive shorn of

democratic control, gained full authority over the budgets of the member states, and

thereby obtained the power to mold the lives of European peoples in accordance to the

interests of the markets.

Hence, Streeck concludes (2014a, p. 189), the progressive forces of Europe should

regroup around the only remaining pockets of resistance to the EU’s neoliberal reign,

which reside in what has remained of the popular sovereignty at the national level. In

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).3 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 Streeck’s book.

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Habremas’s criticism: More Europe!

Habermas (2015, pp. 87–88) concurs with Streeck’s diagnosis inasmuch that he too

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

crisis of single 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 (2015, p. 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 creditor’s political

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

recipient countries. But, in difference to Streeck, Habermas (2015, pp. 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 eurozone’s fiscal

space, 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 (2015, pp. 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

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

imaginary root identities. 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 2015).

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 reforms should give birth to the

European transfer union – a transnational redistributive mechanism for the

homogenization of the continent’s social and economic space – whose competences are

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

body of a future supranational European democracy (Habermas 2015). 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 2015, p. 94), across the whole

of Europe.

Two important points frame Habermas’s criticism of Streeck’s 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 finalité – 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

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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 EU’s

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

overturned in Europe’s quantum leap towards democracy. Together these claims make up

the backbone of Left Europeanism, a vision of Europe’s 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 Habremas’s 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, 2015). The need for transcending

the political framework of the national state stems from the historical logic of capitalist

modernization:

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, pp. 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

12
forget that the nation itself is a ‘highly artificial form’ (Habermas 2015, p. 98) of social

consciousness, which was invented in the 19th century for the cushioning of industrial

capitalism’s 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 (2015, pp. 97–98), in believing that intra-EU’s 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

into an irreproachable organic phenomenons, which are normatively immune to the

course of European modernization and its cosmopolitan proclivity. Yet the welfare state

has been irrevocably overran by the economic forces of 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 one’s back on world

history’ (Habermas 2015, p. 17).

And what about neoliberalism? Well, in Habermas’s 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 Streeck’s

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

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

fundamental driver in Streeck’s explanation of the crisis, then his diagnosis can only

support Habermas’s 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. Accordingly, to regain their

long lost momentum, political parties and grassroots 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.

The rise of Syriza and the role of national context

The sequence of events which led to Syriza’s 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 country’s actual deficit was over 12 per cent

of GDP, rather than six and a half per cent, 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 Greece’s default

threatened French and German banks, which had owned the largest portions of Greek

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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, German

chancellor Angela Merkel, until that moment resolutely averse to the idea of a fiscal

union, accepted joint liability for the debt. However, the responsibility for the underlying

economic imbalances was pinned entirely on Greece and its alleged 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 a result of wages and pensions cuts, regressive tax hikes and public sector

layoffs, the aggregate demand in Greece collapsed, and its economy plunged into a deep

recession whilst government revenues dropped. After five years of austerity, the Greek

GDP had shrunk by 25 per cent, unemployment soared to 26 per cent, and real wages fell

by 30 per cent (Maass 2015). Moreover, Greece’s public debt, which was to be rendered

sustainable by the reduction in state spending, went from 130 per cent of GDP in 2009,

to 177 per cent 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 Streeck’s and Habremas’s respective

arguments regarding the importance of the national context for progressive politics in

Europe fare with the story about Syriza’s 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 in 2015, this did not happen because Germany began questioning its economic

politics out of enlightened self-interest for the continental unification, as per Habermas.

15
On the contrary, the change was brought about by the Left’s ascension to the nation state’s

level of power in the subaltern country most hit by austerity.

Furthermore, this would not have been possible without Syriza’s programmatic call

for the restoration of the Greek national sovereignty (Kouvelakis 2015b), which anchored

the party’s political message since Troika’s imposition of austerity. Using the conceptual

framework of Ernesto Laclau’s 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 Syriza’s discourse was a decisive moment for its

breakthrough from a marginal leftist party, backed by four point six per cent of the votes

in the 2009 elections, to a major anti-austerity force that won 26, 89 per cent 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 Syriza’s 2012 discourse, appearing up

to 50 times in closing campaign speech of Alexis Tsipras, the party’s 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 Greece’s international creditors and the domestic oligarchy (Stavrakakis 2015;

Katsambekis 2016).

More importantly, Syriza’s 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.

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 The guiding thought of that analysis about the causal link between the EMU’s

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). And the political course thereby entailed was encapsulated in Syriza’s

oppositional rallying cry ‘no sacrifice for the euro’ (Syriza 2013). Hence, in order to

appreciate Syriza’s interpellation of the ‘people’, we have to expand upon Streeck’s

explanation of the way the EMU has shaped uneven economic and political effects of the

Great Recession on European societies.

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 eurozone’s

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 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 imbalances first on Europe and Japan,

17
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 created 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, p.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.

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, Germany’s devaluation of the domestic labour would have

backfired through appreciation of the country’s 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

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

eurozone (Schrapf 2014).

Still, for a time the imbalances within the eurozone in fact functioned as an

integrational force. 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

18
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 eurozone’s 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 said 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 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, 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

19
implementing austerity had to be taken over by foreign lenders, who are by their nature

immune to electoral pressure.

Therefore, we may conclude that 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 elites in Greece as the result of a proxy conflict between creditor and debtor

nations inside the EMU.

Syriza’s Habermasian wager and its failure

For all intents and purposes, the negotiations regarding the Greek debt between Syriza’s

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. So, 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

20
the euro’s fundamental flaws, ‘Greece should not exit the eurozone [because that] would

be a disaster for Europe’ (ThePressProject 2013).

Syriza’s ‘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 creditor’s standpoint (Varoufakis 2015). Accordingly, Syriza’s

leaders expected that the European institutions would allow as well as fund the

implementation of the party’s 2015 pre-electoral Thessaloniki program, this 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 country’s

economy (Kouvelakis 2015c).

Syriza’s 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 (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 Syriza’s proposals. Consequently, a German-led ‘Marshall plan’ for

21
the EMU would spring from Greece’s constructive opposition to the Troika, thus

ultimately realizing Habermas’s dream of a single unified European social-democracy.

Initial reactions from the European establishment to the news of Syriza’s victory

provided a taste of the things to come. 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 Euro-institutions, the 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.

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 and constitutive moment

22
in the institutional maturing of undemocratic capitalism, best exemplified by three salient

provisions of the EU’s 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

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, p. 5).

The most striking aspect of Syriza’s capitulation is that the decision to cave in under

the EU’s pressure was announced immediately after the referendum about the Troika’s

bailout conditions held on 5 July, when an overwhelming majority of 61 per cent of

Greeks rejected the Brussels ultimatum – this being to either surrender to more austerity,

or go bankrupt and leave the eurozone. While Tsipras’s reasons for calling the referendum

just to have the result he himself campaigned for repealed are at best moot, the

repercussions of Syriza’s 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 its anti-austerity

struggle for a ‘post-left managerialism’ (Chatzistavrou 2016, p. 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 creditor’s interests, at the

23
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 driver’s seat, with the

former steering and softening the course of austerity.4 Yet, even on its own terms, not to

mention the absurdity inherent in the very idea of a leftist austerity, this nihilistic

explanation fails. For it was precisely Syriza’s political mutation to a TINA party that

caused the weakening of the radical Left in Europe, as witnessed by Podemos’s aborted

rise to power in Spain, which in turn led to the strengthening of the radical Right’s

retrograde opposition to the EU, as the success of the racially intoned Brexit campaign

proves.

The Habermasian illusions

If we consider Syriza’s Habermasian wager the only rational way, starting from the fact

that the European powerholders have themselves both publicly and unambiguously

declared the irrelevance of democracy for the workings of the EMU, and then used the

currency weapon to show that they mean business, three conclusions about its failure can

be drawn, all of which confirm Streeck’s thesis concerning the European integration.

To begin with, an implicit yet fundamental supposition behind Syriza’s strategy

was the Habermasian illusion regarding European politics resting on a reasoned and

uncoerced deliberation among equal interlocutors (Douzinas 2016, Kouvelakis 2016, p.

54). As confirmed by Yanis Varoufakis (2017) and Euclid Tsakalotos (2016), who were

Syriza’s 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

24
well-meaning European sitting across the table would start to see the solution for the crisis

in their way as the debt talks progress.5 What they completely disregarded the relations

of power – the actually existing politics in the actually existing EU, which includes the

neoliberal establishment spearheaded by the German export lobby, who come with both

their opposing interests and concomitant reasons, and the means to enforce them. This

leads me to the second important point.

In Habermas’s modernization narrative, the EU’s 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, today’s 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 capitalism’s ability to let itself be constrained by ever expanding political frameworks

when it becomes endangered by its own predatory impulses. From this perspective,

Germany’s 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 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

25
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 European transfer union with Keynesian policies, grounded in the

democratically expressed will of Europeans to end austerity, 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. Simply put,

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 capital’s 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

26
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

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 designer’s purpose in creating of the eurozone.

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

reason for the denationalization of money (Bonefeld 2005; Storey 2014). This was shown

in Greece, where the euro 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 Habermas’s 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, p. 10), and not like Habermas, as neutral rules of the capitalist machine for

producing wealth, the EU’s technocracy is not the void in European politics – it is the

27
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, pp. 271–273). As Werner

Bonefeld (2002, p.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’.

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 internationalism with progressive

politics. On this point, it is telling that when he finally passed his judgment on what

transpired in Greece, Habermas oddly portrayed Syriza’s call for popular mobilization

against Berlin’s financial carpet-bombing as a lopsided and shortsighted clash between

28
two equally nationalistic perspectives on the nature of the eurocrisis, both entrenched in

their respective anti-European positions (Habermas 2015b). 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 2017), a highly polemical review

of Habremas’s latest book on the EU’s 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 – and that is, as Habermas fails to see due to his

functionalist presumptions, capitalism itself or, to be more precise, capitalism’s

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 Elsässer

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

a political battlefield between lazy Southerners and the German occupier.

Finally, Habermas’s 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.

29
Hence, there is no reason to suppose that the German elections will give Habermas’s

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 Sapir’s calculation (Sapir 2012), for fiscal transfers

from the eurozone’s core to have a long-term developmental effect in the periphery,

Germany would have to contribute around 9 per cent of its GDP for a period of 10 years,

which is something no country can economically and politically endure.

Let us thus conclude in agreement with Streeck’s 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, although the opposition to the

EU will tend to appear at the level where the remains of democracy still persevere – that

is, national politics of its member states – not every assertion of national sovereignty will

be progressive. If the Left makes the strategic mistake of surrendering the ideological

licence to criticize the EU to the extreme populist Right, the identity politics is likely to

capture the impulse of popular resistance to the ongoing European de-democratization of

capitalism and thereby re-embed neoliberalism in scapegoating societies. In that sense,

reservations concerning opposition to ‘Europe’ couched in blank national-statist terms (as

voiced, for example, in connection to Brexit by Worth 2017) appear justified – as long as

one bears in mind that although there certainly can be neoliberalism outside the EU, there

can be nothing but neoliberalism inside the EU.

On a different but connected note, it is sometimes argued that the Eurosceptic Left

championing the good old days of social-democracy offers to the working classes what

30
in effect is an anti-socialist vision of a growing national economy able to compete against

other nationalized working classes (Bonefeld 2017). Moreover, adding to the skepticism

about ‘left governmentalism’, an understated lesson of Syriza’s failure seems to be that

populist anti-austerity parties, when uprooted from horizontal mass movements that

crucially contributed to their rise, and so reduced to the traditional electoral politics, tend

to succumb to the institutional gravity of the status quo (which might be interpreted to

mean that the resistance to neoliberalism has to come and is, in fact, coming ‘from below’,

as argued in Bailey et al. 2018).

Nonetheless, if the European Left is not to subsist on the hope of some spontaneous

continental tsunami of revolutionary multitudes storming the Bastille in Frankfurt and

taking control over the ECB, or that true change is possible without state power, its anti-

capitalist and internationalist dispositions need to be shaped by a sense of reality about

where the cracks in the existing order are. As the ferocity of political and economic

violence unleashed against the Syriza government has demonstrated, even mild

reformism, or rather the struggle for the defense of what is left of the (national) welfare

state, poses an existential challenge to the institutional edifice of capitalism in the today’s

EU. It was, and is, perceived as such by the ruling classes precisely because it threatened

to politicize the economy at the level where European capitalism’s integrationist strategy

remains structurally vulnerable to democratic disruption. Thus, I believe, to counterpose

the class struggle against austerity and the struggle for reclaiming of the popular

sovereignty in the EU – as if the cause of socialist internationalism would somehow be

hurt had the Greek working class managed to break free from the EMU’s neoliberal cage

– is to stay in the trap of the Europeanist ideology and can only have the effect of a self-

fulfilling prophecy – that of mass distrust towards ‘Europe’ becoming a ferment for the

retrograde politics.

31
1
Streeck only sparingly traces the strains of his argument back to the Marxist tradition

outside Frankfurt. He references the work of James O’Connor (1973) on the ‘fiscal crisis of

the state’ – its thesis about disproportion between state expenditure and revenue as

indicative of the fundamental conflict between democracy and capitalism – in elaborating

his Kaleckian view of ‘economic crises as crises of political confidence, and of declining

investment as a communication of discontent on the part of owners and managers of capital’

(Streeck 2014a, p. 21). What Streeck fails to mention, however, is that his point regarding

de-democratization of capitalism (or the rise of neoliberal ‘debt state’) as conditioned upon

the outcome of the class struggle for separation of politics from economy has been previously

well rehearsed in the neo-Marxist ‘state debate’ (see Clarke 1991).

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

useful overview of economic expalanations for the eurocrisis see Nölke 2016.
3
For a detailed analysis of what the possibility of devaluation would mean to the weaker eurozone

countries, and why it would provide them with a basis for a social and economic recovery and

not, as sometimes suggested, only a temporary relief, see Bagnai 2015 and Lapavitsas 2012.
4
See, for example, Balibar, Mezzadra and Wolf 2015, and Gindin and Panitch 2015.

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