On Demands for Greek “Reform”

Senior Scholar James Galbraith on the “reforms” being demanded by creditors (vis. pensions, labor markets, privatization, and the VAT) in the negotiations over Greece’s fate:

On our way back from Berlin last Tuesday, Greek Finance Minister Yanis Varoufakis remarked to me that current usage of the word “reform” has its origins in the middle period of the Soviet Union, notably under Khrushchev, when modernizing academics sought to introduce elements of decentralization and market process into a sclerotic planning system. In those years when the American struggle was for rights and some young Europeans still dreamed of revolution, “reform” was not much used in the West. Today, in an odd twist of convergence, it has become the watchword of the ruling class.

The word, reform, has now become central to the tug of war between Greece and its creditors. New debt relief might be possible – but only if the Greeks agree to “reforms.” But what reforms and to what end? The press has generally tossed around the word, reform, in the Greek context, as if there were broad agreement on its meaning.

The specific reforms demanded by Greece’s creditors today are a peculiar blend. They aim to reduce the state; in this sense they are “market-oriented”. Yet they are the furthest thing from promoting decentralization and diversity. On the contrary they work to destroy local institutions and to impose a single policy model across Europe, with Greece not at the trailing edge but actually in the vanguard. …

Read it at Social Europe.

The Levy Institute’s latest strategic analysis for Greece lays out the ways in which the austerity and “reform” program has undermined the Greek economy, and thereby the country’s ability to manage its public debt.

The report (pdf) also examines how alternative financing arrangements — including a “parallel currency” — might be able to relieve some of the intense fiscal pressure being placed on the Greek government and allow it to invest in a direct job creation program (which would, incidentally, end up reducing Greece’s debt-to-GDP ratio. Reading the history of the Greek “bailout” through Galbraith’s interpretive lens makes one wonder whether that goal is really all that high on “reformers'” list of priorities …).