We wrote this text in June 2018 on account of Greece exiting the Memoranda. The text was published at 2008-2012.net, a site in which we were participating. Since that group and site has been resolved, we republish it here.

It’s been eight years since the signing of the first Memorandum back in May 2010. Now, after the Eurogroup agreement, the Memoranda are declared to be over. Instead of the “clean exit from the Memoranda” that the prime minister, Alexis Tsipras, was advertising, the result is instead a “strengthened supervision”. What is the result of this past eight years?

The answer, in short, is complete failure. And we’re not talking just from the perspective of the daily life of the proletariat, but from the perspective of the Greek economy. The whole matter behind the Memoranda was to raise Greece’s competitiveness in the international markets. Indeed, the Greek labour market became more competitive but to no avail. The after-crisis average of foreign direct investments is larger than the pre-crisis one, but in no way bears a dramatic significance for the Greek economy, and the majority of the investments were from other EU member states[1]. The Greek exports aren’t in a good shape, too – one of the basic ideas behind a currency like euro. According to data from 2015, only 2.5% of the Greek enterprises are exporting[2]. As the CEO of Ernst & Young Greece put it: “Even today, we are focusing the discussion only on fiscal matters. If we don’t change, we’ll have a real survival problem”. Of the exporting enterprises, 85% are “small and too small” companies, amounting only to 28% of the total exports. The 5 bigger companies amount to 25.9% of the total exports. As the CEO, again, put it: “On the issue of exports, the size of the company matters, as funds are needed for investment in innovation and human resources”. And 73% of the exporting enterprises had started their activities before the crisis, so the Greek enterprises didn’t try to achieve an international orientation in order to survive the crisis. The majority of the Greek enterprises are still being reproduced at the level of the national market.

With the Greek enterprises being stuck in their national microworld, the only resolution to the crisis was a domestic devaluation to reduce both the labour costs and the prices of the nationally-produced commodities. According to a report of INE-GSEE (Research Institute of General Confederation of Greek Workers), “[i]n construction, the decrease is about 1/4 of the initial price, possibly due to the extremely difficult conditions prevailing in this sector of production. The corresponding decrease in the services sector was limited to around 10%. […] [In t]he manufacturing industry or the broader industry (excluding constructions), domestic prices didn’t follow the drastic reduction in unit labour costs: In the case of manufacturing, the fall in the price index over the whole period [2010-2016] did not exceed 3%, while the reduction in labour costs per unit went up to 37.5%, due to large reductions in current earnings and productivity gains [not in the Marxian sense]. In the broader industry, excluding constructions and including mining, energy production and the water, sewerage and waste management sector, the price index increased by 4.2% versus a 29.1% reduction of the labour cost per unit of product. […] As a result, instead of the intended competitive deflation, in the case of non-construction industry there was an increase in profit margins. […] The average profit margin for the manufacturing industry (calculated on the basis of labour costs) increased by 56% between 2010-2016, while it remained practically the same for the services sector and it reduced for the constructions industry. […] [T]he manufacturing industry didn’t turn to a policy of aggressive restructuring, intended to expand its share on the international markets, and instead turned to a policy of increasing its profit margins over the same production volume. […] The dramatic wage reductions at the manufacturing industry didn’t yield the predictions of the theory of domestic devaluation (corresponding price reductions, while increasing competitiveness and improving the current account balance) […]”[3].

We must also note the tourist industry. In 2017, the revenues from tourism was 14.2 billion euros from about 27.2 million tourists, with the total contribution of the tourist industry sector to the Greek GDP being up to 27.3%[4]. The tourist industry is also changing the past years due to the Airbnb platform. Just as a little example, while back in 2010 only 32 houses and rooms were available for tourist accommodation rental on Airbnb in Athens, in 2017 they reached 11.585[6]. The hoteliers are accusing Airbnb for unfair competition and see them as a danger for their enterprises, especially for the non-luxury hotels. The hoteliers are also arguing that in order to remain competitive they have themselves absorbed the increase of the value-added tax in order to maintain quite the same prices for their costumers. With Airbnb the composition of the recipients of income from tourism is changing, as many people who are just house-owners are now entering the stage trying to get a small share of the rising total tourist revenues due to the increasing tourist demand. The results from these changes still remain unknown, especially in the case of a future stagnation or reduction in demand.

The whole proccess of restructuring Greek capital that the Memoranda was trying to achieve was in reality put aside by the Greek capital in order to gain a higher profitability just by drastically reducing the labour costs – with the privatisations being the only exception to this refusal of restructuring. The only way that the Greek state was able to achieve the fiscal objectives laid by the EU was new and bigger taxes and, of course, budget cuts on the already small social welfare[6]. All in all, the song of the Greek capital remains quite the same, just with a bigger and poorer proletariat, and smaller and poorer waged middle-classes and petty-bourgeoisie. In general, the Greek capital didn’t change its modus operandi, it just abused the only ways it knew for growth: wage reductions, undeclared work, extraction of absolute surplus value. The role of Greece in the EU will remain the same: a jailer for immigrants trying to pass into EU, a node in the trade network between EU and China, and of course, a “tourist resort”. And despite the dramatic wage reductions, Greece is still only a second-rate area for cheap labour in order to attract foreign investments.

From the perspective of the daily life of the proletariat, the Greek landscape is hellish. Not only for the moment the Greek proletariat isn’t even considering a struggle for its basic everyday needs, but is only interested in gaining back its national sovereignty, both real (lost due to the denationalisation of the Greek state entering Eurozone) and imaginary (the supposed questioning of Greek identity and sovereignty by the Republic Of Macedonia). For the moment, the only major instances of struggles concerning the living conditions of the proletariat are by immigrants at some camps and detention centers. But they haven’t been able to surpass the repression, both by the state and the local racists, and almost no solidarity is acted towards them from the domestic proletariat, with the exception of some local groups of anarchists and leftists. And, unfortunately, violent conflicts between different ethnic and religious groups of immigrants living in the same camps and detention centers aren’t less often than their struggles for their needs…

1. https://www.enterprisegreece.gov.gr/en/greece-today/why-greece/foreign-direct-investment & https://tradingeconomics.com/greece/foreign-direct-investment
2. https://www.ey.com/gr/en/issues/business-environment/ey-survey-made-in-greece-the-greek-exports-challenge
3. https://ineobservatory.gr/wp-content/uploads/2018/01/Policy-Brief-151.pdf
4. http://www.kathimerini.gr/963230/article/oikonomia/ellhnikh-oikonomia/ews-kai-273-h-syneisfora-toy-toyrismoy-sto-aep-to-2017
5. https://www.dikaiologitika.gr/eidhseis/oikonomia/202006/i-ellada-anakalyptei-tin-airbnb-eos-100-i-ayksisi-stis-misthoseis-spition-se-touristes
6. At first glance this may seem contradictory: with both major wage reductions and tax increases, and the massive unemployment, how is the proletariat still able to reproduce? We must bear in mind that for the Greek proletariat the wages aren’t always the only source of subsistence. A significant part of the working class isn’t completely deprived of property and either have a small piece of land in the countryside that they cultivate (for personal consumption or for selling the products) or have an apartment from which they receive rent. Most significant than these are family bonds, which have been further strengthened as a result of the crisis. It’s not unusual for people even in their thirties to still live with their parents sharing the expenses of the household, and grandparents, despite the pension cuts, are reducing their personal expenses to the minimum possible for survival in order to give money to their children or grandchildren. Of course, all the above aren’t true for the immigrants. The vast majority of them don’t own any property. But even before the crisis, many of them were already living together, even four people in an apartment with only one bedroom, in order to make do. This was intensified by the crisis.