The anti-Marxism of Yanis Varoufakis

Nick Beams

The recently published Guardian article by Yanis Varoufakis, the finance minister in the Syriza-led Greek government, setting out his encounter with Marx lays bare the class character of Syriza and the pseudo-left tendencies of which it is a representative.

Varoufakis’ essential argument, as a self-styled “erratic Marxist,” is that his task is to try to rescue capitalism from itself because any struggle to overthrow it is not only doomed to fail, but would open the door to extreme right-wing and even fascist forces.

Varoufakis attempts to justify his political orientation with a combination of praise for the discoveries of Marx and exposures of what he claims are Marx’s sins of omission and commission.

All of what he writes is either a complete misrepresentation of Marx, a confused jumble, or out and out nonsense. But an analysis of his article is nevertheless valuable from two standpoints.

First, its dissection serves to clarify some of the most fundamental points of Marx’s analysis, as opposed to the distortions and falsifications of Varoufakis. Second, it throws further light on the essential orientation of the pseudo-left milieu for which Varoufakis became something of a poster boy.

Like so many other would-be critics of Marx, Varoufakis begins with paeans to the insights provided by the founder of scientific socialism into the workings of the capitalist system. In so doing, he reveals that either he has understood virtually nothing of Marx, or he has deliberately set out to misrepresent him.

According to Varoufakis, Marx “made a discovery that must remain at the heart of any useful analysis of capitalism,” namely, “the discovery of [the] binary opposition deep within human labour.” Marx revealed that labour has two different natures, Varoufakis asserts. It is a “value-creating activity that can never be quantified in advance (and is therefore impossible to commodify)” and also “a quantity (e.g., numbers of hours worked) that is for sale and comes at a price.”

The total confusion that characterises Varoufakis’ musings and his outright distortions of Marx begins here.

Continuing and deepening the work of the English classical political economists, most notably Adam Smith and David Ricardo, Marx established that the value of a commodity is determined by the amount of socially necessary labour embodied in it, measured by time. This is the law of value from which all the appearance forms of capitalist economy—wages, profits, rent and so on—are ultimately derived.

But Marx’s analysis is grounded on a crucial discovery that answered a question which had bedevilled all his predecessors: What is the origin of profit?

The issue emerged in the following theoretical form: If labour was the source of value and if commodities exchanged on the basis of the amount of labour embodied in them, that is, if equivalents exchanged for equivalents, then how did profit arise?

Or, to put the question another way: if labour was the source of value, then what was the “value of labour” that was bought and sold on the market in the form of the payment of wages? To say that the value of the commodity labour was determined by the labour embodied in it answered nothing.

The classical political economists had travelled in a circle around this question. Adam Smith, for example, had concluded that the law of value applied in a simple commodity-producing society, but not in capitalism. But as Marx drew out, capitalism arose on the basis of commodity production, and so Smith had taken a backward step, in effect abandoning the search for a scientific analysis of its laws.

Marx’s crucial breakthrough, which was to disclose the secret of surplus value and its appearance form as profit, was the discovery that the commodity the worker sold in the market was not labour, but labour power—the capacity to work.

Like all other commodities, its value was determined by the amount of labour needed to reproduce it. That is, the value of labour power was determined by the amount of labour needed to sustain the worker and his family. This was not the same as the amount of labour provided by the worker in the course of the working day. The origins of surplus value lay in the fact that it took less than a day’s labour to provide commodities needed to sustain the worker and reproduce the next generation, whereas the worker supplied a day’s labour to the capitalist in the course of the process of production.

In other words, the value of the commodity, labour power, which the worker sold to the capitalist, was entirely different from the value added by the worker in the course of the working day, embodied in the commodities that emerged at the end of the production process. For a portion of the working day, the worker reproduced the value of his or her labour power, but in the remainder of the working day he or she rendered surplus value to the capitalist for which no payment was made.

With the emergence of labour power as a commodity—the product of a whole chain of historical developments in which a new class, the working class, was created, separated from the means of production and having nothing to sell but its capacity to labour—the appropriation of the labour of one class by another class—exploitation—took place not in violation of the law of value and the exchange of equivalents (Marx assumed throughout that the worker was paid the full value of the commodity, labour power, which he or she sold), but in accordance with it.

In the course of his article, Varoufakis jumbles up and confuses these decisive questions. At one point he writes that “both electricity and labour can be thought of as commodities,” completely blurring the distinction between labour—the measure of value—and the commodity labour power, which is sold by the worker to the capitalist.

In the same paragraph he writes that “prospective employees go through the wringer in an anxious attempt to commodify their labour power.” In fact, labour power has already been turned into a commodity, which is then consumed by the capitalist in the production process, giving rise to surplus, or additional, value.

Piling confusion upon confusion, Varoufakis writes, “If workers and employers ever succeed in commodifying labour fully (now labour, not labour power), then capitalism will perish.”

Insofar as any sense can be made of this, it implies that there is the possibility of some kind of reformist agenda, lessening exploitation, because if capitalism were to achieve complete “commodification” it would collapse.

There is another aspect to Varoufakis’ references to the capitalist drive to “commodify labour.” He writes: “Marx’s brilliant insights into the essence of capitalist crises was this: the greater capitalism’s success in turning labour into a commodity, the less the value of each unit of output in generates, the lower the rate of profit, and ultimately the nearer the next recession of the economy as a system.”

What he appears to be referring to here is the historical course of capitalist production, in which capital continually strives to create the conditions whereby the living labour of the worker can be replaced by a machine, today often involving the development of computerisation, and how this striving leads to violent crises because of its impact on the rate of profit and the process of capitalist accumulation itself.

The sole source of surplus value, which forms the basis for the accumulation of capital, is the exploitation of the working class. This is not a product of the subjective drive of the capitalist, but is rooted in objective social relations based on the private ownership of the means of production and the buying and selling of labour power.

Capital consists of two components: capital laid out on the means of production (raw materials, machinery, etc.) and capital laid out in the purchase of labour power. Surplus value, however, emanates from only one part of capital—that laid out on labour power. But accumulation involves the expansion of the mass of capital as a whole. Therefore, to the extent that living labour forms a decreasing component of the production process, there is an inherent tendency for the rate of profit, determined by the ratio of surplus value to the total amount of capital, to decline.

One crucial way in which capital strives to overcome this tendency is by further developing the productivity of labour. It seeks to reduce the portion of the working day in which living labour reproduces the value of labour power and increase the portion of the working day in which surplus labour is rendered free to capital. This is done through the development of new technologies, so that processes once carried out by living labour can be carried out by machines.

However, there are inherent limits to this process. If, for example, the working day is 8 hours and the value of labour power is reproduced in 6 hours, then there are 2 hours of surplus labour. If the productivity of labour is doubled, so that the value of labour power is reproduced in 3 hours, then there will have been an increase in surplus labour extracted in the course of a working day from 2 hours to 5. If this process is repeated and the productivity of labour is again doubled, so that the value of labour power is now reproduced in only 1.5 hours, then the surplus labour will have increased only from 5 to 6.5 hours, a far smaller percentage rise.

Thus, the more the productivity of labour has already been developed, over a whole historical period, the more difficult it is to counter the fall in the rate of profit through increases in labour productivity.

This reduction in the time taken to reproduce the value of labour power is the outcome of nothing other than the development of the productive forces and the social productivity of labour—the basis for the advance of human society. But because of its impact on the rate of profit, that is, the rate at which capital accumulates and expands—its self-realisation as capital, as Marx puts it—the development of the social productivity of labour creates a historic crisis for the capitalist mode of production, which expresses itself in mounting crises.

“The growing incompatibility between the productive development of society,” Marx writes, “and the hitherto existing relations of production [based on the private ownership of the means of production and the buying and selling of labour power] expresses itself in bitter contradictions, crises and spasms.”

These crises take the form of deepening economic stagnation, a slowing down or halt in the process of accumulation, and the destruction of whole sections of the productive forces in recessions, depressions and military conflicts.

In order to continue the process of accumulation, entire areas of capital are destroyed in order to increase the surplus value available to those that remain, the working class is impoverished through the driving down of wages, and social services, which represent in the final analysis a deduction from the surplus value available to capital, are slashed or eliminated.

It is vital to note here that this devastation arises not from any decrease in the social productivity of labour, but rather from its increase. In other words, the very development of social productivity of labour, which forms the basis for the advance of human civilisation, creates a deepening crisis for the profit system, which it attempts to resolve through the destruction of capital, creating mass unemployment and impoverishment and giving rise to the conditions for war.

As Marx explained so clearly: “The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given to it to be gone and to give way to a higher form of social production.” [Karl Marx, The Grundrisse, pp. 749-750]

It must be emphasised that Marx is here speaking of historical processes, not simply fluctuations in the business cycle. Capital has already passed though periods of violent explosions and waves of destruction in the course of the 20th century in its desperate striving to continue. These great upheavals have resulted in untold human misery and degradation and threatened the destruction of human civilisation itself.

The working class in the course of the storms of the 20th century time and again entered the struggle for the revolutionary overthrow of capitalism. But, with the exception of the Russian Revolution, it was unsuccessful, due to the betrayals of its leadership. Varoufakis, like so many others, draws the conclusion from this historical experience that capitalism is too powerful to be overthrown and that the working class itself is organically incapable of rising to its historic tasks.

Now, another breakdown is underway in which the task of overthrowing this outmoded social and economic order is once again placed on the agenda as the precondition for ensuring the continuation of civilisation itself.

But no matter how powerful “the advice is given to it to be gone,” capitalism will not disappear of its own accord. It must be overthrown by a social force created by capitalism whose historical interests lie in carrying out this task. This can only be a conscious operation.

That social force is the international working class. Here again it is necessary to disentangle the confusion created by Varoufakis concerning the distinction between labour and labour power. The working class is that class, created by capital, that sells its commodity, labour power. Its social identity is not determined by race, gender, sexual orientation or any of the other categories on which the practitioners of identity politics obsessively focus, but by its relationship to the means of production. As the seller of labour power, it stands as the polar opposite to capital, its very antithesis, in a way that no other social force can because of its objective role in capitalist economy.

Today, the latest phase in the historical development of capitalism, driven forward by its desperate striving to overcome its irresolvable contradictions, has resulted in the globalisation of production and the establishment of a truly global market for labour power. The working class has become the overwhelming majority of the world’s population, standing, in objective terms, in global unity against its antithesis, global capital.

Because of its objective social character, this global class, the proletariat, cannot win its emancipation anywhere and prevent itself from being plunged into disaster other than by the overthrow of the social system based on private ownership of the means of production and private accumulation. It is compelled, as a matter of necessity, to take control of the productive forces that it has created as the starting point for the reconstruction of society on new, socialist foundations. In short, as Marx foresaw: “The proletarian movement is the self-conscious, independent movement of the immense majority in the interests of the immense majority.”

Varoufakis is very aware that the capitalist system has already entered a new epoch of violent explosions. But his perspective is, in the fullest meaning of the word, counterrevolutionary.

He advises the capitalist class and its representatives that they should take some notice of Marx, recognise where their system is heading, and try to make a course correction in order to prevent a disaster. This advice is put forward with the intention of politically disarming the working class by insisting that saving capitalism from itself is the only realistic perspective if fascism is to be prevented.

However, it is not socialist revolution and the reconstruction of society that constitute some utopian ideal, but the political agenda Varoufakis advances of somehow trying to slow down or prevent a catastrophe within the framework of capitalism.

This is because the destructive logic of the capitalist economy, laid bare by Marx, is not the outcome of the subjective outlook of the capitalist class or its political representatives, but is rooted in the irresolvable contradictions of the profit system. Their agendas are the translation into politics of the objective drive of capital itself.

The crucial issue confronting the working class, therefore, is the development of its independent political struggle to overthrow the historically outmoded and reactionary capitalist system, basing itself on the program and perspective of Marxism.

The working class will be driven by the crisis of the capitalist system into massive social and political struggles, the initial signs of which have started to emerge. But no matter how great their scope and intensity, the necessary program for the overthrow of capitalism will not arise spontaneously out of these struggles. The crucial link in the chain of historical causation leading to the overthrow of the capitalist system is the role of the revolutionary party, which provides the program and perspective for this task—in short, the necessary revolutionary leadership.

Given that he has defined his role as saving capitalism from itself, it is not surprising to find that Varoufakis directs his criticisms of Marx at this all-important question.

Towards the conclusion of his article, in which he explains why he is “terribly angry with Marx” and considers himself to be “an erratic, inconsistent Marxist,” Varoufakis claims that the founder of scientific socialism “committed two spectacular mistakes, one of them an error of omission, the other an error of commission.”

The error of omission, he maintains, lies in Marx’s failure to give sufficient thought to the impact of his own theories upon the world. Marx “showed no concern that his disciples, people with a better grasp of these powerful ideas than the average worker, might use the power bestowed upon them, via Marx’s own ideas, in order to abuse other comrades, to build their own power base to gain positions of influence.”

In other words, rather than provide the theoretical weapons by which the working class could achieve its emancipation, Marx, in fact, developed a theory that could be used by intellectual elites to exercise power over it. This is simply a variation on a very old theme: that Marxism and Marx himself are somehow responsible for the crimes of those who betrayed them.

Varoufakis provides no concrete examination of the historical record to support his assertions. Nor could he, because history demonstrates the complete opposite of his thesis.

Consider the rise of the Stalinist bureaucracy in the Soviet Union, which usurped political power from the working class in the 1920s following the October Revolution. Its rise to power over the working class was not a product of its better grasp of Marxist theory, but a product of the isolation of the Soviet Union, which, in conditions of economic backwardness and scarcity of material resources, led to the emergence of a bureaucratic caste.

The ideological foundations of Stalinism were not based on Marxist theory, but the anti-Marxist nationalist theory of “socialism in one country,” a doctrine that had been refuted long before by Marx.

In the German Ideology of 1845-46, where he began elaborating his theory of historical materialism, Marx explained that communism presupposed and arose out of the development of the world market, and that “the proletariat can thus only exist world historically, just as communism, its activity, can only have a ‘world-historical’ existence.”

Furthermore, the development of the productive forces on a world scale was the necessary premise for communism because “without it, want is merely made general and with it distribution, the struggle for necessities and all the old filthy business would necessarily be reproduced.” [ German Ideology, pp.46, 48]

It was on these Marxist foundations that Leon Trotsky in his masterful workThe Revolution Betrayed provided the scientific analysis of the rise of the Stalinist bureaucracy—the representative of “all the old filthy business”—showing how it emerged as the policeman of social inequality under conditions of economic backwardness and the isolation of the Soviet Union from the world economy and the international division of labour resulting from the defeats of the working class in Western Europe.

Far from the rising bureaucracy basing its rise to power on a superior knowledge of Marxism by intellectual elites, Stalinism emerged in a relentless war against genuine Marxism. This war, which began on the ideological front, led to the mass murder of the Marxist vanguard, culminating in the assassination of Trotsky in 1940.

The situation is the complete opposite of that depicted by Varoufakis. The flower of the Marxist cadre, the most powerful and far-sighted thinkers, those who had the most decisive grasp of Marxist theory and had devoted their lives to using that knowledge to guide the working class in carrying out its historic task, was destroyed as the grasping bureaucrats, espousing anti-Marxist conceptions, secured for themselves positions of influence and privilege. The consequences of this intellectual genocide remain today, not only in the toxic political and intellectual atmosphere in the former Soviet Union, but also in the widespread confusion and disorientation in the working class.

On the basis of Marxism, Trotsky not only explained the origins of the bureaucracy and its rise to power, but warned that unless it was overthrown by the working class, it would inevitably lead to the restoration of capitalism—a perspective that was tragically confirmed, in opposition to the myriad bourgeois intellectuals and apologists for Stalinism who had maintained that the Soviet Union had been permanently established.

Marx’s supposed error of commission, according to Varoufakis, was even worse. It was lodged in his “assumption that the truth about capitalism could be discovered in the mathematics of his models.”

Marx certainly used mathematics in his work, but he did not develop “mathematical models” in the manner of bourgeois economists. Rather, he elaborated an historical analysis of capitalism, laying bare the contradictions within it that were the source of its motion, and the development of which would inevitably pose the necessity for its overthrow if mankind were to resume its ascent.

The attack on Marx’s use of mathematics, however, is just a preliminary assault. The real target is Marx’s striving to lay bare the laws of motion of capitalist economy.

According to Varoufakis, Marx proceeded by ignoring that “a proper economic theory must respect the idea that the rules of the undetermined are themselves undetermined.”

In short, the gyrations of the market, the countless array of accidents through which it operates, are unfathomable. There are no underlying driving forces that produce them and consequently no laws that can be discovered.

Scientific knowledge of the workings of the capitalist economy and the development of a practice based on that knowledge are therefore impossible. Everything remains a mystery and, consequent upon this, the working class must simply submit to its fate.

What a libel on mankind’s intellectual capacity, to adapt a phrase used by Marx in relation to Parson Malthus. Man might be able to develop knowledge of the outer reaches of the universe, penetrate to the heart of the atom and beyond, uncover the secrets of life itself in the structure of DNA and the human genome, but knowledge of his own socio-economic organisation, which he himself has created and developed, remains a closed book.

The political purpose served by this attack on the very possibility of a scientific understanding of capitalism emerges all too clearly in the next paragraph.

According to Varoufakis, recognition by Marx, and, by implication, contemporary Marxists, that his “laws” were not immutable would mean conceding to “competing voices in the trades union movement that his theory was indeterminate, and therefore that his pronouncements could not be uniquely and unambiguously correct. That they were permanently provisional.”

Here Varoufakis makes clear his connection to the entire school of postmodernist falsification, which insists that there are no “meta-narratives” of history and there is no objective truth to be discovered.

The political purpose of his attack on the very possibility of a scientific understanding of capitalist economy is to insist that there is no basis for the working class to develop a political struggle against the betrayals of the trade union apparatus and the pseudo-left parties like Syriza, because everything is indeterminate. There are lots of truths, and therefore there is no truth.

The strident manner in which Varoufakis defends this conception gives an indication of its significance for the social forces he defends.

“This determination,” he writes, “to have the complete, closed story, or model, the final word, is something I cannot forgive Marx for. It proved, after all, responsible for a great deal of error and, more significantly, authoritarianism.”

There is a certain acute irony in Varoufakis’ denunciations of Marxism for opening the way to authoritarianism. In the five weeks since it came to power, the Syriza government, of which he is the finance minister, has been subjected to the relentless authoritarianism of European finance capital as it demands that the onslaught against the Greek working class be intensified and that Syriza scrap the very program on which it was elected.

To this bourgeois authoritarianism Syriza submitted in the space of a few weeks and in the most abject and cowardly manner. The next phase will see Syriza, and, if he remains in government, Varoufakis himself, marshalling the violence of the capitalist state to bloodily repress the opposition that will inevitably emerge from the working class.

Varoufakis addresses the political representatives of the financial oligarchy as “colleagues” and “partners.” But workers and intellectuals who denounce the capitulation of Varoufakis and the Syriza government as a betrayal, on the basis of the scientific analysis of Marxism, are accused of opening the way to authoritarianism.

Varoufakis’ article serves a useful purpose in exposing the class character of his perspective and the government in which he serves. Even more importantly, it underscores that the fight against its betrayals and the pseudo-left milieu of which it is a part must place at its centre the theoretical struggle against the entire school of postmodern falsification, which, in its attacks on the scientific analysis of Marxism, functions as nothing less than the ideological handmaiden of the financial oligarchy.

German parliament endorses Syriza’s proposed austerity measures

Robert Stevens

On Friday, deputies from all parties in the Bundestag, Germany’s parliament, voted to back the extension of Greece austerity programme. The agreement, extending the existing austerity programme by four months, was finalised on February 20 between the Eurogroup and the newly-elected Syriza government in Athens after nearly a month of negotiations.

Legislation in several countries, including Germany, requires that any extension of the austerity programme be voted on in the national parliament.

As Europe’s largest economy and paymaster, Germany led the negotiations with Greece. Finance Minister Wolfgang Schäuble insisted that the election of a new government did not change anything. Schäuble’s position was eventually sanctioned by all 19 Eurogroup finance ministers, including Greece’s Yanis Varoufakis. Syriza will now begin to impose more cuts, coming after five years of devastating EU austerity measures adopted by previous Greek governments.

Introducing the vote, Schäuble said, “We’re not talking about new billions for Greece... It is not about changes to the programme, rather it’s about providing or granting extra time to successfully end this programme.”

He added that any changes the Greek government were considering to the programme had to be agreed by “competent bodies,” by which he meant the European Union, European Central Bank and The International Monetary Fund. Previously referred to as the “troika”, a term that became hated in Greece and across Europe, they are now referred to as “institutions” or in this instance “competent bodies” to spare Syriza’s blushes for accepting their continued diktats.

The vote in the Bundestag represented a resounding all-party mandate for continuing austerity in Greece. MPs from the three governing parties, Christian Democratic Union (CDU), its Bavarian sister party, the Christian Social Union (CSU) and Social Democratic Party (SPD) all voted in favour.

The opposition Left Party and the Greens also supported the extension of austerity, with both parties declaring their endorsement in advance. The final tally was 542 deputies in favour, with just 32 voting against and 13 abstaining.

The vote was held amid an unprecedented campaign among right-wing sections of Germany’s ruling elite and media, describing the Greek austerity agreement as excessively lenient. One headline in the Bild tabloid attempted to portray the Greek population as living a life of luxury: “The bars are full, the ouzo is flowing! So well are the bust Greeks doing.”

The front page of Thursday’s Bild consisted of a front-page headline, “ Bildreaders say No – No more billions for Greece!” In order to fuel this hysterical campaign against the Greek working class, Bild made a call for its readers to take a “selfie” of themselves holding up the word “Nein!” and included a selection of such images in Friday’s edition.

These views echo those of the nationalist right-wing, anti-euro party Alternative for Germany (AfD) and were reflected in the Bundestag vote. Of the 32 deputies who voted against the Eurogroup-Greece deal, 29 were from Merkel’s CDU/CSU bloc.

This is an increase in the number of deputies who voted against the second Greek austerity programme in 2012, on the basis of demanding even more severe attacks. At that time, 13 members of Merkel’s Christian Democratic bloc and four members of her coalition partners, the Free Democrats, voted against.

Klaus-Peter Willsch of the Christian Democrats, who has consistently demanded an even tougher attitude to Greece, summed up the stance of such layers in the debate: “Look at [Greek Prime Minister Alexis] Tsipras and Varoufakis. Would you buy a used car from them? If the answer is no, then vote no today.”

Implying that the Greek people were akin to terrorists, he said, “Better an end with terror than terror without end.”

The SPD’s 193 deputies voted unanimously in favour of the continuation of austerity.

The Left Party overwhelmingly supported a new round of austerity in Greece, with just three votes against and 10 abstentions from their bloc of 64 deputies. The Green Party’s bloc of 63 deputies voted unanimously in support.

The Left Party attempted to dress up their position with a few leftist phases, claiming that the agreement signed with the Eurogroup was on Greece’s terms. Despite the jubilation of the ruling elite internationally, who celebrated to the humiliating capitulation of Syriza, Left Party leader Gregor Gysi ludicrously stated during the debate, “The left government in Greece has broken with the failed austerity policy.” He continued with a straight face, “Now you’ll see that a left-wing government can achieve anything.”

Gysi’s claims were belied by his acknowledgment that under Greece’s existing austerity programme, which he just voted to extend, “90 percent of the 240 billion euro for Greece went to the banks and creditors. Among them was also the Deutsche Bank. Among them were also French banks. 90 percent of this sum didn't go to the Greeks; they have seen almost nothing of it.”

The Left Party is in reality now openly behind the demands of the ruling elite that the Greek people be bled dry, in order that its debt mountain of more than €320 billion be paid off. “We must help rebuild Greece,” continued Gysi ,“so it can repay its debts,” [emphasis added].

The Greens also endorse crippling austerity measures in Greece, in the full knowledge of who is going to benefit. Anton Hofreiter, party leader, supported the extension even as he stated, “This conflict is about the interests of a few super-rich people versus ordinary people in Greeks.”

Following the Bundestag vote, the European Financial Stability Facility (EFSF) board of directors officially extended the Greece austerity programme until June 30. Under the terms of the February 20 agreement, the Syriza government must demonstrate that it has begun to implement austerity before it receives any disbursement of the outstanding tranche it is awaiting from the current European Financial Stability Facility.

In March, Athens must make a €1.5 billion loan repayment to the IMF and then pay a further €800 million in interest payments in April. In the summer, €8 billion in debt repayment falls due, including €6.5 billion to the ECB. The Greek state is bankrupt and cannot access funding through international capital markets. Its’ banks remain on the verge of collapse and are being propped up only by temporary access to high interest rate loans from the ECB. Greece is totally reliant on funding from the Eurogroup, ECB and IMF to meet these payments.

Reuters noted that Greece has been systematically denied access to funding, stating, “[I]ts options all appear to have problems. One possibility—the transfer of 1.9 billion euros worth of profits that the European Central Bank made on buying Greek bonds—will not be allowed until Greece has completed the bailout program.

“Greece had also hoped it could tap the almost 11 billion euros of leftover money in the Greek bank stabilization fund, but euro zone finance ministers have decided the money would be returned to the Luxembourg-based euro zone bailout fund.”

It added, “The only source of quick cash left to the Tsipras government now is issuance of Treasury bills, or short-term debt that matures in three or six months. But Athens’ creditors have set a 15 billion euro cap on such debt and it has already been reached.”

On Friday a euro zone official told Reuters, "The liquidity squeeze is being used to push the Greeks to very quickly start discussions on the review and finish that as soon as possible – not even waiting for the end of April”. He warned, “Eventually they will have no other choice but to adopt the [austerity] measures, and move quickly”.

US economy in deflation and slump

Andre Damon

The US Commerce Department said Friday that Gross Domestic Product, the broadest measure of economic output, grew by only 2.2 percent in the fourth quarter of last year, down from an earlier estimate of 2.6 percent and a sharp fall from earlier quarters.

This followed the announcement by the Labor Department on Thursday that consumer prices fell by 0.7 percent, the largest fall since December 2008. Over the past 12 months, prices have fallen by 0.1 percent, the first annual deflation figure posted since October 2009.

These figures belie official claims that the US is an economically healthy counterbalance to the overall slump and deflation that now encompasses most of the world. In fact, US economic growth, hampered by an enormous impoverishment of the working class in the years following the financial crisis, remains far below pervious historical averages.

On Tuesday, Standard and Poor’s said that it’s Case-Shiller Index showed that home prices grew by 4.6 percent over the past year, the slowest housing price increase since 2011. “The housing recovery is faltering,” David Blitzer, chairman of the index committee at S&P Dow Jones, told the Los Angeles Times. “Before the recession, anytime housing starts were at their current level… the economy was in a recession.”

Meanwhile the number of people in the US newly filing for jobless benefits jumped by 31,000 to 313,000 last week, in the largest increase since December 2013, reflecting a series of mass layoffs and business closures announced this month.

On February 4, office supply retailer Staples announced plans to buy its rival Office Depot, which would result in the closure of up to a thousand stores and tens of thousands of layoffs. The next day, electronics retailer RadioShack filed for bankruptcy, saying it plans to close up to 3,500 stores.

Mass layoffs have also been announced at online marketplace eBay, credit card company American Express, the oilfield services companies Schlumberger and Baker Hughes, as well as the retailers J.C. Penney and Macy’s.

These disastrous economic developments come even as the Dow Jones Industrial Average hit an all-time record of 18,140 on Wednesday, though it retreated slightly later in the week. Worldwide, the FTSE All-World Index is near its highest level in history.

The rise in global stock indices reflects the satisfaction of global financial markets with the pledge by the Syriza-led Greek government to impose austerity measures dictated by the EU, as well as indications by Federal Reserve Chairwoman Janet Yellen in congressional testimony this week that the US central bank is likely to delay raising the federal funds rate in response to recent negative economic figures.

The US federal funds rate has been at essentially zero since the beginning of 2009. Together with the central bank’s multi-trillion-dollar “quantitative easing” program, this has helped to inflate a massive stock market bubble that has seen the NASDAQ triple in value since 2009.

This enormous growth in asset values has taken place despite the relatively depressed state of the US economy, which grew at an annual rate of 2.4 percent in 2014. During the entire economic “recovery” since 2010, the US economy has grown at an average rate of 2.2 percent. By comparison, the US economy grew at an average rate of 3.2 percent in the 1990s and 4.2 percent in the 1950s.

The ongoing stock market bubble has led to a vast enrichment of the financial elite: the number of billionaires in the US has nearly doubled since 2009. The financial oligarchy, however, has not used its ever-growing wealth for productive investment, as shown by the decline in business spending in in the fourth quarter of last year. Instead, it has either hoarded it or used it to buy real estate, art and luxury goods.

On Thursday, Bloomberg reported that global sales of “ultra-premium” vehicles, costing $100,000 or more, surged by 154 percent, compared with a 36 percent increase in global vehicle sales overall. The report noted, “Rolls-Royce registrations have risen almost five-fold. Almost 10,000 new Bentleys cruised onto the streets last year, a 122 percent increase over 2009, while Lamborghini rode a 50 percent increase to pass the 2,000 vehicle mark.”

Meanwhile, the number of people in poverty in the US remains at record levels. In January, the Southern Education Foundation reported that, for the first time in at least half a century, low-income children make up the majority of students enrolled in American public schools.

To the extent that jobs are being created in the US, they are largely part-time, contingent and low-wage, replacing higher-wage jobs eliminated during the 2008 crash. A report published last year by the National Employment Law Project found that while American companies have added 1.85 million low-wage jobs since 2009, they have eliminated 1.83 million medium-wage and high-wage jobs.

Earlier this month, Jim Clifton, head of the Gallup polling agency, denounced claims that the US unemployment rate has returned to “normal” levels. “There’s no other way to say this,” he wrote. “The official unemployment rate, which cruelly overlooks the suffering of the long-term and often permanently unemployed as well as the depressingly underemployed, amounts to a Big Lie.”

“Gallup defines a good job as 30+ hours per week for an organization that provides a regular paycheck. Right now, the US is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older.”

Clifton added, “I hear all the time that ‘unemployment is greatly reduced, but the people aren’t feeling it.’ When the media, talking heads, the White House and Wall Street start reporting the truth—the percent of Americans in good jobs; jobs that are full time and real—then we will quit wondering why Americans aren’t ‘feeling’ something that doesn’t remotely reflect the reality in their lives.”

“Jihadi John,” imperialism and ISIS

Bill Van Auken

On Thursday, the Washington Post revealed the identity of “Jihadi John,” the Islamic State of Iraq and Syria (ISIS) operative featured in grisly videos depicting the beheading of US journalists James Foley and Steven Sotloff, as well as two British aid workers, David Haines and Alan Henning.

The Post named the ISIS member as Mohammed Emwazi, a 26-year-old who was born in Kuwait and raised in London. He is described in a CNN report as “a Briton from a well-to-do family who grew up in West London and graduated from college with a degree in computer programming.”

The media reporting on this identification has been dominated by discussions of the psychology of terrorism and the role of Islamist ideology, along with speculation as to why someone from such a background would choose to engage in such barbaric acts.

All of these banalities are part of a campaign of deliberate obfuscation. Purposefully left in the shadows is the central revelation to accompany the identification of “Jihad John”—the fact that he was well known to British intelligence, which undoubtedly identified him as soon as his image and voice were first broadcast in ISIS videos.

Not only did Britain’s security service MI5 carefully track his movements, it carried out an active campaign to recruit him as an informant and covert agent. As the British daily Guardian put it Thursday, MI5 has “serious questions” to answer about its relations with Emwazi.

Chief among these questions is whether the intelligence agency was successful in its recruitment efforts. In other words, did Emwazi go to Syria with MI5’s foreknowledge and blessings?

If there is doubt as to whether Emwazi was recruited, it is clear that other ISIS jihadists have been. The BBC reported that British intelligence has refused to name Emwazi for “operational reasons.” It adds: “The practice by intelligence agencies of approaching jihadist sympathisers to work for them is likely to continue. It’s believed both Britain and the US have informers inside the Islamic State ‘capital’ of Raqqa. Yet this seems to have been little help in stopping the actions of Mohammed Emwazi, or bringing him to justice.”

At its heart, the case of “Jihadi John” is of significance because of what it says about the real relationship between Western imperialism and ISIS. In the final analysis, ISIS is a product of the interventions by Washington and its allies in the region.

Armed Islamist movements existed in neither Iraq nor Syria—nor, for that matter, in Libya—before US imperialism intervened to topple secular Arab governments in all three countries.

It is not only a matter of these movements emerging out of the mayhem, death and destruction unleashed by the US military and CIA in these countries at the cost of well over a million lives and wholesale social devastation.

Like Al Qaeda before it, ISIS is a creation of US and Western imperialism, unleashed upon the peoples of the region in pursuit of definite strategic aims. In Libya, Islamists now affiliated with ISIS provided the principal ground forces for the US-NATO war to topple Muammar Gaddafi. In Syria, ISIS, the Al Qaeda-affiliated Al Nusra Front and similar Islamist militias have played a similar role in a war for regime-change that has been backed by Washington and its allies.

By all accounts, so-called “foreign fighters” comprise the largest component of the “rebels” who have sought to topple Syrian President Bashar al-Assad over the past three-and-a-half years. Estimates have put their number at over 20,000, with recruits drawn from throughout Europe, North America, Central Asia and elsewhere.

While the media presents the flow of these fighters into Syria as something of a mystery, the question of how they have gotten there can be easily answered. The CIA, MI5 and other Western intelligence agencies have not merely turned a blind eye to Islamists traveling from their respective countries to the Syrian battlefield, it has offered them active encouragement. Turkey, a key US ally, has facilitated the flow of these elements across its border into Syria.

It should be recalled that Western governments and media painted forces like ISIS in Syria as democratic “revolutionaries” waging a progressive struggle against a tyrant. The war, which was stoked through orchestrated provocations, was cited as a justification for “humanitarian” intervention.

Arms and funding poured in to back the largely Islamist “rebels,” even as Washington and its allies steadily escalated the threat of direct intervention. The Obama administration went to the brink of launching a savage bombardment of Syria in September 2013, only to beat a tactical retreat in the face of unexpected opposition.

The Islamist forces on the ground in Syria felt themselves the victims of a double-cross. Much like the CIA’s Cuban counterrevolutionaries at the Bay of Pigs a half-century earlier, their promised US air support did not come and they lashed out in retribution. Ultimately, this took the form not only of the serial beheadings of Western hostages, but also the debacle inflicted upon the US-trained security forces in Iraq.

Washington has hypocritically seized upon the beheadings in an attempt to whip up support for its new intervention in the Middle East. But when similar atrocities were carried out by ISIS and its cohorts against Syrian Alawites, Christians and captured conscripts, the Obama administration looked the other way.

In the wake of the revelations about “Jihadi John,” Britain’s Tory Prime Minister David Cameron issued a ringing defense of the country’s security services, describing its members as “incredibly impressive, hard-working, dedicated, courageous.” He declared his sympathy for their “having to make incredibly difficult judgments.” He insisted that “the most important thing is to get behind them.”

If Britain were a functioning democracy, the revelations about the role of MI5 and its relations with Mohammed Emwazi and ISIS generally would be the subject of a parliamentary inquiry that could spell the fall of the government.

However, in London, as in Washington, the government has been largely taken over by the military and intelligence apparatus, whose crimes are systematically covered up with the aid of a complicit corporate-controlled media.

For workers in Britain, the US and internationally, these revelations only underscore the necessity to build up a genuine antiwar movement based on a socialist and internationalist program and in intransigent opposition to all attempts to exploit the crimes of ISIS—the Frankenstein’s monster created by imperialism—to justify the escalation of war abroad and repression at home.

Workers Struggles: Europe, Middle East & Africa

Europe

Firefighters in England stage 24-hour walkout

English firefighters began a 24-hour walkout at 7 am on Wednesday. It is the latest in a long running series of industrial action in opposition to pension changes that will mean firefighters having to work longer, pay higher contributions and receive less in benefits.

In addition many firefighters fear that having to work longer will mean they are likely to fail the compulsory fitness tests when they reach 55 and so have to leave the service before being able to draw on their pensions.

UK highway maintenance staff continue action

Workers employed by the highways maintenance company, Amery, held a fourth 24-hour strike on Monday and plan to hold a seven day strike beginning March 2. They are seeking a five percent pay rise. Amery’s offer falls short of this figure.

The company is also seeking to dismantle collective bargaining for new starters. Under company proposals new starters would have their pay determined year on year by company directors.

UK television staff to ballot over pay

Staff at the UK commercial television broadcaster ITV are to ballot on strike action after they rejected the company’s two percent pay offer. Last week the National Union of Journalists, Unite and the Broadcasting, Entertainment, Cinematograph and Theatre Union (Bectu) met for talks under the auspices of the government conciliation service Acas, but were not able to reach an agreement.

Indicative votes by the three unions on balloting for strike action were all in the 80 percent region. It was recently revealed that ITV CEO Adam Crozier was paid £8.4 million last year.

Teachers strike at Welsh school

Teachers at a secondary school in the Welsh town of Aberystwyth began a three-day strike Tuesday. The 23 teachers are members of the NASUWT union. The action is in opposition to disciplinary procedures and the demands of a growing workload.

Irish children detention staff hold one hour stoppage

Staff at the national children detention centre in Oberstown held a one hour stoppage on Monday. The staff, members of the Impact trade union, are demanding the introduction of an injury and assault leave scheme for those who get injured in the course of their work.

Rally of Irish firefighters opposes staff cuts

Around 700 firefighters attended a rally outside government buildings in Dublin on Tuesday against staffing cuts. They are members of the public sector Siptu trade union which represents 3,000 firefighters nation-wide.

Siptu is currently balloting retained (part-time) firefighters on possible industrial action against government proposals which would see retained firefighter numbers cut by a third.

Action by Danish airport baggage handlers

Baggage handlers working for Scandinavian Airlines (SAS) at Copenhagen Airport went on strike Tuesday, leading to flight delays. The strike was over dissatisfaction with an agreement signed between the union and SAS management and was the third strike since summer last year.

Portuguese underground workers strike

Staff working for the Lisbon Metro were holding 18 hour strikes, Tuesday and Friday of this week in opposition to plans to sell off the state owned service to the private sector and over poor conditions.

Finnish airport staff face job cuts

Aviator Finland, which provides airport services at the Helsinki-Vantaa airport, has announced it will cut 100 jobs out of its workforce of 370. This follows the company losing a contract with its biggest customer the budget airline, Norwegian. The union IAU said it is currently considering what action to take in the light of the job losses.

German IG Metall union settles pay claim

The IG Metall representing nearly four million workers, mainly in automobile and machinery production have settled their pay claim following talks with employers’ representatives in Baden-Wuerttemberg state. The deal is expected to be taken up in the rest of the country.

IG Metall members will receive a 3.4 percent pay increase from April 1. They will also get a one-off payment of euro 150 to cover the period January to March.

The union had initially put in a demand for a 5.5 percent pay rise backdated to the beginning of the year.

Turkish health workers attacked by police

In December 98 health workers at Maltepe University were dismissed after joining a union and demanding higher wages and shorter working hours. Since then the workers have been protesting outside the hospital. On Tuesday the health workers attempted to enter hospital but were brutally confronted by police who according to the DISK union left two of them injured, a further 34 were arrested.

Middle East

Solidarity support for Israeli chemical workers

The strike by Israeli Chemical Ltd (ICL) staff continues. They are opposing plans by the company to make 140 employees at its Bromine Compounds unit redundant.

There is widespread anger that ICL management has summonsed the workers due to be laid off by attaching notices on the front doors of their homes, telling them to appear at pre-layoff hearings.

On Monday residents of the city of Arad in southern Israel blocked roads leading into the city and Arad city municipal workers held a strike in support of the chemical employees.

Histadrut, the Israeli general federation of labour, has threatened to call for a general work dispute in the south of Israel if the lay-offs go ahead.

Strike by Palestinian workers in West Bank for union recognition

Last week around 20 Palestinian workers employed by M S Aluminium in East Jerusalem held a two hour strike outside the gates of the company. The strike was in response to the company’s refusal to recognize the WAC-MAAN union to which most of the works belong and the company’s refusal to discuss with the union on a plant-wide collective agreement.

UAE migrant workers die in fire

Last week at least 10 migrant workers were killed and a similar number injured when a fire swept through their illegal accommodation. The fire is thought to have begun in a car repair shop and quickly spread to the two-storey warehouse where the migrant labourers were sleeping.

The warehouse where the migrant labourers were illegally accommodated is in the al-Mussafah district of Abu Dhabi, an area on the outskirts of the capital populated with warehouses, factories and workshops.

Migrant workers, many from South Asia, suffer many abuses including confiscation of passports, terrible living conditions and suffer injury and death on unsafe building sites. The warehouse had been illegally rented out to the labourers as living accommodation.

Africa

Nigerian Polytechnics called to resume action

Nigerian polytechnic academic staff, members of the Academic Staff Union of Polytechnics (ASUP), threatened to resume strike action on Tuesday after a three month suspension of the action came to an end. The original nine month strike was called off after a newly appointed education minister promised to resolve the issues.

The central issues were the implementation of CONTISS 15 (a wage and conditions restructuring agreement), which the government had agreed to in 2009. Other unions are likely to join the strike

Bus drives in Johannesburg South Africa continue strike

A strike at the Johannesburg bus operator, Piotrans, is now in its fourth week. Over 60 percent of the drivers were sacked for taking wildcat action. Piotrans is recruiting workers to take up their positions. The strikers are affiliated to the South African Municipal Workers Union (SAMWU) and took action over shift and salary disagreements and union representation.

SAMWU does not come under the umbrella of, the SA Road Passenger Bargaining Council, the industry negotiating body, but the company says it recognises the union. SAMWU accuses the bus company of negotiating with labour brokers associated with Litsamaiso, the outgoing operating company, and not going through the union. The bus workers took strike action in 2014 that included opposition to labour agency employment.

Protest by South African coal miners

South African miners, members of the National Union of Miners (NUM), embarked on a protest march last Saturday to oppose the closure of Optimum Coal Mine in Mpumalanga. The NUM said it had not been given notice of the closure.

The march was to the offices of Glenco Mining at Middleburg in the town of Mpumalanga. The union claims that around 1,000 permanent employees and 500 contractors will lose their jobs. The NUM called on miners in the surrounding area to join the demonstration.

Zambian copper miners walk off the job

Miners at the Lumwana copper mine, owned by the Barrack Gold Zambia Company, have gone on strike after the company announced it will close the mine leading to 2,000 job losses.

The company said it was closing the mine after the Zambian government increased mining royalties from six percent to 20 percent.

Miners are demanding to know what will happen to them. Many had taken out loans on long contracts. They are demanding the company pays larger compensation on the basis of a breach of contract, rather than redundancy pay.

The closure threatens up to 4,000 direct jobs and a projection by Zambia Chamber of Commerce is that 12,000 jobs are threatened by the royalties increase.

East Timorese government promotes new “free trade zone”

John Lucas

East Timor last month formally launched a Special Economic Zone (SEZ) project, establishing autonomous free trade areas in parts of the impoverished country. The creation of the zone is the government’s first step towards establishing Timor as a cheap labour platform for transnational corporate investors.

The SEZ covers two areas of East Timor—the western enclave of Oecuse, which lies within the Indonesian territory of West Timor, and Atauro Island, 20 kilometres north of the capital Dili.

Atauro Island, a former prison centre under Portuguese and Indonesian rule that has a population of 8,000, is to be developed as a tourist and casino gambling centre. Oecuse is the focus of the project’s efforts to establish export-oriented manufacturing industries, including textiles, and cash-crop agriculture.

The Oecuse region is Timor’s most isolated and among its poorest. Most of its 60,000 people survive through subsistence farming. Unemployment is more than 50 percent, according to the government’s own figures, and the majority of young people are forced to migrate to Dili and other areas and seek work in the so-called informal sector of the economy, as street vendors, house maids, restaurant staff, and construction, transportation, and warehouse workers. Wages are as low as $US40 a month.

The government is now promoting Oecuse as a cheap labour, tax-free area for foreign investors, backed by planned multi-billion dollar public investments in pro-business infrastructure. Official documents have modelled the SEZ on free trade zones in countries like Bangladesh and Thailand.

Former Fretilin Prime Minister Mari Alkatiri is president of the “Authority for the Special Administrative Region of Oecuse.” In a speech delivered last July, he declared that the SEZ was based on a so-called “social market economy.” Alkatiri devoted part of his speech to denouncing “Marxist socialism” and “anti-capitalism [that] ignored that the market was the operative factor of economic development.” Underscoring the pro-business perspective behind the new free trade zone, Alkatiri concluded that what was required was “the expansion of the market to make it more attractive to investment,” adding that “none of this can be achieved with the welfare state.”

Alkatiri has since made clear that the SEZ is merely a pilot project that is to be followed by converting all of East Timor into a free trade zone. “All that I will do is so that Oecuse will be a reference for the whole country,” he told the Portuguese news agency Lusa last month.

Alkatiri is the leader of Fretilin, the main element of the resistance movement against the Indonesian military occupation of Timor between 1975 and 1999. He was elected the state’s first prime minister in 2002, only to be ousted four years later in a regime-change operation orchestrated by the Australian government, after being seen as too close to rival powers China and Portugal. Alkatiri has since joined hands with the prime beneficiary of the 2006 coup, Xanana Gusmão, while Fretilin now has four of its leading members in the ruling coalition led by Gusmão’s CNRT party. (See: “East Timorese prime minister resigns, ‘national unity’ government formed”)

Former bitter rivals within the Timorese ruling elite have come together on the basis of establishing the country as a cheap labour platform. What has emerged is a tragic lesson in the dead-end of bourgeois nationalism and the myth that the creation of an “independent” East Timor could advance the social interests and democratic rights of the working class and rural poor. In 2002, with the formal adoption of Timorese independence, the World Socialist Web Site noted: “‘Independence’ has become synonymous with attracting transnational investment, setting up free trade zones and meeting the dictates of the IMF and World Bank.”

As the unelected head of the SEZ, Alkatiri enjoys sweeping powers in Oecuse. The free trade zone law adopted by the Timorese parliament not only gives Alkatiri the right to create a separate taxation and regulatory system for Oecuse but also throws out the window existing constitutional restrictions on foreign nationals and overseas companies owning Timorese land. This law states: “The state guarantee the right to use and enjoyment of land for development of investment projects… The land is ceded to investors according to their respective needs and terms for duration of contracts, according to each type of economic activity.”

While the free trade zone projects are only now being developed, two SEZ offices have been set up, in Jakarta and Macau, as part of the government’s bid to woo corporate investors. Alkatiri has travelled around the world in the last two years, consulting with World Bank officials in Washington and meeting with potential investors in Singapore, Indonesia, Malaysia, South Korea, Portugal, Cuba, and China. In April last year, he accompanied Gusmão on a week-long tour of China, which included visits to that country’s Special Economic Zones.

According to Alkatiri, he received three investment proposals from Chinese companies that wanted to control the entire SEZ project. These were declined, however, with the government apparently looking to diversify investment in Oecuse. Alkatiri has nevertheless promoted “a banana plantation on an area of 400 hectares that would export to China and another for pineapple production on a 100 hectare plot.”

As outlined in the SEZ’s “master plan,” the first priority is to develop pro-investment infrastructure projects such as roads, bridges, power plant, water irrigation, telecommunications, airport and seaport facilities, and public transport. Total public investment by 2025 is projected at US$2.75 billion.

Indonesian and other companies are already working on the ground, constructing roads, bridges, irrigation facilities, and a 20-megawatt power plant. Negotiations are now underway with a Singaporean company to build a 50-room hotel, which should be ready by October.

It remains to be seen whether the government’s grandiose plans of a massive influx of investment ever eventuates. Official SEZ documents notably feature a range of identified risks to the project, including “political and social unrest” in Oecuse and a “global recession or a marked slowing down of growth in key markets such as China, India and the US” that would “greatly impact the feasibility of the [SEZ] initiative.”

The Timorese government is nevertheless pressing ahead, desperate to find some means of avoiding outright state bankruptcy as the massive Greater Sunrise oil and gas reserve remains undeveloped and the Bayu-Undan field, which currently funds more than 90 percent of total state revenue, is expected to run dry within a decade.