Socialism or Barbarism? Syriza, Economics, and Democracy

02/19/2015 01:50 pm ET | Updated Apr 21, 2015

With the Syriza-led government locked in no-blink negotiations with Greece's creditors, especially Germany, it might be time to revive an old slogan of the left: Rosa Luxemburg's "socialism or barbarism." Restated for the 21st century, "socialism" simply means that a people's judgments about its own economic life -- the kind of work people do, the kind of security they enjoy, the kind of dignity they feel -- come before the supposedly iron rules of the international economy. It would also be fair to call it "economic democracy."

The condescending view of the Greeks as somehow not understanding economic reason and the direction of history writes off this kind of economic democracy as infeasible, archaic, and probably senseless. Alexis Tsipras, the leader of Syriza, the anti-austerity party at the head of Greece's new government, has described its "mission" as "the radical transformation of society across Europe, based on socialism and democracy." All of this convinces many observers that Syriza is a symptom of fantasy. Sometimes the diagnosis is directed at the Greeks themselves ("Don't they know socialism is over?"), sometimes to their admirers in Western Europe and the U.S. ("When will they stop idealizing other people's revolutions?"). More sympathetic commentators praise Syriza for being more realistic than it sounds and seeking a "responsible" way to finesse Brussels, Berlin, and Greek's creditors and ease the country out of a punishing austerity without changing the ground rules.

Syriza's government has a chance to reverse the lens. Economic democracy (or, as Syriza calls it, socialism) is politics that puts human needs first and accepts that market-based destabilization, impoverishment, and humiliation are not natural disasters or comeuppance for bad behavior but forms of political violence.

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Syriza has an extraordinary uphill fight, both institutionally and ideologically. Their humane program sounds utopian to most ears. The "socialist" parties of Europe have committed themselves to the European project, which they, like Polanyi's old idealists, believe is the key to peace and prosperity -- so much that they are willing to double down on it at the cost of poverty and antagonism. And the interdependence of European fiscal rules, banking regimes, and so forth creates an obstacle course with a series of tripwires that could sink Greece's domestic banks or otherwise make things even worse.

Syriza is often described as an anti-austerity party, which sounds merely reactive. It is true that the party's support is a response to the disruption, insecurity, and humiliation that budget cuts and unemployment have visited on ordinary Greeks. When Tsipras talks about "an economy that will focus on people's needs" and "a welfare state that ensures education, health, and dignity for all," these rather abstract ideals have very concrete opposites: unemployed young people desperate to flee the country, pensioners pawning their coats and digging through trash for food, taxpayers whose money leaves the country in the form of debt service. Doesn't Syriza's "socialism" just mean "Not this!" -- as it did for many socialists in the 19th century, reacting against the fresh hell of the factory economy?

Maybe. But understanding the Greek situation this way prejudges practically every important question. It treats the current fiscal arrangements of Europe as hard facts, economic logic as hard rationality, and the impulse toward a different social world as a feeling, an emotional response to hard times. In that world, when Syriza declares itself a socialist party, it is announcing that it is unqualified to handle real power and responsibility. On this take, Syriza's voters are, almost by definition, emotional and reactive.

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To see the world differently, it helps to go back to a tradition of thinking that developed before the total dominance of today's conventional economics. That tradition is long and rich, though any effort to use it today requires updating.

Partly by chance, in the week of Syriza's victory, I was rereading and teaching economic historian Karl Polanyi's 1944 classic, The Great Transformation, a touchstone work of non-Marxist democratic socialism. Polanyi asked how Europe had gone mad and bloodthirsty in the 1930s. His answer: For decades, the spread and rigorous enforcement of laissez-faire capitalism had been destabilizing communities, endangering and humiliating works, and despoiling the natural world. Under the artificial and draconian partial economic integration that the gold standard put in place, countries saw these crises amplified while their governments' power to address their crises was diminished. Humiliated, bewildered, and alienated, national populations struck back, either scrambling to recover a lost (and idealized) past or straining toward an imagined (often unattainable) future. Fascism was the worst product of this episode, which Polanyi described as spontaneous self-defense by "society."

The parallels are striking. Replace "gold standard" with "the euro," and "laissez-faire capitalism" with the austerity-and-market-integration program that Tsipras and his allies call "neoliberalism" (that's economic liberalism, as in libertarianism in the European sense of the word), and Polanyi could be arguing about 2015, not 80 years earlier. As for fascism, well, it was lucky that Greece's angry and exhausted voters bolted for Syriza rather than the neo-fascist Golden Dawn. Mainstream parties collapsed over the last elections two years ago, with the ruling center-right party losing about 90 percent of its voters.

Greek politics-as-usual has palpably failed to resolve Greece's social crisis. Because Greek politics-as-usual is also pretty much the only kind of politics the European Union's fiscal constraints and austerity program will tolerate, Syriza's victory portends a crisis. Being anti-austerity means either being anti-Europe or, as Syriza insists it is, a portent of a different, post-austerity Europe. Whether Germany, Brussels, and the creditors are willing to midwife that Europe is another question.

Here Polanyi's picture of Europe's last, ill-starred economic crisis is especially provocative. He offers a way of understanding social resistance to austerity as legitimate and important, not just an emotional reaction or social symptom of hard times. For Polanyi, the most astonishing and destructive feature of the 100 years before his time was faith in the "free market." The market was honored as a natural, scientific, and universally beneficial order, both rational and moral. According to true believers, markets ensured prosperity and peace, and they were the only way to get those prizes.

With such faith, marketeers were willing to stick to their versions of austerity -- gold-standard-driven deflation, sustained depressions -- and were hapless when the system fell apart and hyperinflation replaced it. To them, it was the market -- fiscal austerity and currency coordination -- or bust, and their faith was so strong that they did not really believe the bust would come.

Polanyi accepted that free-market capitalism had created tremendous prosperity, but he also insisted that its advocates, ironically enough, didn't understand economics. There is nothing natural about the market, Polanyi insisted, and no guarantee that it will be self-stabilizing or self-sustaining. For most of human history, economic life was deeply embedded in social life; how you made a living, what work you did, and who you were in your community -- peasant, priest, soldier, lord -- were intimately connected. There was no such thing as "the economy," with its own rules and sphere of operation; there was just social life, which included sharing, household production, tribute, and, sometimes, forms of exchange that we would call markets.

Expanding and integrating those markets -- regularly scheduled market days in certain towns, the activity of long-distance traders -- into bigger markets and eventually "the market," or "the economy," was a political project, executed by reformers who wanted their governments to reap gold from trade and taxes and, later, ships and weapons from industrial production. As Polanyi famously put it, laissez-faire was planned, a product of regulation and state power. Where could this be more obvious than in Europe, a painstakingly constructed single market?

Market rules, once in place, entailed massive disruptions: villages cleared out, new slum-cities around factories, periods of terrible unemployment for people who could no longer feed themselves from the land, and then, eventually, the crises of the 1930s. The market faithful -- and the many interests that would lose money if the rules changed -- treated all this human cost as the collateral damage of history and rational policy. Only the hardest-hearted thought that hungry workers and their stunted children were being weeded out as unworthy or getting what they deserved, but many believed their version of the neoliberal slogan: There is no alternative. So they stayed the course.

Here, too, the parallels are unsettling and clarifying. Polanyi's response was that, as he put it, society came first. It was a historical aberration that modern Europeans believed in the market as they did; it was a superstition of the age, as much as utopian communism was. In fact, social demands -- for stability, security, dignified work, a place to stand in the world -- were legitimate. They came first, and any economic regime should serve them. No matter what the long-term justifications of market theory were, you must not sacrifice the current generation of any society to that abstract future any more than you should throw a generation or a class into ditches to speed the coming of Soviet communism.

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It's become a theme that punishing nations economically is imprudent and can lead to ugly responses -- witness Germany between World War I and World War II. But the stakes of the Greece debate are much higher than that. The real help in thinking about Greece (and maybe Spain and Ireland next) through Polanyi is not the warning about fascism but the missed chance he pointed to: the chance to respect the democratic self-assertion of a society trying to reclaim the utterly legitimate and foundational values of security and dignity. These are the terms at the heart of Syriza's language: the defense and rescue of society, the restoration of security, the pursuit of dignity. They are attempting exactly what Polanyi observed a people might do when abstract economic forces tore apart their social world. So far, they are doing just about the best possible version of it, without help from the rest of the world.

One of Greece's many mixed legacies to the world is the term "barbarians," meaning, basically, "people we can't understand." (The ancient Greeks are said to have heard non-Greek words as nonsense syllables, which they rendered "bar-bar.") The idea has done a lot of harm: European imperialists described the peoples they conquered as "barbarians": unenlightened, unable to govern themselves, needing a firm hand from a rational civilization. Whatever happened to the barbarians during the civilizing process was the collateral damage of enlightenment.

Today, barbarism means blinking at the social violence and muttering, "There is no alternative." Syriza is insisting, instead, that a society has a perfect right to defend itself politically against the imposition of destructive economic rules, even when those are presented as a marriage of science ("This is how the world works") and ethics ("Debts must be paid"). Polanyi's lesson is that such social self-defense will never be extinguished, that it is the most natural thing in the world and, in its humane forms, is what democracy looks like. We should expect alternatives to arise against the "no alternatives" dogma, with or without or permission. The question is whether they will be better or worse, more humane or less. Greece, then Spain, will answer that question. The rest of Europe, and the world, are helping to prepare the answer.