Grexit

Tspiras_28_6_15When I was at university back in the 80s, I took a course entitled Political Sociology. Essentially it was a study of power. The core text was Stewart Clegg’s Frameworks of Power, an extremely difficult text (for an undergraduate), but every week ahead of the seminars, a chapter was consumed and prepared to present.

Clegg introduced me to the concept of Organisational Outflanking. This post is a partial celebration of this concept and a very good example of its employment. Say what we might about Alexis Tsipras, the Greek Prime Minister (above left), he is a fine exponent of the art. It does not matter how poor is the hand that one is dealt, it is still possible to outflank opponents by doing something unexpected. Tsipras announcing a referendum in the home of democracy was a master stroke. The creditors (the EU, the IMF and the ECB – the so-called Troika) were not expecting that. It took a little while for a response, the best indicator of a successful outflanking, as it were.

In writing this, I risk the wrath of Greek friends and colleagues who are being hurt by this crisis. Let us not forget that the crisis that we continue to try to deal with was caused by the banking sector, not the people of Greece. Moreover, Greece’s continued membership of the Euro was managed – conceivably fraudulently – by the banking sector for its own ends. That wonderful banking institution Goldman Sachs made a lot of money out of helping the then Greek Government to hide the true extent of the deficit in contravention of the Maastricht Treaty.

Locking poorer members of the European Union into a currency regime managed from the heart of Europe’s strongest economy, Germany, is a nonsense. When the going gets tough, countries devalue their currencies to render products and services cheaper. Without that lever, what other options are available to Governments? Erm…asking the Troika for money to pay back the Troika and the transfer of state assets, healthcare provision, etc.? 50 per cent unemployment of young people is but one unacceptable consequence of this.

I’m glad to see that Nobel Prizewinning economist, Paul Krugman, reported in Business Insider seems to have come out in support of Tsipras. Summed up in a nutshell:

“Over the past seven years, Krugman argues, the financial noose Europe has placed around Greece’s neck has strangled the Greek economy. Each time Europe has loaned Greece money, it has demanded spending cuts in return. And these spending cuts — austerity — have further damaged the Greek economy.

In the past, every time the situation has come to a head, Greece has caved. And, in the process, it has transformed itself into little more than a financial slave state mired in an economic depression.

There is no way Greece will ever be able to cut its way to prosperity, Krugman argues. And history suggests that any argument to the contrary is crazy.

Given that Europe refuses to restructure Greece’s debt in a sustainable way and allow the country to try to grow its way out of its misery, Greece has no choice but to default and withdraw.”

It is going to be tough with the banks closed. It is not just the people at the ATMs, but the economy more generally.2015-06-29 10.12.07 The whole point about banks is they deal the means of exchange of value; i.e. money. And when they are shut, this becomes very difficult. In response, we either find other stores of value such as gold (or as happened in Douglas Adams’ Hitch Hikers Guide to the Galaxy, the leaf) or we merely exchange things on the basis of a perceived equivalence.

The outcome – either the Troika gets real and accepts that we are dealing with real people and not inanimate institutions, or Greece goes it alone. It has been done before. But if that happens, Europe has to take a close look at itself.

By contrast:

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