Economist Costas Lapavitsas: “An exit from the euro is a taboo for SYRIZA, but not for society.”

Interview by Vasiliki Siouti

The name of Costas Lapavitsas has been much discussed in recent days thanks to SYRIZA’s proposal that he be included in the party’s electoral lists for the European elections. His candidacy was not accepted because SYRIZA’s leadership feared that their political opponents would identify the party with Lapavitsas’s proposal for an exit from the eurozone. However following his rejection as a candidate by the party he issued a statement of support for SYRIZA saying that the hopes of the Greek people rest on the party’s shoulders.

Lapavitsas, an op-ed contributor for ThePressProject International, has argued for years that the root cause of the euro-crisis is the euro itself. Unfortunately for Greece, his dire predictions for the future of the country have been confirmed leading him to assert several years later that “what is happening in the country is a catastrophe without precedent in its history”.

TPP asked him about everything and he answered making clear, among other things, that for him, “the simple anti-memorandum direction and rhetoric is not enough,” and that an exit from the euro “is a taboo for SYRIZA, but not for society.”

In Greece your stance in favour of an exit from the Eurozone provoked intense reactions when it was first heard in 2012 and it continues to provoke. Do you still believe that within the Eurozone there will be no salvation for Greece?

“The situation today is not the same as it was in 2010. Greece could have then gone ahead with a unilateral cessation of payments and an exit from the euro with the prospect of avoiding catastrophe. The political leadership of the country opted for internal devaluation, the Loan Agreements and to stay in the Eurozone at any cost. Today the situation has somewhat stabilized, but through economic destruction, with a huge contraction in production and increase in unemployment. The issue of the Eurozone is now a problem of growth. How will we emerge from the destruction caused over the past four years? If we see it like this we can see that it will be very difficult to take the necessary measures in the rigid framework of the Eurozone. The exit arises due to the circumstances as a question of growth. It arises from the need of society and the economy to find another basis, to get away from the destruction.”

The government however claims that it saved the country from disaster and maintains that the consequences of an exit from the euro would be much worse that those which Greek society is currently living through.

That is absurd. What is happening in the country is a catastrophe without precedent in its history. An incredible weakening of the productive fabric of the country has been caused and a major waste of its available resources – chief among them being the workforce. Young people are being crushed today. For that to be presented as a success shows that those governing are living in a parallel universe.

So the consequences of an exit from the euro would be less severe?

Historical precedent and scientific analysis show that they would be more restricted and that Greece would have returned to growth a while ago. As a subject of economic analysis and economic history there is no question: Greece made the wrong choice in 2010, destroying the economy and causing a disintegration of its social fabric in order to remain in a currency union that is severely problematic.

But today the country is bound hand and foot and the debt is subject to English law. Isn’t it very difficult now?

Indeed today the debt remains enormous, it is owed to public lenders and is subject to British law. It is almost impossible for it to be written off by consensus because that would require approval by a series of parliaments, therefore the debt will remain a burden for decades. The main problem however is that the Greek economy is on its knees and the debt doesn’t allow for a rapid and steady comeback. The productive fabric took a huge blow and the losses which have been sustained are very difficult to reverse. We have a historic contraction in Greece which will take many years to turn around. Writing off the debt with unilateral actions and growth under terms outside of the Eurozone, which are difficult, are urgently needed.

According to opinion polls about one third of Greeks don’t want the Eurozone, but no party has demanded immediate withdrawal. What do you attribute this to?

In my opinion, it is one of the greatest paradoxes of the past four years. There is a widespread desire among the Greek people to face the situation in a radically different way; it is something that we all see but that has not found political expression. The low and middle income strata could deal with the problem calmly and collectively if there was a reliable political party that said, ‘together we will cross to the other side, together we will get the country to the other side of the river.’

Would an exit from the Eurozone be enough in and of itself to provide a solution to the country’s problems?

You know I never said that an exit from the Eurozone is in and of itself the solution to all of our problems. It is however a prerequisite. The issue for Greece is not to leave the euro and to go to a national currency. The country needs deep changes to the state mechanisms, to the economy, deep changes at all levels. We all know the inequalities, the social harshness, the poverty, the general difficulties in the economy. Consider as well that the Memorandum camp also flies the flag of ‘reforms’. There have been major social changes and cuts in our country in recent years, but they are cuts that make things worse for society and the labour force. That is not by chance. The euro is an institutional framework, a framework of power which favours conservative changes – that is the changes in the social structure that favour capital.  

Recently we have seen the dynamism that SYRIZA had, appears to have stalled. Public opinion polls place the party about level with New Democracy. How do you interpret that?

If we see the specific positions taken by SYRIZA and the initiatives it has undertaken as the main opposition party, things are disappointing. SYRIZA doesn’t seek to lead in society and fails continually to shape the political agenda. There is no cohesion, the simple anti-memorandum rhetoric is not enough, its programme is not convincing, they haven’t even created organizing roots in society. For it to take power and effect change, the Left needs to be dynamic, to shape the agenda, to beget visions. Well, in this, SYRIZA has not succeeded and the reason is that its radical wing has not dominated in establishing its positions.

In the past years you have supported SYRIZA but you have also criticized it. Not long ago, some proposed that you be included in the electoral lists for the European elections, a proposal that eventually did not pass. Why did you become involved in this discussion, despite your reservations about SYRIZA?

I don’t belong to SYRIZA, nor do I even have the same political roots. But I never took easy shots at them, despite the fact that I came under fire from many within the party. I believe that those who complain that it has already become an establishment party, that they are already a new form of social democrats, are making a big mistake. On SYRIZA, whether we like it or not, rest the hopes of the working classes. Its character has still not been established. If SYRIZA cannot cope with the needs of the people and the times, then that makes me very anxious. I believe that the wider forces of the left need to contribute in order to consolidate its radical characteristics which are very important. The desirable political solution for the country was always for there to be a coalition of the forces of the left, the main body of which is in SYRIZA. That’s why I accepted the proposal.

For a little while now you have been working with your research team on the creation of an alternative plan for Cyprus. What exactly are you doing?

In Cyprus a major discussion was launched immediately following the events of 2013 with the blackmail of the island and the adoption of the catastrophic programme of the troika. The [left-wing] AKEL party had the same major problems because it had governed the country for five years, exactly during the time that the groundwork for the crisis was laid. It wanted, therefore, to seriously and responsibly to examine new ideas, to form an alternative proposal which would be radical and would not hesitate to raise the prospect of an exit from the Eurozone. My colleagues and I are looking at certain aspects of the Cypriot economy in order to gradually develop an alternative proposal. If this policy requires a clash with the Eurozone mechanisms then we will analyze it and the conditions with which this can be done successfully,

It amounts to an an economic network of an internationally high standard which is working on developing an alternative radical proposal under the terms I explained earlier. Its main body is made up of the researchers of the RMF in London, researchers from Spain where they want to seriously think about what an exit of Cyprus and Greece from the monetary union would mean. Also participating in the team is also Heiner Flassbeck from Germany, an economist of very high calibre.

All this means that the alternative radical proposal to exit the eurozone is not an abstract idea which should spread fear. It can be implemented and there are people who know how to do it.