By Haris Farmakis
The Issue and the Plan
What would have happened if, sometime between early 2010 and now, Greece had defaulted on its debts, exited the Eurozone, cut off itself from the markets and instigated, under a different government of course, sweeping reforms towards the socialist direction in its banking – financial system and economy?
I will call this scenario the Exit Scenario, but I will not try to describe it in any detail, nor answer the question posed; there are too many variables to consider, too many facts to take into account, too many subjective (hypothetical) choices to make. What I will try to do instead is debunk a certain kind of a priori criticism that is being advanced against radical proposals which seek to overturn the financial system, such as one that would espouse the Exit Scenario, namely the criticism that such proposals are unrealistic, utopian. To this end I am going to compare, as regards their proximity to reality, the Exit Scenario with the course that was actually followed by Greece, which I will call the Troika Course.
Defenders of the status quo usually do not care to spell out why the Troika Course was a more realistic path to follow than the Exit Scenario, nor do they explain how we should understand what is realistic and what is not. Hence I will do this for them here, first by presenting, in broad outline, a framework in which the issue of realism can be understood, and then by using this framework in order to contrast the two proposals, as they apply to a couple of policy examples specific to the Greek case. I will conclude that, if we see the matter under this light, then the charge of unrealism no longer applies ipso facto to radical anti-capitalist proposals such as the Exit Scenario and could even be thrown back to the defenders of the financial / economic status quo, in this case, the advocates of the Troika Course.
Possible Worlds and Realism*
We can place any scenario that describes an alternative course of events than the one actually followed in a complete description of (alternative) reality and call the described complete state of affairs a possible world. Thus, the Exit Scenario may be thought to describe a possible world that coincides in its history with the Actual World until May 2010, say, but diverges thereafter in the ways pointed out above. The Troika Course includes the Actual World as it has evolved until now and, through its prescribed reforms, (partially) describes a course that the world may follow from now on.
One way of looking at the extent to which a certain hypothetical scenario is close to reality or not, is to compare the possible world it describes with the Actual World, and evaluate the similarities or dissimilarities of the two worlds in the respects under consideration. Thus, worlds can be compared in their qualitative characteristics, in matters of particular fact, or in their systemic respects, that is, whether their laws and organizational structure coincide, or not.
Consider for example the following possible worlds: First the Armageddon World, a world where a meteorite, following a lawful trajectory from outer space, approaches Earth sometime in the near future and crashes on it, thereby annihilating all life on the planet. Then consider the Miracle World, in which the meteorite follows the same lawful trajectory until shortly before the crash is about to take place, but is diverted in the last instance by some unexplainable miracle and thus misses Earth, so that life continues normally thereafter.
Assuming that no meteorite is about to hit us any time soon and that the laws of nature are followed by celestial bodies under all circumstances, so that miracles such as this actually never happen, which one of these two possible worlds is more similar to our own Actual World? Is the Miracle World, where most particular matters of fact coincide with the facts of the Actual World, but a miracle has taken place, more similar to our world? Or is the Armageddon World, where the laws of nature were respected, but the annihilation of all life brought about a vast number of differences of particular matters of fact with the Actual World (in the lives of people, animals, plants, etc.)? If one takes the view that the most important respect of similarity between possible worlds is coincidence of particulars, then the Miracle World is closer to our own world. If, on the other hand, one thinks that compliance with natural law and absence of unexplainable miracles is the crucial respect of similarity, then the Armageddon World, despite its digression on a vast number of particulars, is closer to our world.
Troika Course vs. Exit Scenario
Let us leave now the Armageddon and Miracle worlds and come back to the bleak Troika world, though only to juxtapose it with the more exciting Exit Scenario.
Among the chief aims of the Troika Course in Greece was (and still is) to increase competitiveness by bringing down labour costs and making the labour market more flexible. Absent the tool of external currency devaluation, the aim is supposed to be achieved through internal devaluation, which, in this respect, works via the increase of unemployment to levels that are high enough to exert pressure towards the reduction of wages and the liberalisation of the labour market. In other words, one of the principal functional conditions of the Troika Course involved dramatic changes in the life circumstances of hundreds of thousands of, maybe more than a million, people, depriving them of work and pushing many of them to desperation. Given that unemployment has indeed risen to record levels and labour costs have already fallen significantly, the Troika has been quite successful in this aim.
The question that comes naturally to mind here then, is: How realistic was the task of bringing about these conditions in the first place? That is, how close to reality, as it was at the start of the intervention, was a situation that involved the radical alteration of the living conditions of a million people but succeeded in preserving the existing financial model? Putting the question in terms of possible worlds, how close to the Actual World, as it was in 2010 (i.e. to our reality at the time), is the possible world where one million men and women have lost their jobs, but the model remains the same? Is this world closer to reality as it was at the time, than the possible situation envisaged in the Exit Scenario, where the financial system has been overturned, but these people have kept their jobs?
Think of an analogous example regarding the issue of home ownership, an issue that is very much in the news at the moment. The Troika Course seems, for a number of reasons, to aim at the decrease of the levels of home ownership in Greece, which are deemed too high. This is why the Troika mandated government has established outrageous taxes on home ownership (that have increased seven fold in the last five years, that is, during a period of economic depression, when the vast majority of families have seen their means of subsistence decrease dramatically or disappear altogether), and has recently legislated the gradual freeing of foreclosures, which were (partly) frozen by law until the end of 2013. If we continue along this path, thousands of people will be thrown out of their homes, their living circumstances changing in a dramatic way.
So, I am asking here again, what is more realistic: to cause abrupt changes in the home ownership and life status of thousands of families, or to leave these intact and let a banking / credit system collapse and be rebuilt on different foundations? Which of the two possible situations is closer to the Actual World, a world that includes a still high percentage of home ownership in Greece and the working financial system as we know it?
If one considers any radical digression from the dominant system that is being followed inside Greece and the Eurozone as the most significant difference with respect to reality, then, indeed, any suggestion of a change in the model is bound to be deemed unrealistic and perhaps utopian. However, if one considers the dramatic change in the working and living conditions of a large percentage of the population as the most important differentiating factor, then the less realistic proposal of the two is the Troika Course, the one that is being followed during the last three and a half years with results that, in reality, seem completely out of this world to the millions of people that suffer them.
The issue at stake, as presented here, in an admittedly simplified form, seems again to be one of a difference in a great number of particular matters of fact vs. a difference in the systemic / lawful organizations of worlds. But, crucially, the laws concerned here are not natural laws, as it was the case in the Armageddon and Miracle worlds considered earlier; they are human made, social laws, which we can freely choose to overhaul if we think that they lead to an unacceptably high number of particular human tragedies.
Disclaimer and Claimer
The considerations that have been used above are certainly vague and general, but, of course, they are not meant to provide definitive criteria that will help us decide on the viability of each option. The issue is multifaceted and a lot depends on the omitted details and on the way each proposal would be carried out. Moreover, any judgment on the degree to which a suggested course is realistic or not, is bound to have a subjective normative element, an element that is based on the way we think the world ought to be.
What my argument is rather meant to do, is undermine the accepted view that preserving the financial system is always the more realistic choice to make, by putting doubt on the equally general and vague a priori criticism of utopianism that is usually directed against any radical proposal that challenges the system in Greece and abroad.
Hence, those of us who believe that the world ought to include full employment and a high percentage of home ownership, can concentrate on the task of working out concrete radical alternatives to the catastrophic course that is currently taken, disregarding the a priori charge that our proposals are utopian only because they question the prevailing financial, economic and political status quo.
In Greece, in particular, we should concentrate on trying to make reality of the Exit Scenario, the only realistic miracle that can save us from the social Armageddon that is already taking place in the dystopian Troika World.
* This section draws from the work of the late philosopher David Lewis on counterfactuals and possible worlds, in particular his article ‘Counterfactual dependence and time’s arrow’, reprinted in his Philosophical Papers Vol. II.