Europe is facing its biggest economic and political crisis in decades. Large state debts in a number of smaller European Union countries are undermining confidence in the euro, compounding the effects of the global downturn. To get out of this spiral of crisis, European ruling classes are demanding big cuts in living standards from workers. The danger they face is that the massive opposition to these cuts will grow over into open revolt.

Greece’s debt crisis has been the trigger for the wider crisis. While Greece has maintained a high level of public debt for years, in December the bond market lowered Greece’s bond rating, raising the specter of a default on its debt payments. A default would have major implications for all of Europe.

In May, the EU and IMF bailed out the Greek government with a package of 110 billion euros to avoid a default. In exchange, the Greek government agreed to carry out major attacks on living standards including across-the-board wage cuts in the public sector, cuts in pension payments, and increases in taxes on consumer goods.

These attacks have provoked enormous opposition by the working class of Greece. Three general strikes have already taken place. May 5 witnessed the largest demonstration in Greece since the 1974 revolution that brought down the post-war dictatorship. Protests nearly spilled over into open revolt. Attempts by workers to storm Parliament were broadcast on TV and internet worldwide.

But the crisis is not isolated to Greece and is spreading to other European countries. Portugal, Spain, Italy, Ireland, and other countries all have enormous public debts and are preparing clashes with their own populations.

Political Crisis

The combination of pressures from the market, major banks, and speculators on the one hand, and the populations that cannot afford cuts on the other, is provoking a political crisis that threatens the stability of the entire European Union.

The present crisis has exposed the contradictions within the European Union and the limitations of European economic integration on the basis of capitalism. While capitalism needs a world market, it also bases itself on the individual nation states, a contradiction that leads to instability in global capitalism (and also war) at times of economic downturn.

Unlike the U.S., the EU does not have a powerful federal government for mitigating the inevitable imbalances between different economies in the EU. As a result, individual national governments within the EU have clashed over how to deal with the present debt crisis. Stronger EU economies like Germany are under pressure to use their surpluses to rescue the Greek government. But the German government headed by Angela Merkel also faces domestic pressure against what is widely seen as a German taxpayer-funded bailout of Greece. Caught between these twin pressures and faced with no favorable choice, Germany in the end agreed to the bailout, but only in the interests of ruling elites and capitalism. Nearly 70% of Greek debt is held by German and French banks and many would face bankruptcy if Greece defaulted.

Niall Ferguson, an economic historian at Harvard, explained: “This bailout wasn’t done to help the Greeks; it was done to help the French and German banks” (New York Times 17 May 2010).

We Won’t Pay

In the face of this crisis, the European ruling classes are demanding that the working and middle classes pay for their crisis. Country after country is carrying out major austerity measures. As part of this process, a major propaganda campaign has developed blaming ordinary working people for the crisis.

This campaign was clearly evident in the U.S. following the May 5 general strike in Greece that caused a major panic on Wall Street. In the aftermath, the corporate media produced article after article blaming “lazy” Greeks for the crisis.

This campaign was so strong that even the talented writer and comedian Tina Fey, promoted as someone with “Greek blood,” was specially invited onto Saturday Night Live’s ”Weekend Update” to denounce the “riots” in Greece.

The insidious campaign blaming Greek and European workers for “living beyond their means” has implications for working people everywhere. In nearly every country in the world, including the U.S., working people are threatened with some form of “Greek Medicine” – major cuts in living standards because of massive government deficits.

Need for a Socialist Alternative

The Greek people did not create this crisis-ridden system, no more than U.S. workers created the housing crisis in the U.S. where still more than a quarter of all homeowners face the threat of foreclosure. This crisis is a result of capitalism and the corrupt policies of major banks. They created the destructive “financial instruments” like derivatives and subprime loans that produced massive profits. The central demand of the Greek working class, “We won’t pay for their crisis,” is entirely justified.

Instead, we need to hold up the massive struggle of Greek workers as an example of what is needed worldwide. One clear lesson from Greece is the massive power that the working class has when it is organized. The May 5 general strike completely shut down Greek society, and the near storming of Parliament showed the potential for powerful movements to topple unpopular governments.

Unfortunately, the movement in Greece did not succeed in stopping the barrage of cuts in spite of the enormous opposition. While the leaders of the unions and the left opposed the cuts, they have not explained what concretely should be done to totally prevent cuts. “Union leaders instead say the cuts should not be carried out in an ‘unbalanced way’ and that the rich should be taxed more. They call for ‘plans for developing the economy’ that would see economic growth and a planned repayment of the debt burden,” (socialistworld.net).

This amounts to accepting that cuts are necessary. But this is only the case if we accept the cruel logic of capitalism that demands working people pay for the economic crisis, while bankers are bailed out and even rewarded with huge bonuses. Greek workers have shown a tremendous willingness to struggle, but without a clear vision of an alternative to cuts the struggle will inevitably die down.

Recent polls show massive anger at the establishment on the one hand but also deep confusion about how a way out for working people is possible on the other. This underlines the point that crisis-ridden capitalism can only carry out these sweeping attacks on workers because of the lack of mass parties of ordinary working people that firmly stand against capitalism’s austerity policies and make an effective case for socialism.

Socialist Alternative is in solidarity with the Committee for a Workers’ International, an organization that is campaigning for a socialist alternative to the bosses’ Europe of the EU. In Greece, our sister section Xekinima has been campaigning for the left to give a bold lead to the anger. Xekinima calls for escalating the struggle with a call for a 48-hour general strike and workplace occupations.

But we also understand that unless workers see a clear, viable alternative to the present capitalist government of cuts, the mass of working people will not be fully prepared to participate in the struggles that are needed. That’s why Xekinima calls for a government of left parties that stand for a socialist transformation of Europe. “The central political demand must be that those who caused the crisis must pay it. This means refusing to pay the debt owed to the bankers, in Greece and abroad, and for the nationalization of the banking system, under workers’ control and management, as an immediate first step.”