If in fact the economy continues to stagnate or deteriorates even further, it seems clear an external devaluation through adoption of a new drachma would be preferable to the vicious internal devaluation that workers in Greece have been subjected to thusfar. You could probably make the same case for the working class in Spain, Italy, and other countries on the European periphery who have been on the receiving end of equally harsh treatment. In Greece’s case, leaving the eurozone would very likely enhance it’s export competitiveness and boost its service sector, as foreign students, tourists, and those seeking cheaper medical care sought to benefit from the exchange rate advantage which would be conferred on the country’s schools, hospitals, hotels and other attractions. While there would be initial turmoil and disruption, Lapavitsas and others have suggested that the effects would be temporary if the adoption of a sovereign currency were accompanied by a debt default, currency controls, nationalization of the banking sector, and a vast public works program.
This is the theory at any rate, and it is really impossible to say whether it would be proved correct or disastrous in practice. That would depend on the condition of the world economy, the prevailing relationship of forces both inside Greece, and in particular the policy of Germany, the ECB, the IMF and the country’s other major creditors outside of it. Richard expects they would “want to make an example out of such a state”, but it’s worth recalling that when a Grexit was first mooted as a serious possibility in 2012, the big power brokers favoured, not gunboats, but a process of negotiation leading an orderly exit as being in the best interest of the eurozone. I don’t think we’ll ever get the chance to put the theory to the test, however, because even should Syriza manage to form the next government, its leadership and the majority of its supporters are, as has been noted, presently opposed to withdrawal from the eurozone and it will almost certainly have to govern in coalition with another party(s) to its right. But if events should somehow propel it and an increasing share of the Greek population to consider an exit, I wouldn’t reject that proposition as economically or politically unviable out of hand.
On Nov 6, 2014, at 12:28 PM, Lenin's Tomb <leninstombblog at googlemail.com> wrote:
> In fairness, the Syriza Left had won, prior to the party’s electoral surge, support for the slogan of ‘not one sacrifice for the euro’. But that slogan was quietly dropped before the May 2012 election, and never revived. And in fact, given the choice between accepting a degree of austerity or leaving the eurozone, most Syria members appear to prefer the former. This is unsurprising. The only serious proposal for a Grexit coming from the Left is Costas Lapavitsas’s. It’s a good programme, but essentially it is itself a form of austerity which depends on a massive increase in the rate of exploitation in order to get the country up and running again outside the eurozone - it would be a heavily punished economy too, as the EU would want to make an example out of such a state. It’s a tough sell.
>
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>> On 6 Nov 2014, at 17:16, Robert Naiman <naiman at justforeignpolicy.org> wrote:
>>
>> Syriza was *never* going to leave the Eurozone. It was always pro-Euro. It
>> always claimed that Greece could have gotten a better deal from Europe, and
>> it always said that if it were in power, it would negotiate a better deal.
>>
>> Also, if Syriza doesn't work to moderate its image - which is as much due
>> to the distortions of opponents as to its own past rhetoric - it has no
>> chance of winning the election and taking power. A key talking point
>> against Syriza is the current "Syriza premium" on Greek debt. If Syriza's
>> line were "set Greece's creditors on fire" its chances of winning the next
>> election would be zero.
>>
>>
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