Greece and the 1953 agreement on German debt

Generally speaking this is a niche blog of interest to the handful of us who are fascinated by what is happening in our workplaces (particularly in the public sector) and to our trade union and labour movement.

However, our local action takes place in a global context and – just now – it is impossible not to be concerned with the plight of the Greek working class and their Government.

If the Syriza-led Government can achieve positive results for the workers who elected it it will embolden all those of us seeking an alternative to austerity. The finance ministers of the European Union don’t want to see that.

Yet a little over sixty years ago a debtor nation at the heart of Europe saw more than half of its debt written off and – as some of the more insightful citizens of that nation acknowledge – that was the foundation of the postwar German “economic miracle.”

The British negotiators in the 1950s wanted to see maximum repayment of German debt, but the United States got their way, facilitating the rebuilding of the German economy both as a market and as a bulwark against the Soviet Union.

From the point of view of the capitalist economy, writing off the debts of debtor nations can be a very rational way to support economic development (and with it opportunities for the profitable investment which capitalists always seek).

The writing down of German debt in 1953 was a largely forgotten moment in the development of the post WWII “long boom” which saw unprecedented stability and growth.

Further debt write offs in the here and now (whether for the Greeks, or other, far poorer nations) could easily be accommodated within the framework of a global capitalist system.

Indeed such an approach might even stimulate trade and growth far more effectively than the global elite’s preferred route of continuous deregulation (which is clearly very unpopular in Europe).

However, capitalists (and their political hangers on across all political parties) are interested in their own power and control rather more than the general welfare of society as a whole.

This is particularly true given that the circumstances of the post WWII long boom were also circumstances in which the share of wages in the national income grew alongside the strength of the labour movement.

A route out of austerity which included writing down Greek debt would make perfect economic sense, but less political sense for an elite which is wedded to shrinking the state and growing inequality, since it would empower those of us who will stop them.

That the guiding forces of global capitalism reached a different conclusion in relation to Germany in 1953 than that which they prefer for Greece in 2015 is not due to the nations involved but to geo-political circumstances.

Sixty years ago the elite feared a global alternative to capitalism and was willing to concede a welfare state, and give ground to our movement, in the face of such a threat. Today it fears no such challenge. We need to find a way to reawaken their fear.

Therefore, we, in all the other advanced capitalist countries in particular, have an obligation to express our solidarity with the Greek workers and their Government, to expose the fallacy of the arguments of “austerians” and to remember 1953 and the agreement on German debt.