The Greek elections; a Greek view

Yanis Yaroufakis is currently lecturer in economics at the University of Athens prior to which he taught at the University of Sydney in Australia

Greece’s Choice: Bargaining versus pleading

When two sides bargain, their interaction reflects a potential mutual benefit but also a measure of conflict. For instance, when a firm and its supplier reach a deal, there is often more than one price where both will benefit. The high end of the range favours the supplier while the lower advantages the firm. So, when bargaining leads them to an agreement on the final price, they unlock a mutual benefit and resolve a potential conflict.

Yanis Yaroufakis

Yanis Yaroufakis,

26 April, 2012

Now, bargaining only makes sense if both sides enjoy a modicum of bargaining power. And what determines that? The simple answer is: a readiness to draw a ‘line in the sand’ and credibly resolve to walk away from the negotiations if that ‘line’ is crossed. Thus, a buyer determines a maximum price, and the seller a minimum price, and commits to scuttle the deal if the opposite side refuses to grant at least this minimalist demand. If one of the two bargainers cannot envision circumstances under which she will prefer to reject the other’s offer, and this is transparent, negotiations are pointless. The party that cannot imagine saying ‘no’ should desist from bargaining and simply plead with the other side, appealing to its kindness, generosity and, in desperate cases like Greece’s, sense of mercy.

Today, Greek voters are going to the polling stations torn by the momentous choice that they must make. Should they vote for a party (Syriza) promising to bargain with Europe for better terms and conditions or for parties (primarily conservative New Democracy and/or the socialist PASOK) that are, effectively, proposing to plead with Europe for better terms and conditions? Ostensibly, both sides of the argument are promising to negotiate with the troika (the European Central Bank, the European Union and the International Monetary Fund). However, in truth, the so-called pro-bailout parties (ND and PASOK) are running on a platform that any deal with Greece’s official creditors is better than no deal. So, in view of the preceding definition of genuine bargaining, they are ruling genuine negotiations out, courtesy of their determination not to draw a ‘line in the sand’ 

The voters’ dilemma gets worse because of the risks involved e.ither way. Pro-bailout parties argue against the ‘line in the sand’ strategy because they believe that such a ‘line’, if it must be adhered to (e.g. following a tough negotiating line by the troika), will lead Greece out of the euro, thus costing Greece more than toeing the troika’s ‘line’ (i.e. Greece is doing as it is told). In sharp contrast, Syriza is arguing (drawing upon the sorry experience of kowtowing to the troika’s every whim during the past two years) that the greatest risk facing Greece is sticking to the present course of precipitous degeneration which inexorably, and speedily, leads Greece… out of the euro.

In the background of this dilemma, lies another fundamental difference of Greek opinion regarding Europe’s handling of the Crisis in countries other than Greece. On the one hand, the pro-bailout parties maintain a touching faith in Europe’s powerful nations to ride the present storm. While they concede that the past two years have been replete with a sequence of errors on the part of Berlin, Paris, Brussels and Frankfurt, pro-bailout parties are clinging on to the ‘theory’ that “this is how Europe makes progress”; to the optimistic view that Europe will, in the final analysis, manage to do what is necessary in order to save the euro and, with it, snatch the European Ideal from the jaws of the unfolding disintegration. Based on this muted optimism, they argue that Greece’s optimal strategy today is to do what it is told (even if what it is told makes little rational sense) so as to maximise its chances of staying within the European fold until Europe’s long-awaited ‘final solution’ to the Crisis arrives. Their nightmare scenario would see Greece fall out of the Eurozone just before the Eurozone is ‘fixed’ through a combination of fiscal transfers, federal moves, debt mutualisation etc.

On the other side of the argument (which has, incidentally, been my own viewpoint for a long while now), a completely different view of what Europe is up to dominates. It is the view of European elites engulfed in a spectacular coordination failure that cannot resolve itself endogenously. They resemble American Pentagon generals of the early 1970s, who could see that the Vietnam War could not be won and was a train wreck in slow motion, but who had no means of combining this realisation into a coordinated attempt to change course. Similarly in the corridors of power in Northern Europe today, everyone can see that the Eurozone is heading for a major defeat, in the hands of this vicious Crisis, but no one dares speak the words that might lead to a collective, a European, re-set that will avert the inevitable disaster. In this view of developments in the European Metropoles, we need a circuit-breaker. Something must ‘give’. Some discontinuity is necessary, to interrupt the unfolding train wreck of the Eurozone. A Greek vote for a party, like Syriza, that is prepared to bargain (i.e. a party that is prepared to draw a ‘line in the sand’) may provide this circuit-breaker. Through this prism, a Greek ‘no’ to the troika is not in the slightest anti-European. Indeed, it is the only good service Greek voters can perform on behalf of the European Project.

If the essence of tragedy is essentially good people being caught up in a vicious dilemma that make it impossible for them clearly to distinguish the virtuous from the disastrous choice, Greek voters are, today, experiencing a very real, very personal tragedy. For my part, I have little doubt what the virtuous choice is: Bargaining is infinitely more sensible than pleading, particularly when the troika is terribly bad at knowing where its own interests lie. Greek voters today have a unique opportunity to jolt Europe out of a complacency that is leading our Continent to a despicable peripeteia.

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