As Lapavitsas explains, the Syriza leadership convinced itself that if it rejected a new bailout, European lenders would buckle in the face of financial and political unrest. The mastermind of this strategy was Yanis Varoufakis. He negotiated with the lenders for more than six months. But Greece could not negotiate effectively without an alternative plan, including the possibility of exiting the euro zone. Creating its own liquidity was the only way to avoid the Troika’s headlock. That would be far from easy, of course, but at least it would have offered the option of standing up to the catastrophic bailout strategies. The Syriza leadership would have none of it (see here).
‘SYRIZA failed,’ writes Lapavitsas, ‘not because austerity is invincible, nor because radical change is impossible, but because, disastrously, it was unwilling and unprepared to put up a direct challenge to the euro. Radical change and the abandonment of austerity in Europe require direct confrontation with the monetary union itself. For smaller countries this means preparing to exit, for core countries it means accepting decisive changes to dysfunctional monetary arrangements….The post argues that Varoufakis is a utopian (which he admits) and also a poor strategist in spite of being an expert in game theory.
While the post is a bit long, the latter part summarizes Bill Mitchell's argument, so it is worth reading to the end. Thomas Fazi, who is also mentioned, is co-author with Bill of a forthcoming book on globalization and the nation state.
flassbeck economics international
Why Varoufakis’ DiEM2025 is fighting the wrong fight