A Point of View: Why Greece and the eurozone aren't playing games

Game theory can't explain the Greek crisis - the entire euro project is now in the hands of fate, writes philosopher John Gray.

After much drama, a third bailout has been announced for Greece and approved by the Greek parliament. The details have yet to be settled, but whatever deal finally emerges Greece's government will be compelled to impose more spending cuts and tax rises at a time when unemployment is already higher than it was in America during the Great Depression. The result will be to lock Greece into permanent poverty, while the burden of debt will never be paid off.
Greece has been forced to submit to another round of destructive and self-defeating austerity policies in order to save the euro. But the euro is weaker than it was before the deal, and many are beginning to consider what for respectable opinion has until now been a forbidden thought: the euro project may have been a colossal error. Instead of leaving it stronger, the deal that has been imposed has strengthened the suspicion that the single currency is irreparably flawed.
It seems a strange outcome for a deal reached among reasonable men and women. But was the deal a result of rational bargaining? If you listened to the media on the negotiations in Brussels, you'd be inclined to think so. There has been constant talk of stratagems and counter-stratagems, bluffs and double bluffs. The Greek drama has been interpreted as a high-stakes poker game, with each of the players trying to maximise their chance of winning.

It's an interpretation that's been all the more popular as a result of the fact that one of the players, Greece's former finance minister Yanis Varoufakis, has written an academic textbook on game theory. A familiar line of commentary has it that the Syriza government destroyed any credibility it may have had among European elites by reckless shifts in strategy. If only the Greeks had played their hand more shrewdly, a better deal could have been reached and the crisis could have been resolved. The eurozone could then become more integrated and more stable.
I think it's an unrealistic analysis. Unworkable and unreformable, the euro can only produce recurrent and worsening crises. But this can go on for only so long. The euro will break down through a process of political contagion, as resurgent nationalism and radical parties of opposition become stronger throughout Europe. The driving force of the currency's disintegration will be a mood of popular anger. Attempting to maintain the euro at any cost can only result in mounting desperation, which will seek expression in violence if no practicable policies are on offer to ameliorate the situation.
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