The essay “Going into Europe”, written by the Marxist historian E. P. Thompson, was first printed in the Sunday Times on 27 April 1975 – the pre-Murdoch era, for anyone wondering. It was published ahead of the June referendum on the United Kingdom’s continued membership of the European Economic Community (the forerunner of the European Union). The article was later republished in a book of collected essays titled ‘Writing by Candlelight’ (London: Merlin Press, 1980).

Although not without its problems, Thompson’s essay is a good synthesis of the socialist arguments against the EU (then the EEC) that were once common currency in Britain, even in the mainstream press.

I have transcribed the article because, firstly, it is an interesting historical document that does not appear to be available elsewhere in a digital form – at least not outside of specialist archives or behind paywalls. It is written in Thompson’s own inimitable style, which some might say is reason enough for its reproduction: the article is genuinely funny!

But the article is also relevant today because it demonstrates a strand of left opposition to the EU that is currently undergoing a revival, especially since the onset of the 2007-2008 capitalist crisis. There are many things currently driving this rejuvenation, but the treatment of the EU’s economically weaker member states, particularly Greece, has certainly been one of the main contributing factors.

In Portugal, for instance, the chairperson of the Left Bloc, Catarina Martins, has spoken of the need to prepare for leaving the euro if their anti-austerity party came to power. During the party’s election campaign in October 2015 Martins stated, “if it’s necessary to choose between dignity and the euro, Portugal should choose dignity” and that “any government which disobeys [Wolfgang] Schäuble has to be ready for the ECB [European Central Bank] to close up on it and for Schäuble to kick them out of the euro.”

Previously the Left Bloc had been in favour of remaining in the EU, but following the Greek experience they have had pause to reconsider their position.

In Spain too, Izquierda Unida (IU), a major component of Podemos – the largest left party in Spain – has taken an increasingly oppositional attitude to the EU in recent years. Indeed, a political motion put to the IU assembly last year by its leader Alberto Garzon, which won over 70% support, clearly states: “[the] EU is un-reformable and incompatible with the sovereignty of peoples or with any policy of social transformation”.

And earlier this year, Jean-Luc Mélenchon came within a whisper of the final round of the French presidential elections, which he would likely have won had he got through. Mélenchon was unequivocal when it came to the EU and its treatment of Greece: “I am not Alexis Tsipras [the Greek Prime Minister and leader of Syriza], I don’t negotiate for 17 hours with people who offend me,” he told the French daily Le Parisien. Mélenchon had pledged to renegotiate EU treaties and put them to a referendum.

Finally, in the UK, the Labour Party is now led by Jeremy Corbyn, a seasoned left Eurosceptic who voted against continued EEC membership in 1975. Since his election as Labour leader, however, Corbyn has made many serious compromises with the capitalist wing of his party (which remains in control of the party structure) – not the least of which was his decision to campaign for a remain vote in the 2016 EU referendum. And just yesterday, it emerged that Labour’s new position on the EU was to campaign for a “soft” Brexit and to remain within the Single Market – i.e. a Brexit in name only.

Because of its more recent association with right wing populist parties like UKIP, many young socialists today are only fleetingly aware, if at all, that the left has a proud history of standing against the bosses’ EU. But left Euroscpeticism lives on amongst many of Britain’s most committed working class fighters. Indeed, during the referendum, four of the most militant trade unions (RMT, BFAWU, ASLEF, and NIPSA), with a record of fighting hard for the interests of their members, all campaigned for a socialist Brexit.

Right wing trade union leaders and Blairite MPs, by contrast, claim that we need the EU to protect workers’ rights. This simply provides cover for the fact that they are unwilling to support workers in struggle themselves.

This does not mean that Socialist Brexiteers are not internationalists. What it means is that we reject the false internationalism of capitalism – a predatory economic system based upon violence, division, and exploitation. As intimated by Thompson’s essay, we call for a voluntary, democratic, socialist federation of European states.

That said, I hope the essay is of some use.

____________________________

Going into Europe

The first person who enthused to me, some years ago, about ‘going into Europe’ went on to enthuse about green peppers. This gave a clue as to what the great British middle class thinks ‘Europe’ is about.

It is about the belly. A market is about consumption. The Common Market is conceived of as a distended stomach: a large organ with various traps, digestive chambers and fiscal acids, assimilating a rich diet of consumer goods. It has no mind, no direction, no other identity: it is imagined as either digesting or as in a replete, post-prandial states easily confused with benevolence of idealism.

The images vegetate in the British middle-class subconscious. This Market has no head, eyes, or moral sense. If you ask where it is going, or why, no-one knows; they give an anticipatory post-prandial burp (‘it will make us viable’) and talk about bureaucratic procedures in Brussels. It has no historical itinerary. It lies in a chair, hands on its tummy, digesting a pasta of Fiats, a washing-up machine meunière and (burp!) that excellent concorde thermidor which may not have been as fresh as it should have been.

This Eurostomach is the logical extension of the existing eating-out habits of Oxford and North London. Particular arrangements convenient to West European capitalism blur into a haze of remembered vacations, beaches, bougainvillaea, business jaunts, and vintage wines. At the referendum the sky will darken with charter flights from the Dordogne, each passenger’s mouth puckered into a oui.

At a poor second, the middle class thinks the Market is about Culture. Bob of the Likely Lads has long been taking Thelma earnestly to Fellini and Godard. The academic and television Bobs and Thelmas, after their long and abject mid-Atlantic enchantment, have entered a no less abject enchantment with ‘Europe’. But it is the same image. Culture is what we consume; it is bestowed, without participation, engagement, dialogue – a common cultural stomach.

For ‘going into Europe’ is also a Magic. It is the Necessary Miracle. Utterly without self-confidence, hemmed in at every side by the defensive organizations of a humane working class (the ‘English disease’), the British bourgeoisie prepares, as its last hope of survival, to surrender its identity to the larger rapacity of the European bourgeoisie. It may not survive itself: but at least it will make sure that Money does.

What is sick about this is that, in national as in personal matters, only an individual with a firm identity can make effective relationships. This ‘going into Europe’ will not turn out to be the thrilling mutual exchange supposed. It is more like nine middle-aged couples with failing marriages meeting in a darkened bedroom in a Brussels hotel for a Group Grope. The gruppensex will rejuvenate no one. But in the recriminations of the bitchy afterglower we can expect a resurgence of bourgeois nationalist rancour of sensational intensity.

The offence of the ‘going into Europe’ humbug is fourfold. First, we are there already. Second, Europe is not that set of nations but also includes Warsaw, Belgrade, Prague. Third, the Market defines the diversity of European cultures as its crassest level as a group of fat, rich nations feeding each other goodies. Fourth, it defines this introversial white bourgeois nationalism as ‘internationalism’.

It will not, of course, work. But the spoof about internationalism remains offensive. And dangerous. For when an altruistic glint gets into the bourgeois eye one can be sure that someone is about the catch it. Once replete, the eurostomach will want to euronate. The present idea is to do it on the British working class. ‘Going into Europe’ will mean ‘rationalization’, ‘winds of competition’, getting rid of ‘restrictive practices’ (i.e. humane safeguards and self-protection), ‘facing up to things’. We can be sure that the things faced up to will be very different through the open shutter of the Dordogne and a bedroom window in Bolton.

These arrangements of capitalist convenience have nothing whatsoever to do with internationalism, political or cultural. What they will do is distance decision-making from its subject and mystify what remains a democratic process. They provide no opportunities for common fraternal action or intellectual exchange which could not be conducted better without them. And have been, for some hundreds of years. Surely Hugh Thomas knows that his “White Anglo-Saxon Protestants have been happily absorbing ‘a few doses of latinity’ periodically for centuries, without any license from a Treaty of Rome?

Some sillies in the labour movements suppose the Market will facilitate socialist and trade union activity. It will do the opposite. It will put the bourgeoisie twenty years ahead at one throw. Luigi and Kurt and George and Gaston, with their secretaries, their linguistic skills, their massed telephones, their expense-account weekends, their inter-locking euro-directorships, their manipulation of the rules and of the Brussels spouters, will always be smiling at the table, with the agenda cooked, the day before the workers get there. And British labour will cast away its one incomparable historical asset (a united movement) in anxious negotiations with its fragmented and ideologically embittered counterparts.

Meanwhile the Dutch elm disease (Europe’s most viable export to England in the past decade) is nothing to the beetles being bred by the bureaucrats in Brussels to blight what remains of our active democratic traditions. True, there are plenty of people high in the British state who would like to do the same. But that’s the point. The enemies, as well as the friends, of democratic process are everywhere and anywhere: internationalism falls along the line of that horizontal fracture, not within a set of vertical alliances.

There is a more momentous point. As British capitalism dies above and about us, one can glimpse, as an outside chance, the possibility that we could effect here a peaceful transition – for the first time in the world – to a democratic socialist society.

It would be an odd, illogical socialism, quite unacceptable to any grand theorist. That is perhaps why most British Marxists have long ceased to attend to British actualities and, at a time of unparalleled socialist opportunity, play to each other their amateur revolutionary theatricals.

But the opportunity is there, within the logic of our past itinerary.  The lines of British culture still run vigourously to that point of change where our traditions and organizations cease to be defensive and become affirmative forces: the country becomes our own. To make that leap, from a market to a society, requires that our people maintain, for a little longer, their own sense of identity, and understanding of the democratic procedures available to them. It requires also the holding open of every international option: for trade with the developing world, for dialogue with the Communist world, for informal intellectual exchange.

It is fear of this transition – of Money toppled from power – which makes our good bourgeois contort his face into an unlikely expression of internationalism. And, equally, the effecting of this transition is the most substantial contribution to internationalism which our people could make.

That is what we could offer to the European dialogue. And to a Europe which includes Oslo and Belgrade. Long, very long after that, a true idea of ‘Europe’ might return: as a cautious federation of socialist states.  It will develop slowly, tetchily, with jealous regard for individual identities. And so it should.

This article was first published in the againstreactionblog.

by Costas Lapavitsas, Theodore Mariolis and Constantinos Gavrielidis

This analysis was published in Il Ponte, LXXIII, n. 5-6, p. 105-33.

Introduction: Ιn early 2010 the European Economic and Monetary Union (EMU) entered a period of crisis that has undermined its very existence, and eventually that of the European Union itself. The turmoil has been a continuation of the global crisis of 2007-9 which initially broke out in the financial system of the USA. The global crisis soon subsided in the USA, the UK and other parts of the world, following decisive state intervention that, first and foremost, protected financial interests. In Europe, however, the crisis has acquired a further and virulent aspect due to the dysfunctional EMU, adopted by the bulk of the EU on 1 January 1999.

In late 2016 the crisis in Europe had remained fundamentally unresolved. The underlying condition of the EMU was poor and its future precarious. In historical terms the EMU has been a failure and there seems to be little that could be done institutionally, or politically to rescue it. Even worse, the crisis and the policies deployed to confront it have undermined the EU itself.

It is indisputable that during this period Germany has emerged as the dominant power in the EMU, thus also shaping the policies and outlook of the EU as a whole. The ascendancy of Germany is not primarily based on the relative size of the German economy, or its putative efficiency. It is shown in this article that Germany has come to dominate the institutions of the EMU and the EU largely through extraordinary domestic wage restraint since the late 1990s, which has given to German exporters a tremendous competitive advantage. The German triumph within the Eurozone has been achieved largely at the expense of German wage workers and others of low income. For the same reason, the ascendancy of Germany is highly precarious: it is based on the suppression of its domestic demand and the growth of exports, rather than on strong productivity growth and technological progress.

Furthermore, it is also shown below that, largely at the behest of Germany, the EU as a whole has enforced harsh policies of austerity and wage repression as well as deregulation of markets and privatisation presumably to ensure growth. By doing so it has avoided institutional changes that might have ameliorated its internal weaknesses. On the contrary, the institutional changes that have taken place in the 2010s have sought to solidify German ascendancy and to pass the cost of dealing with the crisis mostly onto peripheral countries.

Far from strengthening cooperation and making for stability, the policies of the EU have created an impossible situation in Europe. Germany, the largest economy, has an entrenched competitive advantage and vast external surpluses, while peripheral countries and even countries of the core are finding it hard to ensure growth and to earn external surpluses to pay their debts. German economic domination appears to be firmly established within the EMU, contributing to the persistent weakness of the external accounts of peripheral countries as well as undermining core countries. The EMU is set on a course that is dictated by the political and economic leadership of Germany in Europe. It is an illusion to expect the monetary union to alter the current state of affairs from within, given the nature of its institutions.

Peripheral and core countries require a wholesale change in policy that involves lifting the constraint on aggregate demand, and furthermore allows for the generation of external surpluses. On this basis they could also adopt longer-term policies to strengthen productivity growth, employment and income. However, such a radical reconstruction of policy would be impossible within the EMU and it would require confronting the existing EU directives on investment and trade. Even so, to avoid a slow and painful decline the countries of Europe should take action to rid themselves of the monetary straightjacket and attendant German domination. A path could then be opened to growth and solidarity.

Download the full paper: Lapavitsas English Il Ponte.

by Herman Michiel

With this contribution Herman Michiel answers to Andy Storeys “The Myth of Ordoliberalism“, which was recently published in this blog.

It was a good idea of Andy Storey to circulate his article “The Myths of Ordoliberalism” in broader circles than the academic ones [1]. Ordoliberalism is one of those concepts by which the ‘ordinary’ left militant may be overawed, making her/him think to miss basic knowledge on the nature of the European Union. Andy’s paper is sufficiently readable by the broader public to temper such fear. And that it contradicts the opinion of a (also by me) widely lauded left critic as Wolfgang Streeck proves how important it is to continue our debates within the Left.

In this short note [2], I want to show that discussing the role of ordoliberalism in the current European context is not just a matter of debate among political scientists. Misrepresenting and overstressing its significance may result in an erroneous political perspective, which takes as the main target not the neoliberal policies of the European Union and the governments of the member states, but the ‘ordoliberal order’ which one of them wants to impose on the others. This at least is the impression I got after reading “Europe, état d’urgence” by Bruno Odent, a journalist of the French communist L’Humanité [3]. Already the subtitle of the book hints to the main thesis of the author: “La régression nationaliste, consécration de l’ordo-libéralisme”. One could indeed summarize the book as stating that in the last few years, Europe came in a precarious position, nationalism overwhelming the continent, now also in Germany with AfD (Alternative für Deutschland) and Pegida. According to the author, the reason is that ordoliberalism turned into ‘national-liberalism’ under the pressure of economic competitivity and austerity policies.

For Bruno Odent, it is beyond doubt that the post-war West German economy and society were “progressively configured along the lines of the ordoliberal ideal”, in the first place by Ludwig Erhard, the first economic affairs minister and later chancellor of the FRG (p. 22). Even a superficial knowledge of the ordoliberal theses makes one wonder how they could be reconciled with e.g. the not really market dictated institution of German Mitbestimmung , or with the longtime rather protected position of German companies, financed by German banks rather than by the market. Looking for some clarification on this ‘riddle’, I came across the paper by J. Hien, “The ordoliberalism that never was” [4]. And then, I found Andy’s analysis (quoting also Hien’s paper), fully confirming the impression that ordoliberalism is certainly an elaborate theoretical corpus, but much less an active force in German and European policy formation than often claimed.

Odent recognizes that ‘pure’ ordoliberalism was watered down by trade union agitation in Germany and the existence of the ‘socialist camp’ internationally, but according to him, after the disappearance of the Soviet Union and after German reunification, the German ruling class could free ordoliberalism from these restrictions.

All this could seem a matter of personal interpretation and appreciation. However, Odent’s use of the ordoliberal argument with respect to the course of EU policy risks to reduce the latter to a power game between states, rather than a class conflict between Labour and Capital. Let me first mention an impression of stylistic nature. Odent uses systematically the word ‘Konzern’ when speaking about German companies. No specific meaning is given of the term, and there is no indication what difference there is between a German Konzern and other capitalist companies in Europe or elsewhere. But the use of the German word in a French text gives it a sinister flavour; that at least is the impression it makes on me. As if Siemens or Volkswagen were sharks when compared to ‘doves’ as Dassault, Areva, Total, … A similar effect (at least on me) has the frequent use of the word ‘germanique’ rather than ‘allemand’; that’s only one step away from the even more suggestive word ‘teutonique’, which fortunately is not used.

This is not to suggest that the author gives a nationalist turn to the often dominant role of Germany in European matters. He clearly shows how the German working class is the victim of the Hartz reforms, the plunder of East Germany by the Treuhand Anstalt, etcetera. But his ordoliberal reading of the course of European policy in the last thirty years leads to a misleading interpretation. Instead of a worldwide strategy of capitalist forces to restore profitability (usually called neoliberalism), he sees the “hegemony of German capital on the continent and the eurozone” (p. 28); he ignores the neoliberal turn of the EU starting with the Single European Act (1986) and implemented under Commission president Jacques Delors, whose name is nowhere mentioned. No mention either of the excellent service offered by the European Round Table of Industrialists in the establishment of Europe’s neoliberal ‘constitution’; true enough,this Round Table brought together the cream of European capitalists, rather than German ordoliberals.

As one can expect, reducing recent European history to the development of the ordoliberal Spirit is not without problems. Germany is certainly the strongest member state, but why would other states always bend to the ordoliberal hegemon? Odent gives a not very convincing argument: Germany has at it’s disposal a “superior technocratic agency” (p. 29). The link between ordoliberalism and the progress of nationalist and xenophobic forces also poses some problems. As already mentioned, according to Odent, ordoliberalism turned into ‘national-liberalism’ and produced AfD and Pegida. However, this was 20 years after ordoliberalism could freely develop after German unification, whereas the French Front National had it’s first successes years before the Wende. Odent even sees the fiscal programme of the FN “formatted with reference to ordoliberalism” (p. 117).

To conclude, Bruno Odent’s book illustrates in an almost caricatural way that interpreting political and social history as the development of a corpus of ideas, in particular recent European history as a realisation of the ordoliberal programme, may lead to considerable inconsistencies.

REFERENCES

[1] See http://lexit-network.org/the-myth-of-ordoliberalism

[2]I wrote a longer comment on Odent’s book, but in Dutch. See Boekvoorstelling: Bruno Odent, “Europe, état d’urgence”, March 11, 2017, http://www.andereuropa.org/boekvoorstelling-bruno-odent-europe-etat-durgence

[3] Bruno Odent, Europe, état d’urgence – La régression nationaliste, consécration de l’ordo-libéralisme, Le Temps des Cerises, Montreuil, 2016 (15€, 230 pages).

[4] Available at https://www.researchgate.net/publication/283595131_The_ordoliberalism_that_never_was

The following text on the Euro and the concept of money is a transcription of the conference given by Jorge Amar at the Attac Summer University for Social Movements held in Toulouse in August 2017. Jorge Amar is Economist, Chair of the Spanish Economic Sovereignty Association (APEEP) and Research Scholar at Binzagr Institute for Sustainable Prosperity.

What is wrong with the Euro? To answer this question, we need to understand first what money basically is, where it comes from, how it is created and destroyed.

There are two main theories on money: The market-metalist approach (“One money, one market”) on which the European Monetary Union (EMU) has been inspired, and the state-chartalist approach (“One currency, one nation”) which explains the usual situation where a currency corresponds to one country.

The Market-Metalist Approach to Money

For the market-metalist approach, money is only a veil over market and production: As a means to reduce the opportunity cost, for the followers of this approach money is always in short supply, just like real resources are.

The linkage of something material with our common idea of money is immediate: You can touch bills and coins; you can store them; there is a finite amount of ounces of gold or silver; it is hard to find –And you need to earn it or get it by trade or plunder. Money has value because it is scarce.

Our daily experience as money users reinforces this view: We can´t create money out of thin air. Or can we? What if we could?

The father of “Reaganomics” in Europe, Robert Mundell, began from market-metalist notions of reducing the opportunity cost and sought to displace the dollar as the main international reserve currency. Supported by the Theory of Optimal Currency Area, Mundell proposed the creation of a new currency zone in Europe.

In the 1970´s, the EEC commissioned two critical reports analysing the possibility of creating a common currency (for 6 countries). Reports by Werner (1970) and MacDougall (1977) were drafted before the virus of monetarism and the new monetary consensus infected the academy and the economic institutions. Both established one condition ­absent from the European Monetary Union– which is the existence of a common fiscal authority under democratic control. Without this, a union would necessarily be dysfunctional. But, fatally, the Euro could not afford to wait until this happened…

How could this condition be forgotten? Delors’ Commission deliberately ignored this condition –which would have prevented the monetary union from coming into existence in the first place– due to the resistance of the national governments to surrender power to any federal institution. In order to minimize any dissent on the monetary union, Delors’ Commission (at the suggestion of Delors himself) decided to exclude the ministers of finance and economy from the debate: The committee would “consist of the governors of the central banks, who were more independent than governments”[i]. As a consequence, the European Monetary Union was constructed without a common fiscal authority, with no European treasury, a dwarf budget (and this only for the EU as a whole), and with a Central Bank independent from democratic control and solely responsible for price stability (suppressing inflation by any means necessary). Crucially, the European Central Bank was expressly not conceived as a lender of last resort.

Back in 1992, the “wise man” of the UK´s Treasury, Wynne Godley, described the situation as dollows: “The central idea of the Maastricht Treaty is that the EC countries should move towards an economic and monetary union, with a single currency managed by an independent central bank. But how is the rest of economic policy to be run? As the treaty proposes no new institutions other than a European bank, its sponsors must suppose that nothing more is needed. But this could only be correct if modern economies were self-adjusting systems that didn’t need any management at all.” (https://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that)

Still, for Euro supporters, even if the Optimum Currency Area conditions do not exist at all, what is crucial about the Euro is what Robert Mundell asserted: “It puts monetary policy out of the reach of politicians(…) [And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business.(…) Monetary discipline forces fiscal discipline on the politicians as well.” (The Guardian https://www.theguardian.com/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro )

The State-Chartalist Approach

For the state-chartalist approach, by contrast, money is no object. It is a public institution that is politically determined. Beyond the economists, most experts agree: A currency is a unit of account that the authority (the issuer) uses to command and mobilize the existing real resources in accordance with its goals.

For a issuer of currency, currency is never in short supply: Only real resources are. You can fall short of workers or materials to build a house; but you cannot fall short of the inches or meters (measurement units) needed to do it. Money is merely accounting information. It comes from nowhere and goes nowhere. In a sports match, for instance, Do we ask ourselves where the points on an electronic scoreboard come from or where they go to? Do we need to collect the points from somewhere? No. We merely mark up and down points as needed.

Money is the way we measure debt relations and we can establish an infinite number of debt relations between two agents. Therefore, money is not difficult to make. The real point is whether money is accepted. Because each time we write a check, each time we record one “I owe you”, we are creating money.

Why is currency (the money of the government) accepted, then? Because we need it to pay taxes (to redeem our tax obligations, destroying the currency in the process), and government can tax us every time it wishes to. So, to chartalists, there is a hierarchy of moneys that expresses its degree of acceptability.

On the top of that hierarchy is the non-convertible fiat currency. All debts are referred to it, all debts are cancelled by it. The issuer of the currency holds a power over the economic life that –from our point of view as users of money– is difficult to fathom. The issuer of money cannot go bankrupt. It can afford anything there is on sell in its own currency. In fact, the ECB knows this very well: It buys 80,000 millions of euros a month that are created from thin air!

Indeed, money and currency are created from thin air. But something has to back the up. In the case of a piece of paper with the words “I owe you an hour of work,” it is just my disposition to work and my ability to do it. In the case of the currency, it is the government’s capability to tax and to force people to comply with the law. Taxes, then, are important not because they fund anything (for the issuer of money, they do not), but because they make the currency valuable. The Euro severs this critical relation between the European nations that have accepted to join the monetary union and their currencies. De facto, these countries have adopted a foreign currency that is issued by a supranational bank, giving that bank a power over them that Greeks (and others) sadly know very well.

Wynne Godley explained the structural failure of the Euro project as follows: “The power to issue its own money, to make drafts on its own central bank, is the main factor that defines national independence. If a country gives up or loses this power, it acquires the status of a local authority or colony. Local authorities and regions obviously cannot devalue. But they also lose the power to finance deficits through money creation while other methods of raising finance are subject to central regulation. Nor can they change interest rates. As local authorities possess none of the instruments of macro-economic policy, their political choice is confined to relatively minor matters of emphasis – a bit more education here, a bit less infrastructure there. I think that when Jacques Delors lays new emphasis on the principle of ‘subsidiarity’, he is really only telling us that we will be allowed to make decisions about a larger number of relatively unimportant matters than we might previously have supposed. Perhaps he will let us have curly cucumbers after all. Big deal!”

Alternatively, the former member of the Bank of England‘s Monetary Policy Committee, Charles Goodhart, warns:

“The key relationship is the centrality of the link between political sovereignty and fiscal authority, on the one hand, and money creation, the mint and the central bank, on the other.(…) Historically, nation states have been able, in extremis, (whether in the course of war or other – often self-induced – crisis), to call upon the assistance of their money-creating institutions, whether the mint (..), a Treasury printing press, or the Central Bank. Whenever states (as in the USA or Australia), provinces (as in Canada), cantons, länder, etc., have joined together in a larger federal unity, both the main political, the main fiscal and the monetary powers and competencies have similarly emigrated to the federal level. The Euro area will not be like that. In particular, the participating nation states will continue to have the main fiscal responsibilities; but in the monetary field, their status will have changed to a subsidiary level, in the sense that they can no longer, at a pinch, call upon the monetary authority to create money to finance their domestic national debt.”

The crucial importance of monetary sovereignty is well-known even to economists of the ECB, as shown in this piece: “In an economy with its own fiat currency, the monetary authority and the fiscal authority can ensure that public debt denominated in the national fiat currency is non-defaultable, i.e. maturing government bonds are convertible into currency at par. With this arrangement in place, fiscal policy can focus on business cycle stabilisation (…). However, the fiscal authorities of the Euro area countries have given up the ability to issue non-defaultable debt. As a consequence, effective macroeconomic stabilization has been difficult to achieve.” (https://www.ecb.europa.eu/pub/economicresearch/resbull/2017/html/ecb.rb170629.en.html

In short, as a result of the Euro, we are now living in a dystopia, a nightmare designed by “free market” ideologists. The great French economist Alain Parguez describes the situation as “a pure folly denying all natural principles, which transformed the States into agents of speculation ready to ruin their people to save the banks’ balance sheets(…) EMU was the final outcome of a plan which started in the interwar period aiming at a totalitarian New Order inspired by the philosophy and backwards quasi-agrarian economics of Friedrich Hayek”.

Thanks for your attention.

[i] Cited in Mitchell, B. Eurozone Dystopia. Group Thinking and Denial on a Grand Scale, Edward Elgar (2015)

We kindly thank the author for allowing Lexit to publish this piece, as well as Scott Fergurson and Official Sworn Tanslators (Stierleandco.) for editing

By Asbjørn Wahl, Norwegian trade union and political activist

The centre-left failed in getting rid of the so-called blue-blue government at the parliamentary elections in Norway on 11 September. The Labour Party was the main loser, while small parties on the centre-left advanced slightly. However, the parliamentary basis of the right-wing government has started to unravel. A deeper political crisis may be looming in the background, while social contradictions are on the raise. Social Democracy followed the general European downward tendency (except Britain).

First, some basic facts on the Norwegian electoral system. There are 169 members of parliament, who are elected through proportional representation. The 19 counties serve as the electoral constituencies. There is a threshold of 4 percent to qualify for the proportional distribution of representatives, although it is possible to win direct representation from the counties also if the national gain of votes is below the threshold. Two political parties won representation in that way.

In the previous four-year parliamentary period, Norway was governed by a minority government formed by the Conservative Party and the so-called Progress Party (a right-wing populist party). Therefor the name blue-blue government. It was supported by two other parties – the Christian Democratic Party and the so-called Liberal Party (which in reality is neo-liberal, but with a touch of green). This support was established through a formal agreement, but to secure a parliamentary majority for the government, it was sufficient with support from only one of those two parties.

Norway has seen an increasing political fragmentation over the last years. After the current elections, there are 9 political parties in Parliament. The four on the right are mentioned above, while the centre-left opposition includes the Labour Party, the Centre Party, the Socialist Left Party, the Green Party and the Red Party. As in many other countries, however, the entire political spectre has moved to the right during the neo-liberal offensive from around 1980.

For the blue-blue government, two important things changed with the last election. The Christian Democratic Party says that it is no longer willing to sign a contract of support to a government in which the right-wing populist party takes part; and the government is dependent on both the two former supportive parties to achieve majority in Parliament. In other words, the Government’s political basis is much weaker than in the previous period, something which opens the possibility of a break-down of the blue-blue government. Since Norway does not have the possibility to call an election in a mid-parliamentary period, this can lead to a lot of political turbulence or an open political crisis.

Many people expected a centre-left victory at this election, since the blue-blue government had carried out many unpopular policies. The discontent was particularly strong in the trade union movement. However, the Labour Party’s election campaign proved to be quite disastrous under its new leader, Jonas Gahr Støre. One of the big “mistakes” was a flirt with the so-called political centre (centre right), that is with the two political parties which had supported the blue-blue government and by that had also supported attacks on the labour law and other economic and social gains for the working class. Further, the Labour Party was not even able to take a clear stand against the on-going and very unpopular commercialisation of core services in the Norwegian welfare state. Neither did the party come up with a credible policy against the undermining of labour market regulations, which to a high degree is promoted by the increasingly authoritarian, neo-liberal European Union. This is a policy which in Norway is being implemented through the European Economic Area (EEA), an agreement which is strongly supported by the Labour Party.

The right-wing populist party, on the other hand, was successful in setting the agenda for much of the election campaign, first and foremost by playing the anti-immigration card and by focussing on identity policies. The Labour Party was unable to respond to this with the only measures which can really confront such right-wing policies, namely a clear class policy. This did not necessarily happen because the party’s leadership is unwilling to do so, but simply because class politics are strongly in deficit in today’s social democracy – deeply rooted as it still is in a social partnership ideology.

While social democracy is on the verge of breaking down, and even being eradicated, in big parts of Europe today (Greece, Iceland, Ireland, the Netherlands, France), much suggests that also the Norwegian, actually the Nordic, social democracy, despite its fame as the creator of the Nordic welfare model, is now following the downward course of their European sister parties, although more gradually. Power relations does not seem to be part of the actual social democratic narrative – their ‘raison de vivre’ is obviously to administer capitalism within the limits given in the at any time existing power relations – not to shift the balance of power. Thus, the right-wing political offensive is not really being confronted by social democracy.

The golden age of social democracy was based on a class compromise and a balance of power which made it possible to move forward socially within the framework of a regulated capitalism (i.e. the welfare state). The material basis for such policies is now coming to an end with the deep crisis and stagnation of capitalism, and the subsequent neo-liberal offensive. The social democratic attempt to re-establish the class compromise, with its successful tripartite cooperation and social dialogue, even without class mobilisation and confrontations, is an illusionary project in the current political conjuncture.

Maybe the Norwegian election is just another sign that the era of social democracy is now coming to an end.  All those, all over the world, who has been looking at the Nordic Model as their final aim, may have to rethink and reassess their policies and strategies. But who on the left is it that can now provide us with a class policy with perspective?

Norwegian parliamentary election in figures

Party                                               Percentage          Gain/loss from    Number of MPs

                                                         votes                    last election        

The right-wing coalition:

The Conservative Party                         25,0                      -1,8                          45

The Progress Party                                15,2                      -1,2                          27

The Liberal Party                                     4,4                      -0,9                            8

The Cristian Democratic Party                4,2                      -1,4                            8

The centre-left opposition:

The Labour Party                                  27,4                      -3,5                          49

The Centre Party                                   10,3                     +4,8                          19

The Socialist Left Party                          6,0                     +1,9                          11

The Green Party                                      3,2                     +0,4                            1

The Red Party                                         2,4                     +1,3                            1

Following Paris, Madrid, Copenhagen and Rome, the 5^th Plan B summit will take place on the 21^st and 22^nd of October 2017 in Lisbon, claiming back democracy for the peoples of Europe and asserting democratic cooperation and solidarity as true alternatives to the increasing democratic and social deficit imposed by the Lisbon Treaty 10 years ago. In the Lexit Blog we document the call for this conference.

The Lisbon Treaty, together with the Single European Act, Single Market and all the principal directives implementing it (e.g. Posted Workers and Bolkestein directives) is a cornerstone of the contradiction between the neoliberal European integration and European democracies guaranteeing the full enjoyment of civil, political and social rights to the people. The Lisbon Treaty imposed the exact same project of concentration of power and weakening of democracies which was rejected by the French and Dutch ‘NO’ in the 2005 referenda.

In 2015, another historic referendum outcome was bluntly overturned, by a direct violation of the popular mandate and of popular sovereignty: the 5th July glorious 61.3% Greek ‘NO’ to the extreme austerity and antidemocratic measures imposed by the European Union Institutions and the IMF. A coup against the Greek people’s NO was effectuated by the European Commission and the ECB, using the denial of liquidity and financial strangulation as means of extortion. Ever since July 2015, the European Union, the IMF and the Greek Government have been imposing on the Greek people the exact same measures which were rejected by the Referendum and have continued subjecting the country and the people to a Debt which has been found to be illegal, illegitimate, odious and unsustainable by the Parliament’s Truth Committee on Public Debt. The coup against the Greek people is a coup against democracy in Europe, to which we are obliged to react, resist and respond with a solid political plan. And indeed, it was after this coup that the Plan B initiative was launched to protect the European peoples, restore democracy in Europe and ensure prosperity and equality for European societies.

The rules of the Stability and Growth Pact and now the Fiscal Compact are one of the main reasons for inequality and economic failure because they deny democracies the financial capacity to implement key social and development policies. Inside and outside the euro-zone, austerity and mercantilism based on devaluation of labour costs deepens social fractures and inequality in Europe. Fed by this social destruction, another enemy of democracy is growing: the ultranationalist, racist and xenophobic forces.

In view of this social and political disintegration, former social-democratic and conservative parties insist on the recipe for more antidemocratic integration, more austerity control over national budgets, and more attacks to labour and social policies, creating unviable conditions for the living and the future generations and depriving the youth from the prospect to live in liberty, dignity and prosperity.

CETA and other similar free trade agreements, supported by conservative and social-democratic parties, are the Trojan horse that brings social and environmental offshore virus where democracies are subordinate to the power of corporations and investment funds.

The failure of European Union treaties and institutions is not the failure of Europe and its peoples. European democracies need an international alliance of progressive, democratic, popular forces, trade unions and social movements struggling for a break with EU treaties and for building a new cooperation that serves the interests of our peoples and protects democracy and civil, political, social, economic and environmental rights. A cooperation that promotes international peace through the rejection of militarism and the armaments industry, solidarity with migrants and refugees, and the struggle for an international development of high democratic, social and environmental standards.

The Plan B summit in Lisbon will be an opportunity to further deepen the alternative pathways developed at the Paris, Madrid, Copenhagen and Rome Summits. The starting point of our analysis are the current EU treaties that are a straightjacket of our democracies, our societies and economies. We want to initiate and support civil movements of disobedience and win majorities in each of our countries to ensure a new European framework which allows: social development policies that break with the power of the European Central Bank (ECB), direct loans to the states, redistribution of public investment, restructuring public debts and with this eliminate debts that are illegitimate, illegal, odious and unsustainable.

If this plan A fails, due to the predictable hostility of the EU institutions, the outcome will not be capitulation to Brussels. In such case, that country or countries should open the way for a plan B that will make possible other forms of European cooperation, restoring sovereignty and setting up new mechanisms for peoples monetary and economic decision.

The great anti-austerity mobilizations and the social struggles that mobilize peoples throughout Europe and beyond are a key force in our common cause for democracy, social and environmental justice. Civil disobedience to the impositions of permanent austerity is part of the path to a major social mobilization and democratic resistance.

The progressive political parties, trade unions, feminists, environmentalists, human rights advocates, social movements and activists who have gathered in the fora of Plan B are united: between saving the EU and the Euro and saving our peoples from the clutches of austerity, we will always choose the social and democratic rights of our peoples.

by Charles Woolfson

One of Britain’s most celebrated entrepreneurs and an avid supporter of Brexit in the business community, the inventor Sir James Dyson, has argued that World Trade Organization tariffs are not a barrier to financial success or profitable trading with Europe, nor have they prevented his technology company from achieving record financial results. As Sir James put it, the tariffs were “tiny penalty to pay” compared to other taxes such as corporation tax (The Guardian, 27 March 2017). Dyson’s announcement of new investment of 2.5 billion pounds, in order to build a research and development campus in the UK has been enthusiastically welcomed by Theresa May as an example of investor confidence in the Britain’s post-Brexit prospects. Less publicized is the announcement that Dyson is also to invest in Singapore, not just in new production facilities, but in associated R&D employing high skill graduates.

Extending the global reach of Dyson products, including “bagless” vacuum cleaners and state-of-the-art hair dryers, initially came at the price of the closure of manufacturing facilities in England in the early 2000s, with the controversial loss of 800 production jobs, about half the then total UK workforce (The Telegraph, 6 February 2002). The success of Dyson’s business model has relied on low-cost assembly labour (entailing a fraction of the wage costs of UK), first in Malaysia, then the Philippines and more recently, in Singapore where the company manufactures digital motors at its Tuas facility and is currently expanding. ‘Offshoring’ initially permitted Dyson overall savings reportedly of about 30 percent on production and distribution costs (Hollinshead et al, 2002: 263). Today the company reports that sales rose 45 percent year-on-year for 2016, while underlying profits for the year rose a staggering 41 percent.

Accurate figures of the current total East Asia workforce are hard to obtain, but are estimated to be above four thousand in Malaysia and more than one thousand in Singapore (Nikkei Asian Review, 19 May 2016). The wages and working conditions that pertain in these facilities are unknown. The company, known for its secrecy, refused to participate in a detailed survey of 56 electronics manufacturers active in the region (Nimbalker et al., 2016). Dyson corporation has however reported to the UK authorities under the requirements of the UK Modern Slavery Act that there is no forced labour in its establishments and that it utilizes an ethical database, supplier training, and audits from independent third party bodies. There also exists a third party “hot line” for worker complaints (although not independent trade unions) (Dyson Slavery and Human Trafficking Statement, 2017). All would appear to be good news for East Asia, but as a model for a post-Brexit Britain, it perhaps leaves something to be desired.

The “Asian dimension” of Brexit as has been largely ignored as an explicit policy concern, excepting the assiduous courtship by Prime Minister Theresa May (and offer of inducements to) East Asian car manufacturing companies such as Nissan and Toyota, and electronics companies such as Hitachi, to remain in Britain. The Conservative government is seeking to reassure worried investors that Brexit will not be accompanied by the desertion of UK facilities by foreign multinationals with the loss of jobs that would entail. Japanese investment in the UK is worth more than 40 billion pounds and accounted for nearly half of Japanese direct investment intended for the EU in 2015, while creating 144,000 manufacturing jobs (MOFA, 2016). Japanese business has sought “reassurances” that the UK will remain in the European customs union and single market, and guarantees the continuing free flow of workers between the UK and the rest of the continent. As the Japanese Ministry of Foreign Affairs has put it, the UK must maintain at least “the current parameter of the immigration system” and indeed, “the inflow of skilled labour from outside of the EU needs to be liberalized” (MOFA, 2016: 12). With refreshing frankness, the Japanese government has articulated the demands of business: “With regard to unskilled workers, Japanese businesses rely on inexpensive labour from Eastern Europe in the manufacturing and agricultural industries in the UK”. The signing of a future Japan-EU Economic Partnership Agreement in 2017 has added leverage to official demands “that Japanese business and financial interests should in no way be jeopardized by the Brexit and its consequences”, while a leading spokesperson for Japanese finance capital has openly argued for a post-Brexit environment that offers “[more] flexible and privileged treatment with regard to hiring and firing employees, and on taxation than the continental EU countries” (The Guardian, 26 August 2017). Accordingly, Prime Minister May embarked on a three-day visit in the summer of 2017 to offer reassurances to Japanese business although with seemingly little effect, while government ministers have been dispatched around the world to sound out future trading prospects.

In addition to the foreign investment dimension of Brexit, there is the question of future trading agreements after Britain has left the EU. Having not negotiated independent trade deals during its forty years of EU membership, the UK is faced with something of a negotiating hurdle, in the shape of replicating the myriad existing agreements between the EU and ‘third countries’. The EU free trade agreement with South Korea entering into force in 2011 “is the most comprehensive free trade agreement ever negotiated by the EU” (Eurostat, 2015). South Korea however has possibly the largest precarious workforce of any advanced industrial society. The expedient solution of the UK government is to “cut and paste” existing EU agreements into UK equivalents, until such time as post-Brexit trade deals can be negotiated independently. This may prove problematic as the Japanese example illustrates, insofar as it may offer an opportunity to leverage even greater concessions from Britain on regulatory standards (Politico, 30 August 2017).

European Commission President Juncker’s “State of the Union” address in September 2017 to the European Parliament was intended to signal a new confidence in the European project (“the wind is in our sails”). Juncker’s agenda is for deeper European integration beyond Brexit with greater centralization of European decision-making and supervision of finance and banking, and extension of the eurozone. Trumpeting those “partners across the globe … lining up at our door to conclude trade agreements with us”, including Australia and New Zealand, countries that would be prime candidates for trading agreements with a post-Brexit Britain, Juncker has attempted to position the European Union as the global champion of free trade (Juncker, 13 September 2017). As it stands, the Commission has insisted that no UK trade deals, least of all between Britain and the EU, can be signed or even discussed until after preliminary negotiating conditions set by the Commission have been met. Presuming that point is eventually reached to the satisfaction of the Commission, the concern is that labour standards may provide a convenient bargaining counter in negotiating future trade deals for a Brexit government, a concern already expressed by critics of existing trade deals reached by the Commission (Politico, 12 September 2017).

Here the “Singapore model” may begin to assume a new reality. If wage costs can be driven down sufficiently and how far down that might be is a matter of speculation, then Britain could indeed operate as an offshore entity exploiting a competitive advantage. This is a position enthusiastically promoted by neoliberal proponents of a post-Brexit Britain under a regime of unilateral free trade, essentially guaranteeing regulatory regime competition in a “race to the bottom” (Dowd, 2017).

Fears of regulatory competition have already been expressed in European circles. Both Donald Tusk, President of the European Council, representing the combined EU heads of government, and Michel Barnier as chief negotiator for the European Commission, have separately warned that a future UK trade deal with Europe must “ensure a level playing field, in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through, inter alia, fiscal, social and environmental dumping” (The Telegraph, 31 March 2017; The Independent, 20 July 2017). UK Chancellor Philip Hammond has denied that he wants to turn the UK into a deregulated, Singapore-style economy arguing, “I often hear it said that Britain is considering participating in unfair competition in regulation and tax. That is neither our plan nor our vision for the future….”. A post-Brexit Britain, he has claimed, will maintain a “social, economic and cultural model that is recognizably European” (The Telegraph, 30 July 2017). This raises the question of what a “recognizably European” model for the UK, with its already loose labour laws and labour flexibility, could possibly entail.

The more pessimistic “Singapore scenario” for a deregulated post-Brexit Britain raises the unwelcome prospect of which entity might arrive at “the bottom” first. Will it be the UK or a neoliberal European Commission, notwithstanding the bluster over the need to avoid regulatory competition from Tusk and Barnier? The European project is reducing labour standards throughout the remaining twenty-seven member states in its post-crisis pursuit of economic renewal. French premier Emmanuel Macron’s declaration of legislative war “by decree” on trade union collective bargaining arrangements in the pursuit of easier “hire and fire” on behalf of employers, is simply the latest episode of attacks on labour orchestrated at national level, but with the encouragement of European masters, especially the German government (Bloomberg, 28 June 2017).

A Conservative post-Brexit UK government, increasingly enmeshed in bilateral but asymmetrical trade deals with countries around the globe, in pursuit of economic survival at any price, will be similarly tempted to renew and intensify attacks on labour standards and organized trade unions. Future free trade agreements, for example, that currently being floated with the US, could require that the UK loosen its environmental and safety requirements, and surrender control over the setting of key national standards to international arbitration bodies (Bloomberg, 26 July 2017). These standards, including those on labour, are vulnerable in a context of weak global governance of labour standards. This may be something that a Conservative government would happily contemplate, but not so hopefully, a future Corbyn-led Labour one. In that sense, a progressive political mobilisation against austerity that privileges the defence of labour standards at a national level in a sovereign democratic project for Britain of today becomes all the more urgent for at least one possible post-Brexit Britain of tomorrow.

References

• Bloomberg. 28 June 2017. Macron Confronts the ‘Mother of All Reforms’. Gregory Viscusi. https://www.bloomberg.com/news/articles/2017-06-28/macron-confronts-the-mother-of-all-reforms (accessed 29 June 2017).
• Bloomberg. 26 July 2017. U.K. Won’t Accept Chlorine-Washed Chicken in U.S. Trade Deal. Thomas Penny and Charlotte Ryan. https://www.bloomberg.com/news/articles/2017-07-26/u-k-won-t-accept-chlorine-washed-chicken-in-u-s-trade-deal (accessed 26 July 2017).
• Dowd, K. 2017. A Trade Policy for a Brexited Britain. Economists for Free Trade. IEA Discussion Paper, No. 85. August. https://iea.org.uk/wp-content/uploads/2017/08/A-Trade-Policy-for-a-Brexited-Britain-D2.pdf (accessed 28 August 2017).
• Dyson. 2017. UK Modern Slavery Act Statement. Dyson Slavery and Human Trafficking Statement 2017. https://www.dyson.co.uk/community/modern-slavery-act-statement.aspx (accessed 23 July 2017).
• Eurostat. 2015. South Korea-EU – trade in goods. EU-South Korea trade relations boosted by the recent free trade agreement. Statistics in focus 1/2015. http://ec.europa.eu/eurostat/statistics-explained/index.php/South_Korea-EU_-_trade_in_goods (accessed 6 September 2017).
• The Guardian 27 March 2017. Dyson plays down hard Brexit concerns as company posts £2.5bn record sales. Graham Ruddick. goo.gl/waqGPM (short URL). (accessed 27 March 2017).
• The Guardian. 26 August 2017. Japan to seek Brexit reassurances from Theresa May. goo.gl/4ym4zF (short URL). (accessed 28 August 2017).
• Hollinshead, G., Nicholls, P. and Tailby, S. eds. 2002. Employee Relations. Harlow: Financial Times/Prentice Hall.
• The Independent. 20 July 2017. Brexit: EU won’t sign trade deal if UK starts deregulation race to the bottom, Brussels warns. Jon Stone. http://www.independent.co.uk/news/uk/politics/brexit-eu-trade-deal-workers-rights-tax-haven-michel-barnier-environmental-legislation-a7851761.html (accessed 24 July 2017).
• Juncker, J-C. 2017. President Jean-Claude Juncker’s State of the Union Address 2017. European Commission Press release. Brussels 13 September 2017. http://europa.eu/rapid/press-release_SPEECH-17-3165_en.htm (accessed 14 September 2017).
• MOFA. (Ministry of Foreign Affairs of the Government of Japan). 2016. Japan’s Message to the United Kingdom and the European Union. http://www.mofa.go.jp/files/000185466.pdf (Accessed 17 September 2016).
• Nikkei Asian Review. 19 May 2016. British vacuum-maker Dyson is cleaning up in Asia. Sam Nussey. http://asia.nikkei.com/magazine/20160519-China-Inc.-uncovered/Business/British-vacuum-maker-Dyson-is-cleaning-up-in-Asia?page=2 (accessed 21 July 2017).
• Nimbalker, G. Mawson, J. and H. Wrinkle. 2016. The Truth behind the Barcode: Electronics Industry Trends. 9 February 2016. Baptist World Aid Australia. https://baptistworldaid.org.au/wp-content/uploads/2016/06/Feb16-Electronics-Report-Aus-version-FINAL.pdf. (accessed 21 July 2017).
• Politico. 30 August 2017. UK wants to copy and paste EU trade deals after Brexit. Simon Marks. http://www.politico.eu/article/uk-wants-to-copy-and-paste-eu-trade-deals-after-brexit/ (accessed 9 September 2017).
• Politico. 12 September 2017. Juncker’s risky bid to rescue EU trade policy. http://www.politico.eu/article/juncker-trade-sotu-risky-bid-to-rescue-eu-trade-policy/ (accessed 14 September 2017).
• Telegraph, The. 6 February 2002. 800 jobs to go as ‘sad’ Dyson moves factory to Far East. http://www.telegraph.co.uk/finance/2752100/800-jobs-to-go-as-sad-Dyson-moves-factory-to-Far-East.html. (accessed 21 July 2017).
• Telegraph, The. 31 March 2017. EU will ban UK from cutting tax or scrapping regulation as price of trade deal. http://www.telegraph.co.uk/news/2017/03/31/brexit-donald-tusk-article-50-eu-watch-live/ (accessed 23 July 2017).
• Telegraph, The.. 30 July 2017. Philip Hammond: UK to remain ‘recognisably European’ post-Brexit. http://www.telegraph.co.uk/news/2017/07/31/philip-hammond-uk-remain-recognisably-european-post-brexit/ (accessed 30 July 2017).

by Bill Mitchell and Thomas Fazi

Let’s face it: national sovereignty has become irrelevant in today’s increasingly complex and interdependent international economy. The deepening of economic globalisation – and the massive leaps achieved in the fields of mass transport, communications, technology – have rendered individual states increasingly powerless vis-à-vis the forces of the market. The internationalisation of finance and the growing importance of multinational corporations have eroded the ability of individual states to autonomously pursue social and economic policies – especially of the progressive kind – and to deliver prosperity to their peoples. Financial markets and mega-corporations today wield more power than governments – and can easily bring these to their knees. This means that our only hope of tackling the cross-border challenges of modernity, of taming the power of global financial and corporate leviathans, and of achieving any meaningful change, is for countries to ‘pool’ their sovereignty together and transfer it to supranational institutions (such as the European Union) that are large and powerful enough to have their voices heard, thus regaining at the supranational level the sovereignty that has been lost at the national level. In other words, to preserve their ‘real’ sovereignty, states need to limit their formal sovereignty.

If these arguments sound familiar (and persuasive), it is because they are espoused and reinforced on a daily basis by politicians and commentators, particularly in Europe. This became acutely evident during the pre- and post-Brexit debate. A simple Google search for the words ‘Brexit’, ‘sovereignty’ and ‘delusion’ yields hundreds of articles, including from allegedly progressive commentators, mocking voters for wanting to ‘take back control’ – for being too unsophisticated to realise that there is no sovereignty to take back, that ‘[i]n today’s integrated world it is a chimera to believe that one can establish some presumed long-lost economic sovereignty’,[1] and that ‘pooling decision-making and resources is the only way to stand up for self-interest’.[2] As Marlene Wind, director of the Center for European Politics at the Department of Political Science of the University of Copenhagen, summed it up: ‘[B]eing outside the EU with no influence on the rules that will limit and structure any states manoeuvring in a 21st century global society will most likely make [the UK] much less sovereign’.[3]

Before we take these claims to task, a point that needs to be stressed is that these ideas are far from new. In fact, they predate ‘today’s world’ – which allegedly poses an unprecedented challenge to national sovereignty – by a long shot, and have a much less politically correct pedigree than its proponents (which include many self-proclaimed progressives) are aware of. For instance, Joseph Chamberlain, Britain’s colonial secretary and a keen imperialist, had already consigned national sovereignty to the dustbin of history more than a century ago. ‘The days are for great empires, and not for little states’, he proclaimed in 1902. As the British historian Robert Tombs writes, ‘Chamberlain believed that people were better off in a supranational system directed by a high-minded elite’ (with Britain at the helm, of course).[4]However, the ideology of supranationalism and anti-sovereignism has much more embarrassing intellectual forefathers than Chamberlain. These include the Nazis and the Italian Fascists.

As the academic and author John Laughland recounts in his enlightening 1997 book, The Tainted Source: The Undemocratic Origins of the European Idea, the standard view of the Nazis as hysterical nationalists that exalted the nation-state is grossly mistaken. ‘[F]ar from exalting the nation-state, fascists generally hated it’, Laughland writes. ‘[T]he rejection of the sovereign nation-state as a viable political and economic entity on its own was explicit in Nazi and fascist thought’.[5] Even more interesting (and unsettling) is the fact that they rejected national sovereignty for the very same reasons that contemporary thinkers and commentators reject national sovereignty – for being ‘out of date’. Much like contemporary supranationalists, fascists were obsessed with modern technology and economic interdependence:

One of the main reasons why fascists were convinced that the nation-state was at an end was because of technological development. They felt that notions of national sovereignty were simply anachronistic in a modern world with an interdependent economy, international transport, and electronic telecommunications.[6]

Camillo Pellizzi, a leading fascist intellectual of the time, for instance, argued: ‘No single European nation can hope even now, still less in the future, to compete in military, economic or cultural matters with the great forces that are coming to birth or are already in being outside Europe’.[7] For this reason, the Nazis believed that ‘the development towards larger units’ was economically inevitable.[8] To that end, they proposed the creation of a new European economic order to do away with ‘the economic Balkanisation of Europe’.[9] Here the similarities between Nazi thought and the pro-Europeanism of our own day are the most striking. In 1940, Hermann Göring, president of the Reichstag, laid out a detailed plan for ‘the large-scale economic unification of Europe’.[10] This included the creation of a customs union, a single European market, a European clearing system and the establishment of fixed exchange rates between countries, ‘looking towards a European currency union’.[11] But Nazi plans for European integration were as political as they were economic. As Heinrich Hunke, president of the Berlin Union of Businessmen and Industrialists, said: ‘The necessity of a political order for the economic co-operation of peoples is recognised’.[12] The ultimate aim, according to Hunke, was the establishment of ‘political union in Europe’.[13]

As we know, the Nazis’ dystopian dream of a united Europe (under Germany) turned into a nightmare of death and destruction – one caused not by the irrationality and disorder of the nation-state system, as post-war federalists would subsequently argue, but rather by Hitler’s delirious attempt to do away with that very system. Of course, if the post-war system proved anything, it was that the Nazis’ claims concerning the obsolescence of the sovereign state were grossly misplaced: not only was the Fordist-Keynesian political-economic regime that took hold throughout the capitalist world after the war predicated upon the idea that ‘[t]he state could focus on full employment, economic growth and the welfare of its citizens, and that state power should be freely deployed alongside of, or if necessary, intervening in or substituting for market processes to achieve these ends’;[14] but the right of people to self-determination became one of the cardinal principles in modern international law, inscribed in the Charter of the United Nations (though often violated in practice), inspiring countless anti-colonial and national liberation movements throughout the underdeveloped world. As it turned out, national sovereignty was alive and well: through the institutions of the democratic nation-state, from the mid-1940s until the early 1970s, Western countries were able to achieve lower levels of unemployment, greater economic stability and higher levels of economic growth than ever before.

Yet, the ideology of supranationalism proved to be tenacious. In the late 1970s and early 1980s, Western politicians, particularly in Europe, started brandishing once again the same arguments used by the Nazis some decades earlier. Severe austerity policies in countries such as the UK (during the James Callaghan government) and France (during the François Mitterrand government) were justified by appealing to the ‘harsh economic realities’ and ‘inexorable logics’ of competitiveness and globalisation, which, it was claimed, seriously limited the economic sovereignty of individual states (and particularly their ability to pursue a progressive or redistributive agenda). Therefore, the reasoning went, countries had little choice but to abandon national economic strategies and all the traditional instruments of intervention in the economy – such as tariffs and other trade barriers, capital controls, currency and exchange rate manipulation, and fiscal and central bank policies. Instead they could only hope, at best, for transnational or supranational forms of economic governance. As Mitterrand stated at the time: ‘National sovereignty no longer means very much, or has much scope in the modern world economy… A high degree of supra-nationality is essential’.[15]This new consensus set the stage, throughout the 1980s, for a new phase of the European integration process – one that in its essentially planks eerily resembled the new European order that Nazi ideologues had theorised in the 1930s and early 1940s.[16] It is also the period in which the foundations of monetary union, and more generally of neoliberal Europe, were laid down. To be clear, this does not imply that the European Union was created on fascist principles, nor that modern integrationists are fascists, of course; but it does suggest that if we want to understand the profound social, economic and political crisis that the European Union, and particularly the eurozone, are going through, we need to face up to the deeply anti-democratic and authoritarian (not to mention nationalist) roots of supranational and anti-sovereign ideology. As Yanis Varoufakis wrote, ‘we Europeans have a moral obligation to dispel the dangerous illusion that the notion of a European Union, within which nationalisms and the nation-state might gradually dissolve, was an enterprise to be understood as the polar opposite of plans drawn up by the autocratic, misanthropic, racist, inhuman war-mongers that rose to prominence as a result of the mid-war European crisis’.[17]

The repercussions of the post-national ideology that (re-)emerged in the 1980s, and then became all-pervasive in the 1990s and 2000s, are still being felt today. Conventional wisdom holds that that globalisation and the internationalisation of finance has ended the era of nation-states and their capacity to pursue policies that are not in accord with the diktats of global capital. But does the evidence support the assertion that national sovereignty, which so often throughout the twentieth century has been wrongly proclaimed dead, has truly reached the end of its days? Claims that the current stage of capitalism fundamentally undermines the viability of the nation-state often refer to Harvard economist Dani Rodrik’s famous trilemma. Some years ago, Rodrik outlined what he called his ‘impossibility theorem’, which says that ‘democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full’.[18] Rodrik qualified this argument by claiming that true international economic integration requires that we eliminate all transaction costs in cross-border dealings. Since nation-states are a fundamental source of such transaction costs, it follows that if you want true international economic integration you must be ready to give up democracy (by making the nation-state responsive only to the needs of the international economy) or national sovereignty (by creating a system of regional/global federalism, to align the scope of democratic politics with the scope of global markets).

Over the years, political forces spanning the entire electoral spectrum have skilfully used Rodrik’s trilemma to present neoliberal policies – entailing both a curtailing of participatory democracy and of national sovereignty – as ‘the inevitable price we pay for globalisation’. Even those on the left that claim to oppose neoliberalism often invoke the impossibility theorem to justify the contention that the nation-state is ‘finished’ and that financial markets will punish governments that pursue policies not in accord with the profit ambitions of global capital. But this is not what Rodrik meant. Contrary to conventional wisdom, Rodrik acknowledges that international economic integration is far from ‘true’; in fact, it remains ‘remarkably limited’. He notes that even in our supposedly globalised world, despite the flowering of global firms and supply chains, there is still significant exchange rate uncertainty; there are still major cultural and linguistic differences that preclude the full mobilisation of resources across national borders, as demonstrated by the fact that advanced industrial countries typically exhibit large amounts of ‘home bias’; there is still a high correlation between national investment rates and national saving rates; there are still severe restrictions to the international mobility of labour; and capital flows between rich and poor nations fall considerably short of what theoretical models predict. The same points can be made today (almost 20 years after Rodrik’s article was published): national borders remain cogent because they ‘demarcate political and legal jurisdictions’ that impose transaction costs, and hinder ‘contract enforcement’ rules. In other words, Rodrik’s trilemma is a tautology: of course, it is a definitional truth that if we want global capital to have no limits whatsoever, then nation-states have to disappear as legislative vehicles with enforceable jurisdictions (and confine themselves to being servants of global profit-making) and/or citizens must lose their democratic political rights. But, as noted above, that is not the current state of global capitalism (yet), nor is it one that we should aspire to. Therefore, the trilemma has little bearing on reality, except as a political tool or self-fulfilling prophecy.

In general, as we explain in our new book Reclaiming the State: A Progressive Vision of Sovereignty for a Post- Neoliberal World, globalisation, even in its neoliberal form, was (is) not the result of some intrinsic capitalist or technology-driven dynamic that inevitably entails a reduction of state power, as is often claimed. On the contrary, it was (is) a process that was (is) actively shaped and promoted by states. All the elements that we associate with neoliberal globalisation – delocalisation, deindustrialisation, the free movement of goods and capital, etc. – were (are), in most cases, the result of choices made by governments. More generally, states continue to play a crucial role in promoting, enforcing and sustaining a neoliberal international framework (though that appears to be changing) as well as establishing the domestic conditions for allowing global accumulation to flourish. Furthermore, ‘[e]ven neoliberal forms of economic globalisation continue to depend on political institutions and policy initiatives to roll out neoliberalism and to maintain it in the face of market failures, crisis tendencies, and resistance’, as was made clear by the response of governments to the financial crisis of 2007-9.[19] This, Bob Jessop argues, ‘exclude[s] a zero-sum approach to world market integration and state power’.[20]

Upon closer inspection, also the common view of finance as an amorphous power that exists independently of (and dominates over) states appears to be largely unfounded. To the extent that finance rules, it is because political institutions have created a regulatory system compatible with the process of capitalist reproduction under its command. As a result, financial corporations remain as (if not more) dependent on the state for their survival as any other corporations (as quantitative easing demonstrates). As Gerald Epstein notes, ‘international capital mobility can only be mobile to the extent that there is political and government intervention into financial markets’.[21] Epstein isn’t just referring to the obvious (thought oft-forgotten) fact that financial integration can only exist if states consent to cross-border capital flows. Integrated financial markets also ‘require asymmetric power relations and institutional structures of enforcement to operate’, to guarantee creditors that their debts/credits will be paid back and to enforce debt repayment (by economic, political or military pressure).[22]

The same can be said of neoliberalism tout court. There is a widespread belief – particularly among the left – that neoliberalism has involved (and involves) a ‘retreat’, ‘hollowing out’ or ‘withering away’ of the state, which in turn has fuelled the notion that today the state has been ‘overpowered’ by the market. However, a closer look reveals that neoliberalism has not entailed a retreat of the state but rather a reconfiguration of the state, aimed at placing the commanding heights of economic policy ‘in the hands of capital, and primarily financial interests’, as Stephen Gill writes.[23] It is self-evident, after all, that the process of neoliberalisation would not have been possible if governments – and in particular social-democratic governments – had not resorted to a wide array of tools to promote it: the liberalisation of goods and capital markets; the privatisation of resources and social services; the deregulation of business, and financial markets in particular; the reduction of workers’ rights (first and foremost, the right to collective bargaining) and more in general the repression of labour activism; the lowering of taxes on wealth and capital, at the expense of the middle and working classes; the slashing of social programmes, and so on. These policies were systemically pursued throughout the West (and imposed on developing countries) with unprecedented determination, and with the support of all the major international institutions and political parties. In this sense, neoliberal ideology, at least in its official anti-state guise, should be considered little more than a convenient alibi for what has been and is essentially a political and state-driven project. Capital remains as dependent on the state today as it did in under ‘Keynesianism’ – to police the working classes, bail out large firm that would otherwise go bankrupt, open up markets abroad (including throughout military intervention), etc.

Even the loss of national sovereignty which has been invoked in the past – and continues to be invoked today – to justify neoliberal policies is largely the result of a willing and conscious limitation of state sovereign rights by national elites, through a process known as depoliticisation. The various policies adopted by Western governments to this end include: (i) reducing the power of parliaments vis-à-vis that of governments and making the former increasingly less representative (for instance by moving from proportional parliamentary systems to majoritarian ones); (ii) making central banks formally independent of governments, with the explicit aim of subjugating the latter to ‘market-based discipline’; (iii) adopting ‘inflation targeting’ – an approach which stresses low inflation as the primary objective of monetary policy, to the exclusion of other policy objectives, such as full employment – as the dominant approach to central bank policymaking; (iv) adopting rules-bound policies – on public spending, debt as a proportion of GDP, competition, etc. – thereby limiting what politicians can do at the behest of their electorates; (v) subordinating spending departments to treasury control; (vi) re-adopting fixed exchange rates systems, which severely limit the ability of governments to exercise control over economic policy; and, most importantly perhaps, (vii) surrendering national prerogatives to supranational institutions and super-state bureaucracies such as the European Union.

The reason why governments chose to willingly ‘tie their hands’ is all too clear: as the European case epitomises, the creation of self-imposed ‘external constraints’ allowed national politicians to reduce the politics costs of the neoliberal transition – which clearly involved unpopular policies – by ‘scapegoating’ institutionalised rules and ‘independent’ or international institutions, which in turn were presented as an inevitable outcome of the new, harsh realities of globalisation. In this sense, the ‘hollowing out’ of substantive democracy and curtailment of democratic controlling rights that has accompanied the neoliberal transition in recent decades – leading to what Colin Crouch has famously termed post-democracy, defined as a society that continues to have and to use all the institutions of democracy, but in which they increasingly become a formal shell[24] – should not be viewed as a separate development, possibly resulting from the pressures of economic and political internationalisation, but as an essential element of the neoliberal project. The war on sovereignty has been, in essence, a war on democracy. This process was brought to its most extreme conclusions in Western Europe, where the Maastricht Treaty (1992) embedded neoliberalism into the very fabric of the European Union, effectively outlawing the ‘Keynesian’ polices that had been commonplace in the previous decades: not just currency devaluation and direct central bank purchases of government debt (for those countries that adopted the euro) but also demand-management policies, strategic use of public procurement, generous welfare provisions and the creation of employment via public spending.

Given neoliberalism’s war against sovereignty, and the nefarious effects of depoliticisation, it should come as no surprise that ‘sovereignty has become the master-frame of contemporary politics’, as Paolo Gerbaudo notes.[25] By the same token, it is only natural that the revolt against neoliberalism should first and foremost take the form of demands for a re-politicisation of national decision-making processes – that is, for a greater degree of democratic control over politics (and particularly over the destructive global flows unleashed by neoliberalism), which necessarily can only be exercised at the national level, in the absence of effective supranational mechanisms of representation. The European Union is obviously no exception: in fact, it is (correctly) seen by many as the embodiment of technocratic rule and elite estrangement from the masses, as demonstrated by the Brexit vote and the widespread euroscepticism engulfing the continent. In this sense, as we argue in the book, leftists should not see Brexit – and more in general the current crisis of the EU and monetary union – as a cause for despair, but rather as a unique opportunity to embrace (once again) a progressive, emancipatory vision of national sovereignty, to reject the neoliberal straitjacket of the EU and to implement a true democratic-socialist platform (which would be impossible within the EU, let alone within the eurozone). To do this, however, they have to come to terms with the fact that the sovereign state, far from being helpless, still contains the resources for democratic control of a nation’s economy and finances – that the struggle for national sovereignty is ultimately a struggle for democracy. This needn’t come at the expense of European cooperation. On the contrary, by allowing governments to maximise the well-being of their citizens, it could and should provide the basis for a renewed European project, based on multilateral cooperation between sovereign states.

—————

William Mitchell and Thomas Fazi are the authors of Reclaiming the State: A Progressive Vision of Sovereignty for a Post- Neoliberal World, has just been published by Pluto Press. The authors will present the book in London on September 26th at Newington Green Unity Church (39a Newington Green, Stoke Newington, London, N16 9PR). The event will be chaired by Adam Ramsay, Professor of Law at LSE. Eventbrite link here.

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[1] Desmond Cohen, ‘Economic Sovereignty: A Delusion’, Social Europe Journal, 12 September 2017.

[2] Renaud Thillaye, ‘The Left Needs A Better Conversation On National Sovereignty’, Social Europe Journal, 6 November 2015.

[3] Marlene Wind, Why the British Conception of Sovereignty Was the Main Reason for Brexit – And Why the British ‘Leave-Vote’ May End Up Saving rather than Undermining the EU, CSF-SSSUP Working Paper No 3/2017, Centro Studi sul Federalismo, 2017.

[4] Robert Tombs, ‘Sovereignty still makes sense, even in a globalised world’, Financial Times, 7 July 2017.

[5] John Laughland, The Tainted Source: The Undemocratic Origins of the European Idea, London: Warner Books, 1997.

[6] Ibid.

[7] Quoted in Laughland, The Tainted Source.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Ibid.

[13] Ibid.

[14] David Harvey, A Brief History of Neoliberalism, Oxford: Oxford University Press, 2005, p. 10.

[15] John Ardagh, France in the New Century, London: Penguin, 2000, pp. 687-8.

[16] From this perspective, the dichotomy that is often raised in European public discourse between nationalism and Europeanism is deeply flawed. The two, in fact, often go hand in hand. In Germany’s case, for example, Europeanism has provided the country’s elites with the perfect alibi to conceal their hegemonic project behind the ideological veil of ‘European integration’.

[17] Yanis Varoufakis, ‘Lest we forget: The neglected roots of Europe’s slide to authoritarianism’, author’s blog, 14 March 2013.

[18] Dani Rodrik, ‘The Inescapable Trilemma of the World Economy’, author’s blog, 27 June 2000. A full academic argument is presented in Dani Rodrik, ‘How Far Will International Economic Integration Go?’, Journal of Economic Perspectives, Vol. 14, No. 1 (2000), pp. 177-86.

[19] Bob Jessop, The State, Cambridge and Malden, MA: Polity, 2016, p. 193.

[20] Ibid., p. 198.

[21] Gerald Epstein, ‘International Capital Mobility and the Scope for National Economic Management’, in Robert Boyer and Daniel Drache (eds), States Against Markets, New York: Routledge, 1996, p. 157.

[22] Ibid., p. 212.

[23] Stephen Gill, ‘The Geopolitics of Global Organic Crisis’, Analyze Greece!, 5 June 2016.

[24] Colin Crouch, Post-Democracy, Cambridge: Polity, 2004.

[25] Paolo Gerbaudo, ‘Post-Neoliberalism and the Politics of Sovereignty’, openDemocracy, 4 November 2016.

by Andy Storey

Can the European Central Bank (ECB) act as an honest broker in the tracker-mortgage scandal? Fianna Fáil has suggested that it step in to oversee the response of the Irish banks and ensure that customers get the appropriate compensation.

There is a whiff of naiveté (at best) about this proposal. It was the ECB that insisted the Irish government redeem the creditors to the Irish banks in full through the so-called bail-out in 2010, hardly the act of an institution committed to the welfare of taxpayers or the citizenry as a whole.

As a condition of that “bail-out”, the ECB helped push for reductions in workers’ wages and trade unions’ collective bargaining rights, as they have elsewhere in Europe.

The ECB is perfectly prepared to wield a big stick – but typically against workers and governments, not banks. For example, in 2011 the ECB under President Mario Draghi sent a secret (subsequently leaked) memorandum to the Italian government calling for: “the full liberalisation of local public services … through large-scale privatisations.”

Where the ECB does lavish largesse, it tends to be to the benefit of the corporate sector, including already loaded Irish companies like Ryanair, which have been able to access cheap ECB loans in recent years.

Another EU institution – the European Commission – might seem a more plausible candidate to ride to the rescue and defend Irish consumers from the depredations of the banks. The commission did something like that earlier this year when it launched an investigation of Irish car insurers because it had “concerns that the companies involved may have engaged in anti-competitive practices in breach of EU antitrust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position”.

There is a prima facie case that the Irish banks are also, at the very least, taking advantage of their dominant market position in a coordinated manner: Irish mortgage holders pay an average interest rate of 3.2 per cent, while the figure for the Eurozone as a whole is 1.9 per cent. Not surprisingly, the Irish institutions are significantly more profitable than most of their European counterparts.

But the Commission has treated banks a little bit differently to other sectors. In particular, the Commission, in 2008, greenlighted European governments to launch massive rescue and subsidy packages of their financial sectors, amounting ultimately to €4.5 trillion, the equivalent of over a third of EU economic output. Nor did this aid come with much in the way of strings attached – the financial sector right across the Continent has been subjected to relatively limited real reform despite the generosity it has availed of.

When it comes to workers’ wages and rights, the Commission, like the ECB, is perfectly prepared to put the boot in. To take just one example, a 2013 commission review accused Belgium and France of having excessive wage growth on the arbitrary basis that wage-suppressing Germany constituted the appropriate benchmark for comparison. Likewise, that review criticized supposed labour-market rigidities in France, despite that fact that labour productivity was actually higher in France than in Germany.

Back in 2008, Irish writer Colm Tóibín reacted to the defeat by referendum of the Lisbon Treaty in Ireland: “I support the European project … I voted for Lisbon, not because I wanted to follow the Irish political establishment but because I despise it and need protection from it.”

Calls for European intervention to police the Irish banks follow a similar logic – that Irish politicians and companies are not to be trusted, and so we need external agents to protect us against them. The reality is that the “European project” is not some benign cavalry riding to the rescue of besieged Irish people – it is usually part of the problem, not the solution.

There is plenty an Irish government could do to put manners on Irish banks. We should keep up the pressure to make sure they do so, not call forlornly for the fake salvation offered by the bugle call of the ECB.

This article was first published on Dublin InQuirer

 The last Plan B conference took place in late October in Lisbon. Here we document the final declaration. Ten years have passed since the adoption of the Lisbon Treaty by the European oligarchy. The European dream has become a nightmare. The European Union, through its treaties and its internal market, is all about social dumping, economic strangulation and Coups against the people.

The EU austeritarian policies are creating divisions between the peoples of Europe and even territorial tensions inside European countries. The answer cannot be repression and authoritarianism but democracy and the free expression of the people. European federal authoritarianism grew at the expense of retreats in the social and political achievements of workers and peoples. The July 2015 Troikas’ Coup against the sovereign decision of the Greek people to say NO to more austerity has shown the EU will not accept any procedure other than “the rule of the Eurogroup”. We do not accept the strangulation of democracy and the TINA (There Is No Alternative) dogma regarding the Eurozone and the EU.

On the 21st and 22nd of October, we political and civil society activists, gathered in Lisbon to debate an Alternative for Europe, a Plan B. The peoples of Europe have suffered a brutal attack to their democracies and their fundamental rights, including civil, political, social, economic and cultural rights.

The construction of a Plan B for Europe is an imperative necessity to defend the people of Europe against the authoritarian neoliberalism, feeding neo-fascist, ultranationalist and reactionary forces. We reaffirm our common commitment to both individual and collective rights and freedoms and social rights.

Our political forces and social movements must commit themselves to an alternative political program to break up with these treaties in favour of an area of peace, democratic cooperation and solidarity. We stand for:

• Auditing public debt and abolish illegitimate, illegal, odious and unsustainable parts of the debt that the governments accumulated in order to save the private banking system. We call for a European conference on public debt;
• A process of full transparency and accountability, civil and criminal, for the damages caused by the Troika to EU Member States and peoples, starting from the grave damages caused to Greece by the memorandum regime;
• A reform of the missions of the ECB in favour of employment and an option for direct financing of the Member States without conditionality linked to austerity measures. We must defend the right to collective bargaining. We must break with the attacks of the EU Court of Justice and European Commission on the right to strike, collective agreements and domestic social legislations. We reject the Posted Workers Directive, which fuels xenophobia by organising social dumping. We fight for a harmonisation from above of social rights, in particular for minimum incomes. The “Social Pillar” proposed by Brussels is a whitewashing for the ruling elites from the consequences of their austerity policies. We need to defend a right for a country to maintain the most favourable legislation, a “social preferential principle”;
• Replace the policy of internal devaluation by increasing wages and public investment in public services, welfare systems, health, education, housing and public transportation, that will promote the increase of employment and social inclusion;
• Eliminate the European Semester: A single currency is no end in itself and a threat to international cooperation if its architecture demands permanent assaults on wages, pension and public investments. We fight for a cooperative monetary regime eliminating economic imbalances: either via a fundamental reform of the euro zone or, if not attainable, via managed and adjustable exchange rates and selective controls of capital flows. Between saving the EU and the Euro and saving our peoples from the clutches of austerity, we choose our people;
• One planet for all, one general interest: Our “golden rule” is green! Ecosocialism is our common target. In every policy, we should respect a simple principle: to not take more than what nature can renew. Starting with an investment plan for energy promoting the energy transition to renewables and the fight against energy poverty;
• Fight against tax evasion, tax elision and tax dumping as well as support a better redistribution of the tax system;
• A Europe based on solidarity and peace, providing all the necessary measures and support system to all the people who are forced to leave their homes while trying to eliminating the deep causes of emigration such as wars, unfair trade policies and austerity, for which EU policy bears a major responsibility;
• A Europe based on gender equality, against violence and discrimination.

If this plan fails, due to the predictable hostility of the European institutions, the outcome will not be the capitulation to Brussels and Frankfurt. In such case, that country or countries should open the way for a breakup with the Eurozone and the EU Treaties and launch a new system of European cooperation based on the restoration of economic, fiscal and monetary sovereignty, the protection of democracy and social rights and social justice.

The European Union must not have the monopoly over Europe. The Plan B offers new perspectives with our neighbours. New spaces of cooperation exist.

If our conditions are not fulfilled, we will apply it unilaterally in each of our countries. The 2019 European Elections are an opportunity to confront European neoliberals with our project. Fetishism of EU institutions or a specific currency cannot take precedence over the concrete interest of peoples. That is the whole point of the Plan B for Europe.

by Thomas Fazi

The prospects for a progressive reform of the eurozone appear more unlikely than ever. The reforms currently on the table, in fact, are likely to make the situation even worse. This is why progressives should resist any further surrender of national sovereignty to the EU and any further deepening and expansion of the eurozone.

by Andy Storey

The European Union has just decided that 17 countries are tax havens, including Bahrain, Namibia and Panama. The stated criteria were tax transparency (or the lack of it), fairness (whether or not preferential treatment was being given to some taxpayers over others), and participation (or not) in international initiatives designed to limit corporations egregiously reducing their tax bills.

Critics argue that the criteria for inclusion on the list were themselves not fully transparent, and have lambasted the fact that none of the EU’s own countries or territories were included. For example, the development NGO Oxfam has welcomed the list as a step in the right direction, but claimed that at least four EU countries – Ireland, Luxembourg, Malta, and the Netherlands – should have been listed. Ireland is identified by Oxfam as a “conduit tax haven”. In other words, it allows corporate revenues to flow through this country in a way that denies tax rightfully due to other jurisdictions.

It is hard to argue with that judgment, and indeed the EU’s own legal case against the Apple corporation’s tax regime in Ireland would seem to implicitly concede the point.

An analysis prepared for the UK-based Tax Justice Network agrees when it comes to EU countries, and goes even further, suggesting that Cyprus and the UK should be added to the list also (together with many of the latter’s dependencies and overseas territories).

In similar vein, a new report – Tax Games: the Race to the Bottom – prepared by a coalition of European NGOs documents how many European governments are actually accelerating this race to the bottom by cuts to corporate tax rates. (This is a somewhat different issue to tax avoidance, but it is related.)

The Race to the Bottom report was coordinated by the European Network on Debt and Development, a spokesperson for which said that the EU “blacklist looks like an attempt to divert attention away from the fact that EU governments have failed to clean up their own house”.

And that report’s chapter on Ireland – prepared by the Debt and Development Coalition – makes for interesting reading, describing this country as “among the frontrunners in the race to the bottom on corporate taxation”.

One particular issue highlighted by the chapter is Ireland’s tax treaties with developing countries, which are shown to significantly reduce poorer countries’ abilities to raise taxation. For example, “a number of other developed countries have tax treaties with Zambia, Ethiopia and Pakistan that allow the developing countries to apply significantly higher tax rates, compared to the rates contained in the treaties with Ireland”.

But none of this seems to greatly concern the proponents of the current system here, including Pádraig Cronin, vice chairman of the Deloitte financial company, writing in the Irish Times, who notes that, “From the Luxembourg Leaks to the Panama Papers to the Paradise Papers there seems to be an insatiable appetite to examine the activities of businesses and individuals.”

One gets the strong impression Cronin thinks this appetite constitutes a rather morbid obsession. He cautions, “It is important that Ireland does not overreact to this scrutiny” or be overly critical of “various complex but legal methods used by businesses and individuals to minimise their tax bills”.

Cronin might have mentioned that his company makes very good money out of promoting and facilitating precisely such complex methods for (completely legal) tax minimisation.

A report earlier this year compiled for a grouping in the European parliament found that Deloitte, along with the other “Big Four” accountancy firms, was “heavily over-represented in [tax] secrecy jurisdictions … This suggests that their presence in these places is related to the secrecy for transactions that these jurisdictions provide”.

Deloitte does what one would expect it to do – and it does so legally and well. But the question is whether what is good for Deloitte et al. is necessarily good for Irish or European society, or indeed for people in places as far afield as Zambia and Pakistan.

This post was fist published at dublininquirer.com.

This report is meant as a short introduction to the EU debate in Norway: its historical basis, contentious issues, as well as the positions of political parties and social groups, particularly those on the political left. It also gives a general account of recent political and economic developments in Norway, with special emphasis given to the 2017 parliamentary election.

The report was written and compiled by Attac Norway’s working group on Europe. We thank Asbjørn Wahl for allowing us to use his analysis of the recent parliamentary election as part of the report.

The European question in Norwegian political history

Idar Helle

In his works of political sociology Stein Rokkan underlined a set of political cleavages that in his view had dominated the societies in Western Europe up until the mid-20^th century: Political centre vs periphery, religion, urban vs rural interests and finally, from the industrial age, the question of social class.[i] Among these cleavages our suggestion would be that the class issue and the conflict centre vs periphery was most apparent when it came to contentious politics and mobilization of popular protest in Norway after 1945. In particular, through the broad social mobilization and coalition building around the referendum on the membership in the European Community (1972), and then on the membership in the European Union (1994).

Like no other political campaigns linked to the European question, the ”No to EU” campaigns in Norway have defeated the political elites in referendums and denied ”ever closer union”. Even more significantly, Norway is the only country where the no-campaigns have managed to reject EU membership, and two times in 1972 and 1994.

Why was this possible? What created the necessary room of manoeuvre for the campaigns against EU membership? Our suggestion is that the change of the ordinary constitutional rules, that a referendum and not a qualified majority vote (2/3 or ¾)  in the parliament was chosen to decide the question, opened a window of possibilities that no other forces of contention outside parliamentary politics have experienced in Norwegian politics in this era. Looking back on these events, Kristen Nygaard, president of the No to EU campaign organization in 1994, gives a hint on how this  “no” movement was forged.

“In the early days, a meeting was successful if 15-20 people showed up. Discussing, conveying, and incorporating No-strategy was no problem. It took place at meeting after meeting. The local, and sometimes even the regional press, covered these events loyally. They could convey to the capital that people from the leadership of Nei til EU once again had held one of their tiresome lectures, once again with nothing new on the agenda. The same slides showing unemployment, judgements from the EEC Court, dry paragraphs from the Treaty of Rome or Maastricht (…) From these reports, no one could understand what really went on: The building of the largest political organization in Norway. The discussions late into the night after the meetings and the conversations between local key members never made it to the papers, neither did the countless meetings of local executive committees, board meetings, study groups, contacts between important organizations etc.”[ii]

For a contemporary observer of Cold War politics in Europe, especially the Norwegian no-vote in 1972 must have seemed to be against all odds. In the original six EC countries, the political forces on the left and right wings that were against the Rome Treaty and the foundation of the Common Market, were not able to connect and build sustainable alliances with social groups and economic interests that could turn the tables against the elite project of European economic integration. If we go to the labour movement for benchmarking, up until the mid 1970’s mighty union confederations like the CGT in France, the CGIL in Italy and the TUC in the UK were more critical of the EC politics than the top level of LO and the Norwegian labour movement.  But they were not part of any broader centre to left and cross-party alliances that were strong enough to challenge the supporters of further economic integration.

In Norway, the situation was quite different. The no-movement could mobilize along several of the axes mentioned by Rokkan. Especially important were the alliances between the parties and youth parties on the left, important trade union and farmers organisations and their financially important agro-industrial complex.[iii] These red-green alliances from the two EU referendum campaigns in 1972 and 1994 did in fact get an after-life later on with the three party government formed by Arbeiderpartiet, the Sosialistisk Venstreparti and the rural agrarian Senterpartiet that lasted eight years (2005-13). In the same way as this alliance was built from below through common trust and belief in stronger public welfare, it was gradually broken down from the top by the central party apparatus of the three parties and a lack of will for structural reforms away from market capitalism.

This highlights a critical question of the progressive no to EU-movement in Norway and social movements in general: Their ability to win important battles – but not able to build a counter hegemony like the national-liberal Venstre movement from the 1870s and the labour movement after 1935.

[i] Rokkan 1987, pp. 267-380.

[ii] Nygaard 1995.

[iii] Seierstad 2014.

Norwegian elections: Another right-wing victory – and a serious Labour defeat

Asbjørn Wahl, Norwegian trade union and political activist

The centre-left failed in getting rid of the so-called blue-blue government at the parliamentary elections in Norway on 11 September. The Labour Party was the main loser, while small parties on the centre-left advanced slightly. However, the parliamentary basis of the right-wing government has started to unravel. A deeper political crisis may be looming in the background, while social contradictions are on the raise. Social Democracy followed the general European downward tendency (except Britain).

First, some basic facts on the Norwegian electoral system. There are 169 members of parliament, who are elected through proportional representation. The 19 counties serve as the electoral constituencies. There is a threshold of 4 percent to qualify for the proportional distribution of representatives, although it is possible to win direct representation from the counties also if the national gain of votes is below the threshold. Two political parties won representation in that way.

In the previous four-year parliamentary period, Norway was governed by a minority government formed by the Conservative Party and the so-called Progress Party (a right-wing populist party). Therefor the name blue-blue government. It was supported by two other parties – the Christian Democratic Party and the so-called Liberal Party (which in reality is neo-liberal, but with a touch of green). This support was established through a formal agreement, but to secure a parliamentary majority for the government, it was sufficient with support from only one of those two parties.

Norway has seen an increasing political fragmentation over the last years. After the current elections, there are nine political parties in Parliament. The four on the right are mentioned above, while the centre-left opposition includes the Labour Party, the Centre Party, the Socialist Left Party, the Green Party and the Red Party. As in many other countries, however, the entire political spectre has moved to the right during the neoliberal offensive from around 1980.

For the blue-blue government, two important things changed with the last election. The Christian Democratic Party says that it is no longer willing to sign a contract of support to a government in which the right-wing populist party takes part; and the government is dependent on both the two former supportive parties to achieve majority in Parliament. In other words, the Government’s political basis is much weaker than in the previous period, something that opens the possibility of a breakdown of the blue-blue government. Since Norway does not have the possibility to call an election in a mid-parliamentary period, this can lead to a lot of political turbulence or an open political crisis.

Many people expected a centre-left victory at this election, since the blue-blue government had carried out many unpopular policies. The discontent was particularly strong in the trade union movement. However, the Labour Party’s election campaign proved to be quite disastrous under its new leader, Jonas Gahr Støre. One of the big “mistakes” was a flirt with the so-called political centre (centre right), that is with the two political parties which had supported the blue-blue government and by that had also supported attacks on the labour law and other economic and social gains for the working class. Further, the Labour Party was not even able to take a clear stand against the on-going and very unpopular commercialisation of core services in the Norwegian welfare state. Neither did the party come up with a credible policy against the undermining of labour market regulations, which to a high degree is promoted by the increasingly authoritarian, neoliberal European Union. This is a policy that is being implemented in Norway through the European Economic Area (EEA), an agreement that is strongly supported by the Labour Party.

The right-wing populist party, on the other hand, was successful in setting the agenda for much of the election campaign, first and foremost by playing the anti-immigration card and by focusing on identity policies. The Labour Party was unable to respond to this with the only measures that can really confront such right-wing policies, namely a clear class policy. This did not necessarily happen because the party’s leadership is unwilling to do so, but simply because class politics are strongly in deficit in today’s social democracy – deeply rooted as it still is in a social partnership ideology.

While social democracy is on the verge of breaking down, and even being eradicated, in big parts of Europe today (Greece, Iceland, Ireland, the Netherlands, France), much suggests that also the Norwegian, actually the Nordic, social democracy, despite its fame as the creator of the Nordic welfare model, is now following the downward course of their European sister parties, although more gradually. Power relations does not seem to be part of the actual social democratic narrative – their ‘raison de vivre’ is obviously to administer capitalism within the limits given in the at any time existing power relations – not to shift the balance of power. Thus, the right-wing political offensive is not really being confronted by social democracy.

The golden age of social democracy was based on a class compromise and a balance of power which made it possible to move forward socially within the framework of a regulated capitalism (i.e. the welfare state). The material basis for such policies is now coming to an end with the deep crisis and stagnation of capitalism, and the subsequent neo-liberal offensive. The social democratic attempt to re-establish the class compromise, with its successful tripartite cooperation and social dialogue, even without class mobilisation and confrontations, is an illusionary project in the current political conjuncture.

Maybe the Norwegian election is just another sign that the era of social democracy is now coming to an end.  All those, all over the world, who has been looking at the Nordic Model as their final aim, may have to rethink and reassess their policies and strategies. But who on the left is it that can now provide us with a class policy with perspective?

Norwegian parliamentary election in figures

The EU in Norwegian politics

Sondre Molteberg Dalen, Mikkel Broen and Einar Hagness

In recent years, the prospect of membership in the European Union has become increasingly unpopular in the public at large, so proponents rarely push the issue in an active way. Since full membership is generally regarded as being off the table, the Norwegian EU debate is mostly focused on Norway’s participation in the European Economic Area (EEA), which lets the country participate in the single market without being a full member, while also obliging it to implement most of the legislation related to the market (with the notable exception of agriculture and fisheries). These laws are often imported without much public debate, except in a few controversial cases such as the Data retention directive or the Third postal directive.

Both of Norway’s two biggest parties, the Labour party and the Conservative party, have traditionally been among the main supporters of Norwegian accession to the EU, although the grassroots membership of both parties has generally been less enthusiastic than the leadership. Since the Norwegian Labour party still has relatively strong institutional connections with trade unions, it will be interesting to see how they respond to their growing discontent with the EEA. Despite still having the support of leaders in the four national trade union confederations, the agreement has become deeply unpopular among many representatives in the labour movement because of the large-scale social dumping practices it has facilitated in several sectors, particularly through the Temp agency directive. This has led to a debate about whether to regulate the migration by withdrawing from the EEA, or by strengthening the international fight against social dumping. LO, the trade union confederation that organizes the majority of industrial workers in Norway, has passed a resolution urging Norwegian authorities to utilise the room for action in the agreement rather than resigning it altogether. This would entail vetoing the introduction of hostile employment laws, and supporting the trade unions’ positions in disputes where collective agreements are weighed against free enterprise.

The right-wing populist Progress party is Norway’s third largest party, receiving 15 % of the votes in the recent election. The party has generally kept a low profile concerning EU-related issues, although they recently moved in a slightly more eurosceptic direction by advocating for a renegotiation of the EEA-agreement. All other parties represented in the Norwegian parliament generally take a skeptical view of the EU to varying degrees, although only the two left-wing parties and the agrarian Centre party go as far as supporting a withdrawal from the EEA.

The Socialist left party and the Red party constitute the left wing of Norwegian party politics. Compared to other parties of the European left, they have always been strongly skeptical of the EU, and the idea that it might be reformed along broadly progressive lines has never gained much traction among within them. Instead, they see increased national sovereignty combined with closer cooperation between the Nordic countries as the way forward. Both parties support withdrawal from the EEA, the closest equivalent to a left exit in a Norwegian context. However, there are also voices on the Norwegian left that worry about the increasing focus on national sovereignty. They raise the question if it really is possible to promote a progressive nationalism without legitimizing the chauvinistic nationalism of the right-wing populists, and claim that you cannot debate self-determination without simultaneously stressing the necessity of supranationalism. Their immediate resistance to the EU’s neoliberalism is rather focused on regulating financial industry and multinational companies, than limiting people’s freedom to seek jobs across the borders.

The 2017 election resulted in a continued parliamentary majority for the Conservative-led “Blue-Blue” government and their supporting parties, despite all of them losing seats. This was mainly due to a particularly bad showing by the Labor party, for which the gains made by other opposition parties could not compensate. The rural-based Centre party received the largest increase in vote share. Though they are generally the party most associated with opposition to the EU, their election campaign was mainly directed against the ongoing local administration reform and the government’s use of force to merge municipal authorities. As such, criticism of the EEA was tabled most forcefully by the left-wing parties. Overall though, questions related to the EU did not play a significant role in the election campaign.

Economic developments

by Petter Håndlykken and Sten Holth

Norway has a significant oil service and oil exploration industry. As oil prices dropped from the end of 2014, investments in the oil sector fell dramatically worldwide, forcing the oil companies to cut their costs. This led to a crisis of high unemployment in the areas of Norway most dependent on the oil industry. The government responded to the crisis through a combination of cutting interest rates, reducing the value of the currency, increasing the public spending in the construction sector and cutting taxes, especially for the rich. In order to finance this policy, the government has used an unprecedented amount of the yields generated by the so-called Oil fund, a sovereign wealth fund comprised of surplus revenues from the petroleum sector. These incomes are now financing appr. 17 % of government expenses, thus making Norway’s public finances even more dependent on the oil sector. The Labor Party based its election campaign on the insufficiencies of this policy. However in the months leading up to the election there was a drop in unemployment that seemed to indicate that the economy was recovering, which no doubt helped the Conservative government retain its hold on parliament.

Declining investments in the oil sector have been compensated to a certain extent by increased activity in the construction industry related to housing. Housing prices and private debt has increased precipitously in the last few years, which has led many to speculate on the possibility that we might be in a housing bubble. The prices of housing rose, with increasing investments in that sector, and we now seem to be in a housing bubble that is about to lose some air.

Norways’ international relations

by Petter Slaatrem Titland

The Foreign Ministry under the former minister Børge Brende (2013-2017) has been unprecedented in its weak links to the Norwegian civil society. Like many western countries, the government has changed its policy towards the World Trade Organization by entering negotiations on the megaregional Trade in Services Agreement (TiSA). This has marked a shift away from a cornerstone in Norwegian trade policy, which always has been to support the WTO. Norway have also been supporting the developing countries in the WTO, like the withdrawal of important public services from negotiations in earlier rounds in the WTO.

Due to the Nobel Peace Prize to Liu Xiaobo in 2011, China cut off all political ties to Norway. This year the foreign minister presented an agreement on the “normalization” of the relationship to China, which included an agreement on fish exports. Norway also agreed to “respect China’s political system”. This has led to the government not being able to criticize China on human rights abuses, although the foreign minister claims that these concerns are raised in conversations with the Chinese government.

In relation to the UN Norway has not supported the working group on the new UN Treaty for businesses and human rights. After two years of neglecting the process in the UN Human Rights Council, Norway is now an observer in the work along with the EU. Like other NATO countries, Norway has refused to support the UN Treaty on the prohibition of nuclear weapons.

In 2016 there was issued an independent public assessment of Norway’s participation in the war in Afghanistan. The report concluded that the Norwegian engagement had been ill advised, with shifting rationales and a lack of planning for withdrawal. The foreign minister rejected these criticisms.

Norway is not a part of the TTIP or CETA agreement, but has been one of the driving forces in the TiSA negotiations because of the developed service economy in Norway, especially in finance, energy and shipping. However, Norway are not in a position to influence the EU and the US, and the negotiations are currently stalled because of disagreements on the data flow of sensitive information.

The re-elected government are expected to further the expansion of investor-state dispute settlements in investment agreements. The government has also voiced their support for the new Multinational Investment Court proposed by the EU. Former foreign minister Børge Brende was recently announced as the new president of the World Economic Forum.

by Ernesto Screpanti [*]

Since the end of World War II, tribal rivalries and xenophobic sentiment in Europe have never been as strong as they are today. And this is but one of the European Union’s “successes”. Not to mention the resurrected warmongering vocation that led the Union to feed conflicts in Libya, Syria, Ukraine and, when the Union was still in the preparatory phase, to favor the explosion of devastating civil wars in Yugoslavia.

Another series of “successes” has involved the social and economic sphere, with increases in unemployment, poverty, and inequality; the deterioration of labor conditions; reductions in workers’ rights; greater labor insecurity and precariousness; worsening welfare in the areas of education, health services, public utilities and social security; the proletarianization of the middle classes; rising uncertainty and, last but not least, the threatening of household savings by a predatory financial sector.

Meanwhile, the process of convergence of the national economies, prophesied by the founding fathers as one of the most important effects of the Union, turned out to be precisely the opposite. The Northern European economies are growing faster than the average, being led by massive trade surpluses, while the Southern ones are growing more slowly, thus undergoing prolonged de-industrialization with high unemployment and public debt. Moreover, the average growth rate of the Eurozone GDP, which had been predicted to rise in comparison to that of the 1990s, has instead diminished.

Then there is the burying of democracy, a tendency which had already begun with the turn of the century globalization, and which was accelerated by the Union. This led to a process of constitutionalization of the treaties, which is gradually nullifying the national constitutions. And it is doing so without the peoples’ consent, given that whenever they have been called upon to ratify (anti)constitutional “reforms”, the European peoples have rejected them. Then the Union has built a monstrous bureaucratic apparatus, which has taken on such political powers that it is able to effectively condition national government policies. What else has to be said to convince you that such a European Union must be demolished?

The social nature of the European Union

The political organisms that determine the monetary and fiscal policies of the Union are the European Central Bank and the German government, and neither of them is accountable to the European peoples.

Germany’s supremacy over the European economy was already well established in the 70s, and became unwieldy after the German unification of 1990. With the foundation of the Union, the government of that country succeeded in gaining unprecedented competitive advantages for its industry. Through the Hartz reforms (2003-2005) and restrictive fiscal policies, wage growth was put under check, thus completing a process of subjugation of the working class that had begun in the 90s. Moreover, German firms extended their value chains toward Eastern European countries (and partly toward the South), where wages are much lower than in Germany. At the same time, German firms enjoyed a moderate growth in productivity. In this way, German industry benefited from labor costs that grew systematically less than those of its principal competitors, especially France and Italy. This has enabled Germany to maintain a high and growing trade surplus, thus pushing the Southern countries toward deficit (Italy until 2012; France, Spain, Greece and Portugal still today).

Since the Eurozone current account surplus was almost always (at least until 2012) lower than Germany’s own, the Euro appreciated against the Dollar to a lesser extent than the Deutsch Mark would have done. At the same time the Italian, French, Spanish, Greek and Portuguese currencies were not able to devalue against that of Germany. This fact gave Germany a competitive advantage which added to that generated by the labor cost dynamics. Moreover, the German trade surplus is also fed by restrictive fiscal policies. The latter, besides maintaining unemployment and underemployment at the level required to keep workers’ militancy in check and induce trade unions to collaborate, has also helped slow down the growth of imports.

One consequence of Germany’s trade successes was a series of debacles in France, Italy, Spain, Greece and Portugal, for whom the Euro is an overvalued currency, thus adding to the disadvantage caused by a higher growth of labor costs.

The German governments have chosen to “defend” national industry from the effects of globalization with a policy of real depreciation based on austerity and neoliberal “reforms”. They then imposed this model of mercantilist policy upon the rest of Europe, via their restrictive fiscal policies. Since Germany’s output growth was pulled by exports rather than by consumption and public expenditure, it resulted in lower growth for Germany’s European partners, as their exports were not being adequately pulled by German imports. At the same time, by virtue of the constraints imposed by the Maastricht Treaty and the fiscal compact, the highly indebted countries could not expand their economies through growing public and private expenditure. All this determined a systematic divergence between the economies of the North and South of Europe. On the other hand, by virtue of the Kaldor-Verdoorn law (by which productivity growth is partly determined by GDP growth), the low development rates of the Southern economies additionally caused low increases in their productivity, with the consequence that labor costs continued to be subject to diverging dynamics, thus closing a vicious circle that promises to protract and exacerbate this situation for a long time ahead.

Following the Euro devaluation that began in 2014 and the upsurge in global trade growth from 2016, exports are now growing fast all over the Eurozone, and the GDP growth rates have recovered too, albeit less so in the Southern countries (except Spain).

Left-wing observers have developed two different interpretations of the current historical situation. Some blame German mercantilism, as the expression of a neo-imperialist policy in Europe. With its huge trade surpluses, Germany has accumulated a high net international investment position. The value of foreign assets owned by German citizens and companies is much higher than that of German assets owned by foreign subjects. In other words, Germany is the principal creditor and proprietor within Europe. Moreover, German companies have built international value chains that exploit the enormous wage differences between the North and East of Europe. Finally, by generating underdevelopment and unemployment in the South, they are also transforming this area into a huge semi-industrialized periphery in which they produce or subcontract low-cost intermediate and semi-finished products (in 2016 French wages were about 93% of German wages, Spanish 80%, Italian 76%, Portuguese 53%, Greek 45%). Not to mention the constant flow of skilled and highly skilled workers, especially young people, from the South to the North of Europe. At the same time, German companies are buying manufacturing firms all over Europe at sale prices.

The other interpretation focuses on class struggle rather than on conflict among nations. The austerity policies that the German government and the European Commission impose upon all countries of the Union are expedient to the maintenance of the high unemployment regime necessary to keep the workers’ movements on their knees. In this way, not only is wage growth kept under check, but it is also easier to pass the labor market “reforms” required to increase exploitation. All European capital, big and small, national and multinational, is interested in these reforms. In other words, the German ruling classes are not just pursuing the interests of national capital, but they are acting as the vanguard of the capitalist class for the whole continent. Hence, the German-led European Union is the political instrument used by capital to wage its class struggle. It is a real State in the Marxian sense of “a committee for managing the common affairs of the whole bourgeoisie”, and is all the more effective in the class struggle the less accountable it is to the European peoples. It aims to impose the capitalist interest in accumulation and exploitation upon the European peoples.

Which of the above is the correct interpretation? I think they are both valid. They are complementary rather than antithetic. The German ruling class acts with the intention of favoring national interests – but the interests of national capital rather than those of the working class. Just ask the workers with mini-jobs, midi-jobs, one-euro-jobs, precarious jobs, the immigrants, or the two and a half million unemployed. And, although most German workers enjoy some job security as well as decent direct and indirect wages, the fact remains that the trend of the wage share in national income has been decreasing since the 1970s and has not been reversed by the European Union. It is also a fact that in Germany too, as in the rest of Europe, poverty and inequality have increased. The point is that the austerity policies implemented by the German government have determined a similar tendency throughout Europe. This policy is conducive to a strategy of real depreciation based on wage curbing. It is therefore no surprise that the industrial circles of the various countries affected insist in applauding German policies and preaching “let’s do it like Germany”.

The European Union would be considered a disaster if it were intended as a political organization aiming to increase the welfare of its peoples and reduce the previous differences in income and wealth among nations. However, if the EU is seen for what it really is, it becomes clear that no error and no disaster has occurred, and that things have gone precisely as they were designed to. The European Union has turned out to be a great success… from the point of view of capital. Never, in European history, has the working class been so exploited and so frightened (except, perhaps, in the Fascist Germany and Italy of the 30s).

The question we must raise is whether or not this Union can be reformed and converted into a political organism devoted to achieving full employment, reducing national differences in industrial production, reconstructing the welfare state, reducing inequalities, eliminating poverty and redistributing income in favor of wages.

To be optimist, we should be able to answer the following in the affirmative: 1) Would European capital accept reforms aimed at the achievement of such goals? 2) Would the German ruling classes accept some of the following proposals: a) donate 5% of German GDP to the Southern countries; b) introduce expansive fiscal policies and generate a huge budget deficit; c) let German wages rise so as to drastically reduce the trade surplus; d) abolish the bail-in rules and allow national governments to rescue distressed banks through nationalization; e) compel the German taxpayers to finance part of the interests on the sovereign debt of the profligate and lazy nations; f) put the BCE at the service of a full employment policy; g) renounce part of their political power in favor of a federal government accountable to a real European parliament?

Lexit, Euro demolition and the crisis of passage

So, let’s start thinking about how to demolish the European Union. This demolition could take different forms and be triggered, for instance, by a Eurozone break-up into Northern and Southern areas, an agreed return to the national currencies, the exit of a Northern country, or in yet other ways. The left must be ready to act under any circumstances to transform such a crisis into a collapse. One event that is becoming increasingly probable with the passing of time is the unilateral exit of a Southern country. I think that the left should consider this perspective and include Grexit, Spaxit, Italexit etc. in its programs.

In any case, we must be aware that the exit of any country from the EU will cause a crisis, and that such an event will take place even before the exit itself. The crisis will blow up because of the propagation of exit expectations. In countries like Italy, whose public debt is mostly owned by private financial institutions, and especially in those like France, whose public debt is mainly owned by foreign banks, it is highly probable that speculative attacks will bloat the spreads of public securities yields. Thence the national banks who own consistent quantities of these securities could become distressed. Capital and liquidity flights could ensue (in certain countries, like Italy, they have already begun). Panic would be felt among vast strata of the population, and banks might have to face dangerous bank runs. The flow of credit to consumption and investments might stop. Many borrowers would delay payment of their debts, and many lenders could go bankrupt. Stock exchange crashes would be unavoidable and households and companies might face wealth losses resulting in negative wealth effects. In a situation of credit rationing and rising uncertainty, impoverished consumers and investors would reduce expenditure. Thus, the crisis would extend from the financial markets to the real economy.

Other problems would arise immediately after the exit. One concerns the TARGET2 balances. In September 2017 these were negative for Italy (-432.5 €bn), Spain (-373.4), Portugal (-76.8), Greece (-64.2) and France (-7). Surprise, surprise, the highest positive balance (878.9 €bn) was enjoyed by Germany. It is as if the official reserves accumulated by Germany with its current account surpluses had been lent to the other five countries to cover their current account deficits and/or their capital flights, or in other words to buy German goods and bonds. Now, negative TARGET2 balances are not a problem as long as a country stays in the Economic and Monetary Union. However, in the case of an exit they must be settled by the Central Bank of the exiting country. Some payment delay or nonpayment device will need to be negotiated with the ECB.

Another problem might be caused by the length of time required by the mints to produce new banknotes and coins in Lire, Pesetas etc. In this case, part of the production could be subcontracted to other mints. Moreover, since the exit will be followed by devaluation, there could be wealth losses among the companies and households who have debts and net liabilities abroad. These, however, will be offset by the wealth gains of the subjects holding net assets abroad. Finally, redistribution consequences may arise due to the possible inflationary effects of devaluation.

We must be aware of the unavoidability of a crisis, but also of the fact that its length and harshness depend on the skill and determination of the government called upon to manage it. For instance, the inflation caused by devaluation may be countered with an exchange rate maneuver aimed at devaluing the national currency against the Euro/Mark and revaluing it against the Dollar, in addition to a policy of tax cuts on imported energy resources.

Above all, however, we must be aware that a crisis of passage is the short run cost we should be ready to bear to let the Southern economies exit the lengthy stagnation they are doomed to undergo if they stay in the Eurozone.

What could a single country do outside the Union?

Exit from the Eurozone is not sufficient to resolve all the economic problems of countries like Italy and Greece, which have at present the highest probability of leaving the Union. If we remained in the EU we would still be obliged to comply with the founding and amending treaties, and abide by the diktats of the Commission and the Court of Justice. It is necessary to exit the EU completely, so that our representative and participatory institutions get back all the powers required to enact social, fiscal, monetary, commercial and industrial policies. And, to avoid a lengthening of the crisis, the exit must be achieved with a swift repudiation of the treaties, rather than with an application of their rules (which might require two years of negotiations).

One important thing to do immediately after the exit is to decree the nationalization of the Central Bank. Alternatively, if such a subversive provision proves too daunting, we should at least establish the Ministry of the Treasury as the supreme monetary authority. The Central Bank then takes on the function of lender of last resort for the government. Moreover, an ample overdraft facility in the Treasury account opened at the Central Bank needs to be decreed legitimate. These two provisions serve to make it clear to the rest of the world that the State cannot default and that it is able to determine the cost of its debt. Whatever the magnitude of debt following exit from the EU, it would no longer be a problem for the State or for its lenders.

In other words, one of the most important advantages the exiting countries would obtain from liberation is the recovery of their monetary sovereignty. This is necessary to remove the internal constraint on expansive fiscal policies, and therefore implies the recovery of effective fiscal sovereignty too. The possibility of running heavy budget deficits would not be sufficient if the government were subject to the speculators’ tyranny in determining the debt service. Putting the Central Bank under the control of the Treasury means freeing the country of such tyranny.

Another advantage produced by monetary sovereignty lies in the possibility of devaluing the national currency, which can be used to remove the external constraints on fiscal policies. A balance of payments deficit determined by Keynesian expansive policies may be eliminated by means of devaluation. I have already observed that devaluation could have very limited inflationary effects if the government were willing to check them. At any rate, I think we should not worry too much about a slight inflationary effect of devaluation.

A further thing to accomplish, following nationalization of the Central Bank, is to rescue the commercial banks at risk of bankruptcy. The banks’ shares would devalue dramatically during the crisis. The Treasury could buy and recapitalize them. Then they should be managed in the public interest, for instance, to support industrial policies.

At this point, the government will have regained all the instruments necessary to launch an economic recovery and take care of the unemployment and non-employment amassed over decades of wanton neoliberalism.

The question we must now raise is: How far can a country like Greece or Italy go if it is ruled by Abenomics (expansive fiscal and monetary policies accompanied by devaluation)? My answer is: It can go ahead, but not extremely far. Forget the economic miracle of the 50s and the 60s. Those times were characterized by an international payment system that ensured exchange rate stability and discouraged beggar-my-neighbor policies. One country, the USA, played the function of world accumulation engine quite well by pumping up its imports with its GDP growth, and many American multinationals made massive direct investments especially in Europe. None of these conditions exists today.

To be optimistic, we could hope to do as well as certain countries outside the Eurozone. For instance, the Swedish annual GDP growth rate was 1.43% in the years 2008-2016; the United Kingdom’s was 1.02%; and Japan’s 0.47% (Italy achieved a shameful -0.78% and Greece a tragic -3.29%). We should most probably make do with imitating Japan. Sweden’s success might remain a dream.

Although such a jump would in any case represent good performance, I do not think we should be content with it. Italy, Greece and other Mediterranean countries must mend a decade of disasters. If they aim to reach full employment rapidly, they must be able to grow at least 3% a year for a decade. Some protectionist measures may help improve their performance by slackening the external constraint without devaluing too much, but I doubt we can go very far in this direction.

The point is that, if the governments of countries like Italy or Greece wish to run counter to the austerity policies imposed by Germany, they will face a big balance of payments problem. If this is tackled with devaluation and/or protectionism, other countries can only be expected to react. France and Spain would encounter serious difficulties, both because their industries would lose competitiveness, and because the “markets” would immediately unleash a crisis by speculating on their sovereign debts (which are near 100% of GDP) and betting on their exit from the Eurozone. And these are good reasons for following Italy and Greece out of the Union.

What would happen afterwards? It goes without saying that we will need to launch a policy of international trade cooperation. The problem is whether such a policy is possible when governments play the most chauvinistic forms of mercantilism, those based on protectionism and competitive devaluation. In reality, not only France and Spain, but the entire Euroland could take umbrage against the unilateral exit of Italy or Greece. The exit itself would be perceived by the other countries as an act of hostility, even independently of the changes in international competitiveness, since it would cause wealth losses among their banks and other subjects with positive net asset positions in these countries. Can you imagine how mad Luther’s heirs would get with the well-known Mediterranean opportunists? And it would not be surprising if the European Commission decided to offset the trade effects of an Italian or Greek devaluation with a compensatory tariff.

Can these countries bear a commercial war with the rest of Europe? Consider that their economies are somewhat open: in 2016 the degree of trade openness, measured as (export+import)/GDP, was 56% in Italy and 62% in Greece. This means that they can ill afford either a commercial war or autarchic closure. They especially depend on imports of raw materials, oil and gas. Certainly, this dependence can be reduced via a policy of developing renewable energy sources, but only in the long run. In the short run we are all dying. And in this case the short run could well last 10 years!

True, the USA has systematically grown faster than the European countries despite far more protectionist policies. But remember that: 1)  the degree of the US’ trade openness (27%) is less than half of Italy’s and Greece’s (as well as Portugal’s, 79%, Spain’s, 63%, France’s, 60%)  and less than a third of Germany’s (84%); 2) American industry is not over-dependent on energy imports; 3) it is not even over-dependent on exports, the export/GDP ratio being 11.9%; 4) the huge size of the domestic market makes protectionist measures effective; and 5) external constraints on expansive fiscal policies are practically inexistent because the Dollar is the principal international reserve currency.

Some observers dream of Poland-like success. In the period 2008-2016, Poland’s GDP grew yearly at a striking 3.18%, with a peak of 5% in 2011. This country’s growth is based on large scale social dumping and its economy has adapted to become a huge industrial periphery, producing low cost intermediate goods for German industry. Well done, but consider that in 2016 Polish wages were about 38% of Italian wages and 63% of Greek wages. How many “reforms” should we still introduce?

There is no doubt, however, that the very nature of capitalist accumulation pushes in such a direction. Trade competition would increase following a Euro break-up, and a nationalist government might wish to comply with a process that is part of this competition, namely, the process of globalization based on the movements of foreign direct investments. It is difficult to control this kind of capital movement. You can forbid portfolio investments and liquidity flights, but you cannot forbid a multinational from closing a factory or from cancelling a subcontracting order in Italy and transferring it to Poland. How would the Italian government react if Bosch threatened to stop buying freezer parts from Whirlpool in Siena and start buying them from Whirlpool in Lodz? To answer this question, just imagine what kind of decision would be taken by Sergio Marchionne if he were promoted from his current position as CEO of Fiat Chrysler Automobiles to that of Italian Minister of Labor. The workers would obviously be asked to choose, democratically, whether they prefer a wage cut or job loss.

In other words, if growth has to take the form of capitalist accumulation, nominal devaluations and trade barriers could not be sufficient. Capital would also demand a massive dose of wage depreciation. If we have to navigate between the Scylla of high exploitation and the Charybdis of slow growth, the market sirens will insist on singing “dumping dumping”, and governments working in the “national” interest will not be able to resist the temptation: they will try to bring about as much social and fiscal dumping as possible. Forget any hope of wage rises and shorter working days.

In the present phase of global capital accumulation, with firms continuing to internationalize and nations in the grip of a mercantilist revival, a government wishing to practice the Keynesian compromise using Abenomics would be unable to re-launch sizeable growth. Abe’s Japan is a case in point. Yet a nationalist government could try to re-launch such growth with a strong increase in exploitation. In this case, Poland provides a case in point.

Summing up, I am convinced that the economies of Southern European countries would do better outside Euroland than inside it, but I also suspect that they would not do so much better as to enable the working classes to rapidly make up the ground lost over the last 20 years: either growth will be moderate or exploitation will be immoderate. There are two fundamental causes. One has to do with the degree of trade openness of our economies; the other with the capitalist nature of the growth process. These two causes, together, would take a government that had freed itself from the Euro dictatorship and place it even more firmly in the hands of the global “markets” dictatorship.

To build a Europe of the peoples

If we succeed in demolishing the European Union, but are not satisfied with moderate (Japan-style) economic growth or with immoderate (Poland-style) exploitation, we must have the courage to aim for Utopia. We have to think of a way out of the morass by triggering two processes of radical transformation: a process of political re-aggregation in Europe and a process of overcoming capitalism.

The best form of international cooperation for an exiting country is the following: a new united Europe should be constituted immediately after the demolition of the old one. And it should be constituted as a proper federal State. Federal, because it must safeguard the cultural identities of the various peoples. State, because it must be a political organism with a true democratic constitution, a true parliament and an accountable government. The government must be endowed with all the instruments required to enact policies of social transformation and industrial development, to overcome local differences in industrialization, and to expand freedoms and rights.

I hasten to specify, however, that for a long transition phase the federation must involve only the Southern countries – say, the three big Mediterranean peninsulas and France. Imagine a scenario in which the exit of Italy and Greece causes difficulties for France, Spain and Portugal, and consequently induces them to leave the EU themselves. Subsequently, perhaps after a period of commercial wars, the peoples of the exiting countries would understand that they need to re-aggregate.

Why must the federation be limited to the South of Europe for a certain time? Because, after almost half a century of the Currency Snake (from 1972), the European Monetary System (from 1979) and the Single Currency, the differences from Germany have grown so great that it is not possible to invert the tendency without breaking free from the Northern countries and enacting a strong industrial policy protected by trade barriers and devaluation. Let me insist on one particular point: it must be a political federation, and not, for instance, merely a monetary union. A monetary union of Southern Europe would reproduce the problems of the present European Union, with the sole difference that Lombardy would play with Sicily and Greece the same game that Germany is now playing with Italy and Greece.

The economic advantages of a South European Federation would be many. Here are some of the most significant. Integration would prevent commercial wars among the federating countries. It would constitute a continental economy with a much lower degree of trade openness than those of the individual countries. It would constitute a market broad enough to enable companies to enjoy economies of scale and some of the advantages of internationalization without the need for offshoring. It would reduce the governments’ vulnerability to the pressures and blackmail of the multinationals. Finally, it would increase the efficacy of a protectionist policy, since the companies producing import substitutes could achieve economic efficiency more successfully the broader the internal market, while the exporting companies facing commercial retaliation from other countries would also have a greater probability of survival with a broader internal market.

If such a South European Federation aims for sustained growth, the government cannot solely rely on “market sovereignty”. Rather, it must equip itself with effective industrial policy instruments, to be able to launch or re-launch important industries oriented toward exports, import substitutions and R&D investments. Moreover, we will need an industrial policy oriented toward the substitution of fossil energy sources with renewable sources. Finally, the industrial policy should aim to industrialize or re-industrialize vast regions of the continent, so as to reduce some of the deepest internal differences.

Yet industrial policy is not enough. If the federation is to be a democratic State that works for the people and not for capital, the government must also enact fiscal and monetary policies aimed at the achievement of full employment, the advancement of the poor classes’ living standards, the improvement of working conditions, and the reconstruction of the welfare state.

Most of these objectives are difficult to attain with capitalist growth and the global “market sovereignty”. How would capitalist firms react to wage increases, reductions in working hours and the strictures of industrial policies? Trade barriers would not be sufficient to contrast any tendency to offshore and outsource. Hence, the overthrow of capitalism becomes almost a necessity for economic growth. This is an epochal consequence of globalized capitalism – accumulation has become incompatible with a Keynesian compromise on a national basis. The government of the Federation must be aware of this problem and be able to enact the policies required to deal with it. Two in particular come immediately to mind.

First, it is necessary to support enterprises recuperated by the workers who lost their job due to the closing of plants. A law regulating these practices already exists in Italy, but is imperfect and limited, having been worsened by the impositions of the European Union. The law needs to be reformed, among other things, by augmenting the financial facilities for the constitution of workers’ cooperatives, and by extending the number of cases to which it applies. Obviously, it must become a federal law. The development of a strong cooperative sector represents an effective defense against rampant globalization; for capital does offshore, the workers don’t (when they are not unemployed).

Second, when company sizes are so big as to make the constitution of proper cooperatives difficult, the government must favor the creation of new firms or the acquisition of old ones with a sizeable share of public ownership. This kind of policy is especially important when the existing firms are in distress or show social irresponsibility (for instance, because they offshore, or pollute, or tend to accumulate monopolistic power).

In particular, public ownership, either through nationalization or through State participation, must be imposed upon companies working in sectors afflicted by significant market failures: public goods (e.g. infrastructures), merit goods (e.g. health services), information asymmetries (e.g. banks), common goods (e.g. environment), and natural monopolies (e.g. water distribution).

These policies must be realized in a flexible way and with popular consent. In a long transition period, development could be based on a mixed economy with cooperative, public and capitalist firms competing in a well-regulated market.

Conclusions

I can see the condescending smile on the faces of many dismal science practitioners. Nevertheless, I wish to make it clear that my appeal for the courage to aim for Utopia was not ironical. After all, history is a history of changes, and we Europeans should know that the most radical changes often blow up unexpectedly. The question we must raise now is: how could the desired change come about?

To start with, let me make clear that a new European Federation must not be created with treaties signed by States uniting national interests. We already watched this film and did not like it. National interests are normally interpreted by ruling classes as coinciding with an interest in “growth” within the present mode of production, i.e. an interest in capital accumulation.

And forget the illusion of “national sovereignty”, according to which the Italian or Greek or French peoples would recover true democratic sovereignty simply by exiting the European Union. Do not forget that the entrance of our countries in the Union were decided by governments who enjoyed “democratic” legitimacy.

What is required is the building of a “real democracy”. We need to trigger a political transformation in which the exploited masses are the active agents. This change could take the form of the constituent process of a new Europe. One can imagine a serious economic crisis that would make the working classes aware of the need to exit the Euro cage, to free themselves from the political domination of the present ruling classes and from the economic domination of the “sovereign markets”, and hence the need to build a new political system in which the peoples can self-govern.

One could hypothesize a sort of European Resurgence: a movement for liberation and unification nourished by a revolt against an antidemocratic ideology – neoliberalism – and against States subservient to the interests of capital. This Resurgence should lead to the birth of a new State and a new constitution, and to the creation of a democracy open to socialist transformation.

[*] Department of Political Economy and Statistics, University of Siena. This is a modified version of the Preface to the book (in Greek): C. Lapavitsas, T. Mariolis and K. Gavrielidis, “Economic Policy for the Recovery of Greece” Athens: Livanis, 2018.

The European and international centers of the establishment, especially the domestic political and economic establishment, are engaged to brainwashing and terrorizing the Greek people, by presenting the abandonment of the Euro and Greece’s transition to the national currency as destruction.

The Popular Unity (LA.E) published a broschure, which in a brief and as far as possible intelligible way, attempts to highlight and open for discussion the steps and measures of the transition of Greece to the national currency on the basis of a radical program. Moreover, it attempts to highlight that the transition from the Euro to the new national currency, via a radical program, is a realistic and viable option and that this is the only option to pull the country out of the crisis, without any more “bailout” programs and austerity, and bring it back in track towards growth and productive transformation with social justice.

Please find the broschure here: 20180126_Popular Unity – Proposal for Breaking with the Euro.

by Thomas Fazi and William Mitchell

As the EU’s internal crisis increases with many citizens rebelling against what has become a neo-liberal project, European politicians are racing to strip national governments of all power to prevent any further democratic interventions. The centre-left still believes the EU is an institution for the good of Europe. They fail to ask the most important question: Whose Europe are we talking about?

Pinpointing the moment at which the process of European integration took a turn for the worse is not an easy task. That is because the more nefarious (from a progressive perspective) aspects of that process are the result of seemingly non-nefarious decisions taken decades earlier. For the sake of simplicity, we can trace the beginning of Europe’s turn to neoliberalism to the mid-1970s, when the so-called ‘Keynesian’ regime, which had taken hold in the West after the war, was experiencing a full-blown crisis.

Militant wage pressure, rising costs, and increased international competition had caused a squeeze on profits, provoking the ire of capitalists. But, on a more fundamental level, the full employment regime ‘threatened to provide the foundations for transcending capitalism’ itself: an increasingly militant working class had begun to link up with the new counterculture movements of the late 1960s, demanding a radical democratisation of society and the economy.

As the Polish economist Michał Kalecki had anticipated thirty years earlier, full employment hadn’t become simply an economic threat to the ruling classes but a political one as well. This preoccupied elites throughout the 1970s and 1980s, as confirmed by various documents published at the time. The Trilateral Commission’s oft-cited Crisis of Democracy report of 1975 argued, from the establishment’s perspective, that a multi-level response was required. One aimed not only at reducing the bargaining power of labour, but also at promoting ‘a greater degree of moderation in democracy’ and a greater disengagement (or ‘non-involvement’) of civil society from the operations of the political system, to be achieved by spreading ‘apathy’.

This second objective – which the Trilateral Commission judged to be ‘a central precondition’ for attaining the first objective: the transition to a new economic order (that is, neo-liberalism) – was achieved primarily through gradually depoliticising economic policy. That meant hollowing out national sovereignty and removing macroeconomic policy from democratic (parliamentary) control – for example by making central banks formally independent of governments – thereby effectively insulating the neoliberal transition from popular contestation. By ‘tying their own hands’, governments were able to reduce the political costs of the neoliberal transition – which clearly involved unpopular policies – by blaming international agreements and treaties, as well as multilateral institutions. These policies were then presented as the inevitable outcome of the new, harsh realities of globalisation.

In Western Europe this struggle to demobilise popular movements was brought to its most extreme conclusion. Following the collapse of the Bretton Woods system of fixed exchange rates, in 1971, most European countries continued to experiment with various forms of currency arrangements. This eventually led to the creation, in 1979, of the European Monetary System (EMS), which essentially anchored all participating currencies to the German mark and, consequently, to the ‘anti-Keynesian’ and anti-inflationary stance of the Bundesbank. This strategy succeeded in fostering greater exchange rate cohesion, but the adjustment fell entirely on the shoulders of the high-inflation, weaker-currency countries. Their currencies appreciated in real terms and transmitted a disinflationary impulse throughout the EMS.  This ‘competitive disinflation’ led to the low growth and high unemployment that characterised the European economy in the 1980s, generating structural current account deficits in countries like Italy and France.

The decision of the weaker-currency nations to join the EMS led to a loss of competitiveness and export shares on their part, while hugely benefiting the stronger-currency nations (particularly Germany). From the point of view of the former, this might appear largely self-defeating. However, such a decision cannot be understood solely in terms of nationally framed interests, but should be viewed as the way in which one part of the ‘national community’ was able to constrain another, as James Heartfield noted. This was a reaction to the distributional struggle of the 1970s, when European capital called for the state to discipline the working classes and their organisations, in order – first and foremost – to restore the profitability of capital through wage compression. In this sense, the logic of ‘competitive disinflation’ hardwired into the EMS allowed national politicians, now ‘deprived’ of the tool of competitive devaluation, to present wage compression and fiscal austerity as the only means through which to restore a country’s competitiveness.

The prism of ‘depoliticisation’, a willing and conscious limitation of state sovereign rights by national elites, helps us understand all the subsequent phases of the European integration process.

A major breakthrough came in 1986 with the Single European Act, which abolished all capital controls throughout the EEC. These controls had been the major reason for any sense of currency stability in Europe until that moment – but this was overlooked by the Delors Report of 1989, which was the logical extension of the single market legislation and which acted as a blueprint for the Maastricht Treaty of 1992. That treaty (formally, the Treaty on the European Union, or TEU) established an official timeline for establishing a European monetary union. Most participating states agreed to adopt the euro as their official currency, and to transfer control over monetary policy from their respective central banks to the ECB by 1999. Germany also insisted that ECB’s sole objective should be to keep inflation down: its main, if not its only, criterion for acting would be to ensure price stability. Furthermore, Articles 123 to 135 of the updated form of the Maastricht Treaty, the Treaty on the Functioning of the European Union (TFEU), clearly prohibited the ECB from financing public deficits.

With hindsight, the aim seems clear: to extend a free-market-like logic to the public finances of states, thereby activating a disciplinary effect. We saw the ugly effects of this in Europe in the aftermath of the 2007–9 financial crisis. Jean-Claude Trichet, former president of the ECB, made no secret of the fact that the central bank’s refusal to support public bond markets in the first phase of the financial crisis was aimed at forcing eurozone governments to consolidate their budgets.

The Maastricht Treaty also set out strict deficit- and debt-to-GDP limits for member states – which were subsequently tightened. This essentially deprived countries of their fiscal autonomy without transferring this spending power to a higher authority. As Heartfield wrote, monetary union can thus essentially be considered ‘a process of depoliticizing a central plank of economic and fiscal administration, the currency’. In this sense, the establishment of the euro can be considered the end-point of the European elites’ decades-long war on sovereignty and democracy.

As the late, great British economist Wynne Godley presciently wrote in 1992, ‘the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence’. Thus, by adopting the euro, member states effectively acquired the status of local authorities or colonies.

The scope of the European treaties, however, extends well beyond fiscal and monetary policy. The texts effectively set down the primary legal structure of the European Union’s economic policy. This has since essentially remained unchanged. The EU’s guiding principles are clearly espoused in the prefix to the chapter on economic policy, where it says that the EU and its member states must conduct economic policy ‘in accordance with the principle of an open market economy with free competition’ and to comply with the guiding principles of ‘stable prices, sound public finances and monetary conditions and a sustainable balance of payments’.

Other relevant articles of the TFEU include:

• Article 81, which prohibits any government intervention in the economy ‘which may affect trade between Member States’;
• Article 121, which gives the European Council and European Commission – both unelected bodies – the right to ‘formulate … the broad guidelines of the economic policies of the Member States and of the Union’;
• Article 126, which regulates the disciplinary measures to be adopted in case of excessive deficit;
• Article 151, which states that the EU’s labour and social policy shall take account of the need to ‘maintain the competitiveness of the Union economy’; and
• Article 107, which prohibits state aid to strategic national industries.

The treaties essentially embedded neoliberalism into the very fabric of the European Union, effectively outlawing the ‘Keynesian’ polices that had been commonplace in the previous decades. They prevent currency devaluation and direct central bank purchases of government debt (for those countries that adopted the euro.) They prevent demand-management policies, or the strategic use of public procurement, and they place tight curbs on generous welfare provisions and the creation of employment via public spending. They have laid the basis for a wholesale re-engineering of European economies and societies.

The legal implications of these treaties – which are often overshadowed by social and economic considerations – cannot be overestimated.  That is because, even though France and the Netherlands famously voted against a joint European constitution in 2005, ‘ultimately the treaties do establish a constitutional order for the EU’. Yet it is a very peculiar constitutional order, due to its supranational (and therefore intrinsically non-democratic) nature. Unlike national constitutions, it cannot be democratically amended by citizens: it can only be amended unanimously in the context of a new international agreement – which, in practical terms, means that it is not amendable. The only thing individual states can do is repudiate the whole structure.

As the president of the European Commission himself, Jean-Claude Juncker, said at the beginning of SYRIZA’s mandate, ‘there can be no democratic choice against the European treaties’.

Moreover, unlike other constitutions and legal frameworks, which generally define the relation between a state’s various institutions and the basic rights of citizens, this effective European constitution ‘formulates a specific economic philosophy (or ideology) on which it then bases – or rather “constitutionalises” – detailed regulations that frame its economic policy’.

It does this also by anchoring norms and regulations within national constitutions, thus progressively hollowing them out from the inside. This gives immense powers to the European Court of Justice, which has the final word on legal disputes between national governments and EU institutions. It is no surprise that Alec Stone Sweet, an international law expert, termed it a ‘juridical coup d’état’.

In recent years the European Union’s authoritarian constitutionalism has evolved into an even more anti-democratic form that is breaking away from elements of formal democracy, leading some observers to suggest that the EU ‘may easily become the post democratic prototype and even a pre-dictatorial governance structure against national sovereignty and democracies’. We saw this in Greece in 2015, when the ECB actually cut off its emergency liquidity to Greek banks in order to bring the SYRIZA government to heel and force it to accept the third bailout memorandum.

To conclude, any belief that the EU can be ‘democratised’ and reformed in a progressive direction is a pious illusion. Not only would this require an impossible alignment of left movements/governments to emerge simultaneously at the international level. On a more fundamental level, a system that was created with the specific aim of constraining democracy cannot be democratised. It can only be rejected.

This article was first published at braveneweurope.com.

by Herman Michiel

In a reaction to the Brexit speech of the British prime minister Theresa May (2 March), Gabi Zimmer, group leader of GUE/NGL in the European Parliament and member of Die Linke, made a declaration which supposedly represents the position of the radical Left on the current state of affairs in the Brexit negotiations between the United Kingdom and the European Union. I am not happy with this declaration, as it differs hardly from the ones made by the EU establishment.

Consider a statement as “Theresa May did not come up with a coherent proposal on how to concretely translate the political deal of last December into a binding agreement – as requested in the last European Parliament resolution and in the Council guidelines of 15th December 2017.” Or another one: “She dreams of a special treatment for the United Kingdom in the coming future whilst forgetting that she must deliver on the initial promises. Stating that this is not cherry picking does not make it a realistic negotiating option.”

Doesn’t it drip with bureaucratism and EU legalism? Does it suggest any difference between the radical left and the usual representatives of neoliberal Europe? I am afraid not. Parliamentary radical left seems to share the vision of Barnier, Juncker, Tusk, Verhofstadt and tutti quanti on the first withdrawal from the European Union. The parliament resolution, written under the supervision of Guy Verhofstadt, was approved by most radical left MEPs, a quarter of them abstained, none was against. Nonetheless, the resolution requires that the future EU-UK relation be in  “strict concordance with the protection of the integrity of the internal market and the four freedoms“, in other words: free movement of goods,  services, labour force and … capital.  The resolution further requires “safeguarding the EU legal order and the role of the Court of Justice of the European Union“.

For sure, Theresa May is a thoroughly rightist politician, and the Brexit of her Tories is not intended to be an emancipatory project for the working class. But at the same time, May is – whether you like it or not – the current interlocutor for the British nation in its relations with the EU. She will not be that interlocutor for ever. It is not impossible, everyone at the Left hopes so, that a certain Jeremy Corbyn takes that place, who knows even before the 29^th of March 2019, end date for an agreement EU-UK.

Suppose this happens. Will the parliamentary radical left then still insist on “the last European Parliament resolution and the Council guidelines of 15th December 2017”? GUE/NGL will certainly know that Jeremy Corbyn recently opted in a speech for good trade relations with the EU, but he also announced that, in case of a Labour government, the UK would negotiate “protections, clarifications or exemptions where necessary in relation to privatisation and public service competition directives, state aid and procurement rules and the posted workers directive.” In other words, the UK under Corbyn’s Labour would not abide by “the integrity of the internal market and the four freedoms”. But it is in vain that one looks for an echo of Corbyn’s Brexit for the many, not for the few in Gabi Zimmer’s declaration.

A large part of the Left in Europe is still captive of Europeanist illusions and inhibitions, and one can understand the difficulties in breaking through that barrier. To give one example: practically the only ones who voted against the Brexit resolution of the European Parliament were from extreme right parties; if the left had rejected the text, media reports would certainly point to the “extremes who find each other in their hate for Europe”. But leaving the extreme right as the sole (pseudo-)opponents of neoliberal Europe is certainly not a solution.

The left in Europe needs an intense debate on strategic and tactical questions. This will certainly be difficult, sometimes even painful (as in the case of Mélenchon’s demand to exclude Syriza from the European Left Party), but utterly important. Let’s start it in our Lexit network as well!

“Selbstbestimmtes Österreich” (SBÖ, Austria Self-determined) is a new political alliance in Austia.  They define four basic lines for their approach on Austrian politics: Democratic, Social, Sovereign, Neutral. The approach is in key points very colse to the Lexit idea, as the founding declaration says: “The EU-integration is the transmission belt for the neo-liberal reconstruction of Austria, which means that any serious protest against the right-wing government has to include protest against the right-wing EU politics. It cannot ignore that the very essence of the EU neither allows any alternatives against its aggressive economic policy nor against its anti-democratic, militaristic and chauvinistic political moves within its structures. Therefore it is necessary to question the whole structure of the EU and think about alternatives to being a member of this union.” We document their founding declaration in our blog.

Democratic – socially responsible – sovereign – neutral
Against the government dictated by the Federation of Austrian Industries

The current government’s programme largely originates from the pen of the Federation of Austrian Industries and its entourage. With this programme those forces see a good chance to establish a new centre of power that will accelerate the neo-liberal societal and economic counter-reform, safeguarding this process with chauvinistic rhetoric and politics. They are aware of the fact that many of the underprivileged and disadvantaged voted for them in the false hope that their social situation would be improved. So the government also knows they have to act quickly. They will target all social and political forces and institutions opposing the radicalised neo-liberal deconstruction of society.

The political orientation of the current government is congruent with the EU bureaucracy’s politics, so any protest against this government’s measures that calls for EU support exposes itself to ridicule. In order to oppose the right-wing development thoroughly, the neo-liberal changes have to be questioned fundamentally.

The elimination of trade restrictions results in wage cuts, social cuts and de-democratization. As a result, the gap between the rich and the poor is widened, with the concentration of assets and wealth in the hands of a few, reaching levels of the times before 1914. The uncertainties in international exchange relationships are increasing. Deregulated financial markets cannot compensate these imponderables and they themselves become explosives for the next crisis. Export battles are a threat to international relationships and do destabilize countries in peripheral regions to an extent that may result in warlike conflicts and outright wars.

The EU-integration is the transmission belt for the neo-liberal reconstruction of Austria, which means that any serious protest against the right-wing government has to include protest against the right-wing EU politics. It cannot ignore that the very essence of the EU neither allows any alternatives against its aggressive economic policy nor against its anti-democratic, militaristic and chauvinistic political moves within its structures. Therefore it is necessary to question the whole structure of the EU and think about alternatives to being a member of this union.

We want a DEMOCRATIC society, a society based on gender justice, a society that allows all its members to take part in will formation and decision-making processes equally. This requires that the subordination to all the institutions – in particular the EU-bureaucracy – which accelerate the neo-liberal reconstruction of our society must be broken up. Furthermore, it definitely requires turning away from the political establishment that creates concepts and stereotypes of the enemy for the disappointed and those left behind, directing their energies towards those enemy images while at the same time pushing through political measures in the interest of the elites.

We want a SOCIALLY RESPONSIBLE society, a society that respects and protects the collective rights of the people, a society that allows a democratic management of economic processes, thereby taking the interests of the society at large into consideration. Our political aim is to use productivity gains for the development of public services in the health, nursing and educational sectors as well as for an ecological change instead of their current annihilation in export battles and in the accumulation of parasitic wealth. Our political aim is to put an end to a situation where the poor are played off against the poor; in its place, we want a society where everybody’s right to existence in dignity is secured.

We want a SOVEREIGN Austria. Our aims can only be realized effectively if they are related to a concrete political entity. Democracy and a socially responsible welfare state have to be based on this particular political framework. The accusation of falling back into nationalism is wrong and misleading. The nation state is still the framework within which the social life of the people is politically organised. The call for abandoning this national framework under the pretext that this concept would imply the return to nationalist thinking would mean surrender to the elites who, in their turn, effectively use the nation state as a tool to push forward globalisation and to pursue the class struggle in their own interests.

We want a NEUTRAL Austria. It represents the heritage of the victory over German fascism and its imperial expansion. Sovereignty does by no means stand for isolation and dissociation. What we want is an open-minded exchange with other societies as equal partners. This implies that every collaboration or cooperation with major powers like the EU or military blocs like NATO, which secure a world order based on injustice and violence, must be terminated. The status of neutrality offers the chance to work together with other neutral states striving for sovereignty in order to contribute to a world that might realize peace and just international relationships.

We are expecting upcoming social and political conflicts as the profile and plans of the new government are clear:

* cuts in social welfare especially affecting the poorest, especially migrants

* attacks of the public bodies of self-determination (chambers, social security, etc.)

* attacks on collective bargaining and unions

* contracting the budget and further decreasing public services which is deepening the class divide

* tax gifts to corporations and wealthy

* increasing lack of housing in the urban centres

* growing police state and repressive apparatus

* continued gridlock in reducing climate affecting emission

* continued deregulation and liberalisation of transport instead of endeavouring an ecological turn-around

* intensification of the campaign on refugees, migrants and Muslims as enemies; segregation instead of integration

* Emptying out neutrality by participation in core Europe

We pledge to support anybody, political forces as well as institution, who is ready to resist these attacks and will co-operate with them. We do not set any conditions but insist on respecting the political and social rights of everybody whose centre of live happens to be in Austria. We are convinced that a break with the neo-liberal regime is necessary. We do not want to force this conviction on anybody but we want to show in the forthcoming conflicts that this premise is useful.

Our position must become visible, audible and palpable. Hence we are uniting in order to commonly act politically, in front of media and for street actions.

Especially we will fight

* against dismantling the public representative bodies defending the interests of the lower classes which would drive the neo-liberal restructuring of society.

* against a debt ceiling being cemented in the constitution. Its target is not a balanced public budges, but a further curbing of democracy

* against all cut into the welfare state

Published with the kind permission of  The Bullet, Socialist Project Canada

By Richard Fidler

The Spanish state’s repression is now a major issue in Germany, where former Catalan president Carles Puigdemont was arrested March 25, pursuant to a Spanish judge’s warrant while travelling by car from northern Europe to Belgium, where he was living in exile. His arrest provoked immediate mass protests in Catalonia.

German prosecutors are seeking to extradite Puigdemont to Spain where, along with other jailed and exiled Catalan nationalist leaders, he faces charges of “rebellion,” which carries a sentence of 30 years imprisonment.

The Spanish court has issued similar arrest warrants against other Catalan leaders now in exile in Belgium, Scotland and Switzerland. Writing in the Catalan daily Ara April 3, legal expert Javier Pérez Royo noted that each of the extradition judges, irrespective of their country, “knows that the individual cases that they are expected to decide on are all linked by a common thread. And all of them realise that this affair has taken centre stage as far as Europe’s public opinion is concerned, as a browse through the papers will easily confirm.”

There is “a shared link” in all of these cases, Pérez Royo added: “what constitutes a crime of rebellion in a democratic European country well into the 21st century?”

In a manifesto concerning the Catalan prosecutions published in November in the Spanish on-line newspaper El Diario, more than 100 professors of criminal law from throughout Spain state that “it’s seriously mistaken to consider the facts as constituting a crime of rebellion [as defined by] article 474 of the Penal Code” because… the “structural element of this crime, which is violence, is absent.”

Read the full text at socialistproject.ca.

by Thomas Fazi

This text is an edited version of a speech given at the conference “How to deal with Public Debt? – Lessons Learned & Policies Ahead” organised on by the GUE/NGL at the European Parliament and first published by Brave New Europe

Public debt has been an important tool for furthering neo-liberal policies, especially in the EU. In the Great Financial Crisis not only did governments have to bail out private banks, but clean up the economic mess that the neo-liberal free market left behind it, such as the resulting high unemployment, which added to the public debt burden. As a result, a myth has been spun about high public debt, enabling politicians to force through austerity and massive transfer of wealth to the rich and increased inequality.

 The question of public debt is once again making headlines across Europe, most notably in Italy and Greece. Yet, public debt is not among the most pressing issues facing the EU and Eurozone (with the possible exception of Greece), at least from a financial-economic standpoint. Moreover, when talking of “the problem of public debt” or the “debt crisis”, we have to be careful because there is the risk of fuelling dangerous and destructive myths. It implies that the main problem facing Greece and other periphery countries was and is the “excessive” level of public debt itself (in turn caused, it is implied, by excessive social welfare spending).

This was not true for most countries – apart possibly from Greece – back in 2009-10 and it is not true today. In fact, before the financial crisis of 2007-09, some of the periphery countries hit the hardest – Spain, Ireland, to a certain degree even Portugal – had among the lowest deficit/debt levels in Europe. The two periphery countries that could be said to have a relatively “high” public debt pre-crisis (according to the totally arbitrary criteria of the Maastricht Treaty) were Italy and Greece. But in both cases it had been hovering stably at around 100 per cent in the years before. It was only with the financial crisis that the deficit and public debt soared as governments stepped in to bail out their overly indebted banks. Overall, by 2010, the average public deficit in the eurozone had jumped from 0.7 per cent to 6 per cent; while the euro area’s overall public debt had gone from 66 to 85 per cent.

Ultimately, in most countries, the crisis was caused by a build-up of private – not public – debt; in all cases, including those where public debt rose, this can be attributed to the massive increase in cross-border capital flows following the introduction of the euro (which in turn led to equally massive intra-European current account imbalances), as acknowledged even by the vice-president of the ECB Vítor Constâncio. So it is important to acknowledge the structural causes of the debt build-up: these can all be traced back to the creation and faulty architecture of the monetary union.

That said, insofar as most countries today do indeed register relatively high levels of public debt, is that a problem? From a technical standpoint, no. This was proven very eloquently in the summer of 2012, when – after three years of incessant psychological terrorism about the need for high-debt countries to implement harsh reforms and austerity measures, and (in most cases) accept the onerous terms of various bailout packages, all this to “reassure the markets” and reduce the debt – Mario Draghi put an end to the “debt crisis” overnight simply by saying that he was “ready to do anything it takes to preserve the euro”. Draghi’s message to financial markets was clear: if they continued to demand excessively high interest rates, the ECB would step in and buy the bonds itself.

This did not go as far as transforming the ECB into a “normal” central bank – far from it – but it was a telling reminder of the fact that public debt is never a problem so long as it is guaranteed by the central bank that issues the currency in which the debt is denominated. We have countless examples of this around the world. Moreover, it showed that it is the central bank that sets interest rates, not the markets. It also made clear that Europe’s “debt crisis” over the 2009-12 period was the result of the dysfunctional architecture of the eurozone – where governments borrow in what is effectively a foreign currency, i.e., a currency that they don’t control – not the debt itself. Finally, it showed that the allegedly “painful but necessary” policies imposed on countries were absolutely unnecessary and counterproductive with regard to reducing the debt, which has grown exponentially precisely as a result of these policies (due to the collapse in GDP) – and were in fact politically and ideologically motivated class-based decisions. All the pain could simply have been avoided.

So is Europe facing a “debt crisis” today? From a financial standpoint, no: thanks in part to the ECB’s quantitative easing (QE) programme, interest rates on ten-year government bonds are relatively low across the Eurozone, despite a small uptick in recent months. However, the main political issue remains unresolved: the ability of euro area countries to service their debt essentially depends on the “good will” of a central bank not subject to any form of democratic accountability or control. Thus, debt appears to be under control; at any moment, however, the ECB could bring the QE programme to an end, reduce the volume of bond acquisitions of any given country or even exclude one from the programme, pushing it back into the jaws of the financial markets. From a popular-democratic standpoint, this situation is unacceptable.

It is unparalleled anywhere else in the world. In “normal” countries – that is, advanced countries that control their currency – there is a strict operational (if not political) relationship between the central bank and the government, where the former tends to support the decisions made by the fiscal authorities. There, public debt is almost never a problem. We have the example of Japan: even though the country has the highest debt-to-GDP ratio in the world (close to 230 per cent), the central bank in recent years has effectively written off a huge chunk of the debt – more than 40 per cent of the country’s public debt has now been permanently buried in the Bank of Japan’s balance sheet – and has just announced that it will keep interest rates on government securities at zero for the foreseeable future, to reduce the government’s interest burden and help it pursue more expansionary fiscal policies. And guess what? The country is close to full employment. So much for the problem of excessive public debt.

This is the opposite of what happens in the Eurozone, where the central bank essentially tells governments: we will help you service the debt but only if you agree to implement austerity and forego any form of expansionary fiscal policy. This goes to the heart of the problem: public debt in the Eurozone is a political tool – a disciplining tool – used to get governments to implement socially harmful policies (and to get citizens to accept these policies by portraying them as inevitable). We saw this at play in Italy, in 2011, when the ECB effectively used its monopoly currency-issuing powers to pressure a democratically elected government into resigning. And, of course, we saw it in Greece during the infamous summer of 2015, when the ECB paralysed the country’s banking system by cutting off its banks’ access to central bank liquidity.

Greece exemplifies the political use of debt in the Eurozone: as long as the troika disburses the latest bailout trance, the country does not face serious repayment issues for many years to come. So – assuming the troika disburses the money, as is likely – even in Greece the debt does not raise pressing financial problems, though the country would of course benefit from lower interest rates. It does, however, raise serious political issues: Greece is to all intents and purposes a debt colony, whose financial survival depends entirely on decisions made by its creditors. This explains why Europe continues to refuse to seriously consider any form of debt relief for Greece, despite the various commitments and promises to that end made in recent years: debt is the chain that keeps Greece from straying “off course”.

Europe does not, then, face a debt problem; it faces a Euro problem. Certainly, there are many measures that technically could be undertaken at the European level to stimulate the economy, make debt permanently sustainable, etc., even within the current treaties, as countless proposals put forward over the years have shown. But such proposals – let alone a more radical reform of the treaties in a more solidaristic and Keynesian direction, which would require a “Eurozone government” to run budget deficits with the support of a reformed ECB, full debt mutualisation, permanent fiscal transfers between countries, etc. – are simply not politically viable given the current balance of power among countries and the neoliberal path dependency of the EU and Eurozone.

What Greece really needs, meanwhile, like other periphery countries, is a massive public spending and investment boost – i.e., relatively high deficits for a prolonged period – and a lower and more flexible exchange rate. Neither of these two conditions, of course, can be met within the framework of the single currency. Ultimately, the experience of the SYRIZA government shows that implementing truly progressive, redistributive policies within the Eurozone framework is impossible.