For a wide alliance of democratic, social and popular forces to be prepare for the clash with the EU
by Wilhelm Langthaler
By means of the Euro regime the capitalist oligarchies of the European Union are inflicting the worst social disaster on the popular classes. The waves of attacks are carried out in an uneven way affecting first of all the peripheries which in some places are suffering more than during the great depression of the 1930ies. Enforcing mass impoverishment has been requiring a substantial curb on democratic rights and especially the dismantlement of national sovereignty by the Brussels supra-national bureaucracy.
Popular resentment, unease and also resistance is, however, rapidly growing. The subaltern strata eventually start to search for means to end the relentless attacks by the elites. They turn against globalisation. In order to restore social justice and democratic participation the popular masses envisage the return to national sovereignty. The Brexit vote was a heavy popular blow against the ruling elites both the British ones as well as those of the EU. New such acts of disobedience, rebellion and explosion are in preparation and can happen soon in a range of countries. The next litmus test is the constitutional referendum in Italy which could lead to the collapse of the Renzi regime which has been serving as the last defence line of the Europeist elites.
A look on Euromania to understand the disenchantment
The common currency was promoted as the crowning of European unification, depicting its core, the common market with is supra-national institutions, as a civilizational progress. That was based on two indeed historic promises which the workers’ movement ultimately had failed to delivery on: On one hand there is the pledge to social convergence of the continent which historically had been ragged by an abyss between rich and powerful centres and poor and subordinated peripheries. On the other hand there was the projection of a democratic framework which would provide for the overcoming of the inherited conflicts between the nations and allow for lasting peace. Obviously those two aspects go hand in hand influencing each other.
Those were the heydays of globalisation. Clinton promised that unchained capitalism would bring civilization to its highest point eventually ending there. This narrative tended to be bought by the global middle classes, the “Golden Billion”, well into the years 2000. The credit bubble enabled them to embark on a consumerist spree while celebrating that not work but mere financial speculation would secure their wealth.
That poverty has been steadily growing and an army of working poor reappearing, went unnoticed or encountered no interest by the middle classes which provided the pillars which casino capitalism was resting on. Neither did the NATO war on Yugoslavia disturb their perceptions. It appeared as a global policing operation driving out the bad spirits of the past and not as the inauguration of the renewed subordination under the western centres.
Massive and on the long run unsustainable imbalances had been building up, however, already at that time. There was the substantial current account surplus generated by the German centre which went inverse to offsetting capital flows to the periphery. The Schröder government further depressed wages development way below productivity growth – a systematic anti-popular policy no other country could match. But liberalist indicators have been blind to such signs of imminent crisis as market decisions are deemed always right and wise. On the contrary they have been turning it into a virtue every country has been bullied to emulate until today.
Change in the public perception by the middle classes came about only years into the global economic crisis which started in 2007/8. The credit bubble collapsed, banks were pushed on the brink of default being bailed out by the states, which on its turn triggered the sovereign debt crisis. The emergency credit programmes imposed on the periphery provided not only for extreme austerity, wage depression and eternal recession but also led to the loss of the last traces of national sovereignty by the debtor countries.
Hybrid imperial character of the Euro/EU regime
When creating the Euro the capitalist elites were unified in setting up a supra-national institutional framework armoured in front of the popular masses able to impose the neo-liberal agenda. But that did not mean that national interests ceased to exist. Actually it was a complicated compromise between the two leading countries France and Germany. Paris by means of the common currency intended to end the terror which had been exerted by the Bundesbank and to allow some economic co-ordination. Conversely, Bonn/Berlin maintained a sceptical view on the common currency for they feared to be forced to give in to demands of their partners. They eventually accepted the Euro in return to German re-unification and the modelling of the ECB along their extremist ordo-liberal conceptions. Finally German export business got the much wanted brake on currency revaluation which their ideologues and state bureaucrats did not want to grant them. It was this institutionally fixed undervaluation which allowed their ensuing exceptional expansion.
But this compromise included the break-up of the link between currency and treasury – an unprecedented situation where the issuer of money is not empowered to defend it as lender and spender of last resort. Germany refused any “transfer union” and made the “no bailout clause” a precondition.
Deprived of any protection including depreciation and use of their own currency the industries of the peripheral countries got heavily degraded. Austerity common from the mid 80ies did not suffice any more to keep the German pace of driving down the wage/productivity ratio. Given the construction principles of the currency union the default of the periphery became imminent. Without bailouts and bond market intervention by the ECB the Euro would have collapsed years ago.
As the main creditor state Germany thus acquired an extraordinary role calling the shots behind the supra-national bureaucracy. The lacking debt mutualisation, required by any common currency, serves as a powerful stick in the hands of the German elites blackmailing the rest of the EU onto their ultra-liberal line more and more running also against the interests of the respective national elites.
This imperialist turn, however, is of very limited reach and can backfire very soon. To refuse paying the imperialist costs in the long run is a weakness not a strength. The extraordinarily powerful lever of conditioned emergency credits can be easily turned into a lever to split the entire imperial edifice – a simple mechanism of reverse momentum. Suffice that a member country refuses to accept the conditions, is ready to default on its debt and is prepared to issue its own currency – exactly what the Tsipras government did not dare to endeavour.
That shows not only how unprepared Germany is for its newly acquired role but also how vulnerable the imperial edifice of the Euro regime is given the increasing contradictions it continues to generate.
The loss of hegemony of the EU elites across the continent is far reaching. Not only the poor strata but also increasing sections of the middle classes do no more believe in the narrative of social convergence. But the social component is only the basis on which the political crisis thrives. It is the imperial character as well as the German dominance within it that renders things so explosive. The promise of continental participation, democracy and peace crumbled. Not only the Euro but also the entire EU narrative is no more credible for the subaltern classes. The Brexit class vote there is indicative.
The centrifugal forces have grown too strong to be suppressed by the supra-national centre all the more as it is increasingly split along national interests. The collapse of the Euro regime is inevitable and only a matter of time. That will impact heavily on the EU edifice as well though there might be some possibilities of saving some elements.
Which way out this historic conflagration is being floated by the different tendencies within the elites as well as among the forces referring to the popular masses?
From the very start of the common market there has been the idea to push the supra-national authorities towards Keynesian measures. There are different shades and grades of this concept as well as various authors ranging from sections of the elites (like Delors) to the unions passing by the historic left which has not stopped to call for a “Social Europe” until today. Especially in its onset hope had been set on the common currency. First of all, the French state believed to become empowered to balance unchained German ordo-liberalism.
All this is based on an incomprehension of reasons and pre-conditions of the supra-national unification as well as on the prevailing relationship of forces. The common market and its supra-national institutions result in an explicit anti-Keynesian neo-liberal compact which became possible only after the defeat and U-turn of the Mitterrand government in France. Though the Euro started out with a compromise, it still had to accept the German ordo-liberal frame all along the ensuing treaties.
If the weaker states have not been able to withstand the pressure of the neo-liberal centre led by Germany (their elites even had joint voluntarily to be stronger against their own popular classes), how then it is reasonably conceivable that within the supra-national institutions Keynesianism would eventually prevail? It was the other way around: In order to enforce neo-liberalism, the social and democratic gains crystallized on the national level needed to be dismantled by pushing back the states’ distributional intervention by shifting sovereignty to the centre. The Brussels bureaucracy is nothing else than the European form of globalisation.
The best and practical proof for this is the Greek disaster. Syriza tried to extract at least some face-saving concessions but not even that worked. They set all their hopes on the interests of the other states to soften austerity. But the German stick threatened them all eventually leaving Greece alone.
There is the point that stronger economies would wield a more powerful lever like Spain, Italy and ultimately France. It is also true that in the final moment Berlin always has been cutting a deal in order to avert the collapse of the entire edifice. But the concessions, on the other hand, have always been minor and did not alter the overall framework let alone the dominant role of Germany.
The German elites are well aware that they are the main beneficiary of the Euro in an economic sense. Also, their newly acquired extraordinary political role stems from the Euro regime. They will do whatever possible to safeguard this favourable edifice. That does, however, not mean that they are not preparing contingency plans. When Schäuble proposed to Greece to leave the Euro zone, it was not only a means to coerce Athens into submission. It was a test balloon for an orderly withdrawal consistent with the project of a “Core Europe” floated in the early 1990ies. Schäuble was searching for a way to mitigate the predicted tensions within the system in order to save it. It hints that they will not continue centralisation at any cost. In case of significant demand-side Keynesian pressures and measures (not only on the level of monetary policy) they will prefer to quit the common currency and downgrade the supra-national para-state apparatus.
They do know, however, how difficult it is to avoid a chain reaction. Had Greece left, what reason would there be for other countries to stay? Their problems are of the very same nature only differing in degree. So the current solution with Syriza implementing their programme is the preferable one for the German rulers at least in the short run. They hope to be able to muddle through as they continue to believe in their liberal textbooks promising success of their recipes.
Stubborn centralisers from the left-wing of the regime
The Delors-type bureaucrats know, however, better and are aware that crisis is imminent and will erupt again. They also fear growing popular pressure, the German elites are much less exposed to or tend to underestimate being caught in their own ideological bubble. They strongly believe that in the final moment Berlin will need to consent into a mutualisation of sovereign debt as they will not risk the crumbling of the entire system. They think that in the long run they will obtain the compromise that the common currency should have brought already earlier including a common fiscal policy etc. So they push along the line of further centralisation towards a federal state totally opposed to the popular masses hoping that history will prove them right. This explains why Juncker right after the British referendum putting in serious troubles the “ever closer union” opted for a forward defence calling for a further acceleration now no more hindered by London.
Infected with a globalist phobia of the nation state, important sections of the left follow suit. Most prominent: Varoufakis, the former finance minister and negotiation leader under the Tsipras government responsible for the capitulation. After the capitulation of the Tsipras, he alluded to develop a Plan B. But within a few months this turned out to be a new leftist version of a federal EU state, for he considers the logic alternative, the return to national sovereignty, reactionary per se.
The inability and unwillingness to break with supra-national globalisation ties the left to the elites and sheds them from the popular masses leaving the field to rightist forces.
Attempts by right-wing forces
We need to unmask the narrative of the left supporting the EU regime according to which the historic right would be the organic leader of the popular upheaval against Brussels. From this assumption they derive that in order to fight rising nationalism and fascism the EU is the ultimate line of defence.
The reality is, however, that in all the countries most struck by the Euro crisis, the popular masses with their social and democratic demands turned to forces associated in a wider sense with the historic left regardless whether within the ruling political system, on its fringes or entirely outside. Their general tendency unfortunately is to lead them back into the system and to avoid a rupture with the EU.
Historically the right with its pre-dominant anti-communism used to be pro-US and accepted the EU unification on liberalist grounds though defending a more ideological and culturalist attachment to the nation and often nationalism with more or less chauvinist elements. Until the late 1980ies it was mainly the left to refuse the EU in defence of Keynesian economic policy and against the NATO war drive associated with the EU.
Things changed with the massive impact of globalisation after the end of the USSR. Parts of the right embarked on a permanent campaign against migrants and happily embraced Islam as a new enemy. The nearly transversal anti-Islamic mobilisation allowed them a reach deep into sections of the middle classes which had been averse to the right. Meanwhile the left backed globalisation which is free movement of capital, commodities and labour. They associated the defence of migrant labour with the deregulation of labour markets. Also, therefore the right succeeded in turning anti-migration into a code for anti-globalisation drawing on their chauvinist traditions.
But this did not suffice to attract the lower classes. They also needed to soften or hide the elements of economic liberalism and play with or even adopt the defence of social rights and the welfare state as well as Keynesian state intervention into the economy. See the example of the Tory’s leave campaign where one wing of the party of Thatcher used slogans like “instead of sending money to Brussels invest it in the health system”. This is being linked across the continent with the affirmation of national identity (mainly directed against Islam) and with allusions to the return to the nation state including nationalist and chauvinist elements.
So a kind of social democrat line is being mixed up or co-exists with traditional rightist and nationalist aspects in a contradictory co-habitation. This hybrid is possible only because the left sided with the supra-national centre declaring national sovereignty reactionary all together. Only that allowed for the development of a social right occupying at least partially the role of social democracy.
One should not forget that the historic right remains at the same time attached by many different strings with parts of the elite. In no place they are ready for a break with the ruling classes. This contradiction between their words and their deeds could be an important lever to separate them from the popular masses when building a revolutionary democratic and social pole.
Plan B: Lafontaine and the orderly dissolution of the Euro
The consistent calls of Lafontaine and others to dissolve the Euro zone and return to a system of managed exchange rates is the only serious voice from the official left against the Euro regime.
Actually, with its gradualist character this agenda could serve as an orderly withdrawal for the elites as well. It would really be a way to take out tensions and to save the EU though in a modified form. There are, however, some serious problems attached with the old EWS and it is not by accident that France and others wanted to overcome it. Not only the common currency but also the common market as such with its liberalist rules play to the detriment of the weaker states. But it would be certainly an important step in easing at least the additional stress momentum created by the Euro straightjacket on top on the basic symptoms caused by the global economic crisis. Actually, also a part of the Anglo-Saxon neo-classical elite economists lately turned neo-Keynesians have been advocating the same, indeed, in order to save the system and not to overcome it. Only, the EU elites do not show the slightest attempt to go for that proposal.
When transformed into a popular demand things do change. As soon as such a project is no more advanced by national elites but by more or less independent or popular forces not reliable for the elites they are perceived as a threat to the rule of the centre. A hostile class reaction by Brussels, Berlin as well as important parts of the respective national elites is to be expected with a very limited margin of compromise.
A plan for an orderly and accorded withdrawal will therefore most likely turn into a deep rupture. Defaulting on the foreign debt and issuing a new currency will require not only immediate capital controls but the nationalisation of the banking system. Embarking on a massive Keynesian-type state intervention on many fields including protectionist measures (to learn the lessons of Mitterrand’s failure) might follow in disregard of all neo-liberal treaties and rules enshrined not only in the Euro regime but in the EU as such. This unavoidable clash with the supra-national institution needs to be prepared. This flows also from the recent Greek lessons.
For the time being the Plan B milieu has not been able to cope with this problem. They do not want to accept that a very simple and basic social democrat Keynesian project requires a kind of democratic revolution against the EU. Varoufakis was right when he reproached to his former Plan B colleagues that whoever touches the Euro also needs to speak on the EU – concluding to return to the system asking for further increase of the power of the centre. (He does not see that he entered into an even deeper contradiction, for the supra-national centre is either neo-liberal or it will be dismantled.)
A broad democratic front against the Euro regime ready for rupture
On the level of the popular masses is becoming more and more clear that the Euro regime needs to be ended and popular sovereignty restored by returning to national self-determination. The differences between the different countries remain, however, enormous not only between the German centre and the different layers of periphery, but also between the latter themselves for specific reasons boiling down to historic peculiarities.
Some serious cracks also within the political elites are appearing first of all epitomised by the Brexit (though the British elites never shared the drive towards supra-national centralisation). Sections of the elites are starting to contemplate exit scenarios and sometimes also playing publicly with it. They feel that if the “ever closer union” cannot go forward, it needs to go back. Maybe in Italy this process is most advanced and could be much accelerated by a defeat of Renzi.
But we have to see that there is still a huge difference in the perception of the Euro and the EU especially in mainland Europe. While its so-called crowning or acceleration by the Euro is more and more put into question, the European Union as such still remains a taboo all the way down the social echelon. Important parts also of the lower classes fear the rupture and its imponderable consequences. They gauge that the way of less trouble might be a downgrade of the EU along the Lafontaine line minimizing the anti-democratic supra-national elements returning to the 1980ies or even the golden 70ies.
We need to take into account that the time for a democratic revolution against the EU has not come or it not ripe yet. Revolution is always the very last resort when all other attempts have been exhausted. But the conditions for a popular rebellion against the Euro regime are indeed mature and explosions can happen any time.
The main task for today is to build a vast European front of democratic and popular forces (excluding the chauvinist right) to bring down the Euro regime. Its immediate programme is very clear and simple:
- Default on foreign debt
- Issuing a new national currency
- Capital controls
- Nationalisation of the defaulting banks
- Massive public investment to overcome the demand depression caused by austerity
- Decrease inequality
- Regulation and protection of the national economy
It is not necessary to make the position on the EU a precondition for a broad coalition thus reaching out to much broader sections of society. Nevertheless, we are convinced that the question will come up rather sooner than later and we do address wit tour already existing European co-ordination against the Euro and the EU. The only condition is to be ready to follow the programme to the end preparing for a decisive clash with the ruling supra-national elites and the institutions of neo-liberal globalisation.
The consequences with regard to the EU, the inextricable nexus between popular sovereignty and national self-determination, can remain implicit within a common platform for a while as it is the intrinsic logic of the development of the popular struggle anyway.
New form of internationalist co-operation
Neo-liberal globalisation was selling itself as a modernised form of internationalism having adopted the rhetoric’s of the historic left. Nevertheless, it meant the unchained rule of the capitalist elites of the central countries led by the US. We need to return to the original meaning of internationalism that is the co-operation of the popular classes against their own ruling classes to bring down the global system of dominance. The decisive difference is that at the time of the ascendency of the workers’ movement the capitalist systems used to be organised in a bi-polar way using nationalism to bind the lower classes to the elites and to pit them against each other. Today we are facing an essentially mono-polar system which tries to crush any attempt of national self-affirmation against the centre or its sub-centres in the name of international solidarity. This substantially alters the danger of nationalism.
In the European case we need a very close co-operation of the popular movements against the Euro regime and in consequence against the EU trying to re-establish their national sovereignty. If a democratic popular neo-Keynesian regime can be established in one place it will need to strive for close co-operation with any state ready to do so across the globe. It will look especially in the close neighbourhood to its south and its east overcoming the EU borders defined along classical imperialist lines. New social and democratic unions in diverse configurations will become necessary though conceived as co-operation of sovereign states allowing a real movement towards social convergence and peaceful co-operation across the world.