The European Union’s many crises are being expressed in all manner of centrifugal tendencies, fragmentation, and erosion. By the time of the 2008 financial crisis it became apparent that only the national governments had the capacity to act in some sort of reasonable way – not due to national egotism – at least not primarily – but simply because the financial, political, and legal instruments to react at all are only available at the nation-state level.

It is the same with other problem areas – the sovereign debt crisis, structurally weak economic growth in the Eurozone, the risk of deflation, 11 per cent unemployment, the spread of right-wing populism as well as the international political crises in Ukraine and the Arab region in which the EU is directly involved and massively affected. The EU’s inability to act has culminated in the refugee crisis.

All of this has deepened the fault lines within the EU – between the Eurozone and non-euro countries, between eastern and western Europe, between north and south, between debtor and creditor countries, between Great Britain and everyone else, between the German-French axis and all the others. What was incompatible is now drifting apart.

This should not be surprising. Historically, the nation-state became the predominant form of socialisation and could differentiate itself and acquire the capacity to act as well as create a framework allowing a degree of democratic conditions, popular sovereignty, and collective identities; the EU, on the other hand, is a historically new and, from the perspective of the theory of the state, unique entity that is a hybrid of a confederation of states with supranational components. The Union only has fragmentary elements of the attributes and internal cohesion of a nation-state, and its ability to act is consequently slight.

Furthermore, the perseverance of national identities has been under­estimated as well as the collective memory, easily mobilised in conflict situations, of when Europe was once united – under German leadership from the Atlantic Ocean to the Volga River.

The process of integration is thus in an existential crisis with no exit in sight. How can emancipatory politics react to this situation? Does the slogan ‘more Europe, but a different kind’ convey the vision of a social, democratic, and peaceful Europe when the reality has been exactly the opposite for a whole generation now? Can there be a left European strategy today with the motto ‘more of the same!’?

The failure of the left’s European strategy

Ever since Maastricht and the establishment of the Single Market, the left has criticised the EU’s neoliberal orientation and, during the financial and debt crisis, its crisis management. Nevertheless, a majority of the left has clung to ‘the European idea’, that is, it sees as the final goal of the process of integration a political Union, the United States of Europe, a federal state in which today’s nation-states – in analogy to today’s German federal states – have the status of subordinate regional authorities. What Hessen, Saxony, or North-Rhine Westphalia are in Germany today, France, Germany, and Hungary are to become in a federal Europe.

Consequently, a deepening of integration is welcomed in principle, even if its direction goes contrary to the left’s politics. Because of its prioritised European policy the left swallowed the bitter pills of Maastricht, the Single Market, and the Lisbon Treaties. And it also grudgingly accepted the euro.

In the meanwhile, the treaties and institutional arrangement have established a neoliberal constitutionalism and power structures that makes emancipatory change impossible, at least if the rules are respected. Changes of direction are de facto only possible by breach of the treaties. As the Greek experience shows, this can only be done by large Member States or coalitions that are able to assemble a critical mass. The strategy of ‘more Europe, but a different kind’ is therefore doomed to failure. But a majority of the left is still holding on to it. It believes that it is the way to overcome nationalism, implement internationalism, and secure peace and, on the other hand, that alternatives to continued integration mean reversion to the 19th- and 20th­century world of nation-states. It is high time to break away from this binary logic.

Internal flexibility – external openness: a third way

To begin with, even if it were desirable, this kind of reversion is no longer possible. The economic, juridical, communications, cultural, and other interrelations have become so dense, at least in the EU’s core countries, that even Marine Le Pen would quickly come up against their limits if she tried to test them. A frequently voiced and cogent criticism of right-wing populists is that they would not make good on their promises if put to the test.

In addition, a fundamentally new component has come into play, which was not present in the first decades of the European integration process, at least not at this level: globalisation. It is true that it has in no way led to the disappearance of the nation-state, but it has changed its position in the international system. Since many problems today have taken on a transnational character, cooperation across state borders has become imperative, even if the world’s political power hierarchies make the pressure to cooperate look different for Burkina Faso than it does for the USA, and different for Switzerland than for China.

This means that integration within the EU overlaps and is modified and amalgamated by a second, more all-embracing integration process. This has long since become a reality in innumerable spheres. Accordingly, German exports are increasingly shifting towards non-European markets. The City of London is a locus of global finance and cannot be integrated into the EU either through financial-market regulation or through a banking union. There is global interconnectedness through the internet in all its facets irrespective of nation-states or state federations. Even migration flows have their own dynamic – the refugees do not want simply to enter the EU; rather, they hope to reach Sweden or Germany. And the list could be continued.

An emancipatory critique of the EU should take all of that into account. In contrast to what right-wing populists demand it advocates not an illusionary return to the 19th- and 20th-century system of national states but an internal flexibilisation of the EU and its external openness. This involves selective disintegration in certain areas and, conversely, stronger integration in others. Already in 2013, for example, Andreas Nölke proposed ‘steps towards the selective demolition of the current self-radicalising integration and the stabilisation of the level of integration already achieved in the sphere of product markets’.¹

In a 2013 study on the euro published by the Rosa Luxemburg Foundation, Heiner Flassbeck and Costas Lapavitsas proposed an alternative to the euro, not in order to dissolve the EU but, on the contrary, to prevent a chaotic collapse of the currency, due to economic constraints, by undoing a failed step towards integration.²

This does not mean circling the wagons. Even the Single Market can be kept, though of course supplemented by ecological and social regulation. It should be possible to have a plurality of economic models, decentralisation, regional cooperation, more subsidiarity and bottom-up initiatives, less centralisation, and less uniformity and top-down methods. Deconstruction in certain areas, for example in currency, can be balanced by reinforcement in other areas, for example in ecological reconstruction. Cooperation can then take place within ‘coalitions of the willing’.

Even the EU’s official rules now allow for such forms of flexibilisation, for example, through the procedure of ‘enhanced cooperation’. This permits a group of at least nine Member States, which have to represent two-thirds of the EU’s population, to undertake common projects, even without the others’ participation. It is in this framework that eleven countries are negotiating the introduction of a financial transaction tax. The ‘enhanced cooperation’ concept is still rather restrictive, but its idea can be broadened and it can be further developed.

Internal flexibilisation has to be complemented by external openness. Partnerships would have to be free of geopolitical motivations and super­power fantasies (unlike what happened in the association agreement with Ukraine), and cooperate with third parties – for example, immigration policy with Turkey, the Balkans, and North Africa, but also with Switzerland and Norway. And if the Visegrad states instead prefer to seal their borders we can regret it, but we cannot try to simulate commonality where none exists.

Or the example of energy policy: Here it makes sense for many reasons to cooperate with Russia. However, if Warsaw cannot tolerate Putin, then Poland should not be forced to do so. Conversely, others should not be compelled, simply on account of a few obstructionists, to take the path of the lowest common denominator instead of striving for solutions that can really address the problems.

This approach needs to be further conceptualised and concretised. It would be a third way between eurofetishism and nation-state solutions. And it would make it difficult to be accused of nationalism or nostalgia.

Flexibilisation in the question of currency

There is nothing new in currencies being highly emotionally charged in a way that goes far beyond their economic content. West Germany had an almost libidinous tie to the Deutsche Mark. The majority of Greeks, too, who absolutely wanted to keep the euro, probably did so not based on an understanding of monetary affairs but out of a mixture of fear of the unknown and the sense that Grexit would mean being kicked out of an exclusive club.

For its initiators, the euro, however, was first of all a political project. With a common currency integration was to be dynamised and the reunited Germany involved. The euro was meant as a lever to bring about deeper integration. It followed the typical top-down method that the elite project of the EU had always applied to new steps in integration. Jean-Claude Juncker put it in a nutshell: ‘We pass a measure, project it into space and wait a while to see if something happens. If there is no great outcry and no uprisings because most people have no idea of what has been done, then we continue to move forward.’³

As we now know, the common currency did not bring about the hoped for integration; quite the contrary. The euro is a central, though not the only, cause of the drifting apart of north and south Europe. At the same time, a common currency can have advantages. It reduces the transactional costs, the exchange-rate risk is eliminated, and it can – which is especially significant for smaller countries – protect against speculative attacks. On the other hand, there are alternative instruments for preventing speculation, for example an appropriate regulation of the financial markets. Clamping down on the casino is the best insurance against speculative attacks.

Moreover, a common currency has no monopoly on problem-solving in currency matters. The fixed exchange rates of the post-war decades not only kept the exchange-rate risk under control but provided an extremely growth-enhancing environment for the real economy.

A common solution is pegging, that is, the coupling of a currency to another currency – either through a fixed rate or with a fluctuation corridor. For example, the Danish krone, with its coupling to the euro, shows that even within the EU there are other variants between the euro and a purely national currency that work well. Even the continued existence of a purely national currency is not an automatic handicap, as we see with Great Britain or Poland. On the contrary, both have had higher long-term growth rates than the Eurozone.

There is no single sanctified path to designing an optimal currency. The different instruments each have their advantages and disadvantages depending on context. The various alternative proposals should therefore be considered soberly and dispassionately. From the idea of a northern and southern euro,⁴ to the concept of an external and internal euro, to Oskar Lafontaine’s proposal of a (modified) currency snake modelled after the European Monetary System (EMS). The European political congress recently proposed by Jean-Luc Mélenchon, head of France’s Parti de Gauche, together with Yanis Varoufakis and Oskar Lafontaine could be a step in this direction.⁵

Whoever is not prepared to talk about the euro should also remain silent about austerity

Instead, a majority of the left have made the euro into a sacred cow. By now the only argument used in its defence is that the main problem is neoliberalism and austerity, not the euro.

This is acting as if a currency is only a means of payment that can be decoupled from its institutional nature. The euro does not just consist of coins, bills, and account balances. Rather, it is a system of rules and institutions, specifically the issue banks of the Member States, headed by the ECB with its statutes. A currency is a social relation, and as such it is also a power relation. Michel Aglietta has recently stressed this fundamental insight: ‘[…] a currency is not a commodity; instead it stems from the social contract that has been the anchor of all political communities throughout time.’⁶

The euro is constructed in such a way that it primarily, though not exclusively, serves the interests of export-oriented countries like Germany. To do so it requires a) the ‘independence’ of the ECB, b) the prioritising of monetary stability above other macroeconomic parameters, such as growth and employment, and c) the prohibition of public-sector financing.

Among other things, this construction leads to the ‘degrading of sovereign debt to the level of private debt […] as if the euro were a foreign currency’.⁷ Jörg Huffschmid spoke of a ‘cementing of the economic doctrine of monetarism. […] Here the authoritarian worldview shines through that underlies neoliberalism and repeatedly cites Hayek.’⁸ Put differently, neoliberalism and austerity policy are immanent in the Euro System. Whoever is not prepared to talk about the euro should also remain silent about austerity.

No solution in sight

The centrifugal forces unleashed by a wrongly conceived currency will further drive apart the Eurozone, for the structural differences between the northern and southern accumulation regimes are too great: ‘Europe’s south has produced a type of capitalism whose growth is principally driven by domestic demand, when necessary supported by inflation, which in turn is kick-started by a national budget in deficit or through trade unions made strong by high job security in the framework of extensive employment in the public sector.’⁹ By contrast, the German model is characterised by an excessive export orientation (and dependency), which is underpinned by a neo-mercantilist economic policy. In comparison with southern Europe, ‘countries like Germany are centred on a hard currency. This makes them not only inflation savers but also debt savers, although the interest they have to pay is comparatively low’.¹⁰

In each case, the different orientations rest on a broad social consensus anchored in the collective subconscious of the respective societies. In Germany, the trade unions of the export sectors – IG Metall and IG Bergbau Chemie Energie – are integrated into the German model of capitalism. In view of the profound social embeddedness of each of these economic models, a convergence in the reasonably foreseeable future cannot be expected – not even under pressure of institutional arrangements and of the superior economic strength of one side.

Farewell to the ‘European idea’

Flexibilisation of the EU in general and of the currency in particular certainly means giving up the vision of Europe as a large state. This kind of European federate state would have more than a billion inhabitants, would easily overtake the USA economically, and as a superpower could play in the same international league as the USA and China. For sections of Europe’s functional elite this is an attractive fantasy, especially where has-been colonial and imperialist world powers are involved. The rise of the emerging countries – whose self-organisation in the form of the BRICS, for example, is shifting the centre of the world economy towards Asia, permitting Russia to come back as a great power, and creating a Peking-Moscow axis, all of which means radical changes in the international system – strikes fear into the hearts of some that the 500-year dominance of western Europe and its North American offshoot could come to an end.

At this point, left Europeanists will object that the Europe they have in mind is social, democratic, and peaceful. The response to this has to be that in the age of globalisation the attempt to create a new large state can no longer be emancipatory. It spells exclusion for everyone who does not (or is not allowed to) belong to it, and it produces new divisions, especially those between it and bordering regions like North Africa and Russia. This has nothing to do with internationalism. In the end, the internationalist motto is not ‘proletarians of the Eurozone unite!’ but ‘proletarians of all countries unite!’.

Even the goal, in itself honourable, of overcoming nationalism cannot rescue the vision of a Greater Europe as something that is emancipatory, because French, Danish, and Polish nationalism would simply be replaced by a European identity. There are attempts to ground it, for example in the discourse of ‘European values’. If this could work – but in fact it does not – it would in no way be progress.

On the contrary, there would be the risk of a new Europatriotism joined to a massive state power. Schopenhauer’s dictum applies even to the nationalism of small countries: ‘Every miserable fool who has nothing at all of which he can be proud adopts, as a last resource, pride in the nation to which he belongs.’ There is, to be sure, no cause for great fear of Switzerland or Luxembourg as there is of Germany. The left ought to be happy if the EU does not become a large state that could become a superpower.

How realistic is an internally flexible and externally open Europe?

Europe’s left was not even in a position to push through a harmless measure like debt reduction for Greece, which shows how utopian the idea of a ‘social Europe’ is. But as a ‘realpolitik’ perspective is the flexibilisation and opening of the EU proposed here not just as hopeless?

Certainly, considering how things are now, the left will not be able to change the course either of European policy or any other issue. Nevertheless a change of strategy has the potential of shifting the relations of force and building a countervailing consensus, because:

• the left could then step out of the political slipstream of the social democrats and greens and acquire a profile as an independent force in terms of European policy. This would be especially useful for the parliamentary left – but not only for it;
  
  
• by turning away from ‘more Europe!’ the left could seize on the growing EU scepticism of the populations of almost all Member States and try to politicise it in a left direction;
  
  
• in so doing, at least a part of the Euro-sceptics who are susceptible to right-wing populism could be offered an alternative and the rise of the right contained;
  
  
• parts of Europe’s functional elites are warming up to the flexibilisation idea. The above-mentioned procedure of ‘enhanced cooperation’ is an expression of this. Even Angela Merkel has spoken in favour of something of the kind when she said: ‘More Europe is more than the shifting of a particular competence from the nation-state to Europe […]. We should also ask ourselves if we should not give something back’;¹¹
  
  
• and last but not least the left would no longer, in its completely illusory way, be going against the course of history, for the centrifugal forces we illustrated are so strong that even the functional elites’ attempts to resist them are futile. Flexibilisation and openness are going to come. The only question is whether they will (at least in part) be consciously shaped – including by the left – or irrupt chaotically on top of us.

Notes

1 Andreas Nölke, ‘Dampf ablassen! Plädoyer für einen selektiven Rückbau der europäischen Wirtschaftsintegration’, ipg-journal 12.12.2013, http://www.ipg-journal.de/schwerpunkt-des-monats/die-zukunft-der-europaeischen-union/artikel/detail/dampf-ablassen/.

2 Heiner Flassbeck and Costas Lapavitsas, The systemic crisis of the euro – true causes and effective therapies, May 2013, http://www.rosalux.de/publication/39478/the-systemic-crisis-of-the-euro-true-causes-and-effective-therapies.html.

3 Quoted in Dirk Koch, ‘Die Brüsseler Republik’, Der Spiegel 52, 1999 (27 December), p. 136.

4 This provides for a common currency maintained against all other currencies, while within the Eurozone, regionally or nationally, the euro-lire, the euro-peseta, euro-drachma, etc. can fluctuate in relation to the euro-mark and euro-gulden. See also Frédéric Lordon, La Malfaçon. Monnaie européenne et souveraineté démocratique, Paris (2014).

5 Stefano Fassina, Zoe Konstaninopoulou, Oskar Lafontaine, Jean-Luc Mélenchon, and Yanis Varoufakis, ‘Ein Plan B für Europa. Aus dem Finanzstaatsstreich gegen Griechenland vom 13. Juli müssen Lehren gezogen werden’, Junge Welt, 14 September 2015, http://www.jungewelt.de/2015/09-14/021.php?sstr=Mélenchon.

6 Michel Aglietta, Nicolas Leron, “The Eurozone: Looking For The Sovereign”, Social Europe, 11 September 2015, http://www.socialeurope.eu/2015/09/eurozone-looking-sovereign/.

7 Aglietta and Leron, ‘The Eurozone…’.

8 Jörg Huffschmid, Monetarismus als supranationales Recht? Die Unabhängigkeit der Europäischen Zentralbank als Problem für demokratische Wirtschaftspolitik in Europa, contribution at the conference: “Die Europäische Zentralbank. Macht außer Kontrolle?”, Berlin, 8 and 9 November 2001.

9 Wolfgang Streeck, ‘Warum der Euro Europa spaltet statt es zu einigen’, Leviathan, 3 (2015), pp. 365-387.

10 Streeck, ‘Warum der Euro Europa spaltet’.

11 Angela Merkel in an interview on Deutschlandfunk, 13 August 2015, http://www.deutschlandfunk.de/merkel-datenschutz-in-europa-regeln.1789.de.html?dram:article_id=258071.