• Crisis, Europe, Alternatives and Strategic Challenges for the European Left (1)

  • By Elisabeth Gauthier | 20 Apr 10 | Posted under: Contemporary Capitalism , Transformative Strategies
  • After the EU-summit in March it is becoming even more obvious to what extent the EU and the governments are in quite a dogmatic and irresponsible way setting the course for a downward spiral. Merkel and her coalition are continuing their aggressive policies. And without showing the faintest sign of doubt, Olli Rehn, Commissioner for Economic and Monetary Affairs,2 is heading straight towards the abyss when he emphasises that after the fire brigade’s intervention in Greece, in a second phase the budgets of the individual states have to undergo a process of scrutiny before they are adopted for good and that in a third phase the EU treaties should be amended in the spirit of economic governance. In this situation, the IMF is conceded, not only in the peripheries, the role of austerity-policeman, but after interventions in Eastern Europe it is expanding its field of action directly into the euro-zone.

     

    The situation is provoking ever more pessimism as far as the future of the EU, the EU-zone and the individual countries respectively is concerned. Thus, within the EU, the left and the trade unions are confronted with the strategic questions with a new urgency.3

     

    Greece, the South, the Baltic and Eastern European countries Greece is the first in the series of European debt bombs. The discussion about the “PIGS” should not make us forget that the situation in many eastern countries is even more explosive. “The post-communist economies were structured from the start to benefit foreign interests, not local economies. All these debts are unpayably high because most of these countries are running deepening trade deficits and are sinking into depression.”4

    The reality of the crisis shows that, in many respects, Europe is a continent that is increasingly split. This is firstly due to the dominant competitive position of German capital as against that of “Mediterranean capitalism”. This then feeds a differentiated tendency to indebtedness … the member countries develop in divergent ways in terms of their competitiveness”5. Germany is successfully playing the game of “beggar my neighbour” regarding the other countries of the Euro-zone by creaming off their economic demand and exporting its unemployment. Concern is growing regarding Italy and Spain (their fiscal revenues are plummeting) – two countries where the grey economy represents a major and uncontrolled part of the GDP – and Portugal, where the government adopted a drastic austerity plan at the end of March.

    In the framework of the single currency, the lack of co ordination, of measures in favour of harmonisation and of reducing inequality leaves the weakest economies without any means of reacting. They are thus driven to adjust to the situation either through indebtedness or austerity measures. If there is certainly criticism to be made of the Greek government’s policies, including its large military expenses (in complicity with those countries interested in arms exports), one should also condemn the egoism of the most powerful European states, so harmful to the whole region. The aggravation of the crisis in Greece will also have disastrous effects in the Balkans, where Greek bank capital is very present and where an estimated 8,000 Greek firms have invested.6

    While the banks enjoy loans at 1% from the ECB, speculators and investors require 7% from the Greek state, more than double the rates paid by Germany. The rates demanded by the markets cost more than 0.5% of Greece’s annual GDP.7 We must urgently break with operations in which states take over all the risks and accelerate the pauperisation of their societies while the banks use these safety nets to still further extend their risk-taking. It would be more suitable to urgently refinance those states in difficulty under conditions that are clearly below market rates.

    In the case of Greece, the EU has decided to set an example and so to test the available instruments for surveillance of economic and budgetary policies as a whole, which are being implemented for the first time.8 The president of the Euro-Group, J.C. Juncker and the 16 Finance Ministers of the Euro-zone have decided to supervise the disciplining of Greece and demand, through their austerity “recommendations”. France feels that the effort required is already considerable, while Germany would like to make it even tougher.

    A real test of strength between the interests of the people of Europe, and those of the European powers is beginning now. It is in the name of a “Europe for the peoples” and of “another Europe for another world”, in the interest of all the peoples of Europe to find alternative solutions for all the countries in need (including Greece), helping them to face the crisis.

     

    New answers are required of the left

    The problems on the left derive – partly at least – from the fact that during the last decades left forces continual to be unable to come up with a compelling interpretation of the deep transformations of the capitalist system: the development of “financial market capitalism” after the crisis of Fordism and over-accumulation of capital with growing imbalances in the global system. This has had immense impact on the evolution of the working classes, on political and ideological power. The left, which has to be built up by a variety of social forces – e.g. by members of the working classes as well as by longterm unemployed with loose contact with the “world of labour” – has to integrate different social experiences and cultures of radical thought. The left lost a hold on labour or was not able to renew it in a period of deep social transformations. During periods of mass unemployment, the left (in different countries) focussed its discourse and programmes on employment problems and ignored the labour question as a field of social, political and ideological confrontation. These deficits have made it difficult to understand the “big crisis” and to develop adequate alternative thinking. 

    What we are dealing with actually are two simultaneous crises: a financial crisis and a crisis of the real economy. With the advent of finance-market driven capitalism the foundations of production, of wage labour and hard-fought-for social achievements as well as the cohesion of entire societies have been undermined. The unfolding, the interrelatedness and the depth of the financial, economic, ecological, social and debt crises clearly show that the overall crisis is one of the entire accumulation and regulation model in the phase of financial-market capitalism. The current situation is not the consequence of globalisation but of global financial-market capitalism. Further consequences of the social, economic and ecological failure of global capitalism are geopolitical changes, which lead to new tensions, dangers and armed skirmishes. In the EU, contradictions will become so acute that a collapse of the Eurozone is not entirely out of the question.9

    Even the bourgeois bloc does not have a unifying new hegemonic “idea” of systemic reforms. The rescue and stimulus packages are designed only for the short run without the new dynamism of a new accumulation regime. The left must prepare for the long run. More than before, the immediate alternative proposals have to be nourished by alternative logics.

    We must not lose sight of the fact that the crisis in Europe is not one favourable to the left but to abstention, to sanctions against the left. Nationalist, or right-wing populist trends, even extremist ones may find favourable ground here, especially as divisions are intensifying between East and West, North and South.

    If we fail to present a credible left approach, there is a great danger that hopes and a discourse of change may be taken up by right-wing, populist and sometimes extremist forces. The feeling of impotence is in danger of spreading among those at the lower end of society, even if significant struggles may sometimes allow us to think the opposite.

    The crisis also provides an opportunity for learning, understanding and discussing what is new – and therefore a chance of becoming more competent in theory and practice. We observe in different countries major efforts on the part of the left to renew itself in autonomy from the social-democratic parties, to building new alternative platforms and undergoing new political processes. The left has to aim at interpretations which dissolve political and ideological blockages. At the European level it is necessary to work out what a left criticism of the EU consists of. In the present crisis, the left forces must seek more effective means of enabling citizens to get involved in politics and recognise the social options that are at stake in the present confrontations.

     

    On state, governments, political action and economic democracy

    This field is changing with the crisis, and the analysis has to be deepened. Government policies in 2008/09 cannot be considered Keynesian. With a “market-state” perspective10, they massively mobilised public funds – but without touching the distribution of wealth between labour and capital, between private and public interests. David Harvey speaks of a “financial coup d’état”.

    The EU and the states have unceasingly shifted the balance in favour of shareholders11 and the transformation of the latter into “investors” without any lasting connection to the firms concerned. They can no longer be content to remain spectators while providing public assistance to the private sector – they must intervene to the benefit of another distribution of the added value and another way of managing firms.

    The left has to interpret the political changes in public policies during the crisis and to develop a line of argument on public debt. It must insist on the fact that the criteria of economic, social and ecological development as well as of world stability require the development of domestic markets – not on the basis of private or public indebtedness but on the basis of a distinctly fairer distribution of added value in favour of work and the public interest.

    Looking for a new model of political intervention in the economic field, the concept of “economic democracy” – in a new and wider definition – seems an interesting research axis. This multidimensional concept allows for alternative thinking integrating different levels (new redistribution of wealth and welfare model, public sector as vector for alternative logics, growing public power and social property, revalorisation of labour, democratisation of macroeconomic decisions and of companies, new ambition and content of regulations). This concept should be one of the fields where we put together elements in order to form a new picture. In terms of ecology, we must develop a left standpoint on environmental questions, through the introduction of class dimensions. We should examine the concept of a “new mode of development”.

     

    Rehabilitating and updating the concept of class struggles

    The present crisis is also an opportunity to rehabilitate the concept of class struggle, of course not in an old-fashioned, dogmatic or mechanistic way, but as a powerful concept for social and political change. Harvey underlines the importance of the “economy of dispossession”, making the rich richer and the poor poorer, and also of the struggles going on simultaneously in the world against the different forms of “dispossession” (land, natural resources, commons, water, public property, social rights, housing, patents…). Marx always insists on the concept of class as indispensable to both theory and action. This does not mean trying “to reduce questions of nature, gender, sexuality, race, religion or whatever to class terms; this is unacceptable. But,… it is rare for any of them not to internalise a significant class dimension the solution to which is a necessary though never sufficient condition for, say, an adequate antiracist or pro-environmentalist politics….” 12. It is not easy to find the right words – and this is what we have to try to do – in order to imagine the necessary political answers.

    In the current crisis, which might appear as one of antagonism between Germany and Greece, it is important to show how class struggles are presently developing within the Euro-zone. In Germany, the capitalist classes have for more than one decade been trying to involve the employees and the trade unions in a struggle for “locational competition”, which resulted in wages being dumped faster and social rights being dismantled more drastically in Germany than anywhere else (Hartz IV). At the same time, capitalists are making extra profits by an aggressive export policy to the “periphery” within the common monetary and regulation zone. The challenge consists in promoting the understanding that the conflicts are not ones between nations but between classes, to develop new contents and forms of social and political struggles in a period where “some states are able to displace the costs of crisis-management to other states and/or social forces...[where] world market integration does not challenge the state in general but challenges specific states with particular powers, and [where] states can be redesigned and reordered to facilitate [or limit] new forms of accumulation on a global scale.” 13

     

    The struggle for cultural hegemony

    The last few weeks have shown the awakening of a considerable popular fighting spirit in a number of European countries. However, the obstacles to emancipatory transformations remain intact even during the crisis. We must succeed in deeply and lastingly altering the balance of power to ensure that important political forces and governments be led to translate the demands of those who resist and struggle into concrete political choices.

    The necessity to radically break with the dominant logic is becoming much more obvious than before. Beginning with the concrete and sharpened contradictions we have to find alternatives whose content is provided by a “different” logic. The ripening of contradictions before the outbreak of and during the big crisis makes clear the need to connect ideas for immediate action to ideas for an alternative social project.

    The character of a systemic crisis of legitimacy becomes particularly obvious – not only the representatives of the existing order but increasingly the conditions themselves become the object of criticism. In countries such as Germany14 and France15 a massive erosion of trust has been growing in the past twenty years, a process which does not in itself open up a perspective to overcome fatalism. Therefore it is crucial to find new conceptions and a new content of politics as well as forms of not merely formal participatory democracy but really socially activating and transformative democracy.

    Although neoliberalism is losing its ideological and political dominance, we are still a long way from the development of a new cultural hegemony – which is the precondition of a political break with the dominant logic supported by the majority –, and the political forces inspired by neoliberalism continue to be dominant, although they are lacking a clear vision for the future.

    New political creativity is required to advance the potential of resistance and the radicalism present in our societies to overcome the crisis of passivity and to help turn passive resentment into active resistance, into the demand for a change of direction in politics, a transformation of society which implies replacing capitalism.

    For this kind of political creativity a political culture is required of determined openness, which invents new forms of cooperation between different social forces with different traditions. Numerous experiences have shown that non-hierarchical, non-centralised (or self-blocking) and determinedly cooperative practices promote new forms of the collective action of different forces and strengthen the role of European left activists.

    The challenge for left forces consists of working for counter-hegemonies, and particularly of helping the working classes and the groups most severely threatened by the crisis and the austerity plans to achieve the capacity to interpret reality that will enable them to take over the issues of the moment and intervene as actors, to gain the capacity for united action, to realise that very deep changes affecting power and property have become an immediate necessity

    The concrete policies that the left forces propose must aim at creating a social bloc on the basis of common immediate interests, which may lead to the creation of “fronts” – certainly of variable character according to the social and political conditions of each country. This seems a fruitful path, to the extent that such open structures make easier the cooperation between protagonists of different types (political organisations, movements, elements of civil society, trade-union representatives, intellectuals, networks…) and consequently a social and political dynamic. “The systematic crisis obliges us to think about social and political questions in a de-compartmentalised, transversal and global manner”.

     

    On the EU-crisis and concrete alternatives

    The present crisis of the Euro and the EU – one of the centres of the crisis – is not just the consequence of the worldwide financial collapse. It brings right out into the open the failure of the Euro and the serious defects in the construction of Europe, in a way that has been rejected by a majority of the voters during the referenda in France, Holland and Ireland. Neither the EU nor the respective governments have respected the decisions of the people but, on the contrary, have continued to implement the same policies as before.

    The very nature of European integration has turned out to be a factor in the crisis. The crisis has been fraught with particularly serious consequences in Europe. Even if the intensity and the concrete effects of the crisis are not the same in all the countries, in the North and in the South, the East and the West, the trends are nevertheless identical. The Euro and EU orientations were not designed to stimulate real cooperation in favour of the populations, of a new industrial or agricultural policy, public research, the development of public services and infrastructures, in short, in favour of a new mode of development. The treaties that encouraged fiscal and social dumping, the Stability Pact (that has been completely exploded) sought to direct the flow of money towards the markets. The whole collection of measures to set wage-earners and regions in competition against each another only help the big business groups, the financial markets and the most competitive economies of the most powerful countries. In fact, the Stability Pact – which is now being permanently violated by most countries of the EU – has burst asunder.

    According to prevailing EU-dogma, integration should take place without conflict, to the extent that capital and labour could move freely between the former “national economies.” “The monetary union has failed, at least in the form that Germany itself imposed with all its force. The German objective of giving the Euro (through the Stability Pact and the European Central Bank) the strength of the D-Mark, of excluding any transfer payment to weaker countries and ensuring its all-important ability to export to the other European countries has not been and will not be achieved during the crisis”.16 According to Heiner Flassbeck, chief economist of UNCTAD, Greece may have lost its resources because of the downward spiral its economy has entered as a consequence of being brought into competition with Germany’s wage dumping. The German short-term perspective will end up by threatening the German elite and employers with the loss of their export markets.17 New policies of compensation, of gradual integration, would be necessary if they wished less-developed countries to buy the products of the leading countries… The transfer of governance from the centre to the periphery (by privatisation and austerity) strengthens the most important powers at the European level in the same way as it does the dominant classes inside each country.18

    As the contradictions are growing between the centre (the most powerful countries in Europe) and the periphery, inside each country the inequalities, employment and social problems, attacks on democracy and conflicts, are increasing. Thus, in the most powerful countries of the Euro-zone, the pressure exercised by the employers and the governments has been particularly strong and effective, which corresponds to the objectives of increasing competitiveness. It is inside each country of the EU that the hunt for increased competitiveness produces devastating economic, social and political effects that are today being deepened by the crisis.

    The whole debate around “new governance” is in full swing. However, Sarkozy and Merkel only consider “new governance” an increased source of power for the most powerful, without altering the orientations whose manifest failure can nevertheless no longer be concealed. No re-orientations are envisaged by the principal European powers. The timid European attempts, aimed at supervising and regulating the financial system, are inadequate and only very partially address the issues at stake.19 The proposal for a new Pan-European tax on financial transactions is indeed useful, but should be linked to a multi-dimensional offensive to confront the markets in the sphere of circulation and production.

    From a left point of view, the issue is that the demands expressed by the people should be conveyed by alternative objectives and methods, by a new political coordination at the level of the EU. Without converging systems of taxation, common industrial and research policies, complementary budgetary choices, public services working in cooperation, wage and social protection levels that are harmonised upwards, the monetary union can only lead to a rule of market law and social regression. The left should only say “yes” to stronger cooperation when it is a matter of building alternative objectives.

     

    What political response for Greece, for PIGS and for Europe?

    The peoples or the markets? That is the choice we must make. Emerging from the crisis requires a radical change of policy. Today, every major demand comes up against the logic of the capitalist system in an acute state of crisis.

    On a European scale as well as in each of our countries, it is a matter of fighting for real political breaks as well as emergency measures also inspired by an alternative logic.

    The governments, which have a major responsibility for the outbreak of the crisis, must be made to break with this logic of “debts for the states, tightened belts for the peoples, a casino for finance”.20 Instead of consulting experts with interests of their own in the markets, they must make democracy work by taking measures, and undertaking reforms, in favour of social and economic democracy.

    Finance must be democratised, re-directed, resized in a responsible manner.

    The EU must decide to apply specific ways of controlling the movement of capital and taxing financial transactions. The tax havens must be closed down. Bank secrecy must be reviewed.

    The banks must– by a convergent effort of the governments and the EU – immediately be brought to change their orientation, to stop using savings for speculative activity on the stock exchanges and to re-orient credit towards the financing of useful activities and the creation of jobs and infrastructures.

    All policies must be aimed at stopping the crisis of over-accumulation, at intervening massively in favour of the fairest distribution of surplus value, in favour of work and the public interest and of freeing them from the power of the market.

    At the international level, the EU must counter the aggressiveness of the United States and act in favour of the stabilisation of the real economy, the use of SDRs as a reserve currency, replacing the G-20 by a Global Economic Council under UN auspices, the development of instruments to favour equity in trade, removing common and public property from speculation, in favour of multi-lateral and bi-lateral agreements as opposed to setting up competition between peoples, wage earners and regions, and in favour of ambitious and shared policies for resolving the ecological crisis. The EU must contribute to preventing raw materials from being turned into “financial products”21. In international bodies the EU’s voice carries some weight – it must be heard in favour of a world of solidarity, which presupposes a radical change of direction.

    We must break with the dogmas of European neoliberalism that Juncker, Trichet and Gonzales continue to defend tooth and nail.

    The Stability Pact, designed to ration social expenditure, must be abandoned; the European peoples need a pact of cooperation in favour of social and ecological development and of solidarity.

    The European budget must be significantly increased and must enable positive actions by the EU. Fiscal, social and ecological dumping must be banned.

    The European social model must be renovated and re-invented. A radical break with precariousness and the strategy “Europe 2020” is urgently needed.

    The privatisation of whole areas of retirement benefits – urged by the Lisbon strategy and particularly developed in the Eastern countries – has led to serious dangers because of losses in the context of the financial crisis. Stopping the privatisation of pensions, one of the motors of the financialisation of the economy, is therefore a major issue22.

     

    ”Tightening the Belt” is Not the Answer.

    Every Measure that Suffocates the Real Economy is Irresponsible.

    Any rapid budgetary restriction should be rejected, which would lead to the danger of a massive plunge into recession.

    There must be moratoria to stop the growth of public debt, to reduce the growth of public indebtedness, to reduce the pressure on the states, to gain the time needed to set up instruments that favour transparency (enquiry commissions, etc.), to set up new democratic policies and methods. A selective treatment of debts must also be envisaged.

    New means (new deals) must be mobilised, bypassing the markets, so as to meet the needs of public expenditure, to face the crisis and emerge from it.

    Interest on public expenditure must be radically reduced. The ECB must be endowed with the power to buy public bonds to the extent that they could be useful for a new kind of development of jobs and of industrial and research policies, for restarting public services and social protection.

    The assignment and management of the ECB as well as its orientation of credit must be altered to support objectives of development, by abandoning the straightjacket of monetarist policies and modulating the conditions of access in accordance with the contents of the projects, making it impossible for credit to contribute to speculation and overdraft loans.

     

    Economic redistribution and democracy as principles for anti-liberal reforms.

    A fairer distribution of surplus value is indispensible to fight the development of the crisis. Income from work (including insecure jobs …) must be valued more highly than that from capital. A greater part of business profits must be invested in favour of human and ecological development. Solidarity economy should be promoted and also the rights and powers of wage earners.

    The directive “on the rights of shareholders” and its adaptation in the various countries must be suspended and measures taken to counter the volatility of investment and to make more permanent the relation between firms and investments, to separate management from shareholder logic to strengthen the “social interest of firms” and the requirements of the real economy as against the interests of shareholders, investors and the market.

    The use of public money must be democratically controlled. The mobilisation of public funds, particularly in favour of big groups, must be based on democratic principles (their use must generate new power for public authorities and wage earners), on social criteria (the criteria of creating or defending decently remunerated quality jobs…) and ecological objectives (in favour of a new kind of development). The capacity of local authorities to react must be strengthened rather than restricted.

    Any allocation of public money must help develop economic democracy and open the way to a change in power, in property and orientation, accompanied by new power for wage earners and citizens.

    With regard to banking systems, the setting up of public financial centres, subject to control by the state and society, is more than ever indispensable to ensure that credit works for the public interest.

     

    Notes

    1) A more comprehensive version of this text is available from www.transform-network.org

    2) Michael Hudson, University of Missouri. In Financial Times, 8/4/2010

    3) See Joachim Bischoff, Richard Detje, “Europe in Crisis – on the Road to Splitting”. Transform! 05/2009.

    4) See Haris Golemis, Elena Papodopoulou: “The Greek Banks in the Balkans” Transform! 06/2009.

    5) Laurence Boone, Chief Economist of Barkley Capital ; Libération 17/2/2010.

    6) A precise description of the challenges and methods in: Andreas Fishan, Stabilitätskriterien und die öffentliche Hinrichtung Griechenlands, Sozialismus 3/2010 [Stability Criteria and the Public Execution of Greece].

    7) In its 03/2008, 04/2009 and 05/2009 issues, Transform! magazine published reports on the crisis situation in many European countries as well as analyses of the increasingly contradictory development within the EU and the Euro-zone.

    8) see Bob Jessop in the Transform Seminar in Vienna, January 2010 and Pierre Todorov (Barrister in Lovells LLP chambers), “It is time to break with the excesses of the shareholding ideology”. Le Monde 11/2/2010.

    9) Harvey, p. 341

    10) Bob Jessop, Vienna Seminar organized by Transform! January 2010

    11) Bischoff/Detje: Die große Krise und das Alltagsbewusstsein. – In: Die große Krise, VSA, erscheint im Juni 2010 [The Big Crisis and our Everyday Consciousness. – In: The Big Crisis, VSA, to be published in June 2010]

    12) Bischoff/Gauthier: Sarkozy und die Hegemonie des Neoliberalismus, Supplement Sozialismus 12/2007 [Sarkozy and the Hegemony of Neoliberalism]

    13) Stephen Bouquin: The Age of Extremes has Only Just Begun. Transform! 05/2009.

    14) Jens Münchrath, Handelsblatt 22/2/2010, cited by R. Kulke.

    15) Cited by R. Kulke. Schweine, Alkoholiker und die Konstruktionsfehler der Eurozone. blog.rosalux-europa.info/de [Pigs, Alcoholics and the Construction Errors of the Euro-Zone]

    16) R. Kulke.

    17) Jacques Rigaudiat, À Gauche, 18/12/2009.

    18) Elie Cohen: 95% of raw materials were transformed into “financial products” in the 6 years from 2003 to mid-2008, the sums invested in speculation in these areas has increased from 13 to 320 billion dollars.

    19) Transform!


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