• The Crisis of Europe: Elements of a Political Strategy

  • Por Elisabeth Gauthier | 21 Oct 11 | Posted under: Contemporary Capitalism , Transformative Strategies
  • At the time of this writing, Europe is becoming increasingly unstable and no one can predict the scenario of the coming weeks. It is safe to predict that we are heading for a series of tragedies.

    The great crisis that we are experiencing is the result of nearly forty years of neoliberal offensives that the right has been waging with increasing determination – and which has also contaminated whole sections of the left.

    The forms that this crisis is taking are assuming characteristics that were unthought-of only a few months ago in Europe. Cuts affecting its peoples are beginning to produce tragic results.

    We are seeing the reality of the concrete meaning for society of this stage of capitalism that has been rightly called “financial capitalism”1 or “de-civilised capitalism”. What we are seeing is more a worsening of a system crisis or even a crisis of civilisation2 than a way out of the crisis, in so far as the basic contradictions of the crisis of the whole system of accumulation and reproduction have in no way been resolved.

    It has become a crisis for the very existence of the EU and the Euro. After having saved the banks and their situation, an increasing number of states are becoming prisoners of the financial markets, seeing their sovereignty undermined by the economic powers and the European institutions set up by the German and French governments. With these super-austerity policies, a vicious circle is developing, a descending spiral that will produce reactions whose scenarios no one can foresee.

    More and more voices are being raised in Europe, including from the camp of the powerful, calling the austerity option a mistake. Timothy Geithner, the US Secretary of the Treasury, says that “governments should recognise that growth is the greatest challenge facing the whole world”3. Joseph Stiglitz, winner of the Nobel Prize for Economics, feels that “the bad monetary policies that have plunged us into the present mess are unable to get us out of it”.4 Scathingly attacking “the fashion for low taxes” and “debt fetishism”, he stresses the contradiction whereby “the major firms are crammed with liquidities while the banks refuse loans to small and medium sized firms that, in any economy whatsoever are the sources of job creation” and he can only envisage pessimistic scenarios. George Soros says that Europe is in danger because of the weakness of the banks and the risks they were taking in the past as well as the absence of any stimulation of its economies and internal markets.5

    All this shows that the neoliberal dogmas are crumbling but that the dominant forces are showing their inability to produce alternative responses. New forms of oligarchy are undermining democracy and popular sovereignty. In this context of a disintegrating society in which the basic conceptions of solidarity and “co-habitation” are systematically undermined, there is no certainty that it is the united and cooperative resistance of progressive and democratic forces that will come out on top.

    The European leaders unceasingly strengthen austerity policies even though there is tangible and widely recognised proof this autumn showing that these choices – being pushed to the limit in Greece today – not only aggravate the economic and social situation but are, on a long-term basis, depriving the states of revenue and thus the means of intervention. The phoney “aid plans” – aimed at saving the banks, not the population – have led to the destruction of 300,000 jobs in 18 months in Greece; a drop in wages of 30% and a diminution of its GDP by 5%. Unemployment continues to increase to reach 12.3% in Portugal (Eurostat), 14.5% in Ireland and 16% in Greece in the second quarter of 2011. As with the “structural adjustment plans” carried out by the IMF in the past, whose disastrous social and economic results are now recognised by the international community, these policies are leading to recession. In France, budgetary crises are breaking out these days, as an increasing number of local authorities are bankrupt, unable to balance their budgets because of toxic loans6 proposed by the Dexia Bank.

    Europe: towards an authoritarian capitalism?

    The crisis is particularly severe in Europe – which is connected with the very manner in which Europe has been built: on the precepts of “pure neoliberalism” and in the interests of “core Europe”. Continuing the logic of competitiveness and austerity after the outbreak of the crisis in 2008 has led to unmanageable inequities. Society is increasingly undermined by austerity policies. The EU is threatened by divisions between its central and peripheral countries. The lack of balance, which existed before the crisis, has not been overcome. The states have saved the banks without giving themselves any means of controlling them. They have restored the power of the financial markets by giving up any attempt really to control them, by not developing socially and ecologically useful forms of research and production or increasing public revenue; instead their choice has been to transfer the burden of the debt to society. “Plans to help” do not support production and services but oblige countries to institute austerity and put an end to their social model; they expropriate society through extensive privatisation. With the “Euro Plus Pact”, a fresh step has been taken toward an authoritarian Europe. Even as recently as June 2010, Mr. Barroso gave the credit agencies throughout the EU the right to free movement.

    It is becoming increasingly clear that the logic at work can only aggravate the crisis. The EU is facing a structural, maybe even existential, crisis.

    “All the ingredients are there for the crisis to become still worse. … Through failure to have envisaged the slightest restructuring of the Greek public debt to avoid under-valuing the assets held by the private banks, it is unfortunately probable that the crisis is still before us … The danger is not so much to see this European Union break up or the Euro collapse, since they are dying, but that national egotisms, the refusal of mutual aid and even xenophobia, are all that emerge from the ruins”.7

    Indeed, disintegration cannot be imagined as anything but explosive and chaotic, with an incalculable number of bankruptcies. Even from the official German point of view, according to Josef Ackermann, chair of the Deutsche Bank, the cost of supporting the economically weaker members of the EU would be far lower than the cost of disintegration, taking into account the trade ties with the peripheral European countries and the exposure of the German financial sector to these countries8.

    Can the disintegration of the Euro and the EU still be stopped? On the one hand, “lack of specific tools for economic and solidarity action, which could help national economies cope with the pressures of recession and the speculative attacks from the financial markets, created more problems for economic and social cohesion and reinforced inequalities within the European Union”;9 on the other hand the attempts to set up a new “European governance” are intensifying. These take on, in line with the dominant orientations, a form of “authoritarian capitalism” leading to “European ‘post-democracy’ within the structures of an authoritarian capitalism”.10 Indeed, one could talk of a “European coup d’état” when the national parliaments are stripped of their budgetary authority in favour of the European Commission and when the latter sets the orientations in all social, fiscal, wage and investment issues. The attempts undertaken by the European leaders “radicalise neoliberalism”.11

    Today we can dare the hypothesis that Europe can only have a future with a logic opposed to that of neoliberalism. This much is evident: a monetary union cannot become viable without a project of economic, social and ecological development that is geared to solidarity and democratic construction. For the EU this means a double change of logic: another economic logic and a radical institutional change.

    The left must put on the table the problem issue of public authorities and their functions. Instead of “appeasing the markets”, it is “up to the governments to subject the markets to political and democratic control and restore power to the parliaments and the citizens”.12 All the more so as in several countries there are signs of severe crises in their political regimes.

    While statist intervention has been increasing in the economic field since 2008, the neoliberal logic has not been abandoned. The European states and institutions continue to ensure that their actions conform to neoliberal dogmas. The danger of an authoritarian statism in Europe is increasing. The meaning of the “Golden Rule” is “bring the state back to a role in which it would be content to exercise purely symbolic functions. This would be a very great regression, which the neoliberals want, and which is also contaminating some sections of the Socialist Party”.13

    On the one hand, the excessive debt of the states follows various attempts to save the banks, made worse by the present context of global depression. With no perspective of any revival, this is weakening them and reducing their means. On the other hand, the legitimacy of governments is crumbling at a time when there is the greatest need for public intervention and an enormous mood in favour of long-term investments and of a new kind of development for ecological transition.

    The class confrontation over the public debt

    The crisis of the public debt crystallises a major social and political conflict, the consequence of neoliberal logic, but does not alone covey the full reality of the crisis. The present public debt, in many European countries, has a series of causes: the growing inequalities and reduced taxation of capital incomes; the decrease in labour’s share of the wealth produced and society’s loss of earnings; the banks’ policies and their bailout in 2008 without any compensation; the pressure and blackmail from the financial markets as well as the lack of any political will to change the course of events.

    There is no doubt that there is a debt crisis: “The immense financial accumulation of the last 25 years, like that of a largely ‘fictional’ capital in the meaning Marx gave the term, the constraints that this pyramid of financial claims imposed on the countries and the workers … is indeed real. However note that it is not the debt that explains the crisis – so it is not austerity that can help us get out of it. Since the 1980s, to increase the profitability of an over-accumulation of capital, shareholders have been putting unprecedented pressure on labour and the workers… Thus there has been an anthropological dimension to this crisis. Human labour, which should be at the heart of social development, has become a variable to be adjusted.”14 The resulting drop in public revenue and household incomes has been offset by indebtedness – which shows the depth of the disease.

    While indebtedness today demands some emergency treatment, the real causes need to be faced by a new approach to development, to labour, to the real economy, social security and growth. The solution lies more in increasing revenues than in reducing public expenditure.

    Social and political struggles and the battle over their interpretation

    No doubt the lie of the “invisible hand” of the markets is collapsing. However, even if the inequalities (in incomes, property and power) stick out a mile, if the ruling circles are often called the “oligarchy”, if the book Le President des Riches (the Rich People’s President)15 has sold 100,000 copies, if “get indignant” has become a popular slogan throughout Southern Europe, we are still in the grip of a massive sense of powerlessness, with untargeted anger.16 This leaves the powers that be and the markets room for manoeuvre. “The debt” is at the heart of the political and ideological confrontation, which is made easier by the fact that its causes are not yet seen as the result of political choices inherent in the system – those of financialised capitalism, accompanied by a neoliberal offensive on a world scale.

    In many cases the majority of people who oppose the austerity policies do not have a perspective of a credible alternative logic. This absence of any interpretation of the crisis from a class point of view leaves the field open for nationalist and other ideologies aiming at creating divisions inside the subordinate classes. If it wants to break the “straitjacket vision” of the public debt, the alternative way of thinking must tackle the crisis in all its various aspects: the social crisis, the collapse of the real economy and public indebtedness. This presupposes immediately carrying out a debate on current realities, on the reasons for the debt and the solutions to the problem – and all this in a context of a coherent and global critique of the system.

    A number of specific proposals let us to demonstrate the possibility of reducing the public debt: citizen audits regarding the debt’s structure, identifying and cancelling illegitimate debts, immediate reduction of interest rates (which could also be considered illegitimate) required from states, local authorities and public organisations. Regarding the cancellation of some debts, the criteria of social justice must be observed so as not to deprive people whose social protection is dependent on private funds. A new stage of socialising losses must include some elements of public appropriation of assets and powers.

    The debate must also deal with ways of developing the real economy, work and jobs, social, cultural and ecological development – which presupposes radical political changes, the goal of moving on to another kind of development.

    In the context of the European Union, the complexity lies in the fact that such an alternative logic must be applied both at the level of the member-states and at the EU level.

    The need for a social front – at both national and European levels

    If we are committed to opposing the growth of resentments, discrimination and nationalist divisions, we have to bring out the real nature of this confrontation between those classes that dominate in the framework of financial capitalism and all those who are dominated in European society. This involves making clear proposals that will allow the struggles to become more efficient and broaden their support. By crystallising the very nature of this confrontation, such alternative proposals would be able to diminish these resentments or even entirely prevent the underlying conflicts from being channelled into discrimination, resentment and nationalism.

    There is a great danger that the brutal policies carried out by European governmental entities will lead to the search for scapegoats not only inside each society but in other European countries. A “nationalisation” of problems would only give more weight to the nationalist trends, to populist and extremist right-wing forces already very present in Europe as well as to splits between the northern and southern or between the eastern and western parts of the continent. More generally, one should see that the aggressive logic of financial capitalism constitutes a threat to democracy and peace and calls for establishing broader fronts to oppose it.

    Faced with the crisis, the question everywhere arises of how to form a new social bloc that could bring about a change of policy, an alternative logic. In view of the social fragmentation that characterises this neoliberal regime, such a perspective would have to be very complex.17 Under present-day conditions, the class struggle, with the fragmentation and job instability of wage earners, with differences in its experience of the crisis and of public policies, the search for new alliances between subordinate classes requires strategic innovation. It is not only a matter of finding what kind of political project would be capable of overcoming the social fragmentation but also what kind of position would encourage bringing groups together. We have seen that “dignity” is a catalyst which resonates across very different strata and places; this is well illustrated by the extraordinary responses to Stephane Hessel’s call to get indignant.

    As we have said, neoliberal ideas are collapsing, but that does not mean the emergence of an alternative hegemony. The rumbling anger often has difficulty in defining its object and finding exactly whom to approach, which leads to exhaustion and giving up. The worsening of the crisis has strengthened both the anger and the feeling of powerlessness. The lack of the power to interpret, the lack of the power to act and the difficulty in uniting tend to generate resentments that can easily be seized on and manipulated (as we see is happening in Europe at the moment) by radical right-wing populist forces claiming to be defenders of certain social gains for a restricted part of the population. Fighting talk, though certainly needed, is not enough to beat back these resentments. To do so it is essential to propose real perspectives for the power to interpret, the power to act and the power to unite.

    The difficulty of conceptualising the needed confrontations at the European level remains considerable,18 as political powers and democratic forces, social and political organisations, citizenship and political culture, social bases and political projects are still all structured at the national level.The economic powers that have an enormous influence on European institutions are much more advanced in this respect than are the democratic forces. The same logic that is rife at the level of the states – the predominance of the big business groups and financial markets on the political powers – is even more radically imposed at the EU level. This statist structure was established at the height of the neoliberal period, in a context in which, unlike in the case of the nation-states or “republics”, it was not accompanied by the emergence of opposing forces, of democratic instruments, of forms of civil society or of social and political organisations.

    This is why the Europeanisation of forces that oppose the neoliberal integration of Europe is much harder. Nevertheless, initiatives and processes for seeking convergence and common actions are developing. The last Congress of the European Trade-Union Confederation in Athens, as well as the two Euro-demonstrations in Budapest (with 50,000 taking part) and in Poland (70,000 demonstrators) were all more militant than in the past. The Summer University organised by Attac Europe (in Fribourg last August) was an important working meeting that led to citizen initiatives.

    On May 31, in the European Parliament, a European Conference, “Austerity, debt and social destruction in Europe”, was organised, which enabled us to measure the extent to which real convergences between social and political actors from about twenty countries had progressed. This also allowed the establishing of the basis for an alternative logic for Europe.19 It simultaneously covered the debt, the financial crisis, but also major social issues of the workplace, of social services and of democracy.

    The European Left Party, in its July statement at Trevi,20 indicated the major directions for alternatives to austerity, on which a number of social and political forces are acting for another Europe. However it laid more stress on the question of wages (under-estimated in a number of popular initiatives), on a European minimum wage, on powers for wage earners. It also considered essentially modifying the European Treaties and strengthening the authority of citizen-elected bodies. It hopes to work for the emergence of a European front of resistance and of alternatives.

    Regarding movements, it seems time to bring together those who are essentially protesting against “finance” and those who define their stand in opposition to “capitalism” – in other words those who have stressed the radical criticism of financial power and those who base their actions on the critique of labour/capital relations. Regarding ecological challenges, it also seems clearer that they cannot be tackled seriously in the context of the current logic. Faced with the offensives linked to the public debt and austerity, the different movements, be they social, political, trade-union, anti-globalisation or ecological, can only bring their struggles closer to confront a logic that is visibly more destructive than the partial aspects corresponding to their specific objectives. It is significant that many new public self-managing areas are opening up – the “take the squares” movement shows the dimensions that this phenomenon can take on in the current period – as well as working spaces from which convergence in struggle can emerge.21

    The political landscape is continuing to evolve. Populist demands are taking root in a more lasting way.22 The right-wing majorities in power in Germany and France, which are structured around European action, are being increasingly weakened at home. Thus the citadel of the French right, the Senate, has just swung to the left. For the first time in the history of the Fifth Republic23 it has a left majority. The German CDU has suffered a series of shocks in regional elections and has seen its coalition partner in the national government collapse. At the same time, Papandreou, the President of the Socialist International, has accepted the diktat of the EU troika, which will plunge his country into an unending disaster. The coming months, particularly with the election campaign in France, will accentuate the contradictions within European social democracy. It is uncertain what trajectories these coming social explosions will follow.

    For the political left, this great crisis and the transformation of the political landscape brings completely new challenges. Faced with the process of the disintegration of societies and the crumbling of neoliberal hegemony, it must work for the emergence of a new cultural and political hegemony.

     

    Notes

    1. Financial-market capitalism. The German expression “Finanzgetriebener Kapitalismus” (literally “finance-driven capitalism”) is even more explicit. See Joachim Bischoff, Die Herrschaft des Finanzkapitals. Politische Ökonomie der Schuldenkrise [The Dominion of Finance Capital. Political Economy of the Debt Crisis]. Hamburg 2011. Jörg Huffschmid, Kapitalismuskritik heute. Zeitdiagnosen: Vom Staatsmonopolistischen zum Finanzmarktgetriebenen Kapitalismus [Critique of Capitalism Today. Diagnoses of the Times: From State Monopolistic to Finance-Driven Capitalism]. Hamburg 2010
    2. Une crise de civilisation ? Colloque Espaces Marx January 28 and 29, 2011. Supplement Transform! Paris 2011
    3. Quoted in Le Monde, September 24, 2011.
    4. Le Monde, August 17, 2011
    5. Le Monde, August 18, 2011
    6. According to the newspaper Libération, 5,500 local authorities had to resort to loans for a total of 25 billion Euros. The Revenue Court estimates that 30 to 35 billion out of a total of 160 of debts bought by the local authorities were toxic.
    7. Jean Marie Harribey, “La crise est devant nous ?” [Is the crisis ahead of us?] Blog September 21, 2011.
    8. See Joachim Bischoff / Richard Detje, “Titanenkampf” [Battle of the Titans]. www.sozialismus.de; 12/9/2011
    9. Nicos Chountis, MEP (GUE/NGL) , September 2011
    10. Joachim Bischoff / Frank Deppe / Richard Detje / Hans-Jürgen Urban: Europa im Schlepptau der Finanzmärkte [Europe in the Tow of the Financial Markets]. Hamburg VSA 2011
    11. Johannes Jäger , Contribution to the Joint Social Conference’s workshop on debt and austerity [= European Conference Against Austerity.] www.cadtm.org/European-conference-against, London September 30, 2011.
    12. Pierre Laurent, President of the European Left Party, in l’Humanité August 10, 2011.
    13. Dominique Plihon, l’Humanité August 16, 2011.
    14. Jean-Christophe Le Duigou, economist, CGT. Humanité Dimanche September 22, 2011.
    15. Monique Pinçon-Charlot and Michel Pinçon, Le Président des riches. Enquête sur l’oligarchie dans la France de Sarkozy. Paris 2010.
    16. In German the phrase is “adressenlose Wut” (addressless rage).
    17. Elisabeth Gauthier, “Innover pour construire un nouveau bloc social” [Innovate in order to build a new social bloc] In: Une crise de civilisation? Colloque Espaces Marx 28-29, 2011. Supplement Transform! Paris 2011
    18. In this connection see Gerassimos Moschonas’ analyses in this issue.
    19. See the conclusions – convergences of this conference openfsm.net/projects/austerity-debt-and-social-destruction-in-europe/summary. Available in English, French, German and Spanish.
    20. http://www.europeanleft.org/nc/english/home/news_archive/news_archive/zurueck/latest-news-home/artikel/the-eu-will-either-be-democratic-social-and-act-in-solidarity-or-it-will-not-exist/
    21. See a series of articles on this subject in this issue.
    22. On this point see Transform! 08/2011
    23. See the article by Dominque Crozat in this issue.

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