During the 1990s left-wing economists highlighted the difficulties of implementing a single currency without ensuring it was first grounded in unified fiscal, economic and social policies. It was clear that bringing in the euro meant strengthening the strong, and weakening the weak. If currency devaluations can no longer be used to balance losses in competitiveness and to (at least temporarily) protect the economy, then all that remains is remorseless competition for the lowest unit wage costs, or as Elmar Altvater writes “the negative integration of Europe by liberalising the markets and deregulating politics“. The Maastricht stability criteria reflect how the wealthy, with their need for monetary stability, were able to impose their economic interests over the social interests of the people of Europe. This is clearly demonstrated by the fact that the catalogue of requirements developed for the single currency does not even contain a single social criterion such as minimum wages or social standards.
It is clear that the economic imbalances that already existed were and are being exacerbated by the German model of an export-based economy. Built on an optimised focus on global markets in core industries, high productivity standards and the politically enforced reduction of wages through Agenda 2010, the German economy produced and continues to produce enormous export surpluses; it is this that has led to current account deficits and rising levels of debt in Mediterranean countries. At the same time, the living standards of the majority of the German population are below that which the country could actually sustain; these people are being betrayed of the results of their work.
Saving the banks and investment companies that lost large sums of money through speculation on international financial markets cost European states alone around one trillion euro; this significantly increased state debt. Austerity measures implemented under the leadership of the Merkel government led the welfare state to be dismantled further. There are no historical examples of austerity policies ever having solved a crisis. Instead, austerity inevitably intensifies economic crisis and increases mass unemployment, along with their associated social consequences. This is one of the main reasons that Merkel is increasingly becoming a figure of hate in the regions of Europe most affected by the crisis.
During the last 20 years, finance-led capitalism has to a great extent been built on the results of a massive redistribution of wealth in favour of the wealthy and the owners of capital. Yet this system has been unable to provide a new model for growth and accumulation. On the contrary, not only has it led to the greatest financial crisis since 1929, it has also set in motion large processes of destruction; accordingly, the gap between the poor and the rich has continually grown, welfare systems have been dismantled or completely removed, and entire economies have been driven into ruin. For the majority of the political elite, there is no alternative but subordination to the financial markets; in order to achieve their aims the elite is even prepared to sacrifice elements of bourgeois democracy.
If the euro zone countries drift further apart economically the basis of the euro will be undermined. Consequently, the very foundation of the European monetary system is being destroyed in the name of saving the euro. It is hard to imagine how elected governments will be able to maintain their legitimacy with an unemployment rate of over 20% in Greece, Spain and Portugal; over 12% in the EU on average, and a youth unemployment rate of over 50% in various countries.
Which perspectives can these governments offer their citizens, when their citizens are faced by negative economic growth; an eroding welfare system, growing poverty and the sale of public goods?
Chancellor Merkel openly states her aims: “How can we ensure coherent competitiveness in the whole euro zone over the next few years? And I do not mean an average level of competitiveness for European countries, but a competitiveness that can be measured by its capacity to grant access to global markets”. The price of turning Europe into the most competitive economic area in the world is too high for millions of people; we can no longer expect these people to pay this price.
It is unclear whether the reaction of the people in Europe to the policies of uncompromising subordination to the interests of global market-oriented capital and capital expansion will be reactionary or progressive. Clearly, there is a danger that populist, right-wing or even fascist movements might grow and channel the protests into dangerous directions.
Whether this happens will largely depend on the capacity of left-wing parties and organisations to develop and anchor a convincing alternative in society. Such an alternative would have to provide political orientation to the anger and resistance on the streets and against the policies of the Troika. For various reasons I personally do not believe that Oskar Lafontaine’s call to group currencies and politically regulate their revaluation and devaluation is a viable solution. Should the euro system break apart, or individual countries leave the euro zone, then this idea would surely be better than a totally uncontrolled break-up. But there are a number of reasons against it:
· SYRIZA has good reasons to oppose a Greek euro exit. Devaluation would make exports cheaper, but also increase the cost of imports. Imports of oil and other fundamental products – including food – would immediately become more expensive. Moreover, what could Greece actually export? At the same time, a new German currency would probably be revaluated by 30% or more.
· Small currencies would hardly be able to defend themselves against the financial markets. Elmar Altvater writes: “It is naïve to believe that small currencies can compete in the geo-politics of monetary competition and solve their economic problems“. I would not go that far, but it certainly would not solve the problem of economic imbalances.
· Economic integration is already both European and international. Do homogenous, national economic spheres even still exist? If so could they really still be reintegrated into a new form of European monetary union?
If left-wing positions are to be successful, they will need to be taken on by progressive forces in society. An alternative to the policies of Merkel and the Troika will only develop in Europe from below. Left-wing positions must therefore relate to European conflicts, struggles and social movements and be taken up by them.
Many Europeans out on the streets are not there to protest for or against the euro; they are there to fight against the attacks of the Troika, against wage and pension cuts, mass unemployment, the sell-off of public goods, the dismantling of free collective bargaining and democratic rights; or for higher wages and greater social security. In spite of the fact that German unions still find it hard to participate in European-wide protests, coordinated general strikes and protests across various countries have taken place, such as the actions in November in Portugal, Spain, Greece and Italy.
With a little optimism these and other struggles will lead to a new balance of power, a development the left can influence and with which it can build a perspective for progressive change in Europe. The former-President of the Italian metalworkers’ union FIOM-CGIL, Giorgio Cremaschi, summarises this well: “The currency should not be our starting point. Instead, we should focus on economic and financial policies and the institutions on which they are built. What we need to dismantle is the Europe of neoliberal treaties and statutes. [...] We need to put an end to the devaluation of work as a means of increasing exports, which forms the basis of the single currency. Equally, austerity policies must be turned on their heads. For this to happen we need to work democratically together with the population. Referenda must be held on European treaties and statutes. This means that the question of the single currency will only be of importance once neoliberal policies have been overturned.”
· Wages in Germany must be increased and internal markets strengthened through a future-oriented programme. The high export surplus must be reduced.
· Austerity measures should be replaced by a European investment programme aimed at upgrading public infrastructure and services, and implementing socio-ecological reconstruction.
· Financial markets should be regulated and tax havens closed; high-risk speculation should be banned; large banks should be socialised and reduced in size, and the banking system needs to be reorganised.
· A European levy on capital for millionaires and billionaires is needed, instead of making wage-earners, pensioners and the unemployed pay for the debts. The party DIE LINKE is committed to these demands and to a campaign by European left-wing parties aimed at ensuring the debate in Europe is not turned into a nationalist and populist conflict between European peoples, but instead is fought out as a conflict between “the haves” and the “the have-nots”.
· Public borrowing must be freed from the dictates of the financial markets and instead be organised through direct financing via a new publicly-held European bank.
· Economic imbalances, which are currently intensified by wage dumping and social dumping, must be overcome. This includes implementing economic and industrial policies that stop processes of deindustrialisation and the economic destruction of entire regions and countries in Europe and that instead initiate counter developments.
· The dismantlement of democratically elected national parliaments must be prevented; the rights of the European parliament need to be expanded and direct democracy should by strengthened.
“In future, the economic, fiscal, tax, social and labour-market policies of EU member states must be more closely aligned, and we need to end today’s competition to charge the lowest taxes, and pay the lowest welfare and wages” (taken from a draft of the election manifesto).
The party DIE LINKE has developed policies that relate to the struggle against neoliberal hegemony and which provide the building blocks for a social, democratic, solidarity-oriented, peaceful and ecological Europe. If we are to reach these aims, there are no shortcuts that we could take to avoid the necessary social and political debates, the broadening of social struggles and developing European and international solidarity.
Asking whether it would be better to do this at the national or the European level is simply the wrong question. Clearly, social demands and democratic rights need to be ardently fought for at the national level, but there can be no doubt that capital and corporations have long been integrated and networked at the European and international levels and that they obviously use their economic power to further their interests. This is the basis of the neoliberal hegemony in Europe. In ever shorter intervals the employees of international corporations are experiencing how different locations can be played against each other and how powerless these employees actually are, if they are unable to organise cross-border solidarity.
This is why we are dependent on cooperation, coordination and communication between unions, left-wing parties and social movements. Our programme and our policies must support this process. Or, as Elmar Altvater puts it: “Taming unleashed capitalism (or overcoming it, B. R.), regulating financial markets, providing employment supported with social security and switching to renewable energy sources are the tasks for this millennium. A unified Europe definitely offers better opportunities to tackle these challenges than a divided Europe that might shatter due to the discord of financial crisis and the zero-sum game of frenetic devaluation”.
10 May 2013
Bernd Riexinger is the chairman of the party DIE LINKE.