• Thinking Europe Anew Without Imposing It from Above

  • By Andreas Fisahn , Peter Wahl | 16 May 13
  • The EU’s crisis management is deepening the disaster in which the Union finds itself. However, a change of course is not in sight. This would require insight into the causes of the debacle and the courage to abandon the dogmas of the free market; and it would require fighting the power of the financial industry. Europe has to be conceived anew in order to overcome the agony.

     

    A financial crisis and a crisis of competition – not a debt crisis

    At its core, the current crisis is not a debt crisis but a crisis of the competitive and financial order as it was created by the European treaties. The crisis had its starting point in the financial crisis, which itself was the consequence of liberalised and deregulated financial markets. It is not primarily a debt crisis resulting from the mismanagement of individual countries.

    Apart from some aspects of the Greek drama which are now being declared the causes of the crisis, allegedly explaining everything, the countries have been acting ‘in compliance with the system’ and manoeuvring within the financial and competitive order established by the treaties. Within this system it is only consistent for the states to abstain from receiving tax revenue from capital income and to intensify international competition between national competitive territories via fiscal and social dumping. In international competition between national territories the competitive system of the EU finds its most significant expression.

     

    The structural error of the competitive order

    Since the 1980s the EU has gradually been moulded into a neoliberal competitive order. The EEC developed from a state-interventionist customs union to a competition-oriented, neoliberal EU, in which not only the companies but also the states compete against each other. While large areas of commercial law have been harmonised, competition, on the other hand,  takes place where European harmonisation was excluded by law: in the areas of tax law and the social systems. This can only lead to a downward spiral – to a race to the bottom in the fiscal and social domains. Continuing on the same path, interpreted as an intensification of integration, is socially irresponsible and will not work in the long run.

     

    The structural error of the financial market order

    In the 1990s the European competitive order took on a specific dynamic due to the deregulation of the financial markets. Through it, politics has ultimately degraded itself to the point of becoming a mere recipient of orders reacting only to the signals of the financial markets. Uncontrolled financial markets allow institutional investors and the wealthy to avoid being taxed in the national states. This worsens the revenue situation of the states and deepens the dependence of public finances on the markets. Uncontrolled financial markets create virtual wealth which has to be served by the real economy. It is a redistribution machine favouring the owners of financial assets. The financial crash of the years 2007/2008 eventually led to a recession which has continued the present, developing into a debt crisis and bringing about a lost decade for the Union.

    The financial casino has recommenced its operations. Meanwhile, the states are struggling with the consequences of the crisis and through rescue funds the debtors guarantee the casino’s functioning. The losses of the banks are thus socialised. That is why public debts are much higher today than they were before the crisis. After the outbreak of the crisis, the G-20 had announced far-reaching reforms, but so far nothing much has happened except for a few cosmetic adjustments. This is clearly due to the influence of the financial lobby and the “systemic significance” of the major banks as well as in the taboo of questioning the system.

    On the other hand, the European Constitution, which by way of treaties is committed to liberalised financial markets and freedom of movement for capital, is setting tight limits on re-regulation. The crisis of the EU is a crisis of its competitive and financial order. That is where any fundamental revision must start. 

     

    Authoritarian economic governance

    As a reaction to the crisis, the restructuring of the EU in the direction of an authoritarian economic governance is being pushed. All of the various agreements and pacts – the Pact for the Euro, Sixpack, the ESM (European Stability Mechanism), the Fiscal Pact and the Banks Union – have a common denominator: They aim at centralised control of the economic and budget policies of the Euro-countries. Wolfgang Schäuble quite frankly stated that, ‘[i]deally, there would be a European Minister of Finances. He would have the right to veto any national budget and would have to approve the level of new borrowings.’ This is not only a centralist but also an authoritarian solution. Not even in a national state does a minister of finances have the right to veto the budget law decided by parliament. Such an authoritarian solution harbours the danger of ever more democratic and fundamental rights being suspended in order to guarantee a continuation of the socially irresponsible, for the prevailing management of the crisis is first and foremost to uccure by reducing state expenditures through cuts of social benefits and wages.

    What the managers of the crisis demand are upper limits to credits (a ‘debt brake’) and thus an austerity policy leading to depression and further worsening of the economic situation. The number of unemployed has reached a historic all-time high of 12%. However, not even the objectives set by the managers themselves can be achieved by the restricted spending programme: The level of debt is rising in relation to the shrinking gross national product. For this reason too, intensified integration characterised by an authoritarian austerity policy cannot be a sensible route.

     

    Centrifugal tendencies and growing nationalism

    The authoritarian economic governance is understood as a step towards intensifying integration. This position calls itself ‘pro-European’, but in actuality it is not because this form of integration is anti-democratic and anti-social. The very substance of European values is being crushed and, consequently, the European project as a whole jeopardized. As a consequence of the crisis management the distance between Europeans has now become even wider, with the aversion to Germany in particular growing daily and expected to grow further in the near future. National and chauvinist tendencies can be observed, everywhere triggering centrifugal dynamics which could lead to an erosion of the current legal foundations of the EU.

     

    Imposing an intensification of integration?

    As an alternative, demands are being heard for a supranational democracy, especially from within the social democratic and green spectrum, the outlines of which remain completely vague. In order to initiate a democratic reform of the Union, these demands include the calling of a convention to reform the treaties and submitting a new European Constitution to the vote of the populations of Europe. The intentions here may be good, but the reality will be anything but good because the wrongheaded development will not be corrected if the competitive and financial order is not also called into question. At best, single measures are considered such as joint government bonds. These create short-term relief for the borrowings of some countries, but the mechanism of handing out gifts by way of redistribution is tackled as little as is the power of the actors on the financial markets.

     

    Democratisation of the EU

    Democratising the EU is the objective of any emancipatory politics. This involves, on the one hand, the institutions of the EU: To return to democracy in Europe at least requires uniform European suffrage, Europe-wide parties and votes having equal weight. The representation and self-legislation demanded by democratic movements are not being realised. Not even the national parliaments can control European politics any longer. Vassilios Skouris, the President of the European Court of Justice (ECJ) has quite frankly explained how the system works: Europe has acquired competences due to the principle of conferral, and where the limits of the competences are drawn is determined by the ECJ.

    The lack of democratic programming by national parliaments is not compensated or replaced by the European Parliament, since it is not a democratic parliament, elected on the basis of equal suffrage, which would function as the central organ of legislation. In the legislative process, the EP still comes second after the Council. Thus the EU is a post-democracy in which the bustling but for the most part ineffectual activities of the representatives have replaced democratic control and self-legislation.

    Instead, possibilities should be opened up to put into practice economic and political alternatives. Which economic model to choose must, in a democratic society, be decided through the democratic political process. The European Constitution should be opened to a democratic process in which different objectives and perspectives, priorities and concepts can compete to find majorities to support them. This kind of openness would mean taking a road leading out of the established competitive and financial market order, which is only possible through a fundamental revision of the treaties.

    This could involve a slim European Constitution, which under conditions of a democratised European legislation transfers competences but does not lay down any detailed specifications of objectives and means. Conditions sine qua non for further integrative steps are real steps to guarantee the social agenda, to reverse the asymmetry between capital and labour.

     

    For re-thinking the social

    Any politics of emancipation must liberate itself from the binary logic that the road to an authoritarian-centralist order is ‘pro-European’ while rejecting it is considered ‘anti-European’.

    Since criticism of the authoritarian variety of integration is often motivated by nationalism and welfare-chauvinism, hardly anyone in the camp of those struggling for emancipation dares to question the dominant course of integration. For fear of being cornered into the two-camp logic and denounced as anti-European, nationally narrow-minded and backward-looking.

    An intensification of integration at the present moment would only secure in an authoritarian manner the wrongheaded structural decisions of the past; it would lead to a continuation and exacerbation of a policy at the cost of the majority of people and to the benefit of the profits of the big companies; it would continue the wrong set of priorities aimed at turning Europe into the most competitive of all regions, which really means conditions favourable to capital investment.  

    Under these preconditions and power relations it makes little sense to introduce a constituent process by way of a convention procedure. That would require an intense and broad discussion of the perspectives of the EU in and among all the member states so as to arrive at a consensus on the question of how we want to live together in Europe.

    This kind of discussion is not taking place in the midst of the hectic management of the crisis, and that is why the prerequisites are not there for a constituent convention process. In the end, a Europe of solidarity is only thinkable if those social forces organise, who want to push for such a project from below and who are able to defend and preserve both old and new achievements. Democracy is not only a question of electoral procedure but also one of which social interests stand a chance to prevail.

     

    Short-term reaction to the crisis

    As a short-term response to the crisis strict regulation of the financial markets including controls of capital movement and effective taxation of large assets and capital incomes is necessary. The casino must be closed down. Moreover, a ‘transfer union’ of one kind or another is unavoidable. However, the addressees of solidarity are not ailing banks but the citizens of the countries ridden by the crisis and among them those particularly weak socially. Banks may only be saved under the precondition that they are subordinated to public control and run according to a business model committed to common welfare.

    Speculation against crisis-ridden countries must be stopped, through, for example, a ban on credit default swaps for government bonds, the neutralisation of ratings and bans on market access for hedge funds and other highly speculative actors. In addition, the ECB must assume the role of ‘lender of last resort’ until the crisis economies have been consolidated and have recovered to the point where they can stand on their own.

    If required, the temporary flexibilisation of the Euro by introducing regionally different exchange rates or the fixing of currency fluctuation corridors are legitimate measures. If this takes place in a structured and concerted way, the negative effects can be limited and the costs would be much lower than if the Eurozone were dissolved in a chaotic way. If the dominant way of managing the crisis is continued, the collapse of the common currency will inevitably be the outcome.

     

    Global competition

    The EU is integrating itself into the geopolitical upheavals and striving to become the most competitive region on earth. Competition is primarily understood as economic, but is to be supplemented by political and military means. The ideal is the EU as a superpower together with the USA and China, forming the G3. If the world is looked at through the lens of power and geopolitics, the rise of China to a superpower, the potential of India, Brazil and other threshold countries as well as Russia’s attempts to revive it’s former power must, from the perspective of European functionary elites, be regarded as a source of concern. Indeed, the 500-year epoch in which Europe and its North American offshoot determined the fate of the world is drawing to a close. 

    It is obvious that a EU superpower is incompatible with a European policy of emancipation. ‘Peace’ (in the comprehensive sense of the word) must be the objective of any European policy and not geopolitics on the model of past centuries. The EU should play a major role in defining a new international order, which is conceived of as an order of peace and replaces international economic competition with an ecologically oriented order of cooperation and solidarity. Only in this way can the global challenges such as the climate crisis, population growth and the scarcity of resources be faced. The EU should become a region standing for peace, solidarity, democracy and social rights worldwide, in short: a superpower in terms of quality of life.

     

    Note: A longer version of this article was published in German in the journal Sozialismus 11/2012.