A different kind of Europe? Responses to Trevor Evans

How do we respond to the euro crisis? Susan George, Paolo Gerbaudo, Donatella della Porta and James Meadway write
April 2012

These are responses to Trevor Evans' article on the basis for a progressive pan-European response to the euro crisis

The golden calf of capital

The economics of the elite has as much to do with blind faith as rational argument, says Susan George, so our resistance has to reflect this fact

The Euromemo Group’s recent report is a particularly important and thorough analysis-cum-set of proposals to repair years of self-inflicted damage in the eurozone. Its voice, however welcome, is far from the only one in what has become a mighty chorus.

Many respectable experts, such as Nobel economics laureate Paul Krugman and Martin Wolf of the Financial Times, and innumerable NGOs are singing from the same hymn-sheet. A broad coalition has proposed valid and converging alternatives based on both history and common sense.

But let’s face it. None of the reasonable, workable proposals of this consensus, ranging from the mild centre left to the long-time radicals, is even on the table. Governments, the IMF and institutions such as the European Commission and the European Central Bank are not reading, much less discussing or acting on them. This harsh truth should give us a clue about what is actually going on.

We are not talking economics here. We are talking religion – and hellfire and brimstone religion at that. There was no earthly economic reason to allow the Greek quasi-or-actual default to undermine and possibly destroy 50 years of the European work-in-progress. Greece represents no more than 3 per cent of the European economy. However, instead of obliging and helping Greece to correct obvious economic shortcomings, including a bloated military budget and no tax income from the church and the rich, a medieval morality-play scenario was chosen.

The austerity policies everywhere imposed are as dogmatic as anything John Calvin or the pope ever invented. It doesn’t matter that the prescribed doctrines can’t and won’t work. ‘Working’, if by that one means benefiting the great majority of European populations, is not the point. The prescribed commandments must be applied whatever the consequences – which, as opponents have repeatedly warned, will be full‑blooded recession and the increasingly likely destruction of a flawed but remarkable post-war political achievement.

Traces of older and darker human-sacrifice rites are here on display: the markets must be propitiated. These mysterious, god-like forces will have their due: throw another public service, another wage-cut, another batch of uneducated children and their underpaid, uncared-for, often unemployed parents on the fire. The thirst of these gods cannot be slaked. As the European leadership discovers at regular intervals, they always demand new sacrifices.

Yes, I recognise that quasi-rational forces are also at work. We are not talking only religion. We are also talking Politics, Money, Power and Rapport de Forces and our elites surely believe they have found a foolproof way to make the people pay once again for their crisis. Capital must continue to devour social substance, to privatise public services, to squeeze more value from labour, to perpetuate the yawning inequalities that keep it afloat.

I am simply asking that those who remain prepared to fight understand that we are not engaged here in rational argument concerning economic alternatives with respectable people whose ideas are simply different from our own. We are up against a rigid belief system whose priesthood is prepared to defend it to the death – and they have plenty of resources to bring to their battle. Yes, we must continue to campaign and explain, to propose and publish, to occupy and march. But we must also do much more than that.

With our financial transaction tax campaign, Attac verified the Gandhian rule of thumb: ‘First they ignore you, then they laugh at you, then they criticise you and say it can never work, then you win.’ We have advanced considerably with the FTT but it has still not been applied to the euro. You only win when a majority of your adversaries realise it’s in their interests or when they can’t take the heat any longer.

The Euromemo proposals are not in the interests of the financial markets and no cosmetics will cause them to believe that they are. So we are set to remain in Gandhian stage 1: they will ignore us. That is why we need the help not just of economists but also of anthropologists and historians, actors and comedians and theologians. We need satire and denunciation, sermons and our own medieval morality plays.

Some of our foes might even recognise they are endangering themselves by worshipping the golden calf. Do not forget the papal legate who in 1209, during the Albigensian crusade, was asked by his troops what should be done about the possible Catholics mixed in with the heretics. He, like our sacred Markets and our 1 per cent, cried out ‘Kill them all – God will recognise his own.’ Even, possibly, the Germans.

Europeanism from below

Paolo Gerbaudo reports on the Routes of Europe conference in Florence, arguing that the Italian left must embrace the participatory democracy of the Indignados to achieve political purchase

The city of Florence is one of those privileged observation spots from which one can read the health of the Italian left and its international standing. Back in 2002 it was in this city that the first European Social Forum was organised. The event came a year after the bloody battle of Genoa, the event which marked the culmination of the anti-globalisation movement. Hundreds of thousands of members of social movements, trade unions, NGOs and activist groups gathered in what remains, to date, the biggest and most successful European Social Forum. The event testified to the cultural influence of Italian social movements in Europe, and of their espousal of a Europeanism from below.

On 9 December 2011, Florence was again the venue for a forum assembling key progressive intellectuals and activists of the Italian left, convening to discuss the future of Europe. Almost a decade after the first ESF, this forum was staged against a background of political demobilisation, in which Italian activists appear incapable of facing up to the politics of austerity pushed by the new Italian prime minister Mario Monti, who has been de facto chosen by the European oligarchy to reassure the financial markets.

The Florence meeting was titled ‘Routes of Europe’ (punning in Italian on ‘rout’) and sought a new progressive agenda for the old continent. The end result was a draft appeal, ‘Another Road for Europe’ (signed, among others, by Donatella Della Porta, who writes on the following page). This proposes economic recipes resembling those outlined in the Euromemorandum, among them an abandonment of the ‘stability pacts’, a shift in taxation from labour to wealth, the establishment of a European public rating agency, the creation of eurobonds to refinance public debt and investment in the green economy. To this, the Italian appeal adds an emphasis on the need for democratic reform of EU institutions to make them accountable and representative.

To date the Florence appeal represents one of the most advanced policy platforms on European reform. The problem is that it does not identify who should campaign for the demands it puts forward. The organisers of the Florence meeting mooted the idea of a new European Social Forum for this purpose, but this suggestion is a symptom of the degree to which Italian activists are out of tune with what is happening around Europe.

The organisational form that is en vogue across Europe is not the social forum as a convergence of progressive civil society organisations but the popular assembly used by the Indignados: a convergence of individuals who do not feel represented by any organisation, including progressive ones. The policies emerging from the Florence meeting resonate with some of the proposals that have been agreed by the assemblies of the Spanish Indignados through complex consensus procedures. Yet the organisers of the Florence meeting did not seem to acknowledge that this is currently the only movement that can halt the politics of austerity in Europe.

What made Italian social movements so influential during the anti-globalisation cycle was their capacity to combine a high level of intellectual analysis with the inventiveness of grass-roots organisational practices. The meeting in Florence demonstrates that this cultural capacity is still there. What is now missing is the connection between intellectual debate and organisational practices reflecting the direction that social movements are taking around Europe and beyond: popular participation and assembly democracy.

‘Italian activists continue to wallow in nostalgia for the anti-globalisation cycle,’ I was recently told by a member of Democracia Real Ya, one of the initiators of the Indignados movement in Spain. If valuable proposals such as the ones advanced by the Florence meeting are to have any political purchase, they need to find legitimacy in the movements of the present rather than in those of the past.

Another road

Donatella della Porta, professor of sociology at the European University Institute, is a signatory to the ‘Another Road for Europe’ appeal, which has a strong emphasis on the need to democratise the EU, not only by strengthening the European Parliament but through greater participation of civil society

‘Italy needs reforms, not elections,’ declared Herman Van Rompuy, president of the European Council, as he presented his conception of democracy in a speech at the European University Institute last November. During his speech, PhD students from all over Europe held up posters headed ‘Democracy?’ and stating: ‘As the head of a European people whose popular consent in the appointment was deemed superfluous, the office of president of the European Council is the symbol of the ever more blatant democratic deficit at the heart of the European Union. However, the crisis of democracy in the European Union is much more insidious than the appointment of a presidential figurehead. The undemocratic ethos pervades the very structures of the Union.’

In spite of this deficit, they concluded, ‘We believe that another Europe is possible . . . Our Europe can and will once again be rooted in its founding values of human dignity, freedom, equality and solidarity, constructed upon and protected by accountable and truly democratic political institutions.’ Among their ‘95 theses’, two read: ‘No common currency without a common democracy!’ and ‘You can’t balance the budget with a democratic deficit!’

This illustrated how the debate on the financial crisis, is in Europe as in the occupied parks of America, intertwined with a competing vision of democracy.

The EU always had problems of democratic legitimacy. The powers of the parliament are still far less than those of national governments. Moreover, the low quality of electoral accountability leads to and is reinforced by the weakness of European parties. Consequently, elections to it are of a ‘second order’ character, with citizens voting more to indicate their stance on national politics. Likewise, MEPs tend to vote along country lines.

To balance the lack of democratic legitimacy, EU institutions present themselves as benign, efficient and non-political. But with the apolitical pretence becoming less and less credible as the power of non-elected EU institutions grew, their claims to efficiency were undermined by the financial crisis. Also, there is convincing evidence that rich corporate lobbies have privileged access to EU institutions.

In this context, legitimacy has been sought by introducing elements of participation and consultation – for example, taking proposals through citizen’s initiatives. But they have been highly exclusive in their design.

The limits of democracy in the EU are clear, but devising ways of democratising it is no easy task. Increasing the power of the parliament is necessary, but not sufficient to overcome weaknesses in the quality of parties and elections.

Since the first European marches against unemployment, the counter-EU summits, and the European Social Forum, social movements have played an important role in constructing a European public sphere. They triggered a politicisation that is fundamental to democracy (and not a risk for it, as the eurocrats imply). The power of social movements to contest is the main driver of democratisation.

Through protests targeting the EU, they can counter the strength of the lobbies. By monitoring and denouncing the privileged access granted to these lobbies, they can introduce elements of institutional controls. This could mean increased transparency of EU institutions, which are characteristically rather secretive in their decision-making and top-down in their communication.

As for the instruments of participation, the use of direct citizen initiatives is currently limited by high thresholds for both the numbers of signatories required and the number of countries covered, making it an instrument that only large, Europe-wide organisations are likely to use. Moreover, the important democratic moment in referendums is not merely the vote. It must include the process of opinion formation. Together with instruments of direct democracy, it is also important to create free spaces, where a European civil society can develop, ideas and identities can be formed, and communication move ‘from below’ towards EU institutions.

Finally, democracy is not only a procedure. At the national level, democracies have legitimated themselves through reducing social inequalities and granting some modicum of social rights to their citizens. Conceptions of political equality spilled over to claims of social equality. The EU is weak on this. The extensive power of monetary policies has meant declining power on social policies, in the sense of imposing strong limits to these being pursued at the national level. Moreover, a tradition of ‘negative integration’ – the Europe of the market – has detracted from the attention of EU institutions to the welfare of European citizens. Improving the democratic quality of EU institutions implies addressing the demands for a social Europe, a Europe of the citizens.

The ‘Another Road for Europe’ draft appeal is online

Breaking up?

James Meadway argues that while the Euromemorandum proposals are welcome, it is an illusion to think that the EU’s neoliberal institutions can act for social justice

The future for Europe is as bleak as it has been for a generation or more. From the eruption of the Greek debt crisis in October 2009, Europe’s towering sovereign debts have threatened to pull down its enfeebled financial system – a collapse that threatens wider economic disintegration. And yet for two years the supposed guardians of the European economy have proved themselves inadequate. A succession of summits, each one more last-ditch than the one preceding, has agreed on little of use – except endless demands for austerity. It is this rush to cut that is, in the first instance, dragging the whole continent into the mire.

Euromemorandum thinks this results from bad policy – European leaders’ hopeless misdiagnosis of the continent’s malaise, pushing public spending cuts against debts and deficits that were the result of the private sector’s financial collapse and longstanding trade imbalances. It offers alternatives, which are timely and carefully argued, and place the needs of wider society far above the demands of Europe’s bankers.

Therein lies the problem. The economic madness that has spread to country after country, infesting politicians, media, even whole institutions, is not an aberration in an otherwise healthy body politic. It’s the product of a diseased, dysfunctional system.

It is desirable to have European institutions that can co-ordinate fiscal and monetary policy across the whole continent. But how this co-ordination is to emerge from the dysfunction that actually exists is unclear.

And as the crisis deepens, the dysfunction worsens. Far from promoting an ‘ever closer union’ of equal relations amongst Europe’s peoples, the EU has become a machine to drive them apart. The crisis has trailed new xenophobia in its wake. The True Finns, anti-EU, anti-immigrant, rose from nowhere to within a whisker of government. German tabloid Bild has revelled in crude stereotypes of Greeks, while German flags are burned on the streets of Athens.

A clear hierarchy of power has developed through the single currency. Intended on its creation to act as an international reserve currency able to compete with the dollar and the yen, the euro locked member states into a single monetary regime but made no serious provision to unify fiscal policy. Competitiveness, under these conditions, could only be achieved through productivity growth or cutting labour costs. Productivity growth has been unimpressive, but Germany, at least, has been singularly successful in hammering its workers. What was already a wide competitive advantage became, over the decade, a yawning chasm. Export surpluses in Germany and the north were matched by deficits in southern Europe. Those deficits were financed with debt, recycled through Europe’s financial system from northern surpluses.

Instability always threatened. But since the crisis broke, those macroeconomic imbalances have translated into gross political unevenness. If, formally, euro members retain equal rights within EU institutions, in practice the debt crisis has given the largest surplus country immense power. Crippled southern economies, locked into the euro and left with few options, have buckled under austerity.

There are, moreover, other tendencies, less visible but similarly destructive for the project of a neoliberal union. One is Europe’s financial system, liberalised in grand style over the decade of the euro’s existence, becoming perversely repatriated.

National banking systems, rather than integrating more tightly across the EU, are being drawn ever closer to their national governments through their purchases of sovereign debt. As international creditors retreat from risk, governments – especially those in the indebted periphery – grow more reliant on private, national banks. National banks, in turn, are increasingly looking to their central banks to hold short-term deposits, fearful of risks elsewhere. The financial integration of the euro’s boom years is now turning into its opposite.

Calls for the European Central Bank to act as an effective lender of last resort must work against both this tendency to repatriate banking systems and against the built-in weakness of a central bank that lacks a central state. Joint and several liability for ECB bonds and guarantees cannot function when competing sovereign states have every incentive to duck the risks and costs.

The reductio ad absurdum of this belief is the collateralised debt obligation (CDO) on steroids that is the European Financial Stability Facility: an off-balance sheet bailout fund apparently expected, by some miracle of accounting, to bail out its own major contributors.

The space for plausible solutions to this crisis emerging from European institutions is rapidly dwindling, if it ever existed, and a genuine internationalism, based on the needs of working people, is needed. For the countries of the periphery, that means reclaiming democratic sovereignty and breaking the straitjacket of the euro. Turning the Euromemorandum vision into reality will mean ditching some long-held illusions in the ability of Europe’s flailing neoliberal institutions to convert themselves into vehicles for social justice.

James Meadway is an affiliate of Research on Money and Finance and a co-author of the report Breaking up? A route out of the eurozone crisis, available at www.researchonmoneyandfinance.org


 

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