Monday, June 03, 2013

Coherent European left criticisms of the eurozone are popping up

The left-leaning parties in EU countries are still lagging far behind, mostly stuck on supporting neoliberal policies that will be fatal for the democratic project of the European Union. But there are more coherent left criticisms and analyses of the situation appearing.

One of the more notable ones is from Wolfgang Streeck, a previous advocate of the German SPD's version of neoliberalism and one of the idea mean behind Agenda 2010, a justifiably controversial initiative of a distinct neoliberal cast by Gerhard Schröder's and Joschka Fischer's red-green coalition government. Streeck has two recent essays in the Blätter für deutsche und internationale Politik: Auf den Ruinen der Alten Welt: Von der Demokratie zur Marktgesellschaft 12/12 (Dec 2012) Was nun, Europa? Kapitalismus ohne Demokratie oder Demokratie ohne Kapitalismus 4/13 (Apr 2013).

In "Was nun, Europa?", Streeck looks at the ways in which the euro structure has placed critical economic policy decisions into the hands of One Percenter technocrats instead of democratically legitimated governments. This is extremely important. The center-left and center-right parties have been committed to the EU and the euro, ostensibly on the grounds that the EU would protect the peace in Europe and secure democracy. But when the EU and especially the euro structures are visibly damaging democracy, it makes no sense for anyone to ignore that fact with the pretense that the long-run value will someone by some unknown process will win out in the end.

For the center-left parties - obviously more for the base than for their current leaders - the EU has also looked like a guarantee of a secure social state and a general raising of the level of protection for workers and consumers. They also largely bought into the hope that the EU would bring more generalized prosperity. The fact that these hopes are more and more visibly being negated by the real existing euro structure should make those parties urgently looking for alternative policies and effectively protesting German Chancellor Angela "Frau Fritz" Merkel's destructive austerity policies.

Streeck sounds radical when he writes, "Die Alternative zu einem Kapitalismus ohne Demokratie wäre eine Demokratie ohne Kapitalismus, zumindest ohne den Kapitalismus, den wir kennen." ("The alternative to a capitalism without democracy would be a democracy without capitalism, at least without the capitalism that we know.") Or, "Demokratisierung heute müsste heißen, Institutionen aufzubauen, mit denen Märkte wieder unter soziale Kontrolle gebracht werden können: Märkte für Arbeit, die Platz lassen für soziales Leben, Märkte für Güter, die die Natur nicht zerstören, Märkte für Kredit, die nicht zur massenhaften Produktion uneinlösbarer Versprechen verführen." ("Democratization today would have mean to build institutions with which markets could again be brought under social control: labor markets that leave room for social life, markets for good that don't destroy nature, markets for credit that don't seduce for the massive production of unfulfillable promises.")

But he constructs much of his argument around some surprisingly conservative notions, including a seriously discredited one about inflation.

Streeck sees the primary threat to democracy currently coming from the European Central Bank (ECB), which streched its statutory authority to guarantee backstopping of national bonds, the move in mid-2012 which has so far staved off further speculative attacks against individual nations that were creating acute moments of crisis by quickly driving up borrowing costs in the targeted countries to unsustainable levels.

But he still seems to be caught in much of the neoliberal mode of seeing monetary manipulations as the only legitimate form of macroeconomic management. He even frets that the ECB could re-create the inflationary situation of the 1970s, something not at all feasible as long as the depression in Europe continues. He even thinks that the current level of national debt in the United States matters. And despite everything we know from Keynesian macroecnomics, he doesn't seem to realize that deficit spending and the resultant borrowing are necessary for any near-term end to the European depression and to save the euro from Frau Fritz austerity policies.

And he is similarly conventional in dismissing the idea that the eurozone should risk basically any significant inflation. In fact, for the euro to be saved without much further savaging of the economies of Cyprus, Greece, Ireland, Italy, Spain and Portugal, the wealthier countries of the north (especially including Germany) need to run higher inflation to pull the eurozone economy out of depression. What he says about inflation is pretty much economicly illiterate: "Das Risiko, dass sie ... Unzufriedenheit und politische Instabilität zur Folge hätte, wäre immens." ("The risk that it ... would have unrest and political instability as a result would be immense.")

That's just ridiculous. He's terrified by the phantom risk of inflation, even as a remedy to the real existing "unrest and political instability" that Europe is now experiencing, with major center-left parties in France, Germany and Italy in real danger of austerity-izing themselves into political collapse. Which has already happened to PASOK, the social-democratic party that until very recently was one of two major parties in Greece.

This reads to me like a phony radicalism, a German version of the American "liberal troll" phenomenon, in which someone makes liberal- or progressive-sounding argments in a way as to discredit the actual progressive options.

His real point is that the European project is hopeless. And that the only way to bring more democracy and social justice is for countries to go back to their pre-EU status of national sovereignty. Conservative opponents of the EU, like much of the British Conservative Party, wouldn't use the market-critical arguments that Streeck does. But his argument is actually pretty much the same as those of the conservative and right-populist EU opponents.

It's important to note here that the goal he advocates, a reversion to national sovereignty and nationalism, is a likely outcome. And for the countries like Greece and Spain and the rest currently getting the raw end of the austerity policies, it would make perfect sense for them to threaten Germany with a break-up of the union to force Frau Fritz to give up the austerity policies. But for it to be effective, they would have to be willing to follow through with exiting the eurozone when Frau Fritz tries to call their bluff. The post-2001 example of Argentina is just one that shows exiting a strangling currency union can be made to work well.

On top of the shaky economic assumptions, it doesn't strengthen the credibility of Streeck's argument when he writes, "Im Westeuropa von heute ist nicht mehr der Nationalismus die größte Gefahr, schon gar nicht der deutsche, sondern der hayekianische Marktliberalismus." ("In the western Europe of today, nationalism is no longer the biggest danger, and certainly the German version, but rather Hayekian market liberalism.") (my emphasis)

Is he kidding? The current austerity dogma driven by Frau Fritz' German nationalistic stance is the most urgent problem Europe faces. Germany isn't the only problem. But it's clearly Germany that is driving the austerity madness with the narrow nationalistic goal of benefitting their export-driven economy at the expense of the weaker members of the eurozone.

Streeck essentially argues that a unified, democratic EU is just not possible because of the strength of particularism, which is an EU context would mean not the old nationalisms but regional separatist sentiments like those inside Spain over the Basque and Catalonian areas. Building the mechanisms that could make the eurozone work - a eurozone banking union, removing the ludicrous borrowing limits of the Fiscal Pact, establishing eurobonds, establishing a real transfer union - he doesn't even consider in this article. Frau Fritz has carried her nationalistic handling of the crisis so far that such solutions are likely politically impossible. But Streeck's argument effectively dismisses even the possiblity.

This way of thinking goes together with his bizarre dismissal of nationalism, especially German nationalism, as a current problem in the EU. For Streeck, revived nationalism is the solution, not part of the problem. And, no, it doesn't make sense when he simultaneously argues that nationalism isn't currently a problem in western Europe and that nationalism and regionalism are so intractable that an EU in the current sense is impossible to keep as an enduring supra-national institution.

We may be about to enter the post-eurozone, even post-EU phase. It's important now and in that possible post-EU phase to distinguish between the left, conservative and right-populist versions of what has gone wrong. Streeck's argument is cast in center-left terms. But it's hard to distinguish it in its totality from the conservative, nationalistic version. Even though he claims it's a program for the "Kampf gegen den Fortgang des neoliberalen Entdemokratisierungsprojekts" ("fight against the further development of the neoliberal de-democratizing project").

You don't have to be explicitly anti-capitalist to recognize that there is a systematic contradiction between capitalism and democracy. But the neoliberal version is aggressively focused on creating what Streeck and others call a „Fassadendemokratie“ ("façade democracy").

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