Swans Commentary » swans.com November 29, 2010  



Europe: A Union Of Capital


by Charles Pearson





(Swans - November 29, 2010)   From the beginning I thought the European Union was set up to bolster capitalism in that part of the world. Some of its supporters may have genuinely believed that the main aim was to prevent any future war between European states and if you discount the slaughter in what was Yugoslavia we can be thankful that so far such a war has been avoided. But I think the European elites' wish for peace was mainly a consequence of their unhappy understanding that World War II and its immediate aftermath had greatly strengthened US capitalism at the expense of their own. They concluded, or at least most of them did, that an economic followed by a political union should enable them to compete much more effectively with the U.S. The Cold War and dependence on the USA for military aid was a complication, as also was the Marshall Plan, but the ramifications of that are too involved to discuss here. Nevertheless, the planning for a European capitalist super-state went on and the UK joined in 1973, although many in this country still believe they were conned into it. Since then there has been much wrangling and bickering. The UK rejected the single European currency, which came into circulation in 2002, but signed the recent Lisbon Treaty.

Today, I see no reason to change my opinion about the motivation behind the EU, but that does not mean I go along with the people who mistrust all things European and say we should go it alone. That last thought is somewhat similar to the silly idea Mrs. Thatcher and her cohorts supported at one time -- that the UK could become another Switzerland. The unexpressed conviction was that we would be a more successful capitalist country if we broke with Europe. British socialists like me have different ideas, but what has happened in Europe in the last few decades is anything but encouraging. Steve McGiffen puts it bluntly:

Since the passage of the Single European Act in 1987, the European project's principal function, which is to remove decision making from democratically elected politicians and place it into the hands of technocrats representing the interests of corporate capital, has become clearer with each new treaty. The Maastricht Treaty was based on a text written by the European Round Table of Industrialists -- capital's umbrella lobby group. They are actually following Milton Friedman's prescription to make capitalism impervious to democracy, and to use international governmental institutions to do so. (1)

McGiffen is a former official of the United European Left Group in the European Parliament (he now lives in France) and so has seen at first hand who has the real power, but anyone who thinks his views are too extreme should take note that Susan George described the EU as "the most neoliberal and undemocratic Europe in history." (2) She went on to remind us that the Lisbon Treaty was forced through against the clear wishes of the French, the Dutch, and later the Irish and apart from that obvious democratic deficit, there is the concern that the treaty puts Europe under the umbrella of NATO, and therefore under the military control of the U.S. The treaty also confirmed a further aggressive push towards the privatisation of public services. What they have achieved with telecommunications, they now want to extend to health care, water, and education.

What the Lisbon Treaty did in fact was to incorporate market capitalism into a treaty that can be changed only by the unanimous consent of the member states. It locks us into a neoliberal economic system well to the right of the post-Second World War socioeconomic accord on which the welfare states of Western Europe were based. I believe this ominous state of affairs needs to be stressed for American readers, because quite often Europe is seen much more favourably by the US left; see for example Doug Dowd's recent book. (3) The decline in the labour share in national income and the stagnant real wages since 1960 is shown by the European Commission's own figures, even though these can be regarded as "doctored," because the usually increasing and always obscenely high rewards of CEOs and other top managers are included, as if they were "wages"! (4) And in the two years since the present crisis was formally recognized, the European economy has lost four million jobs; unemployment in the Eurozone is now over 10%.

It would be a mistake, however, to think of these reactionary changes only in terms of corporate bullying of weak governments. To quote McGiffen again, with no apologies for the streetfighting language:

...there's an impressive cultural unity, just as there is in the British ruling class, except that it is multilingual and therefore able to bullshit in any number of languages. All these buggers come from the same families, eat at the same tables of overindulgence, sleep with each others' spouses and conduct their disgusting social lives in each others' company. There is no clear dividing line, and in fact a revolving door joins the worlds of corporate and political elites.

The present crisis of capitalism, precipitated by the madness of fictitious capital (as Marx called it) and speculation, in which the EU indulged enthusiastically, has in some people's eyes been even more calamitous for Europe than for the USA. The bailouts have had little effect, except to help the financial sector to resume their highly profitable activities; e.g., the European Central Bank (ECB) lends to private banks at 1% interest but they lend to states like Spain, Ireland, and Greece at much higher rates -- whatever the financiers' beloved markets will stand in fact. Susan George comments that it is mind-boggling that these states cannot borrow directly from the ECB, but that's what the financial sector want. What I find mind-boggling is that millions of people in Europe and the UK, who otherwise are reasonably intelligent, can be told, day after day, week after week, that the MARKET won't stand this, or the MARKET must have that, without rising up in rage and bellowing, WHAT IS THIS THING THAT CONTROLS OUR LIVES? AREN'T WE SUPPOSED TO BE A DEMOCRACY? (I would excuse anyone leaving out the second question if they remember in the film Wall Street the character Gordon Grecco's revealing speech on the subject. I believe there is now a sequel to that movie that could be interesting).

Unsurprisingly, the crisis has strained the cultural unity referred to above and there is dissension in the camp of the European political leaders. Germany's Chancellor Angela Merkel forced a treaty overhaul into a recent summit meeting. After all the tribulations leading up to Lisbon, this was the last thing most European heads wanted, but in the end they bowed resentfully to German determination to rewrite the Lisbon Treaty to shore up the euro. (5) Under the new system, to be in place by 2013, the Germans insist that highly indebted countries struggling to repay will be forced to restructure their debt in a process of "managed insolvency" and -- here's the catch -- their creditors will have to take large "haircuts." But, of course, it is one thing for Merkel to bully her weaker political brethren and quite another to try to bully the MARKETS. Just a few days later the all-powerful investors took their revenge, not on Germany directly, but on Ireland and Portugal, by thumping up their borrowing costs. (6) These are two of the so-called peripheral nations (Greece is another) where there are continual fears of default. Eastern European countries are considered to be such a high risk to western banks that the EU has delegated their control -- I don't think that is putting it too strongly -- to the IMF. However, it is the situation regarding Ireland and Portugal that prompted EU President van Rompuy to echo Merkel, warning that it was a matter of survival. If the euro failed so would the EU. (7)

I think it is becoming clear that the task of trying to treat many different countries with economies of very different strengths as a single unit is virtually impossible. Such a union would not be easy under any politico-economic system, but under the highly competitive capitalist system the problems are greatly magnified. The single currency makes things worse because it has removed a time-honoured way of countries recovering from slumps by devaluing their currencies to increase their exports. What seems to be in the offing now has been called "selective cannibalism." (8) A vicious competition is developing between EU members (with German capital most favoured) to win export markets, most of which are within the EU itself at present.

The determination of all the European governments to protect the financial institutions from the consequences of their gambling and instead to make the working classes pay (and the lower middle classes if you wish to make that distinction), has provoked a resistance. Come to think of it, the situation is so dire that the term "Resistance," calling up memories of World War II, is not completely inappropriate. The first strikes and riots were in Greece, the first target of the IMF. In Romania, up to 80,000 people have been on the streets protesting IMF-enforced spending cuts, including slashing of public sector wages by 25%, and tax rises. In France, protests have focused so far mainly on the single issue of pension "reform," a term the media love. I think Thatcher did as much as anyone to get this word accepted as a label to mask reactionary measures. Whatever it is called the French workers know it will hurt them and millions took to the streets, blockading oil facilities and disrupting air, rail, and road transport, but remarkably with 60-70% of the public in support. As I write the new retirement law has been signed and most of the media are claiming that the protests have run out of steam. That may be only temporary however; one union (CGT) has already announced another day of action.

Unfortunately there are the usual disagreements or worse on the left -- e.g., between Olivier Besancenot's New Anti-Capitalist Party and Jean-Luc Melechon's Left Front Party. (9) A more worrying factor is the role of the unions. They are not united and some activists accuse union leaders of betrayal. As for the so-called Socialist Party of France, most protesters seem to regard it with as much contempt as they do New Labour in the UK. It is clear that this party wants to use Sarkozy's unpopularity to return to power and then push through the same type of social cuts planned by Sarkozy. (10) Its presumed 2012 presidential candidate is Dominique Strauss-Kahn, who is currently the head of IMF. What more proof is needed that this party, like other wrongly labelled "leftist" or "left-centrist" parties (11) is a big part of the problem, not the solution?

We hear less about protests in Germany, but there are signs of growing discontent. There is strong opposition to the government's nuclear power policies and mass protests have erupted against a horrendously expensive redevelopment of Stuttgart's railway infrastructure. Railway strikes have already occurred and more general protests in "Weeks of Action" are planned. (12)

In the UK, the draconian social cuts the coalition government is beginning to impose, (13) even worse than Thatcher's a generation ago, have so far been accepted, even if sullenly, by most workers. Those workers who don't see their own jobs immediately threatened, anyway. It seems that some of them actually believe the government and mass media's ludicrous slogan, "we're all in this together." All of us -- people on the minimum wage, the unemployed and disabled, postmen in fear of their jobs, and, of course, the financiers and the 18 millionaires in the coalition government's cabinet. The latter include George Osborne, the Chancellor of the Exchequer and the man who coined the slogan, perhaps while contemplating the legal loopholes he has been reported to be using to avoid paying taxes of £1.6m ($2.5m).

The Trades Union Congress moaned about the cuts and then timidly proposed a protest march in six month's time! One is reminded of C. Wright Mills's dismissal of the union leader as a "manager of discontent .... He organizes discontent and then sits on it." More encouragingly, a Coalition of Resistance (CoR) is being organised much sooner. The CoR's website (www.coalitionofresistance.org.uk) already lists an impressive number of protests and planned protests around the country. One that caught the eye was by the usually conservative students of Oxford University. Their clashes with police were so disturbing to the authorities that a planned visit to the university by Vince Cable, the government's business secretary (unsurprisingly an ex-banker), was cancelled. Vince Cable is a leader of the Lib Dem Party, which pledged before the election to vote against any increase in university tuition fees. Before the election -- Hah! Since his party has tasted power as the junior member of the coalition government, Cable announced plans to almost treble those fees, meaning that graduates will be saddled with even more debt and yet more young people from poorer families will be discouraged from applying for university courses. Following the Oxford protests 50,000 students and lecturers marched in London and managed to occupy the headquarters of the Tory Party -- Big Brother in the coalition government.

The big question to me is whether these strikes, rallies, and marches in mainland Europe and the UK will turn into something more positive than protests. Unless the strikes are open-ended as well as widespread it is hard to see that anything other than possibly small concessions will be wrung out of governments. I am inclined to go further and say that to force real change there will have to be general strikes and occupations of work places (e.g., closing down Call Centres, so vital to capitalist enterprises as well as a source of constant irritation to many of us). But the political divisions on the left are obstacles to organising and maintaining such a level of resistance. An even bigger obstacle is the sectional mode of industrial warfare, which is still the norm for unions, even though they are much weaker now than when they had limited and short-lived success in the early seventies in the UK. Can we learn from the past? From the failure of the general strike in Britain in 1926? (14) That strike was brought on by savage cuts in wages and other attacks on the working class not so different from what is happening today. Many other things are different, but one remains clear -- to regard a defeat for the workers in such a confrontation today as a victory for parliamentary democracy, as Establishment propaganda claimed for the outcome of the 1926 strike, would be to ignore the vastly increased corporate takeover of political power that has occurred since then in all parts of Europe including the UK.


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About the Author

Charles Pearson worked as a research biochemist in British Universities and then in Canada at the University of Alberta. He retired early and settled with his wife in a small village near Cambridge, England. He writes short stories, mostly humorous, which have been published in small press magazines. Pearson is passionately interested in politics, but as a socialist he feels disenfranchised in the UK.


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1.  A Union of Capital, Edward Lewis and Steve Mcgiffen, www.newleftproject.org, July 4, 2010.  (back)

2.  European Union: most anti-democratic and neoliberal in history, Nick Buxton and Susan George, Transnational Institute, www.tni.org, Oct. 2010.  (back)

3.  Inequality and the Global Crisis, Douglas Dowd, Pluto Press, 2009. This is a valuable book, well documented and more comprehensive than most on this subject. All things are relative and Dowd's concerns are mainly with the U.S., but on Europe, although he qualifies his comments and draws attention to the corruption in Italy where he has lived for many years, the general impression is too rosy.  (back)

4.  The Crisis of Capitalism in Europe, West and East, Ozlem Onaran, Monthly Review, October 2010.  (back)

5.  Merkel forces rewrite of Lisbon Treaty to protect eurozone from debt crisis, Ian Traynor, The Guardian, Oct. 30, 2010.  (back)

6.  Debt costs jump for Dublin and Lisbon, Richard Milne and Ralph Atkins, FT.com in depth, www.ft.com, Nov. 1, 2010. Free registration required.  (back)

7.  Ireland crisis could cause EU collapse, warns president, Julia Kollewe, www.guardian.co.uk, Nov. 16, 2010.  (back)

8.  A new social war is opening up, Charles-Andre Udry, www.internationalviewpoint.org, July 2010.  (back)

9.  France: The movement is far from over: Olivier Besancenot defends mass mobilisations to defeat Sarkozy, by Sandra Demarcq; Besancenot: Blocking the economy to block the reform, both via www.links.org. Oct. 25, 2010.  (back)

10.  France: More strikes, opposition to social austerity, Alex Lantier, www.wsws.org, Nov. 3, 2010.  (back)

11.  The Democratic Party Debacle and the Demise of the Left-Center Left: a Worldwide Trend, by James Petras, www.informationclearinghouse.info/article26773  (back)

12.  Germany: Unrest grows, Sascha Stanicic, www.socialistworld.net, Nov. 1, 2010.  (back)

13.  Spending Review: A comprehensive austerity attack that will lead to a second slump, by Raphie de Santos, www.socialistresistance.org/1084 Oct. 21, 2010.  (back)

14.  A Very British Strike: 3 May - 12 May 1926, Anne Perkins, Macmillan 2006. I expect James Petras would class this book as Left-Centrist, but it has interesting information, including a useful survey of what led up to the strike and some of its consequences. A fascinating account written immediately after the strike and presenting a more extreme view is in Socialism or your money back, pp 83-88, The Socialist Party of Great Britain, 2004.  (back)


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Published November 29, 2010