Tsipras has been chosen by the Party of the European Left (EL) as candidate for the Presidency of the European Union. Does his programme offer a solution to the problems facing workers across Europe?
Within the overall crisis of world capitalism the crisis afflicting the Eurozone is of key importance. On a world scale the crisis is far from being solved, in spite of the recent anaemic recovery in the United States. The policies adopted by the bourgeoisie on a global scale have merely been stop-gap measures, which only serve to prepare new contradictions and problems on a bigger scale.
Bourgeois leaders, both of the political and “technocratic” type, stagger from one solution to another, while the reformist leaders of the labour movement simply tag along behind them, the latter being, if anything, even more bewildered by a crisis which they are either incapable of understanding or recognising.
Globalisation in crisis
According to a study commissioned by the Financial Times, the volume of international financial flows is still (end of 2013) 70% below what it was before the crisis broke out. World trade, which at the peak of the post-war boom was growing by around 10% a year or more, grew by less than 3% in 2013. The free circulation of capital and goods was one of the key factors that promoted economic growth in the past few decades. The ever closer integration of world markets and the enormous development of the world division of labour were instruments which allowed capitalism to partially get round the limits of the nation state, together with the exponential growth of debt and the massive creation of fictitious capital on a world scale which served to temporarily mask overproduction.
Today both these mechanisms have come unstuck, and in a certain sense globalisation is rewinding the film backwards. Financial markets are fragmenting along national lines, something which is particularly true of the European Union, with the banks pulling back into their own domestic markets.
Also on the industrial front there is the growing phenomenon of reshoring, i.e. a reversal of delocalisation with at least part of production being brought back home. After decades when the watchword was to delocalise industry, in all the main industrial countries the aim is now to increase domestic industrial production. The European Union, for example, is discussing a target of raising industrial production from 16% to 20% of GDP, i.e. to increase it by one quarter by 2020.
Even the internet network, itself a means of production, consumption and exchange, that came into being directly on a global scale, risks being broken up by the economic and political tussle over its control and structure, to the point that Angela Merkel has suggested developing a European internet network as a way of guaranteeing against US domination.
The crisis has ruthlessly lain bare what the real situation is: in spite of all the talk about private initiative, competition and the free market, the system cannot survive without the decisive support of the state.
After the 1929 crisis, the spread of protectionism was the main factor in worsening the crisis. A similar development today would lead to even bigger convulsions and it is precisely because of this that the ruling class runs around from one summit to the next in an attempt to find “common solutions” and “common policies” which can avert the risk of a similar collapse.
The whole history of the 20th century demonstrates how the productive forces developed by capitalism have definitively gone beyond not only the limits of private property of the means of production, but also beyond the equally narrow limitations of the nation state. No country can escape the domination of the world market in an economic system in which goods and means of production, especially in the advanced sectors, are created and developed from day one on the basis of a world division of labour from which no one can escape unless they want to face an economic cataclysm. From this point of view, nation states, in particular the European states have become as historically superseded as were the tiny statelets in which both Italy and Germany were divided up into before national unification. Here we see how the bourgeoisie is facing a contradiction to which there is no solution on the basis of their own system.
In an attempt to overcome these obstacles, which are intrinsic to the system, the ruling class has, in a certain sense, gone beyond its own limits and to turn backwards would mean setting in motion a process with unpredictable and catastrophic outcomes.
It is not possible for them to turn back the wheel of history, freeing the system from the “excesses” of the past decades and returning to the “good old days” of the post-war period, to a supposedly productive, healthy and balanced capitalism, based on the real economy and on relatively stable trade relations. On the contrary, the crisis of globalisation promises enormous convulsions that will tear apart even more the economic and political relations on an international scale.
The crisis of the Eurozone
These premises serve to remind us that the crisis in Europe is just one facet of the global crisis of the capitalist system. Nevertheless, to say global crisis does not mean that the same processes unfold in every country at the same time and in the same way.
The creation of the euro was presented as the trump card that would guarantee greater wealth, integration and convergence of the European economies, a strong and credible currency that would allow low-cost credit, prevent the return of inflation that had hit hard the weaker countries during the crisis of the 70s, and so on.
Today, all these illusions have been transformed into their opposite. The euro is not the cause of the crisis, but the rigidities imposed by its very existence have the effect of exacerbating the divisions within Europe. Inequalities are opening up a chasm between rich and poor, credit is drying up, and from an instrument of salvation the common currency has turned into a millstone around their necks.
Herein is rooted the deep division of interests and conflicts over perspectives that are spreading throughout Europe, that have a direct impact both politically as well as economically.
Breaking up the euro today would be a catastrophe the global consequences of which would be unpredictable. It is sufficient to look at the public debt that has to be converted, and the risks of currency and trade wars that this would imply, and the consequent disruption to financial, commercial and productive transactions. In the most critical moments of the sovereign debt crisis in 2011, and even more so in 2012, the ruling class looked into this abyss with terror and pulled back from the brink. The ECB governor Draghi said that any means necessary would be used to prevent the collapse of national finance, and by various means the crisis was temporarily put on hold.
Given that lowering interest rates has had almost no practical effect, Draghi has done everything possible to get around the prohibitions imposed by the statutes of the ECB (which prevents it from supporting individual member states by purchasing securities directly), with various programmes of indirect purchasing, by lavishly funding the banks so that they in turn could guarantee the underwriting of public debts.
The scope of this operation is not of a secondary nature, if one takes into account that for Italy alone up to a maximum of €270 billion have been made available for these operations (at the moment the amount covered is between €230 and €240 billion). In addition, Draghi approved the so-called OMT (Outright Monetary Transactions) programme that would allow the ECB, under certain conditions, to buy up government bonds directly from countries in difficulty, without placing any a priori limits on these purchases. The mechanism of the OMT has never actually been activated, although the threat to do so has been a partial deterrent to speculation on sovereign debts.
The precarious nature of this situation, however, is obvious to all and hence we have two opposite points of view running through the ruling class in every country, and through every one of its parties and factions.
Already back in 2011 the German representative in the ECB, Jürgen Stark, resigned in opposition to the direct purchasing of government bonds by the ECB. Again, in 2012 Jens Weidemann reiterated the opposition of the Bundesbank to the “unconventional” proposals of Draghi, which, however, had the backing of all the other members of the Executive Board of the European Central Bank.
At the centre of the confrontation we always have the same question: should there be forms of joint management of public debt in Europe, and more generally of financial crises (including possible banking crises) or should each country tackle these problems with their own resources?
All the talk of the famous “banking union” that was supposed to ensure the management of banking crises on a European-wide level – breaking the link between the banking crisis and the sovereign debt crisis – has proved to be yet another chimera.
After the idea of a serious EU fund to cover possible losses had gone up in smoke (if it ever was a realistic idea), the agreement reached in December states that losses would fall on the shoulders of shareholders, bondholders, current account holders (above €100,000) in that order. This is a seemingly rigid position (i.e. who is responsible pays up), which if it were applied to a generalised crisis would actually open the doors to a new Lehmann-type crash. The funds to support failing banks, provided by quotas from the banks themselves, are to remain at national level, albeit backed by a European “umbrella”. This is to be followed, within the next ten years (!), by a common fund that will be fully operational by 2026 (!!) with the “grand” allocation of €55billion, merely enough, perhaps, to cover the crisis of one or two medium-sized banks.
The comment in the Financial Times (January 5, 2014), signed by Wolfgang Münchau is therefore not surprising:
“The euro crisis is not over, but one important shift has taken place. The policy debate has concluded. The decision not to set up a common backstop for the Eurozone’s banks has closed the last window for any form of debt mutualisation as a tool of crisis resolution. All of the adjustment will take place through austerity and price deflation in the periphery. Most of the adjustment still lies ahead. Furthermore, it has been decided that debt burdens will be reduced by paying them off – not by inflation, default or debt forgiveness.
“If you look at this with a knowledge of economic history, this is an awe-inspiring set of choices, to put it mildly. The only policy innovations to soften the harshness are two existing backstops: the European Central Bank’s as yet untested Outright Monetary Transactions (OMT) programme, through which it can buy the debt of troubled states; and the European Stability Mechanism (ESM).” (What euro crisis watchers should look for in 2014, By Wolfgang Münchau. Financial Times, January 5, 2014)
We see here how the conflict between so-called “national responsibility” and “EU-wide solutions” continues in a succession of attacks that take place behind the hypocritical facade of “European” harmony, where we see from time to time one side hitting out at the other, without either side ever prevailing over the other.
Recently, the Bundesbank went as far as to state that in the event of a deep crisis it would be appropriate to impose a heavy capital levy. “Countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help… (A capital levy) corresponds to the principle of national responsibility, according to which tax payers are responsible for their government's obligations before solidarity of other states is required.” Frankfurt specifies that these are risky and extreme measures, to be adopted only in exceptional cases, for example to avoid the risk of default on public debt, and concludes: "It is not the purpose of European monetary policy to ensure solvency of national banking systems or governments and it cannot replace necessary economic adjustments or bank balance sheet clean ups." (Reuters, January 27, 2014)
The German Central Bank, therefore, has declared war on the rich... of the other countries. It is a slap in the face and also an open threat: those who risk bankruptcy must sort out their own affairs, and the good money we will suck back here into Germany.
The Cypriot crisis: “A euro does not have the same value everywhere”
What happened in the Cypriot crisis sheds some light on the present situation. The collapse of the Cypriot banks was dealt with by adopting similar measures (of a somewhat less indigestible nature because it was thought that they would first hit the capital stashed away in this tax haven by Russian oligarchs). On this, what we wrote one year ago remains valid:
"The ‘bailout’ of Cyprus marks a new stage in the crisis. The collapse of the banks in a country which accounts for 0.2 percent of the Eurozone economy has generated far-reaching consequences. In the first place, the ‘sanctity’ of bank deposits has been called into question. The fact that in the end they declared that depositors holding less than 100 thousand euros would be guaranteed has not deceived anyone. The fact that the European Commission came out in support of the first version of the plan – whereby money would be taken even from the small depositors – revealed how far it is prepared to go, expressing an open conflict on this question with the IMF. What yesterday was considered as a possibility for Cyprus tomorrow could become real in conditions of bigger crises.
“Secondly, for the first time, restrictions have been placed on the movement of capital within the Eurozone. This will not only have consequences for the Cypriot economy, damaging foreign trade and in general the way companies operate (we are already seeing scandals emerging over inevitable favouritism in the management of the movement of capital). It is a development of epic proportions. Martin Wolf in the Financial Times writes (March 26, 2013): ‘...a euro is indeed not a euro everywhere... The outcome in Cyprus underlines the fact that the value of a euro of bank liabilities depends on the solvency of the bank itself and the solvency of the government standing behind the bank. If both bank and state are insolvent, lenders are likely not only to lose a big proportion of their money outright, but to find that the rest is frozen behind controls, introduced to prevent a collapse of a country’s banking system’.” (Effetto domino. La crisi cipriota e le sue conseguenze, Domino Effect: The Cyprus crisis and its consequences on).
“Europe and democracy”
The dominant wing of the bourgeoisie in Europe continues to cling to the euro and to the European Union, mostly because they see the alternative as – and indeed it is – a leap into the void. “Europe and democracy” remain therefore, for the time being, the two watchwords around which they try to maintain a consensus. They raise alarm bells about the growing “anti-European populist forces of the right and left,” and they are constantly going on about 1914, pointing out that only European integration has guaranteed peace and cooperation, and so on, ad nauseam.
Unfortunately for these gentlemen, the terms “Europe and democracy,” in the context of the present crisis and all the savage cuts, have been completely discredited; they are so much bad coinage just like the waste paper accumulated in the balance sheets of the banks and states.
And in order to peddle this bad coinage, the bourgeoisie calls on the help of the “reformist” leaders who enthusiastically offer their collaboration in spreading illusions about the possibility of a different economic policy as well as the “democratisation of the EU”.
It should not surprise anyone therefore if there is growing political criticism of the way the troika has managed the various “adjustment plans”. It is significant that this criticism runs through all the parties. A Report on the enquiry on the role and operations of the Troika (ECB, Commission and IMF) with regard to the euro area programme countries was recently published. It is a joint document produced by the Socialist and Popular groups in the European Parliament, which concludes that the Troika, which dictated the terms of the “bailout” programmes for Greece, Portugal, Ireland and Cyprus, should be replaced by a real system of government subject to the European Parliament. The Austrian Hannes Swoboda, President of the Progressive Alliance of Socialists and Democrats in the European Parliament (which includes the Italian Democratic Party) even suggests that “dismantling the troika during the Greek Presidency of the EU would be a real victory.”
The above Report suggests ousting the IMF from the Troika and replacing it with a “European Monetary Fund (EMF) on the basis of EU law, which would be subject to the Community method.”
No doubt, in drawing up these proposals the fear of heavy election losses for those parties that have supported austerity after what happened to PASOK in Greece, the PSOE and the PP in Spain, Hollande in France, and so on, has played a role. But it would be simplistic to explain all this merely in terms of the career prospects of a few politicians. It is rather the expression of the deep divisions that run through a ruling class that is facing a crisis, the outcome of which, seven years since it first broke out, are still shrouded in a frightening uncertainty.
Therefore, those who try to interpret the political conflicts in Europe as one of “Europeans/progressives” versus “nationalists/conservatives”, or even fascists, are greatly mistaken. What we have here is a division within the ruling class, a division over interests and perspectives.
European integration and its contradictions
The single market and the creation of the euro have been powerful tools in the concentration and centralisation of capital, from which German industry has benefited enormously. The statistics show how Germany’s balance of trade surplus took off after 1999, the year the single currency was introduced. Between 2006 and 2011 the European Union as a whole saw its share of world trade shrink (excluding trade within the EU itself) from 17.3 to 15.5 percent, while Germany’s relative share has grown.
European targets for increased domestic industrial production are based primarily on the needs of Germany, and are linked to the prospect of strengthening its presence and competitiveness in the world market.
But this is where the contradiction lies: the single currency today is undermining the very base of German industry, i.e. the internal market of the European Union itself. This explains the divisions at the top within the ruling class, even in Germany, between those who support the need to further push forward the process of integration and those who think it is time to push the process into reverse, possibly by digging up to the old plans for a euro restricted only to the north of Europe. In spite of the low votes it won in the elections (4.7 per cent), the birth of the AfD party (Alternative für Deutschland – Alternative for Germany) is an indication of these divisions. AfD is a right-wing conservative party, but it has not been promoted by extreme nationalists or marginal elements. On the contrary, it has the support of powerful sections of the industrial bourgeoisie, especially in Bavaria, and has among its promoters Hans Olaf Henkel, former President of the Federation of German Industries (BDI).
The hard-line position of Angela Merkel is also a reflection of the deadlock between these opposing forces.
The contradictions are not only about industry and market outlets. It is the whole position of Germany and Europe within the global context that constantly opens up new and insoluble dilemmas.
Europe cannot be an economic entity closed in on itself. The antagonisms are of a global nature and they can only be understood globally.
Uniting Europe on a capitalist basis is not at all a peaceful enterprise without any consequences for world relations. First and foremost, for this to succeed it requires a reshaping of the EU to transform it into a solid base from which the major world powers, the US and China in particular, can be challenged for hegemony over vast areas of the world.
After the Second World War, the US favoured – for both political and economic reasons – the creation of the EEC [European Economic Community as the EU was known then]. Three conditions guaranteed that this process would not constitute a threat to their own world hegemony, but rather would contribute to strengthening it. The first was the division of Europe between the two major blocs; thus the economic development of Western Europe was essential in dealing with the Soviet Union (the same was true for Japan or South Korea), and the second was that Germany was itself divided, “an economic giant and a political dwarf” as it was referred to until the end of the 1980s. The conflict between the US and the USSR, and the inclusion of the small European nations within NATO, combined with the direct military presence of the United States in Western Europe, limited to a minimum any ambitions these countries may have had about conducting their own independent policy.
However, over the past two decades, things have changed. Germany was reunited, and has greatly expanded its industrial and financial base and has also recreated its own spheres of influence in the Balkans and in Central and Eastern Europe. The demise of the Soviet bloc has widened the differences in foreign policy between the US and Europe, and even within Europe itself. Suffice it to recall that in 2003 the Bush-Rumsfeld administration appealed to so-called “new Europe” (i.e. the Eastern European countries that were then in the process of joining NATO) against the “old Europe”, i.e. France and Germany, that was reluctant to intervene in the war against Iraq. Other deep divisions are expressing themselves today between the US and Germany in relation to the crisis in Ukraine. On Syria and Libya, France attempted to pursue its own objectives, in opposition to, and without taking into account, the position of Germany.
The crisis is once again sharpening the national contradictions within Europe. The “aid” packages for Greece do not only involve reducing the vast majority of workers and pensioners to poverty conditions. By imposing privatisation and recapitalisation of the Greek banks they reduce them to mere preys of foreign capital, and that small area of influence that Greek capital had in the Balkans (there were about two thousand branches of Greek banks in the region) is also up for grabs.
The nature of the European Union
Despite the rivers of fine words, there can be no European Union that is democratic, progressive, and that cares about the environment and social justice. The utopia of a united Europe on the basis of capitalism, if it ever were to come into being, would produce a further concentration of forces, both economic and political, on the part of the ruling class. It would be a tool in the hands of the bourgeoisie to defend the interests of capital that would be a thousand times more powerful than the existing nation-states, whose purpose would be to further attack working conditions, democratic rights and the welfare state, to conduct anti-working class policies at home and an aggressive policy on the international arena, in an attempt to face giant competitors in the struggle to conquer markets, raw materials and strategic positions worldwide.
Thus we can see how the programme of further European integration, or even an actual federation, would correspond to the interests of the strongest sections of European capital, primarily German capital. In the final analysis, this explains the position of the trade union bureaucracy and the reformists, whose main characteristic is to bend the strongest sections of the ruling class.
However, the main point that has to be understood is that the capitalist system today has nothing to offer. Two centuries ago to unify Germany, or Italy, meant widening the markets, creating the basis for a modern industry and genuine economic and social development. Today’s European federalists love to constantly refer to the founding of the United States of America. But the American Revolution was an enormously progressive act precisely because it opened the way for a rising bourgeoisie, the bearer of a system that, despite all its inequalities and injustices, represented a giant leap forward for humankind. The unionists in the American Civil War, which recast the foundations of the Union, were supported not only by the industrial bourgeoisie (whose aim was to make room for itself at the expense of the slave economy of the South), but also by the working class and the democratic petty bourgeoisie, in America and in Europe.
Today’s attempt to federate Europe on a capitalist basis would only lead to social regression. It also divides the ruling class and cannot but arouse the opposition of the working class who have already experienced the wonders of “Europe” in the form of brutal cuts to social services, the destruction of pension systems, privatisations, casualisation, and the destruction of labour rights.
What kind of democracy, what kind of “Europe of the peoples” would emerge on this basis? Here is a question to which no leader of the left has yet been able to provide an answer.
Nor is this a problem that is confined to Europe or one that is due to the national parliaments having lost powers to the European Union.
Throughout the world bourgeois “democracy” is being more and more emptied of any true content, with power concentrated more and more in fewer hands. Everywhere they pass increasingly repressive laws, and all the key decisions are removed from any public scrutiny, even of the most timid type. Governments alternate without changing anything... And all this is happening not because of any so-called “neo-liberal ideology,” but because the capitalist system no longer has anything to offer to the majority of the population. In the parliament of the richest and most powerful country in the world, the US, the real majority is not made up of Republicans or Democrats, but of millionaires, who for the first time constitute the absolute majority of the deputies. This is the true face of this “democracy”, a democracy for millionaires, in spite of all the attempts to foster illusions that it can be rejuvenated or prettified!
The May European elections and the political conflict
The current instability within the Eurozone is pushing the various ruling classes to seek national solutions, an idea that is being championed by both the German government and the Bundesbank. But in perspective such a response would only serve to further weaken the countries already at risk and render inevitable new crises that will serve to undermine the very foundations of the euro. The manoeuvres of Draghi and the various unstable compromises which from time to time are put in place cannot solve this fundamental contradiction.
One section of the political representatives of the bourgeoisie raises the idea of political union, i.e. of transforming Europe into an actual federal state along the lines of the US model, as a way of solving this contradiction.
In the run up to the European elections scheduled for May 25, Viviane Reding, member of the People’s Party and Vice-President of the European Commission, has called for the question of “a true political union” to be placed on the agenda in the EU election campaign. “We need to build a United States of Europe with the Commission as government and two chambers – the European Parliament and a ‘Senate’ of Member States." According to Reding, such a process would be the “best weapon against the Eurosceptics”. (The Telegraph, January 8, 2014)
We are hearing more and more of such statements as the fear increases that the “populist” parties, that are more or less hostile to the European Union, may constitute a considerable force, up to one-third of the next European Parliament.
The division over the prospects for the European Union have even split the Liberal Group, the third group in the European Parliament. The initial proposal to nominate the current Commissioner for Economic Affairs, the “hard-liner” Olli Rehn to replace the outgoing Barroso as President of the European Commission, was successfully opposed by the candidature of Guy Verhofstadt. This was seen as a victory for the “pro-Europeans”, which was also made possible thanks to the support of the German Liberals. The statement made by Verhofstadt after winning the nomination was clear: “Pro-Europeans are under attack in a number of Member States so it is all the more important that those who still believe in the European Union stand together to combat the reactionary forces of nationalism and populism that [are] spreading doubt and fear in the minds of Europe’s citizens,” (Liberals back Verhofstadt to succeed Barroso, February 3, 2014)
In an attempt to give a semblance of credibility to the institutions of the European Union, which are now universally identified with the worst austerity policies pushed through by anonymous bureaucrats with no popular mandate, a cosmetic change in the procedure for the appointment of the President of the European Commission has been introduced. The appointment will remain with the European Council (i.e. the meeting of the presidents or prime ministers of the Member States), but this will have to “take into account” the outcome of the elections and the European Parliament will have the powers to approve or reject the proposed candidate. And it is through this “democratic” gimmickry that the major parties choose to which of the proposed candidates to connect their lists. Even before the Liberals, the Socialists chose their candidate in the person of the President of the European Parliament, the German Martin Schulz. It is no coincidence that the Socialists are the most enthusiastic in taking part in this democratic farce, so much so that Hollande even suggested holding primaries to select the candidate.
The Popular Party, the main force in the European Parliament and the party of reference of eleven prime ministers in the EU, as well as the current president Barroso, was divided over whether to submit a candidate, finally agreeing to take a decision sometime in March, in spite of the opposition of prominent politicians such as Angela Merkel and Van Rompuy, who were opposed to standing the Europeanist Juncker. [Juncker was finally chosen as their candidate].
The myth of Eurobonds
As always, the reformists fall into line and help to promote the illusions and propaganda of the so-called “progressive” bourgeoisie. The magic word of the Social Democracy (and the trade union bureaucracies) is now “Eurobonds”. The alternative of the Social-Democrats to the narrow “egotism” of the German government is their proposal to socialise the debt on a European scale and to amend the statutes of the European Central Bank (ECB). This is the central idea which the reformists have been pinning their hopes on for the last four years and, as we shall see, is also the main point they have in common with the programme advanced by Tsipras.
But let us assume for a moment that it could actually be put into practice very soon. What would the consequences be? Unifying the public debt would imply immediately unifying the budgets of the individual member states into one single European budget, and soon after unifying the tax system to support that budget. Beyond all the talk about democracy, the German bourgeoisie would demand in exchange strict control over the spending and taxation of all countries. It would be a centralisation of all the austerity policies multiplied to the nth degree. It would be even worse if this socialisation of the various national debts were only partially applied, as this would reproduce on an even grander scale the mechanism of the spread between that part of the public debt considered “healthy” and the “toxic” element.
Socialising debt does not mean sharing out the problem in order to reduce it. It simply means reproducing it on a much larger scale. And no amount of appeals for “solidarity” will serve to convince those who hold the purse strings, i.e. the German bourgeoisie, to embark on this path.
Nevertheless, Draghi has tried to get this policy adopted through the back door, using various tricks to get round the prohibitions imposed by the statutes of the ECB in relation to the purchasing of government bonds. This has been questioned by the Bundesbank, as well as by a number of German politicians, and has been rejected by the German Constitutional Court as it implies a reduction of sovereignty for Germany, that would have to bear all the burden of any losses. The case was then taken to the European Court of Justice, which is now faced with the choice of either burying the problem (until the next crisis erupts), taking on board their arguments (which would mean coming out publically against all of Draghi’s measures), or rejecting it, opening up an institutional conflict with unpredictable outcomes. As much as one may try to get around it, this contradiction is inescapable.
Nor is it true that if the ECB were to start printing money, the problem would be solved. It has not been solved in the US, where public debt has gone through the roof and the Federal Reserve is having to pump in money to the tune of $80billion a month to keep the economy afloat, a policy that is the equivalent of driving a vehicle downhill without any brakes. In fact, as soon as there was talk of the need to restrict (taper) this policy new contradictions arose, generating a flight of capital out of the emerging economies, which were already experiencing a slowing down of growth.
If Europe were to apply the monetary policy of the United States, Japan and Great Britain, the result would be a series of competitive devaluations of the various currencies, accompanied by the resurgence of inflation and probably a trade war.
Neither Keynesianism nor monetarism can solve this crisis, which is an organic crisis of capitalism, although it is true that the rigidities imposed by the single currency have exacerbated the problem. These illusions simply demonstrate just how the reformist leaders of the labour movement, who are utterly incapable of understanding the depth of this crisis, continue to cling to a past that is never going to return. For those parties to the left of Social Democracy, it would be disastrous to follow the same path.
Data has been published recently on the disastrous consequences of austerity measures applied in Greece. Infant mortality went up by 43 percent between 2008 and 2010; stillbirths were up 20 percent, 19 of which were underweight. In the province of Achaia 70 per cent of the population cannot buy prescription medicines. AIDS is increasing, and TB and malaria are making a return.
Forty million unemployed, 120 million Europeans in poverty... for millions of people the word “Europe” is today associated with misery and despair. Not to have a clear class position precisely on this question means leaving room to the demagogy of the forces of the right and extreme right.
The candidacy of Tsipras and his programme
The Party of the European Left, which brings together forces such as SYRIZA (Greece), Izquierda Unida and the PCE (Spain), Rifondazione Comunista (Italy), the PCF and the Parti de Gauche (France), the German Die Linke, the Portuguese Bloco de Esquerda, etc., decided in its congress in December to present Alexis Tsipras as their candidate for President of the European Commission. It is therefore necessary to thoroughly analyse the political foundations upon which this proposal has been made in order to understand its prospects. Are the hopes raised within the Italian left by the candidacy of Tsipras in the next European elections founded? Is it possible to defend workers' rights, tackle unemployment, fight austerity and mass impoverishment on the basis of the proposals put forward by the leader of SYRIZA?
This question is far from being academic. Unlike Italy, in several European countries (above all in Greece, Spain and France) parties belonging to the Party of the European Left have seen in recent years a significant increase in their electoral support. Opposition to the austerity policies carried out by both right-wing parties and the Socialists has generated huge protests and mass movements which in part have also been expressed in a vote to the left of the Social Democracy.
It is therefore all the more important to understand what response these left parties should put forward, and what programme and political perspective can provide an answer to the current crisis.
In late January Tsipras issued a Programmatic Statement in which he presents a position which remains well within the confines of a left-wing pro-EU stance. Here are the main points.
- Put an end to austerity.
- A New Deal for Europe to be financed by low interest lending on the part of the ECB. According to Tsipras the US model would be a winner here. “The USA did it. Why couldn’t we?” (Where Tsipras sees these successes in the USA is a mystery).
- Credit expansion to small and medium-sized firms.
- Use European Structural Fund resources to create jobs.
- Suspension of the new European fiscal framework which requires balanced budgets year-on-year, at least in periods of recession.
- The European Central Bank to be lender of last resort, i.e. the ECB should print money to finance public debts: “The euro’s fate and the prosperity of the people of Europe may well depend on this.”
- Surplus countries should do as much as deficit countries to correct macroeconomic imbalances within Europe, i.e. they should export less and import more.
- A European Debt Conference, like that of “1953, which essentially relieved Germany of the economic burden of its own past, helped rebuild the post-war German democracy and paved the way for the economic success of that country.” Eurobonds and socialisation of debt on a European level.
- Separation of commercial and investment banking activities along the lines of Roosevelt’s 1933 Glass-Steagall Act.
- Effective European legislation to tax offshore economic and entrepreneurial activities.
To sum all this up, the crisis is basically due to economic liberalism and not to the contradictions of the capitalist system itself. The programme is therefore inspired by classic Keynesianism and contains no workers’ demands, the Eurozone is described as the “ideal space” for carrying out reformist policies, and all of this is aimed at the Social Democracy, which receives a final heartfelt plea: “Reality cannot afford the time to European social-democracy. Here and now, social-democrats have to make a historic shift forward redefining themselves in public perception and conscience as a political force of the democratic Left.”
Having abandoned any mention of the class struggle, he simply strives to give advice to the ruling class about what would be the best policies to mitigate the social crisis, and tries to impress the bourgeoisie with “cries of pain” (if something isn’t changed Europe will sink, the euro will sink, the extreme right will grow, etc.).
Illusion and reality
For the European Left to adopt this line means supporting one wing of the ruling class, covering up its real nature with “social” and “democratic” rhetoric, and generally bringing grist to the mill of the enemy.
It is pointless repeating over and over again words such as “solidarity”, “democracy” and a “Europe of the peoples” in an attempt to change the face of reality. Under capitalism you can only have a capitalist Europe. If the bourgeoisie is in control, the State will defend its interests and this is true both at national and European level. To ignore this basic truth means to deceive both oneself and the workers. It is not at all by chance that the ruling class today uses the term “anti-European” as a mark of shame. Loyalty to “Europe” is considered the first and most basic certificate of trustworthiness.
Tsipras’ manifesto offers precisely such a certificate of trustworthiness: “We need to reunite Europe and reconstruct it on a democratic and progressive basis.” And further on: “The democratic reorganization of the European Union is the political objective par excellence. To this end, we should extend the scope of public intervention and citizen engagement and participation in European policymaking and service design. In parallel, we should empower institutions with direct democratic legitimacy, such as the European and national Parliaments.”
Already back in September Tsipras was very clear in his intervention at the Kreisky forum held in Vienna. We provide some extracts from his speech here below.
Tsipras expresses his pleasure at being, “Among Austrian friends who, I assume, share with me the same concerns regarding our common European home. Our common home which is presently threatened by a dangerous social and political time bomb deep in its foundations. A time bomb which we can and must defuse.” He then expresses his concern about the fact that, “the re-emergence of Nazism is connected to the harsh austerity policies imposed on Greece by the troika of lenders and successive Greek governments.” He complains about the fact that as of the 1990s the European Social Democracy abandoned policies aimed at regulating capitalism, adding that, “If social democrats had followed the legacy of statesmen, such as Bruno Kreisky, Willy Brandt or Olof Palme, Europe would not have turned into today’s neoliberal desert.” He then draws a parallel between the crisis of 1929, which he believes was caused by the fixed exchange rates linked to the Gold standard, which the governments of the day did not see as the “architectural fault in the design”, and today’s refusal on the part of national governments to recognise the rigidities of the Eurozone and which could lead to the same outcome: then as today Nazism could triumph.
We will not dwell too much on repeating here the whole analysis of Tsipras, which places all the blame for the crisis on the consequences of Monetary Union and the way this was managed politically. Suffice it to say that the idea that this is a crisis of the capitalist system does not get one mention – even by mistake – anywhere in his whole speech. This is probably so as not to upset his Social Democrat audience (and especially their bosses, who are responsible for tightening the noose around the neck of Greece). Thus, Tsipras presents the following list of proposals as an answer to the crisis.
In spite of all the defects of the Eurozone Tsipras says the following:
“However, now that we are in it, the cost of dismantling it would be horrendous for all of us. So, even if we think it is a terrible monetary union, one that divides our peoples by means of a single currency, we have a duty to re-design it… if the bankers, the ruling politicians and the Eurocrats get their way, Europe will disintegrate.” And therefore: “SYRIZA will win the next elections in Greece and will succeed a fundamental political change. A government of the Left in Greece will extend a hand to Europe’s social democrats, to Europe’s free thinking liberals, to all Europeans who do not want Europe to slide into a nightmare.”
“And we will ask them to join us in a common project: The project of stabilising the Eurozone – a first step towards an open, democratic and cohesive Europe. To do this, we will have to negotiate forcefully with the main levers of institutional neoliberalism in Frankfurt, in Berlin, in Brussels, in Paris.” [For some reason Tsipras here forgets to mention Washington…]
“A Syriza government will put on the table a European Marshall Plan, which will include a proper banking union, a centrally managed public debt by the ECB, a massive program of public investment. Above all, we are requesting a special conference on the European debt in the entire periphery, by analogy to the 1953 London Conference for the German debt at the time, which decided to cut a large portion of it, a moratorium on the payment of interest and a growth clause.
“These are the minimum demands of a future Syriza government.
• They can be granted today without any Treaty changes.
• Without any need for the German or the Austrian taxpayers to pay for the Periphery.
• Without any loss of sovereignty of our Parliaments.
“The only alternative is to accept the slow death of my nation and the slow disintegration of the Eurozone – which will destroy the European Union itself.
“To conclude, my party, Syriza, is intent on promoting a European agenda for the salvation of the Eurozone as a means to giving Greece a chance to breathe… Let’s join forces to do good. Across Europe.”
The congress of the German Die Linke, held in February, revealed the same shift to the right, with a number of formulations critical of the EU being deleted from the party’s programme for the forthcoming May elections.
For a Socialist Federation!
In spite of all the claims to the contrary, the crisis of the Eurozone is far from being resolved. New and greater convulsions are being prepared: economic, financial and political crises and above all mass uprisings, of which Greece has merely been the prelude. This is the perspective for which the European left must prepare. Its role is not to be court advisor, but to build a real alternative for hundreds of millions of workers and youth who find themselves facing a dead end and who will have no other choice but to fight back.
If Tsipras and the “pro-EU left” have illusions that the European Union is the ideal terrain on which to carry out reforms, there are others on the left who believe that “winning back” national sovereignty – i.e. to exit the euro – can open up room for alternative economic policies. The latter position is espoused mainly by those tendencies with a Stalinist background, who suddenly moved from “socialism in one country” to “monetary sovereignty in one country”…
In this division within the left, which is incapable of putting forward an independent working class position and which limits itself to looking for possible partners in this or that section of the bourgeoisie, one sees how far back the labour movement has been thrown by decades of reformism and Stalinism.
But history moves forward much faster than the leaders of the labour movement who still dream of an impossible return to the past.
If – or more precisely, when – the crisis reaches a decisive moment in countries like Greece, Spain, Portugal and Italy, a government of the left will be faced with a choice that leaves no room for half measures: either to “save the euro”, as Tsipras suggests, or to break with the European Union and to set in motion a process that leads to a break with the capitalist system, which starts with cancelling the debt, nationalising the banks and the commanding heights of the economy, together with controls on the movement of capital and foreign trade. To take a step back or to look for a middle road, would lead to a disastrous defeat.
The idea that “nowadays nothing can be decided at national level and therefore the battle needs to be taken to a European level” may sound very radical, but in practice it means telling the workers in Greece that they cannot do anything to solve their problems until a mass movement develops in Europe.
The uneven development of capitalism, which is exacerbated by the crisis, means that it is practically inevitable that this process will unfold through the breaking of one or more “weak links” within Europe. The weakening of the ties between the various national bourgeoisies within the EU, the sharpening of the conflicts, the fact that the political and economic clashes are increasingly more open, all this is not the beginning of fascism or barbarism, as the reformists lament, but rather a process that can favour revolutionary developments and weaken the ability of the ruling class to react. Having proved a failure on many fronts, the European Union has achieved one “success”: it has been a formidable tool in concentrating the forces of the bourgeoisie on a continental scale, multiplying the ability of the single member states to offload the crisis onto the shoulders of the workers. Every time the workers try to raise their heads, whether in Greece or Spain, immediately they are faced with a “united front” of the ruling class, which, behind the cry of “Europe needs it!”, closes ranks, gags the trade union bureaucracy and imposes its policies in a brutal manner.
The crisis of the European Union, which is part of the general crisis of capitalism, will have one progressive aspect to the degree that it weakens both the bourgeoisie and the reformists and makes it easier for the opening up of a revolutionary situation across the whole of Europe.
Breaking with the bourgeois pro-EU policies is an indispensable condition if the left wishes to carry out this task. Only by overthrowing the rule of capital can one achieve the only truly progressive form of European integration, and that is a democratic socialist federation – socialist because it would be based on public ownership and collective management of the banks, the large industries, the communication networks and the main branches of the economy in order to meet the needs of society, and democratic because the people would participate in it only on a genuinely voluntary and conscious basis, with the right to be part of it or to secede from it if they wished.