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| Logo of the anti-austerity party Syriza painted on a pavement in the build up to the January election. Photograph: Syriza logo by Thierry Ehrmann (License) (Cropped) |
Greece's anti-austerity party Syriza may well have surprised many with their decision to sit down with European leaders to hash out a deal that would keep Greece in the Eurozone (Monaghan, 2015). After their strident attacks on European economic policy, in an election campaign where they pledged to end those policies in Greece (BBC, 2015), for many a Greek exit from the Euro must have seemed sure, soon and swift.
So if Eurozone austerity is so unbearable, why would Syriza bother to stay and negotiate?
Italy, which has been treated as Europe's economic case study because of
its own debt crisis comparable to that of Greece, has resisted austerity and is trying to dig its
way out of debt (Traynor, 2014). In that task Italian Prime Minister Matteo Renzi actually wants
the European Central Bank to lead, encouraging the institution to lead
the way with its latest round of efforts to boost growth by pumping
money into the European economy (Treanor et al, 2015).
As for others in Europe, the reality is that reforming Europe's institutions rather than simply abolishing them, with the countries of Europe working together within a better system, is preferable to a return to isolation and handling these crises without support. Those feelings are reflected around Europe, and demonstrate a positive vision of what Europe could be: a co-ordinating body, a network supporting solidarity between member states.
Right now though, Europe's institutions are in the hands of bartering and deal-making national interests. Those forces have co-opted what was once a juxtaposition to their aims - a broad body looking at the greater community interest rather than narrow nationalisms - and re-centred it on a
commitment to the national conservative economics of fiscal austerity and
privatisation (Jones, 2015). But, if reformed, Europe could do so much more.
The European Union was once the middle road between the American capitalist and Soviet communist super powers, looking to co-operation over American competition or Soviet collectivisation. It supported co-operation between members of the community of nations, and between labour and management. It supported new member states in getting up to the same speed as existing members (Feffer, 2015).
That path to successful integration and co-ordination followed on from a long succession of plans dating back to the Second World War. During the war, the countries of Europe had taken on huge debts that made post-war reconstruction a daunting task. In response, the United States drew up the
Marshall Plan, an Act of Congress - with Bipartisan support - that authorised a huge financial investment in rebuilding Europe's infrastructure.
That plan played a large role in rebuilding the UK, France, Italy and West Germany. East Germany, which had been under Soviet control, would only join a reunited Germany in 1990. By that time, the East was in an economic state that lagged far behind the West. Germany responded with massive deficit spending to rebuild the East and accelerate its ability to catch up with the rest of the country (Feffer, 2014).
The European Union of today has
its own version of these functions, but it is not employed to nearly the same degree. It is particularly telling that Europe,
in the face of the financial crisis, rather than collaborate and pursue a co-ordinated spending program aimed at helping the member states back up to an even footing, individual member states were expected to find their own individual response, to their own crises.
The
2008 financial crash and the
Great Recession that followed, essentially caused by reckless capitalism, was initially tackled through the bailing out of private debts by the public treasuries. That private debt, as a result, became public debt (Bellofiore, 2011). The matter the public has been faced with since, is figuring out how to deal with the crushing weight of the debt that was taken on.
One thing has been obvious in the last seven years of crisis. Individual countries, alone, can't manage the accumulated debts that were inherited from the private sector, not least without massive sacrifices. Despite the crisis clearly being interconnected, and global, with debts comparable to the outcome of another great war, this time there has been no concerted collaborative response.
It is in this case, as much as any other, that Europe's fragmentation and disunity has hurt the most. Europe, as a whole, could have shouldered the weight. Instead, the individual countries have been forced to cut and cut and cut. Instead of a Europe that recognised its common bonds and pulled together, we have a Europe of many interconnected parts, acting like parts alone rather than as the parts of a whole.
That disunity is symbolised in the fact that the European currency is not fully underwritten by the political unity which could have brought with it the capacity to hold debt and to lend against the full weight of European wealth (Bellofiore, 2011). Instead, each individual member is using austerity, cutting back its spending in an attempt to surmount and reduce their individual debts.
That comes with a heavy price (Inman, 2015). That austerity effort has attacked market demand by putting a huge strain on personal incomes. As welfare and public sector work is cut back, the amount that people can spend falls and their insecurity increases. At the same time the cuts have also tightened access to credit, squeezing lending to business and making the possibility of finding alternative forms of security and livelihood in the private sector slim.
The absence of cheap credit puts further pressure on the private sector, leading to demands for more 'labour flexibility' - which, in lay terms, means lower pay, shorter hours and less secure contracts for workers - in an effort to cut costs. Those efforts have only squeezed personal incomes and security further still. The whole effect is compounded for future generations, as young people are suffering through colossal levels of unemployment and lack of training opportunities.
The result has been political turmoil in each member state as they find themselves caught between responding to the debt, under pressure from other nations and private sector interests, and an increasingly hostile public response on the other, from people angry about being expected shoulder all of the fallout from the crisis. That has led to huge protests, democratic rejection of mainstream parties and a dangerously rising nationalism and connected intolerance - people, feeling insecure, afraid and under attack, are circling the wagons.
Some of the larger and more prosperous countries have fared better than others, as the economic policies pursued have suited them, or at least their ideologically dominant parties. However, Europe is bound together. The manufacturing regions are bound to the agricultural regions, and they to the commercial and the financial. So, even for prosperous and powerful Germany, there is no escaping the interdependence.
Germany's
neo-mercantilist policies have made them dependent upon exports to the surrounding countries, and to the United States (Bellofiore, 2011). As such, it relies upon the spending power and trade deficits of its neighbours, who over time have responded to their trade 'partnership' with Germany by rearranging their economies. That has meant a decline in their own internal production, and an economy steered ever more towards imports from Germany, the service industry and the US-UK system of speculation on inflated capital assets (such as housing) along with propping up spending with consumer debt.
When austerity was applied, cutting back public sector work and public services, and with no strong internal economy to fall back on, it led to
stagnation and decline in their own economies. That, in turn, has led to a broader
stagnation as countries, like (predominantly) Germany, now have fewer partners to trade with. It has become a destructive cycle.
Italy and
its political and economic crisis, as the country that most resembles a microcosm of Europe at large, has become the case study for solving the crisis in Europe as a whole. Both sides, the Right and the Left, have attempted to justify their solution to the Italian crisis, which represents to both sides a core example of what is wrong with European economics.
On the Right, there is an idea that the root of the problem in Italy, and Europe, is a lack of 'competitiveness' (Sinn, 2014). Prices are too high, so the cost of doing business is too high. The solution for the Right, amongst other efforts at depreciation, is to reduce the protections surrounding labour, so wages can be decreased and hours and contracts be made more 'flexible'. With these things achieved, businesses would start to grow again and employment would increase, spurring growth - although with admitted carnage along with the way with households going bankrupt. For their efforts in pursuing this painful direction, former Prime Ministers Silvio Berlusconi and Mario Monti have been praised, and electoral politics has been criticised for getting in the way of the brutal necessary.
The left takes the opposite tack. If Europe's financial bodies would step up to tackle national debts, and to invest towards creating more employment and stronger wages, then:
'If internal demand and production increase more than productivity, the consequent higher employment could ground consumption on income rather than on debt.'
New sources of funding, more jobs and higher wages - supported by Europe as a whole tackling the matter of the collective debt - could lead to a way out of the crisis through the empowering of labour, of individualism, rather than the curbing of it. Public welfare could be funded to shield people during the harsher times, rather than cut to pay off debts. The problem of prices could be handled in moderation during stronger economics times, not least through the increased competition created by a recovering economy.
The debate between Right and Left becomes a matter of cutting debt, cutting spending, and cutting wages; or to borrow in order to prop up spending and up prop labour. Force what would effectively be an economic recession to lower wages and allow private investment to reboot, at the cost of private debts and hardships; or let the co-ordinating whole take on the burden for everyone at the cost of additional debt in the short term.
For the Right, it becomes a matter of nation-states handling the matter internally, alone, through cuts that place the heavy burden on individuals. For the Left, the nation-states would act in common, pursuing the European ideal of the self-governing communities standing together in solidarity, supporting welfare and investment that finds a path out of the crisis that takes the burden off the shoulders of the individual.
That role, looked for by The Left, is a vision of what Europe could be, and why Europe is so important. The European project marks the ultimate point, for the people of Europe at present, of overcoming the divisions that our differences create between us. It means reaching across those differences to find commonality, solidarity and potential.
And yet, Europe is faced with resentment and hostility by Far Right nationalist movements; an economic and political crisis eating away at its individual member states; and the mistrust and scorn of people caught under the weight of austerity promulgated through Europe's institutions. Europe is held in the grip of a system of bartering national conservatisms, which prevent it from playing the sorely needed co-ordinating role, with a view to the broader community welfare.
Progressives, from Italy to Greece and onwards, want to reform Europe, but frequently find their efforts running up against a brick wall. The continental institutions are in the hands of conservative groups that unwaveringly push their agenda, and struggle between the reformers and the establishment results in a stalemate.
The answer to breaking the deadlock is to take back Europe. Movements like Occupy and Indignados, Syriza and Podemos show us the means. Radical democracy, conducted through new parties founded on new principles, with more direct involvement and engagement by and with the people. Among the primary aims of these groups has to be the reform of Europe's institutions around those principles.
If these new movements are to achieve progressive ends, however, they cannot be like-for-like replacements for the old parties. Instead of top down, patronising leaderships, they need be the co-ordinators of Europe's fragmented communities. The spaces where people can meet and debate, and where they can find solidarity in their struggles.
That too is a role that a reformed Europe could play. The place where Europe's fragmented communities come to discuss, debate and act in common, and where they come to find solidarity. The beginning of the road to achieving it, is to rebuild our political movements along the same principles.
