We saw it coming
The European ruling elite likes to pretend that the crisis afflicting the Eurozone countries was something both unforeseen and unforeseeable, the result of circumstances beyond its control deriving from the subprime loans crisis in the United States and its knock-on effects. This is a lie. In fact, the events which have led to the current crisis, and to consequences such as the effective abolition of democracy in Greece and Portugal, mass civil unrest in numerous member states, and the onset of what will surely be prolonged stagnation, were foreseen by numerous economists, political commentators and activists, and elected politicians. Most, though by no means all of these latter-day Nostradamuses, came from the radical left.
The ruling elites of the United States and the European Union, as well as the political right in general, exercise control through a range of instruments, and important amongst these is the generation of historical amnesia. So historical knowledge becomes in turn a weapon of resistance. A little history, then:
On the eve of the introduction of Euro notes and coins in 2001 Ewout Irrgang, at the time a young economist and activist of the radical left Dutch Socialist Party (SP), now a Member of Parliament and the party’s financial spokesman, was interviewed by the SP monthly, the Tribune, and had this to say:
The introduction of the Euro is no small thing. We are dealing with the biggest monetary experiment in world history. Twelve extremely varied economies will go over, in one fell swoop, to the same currency ….. Introduction of the Euro means not only that we will be paying with the same currency, but also that there will be a single monetary policy. There is a single European central bank, which from Lapland to Sicily will operate the same rate of interest. The rate of interest is the principal means whereby the economic temperature is regulated. If the economy is going badly, you lower the interest rate so that the motor can run a little faster. If there’s a threat of overheating, you raise interest rates to cool it down. In all of these extremely different economies the stove will be stoked to the same level of heat and the temperature will be determined undemocratically and adjusted to the situation in the biggest countries, Germany, France and Italy. That will create irrevocable problems, problems which will be scarcely solvable.
The SP had resisted the Euro’s introduction from the time it was no more than a gleam in the eye of Europe’s leading multinationals, whose interests it was designed to serve. Longstanding party leader Jan Marijnissen had this to say about the plan for a single currency as early as New Year’s Day, 1997:
With the loss of our guilder we are losing more than folklore. We are losing our say in the area of monetary policy, and everything which depends on that. With the Euro in place, the Guilder would be gone and our control of monetary policy would disappear in the direction of the European Central Bank in Frankfurt.
The transfer of monetary power to the European Union cannot be interpreted otherwise than as giving up an important part of national sovereignty. As a former president of the Dutch national bank, M.W. Holtrop said in 1963, "Money is an attribute of sovereignty. If a country gives up its currency, it loses a little of itself.”
The Europe of 1997 is not a country, it is not a nation with which people can identify, a place where they feel themselves to be understood. They have nothing really to do with it, whether or not political leaders decide that we will have a monetary union from 1999 and a single currency from 2002. Europe is only a geographical concept, an abstraction in fact. There is no European people, no European language, no European culture.
At roughly the same time as Marijnissen was penning these words, the second edition of Spectre, the paper magazine which preceded the on-line Spectrezine, published an editorial under the heading ‘EMU’s true feathers’ in which we warned that
…if governments and national banks give up the economic leverage they gain from an ability to determine their own levels of spending and borrowing, if they can no longer decide interest or exchange rates, they will have only one means left to maintain or enhance competitiveness: your wages, your pensions, your welfare rights, your children’s education, will all have to cost less.
The same issue carried a paid ad from Tom Megahy, who died a couple of years ago, but who was at the time a Member of the European Parliament. Until 1999, when the Blairites purged the European Parliamentary Labour Party of all critical elements, Tom was one of perhaps a dozen Labour MEPs who provided a voice in Brussels for the vast majority of British working people who are hostile to the European Union’s neoliberal economics and undemocratic politics. The ad was an act of solidarity, not only with Spectre’s ideas, but with myself. One of Spectre’s co-founders, I worked at the time as Tom’s parliamentary assistant. Again, the ad accurately predicted that ‘EMU’ – the Economic and Monetary Union, whose planned single currency had yet to be named – would ‘deprive the government of vital tools to address immediate and long-term economic difficulties’, ‘create unemployment in countries and regions deemed to be “uncompetitive” (and)… put downward pressure on wages and working conditions, as such areas attempt to regain competitiveness’. It would, in addition, ‘undermine social security and welfare systems’, and ‘hand control over vital economic decisions to unelected bankers’.
These dire predictions have been borne out since 2008, as the banks and their obedient servants in governments and in Brussels have dragged the whole of Europe into an unprecedented economic crisis. Mediterranean member states, and Ireland, have been worst hit. Because they cannot devalue their currencies, their exports have slumped. Falling exports mean lower economic growth and thus reduced government revenues. Governments struggling with budget deficits fell further into debt, encouraged by the low interest rates which were a result of the Euro.
Of course, as any helpful Europhile will remind you, some of Greece’s problems were created by Greeks. Greece is indisputably one of the most corrupt countries in Europe. Greek workers and those who operate very small businesses, however, put in the longest hours in the EU for the lowest rates of pay outside the new member states which joined in 2004 and 2006. Pay increases in the last decade have made some inroads into this, yet they have been below the level of productivity gains. The Greek people are in other words in the vast majority of cases the victims of corruption, rather than its perpetrators.
Since their currencies were abolished and entered the euro at overvalued rates (which they were assured were necessary to counter the threat of inflation), peripheral economies like Greece have acquired massive deficits. Growth, as in the US, has been based on consumption financed by debt and speculation. Although wages have been subject to downward pressure in the peripheral countries too, restraining influences have not prevented the wage gap between Germany and Greece and the others from narrowing, again adversely affecting the poorer countries’ competitive position.
This has occurred despite the EU's much-vaunted 'European Employment Strategy', which has encouraged greater labour market flexibility, precarious contracts and part-time and temporary work. This, and a number of EU measures and European Court of Justice rulings, have weakened organised labour, adding to the Euro’s downward pressure on pay and conditions.
It would be a huge error to imagine that any of this demonstrates some sort of incompetence or pig-headedness on the part of the EU elite. The Euro was created as an instrument to attack the economic, social and political gains of working people, accumulated over two centuries in the most bitter struggles. What is happening in country after country, starkest of all in Greece, Ireland and Portugal, but also – just as visibly to anyone who is paying attention - in Britain, is nothing less than the opening salvos of a new, more intense and more dangerous phase of class war.
Steve McGiffen is Spectrezine’s editor and was a co-founder of both Spectrezine and Spectre, its paper predecessor. He has worked both for Tom Megahy and for the Dutch Socialist Party.
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