national divisions and the eurozone in crisis

Oisín Mac Giollamóir explores the complexity of how the Eurozone crisis affects particular states

If the working class has no country it is for one reason: because capital has no country. But of course capital is often national. The emergence of the nation state and capitalism are contemporaneous. As capitalism emerged so did the nation state. As various historical class relations are dissolved into the capital/labour relation, the notion of the nation’s common interest emerges. But what happens when the nation becomes a constraint on capital accumulation? It expands.

Over the last 60ish years, through the emergence of the EU, Europe has seen the emergence of an integrated capitalist system. However, a major limit of this integration is that the national myth, the idea of a common interest between capital and labour, has not developed on a European level.

The working classes of Europe identify with their national capitals not with European capital. But equally the power that the working class can operate through the nation state doesn’t operate in the same way on a European level.

A part of this problem is simply that a European working class doesn’t exist – the working class of Europe is divided primarily by language resulting in migration between countries being far less than migration within countries.

Further, taxation and the welfare state still exist almost exclusively on the national level. The financing of the ‘solutions’ to capitalisms worst deprivations occurs primarily on a national level. Additionally, the aspects of capitalism that are needed by the capitalist economy but cannot self-finance are financed largely on a national level, be it universal education, the nuclear industry or in recent years the banks.

The result of this is that despite the transnational nature of the current Eurozone crisis, it can only be understood by paying attention to the interrelation of nation states within the Eurozone.

At the moment the crisis of European capital (the flipside of the debt crisis in the European periphery is a crisis for the creditors in the European core) is being dealt with in a national way. The debt burden in the periphery is being transferred from creditors in the core to the taxpayers (i.e. workers) in the periphery in the form of the sovereign assumption of debt. The debt crisis, now sovereign, is then transferred onto the workers of the periphery in the form of austerity.

Three key questions therefore arise. Firstly, can this fix resolve the crisis? Secondly, why is this fix being pursued? Thirdly, what scope for resistance is there in the periphery.

Firstly, this fix almost certainly cannot resolve the crisis. The burden of debt is simply too large. Taxpayers/workers in the periphery cannot finance it. Either an alternative solution is developed or defaults, and with that the demise of the Eurozone, will follow.

Why is this fix being pursued? Briefly, it’s being pursued because in Europe it is the easiest solution. No institutional apparatus exists to solve the problem on a European level and no political will exists to develop such an apparatus. If the German state can get German investors bailed out by Greek taxpayers it will.

What scope is there for resistance? A lot. While it is unlikely that the working class in the periphery will be able to force their states to default on their debt, it may be possible for them to force their states to say on a European level that it is not politically feasible to pursue the planned austerity programs in their states. By doing so this might force at the very least an expansionary monetary policy bringing about a real depreciation of the debt across Europe and an internal rebalancing of price level between the periphery and the core.

The problem here is that the question of how the working class of the periphery can force their states to say the austerity programs are not feasible is an open question.

2 thoughts on “national divisions and the eurozone in crisis

  1. The core countries, and Capital outside it i.e. the US, know that th austerity measures cannot work. Greek debt is 150% of GDP, and rather than the austerity measures reducing that even Capitalist commentators say that they will send it quickly to 200%. The interest on the debt alone is now greater than could be sustained by any potential growth. The bail-out is not intended to solve the crisis, but to give time for western banks to sell their peripheral debt to sovereigns. In fact, its not the workers of the periphery who will then pick up the tab, but the workers of the core, because whether Greece itself is bailed out by those sovereigns paying off its debt, is immaterial. If they do not, and Greece defaults, they will be left holding the debt anyway in tehir Central Banks and through the ECB. Already, the ECB has bought so much Greek debt from private Banks in the secondary market that if Greece defaults the ECB will be insolvent.

    So, workers in Germany etc. like they have before, and like has happened with workers in Britain, will actually be the ones who will be asked to pay more taxes to bail-out their own Governments, and their national banks. My guess is that the threats coming out this week from EU finance Ministers were not intended for the Greek Government, but the Greek Opposition. I think their real message is, “Pass the austerity measures even if you have no intention of implementing it, then we can give you the money.” Then it puts off the crisis for another few months.

    Ultimately, the EU will have to establish something approaching a State. The germans are already proposing an EU Finance Minister, and have been wanting central oversight of national budgets for a long time. Every crisis has led to a centralisation of control. If they don’t get it, then their really will be a big crisis.

    I wouldn’t put too much emphasis on the “there is not a European working-class” argument. In reality this doesn’t exist on a national level either. very rarely do you get truly “class” actions as opposed to sectional actions. The last time in Britain was probably in 1926. Talk to lots of ordinary workers, and you’ll find lots of parochialism just between one town and another let alone one country and another. Things like support for Football teams are merely a reflection of it. But, the reality also is that Capitalism divides workers effectively on a daily basis. Workers are divided individually within the same workplace, in competition after promotion etc. They are divided one workpalce with another, in attempts to win work for “their” company, rather than some other. Time and again, we see workers lining up to support action based on a “cut them”, “close them”, not us basis. Trade Unionism, and Trade Union struggle constrains workers into such a mentality.

    The fact, is that you can only build a true “class” allegiance outside Trade Union struggle. It can only arise upon working-class property and its defence, and extension.

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  2. I like this penultimate paragraph: “While it is unlikely that the working class in the periphery will be able to force their states to default on their debt, it may be possible for them to force their states to say on a European level that it is not politically feasible to pursue the planned austerity programs in their states. By doing so this might force at the very least an expansionary monetary policy bringing about a real depreciation of the debt across Europe and an internal rebalancing of price level between the periphery and the core.”

    It is very much what I think. However, I’d say in different terms:

    (1) Greece (and maybe other states) are already in default, the only thing under discussion is how much plunder will be allowed to the creditors before it is formalized as “restructuring” and how much debt will remain after the “restructuring” as tool for the European Capitalist class to keep the blackmail going. This is much in the hands of the Greek People and a “savage” General Strike would possibly right now force at least elections (with a good chance that the genuine left takes over or at least constitutes a real opposition).

    (2) I have been often advocated for a much weaker euro, not just to distribute the debt but in order to allow the “lower” bourgeoisie (and therefore their workers, this is like “market feudalism”) to compete internationally. The euro has appreciated some 40% since it was implemented and this total monetary nonsense is what is harming the most the Southern European economies. However deprecating the euro now is a bit of “too little too late”, it should have been done in 2007 or earlier. Now is like crying for the spilled milk because the harm is done. What is clear is that potentially the harmed states: all Latin Europe (France is also harmed by these policies), Greece and possibly others like Ireland, have a wide voting majority in the Eurozone decision-making committees and could in theory impose their criterion (at risk of Germany leaving the Eurozone, a lesser evil in any case).

    This is not however a task of the Working Class, which should rather aspire to the transformation of the game rules rather than for tactical positioning but one of the Bourgeois classes in the affected states. Horribly enough these Bourgeois classes have zero class consciousness and seem only able to worship whatever Merkel says. Trust the Bourgeois leadership and you’ll end trapped with no exit on sight it seems.

    I think that at this moment the class war has evolved already beyond a no return point, not just in Greece but all around the Mediterranean (obviously the Arab revolutions are not unrelated, even if they are distinct). Consciousness and organization is maybe still weak and I would not expect major changes (excepting maybe Greece and who knows if there is some surprise) yet but the scenario is revealing the extreme confrontation and the lack of any viable plan by the Bourgeoisie.

    This is critical because no elite can rule without delivering. And the Capitalist class is not delivering anymore. And that is because they cannot: we are at the beginning of the final crisis of advanced (and even decadent) Capitalism. Capitalism cannot fix this because it has hit the environmental limit (Earth is truly exhausted) and “clean-up” wars are impossible for the same reason (nuclear weapons dissuade but can’t win a war – only destroy all).

    Additionally it does not seem to have even the creative will of fixing it anymore: the reaction to the speculative crisis of 2007 (or 2008) has been… not to do anything at all, just shower the failed banks with hoards of public money and hope for the best. That’s ridiculous and shows the lack of determination of the late Capitalist Class faced with its own limits and idiocy.

    The golden age of Capitalism is over forever. They won’t get up. And they won’t fix it, of course. But somebody will have to fix it and there is no one else left but the Working Class: Humankind self-organized in a radical democratic manner (democracy with no limits of course: not anymore the red line of private property).

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