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Is this the end of the European project: German hegemony in an age of austerity?

The European project began at the end of the World’s most devastating war because Germany (with the support of France) wanted to put its past behind it. Now an age of austerity is being inscribed into the foundation of a European super-state because Germany (with the support of France) wishes to put its future first. Fiscal union and German control of monetary policy would be used not to tax those who grew richest in the years of plenty and lift out of depression those who gained least, but to support the competitiveness of German industry through an undervalued currency.

Mercedes and Volkswagens would pound the motorways of Europe and German workers travel to sun themselves on the beaches of the Algarve, the Aegean and the Black Sea. Meanwhile others would make the opposite journey, to the factories and building sites of northern Europe, a new generation of gastarbeiter, more Christian and more welcome than the last. And twenty-one miles off the coast of France would lie the world’s largest tax haven, where German industrialists and Russian oligarchs can dance and dine with their English bankers.

Owen Jones is absolutely right to say that the outlawing of an expansionary fiscal policy (as Paul Mason put it) is “perhaps the biggest catastrophe to befall the European left since the Second World War.” This is not the positive vision (with or without the British tax haven) that European social democrats signed up to; this is a new nightmarish version of “peace in our time”  in which right-wing governments across Europe, pursuing class interests not national interests, choose to subject a hundred million people and more on the fringes of Europe to avoidable misery for generations.

It is all the more nightmarish, because, until now, European Christian Democracy, unlike neoliberals like Thatcher and Reagan and Blair, had supported the idea of a benevolent welfare state. Now Christian Democrats have finally signed up to neoliberalism at just the moment it has been seen to fail. Except in Germany, where they believe they can sustain their benevolent welfare state by using their economic power to export the pain and misery.

Labour should have nothing to do with it. It isn’t a matter of being on the inside or outside. Austerity is wrong and won’t work. Labour’s role should be to give new leadership not only in Britain, but, it seems, to social democrats across Europe, for an alternative vision of European investment and growth without the Euro. Perhaps François Hollande will join us. Perhaps Obama too, if he survives his election through the disarray of the American right. But this is certainly no time to abandon investment and growth for a European project that has utterly lost its way.

If a postive European project can be re-created, it will be through understanding the need for coordinated reflation and regulation, it will be driven by global interests not national interests, and it will be seen as a means to a political end not as an end in itself.

One Comment

  1. Phil C. says:

    unless I’m misunderstanding the situation, it isn’t necessarily the outlawing of expansionary fiscal policy.
    But budgets would have to be balanced.
    So, any fiscal stimulus would have to be funded via increased taxation/revenue rather than borrowing.
    Thus a Left govt would have to follow the Conservatives’ line and make some tough choices – such as raising the tax rate on the super-rich, closing off tax loop-holes, removing tax relief on the pensions contributions of the wealthiest, levying and collecting Corporation Tax, taxing bonuses etc.
    It would hurt a Left govt to have to make such tough choices, of course, but when There Is No Alternative….

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