Yves here. As much as John Weeks covers important ground in explaining how the Eurozone’s fiscal orthodoxy produces right wing policies, he overstates the commitment of the ruling Italian coalition’s interest in leaving the Eurozone. The first candidate for finance minster, Paolo Savona, walked back a great deal of his firebrand talk even after he was muscled out of the role. His replacement, Giovanni Tria, has gone to some lengths to tell Mr. Market that the Italian government has no plans to ditch the Euro.
By John Weeks, Professor Emeritus of the University of London School of Oriental and African Studies and author of Economics of the 1%: How Mainstream Economics Serves the Rich, Obscures Reality and Distorts Policy. Originally published at Triple Crisis
There seems some disagreement as to whether Nero played the violin or the harp as Rome burned in AD 64. Whatever happened 1554 years ago, there was considerable complacent fiddling in Brussels after the 4 March Italian election. To replace the centrist government of neoliberal Matteo Renzi Italian voters cast 60% of their ballots for two anti-EU parties, the aggressively xenophobic coalition of Lega neo-fascists and the anti-immigrant 5 Star Movement (Movimento 5 Stelle, M5S).
Confounding the hope and expectation of the EU elite, this pair formed their misbegotten government in Rome in April. The anti-EU rhetoric of these two parties, plus their promise to breech EU budget rules – end fiscal austerity – ended the fiddling and set off alarm bells.
The EU elite quickly moved to prevent this anti-establishment government from rocking the Brussels neoliberal consensus. The nominally neutral Italian president refused to acceptthe first proposed coalition government of the Lega-M5S. The refusal did refer to thee proposed racist immigration policies, nor to its aggressively anti-Roma policies. Unacceptable to the president that the person nominated for finance minister, who had long standing opposition to the euro (see commentary by Yanis Varoufakis).
Should anyone miss the implied priories of the Italian establishment, the president sought to form an interim government that would continue Brussels-designed austerity policies. To lead that government the president chose a former functionary of the International Monetary Fund. This affront to the electoral process proved short-lived. Soon the far right Lega and eclectic right M5S were back in government with a different, but no less anti-austerity, finance minister.
The partners have quite separate origins. Since its founding in 1991 as the Lega Nord (Northern League) firmly established its position on the far-right of Italian politics. Beginning as a separatist moment, it rapidly achieved regional success even in cities long held by the Italian Communist Party. Using a racist immigration message, the party made the leap from region to nations, dropping “Nord” to become the largest right wing party in Italy, The only group further right is the tiny, explicitly fascist CasaPound, a Lega ally named after the American poet Ezra Pound who lived in Italy and supported the Mussolini dictatorship.
The aggressive and explicit racism of Lega contrasts with M5S eclecticism and internal inconsistency. The M5S advocates policies also found in the programs of European progressive parties, such as a mild version of a basic income. However, its consistently defining political focus is anti-immigration, which provides the basis for a coalition between these unlikely partners. The M5S endorsement of extreme anti-immigration policies was shown by its leadership accepting hard line racist Natteo Salvini, leader of Lega, as minister in charge of immigration. The two parties share a demonizing of the Roma ethnic group(“Gypsies”), with concrete plans to drive them from Italy.
Neoliberalism Run Its Italian Course
How these parties became the largest in Italy reveals much about the consequences of neoliberalism in the European Union. The Italian financial elite pressed hard for governments in the 1990s to achieve the pre-conditions to be an initial member of the euro zone. To meet those conditions Italian governments borrowed heavily in financial markets, much of it from German banks. There followed one of the many little noted ironies of EU economic policy. The large Italian public debt that prompted a series of austerity conditions after 2010 from the European Commission in Brussels, accumulated well before the global crisis, to maintain the Lire stability required for euro membership.
Combined with the borrowing was home-grown fiscal austerity to meet the EU 3% deficit pre-condition for euro membership. The deficit pre-condition is defined for the overall fiscal balance, which includes interest payments on the public debt. Because governments borrowed massively to stabilize the Lire,interest payments approach 5% of GDP, As a result 1995-2006 Italy had the only government in the European Union with a continuous fiscal surplus net of interest payment (the “primary deficit”).
As a result of the substantial fiscal surpluses, the Italian economy grew slower than any other in the EU from the mid-1990s to the present. Polls showthat the consequent stagnation of employment and household incomes generated deep skepticism about EU membership. For twenty years the center-right and center-left Italian governments ignored the growing anti-EU sentiment. The racists and xenophobes of Lega and M5S reaped what the neoliberals had sowed.
European Integration: Sublime to Neoliberal
As the Italian politic turmoil unfolds as across Europe, we find authoritarians in power in Hungary and Poland, and Austria ruled by a coalition of rightists and neo-fascists. In the midst of spreading malaise we can reflect on how Europe came to this degeneration of democracy. By the middle of the 19thcentury the major powers of Western Europe had established themselves or were in the process of doing so, Great Britain and France, followed by the consolidation of Germany and Italy. During the subsequent one hundred years the governments of these powers led their citizens into war after war, each more barbarous than the one before.
After WWII European economic and political integration seemed the apparent solution to this alarming tendency of European governments to launch wars against each other. In the wake of that war the commitment of the leaders of the major European powers to peace was profound and deep. Important to that commitment was the US military occupation of Germany and Italy, and the putative threat of Soviet aggression. While it would be misleading to view integration as the political companion to NATO, we should not ignore the effect of US political and military hegemony over post-war Western Europe.
Placing the origins of European integration in the context of Cold War rivalry helps explain the rapid integration steps after the collapse of the Soviet Union. Discussions of a common currency began early as the 1960s (notably the 1969 Werner Plan), formalized in the 1972 Pompidou-Brandt Agreement. However, substantial progress awaited the most important European change derivative from the collapse of the USSR – the unification of Germany.
In a breathtakingly short period, the dominant force in Europe changed from ancien regimeof the United States and the Soviet Union to newly unified Germany. This shift of power paralleled another fundamental change, the transubstantiation of the European Union from cooperation across governments for peace to a neoliberal economic project. This change occurred with stunning success via a series of treaties severely constraining national governments. Beginning with Maastricht, these treaties allowed less and less policy flexibility, constraining national governments from implementing progressive economic policies. These constrains are by their nature anti-democratic as well as reactionary.
Because governments make the decisions that lead to war, agreements among governments are the appropriate and perhaps only practical way to establish non-aggression pacts, mutual assistance commitments and formal alliances. Depending on the specific laws and institutions of countries, these top-down treaties may or may not require approval by national legislatures. To be effective, such treaties should be irreversible. People from different countries do not go to war unless their governments order them to do so. Constraining governments from making war is a singularly appropriate constraint on the democratic process among civilized countries.
The two principle EU Treaties, On European Union and On the Functioning of the European Union, are anti-democratic for an obvious reason. They are the de factoconstitution of the Union. Unlike the constitutions of all other countries, they specify in detail the nature of the economic system that every member state must implement. These details, such as the infamous fiscal deficit rule of 3% of GDP and the ECB’s inflation target of 2%, cannot be changed by national legislatures or the European Parliament. The treaties constrain EU governments and citizens ad infinitum.
This permanent constraint is rendered irreversible by the near-insurmountable difficulty of changing the treaties, which requires unanimous consent of all member governments (and the case of Belgium by the provincial governments as well); or by a new treaty that overrides the previous, which also requires unanimous agreement. The extreme difficulty in altering any provision of the de factoEU constitution means in practice that EU citizens are denied the democratic right to alter the basic economic policies that govern their livelihoods.
These anti-democratic treaties came as the result of bargaining and compromise among governments of the centre-right and the centre-left, Christian democrats and social democrats under various country-specific party names. Having agreed to the treaty-enshrined dysfunctional constraints on national governments, over the next 20 years these parties faithfully applied them when in government.
In the new millennium each successive national economic crisis became increasingly intractable because the treaties prevented the rational policies that would have solved or prevented them. With each passing year and the centrists further discredited themselves before the electorates with their devotion to austerity. Obvious metaphors come to mind — lemmings racing for the cliff edge and 18thcentury doctors bleeding patients to cure their illnesses.
No metaphor is really necessary because policies speak for themselves. These governments, Holland in France, Renzi in Italy, or almost any other during 1990-2018, acted in the narrow self-interest of financial capital. Despite the manifest failure of German-via-Brussels austerity policies to generate a sustained recovery; despite the appalling human const of these policies, especially but not only in Greece; despite the repeated voter rejection of politicians advocating these policies; neoliberal centrists dutifully defended and implemented contractionary fiscal policies.
It is tempting to explain the political myopia of centre-right and centre-left by “complacency” from too long in government, “detachment” from the electorate, and/or ideological belief in the “TINA” principle (there-is-no-alternative). More promising than these subjective assessments is to pursue the approach in criminal investigations – cui bono, Latin for “to whom does it benefit?”
Inspect of trade and growth statistics since 2000 across the euro zone and the prime suspect jumps off the page – German industrial and finance capital. While cui bonoexplains the behavior of the German government, what about the apparent losers in the rest of the EU and especially the euro zone where austerity policies bite the deepest?
Why did and do the governments of other euro zone countries follow the German lead? The simple answer is that until the recent Italian election and Spanish change of government 15 of the 18 other euro zone states had governments of the political right. Several of these 15 governments would and have pursued reactionary fiscal policies with no encouragement from Brussels or Berlin.
That leaves Greece, Italy itself, and Portugal. Greece is the exception that proves the rule, a nominally leftist government enforcing austerity policies imposed upon it. In Italy the Renzi government purposefully pursued austerity without external pressure. Until the change in Spain only in Portugal did we find an established left party attempting to reject austerity policies (and strongly criticized by EU officials). Whether the Spanish Socialist government will join Portugal in fiscal rebellion remains to be seen.
For two decades centre left parties in Europe have connived, accommodated and embraced the fiscal ideology of the right, differentiating themselves only by the limp promise to implement those dysfunctional policies in a moderate manner. That is how we come to this sorry state in which only one euro zone country has a government of the centre left with a progressive economic policy.
After enduring almost twenty years of economic stagnation with the euro, the Italian electorate had enough and elected parties promising to defy the EU rules of fiscal behavior. The farce of the Italian centre-left implementing reactionary fiscal policies is followed by the tragedy of a frontal challenge to those rules by a coalition of xenophobes, chauvinists and proto-fascists.
The apparent response in Brussels and Berlinto the Italian electorate’s demand for change was to encourage the Italian president to patch together yet another austerity government. That ineffective response represented the continuation of the EU policy so infamously stated by the erratic president of the European Commission. During the Greek crisisin 2015 the ever-quotable Mr Juncker said, “Il ne peut y avoir de choix démocratique contre les traités européens” (there is no democratic choice about the EU treaties).
In the Bible Proverbs 29:11 tells us “whoever troubles his own household shall inherit the wind”. The Renzi government did indeed “trouble its own household [aka Italy]” and with its devotion to EU fiscal rules stirred a wind not south-by-southeast but right-by-far-right. The M5S/Lega government turns that Italian wind to gale force perhaps to sweep Europe.
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“For two decades centre left parties in Europe have connived, accommodated and embraced the fiscal ideology of the right, differentiating themselves only by the limp promise to implement those dysfunctional policies in a moderate manner. That is how we come to this sorry state in which only one euro zone country has a government of the centre left with a progressive economic policy.”
This sums up the mind-hive acceptance and usurpation of what was once called the left in Europe. Country after country has followed a similar pattern. In the UK Blairites became de facto Tory-lite politicians who passed laws that Thatcher could have only dreamed about, all the while covering themselves in cool Britannia nationalism to cover the tax scams they delivered to their rich benefactors. In Ireland Fianna Fáil simply shed any working class clothes it pretended to represent and donned suitable business attire. Then they found a new petit bourgeoisie, neoliberal party (Progressive Democrats) to pal around with during the tiger years. Today we have the real deal Fine Gael, ultra neoliberal party as the dominant power whilst the proles play monopoly.
Follow the money. Money talks, the rest of us walk in bs.
It will be interesting to see an EU elite (Tory party of the UK) break away from their continental cohorts. If they deliver pure capitalism, as envisaged by neoliberalism, will the rest of Europe follow?
It does seem our betters don’t think history rhymes. They seems to be creating very similar conditions that existed in the early part of the 20th century via economic policies that constrict production whilst championing rentier income of every sort. I suppose they believe they have the various populaces so atomised, for want of a better term, and the social communication means to shape the narrative to keep people divided. Meanwhile, populisms, representing nothing more than a negation of issues without substantive redress to those same issues except at a most cursory level, becomes a sort of haven for many of us. But populism, lacking a cohesive centre, potentially becomes a vehicle of the tyrants ascension.
[Also, (and just an odd opinion) I find the use of progressive to describe policies as somewhat off putting. I don’t know why. What’s so progressive about a living wage, decent housing and social healthcare? Complex societies should expect these as normal amongst such riches of material and knowledge. And the term is so easily co-opted by those who oppose average people expecting average wealth amongst the plenty.]
Unfortunately, this article falls into a familiar pattern of trying to fit facts into a pre-existing narrative. As an example:
In fact, opinion polls show nothing of the sort. There is gradually increasing scepticism about the EU in Italy, but repeated polls show around two thirds of Italians are in favour of being in the EU, by any standards, that makes it a popular institution. Ask any Italian and they’ll tell you that the reason Legia and Five Star are so popular has far more to do with increasing disgust at corruption and immigration than the EU or the Euro. The fact that a political party is nominally anti-EU does not mean thats why people vote for it. In fact, all over Europe far right parties (and plenty of left wing and Green parties) have been slowly stepping back from anti EU stances because its been an impediment to them. The fastest growing left wing parties in Europe, such as Sinn Fein in Ireland, Podemos in Spain, and other members of the EUF-NG, have become more, not less pro-EU over time.
As the article goes on to acknowledge, the primary reason why austerity has been imposed across Europe is not directly because of Brussels or Berlin, its because people keep voting for pro-austerity parties. Thats the simple reality.
This is not to say that the EU is not becoming increasingly neoliberal (although I’d argue that neoliberalism is the wrong term for it – better to say its become infected with a particular form of German ordoliberalism), and has strayed far from its original founding ideals. But much as those in the English speaking world love to fit Europe into its own political conceptual model, the EU remains popular throughout Europe, primarily because most voters (correctly in my view), focus on the failures of their own governments in their voting patterns, they don’t blame everything on the EU (even when they probably should). This is quite sensible, as we’ve seen with Brexit what happens when people unthinkingly assume every evil originates from Brussels.
Austerity will end when people stop voting for it. The stupid restrictions created by the Eurozone are not insuperable – in fact, they have been ignored (not least by the Germans) when its been convenient. But blaming the EU will get the left nowhere unless it recognises that it has to create coherent arguments from local level upwards to undermine austerity and get proper fiscal and monetary policies built into every level of government. The nature of the EU is simply a reflection of voters preference for centre right parties for the last 20-30 years. That, sadly, is democracy.
I could not agree more, especially with your last para.
Left, in Europe (and I’d say most of the world) gave up the arguments in the last 20-30 years and if anything else, started to take more of the right-wing ones (state budgeting works as family one etc.)
The revolutionary left is NOT, by any margin, anywhere close to mainstream, in fact, if anything, extreme right parties have the same or more of vote.
Often because they do NOT want a revolution, they just assign the blame for the wrongs to a group of people that is easily identified and blamed (and it’s not necessarily immigrants. Gypsies for example are a good target group too, as are any “lazy gits who want benefits w/o work”, which tends to include all long term unemployed except the person complaining about it)
The left has to come up with a narrative again. You know, amongst the others, it has to come up with something that can give people something to be proud of – even if they have nothing much to do with it. The repression of any and all nationalism was IMO one of the stupider thing left ever did. We’re herd (or social, if you want a nicer term) animals, and feeling part of the group, especially if it can evoke some proud moments, is an important part of most peple’s psyche.
Hopefully Varoufakis can make Diem 25 something.
I’m sure the predatory neoliberal global capitalist pigs will fight it tooth and nail.
Vlade, PK, and Yves, many chats with family and neighbors during my residence in Italy since 2010 (and two other multi-year sojourns beginning in 1980) strongly support and amplify your reactions to this piece.
I reside in Emilia (arguably once Italy’s most civicly-engaged and socially cohesive region; see Putnam’s “Making Democracy Work” or “Bowling Alone”), which, until the Great Recession, had the kind of Italian Communist (the former PCI) political monoculture that the Democratic Party enjoyed in the US southeast prior to Great Society’s advent. And while the plural of anecdote is not data …
I know several multi-generation traditionally leftist and upwardly-mobile families whose current parental generation (not yet “credentialed class”) have achieved wealth in at least the top 20-10th %ile and whose university-graduate children are now in their mid-30s. None* of these children — whose parents at their age were stably-employed married homeowners with one or two small progeny — have stable employment that offers a clear career path, are married or have children, nor are homeowners. Some still live with parents, others in apartments purchased for them by their parents, and the rest rent. In these families:
The parental generation is uniformly and strongly opposed to even thinking about exiting the Euro and/or the EU. They are probably correct about the negative short-term consequences of such a move but steadfastly ignore its long-term consequence that Italian society is sure to reach Greece-level penury.
The children, when I raise the issue in their earshot, have no political response. They occasionally note how much they value passport-free travel and the convenience of a single currency, yet they still occasionally travel to European and non-European destinations where these advantages do not hold.
Thus, although this piece mentions but does not emphasize the “mushiness” of the current governing coalition’s nascent attempts resist EU-imposed austerity, I think the piece overlooks the extent to which this mushiness reflects the broad electorate’s current mood. Moreover, there is no sign of anti-austerity solidarity from Spain or France, or even from the formerly Soviet bloc EU members who suppport the current government’s attempts to force the EU to block in-migration (many of whom have not given up their monetary sovereignty and can therefore better fudge EU austerity rules).
It seems unlikely the new Italian government’s threats to break out of the austerity strait jacket will force EU policy changes unless and until a new economic disruption so severely damages the whole bottom 90% of the Italian electorate that it becomes more realistic about austerity’s long-term damage or their 30-something children become 40-something, knowledgeable or disillusioned enough to reject neoliberal economics, and form a cohesive electoral majority. I don’t expect to see any EU sparkle ponies in my lifetime!
* Sole exception: a son who recently won a competitive State school teacher position after many years in the queue. He will have secure but low-paid employment until the current right-wing government dilutes State employee security even more than the previous so-called “center-left” Renzi government did.
Is there an argument to be made that merely exiting the Eurozone would be a workable solution to reclaim some national fiscal agency and therefore side-stop some of the dictates of the treaty-law (and undemocratic) Administrative State? Because visa-free travel is far from the only tangible benefit of EU membership for Italy’s young. There is also the flexibility to reside and work elsewhere: an essential life-raft for those facing economic dead-ends. And, there are the EU grant transfers that are so essential for building up infrastructure and subsidizing communities in Northern Ireland, for example.
Hey PK,
“That, sadly, is democracy.”
That can’t be emphasized enough. People have voted for the faux lefty charlatans and then the actual neoliberal parties to repair the faults of neoliberalsim with more neoliberal policies.* (And there is always a cohort of our fellow citizens who, whilst being punched from above, then love to punch down. They may never reach the summits of dominant power but they can enjoy some fringe benefits by exercising their small privileges on those with even less or no power.)
The right/far right politicians of various stripes in all European countries and their attendant political “think tanks” have done a superb job of political maneuvering. They know their respective political systems, the cultural attitudes of the populations, and they have the communicative means to massage the message that toys with the desires and fears of those within an economic construct made to be precarious for all but the 1-10%.
But do you see an glimmer of hope for the EU institution where its component parts (countries) are all essentially neoliberal (of any variety) and command not only the means of local production but also control communication so tightly and effectively? I’m assuming an EU of neoliberal components will continue further towards a rightwards continental lurch, and the left (very, very broadly speaking), being so thoroughly infiltrated by those who secretly believe in neoliberalism, cannot effectively be an impediment to the momentum of neoliberal thought and practice. Right now its seems the Marcon syndrome and the Italian political reaction variously represent a new version of populism, which pretty much ensures a right wing tilt without ever addressing the underlying economic conditions that produce populism. Why would it confront itself when this is the situation the elite want and seemed to have worked to produce, and a situation in which the people are content to support through the ballot box?
Hat tip to the neoliberalists. They have played a political-economic blinder.
*I just can just about comprehend a difference between anglo neoliberalism and germanic ortholiberalism in theory but I just can’t see how their apparently different means don’t lead to the same economic conclusions in practice. Maybe they can be confronted differently and overcome differently?
I think the one minor piece of good news is that voters have seen through faux lefty charlatans across most of Europe. Unfortunately, in most countries this has helped the right, not the left. But I’m fairly optimistic that ‘real’ left wing groups such as Die Linke or Podemos are gradually replacing the older centre left.
As for the distinction between neolibs and ordoliberals, I make that distinction because I think that pure neoliberalism is very much an Anglosphere phenomenon. Its become worldwide because the US (in particular) has managed to foist in on international institutions. I think its a category error for many in the English speaking world to automatically think that all right wing free market thought in ‘neoliberal’ whereas in reality it takes a very distinctly different form in Europe (and for that matter, Asia or South America), so I tend to bridle a little when I see US/Oz/UK commentators talk about the EU as ‘neoliberal’. It is right wing, and pro-big business, but I don’t see it as quite the same as Finance led neoliberal thought. Economically, I think the key distinction between neoliberalism and ordoliberalism is that the latter is much more corporatist and mercantilist in instinct, so does not have an inbuilt hostility to the State as such.
Yeah, I see the distinction you make between the two, but I’ll need to do my usual plodding to see the distinctions more clearly. Such distinctions would suggest that the Left, such as it is developing, can approach problems differently within some countries in the EU. Consensus might be more easily bridged between labour and capital in states that aren’t too hostile to the democratic state itself. We shall see.
As to your point regarding your approach to the EU, I’d generally fall into the same category. It would so foolish to simply forget the fraught history of competition and attendant war that prevailed before more formal ties were instituted. Imo, it really is up to the smaller countries to create more common ground amongst themselves within the EU itself in the years to come, and maybe the Left can morph into something worthwhile to help that along.
As to your other point about the EU, I personally would consider myself a ‘soft’ Eurosceptic, by which I mean that I believe that the EU is not beyond repair. I believe very strongly in international co-operation and cross-national structures (how can anyone aware of European history think otherwise?) and in the absence of an alternative – and I’ve not seen any serious proposals for alternatives structures – then the only realistic target for the progressive left is to seek to strengthen the EU as a vessel for protecting individual rights, social rights and the environment, over and above the needs and desires of capital.
As someone who was more or less educated within German economic liberalism I would like to give you an example between the two as it could happen in practice. Imagine the question of privatising public serivces, or more generally the question of the role of direct government involvement in providing essential services and infrastructre.
As far as I can tell the usual way to do this in the anglo context or within neoliberalism would be to fully sell the company or license in question to a private concern with minimal regulatory oversight from then on. This usually leads to asset-stripping of the previously public enterprise, often a monopoly, including immense executive compensation, large dividendens and/or share buybucks and so on while the quality of serivce deteriorates and after the involved finance capital extracted everything it could the public is left with either a lack of serivce or has to fill to bill.
In comparison a German liberal would readily agree that the state should not provide the service itself and field similar arguments to the neoliberal but they would be quite statisfied with real competition achieved by forcing the goverment to tender everything to the general public so that the cheapest and in theory most effective offer may win. If the winning offer happens to be a company wholly or partly owned by the federal or a local government that would be fine as long as competition is assured. Private law companies owned by the public is in fact the way many public services like transportation, water, garbage, electricity… are provided in Germany.
I hope this example helps somewhat although the distinction is of course seldom this clear cut in real life.
that’s not entirely true
https://www.nextquotidiano.it/sondaggio-uscita-dalleuro/
according to those polls, while a majority of the Italians does not want to leave the Eurozone, a majority of them does not trust the EU. My interpretation of such contradictory results is that most Italians do recognize the failures of the EU to deliver socially acceptable politics, but at the same time are too afraid to draw such a radical consequence as to abandon the common currency. Yet, as justified as such fears may be, – such an exit, even if one regards it as the best solution for some countries, could be highly disruptive, they are constantly fueled by the mainstream media and the establishment controlling them. So, I’d say that such discrepancy (adherence to EU and Euro, distrust of EU) reflects what happened in Greece before: a majority rejected the austerity politics dictated on Greece by the EU (mainly the surplus countries controlling its institutions) but was at the same time too afraid to draw the radical consequence of such rejection: Leaving the Eurozone.
As for your generalized claim, that Europeans continue to vote for pro-austerity parties: It is certainly true for the countries which mostly profit from how the Euro regime actually works, the surplus countries, especially Germany (In germany, where I live, every party, with the exception of Die Linke, is pro-austerity, and the say it openly, accepting Schäubles mystified Schwarze Null).
But if you look elsewhere, there are a lot of cases where explicitly anti-austerity parties have gained a majority, even though some later have either receded from that posture (PS in France with Hollande) or have been forced to do so (Syriza in Greece), in Portugal the center-left government has partly succeeded in maintaining it. In Italy an explicitely anti-austerity party (M5S) has gained most votes, while others (Lega and Fratelli d’Italia) clearly declare themselves as anti-austerity, I wouldn’t even count Berlusconis FI as pro-austerity, at least programmatically. In fact, no party, even the PD, would declare itself as explicitely pro-austerity (though they declare themselves as clearly pro-EU), even though they have been executing it all the time.
As for the article, just two notes: I’ not sure that the only political party further to the right than Lega would be Casapound, I think Fratelli d’Italia, the successor party to the neofascist MSI, would indeed be further to the right than Lega.
Secondly: characterising the M5S as anti-immigrant is highly misleading, as you can see by reading this official document coveying the programmatical position of the party. Claiming the M5S to say anti-immigrant conveys the impression that the party is opposing immigrants, people who for whatever reasons, decide or are forced to leave their country. This is not the case, as you can read in that document. What the M5S contests are not the immigrants, but the way immigration has been handled at the EU level, disregarding the principles of solidarity and responsability declared on paper and leaving the most affected countries, such as Italy and Greece, alone.
https://www.movimento5stelle.it/programma/wp-content/uploads/2018/02/Immigrazione.pdf
“Austerity will end when people stop voting for it. The stupid restrictions created by the Eurozone are not insuperable – in fact, they have been ignored (not least by the Germans…. ” I’m not so sure . Being the real policy-makers and the real powers outside the internal political democratic sphere, vote becomes growingly irrelevant. This is ratified and guaranteed by both the institutional restraints of Eurozone and by the material hierarchies of power ( Germany by the way , who is ignoring those rules which are not convenient for her etc etc ). I quote one of knew a lot,the then Bundesbank governor H.Tietmeyer “European governments have finally chosen the path of abdication with regard to fundamental decisonal powers , in favour of the monetary experts . It’s a way that privileges the permanent plebiscite of the world markets against the plebiscite of the ballot box ” (1998).
This has a lot to do with my country present situation, it’s somehow not so relevant to analyse whether or not the current government or the electorate is pro- or anti-euro, pro – opr anti EU ,populist, neoliberal , ordoliberal, whatever,what is cooking , for institutional design, as far as I can understand, is what is described by Olivier Blanchard and others here : https://piie.com/blogs/realtime-economic-issues-watch/how-worried-should-we-be-about-italian-debt-crisis
“The second question is easier to answer than the first. A crisis could be horrific, for two reasons. First, none of the powerful stabilization instruments that the euro area has developed over the years could be deployed to rescue Italy. Following crisis-related downgrades, Italy would no longer be eligible for the ECB’s quantitative easing bond-purchasing program. The ECB would stop accepting Italian bonds as collateral. Access to emergency support programs—the ESM, and through it, the Outright Monetary Transactions (OMT) program—would be conditional on fiscal adjustment, the opposite of what Italy’s new government has promised. Unless the government were to change course, it would be forced to exit the euro, even if this is not its current plan…..”(excerpt ) . I’m not very confident that any political majority in Italy, confronted with the alternative of betraying electoral promises , regardless their goodness or badness, or following the path of disruption, will choose the latter. We’ll see.
The idea that people are ‘voting for austerity’ is simplistic to the point of being inaccurate and feeding into the noliberal propaganda. What are their options, is there a choice, what if all alternatives are implementing neoliberal policies to some degree or another?
This also fails to account for how neoliberalism works, its capture of state and decision making institutions including academia, economists, the media and the widespread propaganda that accompanies it. Neoliberalism certainly does not depend on people exercising their democratic choice to thrive and expand, on the contrary its about rendering democracy meaningless as far as economics is concerned.
It’s only recently there is pushback against neoliberalism and questioning its tenets from a small minority, for more than 30 year ago a lot of dubious ideas have simply been passed off as accepted wisdom by economists, think tanks, the media and politicians.
I have to agree – a very simplistic view. The truth is, the reality has been, and is being, consistently distorted and no real choices are offered. Starting right after WWII, the US made sure that voters in W. Europe had no real choices (just check out what J Colby did in Italy in the 1950s). Not that some E. politicians did not help.
On a more illuminating side, this is a VERY good review of Globalists: The End of Empire and the Birth of Neoliberalism, Quinn Slobodian. I don’t know if it’s been linked to at NC – if yes, sorry – but still, it bears repeating – https://bostonreview.net/class-inequality/j-w-mason-market-police
The foundations of EU are built on the denial of democratic principles.
A fundamental problem-and yes, there are several creating synergy which is initially hard to unravel- is lack of voter participation: From apathy, disgust or whatever. Another is ignorance- so few understand much about why austerity is ever and alwaysThe Narrative. If MMT- basically it’s not really hard to grasp- was more known about generally, it would start to corrode some of the bs constantly being peddled as “common sense economics”; it would get the right questions being asked and that would be a big step.
Look at the FB investigation; hardly anyone had much idea what the scale/direction of the issue was/is even now. Dark Money out-manoeuvres everyone because its unlimited access to mass media and insidious infiltration of all salient pressure points- via revolving doors etc.
Today, as Michael Hudson reports in NC, the enormous loan to Argentina is hardly even noticed. Why? Because the hijacked/ skewed narrative means everyone is overlooking the giant elephant staring them in the face. Austerity is simply insane and is crippling the world’s financial structure and it’s linked to the proliferation of extractive financial strategies. More people need to see this for themselves and then more concern will emerge about what’s going on…and ordinary Jo’s and Joanna’s will see what’s going on around them and that their participation is absolutely crucial.
For most, Thatcher’s analogy of household finances still rules how they see all “economic issues”. That needs to change, and education is the key, like Jeff Epstein on @Citizensmediatv explaining to Graham Elwood.
Thanks to Yves and the team for being out there helping us guys along the way. I appreciate it and I know there’s not too many God Guys left here in 2018
“The nature of the EU is simply a reflection of voters preference for centre right parties for the last 20-30 years.”
PK feels that austerity has been imposed because voters choose to vote for pro-austerity parties. I don’t know the situation in every European country, but for the last 20 years British voters haven’t been offered anything else. “New” Labour under Blair and Brown masqueraded as left of centre, but hewed to the hard right, saddling the country with massive PFI debts and the chaotic aftermath of serial wars.
Yes, it’s true that in the UK it’s often possible to vote for a Green candidate, who opposes austerity. But the FPTP voting system has long been skewed in favour of three right-wing, neoliberal parites. If percentages of the actual vote mattered, we would have more than one Green MP. Perhaps Labour is shifting out of neoliberal austerity mode at last. We shall see.
A self-reinforcing feedback loop has developed from an economics that was corrupted in the 19th century, neoclassical economics.
The Classical Economists observed the aristocracy living in luxury and leisure without doing anything economically productive, they were parasitic rentiers feeding off the economic system.
“Income inequality is not killing capitalism in the United States, but rent-seekers like the banking and the health-care sectors just might” Angus Deaton, Nobel Prize Winner
The US doesn’t know there are two sides to capitalism, the productive side and the parasitic side, where the rentiers feed.
The ideology of neoliberalism was developed from this corrupted economics and rolled out across the world.
Rentier capitalism is a consequence of the corrupted economics that is the root of the problem.
I realize I can be a bit of a “language-Nazi” – so I will do my best to tone it down. Sadly, though, this piece is so horribly written/edited that, from the gitgo, I wasn’t very willing to follow along.
Now, this might be a simply typo, but one would think that if the author is going out of his way to use this example, he might check the (family blog) numbers:
“There seems some disagreement as to whether Nero played the violin or the harp as Rome burned in AD 64. Whatever happened 1554 years ago, there was…” Is the author still in 1618?
From the 3rd paragraph: “The refusal did refer to thee proposed racist immigration policies, nor to its aggressively anti-Roma policies.”
thee = these? three? the?
nor = not? or is there a “not” missing in the first part of the sentence?
In the paragraph beginning “No metaphor is necessary” the (non-) word “const” appears. Did the author neglect to even use spell-check? (thankfully, this mistake translated easily into “cost”)
I won’t badger you with more examples.
My point: when an author – in this case a professor emeritus from the UK – can’t be bothered to perform miminal editing of his work (or ask someone else to edit it), I can’t help but wonder if it’s truly worth reading.
In terms of content: I found the NC comments more enlightening (not to mention better written!) than the actual article.
Not going to make myself popular here but I would suggest that maybe it is not a matter of people preferring centre-right politics at all. I think that there has been a decades long program to capture parties that tend to the left and to demonstrate how little choice voters have these days, I will give three examples.
First the US. Look at the last US election. 335 million people and at the end of the day the people only had a choice of Trump and Clinton – two sides of the same coin. And the left in America? If it was any more missing as a movement, they will have to put their image on the side of a milk carton.
The UK next. Remember when people chose Labour back in ’97? They thought that they were choosing a party to help represent the workers, What they got instead was a party of interventionist neoliberals. Classic bait and switch. To this day Blair is still despised in the UK.
Finally Germany. Decades ago I met many people in Germany that supported the Greens but the articles that I have been reading lately show them to have been captured by what suppose you could call atlantisists. Where does that leave voters a party to choose from? Most parties aren’t listening to ordinary voters so you give your vote to a bunch of rat-bags to get the main parties attention. Sound familiar? Voting for centre-right and nationalist does not always indictate voter’s preferences. Often it was the only choice left to them.
I’d say your statements are spot on.
I’d also say that many on the centre-left believed some of the neoliberal arguments and logic about free markets and so forth, thus making it easier to co-opt left leaning party policies across an entire gamut of countries. However, as the economic landscape was shaped to the wishes of the neoliberals along with some attendant population cohorts, the neoliberals were always on the fore foot to further their agenda. I would contend that the rise of populism fits nicely with their broad goals. They need not have envisioned populism as a means to further their agenda, but they are well placed to reap the produce of populism. Neoliberals always seem to able to shift gears quicker and manoeuvre more deftly than any other political formation out there.
The Left, such as it is, has become somewhat woeful. They would have been, in my sadly wasted youth, much more ‘visionary’ and coherent than formations like neoliberal parties. It seems the old Left found it easier to pursue less risky liberal policies instead of confronting the changing economic landscape and those who were instituting the changes. Were they just confused, bought, just too stale, or some combination thereof? It will be up to a different inter-generation, imo, to find new ways to deal with the tough dilemmas and fight the new battles.
I think the DSA in the USA has a very good strategy for the moment. They seem to be stronger by being a lobbying group rather than a formal political party. They need not use scarce resources to deflect negative news coverage but can instead focus on concrete, material benefits for their supporters.
I think one of the problems of being part of 99% is that the 99% must be by definition a heterogeneous group, often with seemingly conflicting wants and needs. Until the Left learns to make savvy compromises and a few worthwhile alliances, while maintaining a core vision, they can’t deliver to anyone on a meaningful scale.
I think there’s an element of chicken and egg there. I remember living in boomtime Ireland with left wing parties arguing for more of the same, including tax cuts. To make an opposing argument at the time, whilst being honest, would have been an extremely tough call to make. I think there’s truth in what you say, but I think it’s only a partial truth.
Regarding, the left, and milk cartons. I sometimes think the same, but there are times, (admittedly when I’m wearing rose tinted glasses), when I see it differently. I think its a category error to see the left as a monolithic entity (entities?) in the style of right wing parties. It’s only really true where systems are locked rigid around institutions of sorts, (eg. the UK’s first past the post, or the US with it’s two party lock). In both those cases, the parties of labour and the democrats really act as forums or factional coalitions, whereas in proportional vote systems, new parties arise all the time. With the latter, it’s the coalition of these new parties that form the left. Within the former you have to look for the rise of the likes of Sanders and Corbyn.
I believe this is one of the problems of the left, but also one of its strengths. That it is less an institution than the expression of grassroots sentiment leads it to fracture across ideological lines and makes it immensely vulnerable to shifts in public opinion. It also makes it very vulnerable to populist movements. However, it also makes it impossible to eradicate. It exists because of need. With all that said, I do think its success depends on the cohesiveness of a society, or rather, there being a broadly speaking accepted narrative within a society.
The EU is completely unnecessary for the maintenance of peace in Europe.
Nobody in Europe is going to be trying to conquer any territory in Europe. Take one look at the demographics: today’s Europeans aren’t a bunch of lebens looking for some more raum, instead the Europe of today is a bunch of raum looking for more lebens.
Nobody in Europe is going to be waging much war outside of Europe, unless the Americans want them to. Not one European country can wage a war abroad without obtaining at least tacit American permission.
Nobody in Europe is going to be vying for world domination, unless they try to topple the USA from its perch. But the USA has nukes.
So if none of the Europeans can try to rule the world, and none of the Europeans can do much empire-building unless the USA lets them, and none of the Europeans need to acquire territory within Europe, what kind of wars would a disunited Europe, in the world of today or in the world of the foreseeable future, ever really be able to fight?
The European integrationists who harp on the peace issue are like Squealer in Animal Farm trying to tell everyone that “Jones will come back!”
No, Jones ain’t coming back. European peoples should manage their approaches to the unity question without any fear of serious armed conflict within Europe.
Indeed, it is the European integrationists who nowadays are the bigger threat to peace both in Europe and elsewhere in the world. The European integrationists are mostly globalists, and they like to have their countries tag along with whatever war the American hegemon happens to be waging.
The European liberal integrationists are also promoting domestic strife in Europe through their completely mistaken approach to the low fertility issue. The liberal integrationist solution to the demographic problem in Europe is to populate Europe with more and more non-Europeans. People in Europe did not pursue European integration with the idea of radically altering the ethnocultural composition of their countries.
While not entirely clear, one could get the impression, that the article claims, that austerity is unpopular across the EU and – considering this part as well
– only a small elite in Germany favours it.
The reality is very different. Austerity is very popular across large parts of the population not only in Germany but at least as well in the Netherlands and in Finland. Fiscal surplusses are seen by many now as a goal in itself rather than even a means for anything else.
So if the previously quoted part refers to only the Southern European people, there is another reason for governments to accept austerity and it is not the Maastricht treaty as implied by
Of course, the 3% rule can be ignored for a small penalty like committing a foul in football/soccer and getting a yellow card. The real restriction to fiscal deficit spending by Southern European countries is the capital market, that will demand immense interest rates. The only way out would indeed be ditching the Euro with all the consequences of immediate capital flight at announcement etc. as discussed already on this blog.
As well, membership of the Euro lowers interest rates for countries and has done so since a few years before membership, e.g. in Spain real interest rates before the agreement on the Euro were about 2% higher than in Germany. Today the difference is about 1%. In 1995, according to trading economics GDP on a PPP bases was 24,500 and in 2017 about 34,300 (40% growth). The numbers for the UK were in 1995 about 28,400 and in 2017 39,800 (40 % growth). So despite the perceived destruction, the Euro-crisis had in Spain, it still has grown in that time the same as the UK. Is everybody really sure, that the Euro is such a bad idea?
In general – given, that e.g. the Netherlands continuously run a higher current account surplus than Germany – I don’t think the Germany-bashing in the article is the result of rational thought.
Quite amazing really that center-left politicians go along with Neoliberal dogma on money creation especially considering 70 years of Soviet Russia’s government creating money from nothing after closing down private banks. Under-education would appear to be a sine qua non to become a politician!
I don’t think Soviet Russia is an example worth following (and while it may not have had private banks, it had state-run banks which, from the point of money creation, operated in the same way).
Depite the fact that USSR had the potential to become an autarky, it ended up being massively dependent on imports, including on imports of food, and had a perenial problem paying for trade (even with its socialist block partners). In fact, it’s a prime example of how having your own currency means not that much if you have to trade.
All Communist countries with the exception of Hungary, had currencies that in theory were worth something, but in practice wern’t worth bupkis. Only the Forint had an exchange component.
When I dealt in physical foreign exchange for a large firm in L.A., I was told under no circumstances to ever do a deal in said currencies, as they were a joke, disguised as money.
A Soviet Ruble was valued @ around $1.50, but you could pick them up in the west for 1/3rd of that amount, and of course there was nothing to spend it on, and if you were caught smuggling them in, there’d be hell to pay.
When I went to visit East Germany – East Berlin actually – I found that all the coinage was made from aluminum. It was feather light and did not give one confidence in the economy but it was still illegal to take them out of the country. I still have mine as souvenirs.
I drove to East Berlin from somewhere in Bavaria in the mid 80’s with a buddy, and we went from a multi-laned autobahn capable of 150 mph, to a split lane single autobahn where you could go 80 mph, with all of the greenery alongside cut back a few hundred feet, and occasionally you’d see machine gun nests, which was a bit creepy.
To add a little tension to the trip, we nearly ran out of gas @ one point en route, yikes!
Yes – but why? It was all a part of the economic strangulation of the socialist countries by the west. Leaving that out of the picture seriously distorts reality.
The USSR may have imported a lot, but it paid for it (to the socialist countries) with significantly discounted energy supplies. Not looking at the whole picture does no one any favors in trying to understand the past.
Where to begin? Maybe at the ECB. To paraphrase Wukchumni above, it’s a joke disguised as a bank. The ECB will not accept Italian bonds if the economy is inflating too rapidly. Here we have a system of state and muni bonds which are penalized for too much debt and ultimately cities go bankrupt and drink polluted water for lack of affordable financing. Something is going dark. We need new analysis techniques to find out where. The EU it is foundering on the false connection between the EU and the euro. The euro has nothing to do with the EU, it is not based on bedrock democratic social cooperation at all. The euro is counterfeit. That’s how democracy has come to smother democracy.
Austerity is the hallmark of the neoclassical economist / neoliberal
They think it will work because they don’t understand debt, money or how banks work.
They don’t consider private debt and this is why they didn’t see 2008 coming.
https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png
The IMF predicted Greek GDP would have recovered by 2015 with austerity.
By 2015 it was down 27% and still falling.
The neoclassical economist doesn’t know where the money supply comes from.
The money supply ≈ public debt + private debt
The “private debt” component was going down with deleveraging from a debt fuelled boom. The IMF then wrecked the Greek economy by cutting the “public debt” component and pushed the economy into debt deflation.
Richard Koo had to explain it to the IMF.
https://www.youtube.com/watch?v=8YTyJzmiHGk
You just need to understand money, debt and how banks work.
Austerity will end when people stop voting for it – I have no opinion of whether this statement is accurate or not. What I am curious about is how much this can be explained by George Lakoff’s Moral Politics theory. The austerity meme strikes me as coming from the “Strict Father” view that Lakoff mentions. People connected with MMT such as Stephanie Kelton have mentioned that we’re fed this “government is like the household budget” idea when the reality is different.
I believe people carry around life scripts or metaphors of how the world works. Some of these “scripts” come from our genes, our personal neuro and biological makeup, and our temperament. Jonathan Haidt has mentioned the biological aspect of liberal vs. conservative towards the end of his book Righteous Mind.
However some of these scripts/metaphors are programming and modeling we received from parents, school, culture, government, and the media.
Getting off the metaphor train, I think the ideas Nick mentions above make sense:
A fundamental problem-and yes, there are several creating synergy which is initially hard to unravel- is lack of voter participation: From apathy, disgust or whatever. Another is ignorance- so few understand much about why austerity is ever and always was The Narrative
But also other commenters like Rev Kev who mentioned that voters are not given a lot of leadership or choices:
I think that there has been a decades long program to capture parties that tend to the left and to demonstrate how little choice voters have these days
In sum I think “some” of Lakoff’s and others ideas of metaphors in politics makes sense. The politicians, oligarchs, and CEO’s just put out the same trope and people fall in line because it has been ingrained in them through genetics and environment and we follow along. But as more sites like NC and others pull the curtain back on the propaganda and lies, and citizens become more informed then maybe there is hope.
But in the EU austerity baked into the treaties. There was, and is, no chance to vote on the subject.
How did those votes in Italy, Greece and Spain go?
I thank everyone for the perceptive comments, which reflect deep concern about the political conditions in Europe. First, I apologize for the date typo in the first sentence. Second, on opinion polls in Italy, it is my reading of them that a majority of those polled support membership in the euro while being critical of the role of the EU leaders. Third, the British experience of the last three years indicates that when offered an end to fiscal austerity a large portion of the population votes for it. Fourth, a progressive quandary in Italy is the extent to which the electoral outcome resulted form anti-immigration racism and the extent to which it was a revolt against austerity. Finally, whatever one’s other opinions, we all seem to agree that the resurgence of fascism is real.