The election results in France and Greece (6 May), and the forced resignation of militantly neo-liberal Dutch prime minister Mark Rutte (23 April), have thrown economic policy in the eurozone into flux.
There are four main distinct approaches in play. The debate between them has scarcely started in the British labour movement, where even the would-be Marxist left has so far mostly limited itself to a sort of conservative syndicalism: opposing cuts in Britain, advocating more militant tactics, applauding resistance elsewhere in Europe, and commenting that the EU leaders are making a mess of things.
There is debate in Britain among economists. Jonathan Portes, head of the National Institute of Economic and Social Research, former Chief Economist at the Cabinet Office, and an “establishment” economist if ever there was one, responded to the French and Greek elections by declaring that “the idiots in Brussels”, “the austerity crowd”, had “lost the arguments”, and economic life should now be boosted by a big and concerted programme of public spending on infrastructure (roads, rail, schools, hospitals, housing, other public facilities).
The Marxist left should break from its defensive, hunkered-down stance, and take the debate into the labour movement.
Until now neo-liberal policy has dominated. It proposes that governments which cannot borrow on open global financial markets, or have difficulty doing so, must mend their position by huge social cuts.
It advocates strict budget-balancing even for the better-off countries like Germany and the Netherlands; and, indeed, constitutional amendments across Europe to make balanced budgets compulsory except in extremes. To demands for “growth” it responds that the only way is via “labour market reforms”, in other words smashing up workers’ rights, making labour markets ultra-flexible for the bosses, cutting social overhead costs.
Like George Osborne’s policy in Britain, it is above all a policy for the bosses and bankers to “use” the economic crisis to their advantage, in shifting the balance of class forces further against the working class (and, they hope, permanently) — rather than a policy to ease the crisis.
Its priority, as Angela Merkel put it in December 2011, is to “show [footloose global capital] that Europe is a safe place to invest”.
It is an arrogant policy which risks provoking serious nationalist backlashes against the slowly-evolved reduction of barriers within Europe. It means unelected European Union officials monitoring each elected government’s budget each year and vetoing it unless it includes enough cuts and marketisations.
There is a Euro-Keynesian approach. It advocates easing the credit difficulties of the Greek and other governments by lending on easy terms from the European Central Bank, or by the issuing of Eurobonds guaranteed by the collective creditworthiness of the eurozone.
It favours a wealth tax to raise revenue, but opposes rapid deficit reduction through social cuts, and says that better-off countries positively should be running large government budget deficits so as to boost market demand across Europe. It calls for audits of government debt, and repudiation of parts of it.
It demands a big expansion of the budget of the European Union itself (as distinct from member states), and EU-financed investment projects in the worse-off countries.
Many left-wing economists advocate the full Euro-Keynesian package. Left social-democrats, notably Syriza in Greece, advocate versions of it. Jean-Luc Mélenchon, the left social-democrat candidate in the French presidential election, said that the European Central Bank must be placed “under democratic control to allow it to lend at low — or even nil — rates, directly to the states, and to buy public debt”.
Shreds of Euro-Keynesianism can be found right across the mainstream political spectrum, through François Hollande to the fiercely-cutting “technocrat” Italian prime minister Mario Monti and the IMF, and even in the recent statement by neo-liberal German finance minister Wolfgang Schäuble that “it is fine if wages in Germany currently rise faster than in other EU countries”.
At an angle to the range from Schäuble to Syriza are two other approaches: the national-Keynesian and the revolutionary socialist.
Far-right groups like the Front National in France push the most popular version of the national-Keynesian approach: quit the euro, import controls, reindustrialise, more government regulation of the economy and the banks. The FN upholds the interests of smaller-scale French capitalist businesses who orient primarily to France’s internal market and are indifferent or hostile to France being a “safe place to invest” for global capital.
A FN government would block migration; scapegoat and harass the immigrant workers already in France; and enforce “government regulation” in the shape of crushing the labour movement and democratic rights.
There is a left-wing version of the national-Keynesian approach, similar to the “Alternative Economic Strategy” popular in Britain’s Labour left in the 1970s and 80s. Groups like the KKE in Greece suggest that if countries quit the EU, reimpose controls on trade and capital movements, and use government to promote domestic industry, then the labour movement can win better conditions in the national framework than in a wider one.
Revolutionary socialists agree that no national labour movement should wait for a cross-European movement.
A workers’ government in a single country, emerging in advance of a large cross-Europe revolutionary working-class movement, would have no choice but to defy EU rulings and face exclusion from the EU. It would have to use economic border controls to sustain, as best it could, an economy within that country dominated by workers’ control and economic equalisation, and to navigate within the world market.
An isolated workers’ government could only be a temporary makeshift. The workers’ revolution would have to spread to other areas quickly, or collapse. Over 150 years ago, in the Communist Manifesto, Marx and Engels wrote that “united action, of the leading civilised countries at least, is one of the first conditions for the emancipation of the proletariat”, and the international intertwining of the forces of production has increased hugely since then, especially in Europe.
We therefore advance, in the first place, a cross-Europe programme, with these main points:
• Tax the rich, Europe-wide.
• Expropriate the banks and the big corporations, Europe-wide. Put them under workers’ and democratic control. Gear their resources to the reconstruction of public services, decent jobs, and social welfare.
• Thorough-going democracy across Europe. Social levelling-up across the continent, to the best level of workers’ rights and conditions won in any part of it.
• Win workers’ governments across Europe, and join them in a democratic federation.
Too extreme? Unrealistic? Leon Trotsky met similar objections in the 1930s. “The masses do not come to us because our ideas are too complicated and our slogans too advanced. It is therefore necessary to simplify our program, water down our slogans — in short, to throw out some ballast”.
He responded: “Basically, this means: Our slogans must correspond not to the objective situation, not to the relation of classes, analysed by the Marxist method, but to subjective assessments (extremely superficial and inadequate ones) of what the ‘masses’ can or cannot accept. But what masses? The mass is not homogeneous. It develops. It feels the pressure of events. It will accept tomorrow what it will not accept today. Our cadres will blaze the trail with increasing success for our ideas and slogans, which will be shown to be correct, because they are confirmed by the march of events and not by subjective and personal assessments”.
Trotsky also argued that where the revolutionary socialists were a small minority, they should not limit themselves to reciting their programme and waiting for support to arrive, but should also seek leverage in the debates and battles opened up by the inadequate programmes of bigger forces.
The French and Greek elections, and the Dutch government crisis, which have showed that the capitalist classes’ European strategy is in trouble, have also showed that the revolutionary left is still small (1.2% for Antarsya in Greece, 1.8% for NPA and Lutte Ouvrière in France), and that so far the shift to the left is a shift to left social democracy (Syriza in Greece, SP in Netherlands, Mélenchon in France).
In 1934, for example, Trotsky polemicised with his Belgian comrades when they wanted to respond to an economic “labour plan”, of a vaguely state-capitalist sort, proposed by the big social-democratic party, just by scorning it.
Trotsky agreed that “it would be more correct to call it: the plan to deceive the toilers”. He agreed that, as such, it was only “a new, or a renovated instrument of bourgeois-democratic (or even semi-democratic) conservatism”. In fact, the author of the Plan, social-democratic leader Henri de Man, would become a collaborator with the Nazi occupation in World War Two.
Told by his Belgian comrades that “the working masses are absolutely indifferent to the Labor Plan and are in general in a state of depression”, Trotsky said he didn’t know, but accepted there might well be “a certain nervous exhaustion and passivity of the workers”.
Yet he insisted that “our task is twofold”, and not just one of expounding and scorning. “First, to explain to the advanced workers the political meaning of the ‘plan’, that is, decipher the manoeuvres of the social-democracy at all stages; secondly, to show in practice to possibly wider circles of workers that insofar as the bourgeoisie tries to put obstacles to the realisation of the plan we fight hand in hand with the workers to help them make this experiment.
“We share the difficulties of the struggle but not the illusions. Our criticism of the illusions must, however, not increase the passivity of the workers and give it a pseudo-theoretic justification but on the contrary push the workers forward. Under these conditions, the inevitable disappointment with the ‘Labor Plan’ will not spell the deepening of passivity but, on the contrary, the going over of the workers to the revolutionary road” (emphasis added).
A similar approach had been taken by the German Communist Party in 1921-3, increasing its mass support, and putting it on the brink of a revolutionary situation in October 1923 (which, however, under Stalin’s malign guidance from Moscow, the Communist Party then botched).
Rapid inflation in Germany meant that the bosses could, by delaying tax payments, make them nominal. Deprived of revenues, the government had to print money to keep going, which in turn produced more rapid inflation: a vicious circle.
In May 1921 the Social Democrat minister Robert Schmidt proposed “appropriation of real values”, or “Sachwerterfassung”: the government should tax capital by taking a 20% share in all businesses. That would both help the government guide the shattered economy and bring in real income.
The government never implemented the idea, but it gained popularity in a working class angry that pay-as-you-go taxes on their wages were the only taxes being collected effectively. The Social Democratic-led unions took it up, demanding a 25% share.
In November 1921 the Communist Party decided to pick up on the demand for “appropriation of real values”, proposing it at a rate of 51% to allow public control of the economy.
Through to 1923, “Sachwerterfassung” became a major theme of CP advocacy, soon linked with the call for a “workers’ government” (a joint Communist-Social Democrat government which would carry out a specified series of radical measures, such as the “appropriation of real values” and workers’ control over production).
The left national Keynesian programmes cannot be used for leverage in this way, because trying to do that would pull us into the false position of advocating the rebuilding of barriers between nations as a desirable first step (rather than as a temporary expedient maybe necessary if one national labour movement moves far ahead of others).
We cannot endorse the Euro-Keynesian programmes as a “first step”, because they beg the question of how to deal with the banks’ resistance; in general they dodge the issue of “labour-market reform” (in fact, the more mainstream versions openly support “labour movement reform” and cuts in current social spending, arguing only that those cuts should be offset by public investment spending); and in general they are advice to the ruling classes rather than mobilisation plans for the working class. Even Syriza's unusually radical version is more a set of ideal government policies than a working-class action plan, and fails to gear up Greek workers for the necessary struggle (against the EU leadership, but also the Greek state machine, police, army) if a Syriza-led government comes to power.
We can take many elements in the Euro-Keynesian programmes — cancellation of debt (at least partial); increased social spending (at least on investment projects); democratic control of the ECB — and sharpen and build on them.
In that way our criticism will not increase passivity — by suggesting that nothing but a uniform shade of grey is possible until everyone first rallies round the revolutionary socialist minority — but make the most of all the divisions and disputes within the system.