The Union of European Colonies

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Writes Thomas Fazi ...

... the EU’s economic and political ‘constitution’ is structured to produce the very results that we are seeing today – the erosion of popular sovereignty, the massive transfer of wealth from the middle and lower classes to the upper classes, the weakening of labour, and more generally the rollback of the democratic and socioeconomic gains that had previously been achieved by the subordinate classes. Indeed, it is designed precisely to impede the kind of radical reforms to which progressive integrationists or federalists aspire. 

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In the EU – and especially in the monetary union – macroeconomic policies are effectively insulated from the popular-democratic process, as member states lack the basic economic tools that would allow citizens to steer their countries’ economic polices away from the Berlin-Brussels-Frankfurt consensus. The European Commission’s ‘ridiculously ferocious attack on Italy’s mildly supportive fiscal policies’, in the words of Michael Ivanovitch, former senior economist at the OECD – as well as, of course, the treatment reserved in 2015 to the SYRIZA government – provide ample proof of this. 

As the late, great British economist Wynne Godley presciently wrote in 1992, ‘the power to issue its own money, to make drafts on its own central bank, is the main thing which defines national independence’. Thus, by adopting the euro, member states effectively acquired the status of local authorities or colonies, as is becoming increasingly clear. The scope of the European treaties, however, extends well beyond fiscal and monetary policy. The treaties effectively embedded neoliberalism into the very fabric of the European Union, outlawing the ‘Keynesian’ polices that had been commonplace in the previous decades. 

That said, it is certainly true that many technical measures could be taken at the European level to stimulate the economy and make debt permanently sustainable, even within the current treaties. Countless such proposals have been put forward over the years. But the current balance of power among the member countries and the neoliberal path dependency of the European Union and eurozone makes such change politically unviable. 

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Still less realisable is a radical reform of the treaties in a more solidaristic and Keynesian direction. This would require a ‘eurozone government’ to run budget deficits with the support of a reformed ECB, full debt mutualisation, permanent fiscal transfers between countries, and so on. Let’s take a minute to think about what such sweeping institutional reform would entail. First of all, it would require left-wing governments coming to power in every single country of the union more or less at the same time (we have already seen what happens when one country tries to go it alone). After all, the only way to modify the treaties is through unanimity in the European Council. One doesn’t have to be particularly pessimistic to see why that is never going to happen.

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