Neo-liberal restructuring in Europe has come up against its internal contradictions. It has reached its limits. Germany’s export strategy, based on cuts in wages and working conditions, cannot be replicated by everybody else. If one country has such a drastic surplus in trade, others must absorb these products. Even more severely, the Eurozone crisis has highlighted the unevenness of the European political economy. Super-profits reaped in core countries such as Germany were re-invested in state bonds of peripheral countries only in order to purchase yet more goods from the core. This circle could not go on forever and there is no potential solution from within neo-liberalism able to cope with this crisis (see Europe and the limits of neo-liberalism).
In this post, I will assess several potential future developments including an extended period of muddling through based on increasingly authoritarian rule in the periphery, a right-wing xenophobic backlash as well as progressive responses moving us beyond neo-liberal restructuring.
While neo-liberalism has no solutions at its disposal to solve the current crisis of the Eurozone and sovereign debt, this does not imply that it will automatically collapse. On the contrary, a potentially rather lengthy period of continuing muddling through is well possible. The Fiscal Compact of the EU prescribing austerity across Europe is the key here. In countries in Europe’s core, this implies severe cuts to public services and a further restructuring of the state. The UK is a good example in this respect. The health service is cut back, restructured and partly privatised, higher education is increasingly commodified through the introduction of exorbitant fees of up to £9000 per year, disability entitlements are further restricted, the list could go on. At the same time, the overall wealth available is still considerable. People will be pushed out of society with some from poorer backgrounds, for example, no longer able to access University education. In general, however, while inequality rises yet further, large parts of the population still live in good enough conditions to continue going along with the system. Hence, a coalition government of Conservatives and Liberal Democrats, pursuing many policies which the previous Labour government had actually initiated, is sufficient in the political arena to carry through the savage cut-backs. And when there is social unrest by those who are excluded from the benefits of the core, who in other words constitute a social periphery within the core, such as during the riots in the summer of 2011, then enough police is at hand to ‘maintain order’ supported by judges, who hand out draconian punishment. Resistance movements to the cuts, as for example the Coalition of Resistance, find it difficult to mobilise more widely against budgetary restraint, often supported by slogans in the media such as ‘we are all in the same boat and have to contribute our bit’.
The situation differs, however, in the periphery of Europe. Here, cuts have been so severe that they have put many people to their existential limits. In Athens, soup kitchens are busy to provide meals on a daily basis to an increasing number of impoverished citizens. Here, a grand coalition of the centre-right party New Democracy and the centre-left party PASOK, which had dominated Greek politics for decades, was defeated in parliamentary elections on 6 May 2012. More and more police has to be deployed on the street to maintain public order, technocratic government has replaced democracy (see ‘Who is in Charge? Democracy versus Technocracy’). In general, a move towards authoritarian neo-liberalism can be identified with the clear objective to secure the privileges of capital and the rich against workers and the poor.
And yet, it is also the periphery, where potential alternative developments are in the process of emerging. First, there is the clear risk of a move towards a nationalistic, xenophobic right. The success of the fascist, neo-nazi party Golden Dawn in Greece, which entered parliament with almost 7 per cent of the votes on 6 May, confirms this danger. Not all resistance against neo-liberal restructuring will automatically be progressive. On the other hand, progressive alternatives too may emerge in Europe’s periphery. Here, the question of whether Greece should leave the Euro or should stay and push for a re-arrangement of its set-up is secondary in my view. What is more decisive is the push for solutions, which go beyond neo-liberal capitalism at the national as well as European level. As a primary precondition for a radical left alternative, the balance of power between capital and labour has to be shifted back towards labour. This requires first that all left groupings overcome their internal differences and join forces together with trade unions and other social movements. Second, control over the financial system has to be re-established including the nationalization of banks. As capital movements have outgrown national levels, it is the European level, where controls of the financial system have to be re-established. Third, public debt needs to be audited and to a large extent written off. Fourth, the redistribution of wealth from workers to capital has to be turned around through a general focus on increasing wages across the EU. Finally, tax evasion by large corporations must be tackled and so-called tax havens closed.
Such a progressive, radical left alternative will not emerge by itself, but only through struggle. And while the spark of this struggle may be lit in the periphery (see Uneven and combined development and the issue of resistance in the UK!), there can be no justification for us in the core to sit back and watch passively how developments unfold. Restructuring affects our workplaces and our societies too and it is here where we through active involvement in resistance can show our solidarity with the people in Greece.
Prof. Andreas Bieler
Professor of Political Economy
University of Nottingham/UK
Personal website: http://www.andreasbieler.net
5 June 2012