Europe: Form or Substance?

With the New Year another discussion on Europe’s “finality” – its eventual shape – is starting in Germany. Some commentators remind their readers of the 1914 war, when supposedly nobody knew what devastating effects their war mongering might entail, each party pursuing their own narrow goals. Be that as it may (I have already commented on this anniversary in this blog), it is highly legitimate to start once more a more basic discussion on Europe – beyond the dogmatic in or out campaign in the UK.

The German conservative economics professor Hans-Werner Sinn establishes in a recent contribution for Project Syndicate that a political union is an absolute pre-condition for the success of the Monetary Union. As an intermediate step he proposes a “breathing EMU”, which countries could leave temporarily and join again, a general debt reduction conference which would lessen indebted countries’ burdens, a country bankruptcy law, as well as a binding balance sheet ceiling for national central banks.

At the other end of the discussion spectrum is Jochen Bittner, former Brussels correspondent of the renowned German weekly Die Zeit, who praises David Cameron’s promised 2017 EU referendum, since EU citizens were sick of the quasi-automatic “more Europe” path. The English (whom exactly does he mean?), according to Bittner, just wanted more competitiveness, more flexibility, more influence of national parliaments and the re-transfer of competencies from the EU to London.

So far, so good or bad. While Sinn discusses the dysfunctionalities of the governance structure of the Eurozone, but wants more integration, Bittner follows the recent anti-immigration, xenophobic trend and wants much less integration. Neither talks, however, of the truly basic deficiencies of EU economic policy, which has led to sky-high unemployment, appalling and politically and socially very dangerous hopelessness for large parts of the European young generation, about the falling wage share in the EU, about the increasing concentration of income and wealth, about the massive tax evasion by high income earners and large companies, about the real investment gap (not only in infrastructure), about the massive expansion of a predatory financial sector and about the disastrous dogma of taking the state out of economic and social management of society.  Whether we call these developments “neo-liberal”, unshackling of the economy, or “more market – less state” , is irrelevant. We need to lead the discussion of whether society can afford to perpetuate this socio-economic model of the last 30 years, or whether we need as much a peaceful paradigm-change, as was engineered by the Anti-Keynesian revolution of the 1970’s.

It is the unfortunate fact that the European Union (both the Council and the Commission) have adopted this paradigm and seem determined to pursuing it, even in the face of the deepest socio-economic crisis since the 1930’s. The EU’s prime economic policy goal is still “budget consolidation” which from an instrument has been blown up into an self-standing objective. This is supported by any number of “structural reforms”, “flexibilisations”, and the like. Nobody will deny the importance of tax-financed public expenditures and of sustainable debt levels, but the good, old “magic quadrangle” of economic policy objectives, which consists of high growth, low unemployment, measured inflation and a balanced external account, does not speak of budget consolidation. It is highly recommended that the EU pursues these objectives foremost.

Until the EU does not orient its economic policy goals towards the betterment of the social situation of its citizens and the preservation of the environment, tinkering with the governance structures of the Eurozone or other difficult, but cosmetic, changes will neither end the crisis nor increase citizens’ confidence into the European Union. European citizens want to live in peace, have economic and social prospects for themselves and their children, and want to participate in these momentous decisions in a more active way. Professors and pundits would be well advised to direct their considerable resources towards this end.

One more issue. Many wise people say that today’s young people can no longer be “baited” into a positive perception of the EU, by its undeniable success as a “peace project”, since today’s young Europeans have become used to peace around them. I would propose to “market” the EU as a “project for social betterment and social peace”. Such a conception might reverse the negative drift which the present economic policy has exerted on citizens. This should become the slogan for the forthcoming EU election.


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