The Professor in Economics at SOAS, London forcefully argues that the EU is un reformable, and is institutionally set up to support the interests of big business, and wealth owners, particularly in Germany. He laments that many on the political Left see the EU as a potentially progressive. Many economists would agree with aspects of his detailed critique of the way the EU institutions and processes hold down growth and promote inequality between and within countries. But he also offers enough evidence of the EU’s fragility, and instability, to suggest that reform might be possible, or even inevitable. Although he does not make a convincing case that a Europe of independent states struggling to reform themselves is better than a multi-state EU, this book needed to be written and will help to push the debate forward… . T. Andrew Broadbent
This analysis of the failings of the EU by this some time member of the Greek Parliament, is from a broadly Marxist viewpoint. He sees the EU as institutionally entrenching the interests of capital – big companies and wealth holders – as against labour and ordinary working people. He regards the EU is unreformable (120).
He bemoans support for the EU from the political left and in particular from his fellow country man Yanis Varoufakis – in the vain hope that the EU can be reformed and rebalanced in a progressive direction, more favourable to ordinary people .
He points to the dominance of German capital over the economies of weaker southern European economies, the lack of democratic accountability, and the absence of class-based electoral politics in European Parliamentary elections. EU Institutions, treaties and rules – ‘the Acquis Communautaire’, the Single Market (ESM), the Economic and Monetary Union (EMU), the Euro currency, the Stability and Growth pact, the European Central Bank (ECB) and European Court of Justice (ECJ), all combine to enforce a neoliberal economic agenda. This prioritises reducing public spending, lowering public sector deficits and debt , limiting wage growth, and promoting privatisation of public services and ‘competition’.
There is agreement about much of his critique among many Keynesian economists – such as Martin Wolf and Joseph Stiglitz . They tend to agree that the neo liberal austerity policy and the Euro currency have promoted increasing divergence between the European ‘core’ – Germany and Northern Europe – and the Southern periphery, and exacerbated wealth and income inequality within countries.
The policy response to the international economic crisis of 2007-09 held down economic growth and reduced living standards for some ten years afterwards. The banks were bailed out, and the bad debts of the private sector which had caused the crash, were nationalised – and turned into ballooning public sector deficits and debt , – a burden on ordinary tax payers and public sector users, particularly in Southern Europe. But this strategy was implemented to a greater or less degree across the western world, and backed by the International Monetary Fund (IMF). It was not a specifically EU project.
The ‘impossibility of radical reform’ (120) thesis doesn’t seem very Marxist, and not very dialectical. Despite the supposed rigid arm lock which he says German capital has imposed on its own workers and on the weaker economies, he demonstrates a number of weaknesses and internal contradictions in the EU. It is ‘in a state of profound and uncommon instability’, and subject to ‘rising right wing and authoritarian parties in several countries’ which ‘have begun to pose a direct challenge to the EU’ (1). ‘Political barbarism raised its head ….to take advantage of the forces of fragmentation’ (6).
He is not always sure that the existing EU set up under German domination, would be able to enforce the rigid and brutal conditions it imposed on post-crisis Greece,- whose case he analyses in detail – in any future crisis involving a bigger economy than Greece. ‘German hegemony has fragile domestic foundations’ (124).
It might be expected that from his theoretical perspective, these internal contradictions could produce another crisis, which would be an opportunity to challenge the existing set up and fundamentally reform the EU. But he seems to be advocating the complete break up of the EU, ‘there has to be a rupture – an upheaval … a rupture with domestic power structures’ (131) ,‘…dismantling the EMU would be a decisive blow against the neoliberal regime ‘ (134) .
He sees this as a prelude to domestic reforms in each sovereign country – redistributing wealth and raising wages. ‘working people must necessarily contest the national levers of power’ (130).
But confusingly he also suggests such national policies could be implemented in ‘contemporary Europe’ (133) as ‘entirely a matter of social and political choice’ (134), implying that maybe these national reforms could be tried by member states without a prior break up of the EU. Only when Brussels ‘would not tolerate a challenge to the institutional organization of the EU…..the prospect of exiting the EU would inevitably arise’ (136).
His airy scenario of socialist transformation within separate national states having left the EU (129-131) , – seems wishful thinking in the light of burgeoning far right populism across Europe , and the weakness of Left politics, which he says is – ‘increasingly cut off from its historic constituency, the workers’ (129).
Neoliberal ideas were originally promoted by some individual member states – notably the UK, so it could be argued the neo liberal set up was imposed on the EU by national governments – not the other way round. He blithely states – but does not explain how or why – exiting the EU is ‘ not nationalist’ nor would be a return to ‘competing warring states’ , – but rather a ‘radical internationalism’ (140). This contradicts his cogent description of the rise of the anti- EU Right across Europe – which looks the opposite of a new progressive internationalism.
Towards the end, he begins to partially reinvent aspects of the EU – with the separate sovereign countries needing to coordinate their economic expansion, and stabilise exchange rates – which he says would require ‘an anchor country’ and capital controls, and he seems to advocate a kind of Euro for international payments, but not as internal currency.
Despite Lapavitsas not making a convincing case for dismantling rather than reforming the EU, the book is a valuable contribution – and should help to progress the debate on what can or cannot be done to reform or replace the widely discredited economic regime of the last thirty years which led to the 2007-09 crisis. Central banks and the IMF are warning of burgeoning private sector debt and a potential future crisis
There is widespread consensus that finance needs to be re connected to the real economy (production of goods, services, infrastructure investment etc) , rather than being a drain on it – ‘making money out of money’. New sources of public revenue are needed to revive deteriorating public services, income and wealth inequality needs to be redressed, and new ways found to reign in and tax the global monopoly corporations . The EU, despite its glaring shortcomings is an institution which can do some of this when individual countries can’t.Edit “The Left Against the EU”