THE EU IS A NEOLIBERAL, CORPORATIST PROJECT – Bill Mitchell * The Left Case Against the EU – Costas Lapavitsas.

“A cabal of elites who are unelected and largely unaccountable.”

Under current EU trade agreements being negotiated profit becomes prioritised over the independence of a legislature and the latter cannot compromise the former.

There is never a case to be made that a corporation should have institutional structures available that allow it to use ‘commercial’ arguments to subvert national legal positions.

The EU is not an institution or structure than anyone on the progressive Left should support or think is capable of reform any time soon. It has become a neoliberal, corporatist state and hierarchical in operation, with Germany at the apex, bullying the weaker states into submission. Divergence in outcomes across the geographic spread is the norm. It is also the anathema of our concepts of democracy, both in concept and operation. It is more like a cabal of elites who are unelected and, largely unaccountable. By giving their support to this monstrosity, the traditional Left political parties (social democrats, socialists etc) have been increasingly wiped out, such is the anger of voters to what has become a massive coup by capital against labour.

One of the the hallmarks of the neoliberal era has been the way it has pushed the concept of ‘society’ to the background. People live in societies not economies. Economies are meant to serve those societies (and us) not the other way around.

Over the past three decades, financial globalization has produced a highly interconnected but deeply unstable financial system. Almost all of the transactions that this sector is engaged in are unproductive, wealth shuffling.

The problem is that when the players get ahead of themselves the folly they create spills over into the real economy and starts damaging the well-being of all of us. What we have now is a financial sector that is way too large and which uses its financial clout to manipulate political systems to ensure policies structures allow it to get even larger.

“The framework of financial market liberalization may restrict the ability of governments to change the regulatory structure in ways which support financial stability, economic growth, and the welfare of vulnerable consumers and investors.” IMF

Under current EU trade agreements being negotiated profit becomes prioritised over the independence of a legislature and the latter cannot compromise the former.

In other words, a democratically-elected government is unable to regulate the economy to advance the well-being of the people who elect it, if some corporation or another considers that regulation impinges on their profitability. Corporation rule becomes dominant under these agreements.

The agreements create what are known as ‘supra-national tribunals’ which are outside any nation’s judicial system but which governments are bound to obey. The make-up of the tribunals is beyond the discretion of a nation’s population, and are typically dominated by corporate lawyers and other nominees. The notion of accountability disappears.

These tribunals can declare a law enacted by a democratically elected government to be illegal and impose fines on the state for breaches. With heavy fines looming, states will bow to the will of the corporations. Corporation rule!

There is never a case that can be made where a corporation has primacy over the elected government. So there is never a case for so-called ‘Investor State Dispute Mechanisms’ in bi-lateral agreements between nations.

A nation state is defined by its legislature and that institutions set the legal framework in which all activity within the sovereign borders engages. Corporations have rights under that framework as do citizens. But the assumption is that the legislative framework should reflect the goals of national well-being.

There is never a case that a corporation should have institutional structures available that allow it to use ‘commercial’ arguments to subvert national legal positions.

The EU technocrats work away every day on strategies and rule designs and negotiations which explicitly undermine the capacity of elected governments to represent the best interests of their nation. Their trade agreement negotiations are just one aspect of that behaviour.

This is core EU. If you were to eliminate it the ‘European Project’ as it has become would be terminated.

Prof. Bill Mitchell

Book review

The Left Case against the EU

Costas Lapavitsas

A new book advancing the case against the EU is of crucial importance in arguing that its neoliberal structures are irreformable and incompatible with left advance.

COSTAS LAPAVITSAS’S detailed critique of the EU is of immediate importance to all on the left. A renowned expert on the dynamics of contemporary capitalism and professor of economics at London University (SOAS), Lapavitsas was elected as a Syriza MP in 2015.

He resigned from the party in protest at the Syriza government’s capitulation to unending EU demands for austerity and its attacks on the labour movement.

The book contains a penetrating analysis of EU economics. However, its strongest recommendation is the author’s own political experience.

Lapavitsas’s conclusion is that the left can never win if it argues within the terms set by the EU, that the EU cannot be reformed and that its structures, including the single market, are fatally prejudicial to any attempt to implement left policies or indeed simply measures that promote industrial regeneration and defend employment of a left Keynesian character.

He warns the Labour Party that the single market ”is not compatible with the aim of beating neoliberalism, restructuring the British economy and reducing the power of the City in favour of workers and the poor through a far reaching industrial strategy.”

Why has the EU taken on this neoliberal character? Lapavitsas argues that it was always present.

Long before the Treaty of Rome, Margaret Thatcher’s favourite economist Frederick Hayek had advocated a Federalist Free trade association in Europe as offering the ultimate protection against socialism.

Supranational structures would make it possible to bypass popular pressure on national governments for democratic control over capital.

The same supranational institutions would give legal sanction to the myth that economic well-being demands that markets remain free and supreme even if, in reality, such markets are monopolised and also reflect the monopoly power of some states over others.

Lapavitsas argues that this antidemocratic potential became fully explicit with the Maastricht Treaty of 1992 and the introduction of a single currency. At that time, massive differences in economic power existed across the EU between the great industrial combines of Germany and to a lesser extent the Benelux countries and Sweden and the rest, Greece, Portugal, Spain and even Italy.

Trapped within the single currency, deficit countries could no longer devalue to compete. Nor could their governments use any form of state aid to stimulate industrial redevelopment.

As a result, inequality increased and trade imbalances, financed by German, French and British banks, grew to massive proportions.

The outcome, in 2008-2010, was financial crisis, but it is a crisis that is not resolved. Big capital in Germany and its allies elsewhere remain opposed to any fiscal union that would internationalise these debts across the EU. Why? Because this would rob them of the power to secure further institutional and economic change across the EU.

Here Lapavitsas exposes another and less well-known aspect of German industrial dominance, its reliance on driving down labour costs.

German capital investment in industry has in fact been quite low and the country’s high productivity has depended on a series of strategic reductions in labour costs.

In the 1990s, German industry was able to do this by driving industrial supply chains into Eastern Europe to exploit highly qualified but much cheaper labour. Once this potential was largely exhausted, there was an assault on the domestic labour market.

From 2002 the Hartz reforms ensured, says Lapavitsas, that “the protection of German workers in the labour market was profoundly weakened and wage pressures intensified.”

Where did German capital investment go ? Lapavitsas documents the capital flows and demonstrates that it was used to consolidate monopoly control elsewhere within EU economies. And the same pattern continues today. The drive to reduce labour costs continues in Germany and across the EU as competition intensifies with the US.

This is why German capital and its allies need the bargaining lever of debt and austerity to compel further institutional change and, like all processes that involve monopoly power and exploitation, it is unlikely to have a happy ending.

Lapavitsas urges the left, and especially Britain’s Labour Party, to look this reality in the face and seek instead “a radical internationalism that would draw on domestic strength and reject the dysfunctional and hegemonic structures of the EU giving, fresh content to popular sovereignty and democratic rights.”

The Left Case Against the EU

Get it at Amazon.com

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