Tag Archives: EuropeanUnion

Manifesto For The Democratisation Of Europe –  Thomas Piketty and Antoine Vauchez.

A concrete plan to democratise European institutions and policies, with a view to bringing more fiscal and social justice.

Europe will only reconnect with its citizens if it proves it has the ability to bring about genuine European solidarity, by having the main beneficiaries of the globalization process fairly contribute to the financing of the public goods Europe desperately needs.

In a critical moment for Europe, this Manifesto proposes to escape immobilism and abstract discussions by putting on the table a concrete plan to democratise both European institutions and policies, with a view to bringing more fiscal and social justice and to effectively address Europe’s environmental and migration emergencies.

The new European governance that has consolidated over the past decade in the wake of the financial crisis is not only opaque and unaccountable as epitomized by the Eurogroup; it is also ideologically biased towards economic policies with an almost exclusive focus on financial and budgetary objectives. Unsurprisingly, Europe has proved unable to take up the challenges with which it is confronted: growing inequalities across the continent, the acceleration of global warming, the influx of refugees, structural public under-investment (most notably in universities and research), tax fraud and evasion…

Our proposal empowers those member states that wish to address the current political and social crisis of the European project by proposing a budget of long-term investments in public assets of a European scale with a view to fighting social inequalities at EU level, and to securing the long-term viability of a genuine political model of social, fair and sustainable development in Europe.

Financing of the Budget is based on fiscal solidarity through the creation of four European taxes (on high incomes, on wealth, on carbon emissions and a harmonized corporate profits’ tax). To date, European integration has primarily benefited the most powerful and most mobile economic and financial agents: major multinationals, households with high incomes and large assets. Europe will only reconnect with its citizens if it proves it has the ability to bring about genuine European solidarity, by having the main beneficiaries of the globalization process fairly contribute to the financing of the public goods Europe desperately needs.

Such policies are virtually impossible in the current institutional framework, in particular because of the veto right of each country preventing any common fiscal policy. The Treaty for the democratization of Europe (T-Dem) sets the stage for a renewed democratic framework where these new economic policies, in particular the Budget, would not only be possible but also legitimate.

By creating a European Assembly in charge of deliberating and voting upon this Budget, member states can put themselves in a position to tax fairly the most prosperous actors and thus to finance the proposed common budget. With its mixed composition, including national and European members of Parliament, the European Assembly would also have the legitmacy to act as a counter-balance to the ever-growing impact of Europe’s economic governance on national social pacts.

Manifesto For The Democratization Of Europe

We, European citizens, from different backgrounds and countries, are today launching this appeal for the in-depth transformation of the European institutions and policies. This Manifesto contains concrete proposals, in particular a project for a Democratization Treaty and a Budget Project which can be adopted and applied as it stands by the countries who so wish, with no single country being able to block those who want to advance. It can be signed on-line (www.tdem.eu) by all European citizens who identify with it. It can be amended and improved by any political movement.

Following Brexit and the election of anti-European governments at the head of several member countries, it is no longer possible to continue as before. We cannot simply wait for the next departures, or further dismantling without making fundamental changes to present-day Europe.

Today, our continent is caught between political movements whose programme is confined to hunting down foreigners and refugees, a programme which they have now begun to put into action, on one hand. On the other, we have parties which claim to be European but which in reality continue to consider that hard core liberalism and the spread of competition to all (States, firms, territories and individuals) are enough to define a political project. They in no way recognise that it is precisely this lack of social ambition which leads to the feeling of abandonment.

There are some social and political movements which do attempt to end this fatal dialogue by moving in the direction of a new political, social and environmental foundation for Europe. After a decade of economic crisis there is no lack of these specifically European critical situations: structural under- investment in the public sector, particularly in the fields of training and research, a rise in social inequality, acceleration of global warming and a crisis in the reception of migrants and refugees. But these movements often have difficulty in formulating an alternative project, and in describing precisely how they would like to organise the Europe of the future and the decision-making infrastructure specific to it.

We, European citizens, by publishing this Manifesto, Treaty and Budget, are making specific proposals publicly available to all. They are not perfect, but they do have the merit of existing. The public can access them and improve them. They are based on a simple conviction. Europe must build an original model to ensure the fair and lasting social development of its citizens. The only way to convince them is to abandon vague and theoretical promises. If Europe wants to restore solidarity with its citizens it can only do so by providing concrete proof that it is capable of establishing cooperation between Europeans and by making those who have gained from globalisation contribute to the financing of the public sector goods which are cruelly lacking in Europe today. This means making large firms contribute more than small and medium businesses, and the richest taxpayers paying more than poorer taxpayers. This is not the case today.

Our proposals are based on the creation of a Budget for democratization which would be debated and voted by a sovereign European Assembly. This will at last enable Europe to equip itself with a public institution which is both capable of dealing with crises in Europe immediately and of producing a set of fundamental public and social goods and services in the framework of a lasting and solidarity-based economy. In this way, the promise made as far back as the Treaty of Rome of ‘harmonisation of living and working conditions’ will finally become meaningful.

This Budget, if the European Assembly so desires, will be financed by four major European taxes, the tangible markers of this European solidarity. These will apply to the profits of major firms, the top incomes (over 200,000 Euros per annum), the highest wealth owners (over 1 million Euros) and the carbon emissions (with a minimum price of 30 Euros per tonne). If it is fixed at 4% of GDP, as we propose, this budget could finance research, training and the European universities, an ambitious investment programme to transform our model of economic growth, the financing of the reception and integration of migrants and the support of those involved in operating the transformation. It could also give some budgetary leeway to member States to reduce the regressive taxation which weighs on salaries or consumption.

The issue here is not one of creating a ‘Transfer payments Europe’ which would endeavour to take money from the ‘virtuous’ countries to give it to those who are less so. The project for a Treaty of Democratization (www.tdem.eu) states this explicitly by limiting the gap between expenditure deducted and income paid by a country to a threshold of 0.1% of its GDP. The real issue is elsewhere: it is primarily a question of reducing the inequality within the different countries and of investing in the future of all Europeans, beginning of course with the youngest amongst them, with no single country having preference.

Because we must act quickly but we must also get Europe out of the present technocratic impasse, we propose the creation of a European Assembly. This will enable these new European taxes to be debated and voted as also the budget for democratization. This European Assembly can be created without changing the existing European treaties.

This European Assembly would of course have to communicate with the present decision-making institutions (in particular the Eurogroup in which the Ministers for Finance in the Euro zone meet informally every month). But, in cases of disagreement, the Assembly would have the final word. If not, its capacity to be a locus for a new transnational, political space where parties, social movements and NGOs would finally be able to express themselves, would be compromised. Equally its actual effectiveness, since the issue is one of finally extricating Europe from the eternal inertia of inter-governmental negotiations, would be at stake. We should bear in mind that the rule of fiscal unanimity in force in the European Union has for years blocked the adoption of any European tax and sustains the eternal evasion into fiscal dumping by the rich and most mobile, a practice which continues to this day despite all the speeches. This will go on if other decision-making rules are not set up.

Given that this European Assembly will have the ability to adopt taxes and to enter the very core of the democratic, fiscal and social compact of Member states, it is important to truly involve national and European parliamentarians. By granting national elected members a central role, the national, parliamentary elections will de facto be transformed into European elections. National elected members will no longer be able to simply shift responsibility on to Brussels and will have no other option than to explain to the voters the projects and budgets which they intend to defend in the European Assembly. By bringing together the national and European parliamentarians in one single Assembly, habits of co- governance will be created which at the moment only exist between heads of state and ministers of finance.

This is why we propose, in the Democratization Treaty available on-line (www.tdem.eu), that 80% of the members of the European Assembly should be from members of the national parliaments of the countries which sign the Treaty (in proportion to the population of the countries and the political groups), and 20% from the present European parliament (in proportion to the political groups). This choice merits further discussion. In particular, our project could also function with a lower proportion of national parliamentarians (for instance 50%). But in our opinion, an excessive reduction of this proportion might detract from the legitimacy of the European Assembly in involving all European citizens in the direction of a new social and fiscal pact, and conflicts of democratic legitimacy between national and European elections could rapidly undermine the project.

We now have to act quickly. While it would be desirable for all the European Union countries to join in this project without delay, and while it would be preferable that the four largest countries in the Euro zone (which together represent over 70% of the GNP and the population in the zone) adopt it at the outset, the project in its totality has been designed for it to be legally and economically adopted and applied by any sub-set of countries who wish to do so. This point is important because it enables countries and political movements who so desire to demonstrate their willingness to make very specific progress by adopting this project, or an improved version, right now. We call on every man and woman to assume his or her responsibilities and participate in a detailed and constructive discussion for the future of Europe.

Drafted by the following seven authors:

Manon Bouju, économiste

Lucas Chancel, vice-président du World Inquality Lab, Paris School of Economics

Anne-Laure Delatte, economiste, CNRS Research fellow

Stephanie Hennette-Vauchez, juriste, professeure à l’Université Paris Nanterre

Thomas Piketty, economiste, professeur à la Paris School of Economics et à l’Ecole des hautes études en sciences sociales

Guillaume Sacriste, politiste, maître de conférence à l’Université Paris 1-Sorbonne

Antoine Vauchez, politiste, CNRS Research professor, Université Paris 1-Sorbonne

and signed by scores of others

Social Europe

Manifesto for the democratisation of Europe

Download complete Manifesto PDF

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

Exchange Rate Folly: How The British Government Lost The Plot. 

In these conditions of uncertainty, the exchange rate has collapsed. But the scale of the decline has been greater than anyone had predicted. Sterling has fallen sharply against the US$ to a level not seen since the 1980s and there have been similarly sharp falls against the euro. In these cases there are now predictions that the rates may fall to parity within the next few months. The overall effect of depreciation on this scale is to reduce real national income and overall living standards – the cost of imports is increased and export prices are lowered.

For many years the UK has been running a deficit on its current account. In the second quarter of 2016 this was no less than 5.9% of GDP and deficits on this scale have been common for many years. Of course, a country can only continue to run a large current account deficit if it either has large foreign exchange reserves – the UK doesn’t – or else it borrows extensively overseas. Social Europe