Saturday, 9 June 2012

There Will be A Single Europe, One Way or Another

A single Europe will develop, either in the form of a voluntary association of European Nation States, which establishes a Political and Fiscal Union, or it will develop in the form of a Fourth Reich.

From the 19th century on, history has been one of an increasing concentration and centralisation, both at an economic and a political level. At an economic level, it was manifest in the evolution from the small firm, through the joint stock company, the limited liability company, the Trust and the Cartel, all the way through to the Capitalist State Monopoly. That development has been well theorised and explained by Marxist economic theory. It demonstrates the way in which Competition necessarily leads to Monopoly, which leads to Competition at a higher level. The more efficient small firm prospers. As a consequence it becomes larger. Its larger size provides economies of scale, making it even more efficient, and so on. Large firms become able to buy up smaller firms. Credit, established to speed up, and reduce the costs of transactions, becomes available to finance investment, and to facilitate first the development of the Joint Stock Companies made up of associated individuals, and then limited companies that draw in thousands, and millions of investors.

The embryonic forms of Capital – Merchant Capital and Money Capital – arose under the domination of the feudal Aristocracy. They grew in a symbiotic relation with it, that necessarily tied this Capital to the Nation State through those ruling classes. The Merchant Capitalists expanded the range of goods, available for the feudal rulers, through trade. The feudal rulers provided finance, and armies to facilitate the Merchants in establishing new markets, which also expanded the land ownership of the feudal rulers, providing them with new sources of Rent. Colonialism arises on the back of this symbiotic relation between Feudalism and Mercantilism.

By the time Lenin wrote “Imperialism”, this arrangement, under which the world had been divided up, was well established, and it was this that Lenin describes, and theorises. But, in reality, this world was already in decline, by the time Lenin wrote about it. In the 19th century, it was Industrial Capital, Productive Capital, Capital proper, which comes to dominate, in the form of these ever larger productive units. It comes to dominate largely in opposition, not just to Feudalism, but also to the Merchant and Money Capital that had been allied to Feudalism. The breaking up of existing monopolies did not just affect the Feudal Landlords, it affected the Monopolies of the Merchants and Money Capitalists too. As Marx and Engels described, when those Industrial Capitalists eventually succeeded in abolishing the Corn Laws, it was not just the limitations on the import of Corn that went. Quotas, and duties on a whole range of imported raw materials were swept away. The Industrial Capitalists were happy to continue to allow the Landlords, the Merchants and the Money Capitalists to continue ruling over the Colonies, so long as they ensured them the cheap materials they needed, and the markets for their manufactures they needed. But, already by the end of the 19th Century, Industrial Capital recognised that the real source of its profits was not in the credo of the Merchant Capitalist – buy low, sell high – but in the extraction of Surplus Value from productive workers, and increasingly, the means for doing that was via Relative Surplus Value, the continual lowering in the Value of Labour Power, through the introduction of increasingly efficient and productive machinery and techniques. To make most effective use of that, increased size was needed.

The expansion of productive, Industrial Capital, beyond its borders, was driven not by a search for sources of cheap raw materials, or markets, as had been the case with Colonialism, but by a search for ever new sources of productive workers to exploit. The industrialisation of much of Europe, of the US, and of Japan was achieved, not just by the export of machinery, and of Money Capital to finance it, but by the physical investment of British industries in those countries. The reason football spread rapidly, across Europe, is because British firms, who took some of their British workers with them into these countries, set up their own football clubs as they had done in Britain.

Even at the time that Lenin was writing “Imperialism” the vast majority of foreign investment by the existing “Imperialist” economies was not into the Colonies, or undeveloped countries, but into other developed “Imperialist” economies. But, at this time, the ability of firms to operate on an international level was limited by the existing means of production, in particular the means of communication.  However, as Michael Barratt Brown described in his book, “The Economics Of Imperialism”, one of the things that changed this was the development, by large firms, of a new form of organisation. They developed the concept of an business that was organised into a modular form with a central controlling body, which operates as a “Bank”, taking in revenues, from the separate arms, and in turn providing the finance for investment and expansion. On this basis, it does not matter whether one of these modules is in Moscow or Mumbai. This provides the organisational basis for the establishment of the Multinational firm. In the period after WWII, the majority of these multinational industrial companies were in the US, and in the following period, they grew in size and number, and of course, other companies in Europe, and then in Japan, adopted this model.

In the 1980's, but more particularly, in the 1990's, with the rapid development of international telecommunications systems, and then of the Internet, this model could be expanded to a new level, because it means that a central organisation can now keep minute by minute control over operations of a myriad of company units across the globe. The Nation State of the 19th Century, developed to meet the needs of Capital operating within its borders. As the most powerful sections of Capital now operate, not at a national level, but at an international level as Multinational and transnational companies, the nation state is no longer adequate to its needs. In fact, it has long since ceased being capable of fulfilling that function.

When the USA was established, it was on the basis of a series of independent, but federated states. The States were supposed to exercise sovereignty within their own remits, with the Federal State acting to secure the countries borders etc. But, as the USA industrialised rapidly in the middle of the 19th Century, it became obvious that Industrial Capital required a strong centralised state. The US Civil War was fought not to abolish slavery as is often portrayed, but in order to establish such a State, and to remove the ability of individual States – such as the Confederacy – to do their own thing. Although, we often speak of the horrors of European history that saw millions die in wars, the truth is that the US Civil War saw more than 600,000 people killed, at a time when the US population was only around 35 million. The European Wars have been fought for essentially the same purpose, to establish a single European State. In fact, during WWII, Hitler made an offer to Churchill that if he gave Germany a free hand in Europe, Britain would be free to keep hold of its Colonies. Of course, it was not much of an offer, because a single European state under German dominance, would soon become a world dominating power, whilst Britain, with only its economically undeveloped Colonies, would quickly have become irrelevant.

In the 19th century, it was not just the US that went through such a violent process of unification. Britain had by that time already undertaken the process, having subjugated Wales and Ireland centuries earlier, in the 18th Century, Scotland was finally incorporated peacefully after centuries of conflict. But, in the 19th Century, nation states were established through violent conflicts in France, Germany, and Italy. Marx and Engels saw these developments as inevitable and progressive. The continuation of that process, just as with the continuation of the process of concentration and centralisation of Capital at an economic level is equally inevitable and progressive. But, the means by which it is achieved is not at all predetermined. It could arise on the basis of consent, and mutual interest as happened with the Union of England and Scotland, or it can arise by more brutal means. That does not necessarily mean war.

When efficient companies grow they can concentrate and centralise power by various means. On the one hand, their size and efficiency means that in time of economic crisis, they are able to weather the storm. Smaller companies cannot and go bust. The bigger companies buy up their Capital for next to nothing, and simply take over their market share. Alternatively, the bigger company can decide to simply buy up the smaller company, particularly if they have some new technology or product that the bigger company wants. They also have other means at their disposal. They can use their size to engage in predatory pricing, slashing prices to levels that the small company cannot compete with, thereby driving them out of business. Sometimes, they can engage in activities that might be illegal, for example, they can use their size and power to pressure suppliers not to supply the smaller companies, or retailers and wholesalers not to buy from the smaller company.

We see a similar thing within economies. In Britain, the size of the economy in London and the South-east acts as a magnet for yet more economic activity. It is only counteracted by Government regional policy, which seeks to maintain a level of social stability by preventing the process from simply snowballing into massive economic decay, and depopulation of the regions. In Europe, a similar thing exists in what is called the “Golden Triangle” of Northern Europe. Again, it is only counteracted by European Union policy that seeks to channel funds to other regions. This is one reason that if a single European State is not established, and particularly if the existing arrangements break apart – which they will if the current crisis is not resolved, by the establishment of a single state – then economic laws will bring it about by other means.

If, the EU no longer existed, then its current regional policies would cease. The first casualties of that would be the peripheral European states, who are currently suffering. The significant beneficiary would be Germany. Outside the structure of the EU, Germany would be free to concentrate its resources on developing its own economy. Germany is already by far the most efficient and most powerful economy in Europe. But, Germany's productive forces long ago went beyond the limits of the German Nation State. Outside the EU, and outside the Euro, a new German Mark would rise sharply in value, whilst other European currencies, including the Pound would sink against it. The consequence of that would, other things being equal, be that Germany's exports would become far less competitive, which would have a negative effect on the German economy. But, there is no reason that other things would be equal. German industrial companies would seek to expand into other parts of Europe, buying up cheaply the capital, and taking over the markets of bankrupt companies in the periphery, for instance.

In order to buy these companies, Germany would need to sell Marks and buy Pesetas, Drachma, Francs etc. That would reduce the value of the Mark, and increase the value of these other currencies. The more German companies dominated the economy of Greece, Portugal, Spain, Ireland and so on, the more they would be able to dictate terms to their “sovereign” Parliaments. In today's global economy, no government can survive if it fails to ensure that these huge multinational and transnational companies invest, and provide jobs in their country, however much the ideologists of the petit-bourgeois eulogise and mythologise over the role of the small firm.

Of course, it would not just be Germany. Germany would find common cause with other Northern European countries such as the Netherlands, Austria, the Czech Republic, and probably Norway and other Scandinavian economies, and probably some sections of Capital in France. A more rapid integration, concentration and centralisation of Capital within these economies would be inevitable, bringing with it an even greater and more rapid growth of their economic and political power. Such, an economic and political bloc would undoubtedly see the UK, as a powerful economic force sitting on its borders, with historic links to the economy of the US, as a potential enemy. Unlike the relation that tiny countries like Norway and Switzerland have with the EU, a powerful German centred economic bloc, would treat the UK in the same way that a big company treats a smaller, but still dangerous competitor. In other words, the UK would find itself facing all kinds of restrictions in doing business not just with the main European economies, but with those economies in the periphery and elsewhere that were now dependent upon German business to provide them with employment, and economic growth. The UK would face import restrictions, and so on, and concerted attempts to undermine it economically, by all the kinds of measures mention in relation to large companies, as well as politically by all those measures available to powerful states. Even Britain's relation with the US would falter, because Britain is only of value to the US in Europe, as a means of exerting influence. The US has already turned its face to the Pacific, with its decision to relocate its Navy there, as it sees the future not in Europe, but in China, and the developing China-Japan hub of the Asia-Pacific Rim Economic bloc.

In short, the UK economy would be rapidly sidelined and marginalised, going into a rapid decline. In the Communist Manifesto, Marx and Engels wrote,

The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country. To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood. All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilised nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. In place of the old wants, satisfied by the production of the country, we find new wants, requiring for their satisfaction the products of distant lands and climes. In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations. And as in material, so also in intellectual production. The intellectual creations of individual nations become common property. National one-sidedness and narrow-mindedness become more and more impossible, and from the numerous national and local literatures, there arises a world literature.

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.”

When they spoke of “The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate”, they were actually referring to the small, Central European states, which believed they could isolate themselves from Capitalist development. Today, if the EU does not move forward, to a single European State, and as a consequence breaks apart, it will be the low prices, and the vast arsenal of Capital at its disposal, that will allow Germany to batter down the walls of other European states, and establish a broader economic unit by other means. Where today, the possibility exists to bring that about by democratic means, that create the conditions for ensuring that a structure exists for developing a European economy with some modicum of political control for the benefit of the whole of Europe, instead it would mean it arising on the basis of a greater Germany, a Fourth Reich, under which control simply rested on the economic, and therefore political power exercised by Germany. It would achieve what Napoleon, the Kaiser and Hitler could not.

When Marx and Engels speak of “To the great chagrin of Reactionists, it has drawn from under the feet of industry the national ground on which it stood”, they could as easily be speaking of today's reactionaries be they those of the Far Right in the BNP and UKIP, or the not so far Right in the Tory Party, or those within the Labour Movement, who continue to look in the rear view mirror rather than through the windscreen to see where they are going.

A single European State is in the interests of European Big Capital, yet its biggest obstacle is the manoeuvring of Capitalist politicians, who operate within the constraints of structures that are still geared to the needs of the 19th Century Nation State. It is also in the interests of European workers, yet the leaders of the Labour Movement, tied to bourgeois notions of Statism and Reformism, are thereby equally tied to Nationalism, and an alliance with the reactionary national bourgeoisie and petit-bourgeoisie. And, the structures that the workers operate within - The Trades Unions and Reformist Workers Parties - also constrain their own struggles within these limits thereby reproducing the same sets of ideas, and the same sets of leaders.  The recent pronouncements by Angela Merkel, that Germany will agree to EU Bonds, and the other measures required to solve the debt crisis afflicting peripheral Europe, confirm the argument I have made for the last two years. Germany is demanding that the requirements of a fiscal union, with control over Budgets exercised centrally i.e. with German oversight, before they will commit to the necessary measures that will stop the Eurozone exploding.

Germany can afford to do that because if it explodes it will pick up the pieces in the way described above. But, the economic chaos that would immediately ensue would not leave Germany unscathed either. It is a dangerous game to play. Today, Spain is expected to ask for a bail-out for its banks. The IMF say €40 billion are required. Other Credit Ratings Agencies say up to €360 billion is required. The current figures are based on official figures that suggest that Spanish property prices have fallen by around 20%. Anyone who has looked at Spanish property prices recently knows that is joke. Prices have already fallen by around 50-60%, and probably need to fall by another 50%, or more to get to reasonable levels. The Banks in Spain are totally bankrupt because of the debts on this property, and when it collapses, the Banks will need something far closer to the €360 billion than the €40 billion.

That is before the debts and deficits of the Spanish regions are taken into consideration. The parallels with Greece are apparent. Large amounts of money is already flowing out of Spanish banks as it has in Greece, as depositors fear they may not get it back, or if there is a return to the Peseta, it will be worthless. That in turn puts the Banks in an even weaker position, creating a self-fulfilling prophecy. In Greece, the rich began removing all their wealth from the country, and moving themselves too. I was in Spain a few weeks ago, and in the Northern Costa Blanca, there is still an appearance of affluence. The marinas are still full of very expensive yachts, there are still plenty of expensive luxury cars around. But, at the same time all of the attendant aspects of poverty and unemployment are on display. I realise now why every Spanish villa has bars on the windows and doors, why many have security cameras, and others have dogs you wouldn't want to tangle with. The villa we were renting was burgled when we'd only been out for a couple of hours, and talking to its owner he told me his parents and sister who lived in nearby villas had been burgled before, and a representative from the Villa rental company reported he too had been burgled. These are the first signs, as with all those that Paul Mason has reported both from Spain and from Greece, of a society that is in danger of breaking apart.

On Newsnight, last night, Costas Lapavistas, argued that instead of austerity, what Europe needed was something approaching a Marshall Plan, with also debt forgiveness, the restructuring of the Banks etc. Outside a Socialist Revolution (which is not going to happen any time soon) he is right. Europe has fought wars in the Balkans to stabilise its Eastern Flank, it has fought a war in Libya for similar reasons (though with the opposite result), and it has pumped money into MENA as part of trying to establish a wider economic zone. It has talked about some kind of Marshall Plan to stabilise any bourgeois democracies that develop in MENA. But, it is dangerously at risk of failing to take those measures within its own borders, and thereby of blowing itself apart.
Yesterday, on Bloomberg, David Blanchflower, slammed the austerity policies of Cameron and Osbourne, as well as those being applied in Europe. The idea of stimulus, he rightly argued, is being presented as though it simply meant borrowing to finance additional consumption. But, there is no reason he said why such stimulus should not go to finance investment, which would make European economies more efficient.

It is not inevitable that the current debt crisis, affecting peripheral Europe, should go unchecked, and spread to the rest of Europe, and possibly to the US and China. The measures that Costas Lapavistas and David Blanchflower have described could resolve that crisis, but they are impossible outside a single European State, or at least a situation where such a development is being consciously pursued. Workers should not simply allow such an important issue to be in the hands of the bosses and their politicians, who look likely to flunk it. There has never been a more important time for workers across Europe to forge closer links between each other. We need a Europe Wide Labour Movement, including a single European Workers Party, and single European Trade Union Movement. We should build upon the European Co-operative Movement that already exists along with the International Co-operative Alliance, seeking to forge closer links between it, and the European Workers Parties to develop a Europe wide Workers Alternative to Capitalism and its recurrent crises. We should demand the convening of a European Constitutional Convention to discuss the establishment of a democratic European Constitution, including the election by Universal Suffrage of a European President, and Government. We need to begin to forge a United States of Europe, and to begin to work towards the establishment of a European Workers Government.


Jacob Richter said...

You're right on this one:

Jacob Richter said...

Time to discuss a European platform, I think. Starting ideas:

1) For the whole European Union to be and be declared a single and indivisible democratic republic

2) For the whole European Union to be and be declared socially democratic *and economically republican*

[*Economic republicanism, though falling short of socialist ownership, acknowledges the bankruptcy of "social democracy" on the ownership question.*]

3) All the proposals listed in Transition to Socialism in the European Union by Paul Cockshott, Allin Cottrell, and Heinz Dietrich:

4) 2) Matching the transnational mobility of labour with the establishment of a transnationally entrenched bill of workers’ political and economic rights, and with a globalized and upward equal standard of living for equal or equivalent work realized on the basis of real purchasing power parity, thus allowing real freedom of movement through instant legalization and open borders, and thereby precluding the extreme exploitation of immigrants

5) Abolishing all public debts outright, overtly and covertly suppressing excessive capital mobility associated with capital flights, ending the viability of imperialist conflicts and not just wars as vehicles for capital accumulation, and precluding all predatory financial practices towards the working class – all by first means of monopolizing all central, commercial, and consumer credit in the hands of a single transnational bank under absolute public ownership

6) to 10)

Fuller socio-income democracy through direct proposals and rejections – at the national level and above – regarding the creation and adjustment of income multiple limits in all industries, for all major working class and other professions, and across all types of income.

The realization of zero unemployment structurally and cyclically by means of expanding public services a) to fully include employment of last resort for consumer services and even b) to fully socialize the labour market as the sole de jure employer of all workers in society, contracting out all labour services to the private sector on the basis of comprehensive worker protections.

The increase of real social savings and investment by first means of mandatory and significant redistributions of annual business profits, by private enterprises with more workers than a defined threshold, as non-tradable and superior voting shares to be held by geographically organised worker funds.

The implementation of economy-wide indicative planning based on extensive mathematical optimization.

Enabling the full replacement of the hiring of labour for small-business profit by cooperative production, and also society’s cooperative production of goods and services to be regulated by cooperatives under their common plans.

George Carty said...

How likely do you think it is that Germany's powerful anti-nuclear movement is being funded by by other European countries, who fear German domination of Europe and seek to hobble its industrial machine by forcing up the prices it must pay for its energy?

(As well as by Russia, who seeks to sell gas to Germany to replace nuclear power.)

Boffy said...

I'd have to honestly say I have no idea! My guess is not very likely.

One of the first things the EU did when it was set up was to develop the European Atomic Energy industry. European Capital is ranged as a whole against North American and Asian Capital to a far greater extent than any differences between European States could act as a counterbalance.

That's not to say there are not conflicts between European States, and between competing European national political elites. But, those conflicts reflect the contending interests of national bureaucracies and elites, and to an extent that reflects continuing national interests of small, nationally based capital. But, it is Big Capital that in the end dominates, and its interests continue to drive towards the need for a strong, centralised, European State.

A strong German economy is vital to such a project, just as a strong Prussia was vital to the project of building a single, centralised German state.

George Carty said...

Why (in your opinion) are the Germans so hostile to nuclear energy, despite the fact there has never been a meltdown or other significant nuclear accident on German soil?

About 80% of Germans want to abandon nuclear power -- even the Japanese at the time of the Fukushima disaster were not as hostile as that!

Are the historical linkages between anti-nuclear-power activism and anti-nuclear-weapons activism (the latter would naturally be strong in Germany due to its Cold War front line position) the key?

Oh, and I wonder how many people reading this post about German economic domination of Europe would have thought "we should have Morgenthaued the bastards"?

Boffy said...

I think German opposition to nuclear power is a reflection of the strength of the Greens in general in German politics. Japan has to import most of its energy, so I think its understandable that its people should be supportive of an energy source that seems to be more under their own control.

Can you elaborate on what you mean exactly by your last comment?

George Carty said...

Can you elaborate on what you mean exactly by your last comment?

That the Allies should have imposed the Morgenthau Plan on Germany to make sure it could never rise again...

Boffy said...

Right, sorry, I misread what you had originally said.

Well I'm sure those kinds of sentiments still exist within Europe - witness the Fawlty Towers episode, though that's some time ago now. I'd guess that those sentiments are mainly in Britain, given the continuing influence of nationalism and parochialism in British culture.

In France, if anything its the opposite. France and Germany have been coming closer together. That was true under Mitterand and Kohl, and under Merzoky, and will probably be true if an SDP adminstration gets elected with them and Hollande.

I think that many of the people in Central and Eastern Europe, are also likely to not have that view, because they have done very well out of German investment in their economies.

Morgenthau would have been a big mistake for the same reason the Versailles Treaty was a big mistake. It would have stoked nationalist sentiment in Germany, creating instability at the heart of Europe. It probably would not have stopped German industry developing, but might have meant that East German industry developed more. The USSR would have had a good incentive to encourage that.

Moreover, it would not have changed the economic dynamic within Europe that drives towards the establishment of a single European State. If Germany had not fulfilled the role of central driving force, someone else, like France would have.

I found Alistair Darling and others comments about the SNP's call for a currency union with Britain interesting. Darling said, you can't have a currency union without a political union. True, which is why the EU will have to have a political union. But, you cannot have a single market without a single currency, for the reasons alluded to previously about a level playing field.

As a socialist I am in favour of such greater centralisation and breaking down of borders, because it represents progress. As Trotsky once said, we wouldn't be in favour of the Kaiser's war, or the Kaiser's Germany creating a single Europe, but, if it happened we wouldn't call for that Europe to be broken up again!

George Carty said...

I suspect anti-German sentiment in Britain is not just down to Britain's famous "island mentality", but also because British foreign policy for centuries could be summed up as "don't permit a European hegemon to form!" Whenever one continental state became dangerously powerful (such as the Habsburg Empire in the 16th century, or France in the late 17th and early 19th century, or Russia in the late 19th or late 20th century, or Germany in the early 20th century) the British policy was always to ally with nos. 2, 3 and 4 etc to cut down no. 1.

Are you arguing that British foreign policy is inevitably doomed to failure (perhaps because of the increasing importance of non-European states)?

Boffy said...

The best way British foreign policy could prevent a European hegemon developing at the moment would be to build a strong centralised European state. Prussia no longer holds the position in Germany it once did.

UK foreign policy is misguided. For various reasons it has tried to develop as a mid-Atlantic policy. But, the UK is only of use to the US as a central part of the EU. The more the UK distances itself from the EU, the more the US will distance itself from the UK, and seek some other partner within Europe to fulfil that function.

On an economic level the only reason US or Japanese firms have interest in the UK is because of the access it gives them to EU markets.

The foreign policy is an example of what I was saying the other day it reflects the views of a UK political elite rather than the interests of the dominant section of capital.