Review: The Left Case Against The EU

29 January 2019

Andy Yorke reviews The Left Case Against the EU by Costas Lapavitsas, Polity, 2018, 160pp, £15.99

The Left Case Against the EU has proved popular amongst the supporters of “Lexit”, those inside and outside the Labour party who believe that leaving the EU is a prerequisite for a Corbyn-led Labour government capable of implementing radical left measures. Britain’s membership of EU they believe is an absolute obstacle to this.

SOAS economist and former Syriza politician Costas Lapavitsas seeks to give a Marxist gloss to the Lexit position, via a short history and political economy of the Euro and the Eurozone crisis. It comes at a critical point in the political struggle over Brexit but fails to deliver on its title, as his argument contradicts itself in two key aspects.

First of all, Lapavitsas fails to hit his target because his analysis is overwhelmingly focused on the Eurozone rather than on the EU itself, whose undemocratic structures are only fleetingly described in the final chapter. The author’s examination of the Greek debt crisis allows him to make his main point, which is that the “Iron Trap of the Euro” deprives countries of the ability to devalue their own national currencies in a crisis. But this has very little relevance to imperialist Britain, the EU’s second biggest economy, with a national currency of its own totally outside the Eurozone’s formal structures, and not currently facing a sovereign debt crisis.

Secondly at a crucial point, Lapavitsas contradicts his own Lexit policy, saying that “A left government must be prepared for a rupture with the EMU [European Monetary Union], and for a direct challenge to and even rejection of the EU. This is the only positive lesson for the European left from the debacle of Syriza.”

Lapavitsas’s “rupture” with the EU is always posed as an abrupt event, as a walkout or “expulsion”, but in reality the point is to “confront” it, and Britain can mount a very powerful struggle within the EU. Britain is actually a useful touchstone for the weaknesses in Lapavitsas’s arguments. He fails to analyse seriously the linkages between the EU and Eurozone, and given the left’s focus on the EU’s marketisation, labour and other directives, it isn’t possible to collapse the EU into the Eurozone.

Major EU imperialist powers like Britain, Germany and France (and even Spain and Italy, if to a lesser degree), can defend their own “national” interests within the EU in a way that weaker countries like Greece simply can’t. So the EU’s and the Eurozone’s foul treatment of Greece certainly reveals that the EU is an imperialist-dominated bloc, exploiting and bullying its smaller and weaker members and treating them like colonies (or as Marxists would say as semi-colonies). But this quite simply is not a template for Britain’s relationship to the EU’s neoliberal project.

A tale of two countries

German hegemony and Greece’s crisis and brutal bailout are certainly the two poles of the Eurozone crisis and the twin focus of Lapavitsas’s account, but overall this produces a one-sided story. While Germany is certainly the dominant power both within the Eurozone and within the EU as a whole, this domination is far from total.

Nor is it without its own contradictions. Indeed, Germany’s ruling class is deeply ambivalent about shouldering the burden of anything more than a conditional economic and monetary hegemony, and for good reason. Anything more than this might hurt rather than help German capitalism’s recent relative economic success.

Germany for example has repeatedly refused to go along with French calls for moves towards fiscal union and expanded common budgets, because these would require sacrifices from German banks and German industry. Besides which, any more open political domination over the EU by Germany and France would further rouse already rising nationalist forces in central and eastern Europe.

Lapavitsas rightly recognises that Germany’s hegemony is “conditional”, and his third chapter on “The Ascendancy of Germany” has useful comparative data on Germany’s competitiveness within the EU. However his overall analysis is more one-sided, with Germany the supreme power dictating to the rest of the EU, and is littered with exaggerated descriptions such as “the naked fact of German hegemony” and statements like “nothing will happen in the EU until Germany decides to act” and “by 2017, Germany had imposed its will on the EMU and EU”.

Secondly, he tries to locate Germany’s export competitiveness solely in its governments’ repeated attacks on the German working class under Gerhard Schroeder and his Agenda 2010 “reforms”, seeing in this a decisive defeat for German workers without recognising the productivity growth for German capital that this enabled.

In any case, Britain was already two decades ahead of Germany when it came to neoliberal social vandalism, although this principally benefitted the global power of the City of London via the “Big Bang” of financial deregulation, while UK manufacturing was slashed or sold off to foreign owners.

For Lapavitsas, German hegemony is one-dimensional, without reference to the other major EU powers or to other rivals in the world market. But Germany’s strength lay not just in its exports to other EU countries, but also increasingly in its huge export drive to China. These helped to stabilise its economy after the global crisis of 2008, and gave Germany an even more powerful position in the Eurozone crisis of 2010-15. Chinese imports replaced imports from countries like Greece, Italy and Turkey, and helped to swell Germany’s intra-EU trade surplus.

Meanwhile, at key points in the Eurozone crisis major powers like Britain and France were right behind Germany and the “European Troika” of the European Commission, the European Central Bank and the International Monetary Fund (IMF), despite a few weasel words of sympathy for the Greeks. The Troika’s institutions after all were acting as bailiffs to assure loans to Greece from British, French and Spanish banks, and not just Germany’s. And David Cameron’s Tory-led coalition government hardly needed Jean-Claude Juncker to twist their arms to impose austerity in Britain, or to support attacks on workers’ rights in Brussels.

The growing economic integration of the various states of Europe, and the compromises that this necessitated among the big European powers’ ruling classes, were forced on them overwhelmingly by unremitting competitive pressure on the world market from US, Japanese and now Chinese capital. This pressure was increased at key points by the currency market speculation that drove Britain and Italy out of the Exchange Rate Mechanism in 1992; while it was the bond markets’ loss of confidence that battered Greece, Portugal and Ireland into accepting bailouts and austerity in 2010-12.

In short, the driving force of neoliberal austerity was an increasingly globalised international capitalism, and with it the growing sharpness of competition between all of the major imperialist powers.

To defend his position, Lapavitsas claims that “the internationalisation of production and the spread of trade do not require a single market”. But here he ignores the fact that the USA and China each have a huge home market as their base of operation on the world market. For German, British and French capital, the only viable response to this has been European integration. Europe would hardly be a better place for workers if it were divided into competing capitalist states, under just as much competitive pressure from imperialist global powers like the USA and China.

To support his picture of the EU as a one-way German street, Lapavitsas argues the French bourgeoisie no longer has any objective interest in the EU project, or even in the Eurozone. He believes that nothing is left of the Franco-German axis but “a cherished notion”, that France’s push for the Euro was a “strategic miscalculation”, and even that Emmanuel Macron’s present neoliberal drive is a similar “historic error” for French national interests.

Like an armchair general for the other EU ruling classes in their rivalry with German imperialism, he commends the British ruling class for “wisely” having stayed out of the Eurozone. But this was mainly to defend the City of London as a global financial centre, a key aspect of the “financialisation” of the economy that Lapavitsas bemoans elsewhere, and was if anything a compromise forced by Britain on Germany and France.

Overall, Lapavitsas’s distorting lens fails to produce a Marxist historical materialist analysis of how the major European economies were forced to integrate in the interests of their own capitalist classes, and not just on account of German diktats. Above all, Lapavitsas fails to mention the historic possibilities that capitalist growth and the expansion of its economic spheres of activity create.

Karl Marx by contrast recognised as early as 1848 that the capitalist class, by concentrating production, creates its own gravedigger in the form of the working class. The Russian revolutionary Lenin pointed out that the giant monopolies of the imperialist epoch, producing goods and services for a world market, create the future basis for socialist economic planning, and that larger states provide wider ground than smaller ones did for the development of the class struggle and for future socialist development.

Breaking up any existing single market or federation of capitalist states into smaller “sovereign” states will be no more progressive than breaking up giant corporations into smaller ones would be. In fact, such a process takes us further away from the struggle for socialism, and encourages divisions within an international working class that has the task of conducting this struggle.

The poverty of national illusions

Lapavitsas’s sole concrete remedy for Greece is for it to leave the “Iron Trap of the Euro”, in order to devalue its own currency and so allow its economy to adjust. But the same austerity programmes that the IMF imposed on Greece through the Troika were already imposed decades before on developing countries in similar debt crises.

The fact that they had “independent” currencies to devalue didn’t save them from the most savage neoliberal austerity. If anything, the tyranny of foreign exchange and government bond markets would impose exactly the same sort of diktats on Greece as the Troika managed, just via a different route. Hungary, an EU country that is not even in the Eurozone, was forced by currency speculation on the forint to go to the IMF for a bailout loan and austerity.

In fact the ability to devalue one’s own national currency is a complete red herring, rather than a cure-all that “frees” a country from austerity. The huge devaluation that would have been involved in restoring the drachma in 2015 would have seen working-class wages slashed and state assets sold off on a scale as bad as or even worse than the measures imposed from Frankfurt and Brussels.

More fundamentally, Lapavitsas believes that it is a nationally-centred strategy based on left-Keynesian policies that offers countries like Greece a way forward. His hope is that such a strategy would raise demand, investment, growth and living standards, and that this will “tilt the balance of power against capital and in favour of labour, thus preparing the ground for the socialist transformation of Europe”.

But given the current historic crisis of capitalism, combining stubbornly low profit rates, frenetic inter-imperialist competition and looming ecological catastrophe, these will not work in any sustained manner even for the most rich and powerful countries.

The problem here is twofold. Firstly, as seen above it ignores the pressures of a globalised capitalist system that dominates even the most powerful national economies, imposing attacks by each capitalist class on its workers through the pressure of competition, whether in finance or trade. Secondly, attempts at economic nationalism, like the immigration controls to which they are invariably linked, fatally divide the international working class and its struggles.

It is the international unity of the working class (and the unity of multi-national and multi-ethnic working classes within individual countries that have been created by migration) that holds the real answer. It is this unity that can fight the diktats of the banks and multinational corporations, or the power of a Troika, a Trump or a Xi Jinping. This unity is also essential to fighting the right-wing and racist versions of the futile search for “national sovereignty” that the Lexiteers and left-populists try to fill with a “progressive” content.

Precisely because of the level of its integration, austerity in Europe led to coordinated protests by over ten million workers, including strikes in November 2012. International actions like these can be built upon, and have the potential to impact upon, to “integrate” and “restructure” the domestic class struggle as well, if the rank and file of the labour movement succeeds in build its own Europe-wide organisations to take control of this struggle. But to the extent that the existing national labour movements’ unions and parties (with their hidebound bureaucracies and their own national blinkers) called a halt to this, everyone loses out.

To be fair to Lapavitsas, he does recognise that Greek crisis had “its roots at home”, and the Greek ruling class, “placing its own class interests ahead of society”, collaborated with the Troika in the bailouts for its own ends. By examining an actual crisis and struggle, Lapavitsas is forced to break with his single-minded focus on the EU and argue that to break with austerity needed “a sharpening of domestic class opposition to the point of breaking the power of the Greek historical block”, that is to break first with the Greek ruling class. He goes on:

“There must be a rupture with the domestic power structures that have a vested interest in the current arrangements. There must also be a rupture with the transitional institutions of the EU that sustain the current arrangements.”

But the way out of this impasse did not lie in ministers like Yanis Varoufakis trying to soften the heart of his German equivalent Wolfgang Schäuble, whose response to Syriza’s stunning election victory in 2015 (after it pledged to reject any further austerity) was to say that “elections change nothing”. It lay in Syriza summoning the working-class youth, the trade unionists and the socialists of Europe as a whole to Greece’s aid by taking direct action in solidarity “at home”.

The importance of these lessons is that a Corbyn government’s main enemy will also be at home, in the form of the British ruling class and not just the EU. Its best chances of victory will be in leading a European revolt in its support.

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