The EU: neoliberalism and democracy – part 1

EU-TWEET-2Both right and left supporters of leaving the EU see it as some sort of emerging Super State, a bureaucratic Leviathan sitting on top of a population of so many Joseph Ks, captured by its labyrinthine rules, in a state of helpless and woeful ignorance of the malevolent plans to which they are subject.

Within its confines there is no way out, there is no solution.  Nothing is familiar.   It is foreign in every respect.  There is no democracy and you can do nothing to change it.  For the Left it cannot be reformed – its essential character is neoliberal – although it can be defeated, or rather it can be escaped from.  And this is what Brexit offers.

It offers release from a putative empire and its recognisable emperor – Germany.  The very breadth of the alternatives presented as possibilities outside its walls is testament to the potential freedom existing beyond its bewildering restrictions, its Treaties, Guidelines, Regulations and Directives. The natural territory of democracy is the nation and the return of national democracy will free Europe’s very different peoples to make their own decisions.

The differences between the British, the Finns, Bulgarians, Greeks and Italians etc. are simply too great.  No cultural commonality or elements of unity can be found and therefore no common political architecture can accommodate their different views, aspirations, values and demands.  Lack of democracy within any project that attempts it is therefore inevitable.

The ‘Peoples Movement’ in Ireland, which opposes the EU and supports Brexit puts it like this:

“The supposition in the EU Treaty that member-states already share a common value system is, moreover, a disingenuous fiction. The principles of “liberty, democracy, respect for human rights and fundamental freedoms and the rule of law” which are stated in article 2 of the Treaty on European Union to be the foundation of the EU, are not unequivocal concepts. There is no Union-wide consensus on what constitutes a higher or lower standard of protection of rights; there is no consensus on the source of human rights, such as the theory of natural law, whether secularly or religiously based, that would permit a rational analysis and evaluation of conflicting positions.”


Such an analysis is not one that any socialist can endorse or support.  In fact socialism rejects every substantive claim made above.

The EU is not even a State never mind a Super State.  If we begin with the understanding that the state consists above all of armed bodies of men and women then the EU has no army and no police with which to assert the class interests of European capitalism.  It often cannot unite politically even if it did have a single and coherent state apparatus to command. It had no such view when Yugoslavia disintegrated and it was NATO that went to war.  That it is not a Super State became clear in its failed intervention in the Ukraine, where it lacked the economic power, political unity of purpose and military prowess to counter Russia.

The illusion of a united, efficient and increasingly powerful bureaucratic apparatus reveals a view of bureaucracy as a predominantly rational and rules bound organisation that is internally coherent.  But not only is this not the case with any bureaucracy it is certainly not true of the EU.  Even its critics, or at least some of them, are not so much forced to acknowledge this but see it as a primary feature of the EU – that its rules are as often observed in the breech as in the observance.

There is apparently a remarkable level of non-compliance within the EU and its member states, in which EU Directives are not transposed into national law, rules are not adhered to, decisions at summits are not respected and European Court of Justice rulings are not enforced.  In other words the state machinery necessary to impose laws is not in place.

So the Maastricht rules dealing with debt and deficits were first broken by Germany and France while such rule breaking by Greece is anathema.  Much has been made of the Greeks fiddling statistics to get into the Euro but what they did was simply to follow what the Italians had done before, and everyone looks the other way when this is mentioned.  Bank stress tests are taken seriously by no one. The Eurogroup, the body that decides on these economic matters, that determines the economic policy in the Eurozone, has no legal standing and therefore doesn’t legally exist.

The incoherence of much of the bureaucratic machinery is illustrated in the inefficiency and corruption that besets the EU.  It lacks effective financial controls so that it has failed its own Court of Auditors for over twenty years.  In 2003 only 10 per cent of payments by the European Commission “faithfully reflected budgets and expenditure”, while the rest could not be accounted for and over 10,000 cases of larceny were uncovered in the year before. When the Chief Accountant reported that the EU budget “was an open till waiting to be robbed”, Neil Kinnock fired her. He also smeared another whistle-blower after she reported improprieties at Eurostat, a statistics agency whose figures were employed in allocating the EU budget. It has been investigated six times, during which shell companies, slush funds and “rake-offs” were all uncovered.

In his latest Book – ‘And the weak suffer what they must’ –the ex-Greek Finance Minister Yanis Varoufakis, rips into the failed design of the Euro and the rules it is based upon but admits that these rules are often in large part made up by the EU as it goes along.  This includes as a result of the struggle between the Bundesbank, its German ordo-liberals and the Draghi-led European Central Bank and its commitment to ‘do whatever it takes’ to save the Euro.

This is not some sort of all powerful juggernaut or all-powerful emerging German empire.  The GDP of Germany in 2015 was over €3 trillion while that of the EU as a whole was over €14.6 trillion, so the German share was around 20%.  Germany also lags behind Britain and France in terms of military capacity so whatever about its economic strength this is not basis for a fourth Reich.  Germany can lead but it cannot on its own determine the future of the EU.

The EU therefore lacks the scope and depth of function required of a state while aspiring to both, the difference for its critics often obscured by its declarations of intent and its bombastic and arrogant approach to what it does control.  It is not therefore easily identified, categorised and summed up so, when its more obviously nationalist critics denounce it, the simplicity of their analysis is often embarrassing. So the People’s Movement can’t help but notice that the EU has no army and police but “Their absence makes it all the easier to hide from ordinary citizens the reality of Europe’s hollowed-out nation-states and the failure of their own mainstream politicians to defend their national democracies.”  The People’s Movement declaration of hollowed out national states fails to register its admission that the EU proto-state is also empty of crucial functions.

The simple story of EU power also includes the declaration that the EU cannot be reformed as it is intrinsically a neo-liberal construct, one that enforces this economic policy on its members.  But as we have noted, such enforcement is not uniform.  The progenitor of the EU, the European Coal and Steel Community, was not a vehicle for the free market but a cartel arrangement for oligopolies. The EEC/EU was part and parcel of Europe-wide Keynesian policies in the 1960s and is now part of the neoliberal turn that was to be consolidated in the European Constitution but became part of the Lisbon Treaty when this constitution was rejected.  It is also strongly in evidence in the austerity agenda mandated by the Maastricht Treaty and enforced during the Eurozone crisis.  It has not therefore always been part of the EU and there is good reason why it may not remain part, including that it is not working, for example irrecoverable debt cannot be repaid.

While the EU has introduced state aid rules that restrict state subvention of private capital it does not prohibit it.  The Lisbon Strategy of 2000 called for it to be phased out but the reality became more rules that explain how it may be permitted.  In the years 2000 to 2011 its level didn’t change, amounting to 0.7 per cent of GDP, so argument continues as to whether public procurement in the EU is more or less open than its competitors in the US or Japan.

The EU is made up of states, which jealously guard not only the interests of their national capitals but also their own interests as states. This includes protection of state owned capital.  For example in the field of energy, where the EU has some competence i.e. it has some control, many components of this industry are still state owned. Even in the Irish State, at the depths of the crisis and diktats from the Troika of European Commission, European Central Bank and IMF, the state retained ownership of much of power generation through ESB and the electricity transmission and distribution system through EirGrid.

Those on the Left who regard the interests of nation states, and their powers of discretion, as the alternative to the neoliberalism of free markets have a lot of explaining to do, in particular how these states that barter and trade off the perceived benefits of trade to themselves, and the big capitalist businesses they seek to protect, are any sort of alternative.  The seeming obsession of the EU with competition rules is in part an inevitable result of any inter-state cooperation, which is undoubtedly more involved in the EU, but which would not disappear outside of it, that is if progress on trade and investment deals is to be made.

The emphasis on free markets and competition arises not just from a general and obvious commitment to capitalism by all the European capitalist states but from the desire to create a free trade area across Europe in the same way that there is generally free trade within the national states themselves.  This is not because the individual states do not want to intervene to bolster the position of national champions but because they must have rules and mechanisms that limit the same intervention by the other states that may be to the detriment of their own capitals.

The developing logic is to create not national champions but European ones, which leads to a similar process at the world level.  The US and Japan etc., like the EU, seek trade and investment deals that will allow the growth of their capitals without discriminatory barriers put in their way by other states.  Each therefore has to strike deals that limit such practices, not only between but also within their borders, and which protect their own big capitalist businesses. The confidence to exploit and exchange commodities that exists at the national level is sought at the European and world level through a single European market and world trade and investment deals.  To see these deals as the problem and not the system of exploitation and commodity exchange that is taken for granted at the national level is to forsake a socialist for a purely nationalist perspective and fail to understand the roots of what is going on.

A contradiction thus exists between the rhetoric of free competition and the state and EU interventions that seek to strengthen particular capitalist concerns.  From this also arises the repulsive system of lobbying by big business that is such a feature of the Brussels scene.  It brings to light the crony and corrupt interface between politicians and capitalists which has grown organically at nation state level and because of this is much better hidden from public view.

The contradiction is also expressed through the fact that the state at a national level not only provides for a level playing field that privileges the workings of capitalist competition, which finds expression through the market, but also intervenes positively to support groups of, or individual, capitalist concerns.

This not only involves what might be considered purely economic measures, such as grants, subsidies, and taxation arrangements but also purely political interventions that for example provide for or foreclose market access.  The rules and the wrangling in the EU are the outcome of the attempts to do this at a supra-national level.  Such activities would continue were Europe to revert to a world of separate nation states – the world beloved of nationalists and a left no longer confident of the future but hankering for a supposed golden age of social democracy, i.e. a particular form of capitalism.

What does change in the EU framework is acknowledgment that the state’s intervention in support of capitalism is no longer adequate if confined to the national level and that the political interventions required also have to take place at the European level.  The logic is creation of a political vehicle that can do this adequately, a European State.  If you don’t like this the answer is not to attempt to turn back the clock to an earlier form of capitalism that the development of the system has outgrown but to make the alternative to capitalism also international.

Forward to part 2

3 thoughts on “The EU: neoliberalism and democracy – part 1

  1. I have recently been taking a look at the philosophic history of some of the most used concepts deployed in current journalism. My interest was prompted by the regular use of the concept of regime change. I was interested in what term really intended. If we take Syria or Libya one could ask, does a regime change mean a change in the Head of the Government, does it mean a change in the relationship between the Government and the society, and what about the State? What distinguishes a regime from a State? The State seems to intend a more remote thing, the international recognition by other Governments/States of lasting national borders. If there is an intention or plan to redraw existing political borders then it would seem we should be describing State change rather than regime change.

    When I looked back at Marx I find more than one description of the meaning of the STATE. There is the armed body of men description, this is one more suited to what Engels passed down as orthodoxy, yet there is another one that is much more economical sounding, a committee for the supervision of the economic affairs of the bourgeoisie. The one about the armed men, originates out of the philosophic legacy of Machiavelli, for he not only was the first to use the word il Stato, he also argued that the military arts are the effective basis of a successful politics. His perspective was that the Italian city States were weak and subject to foreign invasion for their lack of well trained armies, his political advice is couched in terms of the necessity for good arms.

    The political language of the philosophic GREEKS makes no reference to The State, political ASSOCIATION is described in terms of a difference in Regime. Is the contemporary usage of political regime an echo of the political thought of Aristotle and Plato? The city State of Athens was not a State in the modern meaning, for one thing it had no a Standing Army and no permanent bureaucracy. The concept of political regime as deployed by Aristotle seeks to isolate the ruling element, ethos This seems more like our modern conception of political culture, for Aristotle associated ethos with education, Hegel often translated the Greek word regime into the German word Volk, and we English speakers like to translate Hegel’s Volk as culture or spirit.

    So is the EU a State or a regime? If it is a State or intending to become a State it might also have to have something more than a Standing Army, it might pretend to be a new Nation called Europe. This is because political borders are established on the basis of the recognition of the right of Nations. The STATE can be said to be a problem for Marxism because the Nation is such a big problem for political science. I recently read Nigel Harris ‘s 1990 book National Liberation, Harris is an historical materialist who dislikes nationalism, he is an internationalist, he gives us some remarkable examples of the perversity of the International Communist Movement in its heyday. He refers to the Black Belt States of America, the Comintern inspired by a document of Lenin’s promoted the idea that the Black people of America constituted a nation and therefore required a State of their own. He says ‘It took some time to get the Communist Party of the United States to adopt the demand, particularly since none of the black membership recruited from the North accepted the proposal. By 1930 the party was pressing the case for a national rebellion in the South..The line remained officially intact up to 1958.’

    The second episode describes events in Germany in the period of Wiemar crisis. In 1930 the Comintern policy document described Germany in terms of an oppressed nation of British and French imperialism..’indeed the KPD’s main attack on the Nazis was that they failed to fight for German national liberation, for the recovery of the territories lost under the terms of the Versailles Treaty. The Germans of Austria , Danzig, the Saar and Silesia had been betrayed by the Nazis; only the KPD championed their right to rejoin Germany.’

    The perversity of Comintern Communism is one thing, the philosophy of the nation another. There is no State that does not promote a nationalism of some quality, good or bad, intense or relaxed. The evolution of the European Union has been overall steady, slow and fast at different times, but it has probably reached an end point. What seemed liked a process made to diminish national conflict, for this is how the pioneers thought about it in the beginning, is now provoking a swelling up of nationalism both left and right, and this is jeopardizing all of the long standing political establishments, including the most established one of them all, of Great Britain. The European Union is not a State, it is more like a regime, which is in tern is more like a political culture defined by rules written by trans- national experts. The thesis that capitalism has outgrown nationalism seems true if one fixes on economic criteria and logic alone, but has Capitalism also outgrown the State, if it has not then it has not genuinely superseded nationalism, for No State exists today without the legitimacy of nationalism gives it. In my opinion the European Union has reached its end point because nationalism is not about to wither away.

    • In a certain sense, nationalism already has passed away, whilst in another it has not. Most modern nation states are in fact, multinational states, i.e. they contained numerous nationalities. If we take the French nation state, for example, it was a coming together of 200 different nationalities. Germany combined Prussians, and so on. Italy combined the Lombards with other nationalities. Britain combined the English, Cornish, Welsh, Scottish and Irish.

      As Engels describes in his writings on the “Non-Historic Peoples” discussed by Rosdolsky, most nation states arise on the basis of some dominant nationality forging such unity, and the inability of certain nationalities to be able to establish their own state. In fact, Marx, Engels and Lenin, argued that in relation to these latter nationalities, the demand for self-determination was in fact reactionary, that their time had passed, and that their search for nationhood usually led them to align with larger reactionary states, in the hope of achieving their goals. They had in mind the small central European nationalities, but a similar argument could be made today in relation to the alliances made by Palestinians with various reactionary regimes in the region.

      Marx’s comment about the state is not about merely the economic affairs of the bourgeois. He states,

      “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

      His comments in The Eighteenth Brumaire of Louis Bonaparte, in The Civil War in France and so on emphasise his conception of the state as the means by which the ruling class keeps itself in power, and both he and Engels write about the fact that in Ancient Greece, and other early civilisations, the state’s bodies of armed men were often comprised of foreign slaves and mercenaries.

      The state is also conceived in another way as meaning the nation state as a geographic area. The two terms are unrelated, other than for the fact that the nation state in this second sense defines the borders over which the state in the first sense holds a remit.

      The EU is not a state in either sense. It is a proto state. The fact of the existence of assorted nations and nationalities within its borders is irrelevant. Switzerland is a nation state, and yet comprises three distinct nationalities of Germans, French and Italians; Canada is a nation state that comprises English and French nationalities – and a large Italian nationality, not to mention the Inuit; the USA comprises the English nationality, as well as the Mexican nationality in those states that were formerly part of Mexico such as texas, California etc., as well as the Native American nationalities, the Polynesians in Hawaii and so on.

    • Surely the policies of the Comintern you describe are those of the Stalinist period. A distortion of Marxism at best. The position on Germany led to “National Bolshevism” – terrible. Wasn’t Stalin critisised by Lenin for his attitude to nationalities in the USSR?

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