Europe’s US imported nightmare

I note the US have been rather quietly urging the EU to resolve the so-called ‘Greek crisis’, which I really think is a euro-crisis, even though its current epicentre is in Greece. What the Americans are doing beyond the purview of the public gaze is anyone’s guess but we can be sure it is interventionist, self-interested and probably not helpful to the well-being of ordinary Europeans including Greeks. The US influence over Europe has, in fact, culminated in the crisis, even if that realisation is not understood by many. I have just finished reading a book by the French journalist/publisher and politician – Jean-Jacques Servan-Schreiber – who died in 2006. The book – Le Défi Américain (The American Challenge) was very popular when it was published in 1967. It initially was a major hit in France and later was translated widely. It helped me understand how the US intellectual tradition has at critical times in Europe’s modern history been so definitive.

Jean-Jacques Servan-Schreiber (aka JJSS) was implacably opposed to the anti-US and British sentiment expressed by Charles De Gaulle and believed the Anglo world was critical for the development of Europe after the devastation of World War II.

He founded the weekly French Magazine L’Express, which fulminated continually against the Gaullist policies and was the darling of the young intellectual left in the 1950s and 1960s in France. While it is a right-leaning publication now its beginnings were certaintly not of that persuasion.

This New York Times obituary (November 8, 2008) – J.-J. Servan-Schreiber, French Man of Ideas, Dies at 82 – provides more personal background if you are interested.

The thesis is the Le Défi Américain is that Europe would ultimately succumb in both economic and cultural terms to the relentless push by American corporations into the European markets. But this penetration would not only be in terms of goods and services but also narratives and ideas.

While he supported ‘free trade’ and was anti-protectionist, which brought him squarely into conflict with the Gaullists, he challenged European political and corporate leaders to resist the American threat to European independence. He believed that Europe was “witnessing the prelude to our own historical bankruptcy”.

He wrote:

… we are now beginning to discover what was concealed by 20 years of colonial wars, wars that dominated our thoughts and our behavior: the confrontation of civilisation will henceforth take place in the battlefield of technology, science and management.

Charles De Gaulle was clearly hostile to the American involvement in Europe via the Marshall Plan and the development of NATO. He considered that France was under a cultural attack as well as being economically threatened by US corporations. I am sure you are all familiar with the French attempts to sequester their language from contamination from English, in particular. That paranoia went back to this period.

But by the 1960s, the cultural threats were seen as less of an issue than the role that technological innovation was playing. Many people started talking about the so-called ‘technology gap’ that Europe was facing vis-a-vis the Americans.

American was clearly seeking to exploit its leadership in technological innovation to exert political influence on the Continent. As the time, the Soviet leader (Kosygin) even went to the lengths to visit Paris to try to stitch up a Soviet-Euro alliance against the growing fear of US imperialism.

There was a great article in the Science Magazine in February 1967 that I dug out of my archives today. It is a one-page commentary by Philip H. Abelson (Science, February 17 1967, Vol. 155, No. 3764, 783) – European Discontent with the “Technology Gap”. The link is to JSTOR if your library has access.

He said that:

In many fields, Europe’s technology is at least equal to that of the United Sitates, but in some highly visible areas, such as aerospace, electronics, (and computers, America is preeminent. European leaders feel that the technology gap is growing, and some foresee an “under- developed continent” dependent upon the United States.

And the reasons advanced for this:

1. “The large U.S. market encourages investments, such as the $130 million that RCA poured into color television, and the U.S. devotes a greater fraction of its large gross national product to research and development than Western Europe does”

2. “Less talked about are other differences between us. One is la matter of education. In Germany only 8 percent of college-age youths enter universities, while in the United States 40 percent do so. This contrast contributes to a difference in managerial skill. Middle levels of Ameri- can management are more competent than their European counterparts”.

And the classic quote relating to “differences in social attitudes”:

An illustration was provided me by an official of a large European-based oil company that operates laboratories on both sides of the Atlantic. The company had discovered that the cost of performing comparable work on the two continents was the same despite much higher salaries being paid in the United States. The man’s explanation was this: in Europe scientists directed the work of techni- cians while in the United States scientists personally made the measurements. Moreover, in America top scientists were willing to eat cafeteria-style. In Europe, a leisurely lunch must be served, on a white tablecloth.

One could say that even today, that what one finds at a typical EU-Brussels type talkfest (meeting, conference whatever) in terms of sumptuous catering and wines is quite apart from what is on offer at similar gatherings in the Anglo world.

The Science article also noted the rise of Japan after the Second World War was not just about “a willingness-even an eagerness-to work” but was due to it creating the “best ideas” as a result of their “educational policy” which sees the nation “a larger proportion of their youth than the Europeans do”.

Servan-Schreiber wrote:

… if present tendencies continue, the third industrial power in the world, after America and Russia, could be, not Europe, but American industry in Europe.

The book noted that the US firms that had invested directly in Europe were “the most dynamic element of industry in the Common Market countries” (Source).

The technology gap emerged because even though US firms were operating in Europe, the technology available at the time could not produce the products that the corporations were developing and as a result they had to be produced in the US and imported into Europe (Source).

The problem Servan-Schreiber identified as three-fold:

1. The flow of profits out of Europe to the US-owned firms.

2. The colonisation in an economic sense of Europe by US firms.

3. The cultural invasion.

So there was a massive debate at the time on ways that Europe could emulate the American model to ensure it kept in the technology race.

I should add that I have been studying this literature of the late 1960s as part of a broader project examining the demise of the ‘left’ narrative in European politics and the way economic policy has become homogenised as neo-liberalism – a conflation that, ultimately culminated in the Maastricht Treaty and the current crisis.

At the time, Servan-Schreiber’s ideas were not widely accepted by the French establishment and De Gaulle is rumoured to have dismissed the book as being “trivial” (Source)

In the Daily Telegraph Obituary (November 9, 2006) we read that De Gaulle’s dismissal of the ideas in ‘The American Challenge’:

… encapsulated the sense of rivalry, almost antagonism, towards America and the American free market model that has been a hallmark of French political discourse ever since.

The Belgian economist Jacques Drèze wrote an interesting reflection on these ideas in 1969 when he was at the University of Chicago – The American Presence in Europe.

[Reference: Drèze, J. (1969) ‘The American Presence in Europe’, Selected Papers No 31, Graduate School of Business, The University of Chicago, 1-16)].

Drèze considered “Le Défi Américain” to be “one of the greatest publishing successes ever to be known” in the French-speaking Europe.

He considered that “one sign” of America’s innovation:

… is the great regard in which education is held-not only education of the type we try to provide at Chicago, but also education of the type that millions of Americans are getting in community centers, or buying through the mail, and so on).

He said that:

I hope that no matter how much American presence there ever will be in Europe, there also will be a discovery by Europeans of the best of the United States-and this can only happen through European presence in the United States.

Well that certainly ˙happened with regard to the evolution of the monetary union, although I would vehemently disagree with Drèze that the import of American ideas in the area of economics was desirable, particularly the ideas disseminated by the University of Chicago.

In my my current book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) – I examined the evolution of the monetary union from the late 1940s and traced it in terms of the ideas that underpinned the various policy proposals.

It was clear that the earlier, organised attempts at designing a monetary union embodied, for example, in the 1969 Werner Report and the MacDougall Report in the late 1970s.

The great European visionaries in the immediate post World War II period did not desire to put the European economies into a straitjacket of austerity and hardship.

Rather they aimed to achieve peacetime prosperity. Europe’s political leaders devised the ‘European Project’ as an ambitious plan for European integration to ensure that there were no more large scale military conflicts fought on continental European soil.

The Project began at a time when the advanced nations had embraced a broad Keynesian economic policy consensus with governments committed to sustaining full employment.

The Keynesian era emerged out of the Great Depression, which taught politicians that without major government intervention, capitalism is inherently unstable and prone to delivering lengthy periods of unemployment.

Full employment came only with the onset of World War II as governments used deficit spending to prosecute the war effort. The Keynesian era of macroeconomic policy that followed was thus marked by government deficits supplementing private spending to ensure that all workers who wanted to work could find jobs.

The broad political and economic consensus that emerged after the war brought very low levels of unemployment in most Western nations, which persisted until the mid 1970s, although some European nations had bouts of sustained higher unemployment as a consequence of having to defend their weaker currencies.

Within this broad policy consensus, the discussions about integration were conditioned by Franco-German rivalry. France was determined to create institutional structures that would stop Germany from ever invading it again.

It saw an integrated Europe as a way of consolidating a dominant role in European affairs but was determined to cede as little national sovereignty as possible to achieve these aims.

As noted above, France was also resentful of the influence that the US was exerting in Europe, particularly through the Marshall Plan, which intrinsically tied West Germany to the US.

The Germans, suffering a deep shame for their past militarism and associated deeds, had only their economic success including the ‘discipline’ of the Bundesbank to generate national pride.

As well as a need to expand its export markets, Germany wanted to be part of the ‘European Project’ to demonstrate a rejection of its ugly history. But an obsessive fear of inflation meant that this participation had to be on German terms, which meant that the new Europe had to eventually accept the Bundesbank culture.

This became a grinding process. Within the German ‘stability’ environment, it was seemingly overlooked that Germany, in fact, relied on robust import growth from other European nations for its prosperity.

The fact that not all nations in a Bundesbank centric ‘stability environment’ could have balance of trade surpluses was ignored.

The 1970 Werner Report outlined a comprehensive timetable for the creation of a full economic and monetary union by the end of the decade.

It was clear the Committee wanted monetary and fiscal policy to be centralised with the “centre of decision of economic policy … [to] … be politically responsible to a European Parliament”.

A later study by the MacDougall Committee in 1975 also emphasised that an effective economic and monetary union would require a strong fiscal presence at the federal level.

They assessed that:

It is most unlikely that the Community will be anything like so fully integrated in the field of public finance for many years to come as the existing economic unions we have studied.

The Werner Report was not implemented because of the growing currency instability the French fear of German dominance and their unwillingness cede power to supranational institutions, combined with the German inflation obsession, stood in the way.

The two nations could clearly find ways to cooperate on a political level but trying to form an economic and monetary union was difficult.

In 1972, the Governor of the Danish Central Bank said (quote from my book):

I will begin to believe in European economic and monetary union when someone explains how you control nine horses that are all running at different speeds within the same harness.

What eventually allowed the ‘nine horses’ to be harnessed together was not a diminution in Franco-German national and cultural rivalry but rather a growing homogenisation of the economic debate.

The American influence was manifest.

The surge in Monetarist thought within macroeconomics in the 1970s, first within the US academy, then in policy making and central banking domains around the globe, quickly morphed into an insular Groupthink, which trapped policy makers in the thrall of the self regulating, free market myth.

This was the ‘American Challenge’ – but it was not in the form that Servan-Schreiber envisaged in his 1967 book. Europeans started flocking to US graduate programs in economics and came out with shiny new PhDs and very little knowledge about how monetary systems operate.

The American intellectual invasion of Europe in the 1970s was not a qualitative improvement – rather a race-to-the-bottom of ignorance and ideological supremacy for neo-liberal ideas.

The Europeans imported these inferior economic ideas and analytical techniques via their young PhD students as they returned hometo take positions in government, central banking and in other places of influence.

The accompanying ‘confirmation bias’, which is ‘the tendency of people to only notice information consistent with their own expectations and to ignore information that is inconsistent with them’ overwhelmed the debate about monetary integration.

The introduction of the Monetarist inspired Barre Plan in 1976, by French Prime Minister Raymond Barre, under President Valéry Giscard d’Estaing, showed how far the French had shifted from their Gaullist ‘Keynesian’ days.

Across Europe, unemployment became a policy tool aimed at maintaining price stability rather than a policy target, as it had been during the Keynesian era up until the mid 1970s. Unemployment rose sharply as national governments, infested with Monetarist thought, began their long-lived love affair with austerity.

The Delors Report (1989), which informed the Maastricht conference, disregarded the conclusions of the Werner and MacDougall Reports about the need for a strong federal fiscal function because they represented ‘old fashioned’ Keynesian thinking, which was no longer tolerable within the Monetarist Groupthink that had taken over European debate.

The new breed of financial elites, who stood to gain massively from the deregulation that they demanded, promoted the re-emergence of the free market ideology that had been discredited during the Great Depression.

The shift from a Keynesian collective vision of full employment and equity to this new individualistic mob rule was driven by ideological bullying and narrow sectional interests rather than insights arising from a superior appeal to evidential authority and a concern for societal prosperity.

The Monetarist (neo-liberal) disdain for government intervention meant that the EMU would suppress the capacity of fiscal policy and no amount of argument or evidence, which indicated that such a choice would lead to crisis, would distract Delors and his team from that aim.

Delors knew that he could appease the French political need to avoid handing over policy discretion to Brussels by shrouding that aim in the retention of national responsibility for economic policy making. He also knew that the harsh fiscal rules he proposed that restricted the latitude of the national governments would satisfy the Germans.

Monetarism had bridged the two camps.

The Americans had won!

The Eurozone is now locked down in a straitjacket of economic austerity, driven by an economic ideology that is blind to the evidence of its own failure.

The neo-liberal policies of deregulation and the demonisation of the use of discretionary fiscal deficits (government spending greater than tax revenue) created the crisis in the first place, and now the same sorts of policies are prolonging it

The current policy approach has institutionalised economic stagnation, widespread retrenchment, and the deterioration of working conditions and retirement pensions.

Millions of European workers are now unemployed, youth jobless rates are around 60 per cent in some advanced nations, inequality and poverty rates are rising, and massive daily losses of national income are being endured.

The dramatically high youth unemployment rates will ensure that the damage will span generations and undermine future prosperity as a cohort of jobless youth enter adulthood with no work experience and a growing sense of dislocation from mainstream societal norms.


But there is, of course, one thing that the Europeans failed to grasp as they soaked up American monetarism like illiterate sponges thirsty for anything that they could parade as ‘sophistication’ – such has been the inferiority of Europeans that goes back to the debates that we discussed earlier (Technology Gaps etc).

They failed to grasp that the US President floated the US dollar and abandoned any notion of convertibility – that is, in August 1971 the US dollar became a true fiat currency and the US government inherited significant federal capacity to maintain economic growth and low unemployment.

The European embrace of Monetarism led to the Maastricht Treaty and frightening fiscal rules that have created the crisis throughout Europe and the Depression in Greece.

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That is enough for today!

This Post Has 16 Comments

  1. There are a number of theories as to American dominance of the world today, and most probably have at least some merit and play some part. I’ve been thinking in a little of a different direction of late; that US dominance is a direct result of the August 1971 change to a true fiat currency. Now obviously (as you mentioned) the US had to have the surplus capacity to do that, but I’m thinking a little beyond that; that it was the US’s move when others (esp Europe) did not, and while other did not use their fiat to such abandon (well, perhaps Japan, but they weren’t sporting a world class military with it) to the direct goal of dominance. In other words, the US is dominant because it spent a lot of money to be so (money we did have, according to the monetarists), while others who could have did not. Even the USSR, which was attempting this, was eventually convinced by those same monetarists that they had spent beyond their means, and they voluntarily collapsed their currency as a result, leaving the US unchallenged, NOT because of military superiority or economic superiority in its classical sense, but simply because the US was the last one standing in the proliferate usage of their fiat.

    I of course await the slings and arrows of the others here for comments.

  2. I’ve just bought the ebook on Google Books. Fortunately, it’s possible to read it on my K from A thanks to a little workaround.

  3. Benedict

    Neither a sling nor an arrow:- I presume that in the penultimate line you meant to write “profligate”? Which would convey a very different emphasis.

  4. Bill

    I’m still reeling from the extraordinarily counter-intuitive shock of having Jacques Delors presented in the role of midwife for neoliberalism’s advent in Europe, via Maastricht. In the British neoliberals’ (cheerleader:- Margaret Thatcher) demonology Delors was chief demon. There was the famous party-conference speech in which after berating him for plotting to undo all the Conservatives’ heroic, successful, efforts to roll back the tide of socialism her speech-writers put into her mouth the one-liner “socialism by the back-Delors”, to chrystalise his evil tendencies.

    Not that I’m doubting the validity of your thesis: seen in hindsight it fits perfectly. I just wonder why I didn’t see it before, and why it hasn’t attracted more notice from better-informed people than me. Has everybody been as brainwashed as I evidently was?

    The view that most Brits had of Delors was of a left-wing ideologue hell-bent on realising a vision of a federal, socialistic, Europe (a kind of France-writ-large) and the architect-in-chief of Britain’s being steamrollered by majority-vote into going against its own deepest instincts and inclinations. People like me who had enthusiastically supported Britain’s entry into the “European Community” as it was then known had done so in the firm belief that what we were voting-for was something originally called “the Common Market” ie a customs union cum trading-bloc with, before long, a “single market” for goods and services and free movement of capital and labour. Not for a supra-national quasi-USE with very little democratic accountability which was what we saw Delors as promoting (successfully, to our dismay).

    I still find it hard to really believe that Delors was a closet neoliberal but I must admit that I knew very little then and know even less now about what Delors’ political allegiance actually was. Did he not have his roots on the Left? If so, how did he become chief architect of european neoliberalism as embodied in Maastricht? Was it just to beguile the Germans? Yet his support from the French too was completely solid. I don’t get it.

  5. Hi Bill – not to be churlish, but FYI when I enter the VIP35 code at Elgar online, the sell price drops by 28%, not 35%. Thought you should know. Hoping to buy the book at some point!

  6. I missed the discount but your book worth every euro I´ve paid for a month ago

  7. Dear Andi (at 2015/07/03 at 0:59)

    Thanks for your intelligence. The explanation is that the 35 per cent discount is on their list price of £110 which gives you the £71 discount price when you apply my special VIP35 code. But at present, they are offering the book at a discount on the £110 at £99, which means the £71 you pay when you apply my VIP35 special discount code amounts to only 28 per cent on the already discounted price, as you observe.

    I have no control over that, sorry.

    best wishes

  8. Dear Robert (at 2015/07/03 at 0:48)

    That is the whole point of my current book project (one of them), which emerged from the Eurozone Dystopia book research. Monetarism captured the left as well as the right. Think British Labour Party, Australian Labour Party, social democratic parties everywhere. Think European socialist parties who are leading the charge in dishing out the austerity. They all were captured.

    best wishes

  9. Hi Professor,

    I’ll be buying the new book.
    Just wondering about the progress of the MMT Textbook, I’d like to start developing
    my understanding.
    I know bits of it are online but I can only really absorb ideas properly from a real book.



  10. More broadly speaking, capitalism has captured the entire world just as Marx predicted. The 1960s French debate and the contemporary European situation are only this prediction embodied forth in one region of the world.

    “The bourgeoisie cannot exist without constantly revolutionizing the instruments of production, and thereby the relations of production, and with them the whole relations of society. … Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation, distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away; all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned, and man is at last compelled to face with sober senses his real conditions of life and his relations with his kind.”

    “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 civilization. The cheap prices of its 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 civilization into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.”

    Has all this not happened exactly as Marx predicted? His accuracy of analysis, his prescience in prediction are astounding. It is even possible to understand why a “socialist” revolution like Lenin’s was premature and bound to fail. The progress to fully global capitalism has to occur first. Capitalism by its inherent systemic and thorough-going nature had to and was bound to triumph everywhere first before the preconditions for a socialist revolution could be met. Equally, it is clear why the Western “Left” had to fail at or near the general peak of capitalism. The failure of the left was part and parcel of the complete (and systemically certain) triumph of capitalism.

    “It (capitalism) compels all nations, on pain of extinction, to adopt the bourgeois (capitalist) mode of production..” Here is a perfect expression of Realpolitik or if you will of the geostrategic importance of economic capacity (Paul Kennedy) and its facilitated military projection as per “Offensive Realism” (John Mearsheimer).

    Capitalism is a far more powerful production system (with the aid of science and technology) than any production system which has gone before. While it still has boundaries, boundaries beyond which capitalism does not yet exist, it still has fertile grounds for expansion: downtrodden peasants as yet not transformed into exploited workers and natural world as yet not completely pillaged and ransacked for raw materials.

    The denouement comes and can only come when there are no more peasants to transform into exploited workers and/or no more natural world to ransack. Peasants today are what we call subsistence farmers. “Subsistence farming continues today in large parts of rural Africa, and parts of Asia and Latin America.” – (Wikipedia). There are, on some measures, still 2 billion subsistence farmers left in the world. At least a billion of these are in the Indian sub-continent and China combined. Given the more recent revolutions in robotic production there now seems little to no chance that all these remaining subsistence farmers (a reserve labour army of 2 billion) will ever need to be drawn into capitalism. That is to say capitalism will always be able to maintain a huge global reserve army of the unemployed and the marginally self-subsisting with which to discipline workers and with which to make gains for capital via labour arbitrage.

    It may even be that gains via labour arbitrage could be maintained indefinitely by running a endless system of rolling crises and impoverishment around the globe. When a nation or region becomes too affluent (in the eyes of the metropole capitalist oligarchs) and thus demands wages which are too high, the technique will be to move production to another currently impoverished area and progressively impoverish the existing more advanced area. On the downswing this “existing more advanced area” (let us call it Europe or USA or Australia) is enabled to maintain an artificial level of aggregate demand not supported by diminishing wages but supported by lending. This enables it to take the imports of the newly industrialising regions. When each “existing more advanced area” has served its purpose it is then progressively trashed and a backward area which will in turn accept low wages is employed for capitalist production. The newly rich region or country, say China, will eventually have its wages disciplined in turn in a similar manner. This very late stage capitalist dynamic might not assume so much a national character as “metropole / hinterland” character.

    In the above scenario, revolutions will also assume an ever-changing and patchy “hinterland” and “backwater” character and be unable to effect changes against the metropoles of power with their stranglehold control on technologically advanced security and military power (the oppressive apparatus).

    Only in capitalism’s attack on nature is there any clear hint of a limit to this process. It is perhaps not raw resource limits which will impose the limits but rather the bio-service systems of the bio-sphere which will impose the limits on capitalism. In this analysis, climate change, species extinctions, death of the oceans and other ecological crises, will generate the only realistic catalysts and grounds for widespread revolutionary change. Then the oppressed and marginalised hinterlands and the metropole middle classes (bureaucrats, technocrats, managers, security and military personnel) will all realise that the capitalist oligarch system is destroying the planet and thus the basis for the lives of the 99%. At that point the peasants, subsistence farmers, bureaucrats, technocrats, managers, security and military personnel could all realise they are essentially in the same boat and on the same side. That could be an “interesting” time for the 1%.

  11. @Benedict@Large
    That’s actually a really interesting:why couldn’t the USSR compete with US military spending and military technology,from an MMT perspective.
    What I do know is that the entire USSR industrial complex was geared toward producing intercontinental ballistic missiles (neclear warheads).But not much else.

    As for the US it was pentagon state spending and military directed R&D investments which produced the technological lead that the US currently has over the rest of the world.
    Some of which made its way to the consumer market.

  12. Prof. Mitchell,
    Thank you for another insightful post! Since you said you are looking into the demise of the European Left, I was wondering if you are familiar with the book “The Road From Mont Pelerin” by historian of economic though Philip Mirowski (and Dieter Plehwe, who I believe graduated a philosopher). The book narrates the national origins of neoliberalism in France, Germany, and England, as well as the origins of the Chicago School of Law and Economics. That book is absolutely crucial to understand neoliberalism. Unfortunately, not much else has been published in English that helps to understand neoliberalism and its rich history. In French, the sociologist François Denord has also published on neoliberal intellectual history and its influence in the EU. You will probably find his writings fascinating. Also, the philosopher Serge Audier has published some very interesting and rigorous historical analyses of neoliberal history: his book called “Neoliberalisme: une histoire intellectuelle” and his other book “The Colloque Lippmann” are a must read to really understand neoliberalism. Keep up your awesome work, professor!

  13. Hello Robert (Friday, 3rd July 2015 at 0:38)

    “in the firm belief that what we were voting-for was something originally called “the Common Market” ie a customs union cum trading-bloc with, before long, a “single market” for goods and services and free movement of capital and labour. Not for a supra-national quasi-USE with very little democratic accountability which was what we saw Delors as promoting (successfully, to our dismay).”

    The big con is that the public believed – and still believe – the claim that you can be in a single market in almost every facet of your national life and still be sovereign, self-governing, independent, etc.

    The single market is every bit as dictatorial and undemocratic as the quasi-USE you refer to. In fact, they’re basically one and the same. Economics/trade is the vehicle for extending superior power over nation-states and bringing them under one system, not as equal partners but as subordinate bit-players. Anyone disagreeing with this project gets called, by Merkel’s lot, ‘quaint’.

    Unless the British public wake up to the fact that they don’t need to be *in* the single market in order to have full trade with it, they’re condemning themselves to annihilation of their country.

  14. Jake,
    “why couldn’t the USSR compete with US military spending and military technology,from an MMT perspective.”

    Remember, the USSR had a gold standard, long after it was abandoned everywhere else. I suspect that had a lot to do with it.

  15. Jim

    “The single market is every bit as dictatorial and undemocratic as the quasi-USE you refer to. In fact, they’re basically one and the same. Economics/trade is the vehicle for extending superior power over nation-states and bringing them under one system, not as equal partners but as subordinate bit-players”.

    That’s going a bit too far for me. Yes, a single market necessitates the creation of supra-national rules and regulatory bodies, but these need not inherently be dictatorial or anti-democratic – any more than their domestic equivalents. Or are you implying that ALL regulation of markets must inherently be “dictatorial…etc”? Which would place you firmly in the neoliberal camp.

    For all I know that’s in fact where you’re coming from, in which case ought you not perhaps to be challenging Bill’s thesis head-on?

  16. This is a really good article Bill which seems to make a lot of sense in explaining the historical development of the flawed Eurozone mechanism. Part of the difficulty for many not familiar with your development of MMT thinking, however, are still going to be confused about the role played by “government deficit spending” in economic activity including economic growth since the use of the word “deficit” has for most people pejorative associations. I understand why use the term and there have been attempts to substitute the word “injection” but even this doesn’t quite capture the process going on. It would seem better to my mind to use the term “net circuit” government spending and be persistent in explaining what this means.

    Finally, George Bataille’s book “The Accursed Share” helps I think to better explain the pejorative fear attaching to the word “deficit,” which David Graeber also touched upon in his book “Debt,” and this is to be found in Bataille’s discussion of the potlatch tradition. Essentially because human beings have evolved a flexibly cooperative way of working together for survival purposes securing a reputation as being a responsive cooperative individual pays dividends and giving wealth away in potlatch ceremonies is a good way of securing that reputation. Paradoxically going into a “deficit situation” suggests an inability to be able to return “favours” vital to successful cooperation. Here is the “money sociologist” Nigel Dodd relating Bataille’s ideas to the Eurozone situation:-

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