European Left face a Dystopia of their own making

Last week, I re-read an article from May 1, 2012 by Abraham Newman – Austerity and the End of the European Model – that was published in Foreign Affairs. The article carried the sub-title “How Neoliberals Captured the Continent”. The author is a US political scientist and observed that given the unprecedented austerity that the European politicians have inflicted on their nations with such damaging consequences, the “Tea Party loyalists in the United States should be green with envy”, The hard-line US Republicans don’t go close to their European brethren. The thrust of the article was that independent of the short-term effects of the austerity it “will transform Europe’s political economy in the long term, lending credence to neo-liberal ideas of limited government and loosely regulated markets. The irony of this transformation is that it reinvigorates the very ideas that helped cause the financial crisis in the first place …” This is a theme that I share. It is also a starting point for a very interesting essay I read last week by Slovenian lawyer Bojan Bugaric – Europe Against the Left? On Legal Limits to Progressive Politics – published May 2013. I have been seeking to understand these perspectives more deeply as part of my larger book project concerning the demise of the European left.

Cast your mind back to the early days of the crisis. Wolfgang Schäuble has not always been the German Minister of Finance. He took that role in October 2009.

His predecessor, Peer Steinbrück was there as the festering storm that had been building for a few decades finally exploded into the GFC – an “earthquake” as he put it in September 2008.

On September 25, 2008 he told the German Bundestag that (Source):

Wall Street and the world will never again be the way they were before the crisis … [which was the result of] … a blind drive for double-digit profits … The cause of the crisis was the irresponsible exaggeration of the principle of a free, unrestrained market … This system, which in many ways is inadequately regulated, is now collapsing …

It is a pity that insight didn’t shape European thinking in the years that followed. His replacement as Finance Minister certainly changed the script.

Abraham Newman’s insight was clear in 2012:

Austerity politics in Europe is not simply a short-term fight between the surplus countries in the center and the deficit countries on the periphery. It is a long-term political agenda that privileges lenders over debtors and capital over labor and, as such, should be seen through the lens of partisan politics …

Reviving an alternative agenda for the political economy of Europe would first require social democrats to convince voters that the crisis is not just a story of profligate governments but also of reckless markets.

And in 2012, that should not have been a hard thing for progressive political parties to accomplish.

The indecent shifts in income and wealth distributions and the obvious fact by then that the early growth dividends after the crisis were almost exclusively being reaped by those at the top of these distributions while workers faced real wage cuts and relativity compression or debilitating unemployment and a steady slide into poverty as scarce saving balances were exhausted.

Bojan Bugaric’s article takes this idea a bit further for he too is incredulous that (in May 2013 when he wrote the piece) that European politics was being dominated by centre-right parties that promoted austerity as the only solution despite the material circumstances of the situation presenting:

… a great window of opportunity for the Left, which could not have been blamed for the disastrous consequences of neoliberal economic and political policies of the centre-right parties in power.

He lists a number of ‘favourable’ circumstances in addition to the “economic conditions” for “shifting the political terrain in favour of the left”.

These include the “rise of a progressive younger generation, the increase in immigrant population, the growth of the professional class and the increasing social weight of single and alternative households and growing religious diversity and secularism”.

But as we know, the progressives have not gained any traction pursuing anti-austerity programs (and we can dismiss Syriza’s pathetic masquerade) and have instead surrendered the debate space to the right who have progressively (sorry about the pun) introduced European Treaty changes (for example, the Fiscal Compact) and domestic legislation which:

… basically outlaws Keynesianism and its counter-cyclical economic policies and constitutionalizes austerity and balanced budgets as new fundamental principles of the EU constitutional order.

That is an amazing state of affairs given it this resort to extremism has happened in a relatively short time-frame.

Bojan Bugaric seeks to explore the hypothesis is that these developments have confronted the European left “with a distinct constitutional order, which because of its pro-market neoliberal bias, radically limits the ability of the Left to pursue its political program”.

He posits that one influential view is that it is now “structurally impossible to combine common economic market and redistributive social policies on the EU level”. This is because the previously-held neo-liberal ideology of the centre-right parties have been embedded in legislation, legal code, constitutions which make it moot as to the personnel that occupy senior positions in the judicial and bureaucratic infrastructure.

It is law that is now driving the politics which “crucially determines the … relations of production”.

So the European Left has nowhere (progressive) to go – no room to manouvre.

He largely rejects that view and argues that it has been the:

… the reluctance and inability of the Left to ‘Europeanize’ its social agenda … The Left thinking and policy proposals concerning ‘social Europe’ have remained firmly embedded in the logic of the nation state. The Left urgently needs a new post-national approach to ‘social Europe’.

In my current book – Eurozone Dystopia: Groupthink and Denial on a Grand Scale (published May 2015) – I argue that it was not until the onset and emerging dominance of University of Chicago-style Monetarism that the debate on European integration veered off onto its disastrous course marked, initially, by the passing of the Single European Act in 1986, then the release of the Delors Report in 1989, which paved the way for the Maastricht Treaty in 1992.

Prior to the emergence of Monetarism, the discussions of economic and monetary union were along the lines that a federal fiscal authority with the capacity to provide public spending buffers to help nations facing asymmetric negative demand shocks would be an essential part of any effective design.

The conclusion of the 1977 MacDougall Report was that the state of European politics, especially the unwillingness of France and Germany to truly cede their national fiscal capacities to such a federal authority in such ways that the latter could function effectively, was such that an economic and monetary union should not proceed.

In 1972, for example, the Governor of the Danish Central Bank said:

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.

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

The accompanying ‘confirmation bias’ overwhelmed the debate about monetary integration.

Bojan Bugaric, similarly, considers the 1980s as the “turning point” for the Left as neo-liberalism became embedded in the Treaties of Europe rather than the expression of centre-right political parties seeking a popular mandate.

At that point:

The relaunching of European integration thus coincided with a major shift in the political ideology. The golden age of the Keynesian welfare state did come to an end and gave its way to a new powerful ideology – pro-market neoliberalism.

The embedding of neo-liberalism in the treaties was according to Bojan Bugaric facilitated by “Mitterand’s turn from failed domestic Keynesian policies to Europe which crucially contributed to the success of the single market project”.

Keynesian policies, which empowered government to stimulate domestic demand and reduce unemployment, did not fail at the time. They were just inconsistent with the rigid European Monetary System (EMS) which was dominated by the mercantilist policies of Germany, which meant that France had to engineer a domestic recession – through Keynesian policies – to maintain the agreed exchange rate parities.

Bojan Bugaric claims Mitterand’s ‘turn to austerity’ “made centre-leftism obligatory for other European Left parties”. That may be true but it just leads to the further conclusion that the Left parties throughout Europe became seduced by the same kool aid – Monetarism.

I considered the role of Mitterand (and Delors) in this blog – Mitterrand’s turn to austerity was an ideological choice not an inevitability.

The conclusion of that analysis, which came out of the research I did for my recent Eurozone book, was that the French were still intent on remaining in the EMS despite the obvious evidence that it was a dysfunctional system that only led to domestic misery (for France).

The French Socialists wanted everything: political popularity associated with the lower unemployment and improved living conditions, a straitjacket on perceived German pretensions to European power, and continued German subsidies to the Common Agricultural Policy (CAP).

On the one hand, domestic policy sovereignty was crucial if it was to lower unemployment and this predicated against participating in the EMS.

On the other hand, the desire to undermine German influence and to find a way to subsidise their farmers under the CAP forced them to engage in the European dialogue. They were caught betwixt!

By the third currency realignment in March 1983, the French were at the crossroads and the incompatibility of these competing ambitions was obvious.

At that point, France had a choice. It could retain its policy sovereignty and pursue its legitimate domestic objectives by floating the franc or remain within the EMS and subjugate its domestic policy freedom to the dictates of the Bundesbank.

Unfortunately, for the French and for Europe in general, they chose the neo-liberal path, however culturally alien this was to them

History tells us that the French government fell lock step into the increasingly dominant Monetarist policy approach that involved using rising unemployment as a policy tool to discipline the inflation process.

That political reality was too stark for the public to accept and necessitated a smokescreen being erected to disassociate the rising unemployment from macroeconomic policy choices.

The rising unemployment was reconstructed by the political and bureaucratic spin doctors as a ‘structural’ problem reflecting a failure of individuals to be self reliant and assiduous in job search and skill development. A bevy of securely employed and highly paid economists pumped out a massive number of ‘research’ papers, which served to give authority and legitimacy to this ideologically tainted and empirically bereft view.

Most of this ‘authority’ lacked credibility, but then mainstream economics has never really been concerned with its theoretical inconsistencies or lack of empirical traction.

The ‘tournant de la rigueur’ that Mitterrand took in 1983 is held out by left-wing intellectuals as an inevitable response to increased globalisation and the end of the autonomy of the nation state in economic terms.

Mitterrand’s later ‘partnership’ with German Chancellor Helmut Kohl in forging broader European integration was the driving force in the subsequent introduction of the Maastricht treaty. Jacques Delors, Mitterrand’s austerity hatchet man, assumed a major role in the process that created the disastrous Eurozone.

There are two things that the ‘left’ repeatedly invoke and they both involve Mitterrand, in one way or another. First, that globalisation and the internationalisation of finance ended the era of nation states and their capacity to pursue policies that were not in accord with the profit ambitions of global finance.

The claim is that if a government tries to pursue full employment and redistributive policies then the financial markets will punish such a government through so-called ‘capital flight’ which would cause the currency to depreciate and the share markets to collapse.

The result would be economic crisis.

The narrative then claims that Mitterrand had no option but to abandon the Keynesian Social Democratic policies encapsulated in the 110 Propositions.

To the ‘left’, Mitterrand thus represents a pragmatist who was cogniscant of the international capitalist forces he was up against and aware enough to be flexible to do the best for France.

The alternative view (which I hold) is that Mitterrand was never a champion of the left. He just used that platform to achieve his presidential ambitions and the 110 Propositions were just a political vehicle to demonstrate a start departure from the deeply unpopular policies that Raymond Barre had pursued in the late 1970s.

He is not a role model for the left. He could have taken quite different decisions – the first of which would have been to abandon the fixed exchange rate policies and to give the French rural lobby a reality check.

Far from being helpless against the power of international capital, a sovereign, currency-issuing state like France at the time still held all the cards.

There is also a crucial difference between globalisation (by which I mean the growth of Transnational Corporations and international supply chains) and the neo-liberal ideology (by which I mean the dominance of free market economics, the demonisation of government intervention, the demands to eliminate the welfare state and the widespread deregulation of financial and labour markets).

Those two developments are separable and distinct although the latter certainly reinforces the threats imposed on nation states by the former.

My view is that the ‘left’ has conflated the two developments and consider globalisation equals the demise of the nation state. It hasn’t. The neo-liberal ideology is serving that function and that is a matter of choice.

Democracies can choose whether to undermine the nation state – by, for example, signing up to these so-called ‘free trade agreements’ and creating tax havens for TNCs and deregulating labour markets to allow the TNCs to increase their profit rates at the expense of the local population.

There is nothing inevitable about that at all.

Another blog – The origins of the ‘leftist’ failure to oppose austerity – also bears on this issue.

What I found interesting about Bojan Bugaric’s analysis is that he contends that once the European Court of Justice (ECJ) started interpreting the EU regulations they “paved the way for a future reconfiguration of the original balance between the economic freedoms and social rights in the EU legal order” and thus “limited member states’ discretion in formulating national policies”.

So one might argue that the very essence of the European Union has become neo-liberal, which goes well beyond the political preferences of the parties in power at any point in time, and raises the question for progressives of whether the whole exercise should continue to be supported.

That is, can a progressive politics survive while a nation is part of the EU? This goes well beyond the argument of whether a nation should exit the Eurozone, which, of course, I recommend for all Member States.

He also argues that the Maastricht process ended with the ‘economic’ agenda based on hard austerity (Stability and Growth Pact) supplanting the traditional European ‘social’ agenda as equal partners.

The “social elements” remained at the “the national level” but were “gradually hollowed out” by the primacy of the “supranational marketization” at the EU level.

This is the post-Maastricht reality that the Left faced even though it was the support of the Left that created this dystopia in the first place (support for single market and the EMU).

Bojan Bugaric contends that the Left has failed to respond to this reality. Even when they were in power in “13 out of the 15 states” in the late 1990s they could not use that position to force desirable treaty changes that would have given a more reasonable balance between the, now, competing economic and social objectives.

Blair sided with Kohl and thwarted the French Prime Minister Lionel Jospin’s attempts to reduce the neo-liberal bias in the Treaty.

He cites the Amsterdam Council fiasco that consolidated the Treaty of Amsterdam and the role played by Tony Blair’s ‘third way’ which “strongly opposed to any idea of binding regulation and intervention in employment policy at the European level” as being an undermining force for any Left unity at the Council.

The resulting Treaty of Amsterdam failed to embed a “social democratic EU agenda” into the EU constitution.

A similar split occurred in the lead up to the Lisbon Treaty. Blair was again at the forefront in opposing changes that would lead to the “constitutionalization of ‘social’ Europe'”.

He claims that much of the internecine disputes within the Left can be traced back to it being “imprisoned within the nation state logic of progressive social policy”. They suffered from a “fundamental failure of imagination” to see an “post-national, EU approach to social policy”.

They could have instead fought for a ‘Keynesian’ federal fiscal capacity within Europe and an elevation of the welfare state to the EU level. This would have also meant strengthening the European Parliament.

In the earlier Reports on European integration, for example, the Werner Report – the development of this federal capacity was deemed essential to the success of any plans to move to a common currency.

But once the Left went along with Delors (indeed he came out of the Left) and abandoned the federal fiscal capacity, they also had to face the consequences that social policy would remain at the national level and be subjected to the unworkable fiscal rules that limited national freedom.

It was clear to outsiders on the Left (me among them) that once the European Left signed up to the Maastricht process that they were undermining the capacity of their nations to maintain full employment and sustain prosperity for the working class.

It was only a matter of time before a major crisis hit and the social welfare nets would be attacked by the neo-liberal orthodoxy insisting that the fiscal rules be obeyed at the Member State level.

Nation states did not lose power by circumstance. They gave it away and the citizens who had little voice in the hand-over are now bearing the consequences.

Once the crisis came and the response was harsh austerity, things have become much worse. Bojan Bugaric notes that the latest developments – for example, the Fiscal Compact:

… basically entrenches a certain economic theory at the level of constitutional law requiring the signatories of the Treaty to change their constitutions, preferably, with new provisions of binding force and permanent character …

it basically outlaws Keynesianism and its counter-cyclical economic policies …

The neo-liberals have thus seriously undermined democracy in Europe and empowered the ECJ to enforce basic economic policy dictates from the EC to the Member States.


Europe has become a technocracy ruled by neo-liberal economists who play with models that have no relation to the real world and when they are applied to the real world fail badly.

A dystopia of the worst kind has been created – it is a nightmare.

The European Left now has to face the reality that their beloved ‘Europe’ is corrupted and only root-and-branch changes to the Treaties will restore it to a more democratic, social-inclusive and economically prosperous path.

Which is why the behaviour of Syriza is to be condemned. They had the strength of a strong popular support. They failed because they went along with the technocrats at the expense of articulating any alternative vision. Sure they said they were anti-austerity but that was just motherhood stuff.

Perhaps it is up to the likes of Jeremy Corbyn or the new Socialist power bloc in Portugal to provide some vision and leadership for the Left in Europe to articulate a new path.

Things look bleak as they stand.

That is enough for today!

(c) Copyright 2015 William Mitchell. All Rights Reserved.

This Post Has 19 Comments

  1. A diamond post – again! The very problem for left overall after 80s, is that majority of the ethics and intellectual thought of the left is concerned with social issues, leaving full room of economical issues separately treated by other entities, including right-wing, household-biased right-wing economical theorists. On the left the concise understanding of how political economic theory and it’s offsprings as varying institutes as ministries of finance are, is sometimes non-existent, as they are proclaimed under the shadow to be as “scientific”. The whole economic understanding of the broad left (starting from social democrats and more left) has to be reinforced and -educated.

  2. Thanks Bill. Great piece today (as always). I’m on a warpath to explain this stuff to people currently that there is no chance of ever winning unless they can have a “come to Jesus” moment (for want of a better description) and see that if they never leave the Neo-liberalism mindset they are doomed to fail like the labor party and the greens are and will in Australia.

    I’m so angry at Syriza. I’m also angry at Varoufaks who constantly and consistently always said leaving the euro would be a disaster and practically impossible. I don’t know why he kept saying that as he locked himself in to that. He should have left the possibility open and boy should they have taken that option while they had the chance. They could have taken the people with them if they had explained it and gone with the momentum after the vote probably by just staring an IOU script currency as you’ve suggested at times.

    I’m just yearning for Italy or Spain or France even just anyone to start fighting the currency and push the to the limit and show fiscal stimulus works. The Neo-liberal narrative is an incredibly powerful narrative it absolutely blows my mind how powerful it is that people can’t see it. I can’t afford your book European dystopia at the moment but hope to read it soon when I can.

  3. Yes Neo-liberal DSGE theory and ideology infiltrated the thinking of nearly all economists, and politicians being notoriously ignorant, unimaginative and servile to power have lead us to where we are. I couldn’t agree with that more. But what this analysis does not include is the insight that the micro-economy itself is inherently cost inflationary and so injecting money into it whether via government spending to enterprise for infrastructure etc. or private financial means to enterprise….will re-initiate that cost inflation…instead of resolving it. The indirectness of policy (to enterprise first instead of directly to the individual) is the ultimate mental hurdle theorists on both the left and right must overcome.

    The right needs to ask itself whether it values capital ideology and power more than individual freedom and systemic free flowingness, and the left needs to ask itself whether it values socialist ideology and power more than individual freedom and systemic free flowingness. There is a third way.

    Direct monetary Gifting to the individual (and back to enterprise after they have gifted the consumer with a retail discount) resolves the problem of cost inflation and of ideologies on both the left and right.

  4. Dear Bill

    Let’s say that the establishment consists of big business, senior civil servants, the national media, academia, the thinks thanks and the main political parties. Big business can be assumed to be almost totally neoliberal. If a majority of the economic part of academia, the think tanks and the senior civil service, and the media and all centrist and rightwing (not extreme rightwing) political parties are also neoliberal, then leftists politicians will endure a lot of criticism when they are in opposition and fierce resistance when they are in power. The fact that leftists often pursue policies that are very similar to those of the right may not be due to an embrace of neoliberal ideas on their part but simply a preference for the path of least resistance. It is so much easier to govern with the establishment than against it.

    Regards. James

  5. Perhaps it is up to the likes of Jeremy Corbyn or the new Socialist power bloc in Portugal to provide some vision and leadership for the Left in Europe to articulate a new path.

    Maybe but they will have a hard time to get other European social democrats on board. Not even a slim chance they would get Swedish social-democrats along, Norway’s, Germanys, Danish would for sure be reluctant. I don’t know how it’s all around Europe but the Portuguese presidents undemocratic behavior doesn’t seems to get fellow European social-democrats up in arms. They are hooked on neoliberal fiscal prudence cool aid.

  6. He lists a number of ‘favourable’ circumstances in addition to the “economic conditions” for “shifting the political terrain in favour of the left”.

    These include the “rise of a progressive younger generation, the increase in immigrant population, the growth of the professional class and the increasing social weight of single and alternative households and growing religious diversity and secularism”.

    Where is this “progressive” younger generation? Yes there is postmodern left hooked on identity politics and so on but economically they are soaked in neoliberal “basics”, e.g. money and how it’s created and operate is a non-issue.

    Immigrants is far from any lefties in the sense of old unionized fighting labour in the west. Prime loyalty is to ethnicity, clan and so on rather than class. Can’t see what that religious diversity would help, the diversity is that Islam is a growing religion and in general far more conservative and “faithful” than the modern “secular” Christianity in Europe.
    He indulge in fantasies, he enumerate stuff that rather as whole are socially dividing than galvanizing a social fabric.

  7. The problem, as I see it, is one world idealism. There is a little bit of a love of centralism amongst the Left, yet it is pretty clear that people are not coming together as one, but are dividing into greater numbers of tribes that really want to run their own affairs.

    The EU is, always has been and always will be a single political question. Do you want to be part of a United States of Europe or not? The view of the population seems to be no – given the response to the migrant crisis.

    So the whole project is still born. Those people that push for it are the same people that push basic income, unlimited immigration, permanent rule by central bank, fixed exchange rates and all the other sacred cows of the left. All desperately trying to prop up ideas that simply do not work if subjected to even the most rudimentary systems analysis.

    What we need is a Pragmatic Left that investigates and proposes solutions to a world of distributed tribes interacting with each other. And that is something different to the Idealistic Left or the Neo-Liberal Left that seems to be in place at the moment.

  8. Dear Bill,

    thanks again for a very good blog. The question that the European left needs to address was posed along the following lines “is a dream alive if it don’t come true, or is it something worse”? in a pop song some time ago.

    I do not know why the European refuses to face reality. Facing reality would amount, first of all, to simply admitting that the euro is quite concretely killing the left. And that this is its own fault.

    Very little of this critical thinking seems to take place. For instance, in Finland me and a collague (Antti Ronkainen) recently published a report studying “unilateral measures to end austerity” that are available for the member states. It was published by the Finnish Left Forum at the beginning of October. We also made a two-pager version for the Finnish left’s weekly newspaper, summarising the main arguments.

    The result? No one replied from the Finnish left thus far.

    Only a recently retired head-of-a-department from the Finnish ministry of finance has shown any interest towards the report, and commented on it. This was a very welcome development, especially since our views are quite apart from one another.

    But the situation is quite frustrating at the moment.

    As for analyses of the “constitutionalisation of austerity”, may I suggest you (bill and other commentators) this IMHO very good article written by legal scholar Lukas Oberndorfer:

    I am not an expert in legal scholarship, but to this social scientist this article provides a very unnerving reality check. Mind you, it was written in 2013.

    Also, you might want to check out books by legal scholars Kaarlo & Klaus Tuori (The Eurozone Crisis 2014; European Constitutionalism 2015) as well as this collection of essays dealing with austerity, labour law and social policy compiled by legal scholar Niklas Bruun (the Oberndorfer piece is included in it):

    I am sure there are others. But I think these works contain insightful contributions.


  9. But just think about the implications of forty years of false economic thinking and politics in Europe. It is absolutely not likely that the politicians and economists who have made a career in this environment will acknowledge the problem. It is therefore of great importance to inform the new generations learning economic thinking. For as Max Planck famously wrote “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

    I have just shared the post on facebook with sociologists and journalists etc. from Germany, France, UK, and USA and more.

  10. I will recommend what I consider to be the most important sociological text on the ideology of neoliberalism by Pierre Bourdieu. Published in Le Monde Diplomatique, December 1998.

    The essence of neoliberalism
    What is neoliberalism? A programme for destroying collective structures which may impede the pure market logic.

  11. Complementing Joel’s legal recommendations, there is Vaughn-Whitehead’s edited The European Social Model in Crisis: Is Europe Losing Its Soul? It begins with an overview, then treats a number of nation-states in detail, and ends with an assessment of Britain’s social model. In respect of the Blair legacy, it should be noted that Blair’s “third way” received academic support from Anthony Giddens, a sociologist who can give a presentation without notes, whether vacuous or otherwise unremarkable, and whose book, Sociology, was used as a main text in first year sociology courses in a number of British universities for many years.

  12. James Schipper

    “Let’s say that the establishment consists of big business, senior civil servants, the national media, academia, the thinks thanks and the main political parties.”

    If you want to know who they are google “Bilderberg Group members list 2015”. Monbiot reckons the group is more important for world finance that the G20. And it doesn’t publish its proceedings.

  13. Neil I totally agree we need a pragmatic approach.Open border immigration policy
    amongst nations with asymmetrical prosperity ,peace and personal liberty will only
    result in one way traffic .It is only a question of time before the Eu police its borders.
    Where of course I totally disagree is the claim that a universal job guarantee at a
    living wage is in any way a pragmatic solution.In a different labour market maybe
    but in the labour market of the UK today for instance such an offer would attract
    tens of millions of workers who currently do not enjoy such employment.It would be
    a logistical nightmare to implement.For the low wage private sector to compete they
    would have to double their wages ,firm failures and price rises would be inevitable.
    The living wage would have to rise to compensate or it would become an Osbourne
    living wage.
    It is far more pragmatic to tweak existing welfare and taxation policies to insure
    a minimum income (I do not believe that initially this could be set at a living wage
    such is the current lack of goods and services ,particularly housing,to provide
    such a decent living).The stimulus of increased income for the poor and targeted production
    from the government could in time provide work and decent living conditions for all
    and even lead to the kind of tight labour market where a government universal guarantee
    at a decent living wage could be implemented.
    The belief that the government could decree tomorrow jobs and a real living wage ( one that
    could provide a decent living conditions)is I am afraid Leftist ideological Utopianism of the
    highest order.Not that I am against targeted job schemes.
    AS to Bills article I agree with every word.I would add thou the European Left’s acquiescence
    to neo liberal economics did not come out of the blue.It is a part of a long history of
    corruption.The failures and eventual collapse of soviet style ‘socialism ‘ accelerated the
    There Is No Alternative to the market mantra.
    The irony is of course the relative success of the post war settlement (when the rich and
    powerful acquiesced to traditional demands of the left in fear of losing all their wealth and
    power) was able to be eroded by market failures more than Keynsian failures.The oil inflation
    driven by a supply cartel and now the global financial crisis played by the 1% to maximize
    their control .I fear what response will be administered to next major crisis.Dark times ahead.
    Government monetary sovereignty is the only power to protect the majority in these times
    and it is a power the European Left have abadoned .

  14. Joel, your lyric comes from Bruce Springsteen’s The River. The song, like the times in which we are living, is depressing. I find it so anyhow. Springsteen seems never to have forgotten his working class origins, rooted in New Jersey, a state that other states surrounding it look down on, even though many went, and perhaps still do go, to “the shore” for their summer vacations. Ronald Reagan wanted to use Springsteen’s song, Born on the Fourth of July, as an anthem, thereby showing a complete lack of understanding of the song. Springsteen wouldn’t let him use it. A question came to my mind reading your comment: How many of Springsteen’s fans, and he has many, explicitly reject the neo-liberal paradigm? While they should, do they, in fact?

  15. Larry,

    thanks for your recommendation (Vaughn-Whitehead’s edited The European Social Model in Crisis: Is Europe Losing Its Soul?), which I need to check out as I am currently working on something related to this topic.

    You are also very spot on about Tony Giddens’ influence. When I first entered uni in 2003, it was somewhat disturbing that “radicals” thought Giddens was an emancipatory thinker whereas for instance scholars from the Keynesian, Kaleckian and Marxian traditions were really outdated, even labelled repressive. I dont think this trend was or is not unique to Finland (although in our case the proximity to Russia and ex-USSR gives it a unique flavour, I guess).

    On that note, I would also single out Antonio Negri’s post 1990s stuff as the so to speak “radical alternative” to third wayism, which of course remains entirely on the 3rd way’s orbit. When you look at it, more or less the same elements are at play in his works as in Giddens’, only the discourse is aesthetically quite different. The analysis is not, however. There is no macro; micro-level subjectivities constitute stuff; markets take care of economics; focus is on movements and/or progressive identity politics and social policy (to ameliorate the effects of unemployment, which is seen as inevitable). He has been quite influential in Finland, among leftists at least. At the end of the line there are two claims: capitalism has moved beyond capitalism for a reason I never seem to get but many do; And, when all is said and done, it boils down to “pretty please, give us a guaranteed basic income”. I am not very convinced.

    As for Springsteen, yes the quote is from “The River”, but I seem to have misheard and then mistyped it! Nevermind. It is an interesting question whether he manages to convey the working class sentiment to the wide base of fans. I kind of doubt that it occurs coherently, no, but perhaps bits and pieces occasionally “shine through” the veil of ideology?

    It is undeniable that the working class viewpoint (in sickness and in health) is present in the songs though, especially in the stuff up until The River (album). And yes, I agree that the song I quoted is not a very bright one.

    Another favourite image of mine is that of social alienation leading to a point where a person “becomes the hand that turns the key into the “Jackson Cage” (a bad place in general, put it that way). Stark stuff, and anyhow, that image pretty much encapsulates the Third way left to me.

    Oh well… hope this wasn’t too boring.


  16. @Neil

    The basic income folks’ program doesn’t work precisely because it is socialist. Re-distributing scarce macro-income…doesn’t resolve the scarcity. It might palliate it and allow the business model of Banking/Finance to continue dominating every other business model and all of to boot, but actually solve the problem…sorry. We need the Distributist/Giving/Gifting/monetary grace paradigm.

  17. Joel, Boring? Not at all. I think I understand, at least some of, the issues Finland has with Russia. After all, they got Karelia after the war, didn’t they, which a Finnish friend I went to grad school with thought really belonged to Finland.

  18. Larry, well, I guess I was overly self-consciouss there. But let me just say in my defense that you asked for it!

    It is true that a good part of Karelia became part of the USSR after II WW. Some Finns have strong opinions about that. Somehow, I don’t. Perhaps I am too young – and I am certainly non-patriotic by the usual nationalistic standards. Usually, the opinion on Karelia among Finns correlates with where one stands on these questions on the one hand. On the other hand it has to do with whether one’s family was forced to migrate from Karelia after the war. But not always (and I am not implying anything here :).

    Part of “Karelia” remains on the Finnish side, namely the Lappeenranta-Imatra region. My hometown, if we continue to talk Springsteeneese.

    After the 1990s crisis in Finland, the collapse of the Soviet union and the general troubles within the forestry and paper producing sector, tourism and trade with the Vybourg – St. Petersbourg region has been a huge boost in keeping the South-Eastern part of Finland economically afloat. Yet openly racist attitudes towards the Russians have been the rule of the day for as long as I can remember.

    First, it was “them piss poor commies” and general pejorative stance towards the Russians during the 1980s. Then some people began to have money and spent it on our side of the border, thus increasingly carrying their money to Finnish stores from, say, 1996 onwards. Then that was wrong too, somehow. Now, I am aware that not all of that money was, is or never will be 100% legit. I am also aware that it was the upper echelons of the Russian society that first began to show money.

    IMHO it is perfectly understandable if people express an attitude towards that in a context of a late 1990s faltering forestry/papermill economy in the Finnish Southern Karelia. But the trouble is that the inequality / class sentiments become lost in translation, and it somehow turns into a national, even racial thing and this is quite disturbing, really. Always was.

    The war left deep scars, and of course the Finnish right has been quite efficient in boosting these fears via anti-communist sentiments from the 1940s on. Finland is a quite xenophobic country, in my experience.

    What I wrote above might shed some light on the fact that about a month and a half ago a Finnish guy thought it was a brilliant idea to show up in an anti-migration rally dressed up in a KKK costume. I am not kidding, it was in international news, too. The same goes with the attempted arsons of shelters appointed to refugees during the past couple months.

    This is deeply shameful shit. Many thanks, austerians!

    In more general terms, I think that one of the main problems of the EMU is just that: the design of the system fuels suspicisions and competition amongst the member states via two institutional channels: first the fiscal rules (who obeys and who does not?) and secondly via the export led competitiveness mania (who gets to beggar their neighbours via beggaring their workers and unemployed first). In brief, the system translates capital labour antagonisms into nationalistic antagonisms. IMHO this is reckless playing with fire, but then again following Kalecki, nationalistic and even fascistic tendencies are capitalism’s offroad, 4×4 gear as it were. Unemployment is a very powerful tool in this cabal, too, as you know.

    Thereby, IMHO not-even-very-latent nationalism is present in the DNA of the EMU.

    I think the European left has forgotten these simple but important truths. It is urgent that at least parts of MMT community have stood up. But if I am not terribly mistaken, Lerner mentions the need to confront fascism via full employment policies on the second or third row of the 1943 Functional Finance essay. So anti-fascism is an integral part of MMT, at least in my view.


  19. History rhymes so proficiently because we don’t actually solve problems….we only palliate them, or in the case of the DSGE/austerity mindset…deny them until they fester and explode back at us in the all too familiar and perennial human mindset flaws of fascism, racism and private financialism. Man is a flawed but basically good being. It’s about time we started enabling and encouraging that goodness with a natural philosophy of grace/graciousness, and applied that philosophy to the economy in relevant and valid ways as well.

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top