Why the euro has to be abandoned if Europe is to be saved

23 Jul, 2020 at 10:14 | Posted in Economics, Politics & Society | 3 Comments

The euro has taken away the possibility for national governments to manage their economies in a meaningful way — and the people have​ had to pay the true costs of its concomitant misguided austerity policies.

The unfolding of the repeated economic crises in euroland during the last decade has shown beyond any doubts that the euro is not only an economic project​ but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.

austerity22But do the peoples of Europe really want to deprive themselves of economic autonomy, enforce lower wages, and slash social welfare at the slightest sign of economic distress? Are increasing​ income inequality and a federal überstate really the stuff that our dreams are made of? Yours truly doubts it.

History ought to act as a deterrent. During the 1930s our economies didn’t come out of the depression until the folly of that time — the gold standard — was thrown on the dustbin of history. The euro will hopefully soon join it.

Economists have a tendency to get enthralled by their theories and model​​ and forget that behind the figures and abstractions there is a real world with real people. Real people that have to pay dearly for fundamentally flawed doctrines and recommendations.

NLR95coverNow more than ever there is a grotesque gap between capitalism’s intensifying reproduction problems and the collective energy needed to resolve them … This may mean that there is no guarantee that the people who have been so kind as to present us with the euro will be able to protect us from its consequences, or will even make a serious attempt to do so. The sorcerer’s apprentices will be unable to let go of the broom with which they aimed to cleanse Europe of its pre-modern social and anti-capitalist foibles, for the sake of a neoliberal transformation of its capitalism. The most plausible scenario for the Europe of the near and not-so-near future is one of growing economic disparities—and of increasing political and cultural hostility between its peoples, as they find themselves flanked by technocratic attempts to undermine democracy on the one side, and the rise of new nationalist parties on the other. These will seize the opportunity to declare themselves the authentic champions of the growing number of so-called losers of modernization, who feel they have been abandoned by a social democracy that has embraced the market and globalization.

Wolfgang Streeck


  1. As would be expected from Streeck, this is an excellent read, although personally I sympathise with and support the European project, including the Euro.

  2. I might also add that Streeck points out problems for MMT, and their idea that deficits and debts don’t matter if there are no resource (and for smaller countries balance of payments) constraints.

  3. “The European South produced a type of capitalism in which growth was driven above all by domestic demand, supported where need be by inflation; demand was driven in turn by budget deficits, or by trade unions strengthened by high levels of job security and a large public sector. Moreover, inflation made it easier for governments to borrow, as it steadily devalued the public debt. The system was supported by a heavily regulated banking sector, partly or wholly state owned. All these things taken together made it possible to harmonize more or less satisfactorily the interests of workers and employers, who typically operated in the domestic market and on a small scale. The price for the social peace generated in this way was a loss of international competitiveness, in contrast to hard-currency countries; but with national currencies, that loss could be made good by periodic devaluations, at the expense of foreign imports.”

    I have to concede this point to Streeck. Robert Mitchell pointed out an interpretation of Adorno, pointing out a fixation on quantitative GDP and how this can suppress real inquiry. And in some ways the southern European countries fell into this trap. I can remember a lot of talk once going around which pointed out that northern European countries were richer, but people in the south were happier – and sometimes healthier – people on Greek islands such as Crete have been some of some of the longest living people in the world. It comes back to questions about what is ‘development’. Should it be measured by the degree of industrialisation and GDP per capita?

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