“The left is paying the price for its conservative discourse on the currency union.”

April 4, 2017

Costas Lapavitsas who is an economics professor at London’s School of Oriental and African Studies, visited Barcelona last week to present his latest work, ‘Eurozone Failure, German Policies and a New Path for Greece’. In this text he advocates Greece leaving the euro, as an instrument for overcoming the country’s crisis. Critical of Alexis Tsipras, Yanis Varoufakis and Syriza (he had been an MP for the party before the third deal with the Troika), Lapavitsas is conscious that his positions regarding the EU and the euro are still in the minority among European progressives. Nonetheless, he believes that “the first step for the Left is to say that the currency union has to end.”

Last week Lapavitsas was interviewed by Oriol Solé Altimira and the text of the interveiew (in Spanish) was published by El Diario. Here is the interview translated into English.

A year ago you were in Madrid for the presentation of the Plan B for Europe. How do you think that this initiative has developed?

The Madrid discussions were interesting, because a lot of people came and there was a good atmosphere. Nonetheless, they were politically confused, because various ideas were presented on what the Left ought to do about Europe, without any concreteness. People still think that it is possible to change the European Union. One year later, I think that this position has lost supporters. More people have realised that if we want an alternative, a different path or different strategy, we have to take radical steps also with respect to the institutions and the EU.

And this [latest work] is your plan for Greece, in which you propose leaving the euro

Leaving the euro is part of a strategy. But essentially we have to take measures to strengthen aggregate demand: public spending and investment. Initially, the public sector has to take the lead in order for the economy and the private sector, and especially services, to be able to begin to breathe again. After that, it would be necessary to take measures in terms of industrial policy.

And it is not possible to do that within the Eurozone?

The EU’s fundamental institution today is the currency union. And the currency union has failed. It is dysfunctional, and it has not brought reforms, prosperity or solidarity, but quite the opposite. It has intensified the hostility and tensions among Europeans. The first step for the Left is to say that the currency union has to end. The euro has failed, and we do not need it.

But would getting rid of the euro not precisely mean countries and their currencies competing among themselves, rather than having a shared solidarity?

It is not necessary return to a system of national currencies competing among themselves, either. There are intermediate alternatives, through which the nations of Europe can organise trade and capital movement. We do not need either a common currency like the euro, or the current European Central Bank (ECB). The mechanisms that have been used for some years basically favour big business and the big banks.

Ultimately, if the Left adopts an anti-euro discourse, will it not be making the far Right’s work easier?

Quite the contrary! This is another failing of the Left’s. If the Left had not accepted the euro, or had positively proposed a break from the euro on the basis of a radical discourse — “radical” in the sense of getting to the root of the problem — it would have made things more difficult for the far Right. In Greece the far-Right Golden Dawn party does have MPs, but it has not been able to establish itself in the debate over the euro, because there was already a Left arguing for [abandoning the single currency]. And it should have been the French Left talking about that, instead of Marine Le Pen.

Even so, the majority position on the European Left is not leaving the euro, but reforming the EU. We have seen this in Spain with Podemos; as it made headway in the opinion polls, its discourse moved closer to the centre

Certainly. And for this reason the European Left has failed over the last decade, while the Right — and now it seems, the far Right — has had a great time of things. Historically the Left could be counted on to drive through policies favourable to the working class and the most vulnerable into institutional life, challenging the powerful and promoting radical changes. That is to say, changing the system, changing the world. Where is all that now? The Left is paying the price for its conservative discourse on the currency union. The far Right is now putting across a radical discourse, and it has stolen the greater part of the Left’s messages — and in some cases, its electorate.

Your country, Greece, seems to have got stuck in a vicious circle of bail-outs and adjustment plans

Within the context of the Eurozone’s failure Greece is an extreme case. I do not believe that Greece will satisfactorily emerge from the crisis in the medium term. The reason is that when the crisis took hold, the solution which the European Commission and Berlin imposed essentially destroyed aggregate demand. Spending and pensions were cut, and taxes went up. This combination of measures caused a contraction in aggregate demand, and investment collapsed. Shops closed, unemployment grew and there was a massive recession.

It was said that this would stabilise the economy, and that once aggregate demand had fallen this would provide the opportunity to take additional measures like liberalising and deregulating the economy, in order to become competitive. But modern capitalism does not work like that. What happened is that the country stagnated: the economy grew a little and then began shrinking again. And Spain is not far off that description, either.

Neither does it seem that the lenders are proposing a route very different from the one that has been followed up till now

Greece will never grow this way, and it will remain stuck in stagnation, with aggregate demand destroyed, waiting for a miracle. This is a path taking Greece toward marginalisation and irrelevancy, and things will go on like that as long as it stays in the currency union. To begin carrying out policies other than austerity, we have to leave the Eurozone.

It seems that the support the Syriza government received during the referendum [in July 2015] has now evaporated. Is the “workers’ Europe” more myth than reality?

The workers’ Europe does not exist. It is a myth, which most of the European Left believed in. There is not a single Europe; there are 28 states, 19 of which are in the currency union. The Left needs to think more about national sovereignty, and redefine it — not in a nationalist or aggressive sense, but in a popular sense. I believe that this is the real prospect for a people’s and workers’ Europe. And not a transnational body headquartered in Brussels, governed by bureaucrats living in their own world.

I think that it is a mistake to think that it the Left could transform [this latter] into a people’s Europe. The workers’ Europe exists first of all in your own country when you demand sovereignty. That is the basis for being able to create a Europe of solidarity.

You live in London. How have the first few months after Brexit been?

Brexit showed that the British working class does not want the EU, that the EU is not a popular project and that it never has been in the United Kingdom. The EU was a project of the British middle class. And I believe that what we can say about the United Kingdom could also be said of quite a few countries: the EU has never been a project of the popular classes.

But the worst consequences will come when Britain actually activates the mechanism to leave the EU?

After the referendum people said that Brexit would be the end of the world and that there would be a massive recession, capital flight and economic turbulence. So far none of that has happened. Obviously when the real detachment process begins there will be some negative effects, but up till now they have been exaggerated. The predicted catastrophe is not happening. A lot of people are thinking “If this is what happens when you decide to leave, then where’s the disaster?”

There will be complex negative effects on the economy. Untying a whole legal settlement will be an enormous amount of work, for European legislation affects many different parts of life. Trade deals and financial operations will also be affected, though we do not know very well how.

Had you hoped that Brexit would win?

The British ruling class did not want Brexit. The City of London and the powerful wanted to remain. It was a surprise, and the elites were not prepared, because Brexit was a popular vote. However, at the political level Brexit has helped put an end to the Conservative Party’s divisions over Europe. Today the Conservatives are strengthened.

The Left, conversely, seems totally disconcerted

Labour has no clear perspective, and it is divided. The UK Left is in crisis because it does not know what to say about Europe. It does not have radical proposals to put to the people. Some believe in [Britain] going back into the EU, thinking that they can change it. But that is senseless. It will never happen, and even if it did happen it would only lead to a worsening of working-class people’s lives — working-class people who voted against the EU.

This shows one of the European Left’s problems: that it has lost working-class people’s trust. Rather than proposing a programme to abandon austerity and encourage public investment and the redistribution of wealth, part of Labour is devoting its efforts to seeking a second referendum. Working-class people rejected this institution, yet part of Labour wants to go back into it. Politically speaking, this is senseless. In this context, the far Right is winning over the British working classes. This is terrible, and the worst thing is that it is happening in several European countries.

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