“When the facts change, I change my mind. What do you do, sir?”
John Maynard Keynes
Part One: Swimming in Europe
Its been a tough decade since the great financial crisis started in 2007. When the Great Moderation came to an abrupt end with the crash of the financial system I think a lot of people on the Left in Europe, including myself, expected that with the neoliberal project hitting the buffers it was finally time for a more progressive project. Time for a more robust European social democracy, a time for reform, a time when the EU would finally show its mettle and its value as a great progressive social and economic project. Things have not turned out as I thought they would. I think a lot of other people probably feel the same way. The EU has not turned out to be social democracy writ large but instead a place of mass unemployment, stagnation, institutional sclerosis, and rising rightwing nationalist populism. And the the biggest crisis of capitalism since the 1930s has not led to the rebirth of social democracy but its, possibly terminal, decline.
How did this happen? Why did things not unfold as I expected? I have to start by accepting that I was wrong about a lot of big stuff. In recent years I have been doing a lot rethinking about some of these big things, stuff I obviously misunderstood, as I have tried to understand why the EU seems to have gone so wrong, why the nationalist parties have been gaining so much new support and why European social democracy is in such trouble. This meant thinking about things like how the EU really works and what it has really become, exploring the relationship of nation states to progressive politics and to democracy, and rethinking what a European progressive strategic project for taming capitalism in a globalised world might look like in the early 21st century. I have begun to change my mind about all those things and in this article I want to explain how my thinking has developed, the sorts of ideas I am exploring and to invite feedback because, of course, my conclusions are only interim and (as has happened many times before) I might have gotten everything wrong. Really these articles should viewed as me thinking aloud, and I remain unsure about a lot of things to do with the EU.
My basic political view of the world, of how things work and what needs to be done, has gone through two previous big changes. One was when I left behind the insurrectionism of 1968, a change of thinking that started in the second half of the 1970s and pivoted on the 1979 UK election and the victory of Thatcherism. My main guides back then were first Marx and then Gramsci. I still wanted to see the replacement of capitalism with socialism but I stopped thinking in terms of moving towards some sort of revolutionary event and instead thought about things in the context of a long war of position, of slowly building a progressive project and hegemonic block that over many years would move to a position of dominance and deliver democratic socialism. This new way of thinking meant that I started taking democracy very seriously, and (unlike during my post 1968 insurrectionary phase) I thought that elections really mattered and that even when we managed to get socialism we would still need democracy. I still wanted to replace capitalism with something called socialism but I didn’t want to smash up the system quite so much and I definitively didn’t want the dictatorship of the proletariat and I didn’t want to abolish parliamentary democracy.
Throughout the 1980s my thinking continued to evolve, but because, as I focussed on earning a living and being a dad, I had stopped being a full time political activist and had less time to think systematically about politics so my thinking developed a bit haphazardly. But as the 1980s passed I came more and more to think that actually replacing capitalism with the planned economy of socialism might be a pretty bad idea, that all the examples of where that had been done were not exactly attractive or successful. This letting go of socialism, which was the second step change in my political thinking, culminated for me when actual existing socialism collapsed between1989-92 by which time I had stopped thinking of myself as a socialist. In the revolutions that started 1989 I clearly knew where I stood which was with the people in the streets that were trying to overthrow the communist states and the planned economies in the east. I knew moving from a dysfunctional planned economy to a capitalist system, and integrating these new economies into the global system, was going to be pretty tough for these new democracies but I couldn’t see any alternative; the planned economy was an historical dead end of tatty poverty, secret police and dreadful authoritarian dead culture.
By then my thinking had completed the big step change that had come with the letting go of socialism. My world view was something like this:
• Capitalism was generally a good thing and there was nothing that could replace it as the main engine of economic life. It was good because it brought material prosperity and progress, and because it allowed a space for freedom. Planned economies have always been pretty awful and the unplanned economies of capitalism simply work better as motors of economic growth. But capitalism could also be pretty bad and it needed democracy to tame it, civilise it, and realise its promise of freedom.
• The space for freedom that capitalism created could only be realised in a democratic state where different political parties competed with each other in an unfettered way in order to the win the votes of an enfranchised citizenry.
• Democratic states could only flourish and really deliver political freedom when there existed a rich civil society between the state and the market, where the rule of law operated to protect individual and democratic rights, and where minorities and minority opinions were protected by a culture of tolerance and human rights.
• The existence of a strong and deep system of democracy meant that the excesses of capitalism (and capitalism by its nature would always strive to be excessive) could be tamed. The single most important way this would be done was by using democracy to create a material system of social solidarity through large scale social programs of social welfare, pensions, socialised health care and free education.
▪ The system of social welfare that had grown up after WW2 in the western liberal democracies meant that a sizeable chunk of national life was actually delivered via a planned economy (the NHS for example is a very big planned economic endeavour) but it seemed to work better if this planned and socialised part of national GDP was always a bit smaller than the main capitalist sector of national GDP. It seemed pretty clear that a mixed economy was the optimum mechanism for delivering optimum human welfare.
So to encapsulate – I had come to believe that the mixed economies and political freedoms of the western liberal democracies had quite clearly delivered the best results for people and were the best system. Given that these liberal democracies were all built inside the most developed capitalist economies it seemed pretty plausible at the time to expect that eventually any fully developed capitalist economy would tend towards becoming a liberal democracy, not least because life inside the existing liberal democracies was so very attractive to almost everyone outside of them. This meant the citizens of developing economies, as they were collectively empowered by the very process of capitalist accumulation (through urbanisation and industrialisation for example) would eventually all clamour for the same rights and opportunities that the established liberal democracies offered their citizens.
This didn’t mean that without a commitment to establishing socialism there wasn’t a very important role for the Left, because there were some very tricky issues that mostly could only be addressed from the Left.
The first issue I could see, back then, was that as circumstances changed, and as the dynamic of capitalist accumulation and innovation unfolded, there had to be a constant progressive political project to protect, renew and adapt the material systems of social solidarity. This was particularly urgent in the UK in the 1990s after nearly two decades of Thatcherite erosion of social solidarity. At the same time it was not always the case that a bigger public sector and a smaller private sector was a good thing. It seemed to me that the art of modern progressive politics in liberal democracies was all about building a strong consensus, and a successful electoral bloc, that could protect, enhance and where necessary reform public sector services, defend and renew the fabric of civil society, and at the same time allow a dynamic wealth creating private sector of capitalist enterprise to flourish. Because of this view of what the progressive project was I embraced New Labour when it arrived as the best way forward at the time.
The second big issue was that all existing models of liberal democracy were built inside nation states but clearly capital was not restricted to operating just within nations and the dynamics of capitalist accumulation operated in a global arena. The 1990s marked a period when the international dynamic of capitalist accumulation seemed to accelerate sharply. The collapse of the communist east, the signing of the various world trade deals and the rapid emergence of a dynamic capitalist economy in China (and to a lesser extent in other emerging economies) all meant the global system of capitalism moved up a notch. Technical innovations such as the adoption of containerised shipping and the internet all helped deepen global economic integration and the global arena of capitalist accumulation. At the same time the various neoliberal reforms of the 1980s, most importantly the removing of restrictions on international capital flows, meant that a very complex and dynamic system of international finance and trade had developed. All these developments made the notion of trying to manage capitalism by just using national policy tools very problematic.
Europe moves centre stage
Just as communism was collapsing I started to work full time in the political system on European projects. It was an exciting time to be inside the European system as the project of European collaboration and integration was taking a momentous step forwards with the Treaty of Maastricht and the creation of the European Union.
Back in the early 1970s, flush with my post 1968 red hot super radical ultra-leftism, I was a simple uncomplicated internationalist. I felt part of a world wide movement of revolutionaries making a new world. Radical leftists everywhere were my comrades and it was this imagined international community that I felt a profound link with and not the imagined community of the nation. National borders meant little to me, the trappings of national identity seemed farcical. I thought all the paraphernalia, myths and rituals of the nation were just a joke (except of course those associated with anti-imperialist struggles of national liberation). My allegiance was to the red flag and not the Union Jake. I thought (laughably in retrospect) that as time passed nationalism and patriotism, along with absurdities like religion, would just fade away.
The only time the issue of Europe and the European Community (as it was called back then) intruded in my early political life was during the referendum on UK membership in 1975. At the time most of the Left was opposed to membership but I decided to vote Yes instead. I did so because, without thinking too deeply about it, it seemed obvious to me that capitalism was already international and operated increasingly without borders. It was clear that the international operations of capitalism were almost certainly likely to increase and that as a result the ability of any one national government to control capitalism was going to become increasingly problematic. If capitalism was increasingly international then government needed to be increasingly international as well. This chimed nicely with my internationalism. Even after I stopped being a socialist I still felt very committed to internationalism and wary of (but less hostile towards) national identity and patriotism.
It’s interesting to note looking back to the first half of the 1970s, when I was at my most ultra leftist, that at no time did the issue of democracy or its relationship to nation states enter into my head. Back then I thought that democracy was mostly a sham and that ‘bourgeois democracy’ would be swept away by something that at the time I would have called ‘socialist democracy’ (i.e. no democracy and a government run just by people who agreed with me). It was only when I shifted toward the notion of the long war of position and the politics of hegemony that I began to take democracy seriously.
Through most of the grim Thatcher years in the 1980s I barely noticed the European Community and indeed the European project seemed superficially to be going through a period of stagnation, nothing much appeared to be happening. In fact In the second half of the 1980s significant things were beginning to quietly happen in the European project. In 1984 the European Community adopted a new flag and a new anthem, a trivial step perhaps but one that symbolically said that this new pan-European entity was beginning to assert that it was in some ways on a par with a nation a state. Flags are important and at some time even those on the Left who are most cynical about such emblems have felt powerfully connected to some sort of flag (perhaps the NLF, red, black or rainbow flag).
More significantly in 1985 Jacques Delors, a leading member of the French Socialist Party and the Mitterrand’s ex finance minister, took over as president of the European Commission. Not only did he inject a new energy into the European project but he apparently imbued it with a progressive sense of social solidarity making it much more attractive to the Left in the UK. In 1988 he addressed the TUC congress, at a time when the trade union movement was not only under attack but had been ostracised by the UK government, so to have the President of the European Commission specifically seek out the trade union congress as a venue to speak was of huge symbolic importance. In his speech Delors made a strong case for a social Europe. I think it was from this moment that most of the Left began a shift in the direction of supporting this new energised, and apparently, progressive European project, if for nothing else than as a possible counter weight to the crushing reaction of the Tory government.
At the end of the 1980s the tempo in Europe suddenly accelerated. In 1989 the communist bloc in Europe collapsed and by 1991 the Soviet Union was gone. This was a political earthquake, and it had a profound impact on the European project. There were several worrying strands of uncertainty unleashed by the collapse. One was the worry (and hope for some) that with the Soviet Union gone the USA was almost certain to scale down its involvement in Western Europe. Could an independent European project move forward, or even survive, without the external threat from the East and without imperial protection and steerage from the US? Another strand of change was the sudden appearance of a raft of new democracies and new countries in the East. What could the project of European integration offer to these new eastern democracies? Finally the most pressing problem of all was that with the fall of Berlin Wall it was very quickly clear that German reunification was quite suddenly, and unexpectedly, going to be to be upon us. That scared a lot of people, especially the French and the Brits.
Within a few years of the communist collapse the entire European project had changed gear and began to move forward at a much faster tempo and with a far more ambitious program. Out of all this came the Maastricht Treaty, a quickly implemented Single Market, a raft of new institutions and powers, a name change to the European Union (implying a new deeper and more permanent binding together), a commitment (with a time table) to a new single currency (built on German and Bundersbank principles), and the opening of the negotiation process to widen the Union to the east and south. There was also a more explicit commitment to ‘ever deeper union’, much to the discomfort of the Brits, and now it seemed that the EU was really on the road to somewhere.
In midst of all these developments Thatcher fell and suddenly everybody on the Left could glimpse some light at the end of the tunnel, and this light seemed to be connected to a newly invigorated, progressive and internationalist European project which dovetailed with the British Left’s new burst of optimism.
Just as all this was happening in 1990, by happy serendipity, I found myself in a new job working full time on European projects for Margret Hodge, a Labour politician who had ambitions to be the first Mayor of London (assuming a Labour victory in ’92) and who was working to open up new lines of communication and politicking with Brussels that would bypass the reactionary, and increasingly clapped out, Tory national government. Other UK regions and cities were also taking this route and playing this game. It was an exciting and intoxicating time to work full time on EU projects and programs. I threw myself into it, learning how to navigate the byzantine Brussels bureaucracies, how to play the complex games of the UK and European civil servants, how to speak the new bureaucratic and policy jargon of EU. I was pretty good at this stuff. Over the years, fuelled by the generous expense accounts that came with European work, I jetted around Europe, making lots of new work friends, poking my nose into the nitty gritty of local and regional government from one end of the continent to the other. I came to know intimately the details and daily dynamics of dozens of different political systems and national political cultures. I could walk into town halls in Bologna, Budapest and Thessaloniki and steer myself around their corridors, and around the dance of local political intrigues and power plays, just as easily, and with the same familiarity, as I could in the town hall in Islington. It was exhilarating, fascinating and oh so much fun.
I became a passionate believer and advocate for what might be called the ‘EU package’. This was the vision of a Europe bound together into a single political system, with a strong pan-European layer of institutions and powers resting on, and working in partnership with, strong regional and local government. In this vision power and relevance would leech out of the old national governments, and most of the important stuff in politics, and most of the money, would shift upwards to the EU institutions and downward to the local and regional. The old national entities would lose their importance and start to fade away, they had after all been the source of so much bloodshed and suffering. It was such a logical and pleasing vision. It rekindled my old internationalism in what I thought was a far more practical and less idealogical new form. Once again I thought I could see that history was moving ineluctably along a path, this time towards a new post national future and a new united Europe. That was when the alarm bells should have gone off, because generally the moment you become convinced history is on your side is the moment you are usually losing the plot.
In fact what was happening was that I was becoming a member of the Brussels nomenklatura. As Georges Clemenceau said “There is no passion like that of a functionary for his function” and boy did I love my function. Working inside the Brussels bubble is a powerful experience, inside it everything seems so clear and, at a ‘grand scheme of things’ level, so unproblematic. It becomes easy to think that those with doubts about the EU project, those for whom national identity still loomed very large or who complained that the EU was undemocratic, must be some sort of political and cultural dinosaurs resisting their inevitable historical extinction.
Things start to go wrong
By the time New Labour won in 1997 and apparently swept away the reactionary old Tory Euro scepticism, I was working flat out as as an operator deep inside the machinery of the EU, running dozens of project, constantly on the move from one European city to another. My belief in the European Union as a grand progressive project, and the instrument we progressives could use to tame capitalism, was at its peak.
But as the 20th century came to a close my support for the notion of ever greater union and the entire European project began, at first almost imperceptibly, to waiver. In order to be able to effectively operate politically as I worked so closely and intimately in the political systems of so many cities in Europe I needed to understand and appreciate the deep play of numerous local myths of national origins and identity, and of national histories. I began to realise just how complex the national question was. I was reading a lot about how the nations I was working in had come into existence because I needed, as a practical aid, to understand how their various national identities had been formed and how their political system had been created. As the Balkans burned I started to study the role of ethnicity in European history and nation building. For the first time I started to really think and read deeply about how nation states (which are after all fairly modern inventions) had come into existence and how they worked. I came to realise just how important nation states had been in creating national arenas in which democratic political systems had been built, and upon which social democratic structures of social solidarity were erected, and how dangrous underming those national foundations might be.
Meanwhile the EU moved forward. The Euro arrived and with it came the first moves towards the promised next stage of the political union which it was claimed was going to accompany economic union and deliver ever ‘deeper union’. It was through political union that I expected the new pan-European systems of democracy and social solidarity to be created. Unfortunately it quickly became apparent that there seemed to be some very troubling and increasingly severe problems with the whole process.
Once monetary union was a done deal in 2000 I thought it was important that the EU moved forwardly briskly to political union because it would be politically reckless if the twin tracks of economic union and political union got out of sync. Eventually the draft treaty on the new EU constitution came out and I was shocked by how timid, inconsequential and down right reactionary the proposals were. The draft constitution proposed a tepid increase in the scope of majority voting in the Council of Europe, the right of the European Parliament to reject – but not select – a President of the Commission, and the creation of a new full term post of President of the Council who was not going to be selected by any sort of open pan-European democratic electoral process but instead selected in secret deliberation by the European Council. There was a complete and utter absence of any proposals to create a new meaningful democratic tier of government in the EU, and without a truly democratic EU political system who in their right minds would want to transfer fiscal powers? And without fiscal powers there was no social Europe.
It got worse. The new EU constitution treaty was voted down in referendums in France and the Netherlands, and all planned subsequent national referendums were cancelled. Instead of going back to the drawing board and building a popular mandate from below for political union the response was the Lisbon Treaty which pushed through 95% of the failed constitution but this time mostly without even bothering to ask for a popular mandate via referendums. An amending “reform” treaty was drawn up and signed in Lisbon in 2007. It was originally intended to have been ratified by all member states by the end of 2008. This timetable failed, primarily due to the initial rejection of the treaty in June 2008 by the Irish electorate in the only national referendum held to ratify it, a decision which was reversed in a second referendum in October 2009 after Ireland had secured a number of concessions. So Europe was to get a new political system and out of the hundreds of millions of it’s citizens only a few million in Ireland were actually asked to express their opinions on the matter, and even there they had to be asked twice in order to get the ‘right’ answer. We got a European President but not one elected by the people or even by the European Parliament (parliament could reject but not select the Council’s proposed candidate). The fact that the first president was an anonymous charisma-free non-entity whose face or name would not be recognised by most ordinary EU citizen rang deep alarm bells in my head. This did not feel like a new democratic union, this felt like a stitch up.
Then came the financial crisis, and the crisis of the eurozone, and suddenly the terrible flaws of the single currency system, and indeed of the entire system created at Maarstricht and Lisbon, became horribly clear. I had by this time retired from European work and as I was now outside the Brussels bubble my head could clear, and I had a lot of time to try to work out what was going on. And what was going on was not good. The single currency system was causing economic stagnation in Europe, and the resulting debt, austerity and mass unemployment in its periphery was eating away at European political solidarity. The sacrifice of the Greeks to save the German banks was a monstrous, disgraceful, and apparently unending, callous exercise in economic cruelty. The governments of Greece and Italy were simply removed and replaced with more amenable leaders, and the governments of Spain and Ireland given explicit orders to change their economic policy. All this was done by threats from the European Central Bank, an institution constitutionally and by design immune to any democratic oversight, that it would force the closure of the various national banking systems of anybody who disobeyed instructions.
The promised political union that would deliver a European level social democracy was clearly not happening and was unlikely to happen any time soon, possibly never. In fact the whole EU project seemed to be a major contributing factor in the rapid decline of the great social democratic parties of Europe such the French Socialist Party, the PSOE, PASOK and even the British Labour Party. Meanwhile the various rightist nationalist parties, having embraced a generally eurosceptic but leftist set of populist economic policies rushed in to feel the vacuum left by the implosion of social democracy.
In Part Two of this series I will examine the deep flaws of the EU in relation to the two critical, and linked, issues of democracy and material social solidarity.
tony I recognise a lot of what you say from having read varoufakis’s book, which I am sure you have read and which is really great. I agree with much of what you say, and have probably followed a similar trajectory, although I am a little less sanguine than you seem to be about the efficacy of liberal democracy coupled with material and technological progress. I am just reading Pankaj Mishra’s book The Age of Anger, which i thoroughly recommend. He shows how the homogenisation of culture which has proceeded since the 18th century, and the notion of perfectability entrenched in both liberal democratic capitalism and socialism, has led to the upsurge of ethnically based nationalisms, often based on very tenuous and romanticised notions of “the people” and “the nation” and its history. I can’t do justice to the book here which is densely packed with erudition about history, culture and philosophy. Take my word for it, you just have to read it.The current system has delivered gross inequalities, elites completely cut off from the alienation suffered by those they exploit, atomisation, magical thinking and cynicism. There has to be something better, and I agree it isn’t the old socialist dream of 1945. The nation state is still the most likely way we will continue to organise ourselves, but they need to offer people something that prevents this decline into the idea of nation as based on a single ethnicity – we know where that leads.
If you mean Varoufakis’s latest book on his experience as the Greek Finance minister – I haven’t read it yet but its on my holiday reading list 🙂 Pankaj Mishra’s book sounds really interesting and I will put it on my list. The writer who has had quite a big impact on me recently is Wolfgang Streek, in particular his most recent book “How Will Capitalism End?: Essays on a Failing System”. The other book that had an enormous impact on me, and touches on all the issues you raise, is the utterly brilliant “Dark Continent: Europe’s Twentieth Century” by Mark Mazower.
The thing about nation states is that although they can become the vehicle for the creation of liberal democracies their actual creation is usually a really horrible process. Building nations states seems to almost always involve violence, ethnic cleansing (sometimes genocides), the persecution of minorities, wars with neighbours and a lot of people getting killed. With luck an emerging nation state can come through all that and build a functional and tolerant democracy but sometimes the whole process can just not work out and whole regions can suffer terrible violence, strife and instability as a result of the failure to build viable nation states (for example almost everywhere in central Europe in the mid-20th century, almost everywhere in the Middle East now). However nation states are currently the only vehicle through which successful social democratic projects have been delivered. Wolfgang Streek is very pessimistic arguing that while capitalism was tamed and contained in the western liberal democracies in the ‘golden’ era after WW2 since the 1970s capital has increasingly escaped the control of the national democracies and the EU shows that you cannot scale up democracy beyond the nation state so we are entering a period when democracy can no longer contain capital. Thats a poor summary of a fairly complex argument – I will be writing more about that in Part Two of this series.
i have read mark mazower’s book and yes, it is really good – the Varoufakis I read is called “and the weak suffer what they must” -the Streek thesis sounds convincing if depressing
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