Re: [OPE] Greece Finance EU and Neo Liberalism

From: Dave Zachariah <>
Date: Sat May 08 2010 - 09:36:33 EDT

On 2010-04-30 11:33, Paul Cockshott wrote:
> At the same time they set their face against any transformation of the EU that would have strengthened the tax raising and spending powers of the European Parliament. The crisis in Greece, and shortly in Portugal, stems ultimately from this. The Eurozone is a monetary federation without the federal government tax and spend powers that have been essential to the functioning of earlier monetary federations like Germany or the USA. If the EU parliament had the power to levy income and property taxes across the Union, the current crisis in Greece would not be happening. A large part of the expenditure now met by the Greek Government would be being met by the Union out of general Union taxation: defence, pensions, perhaps medical costs.
> Union taxes would, as in any other federal state act as a means of redistributing income between richer and poorer areas. Within the UK, Northern Ireland, being a relatively impoverished area, receives a greater per-capita share of central taxes.
> But all this would have run counter to the neo-liberal agenda. Social democratic politics having been exorcised at the national level, could not be allowed to return at the Union level. Thus there was no question of the Union having the tax raising powers necessary to provide for example common EU pensions or an EU health service free at the point of need across the continent.
> If the left can not pose issues relating to the financial and tax structure of the Union, there is both the threat of nationalism re-emerging as the main discourse, and the immediate threat of drastic losses in social services across several nations.

This addresses a very urgent issue. If one wants a political union of
any size along with a common currency the existence of a sovereign
state---in this case a federal European state---that can transfer
credits within it is imperative. The current configuration of the EU is
not only economically unstable but politically as well because it
presupposes that individual nation-states, in this case Germany, will
bail out other 'national' economies.

This will risk to further push the conflict into antagonisms between
'nations' rather than between classes, unless the Left forces can
polarize the question along the latter dimension instead. Perhaps the
joint crises of Portugal, Spain, Ireland and Greece could lead the way
to such cross-national working class politics.

Incidentally I just read that one of India's most prominent economists,
Jayati Ghosh, has been making a similar analysis as you:

    A Greek tragedy
    Jayati Ghosh

    "The euro has always been an unlikely major currency, based as it is
    on monetary union between countries that do not share political
    union. Its creation was remarkable, a tribute to idealism and a
    reflection of the triumph of political will over economic barriers.
    To outsiders, it is a fascinating experiment, since its apparent
    stability thus far calls into question a belief that was
    axiomatically held by many economists: that monetary union is
    difficult if not impossible without fiscal federalism underpinned by
    more comprehensive political union."

//Dave Z
ope mailing list
Received on Sat May 8 09:40:11 2010

This archive was generated by hypermail 2.1.8 : Mon May 31 2010 - 00:00:02 EDT