“Ungovernable” Europe enters economic depression

The most crucial discussion at the CWI School 2012, held last week in Belgium, with up to 400 participants, was on Europe. This was introduced by International Secretariat member Peter Taaffe (pictured) and there were a number of excellent contributions from the floor, as comrades grappled with real and immediate situations posed for socialists internationally. Kevin Parslow from the Socialist Party (CWI England and Wales) summarises the plenary session.

The world crisis had coined a number of new words: ‘grexit’, ‘spanic’, brixit and others, to represent different possibilities in the crisis. But what nobody could do on a capitalist basis was under-write or solve this crisis economically. Not even German capitalism, as Chancellor Angela Merkel confessed, has unlimited resources. In the 1920s, the Dawes Plan, underwritten by US capitalism, saved Germany and Europe for six years until the Wall Street crash and the onset of the Great Depression; it was the economic price paid to prevent revolution. Now, no power in the world can act in a similar fashion to solve the European crisis.

The European capitalists have created the European Stability Mechanism (ESM) to bail out struggling economies. But the combined debts of Spain and Italy, next in the firing line, amount to €2.8 trillion, six times the resources of the ESM! Economists and politicians say a collapse of the euro is inconceivable yet the same was said of the Soviet Union. In both cases, the capitalists could not see how the situation could go on but could not envisage its collapse! In the case of the euro, the staggering events brought on by the world economic crisis will drive its demise; Peter pointed out that there have been 70 currency collapses since 1945.

The CWI had predicted from before the euro’s creation that it carried within it all the seeds of its own destruction. What had brought it into being and how it lasted so long was due to the prolonged boom up to 2007. But the profound economic and political crisis, rocking all capitalist institutions, means the eurozone is staggering from one crisis to another.

Northern Europe not immune

Northern Europe has been affected by the crisis, with youth unemployment reaching 28% in Sweden. Scandinavia, particularly Sweden, as Arne Johansson of Rättvisepartiet Socialisterna pointed out, once a blueprint for the welfare state and social democracy, is now a model for neo-liberalism privatisation of public services under its right-wing government and books are being written over the demise of the ‘Swedish model’. Oil workers have taken strike action in Norway and the crisis is so acute in the Netherlands that the left-wing Socialist Party there is heading the opinion polls. Even mighty Germany will not be immune; although in a boom, partly due to a long-term devaluation of the euro compared to the deutschemark, the government parties have been rocked by bad results in the regional elections.

Eastern Europe and the countries of the former Soviet Union have also been devastated by the crisis, which has caused political and economic upheavals in Hungary, Romania and elsewhere. The intervention of the CWI in Kazakhstan has shown the possibilities for winning support for genuine socialist ideas in former Stalinist countries.

But it is mainly in southern Europe where the social, economic and political situation is most acute, with Greece in the vanguard and Spain, Portugal, Italy, Ireland and others not far behind.

Greece

Greece accounts for less than 2% of eurozone gross domestic product (GDP) yet it is important for the capitalists in Europe, the working class and the CWI. We are watching avidly as our Greek section grapples with the task of giving leadership in the face of a five-year depression, terrible social conditions, worsening by the day and a society forced backwards by the barbarians of the European capitalists, represented by the ‘troika’ of the European Union, the International Monetary Fund and European Central Bank. In the recent general elections, the majority of Greek voters, although with reduced turnouts, voted for parties against the austerity packages imposed on them. However, the electoral system, which gives the winner of general elections an extra 50 seats, has allowed the right-wing New Democracy to form a pro-austerity government with the ex-socialist PASOK and its split, Democratic Left. Already, this government has called off attempts, if it ever meant its election slogans, to renegotiate the austerity package accepted by previous governments and will press on with further cuts.

Our Greek section faces great challenges, defending the working class from the attacks, putting the right demands which take consciousness forward and pursuing the correct tactics, to win over the most combative workers and youth to genuine Marxist ideas. The situation was explained graphically by Nikos Kanellis and Nikos Anastasiadis of our Greek section: the regular demonstrations in the centre of Athens, the general strikes which failed to defeat the austerity measures, and the effect of the elections as a ‘political earthquake’, which lifted the depression after the failure of the general strikes. Syriza had gone from 4% of the vote in 2009 to 26% in June 2012 and it was attracting to its ranks ex-PASOK supporters, which could have its dangers in pulling Syriza rightwards. In fact, a lack of decisiveness, particularly on the euro, in the last few days of the election campaign may have cost Syriza victory.

Greece will default on its debts at some stage and will be ejected from the euro. The question of a new currency will be posed. The euro has been associated with modernity compared to the old drachma but how will workers be defended if Greece (or any country) is forced out? Therefore, we have not called for ‘Get out of the euro!” but workers, although feeling the euro was a step forward, will not tolerate years of eurozone-imposed debts and will push to leave in the future.

Some capitalist economists – such as those in Deutsche Bank – have raised the idea of a double or parallel currency to run alongside the euro for a period. This would have the effect of driving down living standards through internal devaluation. The break of Argentina from the dollar-peso peg at the turn of the 21st century was accompanied by parallel currencies but this excluded whole groups of society from the monetary system and was accompanied by the reintroduction of barter. There was some discussion on this question in the school and this will continue further.

These points raised discussion in the meeting as to the best demands to put to workers. However, as Lynn Walsh of the IS pointed out, whatever becomes of the euro, socialists in Greece have to demand cancellation of debts, nationalisation of the banks and industry, a rejection of austerity, control of foreign exchange and trade as part of a socialist plan as the only way to defend workers’ living standards.

Golden Dawn threat

The far right in Greece, in the form of Golden Dawn, gained about 7% in the two general elections this year. The rise of the far right and reaction throughout Europe is the other side of the coin of this period to the rise of socialist ideas. Whereas the crisis will force workers to the left, the far right will also gain when the working class organisations do not give a strong enough lead, as has already been seen in Greece, in Hungary with Jobbik, with the votes for the Front National in France and other far-right parties in Europe. Having the correct ideas to take on the far right, which means taking up the social problems they exploit to gain support, is vital for CWI sections.

Other alternative formations have also sprung up where the traditional parties of both right and left have been discredited by their pro-capitalist austerity policies. The successes of the Pirate party in Germany and of the comedian Bepe Grillo’s movement in Italy show the discontent with ‘old’ politics throughout Europe.

The situation in Greece has elements of civil war about it. It is not a coincidence that there have been comparisons with the Weimar Republic in Germany between 1919 and 1933, and particularly the austerity regime of Chancellor Brüning that led to the rise of the Nazis. However, we have to caution that the idea that the capitalists can go directly to military rule or fascism is wrong. The working class will have a number of opportunities before that is posed but socialists need to warn of the dangers if the working class fails to take power.

Spain

Much of the focus of attention recently has passed to Spain, where a situation reminiscent of that prior to the civil war was developing. Austerity measures have provoked a massive reaction, typified by the Asturian miners’ march to Madrid to protest at the slashing of coal subsidies. Prime Minister Rajoy had sent a text during European summit negotiations, protesting at proposed harsh measures, which said: “Spain is not Uganda”. Unfortunately for him, it was pointed out that Uganda’s economy was growing while Spain’s had contracted! The banking crisis had led to guarantees of €100 billion directly to the Spanish banks yet this would do nothing to solve the underlying problems of the economy and the Spanish government would probably need a separate bailout.

The crisis in Spain has also raised the issue of national question. The autonomous regions control almost 40% of public spending and austerity policies will come up against the anger of the nationalities and regions, particularly in Catalonia, the Basque country and even now in Andalusia. What could develop is left nationalism, with struggles against austerity fusing with nationalist sentiments. This conjuncture may also arise in Scotland and Wales, and other European countries. The task of Marxists is to put forward a programme on the national question that links it to the struggle against capitalism and towards socialism.

Francois Hollande won the French presidential elections, and the Socialist Party the assembly elections, promising some concessions, but nothing on the scale of Francois Mitterrand’s presidency that nationalised 38 banks before forced to reverse his policies in the early 1980s. The scepticism towards all parties was shown by the much lower turnout for the elections. The vote was more against Sarkozy and the UMP than pro-Socialist. The significant factor was the rise of the Front de Gauche led by Mélenchon.

Left parties

As the CWI explained from the mid-1990s, the move of the old social-democrat and Labour parties throughout Europe to openly embrace capitalism would leave a space for new formations to put forward socialist ideas. Parties such as Rifondazione Comunista in Italy grew in the 1990s but fell back when they failed to develop clear socialist policies. But the crisis has spurred the formation and enlargement of new left formations, including the Front de Gauche, the Socialist party in the Netherlands, Die Linke in Germany and others. Syriza has been pushed into a position where it is openly challenging for government and could form the next administration in Greece when the current one falls, as it most likely will and probably not after long. The CWI has orientated towards these formations and, while not necessarily mass in numbers yet, electorally they represent a force and workers and youth will join them, or similar organisations, in the future. The CWI will be present in these organisations to give a clear socialist direction to them.

Peter also referred to the situation in Ireland, where the United Left Alliance, including the CWI section, the Socialist Party, now has 5 TDs (members of parliament) and is leading the mass campaign against the household tax. Sinn Fein, the party of Republicanism in Ireland, could become the largest party in the South at the next election, and a stronger socialist contingent could also be elected. As Joe Higgins, one of the Socialist Party TDs pointed out, the Socialist Party has come under attack in sections of the right-wing press, using a spurious pretext of the TDs’ ‘expenses’ for supporting the household tax campaign. The government is intimidating non-payers of the household tax but this campaign could be as big as the poll tax in Britain, which led to the downfall of Prime Minister Thatcher.

Similarly, Britain’s coalition government is riven with divisions and there has been an upsurge in strikes in the public and private sectors. The National Shop Stewards Network is playing an important role in galvanising the trade union movement and the Trade Unionist and Socialist Coalition is beginning to make small but important moves forward on the electoral plane.

Europe has become “ungovernable”, as it enters its ‘Japanisation’ phase, a long period of depression. “How much pain can the countries under stress endure? Nobody knows. What would happen if a country left the eurozone? Nobody knows. Might even Germany consider exit? Nobody knows. What is the long-run strategy for exit from the crises? Nobody knows. Given such uncertainty, panic is, alas, rational. A fiat currency backed by heterogeneous sovereigns is irremediably fragile.

Before now, I had never really understood how the 1930s could happen. Now I do.” This was the gloomy prognosis for capitalism of Martin Wolf in the Financial Times. It shows the extreme pessimism of the European capitalist class.

Trade union militancy

Peter concluded that Marxists must root themselves in the situation. The current young generation will be the ‘lucky generation’. For 50 years, the pioneers of Marxism in Europe have seen marvellous developments but would give it all up to participate in current events. We can now look forward to the socialist revolution which is developing in Europe and worldwide.

In his reply to an excellent discussion, Tony Saunois of the IS remarked on the increase in trade union militancy. The general strikes that have taken place have tended to be protests, which some right-wing leaders of the trade unions have been only too eager to choke off. Not yet have these strikes raised the question of power for the working class. This will come in the future, as will the need for workers to get organised politically, either in broad mass formations or revolutionary parties directly. At the moment though, there is still an anti-party mood in most countries of Europe.

The tasks of the CWI include building our own sections but also to fight for new mass parties with demands to transform these new organisations as part of the struggle to transform society. In that way, our sections need to grow into bigger parties and shape events. Tony said we are in a protracted crisis and in a race against time. The key question for the CWI is to face up to the challenges and build our forces to transform society