Paul Murphy MEP (Socialist Party) contributes to a discussion on what position the Left should take on the euro.
It hasn’t gone away, you know. Although much of the media and political commentary would suggest otherwise, the eurozone crisis is very far from resolved. The economies on the periphery of Europe all face deep economic crisis, the burden for which has been heaped upon working class and poor people, with the devastating social consequences seen at their most extreme in Greece. The situation in much of the rest of Europe is not much better. The political consequences of this ongoing crisis have been seen with near government collapse in Greece, Spain, Portugal and Italy over the course of the summer – with mass disillusionment with austerity a key underlying feature in all cases.
The Irish capitalist class has long tried to separate itself from the other peripheral countries – repeating the mantra that Ireland is not Greece and trying to demonstrate it by more effectively implementing austerity. It has been assisted in that task by the leadership of the trade union movement, which tied to the Labour Party, has attempted to stifle opposition
However, the facts and the crisis remain. The debt to GDP ratio is now at 125% in Ireland and rising. Another dramatic wave of the eurozone crisis could be unleashed at anytime by political or economic developments, the effects of which would be strongly felt in Ireland. The euro will again be at the centre of political developments.
As Ireland moves into primary surplus, the euro could become an important justification for austerity used by the political establishment and a battering ram against the Left. An important reason given not to default on debt or break from austerity policies may be the possible consequence of Ireland being forced out of the common currency. If the experience of Greece tells us anything, it is that
an important argument of right wing forces in the next local and European elections, but in particular in the next general elections could well be – if you implement left or socialist policies, Ireland will be out of the euro and economic disaster will result.
Socialists and the Left must prepare to tackle this scaremongering, to demystify the euro and
to put forward a left ‘exit strategy’ from the crisis that accepts the possibility of exiting the euro and puts forward radical socialist economic measures to deal with the consequences. There are two pitfalls common on much of the left to be avoided here.
The first is the approach of the Syriza leadership which in the last Greek elections was to deny the likelihood of being pushed out of the euro – claiming it was possible to both refuse to implement the Memorandum of Understanding and to stay in the euro. The second is that of separating euro-exit from the question of radical socialist change – posing exiting the euro as a solution to the economic crisis, without acknowledging the problems of euro-exit on the basis of the continuation of austerity and the rule of capital.
The alternative is an approach which sees the question of the euro through the prism of the need to break with austerity and the capitalist system and for radical socialist change. That means refusing to be blackmailed into not raising the need to reverse the cuts and attacks on working class people by the fear of being kicked out of the euro.
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What programme?
Particularly in Ireland right now, in the absence of major struggles that threaten the dominance of austerity and capitalism more generally and pose the possibility of an alternative way of structuring the economy, a demand even by the Left to leave the euro would be widely understood simply as a call to exit on a capitalist basis. Given the fears that exist about euro-exit among broad sections of the population, it would also play into the hands of the right.
Instead, a key point is that in or out of the euro, a continuation of austerity and policies designed for the interests of the rich both in Ireland and internationally, is disastrous for working class people. Exit without breaking from the neo-liberal and capitalist rules would see a huge shock and economic dislocation, a likely massive flight of capital and a further decline in the already historically low levels of investment. In the medium term, the likely significant devaluation would allow for the development of exports as well as import substitution, however working people would shoulder a large portion of the burden with the price of imported goods rising dramatically.
It is therefore necessary to pose the question the other way around. Can working class people afford to continue with austerity, the repayment of odious debt, mass unemployment and emigration? Evidently not. It is therefore essential to break with these policies – first and foremost through debt repudiation, saying that investment in jobs and decent public services takes priority to paying bondholders. This is what is necessary and people should refuse to be blackmailed with the threat of exit from the euro. No more sacrifices, in terms of increased austerity, should be accepted in order to remain within the euro.
While accepting the likelihood that following this course will mean a clash with the European Central Bank and could well mean being forced out of the euro, it is necessary to say that exiting from the euro in those circumstances does not have to herald economic disaster. In order to manage euro-exit, it requires a series of socialist economic measures to protect the economy and society from the potential negative consequences. Although these are not likely to be on the immediate agenda for Ireland, it is necessary to explain and popularise the socialist measures necessary to point the way out of the crisis.
The first would be the immediate imposition of capital controls to prevent the flow of large amounts of money out of the economy. In a perverse way, the fact that capital controls have been implemented in Cyrpus at the instruction of the Troika, illustrates how they can be implemented in today’s age of electronic transactions. Of course, the capital controls introduced by a left government would have a fundamentally different purpose and character to those seen in Cyprus.
The second would be the imposition of democratic public control over the banking system. That means the full nationalisation of the key banks and their transformation into public utilities run for society. Linked to a programme of repudiation of national debt would be an imposition by the banks of losses on the European Central Bank and other bondholders in order to ensure that the banks do not collapse. Under public control, they could become important tools for enabling the redevelopment of economic growth, with credit directed to small businesses. Linked to this would probably be the establishment of a Central Bank under public control to print domestic currency.
Third would be the initiation of large projects of public investment which would create jobs, in, for example, the insulation of homes and public buildings, the development of renewable energy resources, upgrading water and sewerage infrastructure and the building of new homes and adaptation of already built homes. These could be funded through the savings from the non-payment of debt as well as progressive taxation on the rich and major corporations.
Fourth, an investment plan and a democratic plan for the economy as a whole would be necessary to ensure a redevelopment of productive investment. This would necessitate public ownership and democratic control of the key sections of the economy – construction, telecommunications, energy production, pharmaceutical companies, the major retail multiples – in order to co-ordinate the activities of the different economic sectors and implement a plan for sustainable economic growth.
Of course such a programme amounts to the essentials, on an economic plane, of a socialist transformation of society. It could only be carried through with a fundamental struggle against the opposition of domestic and international capital. Such a struggle, as has already been seen embryonically in Greece, would inevitably throw up the institutions of popular assemblies, neighbourhood and workplace councils that could be the basis for an alternative, infinitely more democratic, socialist state.
Internationalism
One argument raised by those on the Left who are more ‘pro-euro’ is the need for Europe-wide struggle and the need for Europe-wide social transformation. Some suggest that a country leaving the euro amounts to a nationalist solution and that it would undermine solidarity between workers across Europe.
This argument ignores the uneven development of the economies in Europe and of consciousness and the class struggle within the continent. It also misses the radical impact on a European plane which a euro-exit as a result of the implementation of radical Left policies would pose. Instead of being a break to common European action, it is likely that such a policy could be a spur to action in a number of countries.
In reality, this ‘internationalist’ and ‘European’ argumentation is often simply a cover for a thoroughly reformist position and a lack of confidence in the ability of working class people in Europe to fight back and co-ordinate struggles based on their own strength and not that of capitalist institutions. Instead of engaging fully in the struggles against austerity across Europe and the institutions and governments which are driving it, appeals are made instead for “euro-bonds” and a more “social” European Union. In suggesting that the European Union and its institutions can be transformed or can play a progressive role, this line of argument serves to prettify those institutions and also promotes a fatalistic attitude that undermines the importance of struggles now against austerity in favour of a view that progressive change can only come through change at a European level.
It is a reality that class struggle today in Europe, despite attacks being co-ordinated at a European level, still takes place in a primarily national context – whereby governments and employers implement austerity measures and they are resisted primarily on a national plane. It is the job of socialists to engage with those movements, to seek to develop them to the highest level possible, to argue for workers’ unity across Europe and to seek to develop them into joint Europe-wide struggles. However, this Europe-wide struggle is not a precondition for fully engaging in the fight.
Workers in all countries in Europe do not have to wait for there to be the basis for a struggle on the same level continent-wise before struggling against austerity. Even in one country, there is always an uneven development of political consciousness, understanding and activity. This is many more times the case across a continent such as Europe. The struggle will inevitably be at a significantly higher level at particular points in some countries than in others.
Therefore, it is entirely correct to seek to develop struggle, including the prospect of genuinely left governments and a break from the rule of capital, to the furthest extent possible in the peripheral countries of Europe. It may well be the case that capitalism will once more break at its weakest link. If linked to a thoroughly internationalist approach, victories and battles in one country can have a decisive role in developing a movement that can have a Europe-wide impact.
None of that is to deny the fact that a conscious internationalist approach and appeal is absolutely necessary, and would be even more so in the event of a break with capitalism in one country. One peripheral country exiting from the euro and trying to implement socialist policies would face major difficulties within a relatively short period of time. In order to survive, it would be necessary to try to expand this change, with the establishment of governments of workers in a number of other countries.
It is likely that the conditions for this would be extremely favourable. A left exit from the euro is overwhelmingly more likely in one of the countries of southern Europe at this time. Conditions and struggle are increasingly converging in Greece, Spain and Portugal in particular, with workers seeing a common enemy in the Trioka and taking confidence from each others struggles.
With a conscious internationalist appeal, a Left government and a euro-exit which flowed from that could well result in major movements in other peripheral countries resulting in similar revolutionary change. This could open up the prospect of a coming together through federation of a number of economies who are struggling for socialist change and may establish, alongside favourable trade agreements based on solidarity and sharing of resources, fixed currency exchange rates.
A class appeal would also be necessary to workers in the core of Europe, in particular in Germany. This would aim to clarify that this is not a question of German workers paying for the crisis, but rather that working people throughout Europe have been the losers of the EU and euro project and that big business and finance capital must pay. In that way, even if revolutionary change wasn’t immediately placed on the agenda, the room for the German capitalist class to go on the offensive could be restricted.
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The Euro - exit stage Left?
