Europe’s new Iron Lady is even criticizing Trichet for doing some little covert easing on the side. Traditionally, central banks have been sacred to German governments. And yes, right-wing teutons would have us believe that the country is still traumatized by a bout of hyperinflation happening 85 years ago, so that monetary orthodoxy and financial rigor shall never be doubted, much less undermined. So Ms Merkel, while the country is sinking into a hole dragging the whole of Europe into unemployment and eurozone is falling into deflation (it wouldn’t if the ECB were doing some serious quantitative easing), is worrying about inflation and fiscal profligacy. Call it the Maastricht fixation. Hope the european and national elections punish here. If that weren’t the case, it’d be as if europeans had signed their own pink slip and rewarded Europe’s present élites for the mess they got us into and cannot get us out of.

This year, France experienced 283 protest rallies on Labour Day in cities from Marseilles to Bordeaux, Grenoble and Paris. Although not as dramatic as 1968, the estimate by one of France’s largest trades unions of 1.2 million protesters was five times higher than the protests in May 2008.

In addition, compared to 1968, the 2009 Labour Day protests were more widespread throughout Europe. On 1 May in Germany, union leaders estimated 484,000 people demonstrated in 400 rallies across the country. In Berlin, 237 police were injured after running battles with stone-throwing activists, leading to 289 demonstrators being arrested and five cars torched. In Istanbul, more than 100 protesters were arrested and dozens of people injured as supermarkets and banks were deliberately targeted. In Athens, rioting was dispersed by tear gas, and in Linz in Austria, 20 people were injured and five arrested.

This violence was unrepresentative of the majority of peaceful demonstrations that occurred on 1 May, which is a traditional day of socialist, worker and union-led protests. Nonetheless, the geographic spread of the violence and diversity of motivations behind it reflected an underlying trend: revolutionary and protest movements have become more active across Europe amid the global economic downturn.

I’m concerned about Europe. Actually, I’m concerned about the whole world — there are no safe havens from the global economic storm. But the situation in Europe worries me even more than the situation in America.

Just to be clear, I’m not about to rehash the standard American complaint that Europe’s taxes are too high and its benefits too generous. Big welfare states aren’t the cause of Europe’s current crisis. In fact, as I’ll explain shortly, they’re actually a mitigating factor.

The clear and present danger to Europe right now comes from a different direction — the continent’s failure to respond effectively to the financial crisis.

Europe has fallen short in terms of both fiscal and monetary policy: it’s facing at least as severe a slump as the United States, yet it’s doing far less to combat the downturn.

On the fiscal side, the comparison with the United States is striking. Many economists, myself included, have argued that the Obama administration’s stimulus plan is too small, given the depth of the crisis. But America’s actions dwarf anything the Europeans are doing.

The difference in monetary policy is equally striking. The European Central Bank has been far less proactive than the Federal Reserve; it has been slow to cut interest rates (it actually raised rates last July), and it has shied away from any strong measures to unfreeze credit markets.

The only thing working in Europe’s favor is the very thing for which it takes the most criticism — the size and generosity of its welfare states, which are cushioning the impact of the economic slump.

This is no small matter. Guaranteed health insurance and generous unemployment benefits ensure that, at least so far, there isn’t as much sheer human suffering in Europe as there is in America. And these programs will also help sustain spending in the slump.

But such “automatic stabilizers” are no substitute for positive action.

Why is Europe falling short? Poor leadership is part of the story. European banking officials, who completely missed the depth of the crisis, still seem weirdly complacent. And to hear anything in America comparable to the know-nothing diatribes of Germany’s finance minister you have to listen to, well, Republicans.

But there’s a deeper problem: Europe’s economic and monetary integration has run too far ahead of its political institutions. The economies of Europe’s many nations are almost as tightly linked as the economies of America’s many states — and most of Europe shares a common currency. But unlike America, Europe doesn’t have the kind of continentwide institutions needed to deal with a continentwide crisis.

This is a major reason for the lack of fiscal action: there’s no government in a position to take responsibility for the European economy as a whole. What Europe has, instead, are national governments, each of which is reluctant to run up large debts to finance a stimulus that will convey many if not most of its benefits to voters in other countries.

You might expect monetary policy to be more forceful. After all, while there isn’t a European government, there is a European Central Bank. But the E.C.B. isn’t like the Fed, which can afford to be adventurous because it’s backed by a unitary national government — a government that has already moved to share the risks of the Fed’s boldness, and will surely cover the Fed’s losses if its efforts to unfreeze financial markets go bad. The E.C.B., which must answer to 16 often-quarreling governments, can’t count on the same level of support.

Europe, in other words, is turning out to be structurally weak in a time of crisis.

The biggest question is what will happen to those European economies that boomed in the easy-money environment of a few years ago, Spain in particular.

For much of the past decade Spain was Europe’s Florida, its economy buoyed by a huge speculative housing boom. As in Florida, boom has now turned to bust. Now Spain needs to find new sources of income and employment to replace the lost jobs in construction.

In the past, Spain would have sought improved competitiveness by devaluing its currency. But now it’s on the euro — and the only way forward seems to be a grinding process of wage cuts. This process would have been difficult in the best of times; it will be almost inconceivably painful if, as seems all too likely, the European economy as a whole is depressed and tending toward deflation for years to come.

Does all this mean that Europe was wrong to let itself become so tightly integrated? Does it mean, in particular, that the creation of the euro was a mistake? Maybe.

But Europe can still prove the skeptics wrong, if its politicians start showing more leadership. Will they?

AGITATION AS MIDDLE-CLASS EUROPE STRUGGLES TO COPE

By John Thornhill

Economics is convulsing European politics. Governments have fallen in Iceland and Latvia; strikes or protests have erupted in Greece, Ireland, France, Germany, Britain, Lithuania, Ukraine and Bulgaria. Financial turmoil has shaken even the continent’s furthest-flung outposts: the French Caribbean island of Guadeloupe has been ravaged by violent strikes, while Russia flew riot police into ice-bound Vladivostok to quell street protests.

This spasm of unrest was hardly expected when the crisis broke in the summer of 2007: many Europeans believed they would be spared the worst effects of a disaster forged in the suburbs of the US. Since then, as the crisis has spread, initially sanguine forecasts have given way to ever more gloomy predictions: European Union finance ministers this week revised down an already grim outlook issued barely 10 weeks ago.

Beyond the economics, there is now a gnawing concern that Europe may be only at the beginning of a far more tumultuous cycle of instability. Whereas the administration of Barack Obama in the US may be looking to exploit the political upside of the crisis, Europe’s leaders are more concerned with limiting its downside. The region’s democracies, as well as the institutions of the EU itself, are being stress-tested as never before.

The proudest achievements of the 27-member organisation – a single market, a common currency and the convergence between west and east – are under strain. “There is no doubt we are living through the greatest financial and economic crisis in living memory,” says José Manuel Barroso, president of the European Commission. As governments take often unpopular action to salvage their economies, anger is mounting as a result of rising unemployment, pay curbs, bail-outs for devastated banks and falls in house prices and the value of pension funds.

Juan Somavia, director-general of the International Labour Organisation, a United Nations agency, has warned that social unrest could worsen if stimulus packages are not seen to benefit ordinary people, saying: “There’s a sense that it’s ‘billions for bankers but pennies for the people’.”

For the moment, it is impossible to predict what the political aftershocks of the economic earthquake will be. The left should be the natural beneficiary. Yet many of Europe’s socialist parties seem more concerned with defending the partisan interests of their supporters rather than devising a holistic response. Trade union leaders recall ominously that it was the far right rather than the moderate left that gained power in much of Europe in the 1930s during the last catastrophe of capitalism.

Some observers, such as Emmanuel Todd, a French sociologist, are predicting the end of democracy, or at least its significant erosion, as populist rightwing leaders including Silvio Berlusconi, Italy’s prime minister, and French President Nicolas Sarkozy become increasingly demagogic and authoritarian. Others forecast a reversion to nationalism and protectionism as countries abandon the European ideal and look to defend their own.

In this view, the EU may increasingly be seen as part of the problem rather than the solution, the “Trojan horse of globalisation” in the words of Mr Sarkozy. Along with other national leaders, he has been spearheading the response to the crisis, leaving Brussels bureaucrats to fret about infringements to state aid and competition rules and the trashing of the eurozone’s fiscal rules.

But in spite of heated rhetoric, the national political impulse and the traditional muddle of EU policy, the bloc’s political leaders have not yet broken ranks over the sanctity of the single market or the imperative of collective action. After a hesitant start, the Commission is taking the initiative in developing pan-European financial regulation and helping the most vulnerable member states. It is still possible that the crisis will result in deeper integration rather than disintegration.

Different countries are responding in different ways depending on the vulnerability of their economies, their political systems, their leaders and their national cultures. Yet one feature common to almost all is that it is the middle classes who are suffering the most in this recession. Even before the turmoil, some sociologists were talking about the emergence of “hourglass societies” in Europe as globalisation sifted the winners from the losers.

“The middle class – at least in Germany – is shrinking now. This is a completely new situation for Germany. You have much more upward mobility and downward mobility from the middle class. I assume that the financial crisis will accelerate the process,” notes Stefan Hradil, a German sociologist. That analysis is resonant in Britain too, where the media have highlighted the plight of the “coping classes”, those once self-assured professionals who are now financially stretched.

Perhaps the most explosive political moment will come when Europeans are presented with the bill for today’s rescue packages. Governments will be able to rebalance their public finances only by cutting spending and raising taxes on the struggling middle class.

Wouter Bos, Dutch finance minister and leader of the Labour party, says the crisis has killed the myth of “happy” globalisation, in which everyone benefits. Politicians will have to do more to protect the losers from globalisation if they want to maintain support for open markets and free trade. That will mean that the “visible fist” of government will be increasingly used alongside the “invisible hand” of the market. Effective regulation and social justice are going to become priorities.

But Mr Bos has no doubt about the scale of the challenge: “For the first time in post-world war two history we have a generation that seriously doubts whether the next generation is going to live better than themselves.”

Additional reporting by Hugh Williamson ]]> http://www.greatrecession.info/2009/03/12/middle-class-europe-made-precarious-by-crisis/feed/ 0 http://www.greatrecession.info/2008/12/18/next-left-european-politics-and-movements-in-the-great-recession/ http://www.greatrecession.info/2008/12/18/next-left-european-politics-and-movements-in-the-great-recession/#comments Thu, 18 Dec 2008 15:22:25 +0000 alex.foti http://www.greatrecession.info/?p=74 Do a bit of historical rewind and think you are back in 2000 again. Boy, was Europe optimistic back then. The new economy hadn’t crashed yet, and Dubya did not seem to stand a chance against Gore. Sure, noglobal protesters had emerged as spoilers of the party of monetarism and neoliberalism, and the cinders of the Balkans were still smouldering, but the West looked triumphant (check the economist’s millennial issue or any other piece of myopic self-celebration of neoliberal capitalism). The European Union seemed its most civilized achievement, having abolished war, created prosperity, and setting out to absorb post-cold-war central europe in its supranational institutions. The euro was just one year old, when Joschka Fischer, in his famous lecture at Humboldt University, sketched out a plan for a federal, multicultural, liberal Europe uniting East and West, while europarlamentarians and members of the euroconvention were out to draft a constitution that would give a political skeleton to the Single Market and the Single Currency.

Nine years after, we can look back and see than none of this happened. The much-touted European miracle of a transnational polity turned out to be a mirage. The EU has been voted down in almost any open electoral contest (France, Holland, Ireland), and the neoliberal legacy that propelled Europe into Maastricht and Schengen has caused the biggest economic slump since the Great Depression. In fact, the eurocracy has been standing idle as the meltdown progresses, while national governments rushed to insure their banks from a run on them (ask the Icelanders who can’t use their credit cards any longer or indeed buy anything coming from abroad). To add worse to worst, new cold war tensions loom in its East. In short, political Europe lies in ruins, as nationalism, xenophobia, clericalism are dangerously on the rise everywhere.

Eurofederalism, once a progressive ideology commanding the allegiance of most of European élites, is definitely passé. While America is finally on the lookup with Obama’s election marking the end of the long, dark years of bushism, Europe lies in shambles. It does not have an economic or geopolitical direction, much less a social and a cultural agenda. In this confused scenario, a statist rightist like Sarkozy is looking like a giant standing amidst the rubble of laissez-faire, calling for unprecedented government intervention in the economy, altho this has splintered the traditional Franco-German core of the EU. Even a discredited leader like Brown is getting a new lease on life because of the crisis. Berlusconi instead is going to pay for the crisis dearly in political terms (and it’s not clear what
the cost of offloading the major toxic assets held by the Italian government and banks will be), as the Anomalous Wave student movement is proving as I write these lines. Their mobilization has already mobilized millions and produced two general strikes. It’s the only social force that manages to counter the cryptofascist policies and the persecution of gypsies, muslims and immigrants enacted by Berlusconi III, who presides over a government exclusively composed by fascists, xenophobes and all the sycophants on his vast payroll. Not even the clericals are in his government, although Mr B has been publicly blessed and praised while he was attending a Mass held by Papa Ratzy. The new socialist hope of Europe, Zapatero, is now paying the price for his mix of social progressivism and economic conservatism. The latter has propped up real estate prices to impossible heights and now the fall is very harsh. But there’s no question that socialist and social democrats are rediscovering their keynesian instincts and are moving to left in practically every European country. Also Merkel is being weakened by the crisis: her free-market and monetarist instincts are playing against her on the domestic side, and Putin’s aggressive stance in Georgia and elsewhere is weakening her foreign position. Unfortunately, the SPD does not seem posed for a united left approach with Die Linke and Greens that could defeat the CDU in the next elections (it would already have a majority in the Bundestag).

But events are unfolding rapidly as eurocorporations have started laying off workers and employees in large numbers, and this major fact could alter the political landscape dramatically. Right now, Europe seems to be coming apart at the seams, with an unloved political structure, an outdated economic policy, and an outmoded foreign policy. Many have started betting on the dissolution of the euro. It is likely that the great recession will hit Europeans harder than Americans, due to the neoliberal and monetarist inertia built into european institutions. In fact, the EU has never weathered a major recession in its history. Will it withstand the financial hurricane it never thought possible?
Already spreads on eurobonds issued by the Greek, Italian, Portuguese governments have risen sharply. Yet panic-stricken Iceland and Hungary want shelter under its umbrella, and even Denmark and Sweden are now considering joining the euro, not to say the UK. One of the few countervailing effects to European self-dissolution is that the split between Old and New Europe is likely to be repaired under Obama. But this will also mean that NATO will be strengthened, as euroatlantic relations are now on the sunny side.

Obama’s victory undoubtedly brings a wave of optimism, which after all these years of bushist darkness and obscurantism is refreshing. His administration should chart a fairly liberal, ecokeynesian course in socioeconomic policy. The gross inequalities created by three decades of free-market fundamentalism are likely to be reversed, in America. But what about Europe? From a European perspective, Obama’s election exposes the white christian xenophobic monetarist gerontocracy that still holds on to power in much of europe (definitely in spaghettiland). Strange as it may seem, Europe now finds itself to the right of America. The other time it happened it was in the very scary 30s and 40s with FDR, whose New Deal clearly represents a political template for BHO. His election was made possible by the mobilization of young, women, blacks, latinos. This is the political constituency that opens up venues for social change in Europe, too. In Europe, blacks, arabs, slavs, turks, latinos are either discriminated or persecuted by national governments; they should conversely be empowered by Europe’s Next Left. Let’s write on our banners once for all: Pour l’europe sans frontières du métissage sociale!

European movements have steadfastly refused to give priority to a European agenda, and thus to become the effective social and political opposition to Commission, Council, and Central Bank. The latter is a dangerous remnant of monetarist orthodoxy and if not decisively confronted by political and social pressures, will make the recession worse in Europe than in America, meaning millions more unemployed. Trichet was raising interest rates as late as July, when Europe was already in recession. Suicidal. (Today it’s still over 3%, while zero interest rates are already a reality in US and Japan). We must get rid of him and the Stability Pact. This is priority #1 for organized labor and egalitarian movements.

Since Rostock, radical movements in Europe have targeted three major issues: resurgent racism and fascism, climate change and greenwashing, NATO and euratlantic militarism. Other movement priorities such as precarity, gender, free media continue to be important, but comparatively less so than in previous years. In the wake of the Great Recession, capitalism’s biggest crisis since the 30s, I surmise the hypothesis that a renewed emphasis on the self-organization of precarious, immigrants, unemployed is absolutely crucial. Mass unemployment will give new life to rightwingers everywhere in Europe, we’re already witnessing this in Italy, Austria, Switzerland, Belgium, Denmark, to name just a few countries. And while antifa and antira action is absolutely essential during emergencies, such as when Lega Nord and Vlams Blok tried to stop Koeln’s mosque from being built, not addressing the social causes of xenophobia will make all of us weaker. We must build social solidarity. And to do so, we have to create organizations where mixité and métissage are the norm, where precarious and unemployed, no matter if black or white, christian or muslim, red or pink, can join in common struggles and campaigns against borders and precarity, i.e. against persecution and detention of migrants and exploitation of the disenfranchised in Europe today. More than that, now that deregulation and neoliberalism have been exposed as the market theology, we can actually fight for and obtain a European Welfare State revolving around a European basic income and living wage, p2p culture and ecosocial communities, and more.

We should be clear that this is an overinvestment crisis caused by massive deregulation and negative redistribution: three decades of market excesses, credit-fueled consumer expansion and business-friendly policies have finally come to an end. Neoliberalism, that ideology of the Commission since the 90s, has met its demise. Hayek and Friedman are now finally buried: the policies advocated by the shock therapists have turned out to dig the grave of laissez-faire. It will be decades before that corpse is unearthed again, if at all. This is a crisis like the 30s and harbors similar dangers, namely global fascism, militarist, ethnonationalist, genocidal. Since this is also a biocrisis, it will be ecofascism, regaling given economic and ethnic elites with mastery over their own lives as they send billions to their deaths: if you ain’t got an SUV, you drown, this is the ecofascist message that New Orleans sent to the world. Precarious, creative, migrant labor must win higher income share and expanded leisure at the expense of capitalist elites, while compelling the state to redistribute social productivity, but it will need the equivalent of last century’s radical industrial unionism to do so. At the same time we have to make sure that redistribution is not about fueling our carbon addiction (like in the old-style keynesian expansion), but spent for social activism, public welfare, economic innovation and grassroots redesign of production, energy, transportation systems. The conflicts over social power will be huge about whether to assert a radically progressive agenda or a radically reactionary one. We’ll see conflicts within and among regions of the world like we haven’t seen in decades, if not centuries.

Since Rostock, Copenhagen, Heathrow a new lymph is flowing in the anticapitalist movements adopting queer pink, anarcho black, radical green ideological forms. Pink, black, green urban insurgence seems the name of the game. Pink, because since at least Act Up threw the gauntlet of protest to the neoliberal order, queer has become revolutionary for all sectors of society: it’s no longer simply a matter of identity politics, it bespeaks a radical social transformation, and the contested institutionalization of the end of patriarchy. Pink because it refers to pinko deviant political
tendencies in non-pacified urban subcultures, experimenting with the radical mixing of codes, genders, ethnicities. Pink like a clown insurrection. And ecotopian green like reclaim the streets, guerrilla gardening, criticalmass-vélorution, and now the climate action camp, setting a new template for ecological protest. It’s a DIY, eco-hacking way of dealing with environmental issues, exploring how they can empower the people in adopting alternative forms of socialization and social organization. Urban insurgence, like the one that has mobilized Copenhagen’s alternative youth since March 007 in countless demos, large-scale rioting, and huge non-violent actions to defend to the last the very idea of social squatting as a way of life, which has become integral to the notion of european urban culture over the last three decades. Self-managed zones and radical collectives will have to federate all across Europe, if the political legacy of punk and autonomism is to survive in our cities.

The Great Recession holds promise for radical transformation, but we gotta be clear about what it is about. If we next ftist radicals want to act in defense of the biosphere and remove the capitalist causes of climate change, while maintaining the digital civilization which common labor, information and knowledge has created, I think we should use revolutionary means (civil disobedience and direct action) for ends that are ultimately reformist: a new urban environment, a new welfare system, a reregulated labor market, strongly curtailed capitalist freedoms: NGOs and civil society won’t do it in our place. In other words, anticapitalism is likely to trigger fundamental ecosocial reform, rather than the revolution. This is because the present capitalist crisis is not caused by social and political constraints imposed on accumulation and domination (such as in 1917-22 or in 1968-77), but rather by the lack of regulation from above as well as effective resistance from below.

Also, in the ideological fight with the right and in the ideological competition with liberals and ocialists, anticapitalism as a label doesn’t cut it. In fact, it’s already being appropriated by trotskyists for old New Left parties that cater to the protest vote but don’t change the fundamental hierarchical structures of politics in the direction the Next Left has been experimenting with since Chiapas and Seattle. We need a new social organization (the One Big Heretic Union) and a new (pink, black, green) political ideology for the anticapitalist movement, which, looking at it from the perspective of malmoe’s Klimax vs E-On street block or the night’s battle by the Hilton, is in a nutshell the interbreeding of the autonomous, anarchist, antifa, queer, vegan tendencies that have been brewing over the last two decades in metropolitan subcultures. I think next leftists can better expand their radical action and build alternative structures for society, if social liberals and green capitalists prevail over nationalist authoritarians and military-carbon corporatists in the present historical bifurcation.

The simultaneous interest rate cuts by the world’s central banks in early October 008 was the last-ditch effort to solve the crisis by monetary means. In fact, it didn’t work and monetary authorities have fallen into the liquidity trap, where monetary policy becomes ineffective, and only fiscal policy has an effect on the economy. Thus only major deficit spending of the equalizing sort can now drag the economy out of deep recession. The political battle in Europe and America will be on that, in my opinion. This overaccumulation crisis which is turning into a major effective demand crisis (realization crisis in the marxian terminology). Anyway my take on the Great Recession, which I somehow predicted (the article was printed in early 2007) is here (there’s one typo in the geopolitics cell, it should read “unstable UNIpolar” in the 80s and 90s):

www.leftcurve.org/LC31WebPages/Grid&ForkTable.pdf

Today the debate in movements seems to polarize around two ways to go about the new historical situation created by the Great Recession and America’s shift to progressivism:

i) let’s finally secede from the mad and corrupt world of capitalism and build the new society from scratch, a place were solidarity and sharing are in and inequality and exploitation (of women, peoples, nature) are out; let’s call it the steampunk solution.

ii) the great recession is a once-in-a-century opportunity to build radical political and social organizations/ federations/coalitions that can impose redistribution (and thus economic sustainability) and push for the redesign of basic social structures toward ecological compatibility; let’s call it the commonist solution.

But the two strategies should not be mutually exclusive, especially if we wanna beat the Right. For instance, a massive increase in public spending that goes toward financing alternative, sustainable communities, as well as environmental remediation public works are likely to be progressive ways out of the recession, while a new postcapitalist culture won’t be able to thrive if there aren’t enough spaces and hoods that experiment with new ways of collective living
and explore new dimensions of social conflict.

To conclude, a list of statements that in my wet dreams should spring all european radicals into common action, now that capitalism is in crisis and neoliberalism is over:

– the EU is engulfed by the great recession and is reverting to national sovereignties to solve the credit crisis: one more blow at the already vacillating political legitimacy of Commission; but in the present sociopolitical climate in Europe a rightist, authoritarian and xenophobic, even outright fascist outcome is more likely than a leftist outcome (reformist and/or revolutionary don’t matter)

– in fact, the elites are in disarray: they don’t know how they sank into shit so fast and don’t know the way out, while the free market suddenly has no longer any appeal for the media or the population at large

– the deepening recession will provoke escalating labor conflict, but the precarious generation must build its own organization or be left out from the redesign of economic institutions

– G2, as second-generation immigrant youth (first-generation europeans) are called in italy, will be at the forefront in the social conflict vis-a-vis securitarian and cryptofascist powers — today islamophobia is the functional equivalent of antisemitism in interwar europe: it’s the faultline between right and left in europe; in recessive conditions, which will fan the flames of xenophobia, only a transeuropean revolutionary social organization can bridge the gulf between immigrant and native workers, service and creative labor, between rebellious G2 youth and dissident white youth: let’s build the European Union of the Precarious and the Unemployed

– politically, it’s high time that we build a european federation of autonomous/anarchist/antiracist/queer metropolitan zones and movements sharing common symbols, tactics, strategies. A Hanseatic League of Social Centers, if you will. The circle and the jagged arrow (aka the Blitz) is probably the most universal symbol of european insubordination. For all my quest for a new radical iconology, let’s adopt the inherited one as common signature of our struggles: live it! share it! squat it! fight it! block it!