CHAPTER 6

AFTER THE SECOND WORLD WAR: FROM THE UTOPIA OF PEACE FOR THE COLD WAR TO THE EURO-CRISIS AND THE SEARCH FOR A NEW NARRATIVE

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Europe as an economic, social and political space

After the Second World War, Europe as an economic space was regulated by quotas and licenses. As a social space it was destitution and as a political space it was a value conflict where two ideologies propagated different kinds of morality around the key words of ‘freedom’ and ‘equality’. Under the conditions of the nuclear terror balance, interest politics began to relativize the moralist rhetoric. However, as an economic, social and political space, Europe soon after 1945 became split between East and West. A West European economic space slowly emerged mainly based on free trade with commodities and currency convertibility and an East European economic space based on the exchange of raw materials and industrial products between the Soviet Union and its satellites. The Cold War tightened these developments and deepened the two integrations. The American Marshall money supported the Western integration. The reconstruction economy boomed and the nations in Western Europe became nation states in the proper meaning of this term, national communities of destiny designed against the backdrop of the Cold War based on the provision of general welfare. Mass consumption triggered mass production in mutually reinforcing dynamics. Reconstruction under the conditions of the Cold War also meant military expenditure and armaments which contributed to the boom. The state economies in the East never managed to develop corresponding economic dynamics of mass consumption and mass production, but the allocation for armaments followed the Western pattern.

In Western Europe the Cold War provoked a trade-political split between the Six Christian

Democratic countries which created the ECSC and the EEC, and Britain together with the Scandinavian more social democratic states and the neutral Austria and Switzerland, which all wanted less suprastate economic integration than the Six.

However, the two trade-political areas co-operated. The development of a West European free trade area and the reconstruction economy of growth constituted an economically ever-more integrated space which provided an economic surplus for political distribution and provision of general welfare – the ‘European rescue of the nation states’, as economic historian Alan Milward put it. This European order was, in turn, linked to the wider Western free trade system under the American dollar hegemony.

Welfare would demonstrate the superiority of the Western model in a situation when the experiences from Weimar were fresh and 25 per cent or more of the electorates in Italy and France voted communist. Democracy was potentially dangerous and had to be controlled. Welfare would keep the extremes away from the national democracies. The instrument of control was the High Authority, today’s Commission. Europe was, from the outset, a technocracy never defined as social or democratic, which were categories for the nation states. The model worked reasonably well during the first half of the Cold War and the economic boom triggered by the rebuilding of Europe and by rearmament to prevent/prepare for the next war.

In the 1970s the dollar hegemon collapsed not least against the backdrop of the costs for the Vietnam War. The tension between Europe and the USA grew. The European powers tried but failed to develop a more autonomous economic and political alternative to the one that

had collapsed. As a social space the framework conditions changed with mass unemployment. After the initial perplexity in the face of these developments, a fundamental transformation of the labour markets and of the economy at large occurred, as we have seen, the great transformation in the 1970s. The public provision of welfare decreased resulting in social marginalization and destitution. In the 1980s, a new European economic space took shape in reaction to the gloomy 1970s. ‘Market’ became the new key word. The free exchange on the European internal market spread from commodities to services, labour and capital. The expectation grew that the intensified economic and political integration would result also in a European social space based on the nation states. 

The collapse of the Soviet hegemon and its satellite system around 1990 sped up the expectations in the European market project which through the Maastricht Treaty for the European Union in 1992 also seemed to become a more distinct political space. The contours of an integration of Eastern Europe into this European economic and political space emerged alongside the expectation that somehow it would become a social space through economic growth.

The end of the Cold War provoked dreams about the end of history and the final victory of liberalism. A powerful neoliberal ideology marketed as economic theory painted a colourful imagery of a seamless world and a self-propelling economy, which performed best without any political monitoring. Deregulation became a buzzword. At the same time, the old capitalism based on the financing of industry was transformed into finance capitalism, where financial operations/speculation became the motor of the economy. Of course, financial speculation bubbles were not new, but financial capitalism increasingly detached itself from industrial capitalism.

The EU underpinned this development under the motto of deregulation. Nobody anticipated the force of the transformation until the collapse of the banking system in 2008, which provoked the nationalization of gigantic losses through state debts, which, in turn, provided the next booty for the recovered but still hungry financial market operators: the debt-burdened states.

An existential crisis has replaced the dream of Europe as an economic, social and political space, populated by states which are an interdynamic reinforcement of each other. The once-functioning machinery in Brussels has lost legitimacy and too many Europeans refuse to believe that it has the capacity to respond to the value crisis, which can also be formulated as a loss of meaning of Europe as a project. New meaning would require the traversing of the chasm between North and South, East and West and the ever-bigger social chasms in Europe.

The Maastricht Treaty was sold as a federal step, but meant the beginning of a power migration from the Commission to the intergovernmental decisions in the Council as we just saw, a legal dilution of the project, yes, a deregulation. The technocratic regime of 1951/1957 with clear rules shifted to a non-transparent intergovernmental negotiation machinery.

The Commission and the Council seem to be stuck in their legacies of opaque conclaves and it is difficult to expect any radical refoundation from there. They are de-legitimized in the eyes of too many European citizens. The U-turn from their ritual invocations of the market to their new language after 2008 describing the market as Europe’s most dangerous enemy seems just too big a conversion to make an impression.

Rather than from the Commission or the Council, new legitimizing force might come from the European Parliament, although only after it has got a new constitutional and political foundation. The EP as the forum for a contentious interest-driven debate on a project about a social Europe would have the potential of providing new legitimacy by bringing the social issue to the fore again. The EP would in such a scenario be the forum which meets the

disembedding of the market forces, to use Polanyi’s strong metaphor, with their political re-embedding. The social issue did not disappear in the 1980s. It only disappeared from the political agenda through the power of the Hayekian narrative. Ethnic nationalism and hostility against immigrants have been substituted for the missing debate on the social. The ethnic mobilisation against poor immigrants canalizes social Angst where social politics is missing and moralist prescriptions of austerity have failed to provide confidences.

It is the failure of the European left that it has neglected to identify and define a European solidarity. The left has been stuck in its national happiness and hubris, and is now harvesting the growing nationalism, which can only be confronted through a concerted European action, an action which is more than just anti-nationalist, and which outlines the credible contours of a new regulative order of a social Europe. Such an agenda would probably require new European parties in the true sense of the word, European election lists, constituencies and election campaigns of a new kind, where the issue of a social Europe and a European solidarity should have the prominent place. Such an agenda requires that the EP claims another place in the architecture of the EU based on political confrontation and contention between left and right goals. Never again a scandal such as when the Deutsche Bank director Ackermann on the invitation of Merkel advised the Council on the bank crisis in a meeting, as always closed to the public, and the Speaker of the Parliament was refused admittance. This was in January 2012 during the work on the second ‘rescue’ package for Greece which was a sham to bail out the German and the French banks under the cloak of a Greek bailout. Never again a scandal such as the Luxembourg tax havens.

How realistic are such lists of never again? How realistic is a reformation of the European Parliament for a contentious debate on a social agenda? This book has shown that one should never say never more or never again. It is also clear that one should never say never. Some comfort might be found in the fact that the failure of Europe’s left cannot be referred to some inherent system logic, but is a failure of human agency. Markets are man-made, not self playing pianos or given by some historical logic.

Social reforms through a stronger EP would obviously require economic reforms. Reforms for a social Europe must be built on a strong economy. Corruption can never help the miserables. However, plans for economic efficiency for a social Europe must necessarily confront the myth of Germany as the relevant model. The talk about German economic efficiency has totally missed the critical question of the price of the efficiency. The necessary reforms that the German centre propagates have lost the connection to social standards. It is difficult to see this as a legitimizing model for Europe bridging the division between North and South, East and West. Economic efficiency must be defined in other ways. Having said this, it is also clear that efficiency is a term that can only be defined from ideological points of departure. It must be taken down from the high heaven of economic theory where it is seen as a neutral concept.

An efficient rethinking of economic efficiency for a social Europe would have to confront the fact that the social standards and economic differences in Europe are big between East and West, South and North. This fact has so far been concealed instead of confronted. What does this fact mean for labour markets and enterprise relocation? Severe immigration politics and fortress Europe cannot be the long-term solution any more than the competitive race to the bottom.

It is not just the social question which is an argument for a different and more contentious European Parliament. The democratic question is also a strong argument for the emergence of change. The triumph of the Syriza in the Greek elections in January 2015 highlights the question of whether national electorates can change anything in the EU. The voice of the Greek people faced a united front in the Council arguing that what earlier governments had

agreed on could not be changed. There was a lack of a contentious European forum for the debate that the Greek government, as the representatives of the Greek electorate, wanted to open up, a debate on a new European alternative to the austerity politics. The treatment of Greece is an unprecedented act of hypocrisy: as long as the preceding Greek governments paid lip-service to the diktats of the troika but did little to implement what they had agreed to, there was no problem.

The Greek case demonstrates the weakness of the EU as a market project. A functioning market would create equilibrium either through a change of exchange rates, which is not possible in the EMU, or through the recycling of export surpluses which would require a political union which does not exist. Instead of responding to this dilemma the European leadership tried to escape from it by transforming the argued market economy to a commando economy supported by the IMF. With this manoeuvre, the decision makers in the council and the commission demonstrated the paradox of Hayek’s customs union where at the end not the market but political interventionimposed the rigidity that he argued was necessary to keep the union together.

Europe as a legal space

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