Why Europe's capitalist leaders cannot save the floundering eurozone project

Workers from European countries protest against the European Union neoliberalism and austerity cuts, photo Paul Mattsson (Click to enlarge)

The capitalist leaders of the European Union are incapable of resolving the ever deepening sovereign debt crisis afflicting many countries in Europe today. They are also hopelessly split on what measures to adopt in order to rescue the floundering eurozone project.

This current crisis was, however, entirely predicted by the Committee for a Workers' International (CWI - the socialist international organisation to which the Socialist Party is affiliated) as shown in the 2005 article below, reproduced from Socialism Today, the journal of the Socialist Party.

Europe in turmoil, a socialist analysis, 18 June 2005

The current crisis is a vindication of the analysis of the Committee for a Workers' International (CWI) that the European capitalist classes are unable to unify Europe to construct a capitalist 'United States of Europe', as even some Marxists outside the ranks of the CWI believed.

The EU 'project' for greater economic and political integration was rooted in the pressure on the European capitalists from competition from US imperialism and, more recently, from China. This drove them towards increased collaboration and led to illusions that this would result in a politically unified Europe.

Workers from European countries protest against the European Union neoliberalism and austerity cuts, photo Paul Mattsson (Click to enlarge)

This trend, along with the process of globalisation of the economy and growth of multi-national and trans-national corporations, illustrated how the productive forces have outgrown the limitations of the national state and to a certain extent have even outgrown continents. The big companies increasingly look towards the world market rather than simply their national or regional base.

Yet, at the same time, this process has its limits and comes up against the insurmountable barriers of the separate nation states and the national interests of the capitalists...

Some thought that the process of EU integration and Economic and Monetary Union (EMU) represented the point of 'take off' for a unified capitalist Europe. The CWI consistently argued that this was not the case.

Our analysis explained that although the process of integration of the EU went a long way, further than even we originally anticipated, at a certain stage a recoil would take place. This would result in renewed national antagonisms and conflicts between the various national states. This process of unravelling would worsen in the event of a serious economic crisis, recession or slump.

End of the euro?

Workers from European countries protest against the European Union neoliberalism and austerity cuts, photo Paul Mattsson (Click to enlarge)

The introduction of EMU and the euro was a political and economic gamble by the capitalists, pushed through in the teeth of some opposition from their own side, during the triumphalist wave which followed the collapse of the Berlin wall.

Initially the Bundesbank opposed the introduction of the euro but was compelled to accept it in the light of the political pressure of the capitalist politicians who supported its introduction. The stability pact was introduced as a 'safety net', which was intended to prevent governments resorting to 'profligate spending'.

Yet, the whole idea of the euro was tailored to a situation of continued growth of the European economies, with no real account taken of what would happen in the event of a slowdown, stagnation or recession...

The ruling classes attempted to impose an economic union in the absence of an existing political union. As we explained at the time, this has never succeeded in the past. Without a political union, moving towards the establishment of a unified nation state, an economic union or currency could not survive indefinitely...

There is a vast difference between a federal state, such as the US, which can distribute funds to local state governments in a relatively easy fashion on the basis of an agreement and the EU. The distribution of resources or funds cannot be done in the same way, in a Europe composed of different nation states...

While an immediate collapse of the euro or the EU is not the most likely short-term perspective, the sharp increase in political and economic tensions between the representatives of the various ruling classes will intensify...

However, the onset of a deep economic recession or slump or world financial crisis will sharpen these conflicts further and could provoke a relatively rapid collapse of the euro.