revolutionary reflections | For Another Europe (Part 1)

With Brexit the EU has never been a more controversial and critical issue for left political strategy. In the first of a two part piece Raymond M reviews Guglielmo Carchedi’s classic Marxist analysis of the EU. The second part looking at the incorporation of the labour movement within the EU project will appear in next week’s revolutionary reflections.

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Introductory remarks[1]

This piece has been written in response to the confusion of the radical left over our attitude to the EU. The piece aims to look at the EU from a class perspective to see how it works, and to see how we can develop an effective response to the wage compression, increasing inequality and racism that are the reality of the EU.

In the first part of this piece the EU is analysed drawing on Guglielmo Carchedi’s work, which sets out the EU’s class basis. This shows that the EU is an institution that has the interests of capital hard wired into its structures, that it is unreformable and that it operates in the interests of capital at the expense of the oppressed and working class.

This perspective challenges the view that EU membership is in the interests of the working class and oppressed groups. That the labour movement’s participation in the EU’s structures undermines independent working class organisation and the development of a genuine internationalism that can effectively challenge and confront the growing racism that we are seeing across EU member states. This part of the analysis will be set out in the second part of this piece.

Context

Cameron won the Tory leadership in 2006 with a promise to de-toxify the Tories and bring them to the ‘centre ground’. At his first party conference speech as prime minister in October 2010, Cameron mentioned the ‘big society’ ten times and Europe hardly at all. He wanted to shut down Tory arguments over the EU and to stop them ‘banging on about Europe’.[2] Instead he conceded a disastrous referendum with a 52:48 percent vote to leave the EU that forced his resignation. Theresa May’s first party conference speech as prime minister sent a signal to the Tory rank and file that she would be taking a firm position in negotiations hinting at a ‘hard Brexit’. She said ‘We are not leaving the European Union only to give up control of immigration again, and we are not leaving only to return to the jurisdiction of the European Court of Justice.’[3]

The new Home Secretary pledged to produce lists of employers with the highest proportions of foreign staff ‘named and shamed’ for not employing British people in a move that provoked understandable outrage. As national tensions increased the German Chancellor, Angela Merkel, was applauded by German business leaders for a speech calling on the EU to unite in resistance to British Brexiteers trying to gain access to the European single market without accepting free movement. The French President Francois Hollande went further. ‘There must be a threat, there must be a risk, there must be a price for Britain’s actions’, he said. In response the overvalued pound plummeted to levels not seen since 1981 and British business leaders panicked about what the future outside the Single Market may hold. Within a few days the Tories had backtracked on the xenophobic proposals to ‘name and shame’ employers who employed migrant labour, though, the lists will still be compiled by the Home Office, no doubt to be used as a ‘bargaining chip’ in the Brexit negotiations.

The referendum has sent the country into unchartered territory with a foreign policy course that is completely at odds with the wishes of the majority of the British ruling class. It is difficult to overstate the significance of the political crisis engulfing the party of British capital. It is equally difficult to know which of Blair and Cameron has been the most disastrous PM since Anthony Eden. The vote also represents a significant defeat for the EU with its first retreat from 60 years of expansion and integration. Britain is the second largest state in the EU, if it leaves the EU the union will lose an eighth of its population, a sixth of its GDP, half its nuclear weapons and a seat on the UN Security Council.[4] Furthermore, this vote could send a signal to other European voters who share the frustrations of voters in Britain, showing that it is possible to leave the EU.

While the Tories appear to be in disarray over Brexit, the British left were split over the position to take on the referendum. This is because there has been no developed left critique or serious opposition to the EU from the left in Britain for decades. In other European countries there has been organised left opposition to the EU. In France, Ireland and the Netherlands, movements and political parties have played a role in developing opposition to the various treaties that have been put to the vote in recent years. The absence of a rooted left critique of the EU in Britain has created the vacuum that was filled by the right. As the different political forces in Britain and Europe realign to deal with the triggering of Article 50 early next year, the development of a well-grounded left critique of the EU remains an important starting point for the development of a credible strategy for building a campaign for a left exit.

A developed left critique of the EU can help us unite to develop a common set of demands and build a campaign beyond our ranks that can take Brexit in a direction that is beneficial for working class people, in other words, a strategy that could take Brexit in a different, socialist direction.

This piece hopes to offer a contribution to the development of that left critique, and has been written in two parts. The first part provides an outline of the ideas presented in Guglielmo Carchedi’s 2001 book For Another Europe, while the second part applies his class-based analysis to current situation.

Part 1: Carchedi’s Argument

Despite being written before the accession of Eastern Bloc countries and the Great Financial Crash, Carchedi provides a Marxist analysis of the political economy of the EU that remains unsurpassed. The book includes a detailed account of the EU’s institutions along with an explanation of the class interests that drove the development of what finally became the EU. The book’s main strength, however, lies in the way it lays bare the social and political relations that are hidden by the economic relations of the market. One of the problems we face today is how orthodox neoclassical economics seeks to disguise these relations. Most books on the economics of the EU share the same theoretical foundations. They are inspired by either neoclassical or Keynesian economics. Carchedi argues that neither approach can provide a satisfactory account of the origins and development of the EU. He argues that it is only possible to understand the inner contradictions and the forces driving the economic integration of the EU if we start with the proposition that production and the distribution of value are the economic bedrock of society, with social classes as the basic unit of social life.

Carchedi develops a class based approach that critiques neoclassical, or equilibrium economics. He introduces his own theoretical framework which can be described as a ‘value-based’ political economy. Carchedi uses his framework to explain what is actually going on within Europe and its relationship with the rest of the global economy. He analyses the transfer of value between technically advanced and technically backward capitals and the role financial markets play in maintaining the economic dominance of the more advanced EU member states. His aim is to lay bare the class forces driving the EU and the interests it serves. The next section will explore Carchedi’s analytical framework before looking at how he applies it to the EU institutions.

Neoclassical economics

To help reveal the class nature of the EU, Carchedi critiques neoclassical economics. The economic meltdown in 2008, led to many including the Queen to ask how well paid and trusted economists were unable to foresee the crash. To the neoclassical economist the market represents a perfect organism that should be left to work unhindered by the state or other external actors. They deny that economic crisis is intrinsic to capitalism, because that would entail an admission that capitalism has limits which exist within the form of the market itself. Accepting this would mean accepting that capitalism carries within it the developing contradictions that can sow the seeds of its own destruction. Rather than drawing these conclusions neoclassical economists have spent decades developing an ideology that denies the possibility of crisis and that the best conditions for the market to reproduce itself lies in the absence of outside interference.

The equilibrium theory says that in a developed international capitalist market, profits and wages should gravitate towards equality. It says that we can analyse the market as if it could reproduce itself perfectly without change, provided that the ‘correct’ levels of unemployment, interest, and wages, were allowed to occur. Neoliberal policies reflect this view, which dictate that the market take its course.

Equilibrium theory starts from the premise that all differences between producers have been eliminated. This means that differences between low and high productivity producers are eliminated from the theory. It is assumed that the average rate of productivity is the actual rate for all producers in the market. For example, with growth, which does represent change within the system, it takes place in unchanging proportions which is symptomatic of the markets natural drive towards perfect reproduction. In practice the theory assumes that countries like Greece and Spain are on a level playing field with Germany and other advanced EU member states. The theory assumes that any differences would be eliminated through the ‘natural’ workings of the market and that freedom of movement would lead to an equalisation of wages across member states.

Nowhere in neoclassical economics is there an explanation that trade under optimum conditions can create or increase inequality. The theory offers no explanation for increasing inequality between and within nations resulting from globalised trade, and if we accept equilibrium theory the only possible explanation lies in the failure of the people who find themselves impoverished. The victims of inequality have no-one to blame but themselves for their own destitution which is one of the foundations of modern racism and the idea of backward peoples and nations. Therefore any sudden change, like an economic crisis, must be a result of factors external to the inner workings of the system. In other words a crisis is always the fault of trade unions, terrorists, bad governance, over-regulation, poor monetary policy or whichever opponent of free market orthodoxy is in vogue.

Class and Value Based Political Economy[5]

Carchedi places the EU within the context of the world economy. His objective in the first instance is to understand the relation between Europe and the rest of the world, with the USA and developing countries. He uses the Temporal Single-System Interpretation (TSSI) of value theory. The TSSI is a non-equilibrium political economic theory based on the labour theory of value to provide a critical reappraisal of neoclassical economics. He uses the TSSI to reconstruct classical Marxist explanations for growing inequality, mass poverty and unequal development.

Marx explains how value is never identical between producers, but is an average of the use-values produced divided by the hours worked by the collective labourer. Companies with differing productive techniques coexist together in time. They sell their products at the same price which means that the more productive company with the lowest costs makes the most profit and the company with less productive techniques makes less profit. To put this in value terms the value that is produced by the less productive company is appropriated by the more productive company.

This process is in continual motion. As average productivity rises, companies with low productivity go bankrupt, or leave a particular market to be replaced by new more productive companies. This operates like a positive feedback mechanism and productive capital becomes concentrated in geographical areas. Where companies are making high profits they invest in innovation and maintain their lead over the less productive companies. The exchange rate between countries with highly productive companies and the lower productive ones grow apart. The labour of one worker in the more productive countries is exchanged in the market against the labour of several workers in the less productive country. This drift in exchange rate has a further negative impact on the country with lower productive techniques.

The international rate of exchange, which tends to reflect the productivity of the country, prohibits the company in the low productivity country from catching up by purchasing new technology. The price of the new equipment will express the ratio of productivity between the more productive and less productive economies negatively on companies trying to catch up. For the less productive companies the only way to compete is to cut wages. So for example, within the EU nation states will encourage employers to take advantage of free movement to help the process of undercutting wages.

As mentioned earlier, when the market does not behave according to neoclassical economic expectations, this is explained in terms of external and non-economic factors. Typically, this requires an equally external and political intervention in the hope of restoring equilibrium.

Carchedi illustrates the point regarding the huge subsidies from the Common Agricultural Policy (CAP) made by the EU to protect farmers’ incomes. For the neoclassical economist, this becomes a regrettable sacrifice that interferes with the optimum performance of the market. For Carchedi, on the other hand, the subsidy is a political measure taken by the EU to maintain support for the institutions and to protect the social order in the face of the chaos unleashed by the unfettered market. These CAP subsidies also increase the tendency towards the concentration and centralisation of capital as an overwhelming proportion of the subsidies are given to the more productive, larger farmers.[6]

We have already seen how value-based analysis enables Carchedi to lift the veil off market ideology to discover the true workings of the market. He explains the role that equilibrium theory plays in maintaining support for the EU, and how EU policies are presented in terms of neoliberal or economic equilibrium theory.

For Carchedi this requires a rejection of the language of orthodoxy, of ideal conditions of trade and exchange which would, even if they did exist, create havoc in society.

When seen objectively, Carchedi demonstrates the way EU trade legislation promotes the opposite of what it claims. The CAP as described earlier, or the social fund that is used to redistribute up to ten percent of the EU’s budget to less developed regions exist not to ensure the free working of the market but to overcome the differential outcomes produced by the workings of the market. Rather than tending towards equilibrium, these measures form a failed attempt to try and alleviate the worst symptoms of market outcomes.

The tendency towards growing gaps between more productive and less productive capitals has been felt in terms of uneven development within the EU and the wider global capitalist system. For example, the exchange rate for the Euro is typically set at a rate that benefits the more advanced nations in the Union, principally Germany, which prior to the introduction of the common currency had a much more expensive currency, the Deutschmark. By being able to offer its products with a cheaper currency, German exports have been boosted since the introduction of the Euro. Meanwhile, the common currency has had the opposite effect on developing countries as the Euro has made their exports relatively more expensive multiplying the negative impact of them being less productive. While there have been significant currency fluctuations, this has been the general impact of the new currency.

This has real human consequences as wealth and skilled jobs gravitate to more developed parts of the EU. For example, the number of teachers in Latvia has fallen by more than a sixth in recent years as they emigrate to other EU countries. So there are significantly fewer teachers in Latvia per pupil than there were 20 years ago.[7]

Foundations of the EU

The first section of Carchedi’s book provides a detailed empirical history of the European institutions and process of enlargement. From the outset, European integration was a Cold War project supported by the USA. For the founders, it represented an opportunity for the development of a third force independent of both the US and Soviet bloc. After the Suez debacle of 1956, it was hoped that European integration would allow EU states to develop an effective counter to US hegemony.[8]

Carchedi provides a detailed description of the early moves towards integration by the Netherlands, Belgium and Luxembourg with a customs union – the Benelux in 1948. This was followed in 1951 with the development of the European Coal and Steel Community (ECSC) which formed the basis for reconciliation between France and Germany. Although limited to steel and coal, its importance was much greater because these were some of the most strategic sectors of the European economy. The ECSC was set up to ensure the security of supplies for the development and modernisation of industry. At its core, the Franco-German axis provided a balance between French military and diplomatic strength and German economic weight. The Benelux countries wanted to be part of a supra-national framework that would allow them to pool resources on a larger diplomatic stage.

In 1958 the Rome Treaty created the European Economic Community (EEC) without any consultation with the European electorates.   The EEC was a common market that added the free movement of labour and goods within the Community. In the mid 1960’s, the European economy was in a period of global expansion and the US was supportive of a growing market in the EU to absorb US exports. A stronger Europe also had the advantage of becoming a bastion against global communism – particularly in Italy, Spain and France.

From these beginnings Carchedi goes on to explain the forces driving the developments that culminated in the Maastricht treaty in 1992 which constituted the EU. He explains how the EU came to represent a regional concentration of wealth far larger than the US in both population and GDP and how Europe’s leaders hoped to establish a trading zone that can compete with US capital.

Carchedi describes the problems with the accession of the UK and highlights the tensions within British ruling class circles. He explains how firstly, the British wanted to maintain their relationships with the US and Commonwealth countries and secondly, how the UK wanted to maintain its role as a world power. The UK’s economic power was related to its financial strength and the role of the pound as an international currency giving the UK significant economic advantages. These interests led to the UK withdrawing from negotiations to set up the EEC in 1958.

The Common Market, however, proved to be more successful than the British anticipated and the sterling area proved increasingly limiting for British exports. In 1953, 47 percent of British exports went to the sterling area and 27 percent to Western Europe. By 1962 the export ratio changed to 34 and 37 percent.[9] British capital realised that the appearance of European companies with access to the Common Market allowed them to reach the size of US corporations and compete with them on the global market. They realised that if they didn’t change their strategy then British industry would eventually be squeezed out of world markets.

Britain applied for EEC membership in 1961. Carchedi has written elsewhere that ‘both trade flows and capital concentration and centralisation demanded accession to the EEC.’[10] With disagreements over the Common Agricultural Policy (CAP) and trade tariffs negotiations ground to a halt. A second application from the Labour government in 1966 was unsuccessful due to hostility from France. Following De Gaulle’s resignation in 1969, negotiations were opened for a third and final time and were successfully completed in 1971. The UK finally joined the EEC on 1st January 1973 along with Denmark and Ireland. This development represented a further shift in global power relations. The US remained the world’s hegemonic nation, however, these recent accessions further increased both the size of the EEC’s internal market and its global economic power. This prolonged period of negotiations was an indication of the political tensions within the British ruling class that have always pulled them away while simultaneously pushing them towards European integration. The political drive to maintain global status and the economic interests of British capital do not always steer them in the same direction.

Carchedi shows how the EU altered its approach to social policy as the political and economic situation changed. In the 1950’s and early 1960’s there was little focus on coordinating European social policy. The Rome Treaty of 1958 recognised the need to improve and harmonise workers’ conditions and the standard of living for workers, equal pay for women, guaranteeing the rights of association and collective bargaining. These policies reflected the needs of the developing union where it was believed that relatively poorer member states would catch up with the more advanced ones and there would be economic and social convergence. Nonetheless, this was in a period when the system was growing, labour was in short supply and relatively acquiescent.

Towards the end of the 1960’s this changed. The main reason was the great wave of workers militancy and radicalisation across the continent, which continued up until the mid 1970’s. These mass movements changed the relationship between capital and labour in favour of labour. This forced the EC countries to adopt a more interventionist approach. In 1972, programmes were drawn up alongside the European Social Fund to develop distributional regional policies to improve living standards and address disparities created by the market. However, the downturn in the economy in the mid 1970’s and the corresponding decline in militant social movements changed the EC countries’ approach.

Jacques Delors, who as President of the Commission championed deregulation and flexible labour markets, is mistakenly given credit for the development of positive social policies. Delors had been committed to a Catholic interpretation of social democracy. He had been the French Finance minister in Mitterand’s government from 1981-83. In this period, he was responsible for ending spending on earlier genuinely reforming social policies, instead shifting the government’s priorities towards monetarist measures that focused on price stability and financial discipline. This is how Delors saw his role in the battle to ‘modernise’ the French social democratic government

Historically there has always been a minority position in France that views inflation as the most damaging for the long-term health of the economy… This minority has always sought to modernise France: to stabilise the currency, to fight inflation, and to promote healthy growth and employment. And it happened that this minority won in France during the 1980s. It was a long and difficult struggle.[11]

As President of the Commission, Delors was an established monetarist who took charge of pushing forward market and monetary integration in the EU. The single market was a milestone in the global ascendancy of neoliberalism and Delors was one of neoliberalism’s European founding fathers in its ‘vanguard phase’. This is the phase associated with the assembly of the basic components of neoliberalism under Thatcher and Reagan in the period which began in 1979, and began to close in 1989.[12] Delors was to become one of the most important figures in establishing neoliberalism within Europe with his successful ‘long and difficult struggle’ to reorientate French and then European capital. The importance of his role has been underestimated.

While he was not capable of inflicting the kind of defeats that Thatcher and Reagan achieved on their respective nation’s workers’ movements, he is as much a figure of significance for being able to achieve both the reorientation of European capital and as the pioneer of social neoliberalism. Neil Davidson has defined social neoliberalism thus:

This apparent supplementing of the naked laws of the market was originally marketed as a “third way” between traditional social democracy and neoliberalism. It is more accurately described by Alex Law and Gerry Mooney as “social neoliberalism”, since it involves not a synthesis of the two, but an adaptation of the former to the latter.[13]

Elsewhere Davidson writes:

Crucial to the ascendancy of social neoliberalism, as first represented by Bill Clinton and Tony Blair, was winning over sections of the liberal new middle class which had resisted the appeals of Thatcher and Reagan and who comprised much of the individual membership of the parties which they led. Social neoliberalism gave, so to speak, permission to partake of the feast without guilt.[14]

This perfectly describes the social base and function of social neoliberalism but, as we have seen, the foundations of social neoliberalism stretch back beyond Blair and Clinton. The evidence here shows that it was Jacques Delors who was the earliest champion of this retreat and accommodation of social democracy to neoliberalism. This is not an academic point, as Delors’ role has had a significant impact throughout the European and British labour movement. Many of those who would violently disagree with Blair, Brown and the New Labour project would not see Delors as an advocate of social neoliberalism, never mind as a pioneer of neoliberalism within Europe during the ‘Vanguard phase’. They may even see him as a friend of labour. Confusion about the role he played continues to damage the labour movement in Britain today as we’ll see later in second part of this piece.

The single market’s declared aim was to restore Europe’s global competitiveness by increasing the commodification of previously protected sectors with the further liberalisation of monopolies, which tended to be in the public sector. It elevated market expansion by enabling corporations in the more developed, northern countries to expand their presence throughout the southern and latterly, eastern periphery. Delors was responsible for the Single European Act of 1986, which resulted in the completion of the internal market. This was happening after the French turn to the right at Delors’ prompting, Kohl’s return to office in Germany and Thatcher’s drive to cut social spending and deregulate markets with the ‘Big Bang’ of 1986. All of these events were significant developments in the shift towards market fundamentals in Europe.

The high hopes of pro EU social democrats for significant social change at the behest of the EU had by this time evaporated. When social policy once again received renewed attention it was with a different set of priorities. The European Social Model (ESM) is commonly attributed to Delors. While the 1992 Maastricht treaty included a social chapter, which allowed for majority decisions on social-policy issues, the social dimension was marginalised as states supporting free trade, such as Britain, Germany and the Netherlands wielded their right of veto, which proved decisive.[15] These states also demanded a common market, unrestricted free trade and capital movement between Europe and the rest of the world. These demands were finally met once a deal could be reached with France and Italy. A strong free market could never accommodate demands for strong European wide standards for labour.  In terms of democratic accountability, the Maastricht treaty brought about a decisive widening of the gap between rulers and ruled. The Euro system was designed to be immune, where possible from electoral pressures. The greater shift towards neoliberalism saw the end of any policies that could be associated with a genuine ‘Social Europe’.

With the onset of financial crisis, Germany’s economic weight had enabled the nation to be transformed into political power. The Deutschmark had emerged as Europe’s major currency amid the monetary turmoil of the 1970s. When the Treaty of Rome was signed in 1958, the German economy was a sixth bigger than France’s. By 1973, it was larger again by a half. Washington and the financial markets traded with Berlin to guarantee trillion Euro cash infusions to the banks of EU nation states. This resulted in an accompanying loss of economic sovereignty in these Eurozone states with leaders being forced either to quit or comply with German fiscal policy demands. Germany has around 17% of the EU’s population and GDP, but lags behind Britain and France in armaments. Its power rests on its economic weight and recognition by the other states and the US Treasury that the German Chancellor is the effective executive head of Europe. The terms of the bailout have left a heavy strain on representative democracy in member states. Historic political parties have been virtually destroyed in Ireland and Greece with parties in Italy, Spain and France now following a similar path.

European capital, the Institutions and democracy

Social democratic supporters of the EU believe it is better to be in the Union in order to change and reform it from within. Nonetheless, no one has yet developed a convincing strategy for reform. This is partly because the EU institutions are so opaque but also because the EU is structured in such a way as to make meaningful reform pretty much impossible. The way the parliament, commission and council are structured is little understood. The lack of democracy within the institutions is often described as the democratic deficit of the EU. However, this term is insufficient, The real democratic deficit exists in how capital influences the institutions to the detriment of labour.

The European Central Bank (ECB)

The European Central Bank (ECB) is the central bank for the euro and it administers monetary policy of the Eurozone. European monetary policy uses the Euro to obtain ‘seigniorage’ in currency markets. The ECB’s capital is €11 billion which is owned by the central banks of all 28 EU member states. However, this understates the power of the ECB. Every month the ECB buys €80bn worth of government and corporate debt as part of its quantitative easing programme.[16] This allows the EU to pay for real value with paper with no intrinsic value. It is thus another form of appropriation of value that arises from the asymmetry of trade with the currency of the commercially and financially dominant country or trading block. This makes it an incredibly powerful actor on the global markets, where it effectively creates money out of fresh air by adding digits onto its balance sheet.

The ECB is unaccountable and of course unelected. Its primary objective is to maintain price stability, or control inflation. The ECB must be consulted on any proposed legislation that may affect ‘its field of competence’ by the EU or any member state while being completely independent of both.[17] The ECB can make regulations which are binding in their entirety and directly applicable in all member states.[18] It can also impose fines on those who fail to comply with its regulations and decisions.[19] National capitals express their interests through national banks and the ECB. However, for Carchedi, the ECB enjoys relative autonomy as it pursues measures that ensure the continued expansion of reproduction for the most advanced European industrial capitals. The much-vaunted independence of the ECB simply means it is largely independent from political parties and national governments as it pursues the interests of advanced European capital. When its independence is expressed this way it helps us understand how it continues to pursue deflationary policies which are central to its outlook regardless of the social consequences and without any opposition.

European Roundtable of Industrialists

Carchedi details how the most influential lobby group, the relatively unknown European Roundtable of Industrialists (ERT) has been a driving force behind EU integration and all major reforms since the 1980’s. Understanding how the ERT uses its lobbying power helps explain the institutionalisation of neoliberal policies in the EU.

First, we should see how the ERT see themselves:

The European Round Table of Industrialists was formed in 1983, a time when competitiveness was hard to maintain in fragmented European markets. The European economy had been plagued by rising inflation, soaring unemployment and declining growth. The commitments contained in the Treaty of Rome of 1958 remained unfulfilled and the European Council seemed unable to take decisive action. With the active support of Etienne Davignon and François Xavier Ortoli, then Members of the European Commission, Pehr Gyllenhammar of Volvo, Wisse Dekker of Philips and Umberto Agnelli of Fiat decided to mobilise a group of leading industrialists to create a basis for truly European economic cooperation. In their view, what was needed was more concerted and decisive action at European level and a removal of all barriers to a truly single market. Jacques Delors, past President of the European Commission (1985-1995) and one of the key advocates of the Single Market, has publicly recognised the important role played by ERT in this area.[20]

In this short summary, the ERT show how with active support from Commission members, including of course Delors, they have been able to help overcome resistance to European integration and remove barriers to a “truly single market”.

Carchedi cites some key examples of ERT influence:

Firstly: The alliance of the Commission with Delors, then Commission President and the ERT were together responsible for setting up the internal single market that would take shape in the early nineties.

Secondly: Policies on growth, competition and employment were prepared by the ERT in 1993. Once again it was Delors who presented policies with calls for deregulation and flexible labour markets which were adopted in December that year.

Thirdly: The ERT were very active in negotiations about the Maastricht treaty with regular meetings with European Commissioners and powerful policy makers in national governments as early as 1985. Their aim was to ensure that the Commission listened to its proposals for a single currency to be implemented alongside the internal market with a timetable that is remarkably similar to that which was finally agreed in the Maastricht Treaty.

In a report by the former secretary general of the ERT, Keith Richardson, entitled ‘Big Business and the European Agenda’, Richardson was critical of the ERT’s success in influencing the European Commission.[21] He says:

Presenting a report under the name of the ERT seems to be the only way of getting the attention of the leaders of the EC (the European Community, as it then was). Time after time, the ERT has succeeded in getting the EC to adopt the agenda of business at the expense of the environment, of labour and social concerns and of genuine democratic participation…..The political agenda of the EC has to a large extent been dominated by the ERT……While the approximately 5000 lobbyists working in Brussels might occasionally succeed in changing details in directives, the ERT has in many cases been setting the agenda for and deciding the content of EC proposals.

No one would expect the ERT to be elected or publicly accountable, however, Richardson explains how members of the ERT are chosen:

They were not simply the heads of Europe’s fifty biggest companies…. Certainly their companies had to be substantial, which in this context normally meant sales worth many billions of euros, international in their interests and of solid reputation, but the ERT looked equally hard at the standing of the individual businessman in his own country and his own industry. Was he personally respected?…Would he spread ERT messages back among his own national politicians and other business groups and would he command attention when he did so? And in the end, as with any club, what finally mattered was, “Do we know him?” Nobody was considered except on a personal recommendation from an existing member.[22]

The ERT is a self-selecting body that has entry criteria that would make a Freemason blush! This is one of the most powerful bodies in the EU. Although its existence is not completely secret, it is relatively unknown and accountable to no one but itself – the most powerful industrial capitals in Europe.

The ERT’s reach has extended to include over 50 ‘captains of industry’ or heads of European transnational corporations today. Its influence on the institutions and national governments is no doubt greater today than when Carchedi was writing. The EU is criticised for being undemocratic, unaccountable and opaque, however, the powerful influence of the ERT is known to very few people. It focuses on shaping the direction of the EU and not on tinkering with or amending specific legislation. Its aim is for big business to dominate all future legislation. So for example in 2000 when the Lisbon treaty made competitiveness a strategic goal, the ERT had played a significant role behind the scenes, and met annually with heads of the EU.

Despite requests from the Corporate Europe Observatory for access to documents and minutes relating to these high powered meetings, surprisingly little information has been forthcoming. The limited information available shows continued pressure on weakening labour laws and calls for cheaper energy with calls to leave all options open, including support for the exploration of shale gas. More recently, following the ERT meeting with Barroso, Hollande and Merkel on 19th February 2014 which discussed industrial policy, energy, climate change and labour policies, the very next day, the three heads of state and the ‘Competitive Council’ met to discuss the pressure on energy prices and the need for a single energy market to improve competitiveness. The ERT Chairman demanded a ‘balanced’ approach between energy and climate policies that protected the aim of increasing industries share of EU GDP to 20 percent.[23]

Carchedi has provided a few examples of how the ERT influences the European Commission through the lobbying mechanism to ensure their interests are taken into account in any legislation that is drafted before any proposals reach the European Parliament. This provides the interests of capital a hearing that no other pressure or lobbying group receives, for example, trade unions, consumer groups and environmental groups. The detrimental impact on democracy, labour and attempts to tackle climate change should be obvious.

Conclusion to Part 1

Having reviewed Carchedi, we can see how the application of a value analysis can frame the way in which the EU has emerged as a set of institutions firmly embedded within capitalism. In the next part we will examine the way in which the labour movement  is being co-opted into this project and the conclusions this raises in terms of the left’s political orientation on the EU.


[1] Thanks to Neil Davidson, Mona Dohle, Brian Parkin and Joe Sabatini for reviewing the essay and providing useful comments. Special thanks to Christakis Georgiou who provided useful advice even though he disagrees with my political conclusions.

[2] See Toby Helm https://www.theguardian.com/politics/2016/oct/01/tory-conference-brexit-divisions-moderate?CMP=Share_iOSApp_Other

[3] For the full speech see http://press.conservatives.com/post/151239411635/prime-minister-britain-after-brexit-a-vision-of

[4] See Susan Watkins New Left Review https://newleftreview.org/II/100/susan-watkins-casting-off

[5] This section has benefited from a reading of Alan Freeman’s essay, ‘For Another Europe: A Class Analysis of European Economic Integration’, 2006.

[6] See Bruno Carchedi and Guglielmo Carchedi (1999) Contradictions of European Integration,

[7] See Kevin Ovenden, https://kevinovenden.wordpress.com/2016/09/29/immigration-the-labour-movement-and-the-left-in-britain-today/

[8] See Susan Watkins New Left Review, https://newleftreview.org/II/90/susan-watkins-the-political-state-of-the-union

[9] See Mandel, E. Europe v’s America: Contradictions of Imperialism, Monthly Review Press, New York

[10] See Bruno Carchedi and Guglielmo Carchedi (1999) Contradictions of European Integration,

[11] Cited In http://isj.org.uk/the-euro-crisis-and-the-future-of-european-integration/

[12] See p.41, Neil Davidson Neoliberal Scotland: Class and Society in a Stateless Nation, What was Neoliberalism.

[13] See Neil Davidson, ‘The Neoliberal era in Britain’, ISJ 139.

[14] See p.51, Neil Davidson Neoliberal Scotland: Class and Society in a Stateless Nation, What was Neoliberalism.

[15] See Christoph Hermann and Ines Hofbauer, ‘The European social model: Between competitive modernisation and neoliberal resistance’, Capital and Class, 2007.

[16] https://www.ecb.europa.eu/mopo/implement/omt/html/pspp.en.html

[17] See Michel Aglietta, ‘The European Vortex’, New Left Review, 75, 2012

[18] See Carchedi (2001) For Another Europe, p.23.

[19] Article 108a.

[20] http://www.ert.eu/about-us#ERT-Structure

[21] Keith Richardson (2000), Big Business and the European Agenda, p. 30, The Sussex European Institute.

[22] Keith Richardson (2000), Big Business and the European Agenda, The Sussex European Institute,  p.10.

[23] Corporate Europe Observatory, https://corporateeurope.org/lobbycracy/2014/03/permanent-liaison-how-ert-and-businesseurope-set-agenda-eu-summit

 

 

 

 

 

There are 12 comments

  1. Jeff

    You just have to skip to the last paragraph to see the article is “Lexit” shite 🙂 It does not address what is happening now. It is like saying the British state is neoliberal and therefore we should have no part in it. It does not mention resistance, or ways to do it. Pity rs21 has got caught up with the “Lexit” brigade. I though they had more sense. The article seems very good and academic and uses the kind of words we would like Marxists should use etc, but it misses the point about us peeps, the working class and what we think and how we struggle.
    The reason why I, along with other Marxists, voted to remain was not because of some theoretical analysis of the EU and capitalism, but because we saw a danger in the rise of the hard and far-right. Unfortunately, we have been proved right, or even fortunately because the “Lexit” ideas have been proved to be duds. It did not take someone with a pHD to figure out that the “Lexit” campaign would fail. “Lexit” was never on the cards, There are those on the left who want to rant and rail about the EU, but they do not see, or want to see, the damage that Brexit has done to how the UK population sees immigrants. Not only that, Brexit has emboldened the Little Englanders. We now have a hard-right, populist Trump egged on by Brexit, and the French NF looking to make the big-time, hoping to do a Frexit. Will rs21 support the French NF, even implicity? With the rise of the right, what we must do is defend what we have, even if it is crap, becuause if the right win, we will be royally fucked.

    Liked by 2 people

  2. RayB

    It’s as if the Remainers on the left have selective amnesia. Long before the Brexit referendum, leading Remainers and the media were scapegoating migrants. The physical and political walls built around the EU to keep out migrants were supported and erected by fully paid up EU member states before the referendum was even announced. And after the referendum what does the French government, a founding member of the EU, do? It sends in police to viciously attack migrants in Calais. So much for the EU protecting migrants and dispelling racist attitudes!
    Leading Remainers in Labour are now advocating immigration restrictions to placate the racist media and the mythical “white” working class. These Janus faced hypocrites who bemoan racism while cheerfully joining in UKIP’s anti-immigration rhetoric are still the public face of Remain.
    In the US the election choice was between a racist demagogue and an opportunistic neoliberal who supports immigration controls and called African American men, “super predators”. The left needs a much better analysis of why Trump won and why Brexit occurred than the one peddled opportunistically by the center left that everyone who voted for him or Brexit are racists.
    Despite all the racist rhetoric spouted by the liberal media and leading exponents of Remain before and after the referendum, according to Jeff, it is apparently those who supported Lexit that are responsible for the rise in racism. Such a conclusion beggars belief!

    Like

  3. rs21

    Thanks Jeff for your comment, and thought it would be helpful to clarify the editorial position of rs21’s revolutionary reflections series.
    We set up revolutionary reflections in October as a way to encourage people to write longer in-depth pieces for the website, and to encourage new writers, people who had specific areas of interest or specialism and people who wanted to contribute to wider debates.
    The aim of revolutionary reflections is not to be a place for publishing hard and fast, or official rs21 pieces, but rather a space for exploration and development of ideas. If you look at the range of pieces we have published, hopefully this will be borne out.
    We put out a general call for authors and this piece along with the others published are in response to that call.
    In terms of areas where there are debates and disagreements within the revolutionary left, and the circles around the revolutionary left, our policy is to encourage all points of view. This applies as much to the EU, where we would welcome submissions from people who voted Remain or abstained.
    We therefore welcome article submissions, comments on the website and on social media where articles are published, and we work closely with the authors to help them to develop their pieces.
    The conditions in which we would refuse to publish would be where the author is putting across racist, sexist, homophobic views. In other circumstances we may end up not publishing a piece after consultation and discussion with the author. Usually this would be where the piece is unsubstantial or where there are other avenues for publication that would be more suitable.
    For the record it is worth noting that the editorial group behind revolutionary reflections is made up of people who took different positions on the referendum, though we stick by our policy of publishing pieces across a range of opinions regardless of the positions we personally hold.
    Anyone interested in submitting a piece can log onto the revolutionary reflections part of the website and scroll down to the bottom posting that had the initial call for submissions.
    Joe and Hazel, co-editors of revolutionary reflections.

    Liked by 1 person

  4. Matt Collins

    ‘The far-right is rising!’
    ‘OK, yes, why do you think the far-right is rising?’
    ‘Just shut up and vote for the EU’

    Great contribution Jeff thanks… Baffled as to why comrades are wasting verbiage on him (or why his comment was published)

    Like

  5. Mike H

    Capitalism is hardwired into BOTH the EU and each ‘nation’ state so I am not sure where this is going? A minor point
    (a) the comment on Latvia seems to imply skilled workers should stay at home???
    (b) all transition societies have experienced birth rate declines so losing teachers does not necessarily mean a rising pupil teacher ratio. See the UNESCO database http://data.uis.unesco.org/?queryid=180
    (c) the UNESCO data suggests that the pupil teacher ratio in Latvia is better than the UK and for some ages falling and possibly better than it was ’20 years ago’

    Liked by 1 person

  6. lives; running

    I’d spotted the Latvia point as well and I’m puzzled as to why Carchedi or for that matter Ray thinks this is a bad thing. While in RS21 we have a range of views on Europe, we have always supported workers’ rights to move

    Like

  7. Charlie Hore

    The point about Latvia has nothing to do with the EU – it’s intrinsic to modern migration that it draws skilled workers from poorer countries to the richer ones.The NHS has always relied on workers from the Caribbean, Asia and Africa, for example, but I don’t think that is something we attack or criticise the NHS for. It’s a dangerous argument to make, because it’s also part of the ‘left’ argument against free movement that comes from the Communist party and other left nationalists, which implies that migrants would somehow be better off if they had to leave.
    There’s a larger problem, though. The article starts by saying ‘This perspective challenges the view that EU membership is in the interests of the working class and oppressed groups’, but it doesn’t – laying out how precisely the EU is an anti-working-class, racist and neo-liberal institution offers no guidance as to whether it is in the interests of workers for Britain to leave in the very specific circumstances of 2016. The political arguments about how precisely to understand the nature of the referendum and its likely consequences can’t simply be deduced from the capitalist nature of the EU.

    Liked by 1 person

  8. Ian Allinson

    If I’ve understood this right, it’s basically arguing:
    1) The idea that capitalist economies tend to equilibrium is rubbish – capitalism generates and sustains inequalities
    2) Exchange rates reflect differences in productivity, and a shared currency tends to favour the more productive bits of an economy at the expense of the less developed bits
    3) EU social policies have been attempts to ameliorate the inequalities generated to allow social acceptance of the set-up
    4) The EU and its predecessor organisations have always been heavily influenced by big business, and it still is

    None of those points seem hugely contentious on the left, though obviously the context Raymond puts it in, of supporting Brexit, is.

    I think 2 could do with more explanation. In particular, the ECB sets interest rates for lending across the Eurozone, so giving less developed countries access to cheaper credit. This potentially allows for investment in those countries and potentially counteracts the argument Raymond makes. However, it also helps generate bubbles and indebtedness which contributed to the Eurozone crisis hitting less developed countries.

    Like

  9. Ian Allinson

    Should have added a fifth point Raymond was clearly arguing:
    5) The right dominated the debate over Brexit because the British left has for years failed to have an adequate critique of the EU, unlike some of its European counterparts

    Like

  10. Charlie Hore

    I don’t think the analysis has been lacking – Carchedi’s book has been around for 15 years, and the wider idea of the EU as a ‘bosses’ market’ has been common currency on the left for longer. I think it’s more to do with the fact that opposition to the EU has had no traction in social struggles, because the EU hasn’t been the source of the attacks on us. It’s telling that the huge anti-austerity demos of recent years have had no anti-EU placards that I’ve ever seen, either produced by groups or home-made. And the right were always going to dominate the referendum debate, because it was the electoral weight of the right that forced Cameron to concede the referendum in the first place.

    Like

  11. raymorell

    I wasn’t planning to get involved in this because EU debates tend to generate more heat than light. However, it does seem as though comrades haven’t read the full article and probably haven’t read Carchedi either. Rather than let the misrepresentations of my position stand I’ve decided to respond.

    Ian is the only comrade to seriously engage with the thrust of the article. Mike does raise a valid empirical challenge that I’ll hopefully get time to check and respond to. Comrades seem to have focused in on one observation about the impact of migration on a developing country. However, this is a minor point. In reality, I could have chosen Greece, or a number of other countries to make the point. However, the really disturbing issue is the way that good comrades try to imput “dangerous arguments” into a position that I clearly don’t hold to develop a completely fallacious and dishonest argument. I thought that I’d left this style of “debate” behind me after I left the SWP. The position we take on ‘freedom of movement’ is dealt with in part 2 of the article which I note has no comments from the comrades. Charlie says that the book has been around for 15 years which is of course true. The reason I wrote the piece is because I’m not sure that many comrades have read it. The first part of the essay tries to summarise the main points of the book. Some have found this tedious, however, the point in working through a Marxist analysis is to then apply the analysis and hopefully, the method to the current problem we face today. Essentially , the critical point is to start from the position of labour and not capital. Sadly, I don’t think comrades have grasped this and they certainly don’t appear to be starting to engage with problems today from this perspective. According to Charlie, the article “offers no guidance as to whether it is in the interests of workers for Britain to leave in the very specific circumstances of 2016.”. This is true, I didn’t set out to do this because I don’t accept Charlie’s view on the “specific circumstances of 2016”. It would be useful if Charlie and others could spell out exactly what these specific circumstances are, from the perspective of labour that would lead us to support an imperial, racist neoliberal set of institutions.

    What I did set out to do was start here – “This perspective challenges the view that EU membership is in the interests of the working class and oppressed groups”. That means I spell out what the impact of the EU is on “the working class and oppressed groups”, who reside, admittedly, mainly outside of Britain. But hopefully I shouldn’t have to spell out the importance of understanding the impact of the EU on those outside of Britain. Based upon an internationalist perspective, I conclude with struggling to see how opposition to the EU is not a strategic consideration from which tactics must flow. This is also stated clearly in the article.

    So to make it clear, the article sets out to do the following:

    Restate and explain a widely understood point about the nature of the EU. It’s imperial, racist and neoliberal core from the perspective of labour. So far no disagreement.
    I then talk about the failed project of engagement with the EU and conclude that it’s impossible to reform and it’s destruction is in the interests of the poor and the oppressed. I hope we’re on the same page with all of this so far? Any disagreements?
    I end the article by asking those who support a remain position how they can effectively oppose racism and austerity while supporting the EU. That is the challenge that no one has yet met.

    We’ve had no response to this or the other serious arguments raised in the article. I am hoping for a developed response that challenges the thrust of the arguments and not further misrepresentations of my position or shadow boxing. C’mon comrades, raise your game

    Like

  12. Kevin Ovenden

    The argument about free movement of labour in capitalist sense versus a socialist conception of unimpeded voluntary movement is not difficult. And it’s not new. I think people are making a bit of a meal of this.

    This is from the conclusion to Paul Foot’s seminal Labour and Immigration in 1965, making the case against immigration control (for the avoidance of doubt):

    “The only possible attitude of an international socialist is outright opposition to immigration control. Yet it is only by taking the argument two stages further that such a position will ever convince the working class. First, that the socialist case does not stop with opposition to control: that the process whereby the employers of one country go out (as for instance the German employers go to Turkey) to recruit thousands of workers en masse, uproot them from their homes, house them in ghettos, use them as cheap labour to soften the militancy of indigenous workers – this process has nothing whatever to do with international socialism. Socialists must make it clear that they are looking for a system where people are not forced through economic circumstances to leave the homes and cultures they know and understand: that under international socialism, movement between countries is free, of course, but it is in the real sense voluntary.

    “Finally, opposition to immigration control must not become the sole province of well-meaning liberals who ‘believe’ in the fundamental equality of God’s children. Socialists must make it clear that they are opposed to anti-immigrant propaganda, opposed to immigration control, not for any abstract principle, but because of the need of workers of all nationalities, to forge a weapon which, unlike immigration control, will carve out the highest standards of life and living for all workers.”

    Like

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