Social responses to the financial crisis in Europe in 2008-2012 highlight a paradox. After a decade of intense protest against neoliberal globalisation and the emergence of extensive transnational links among civil society groups, the explosion of the 2008 crisis proved the activists right. Yet, since the arrival of the crisis which began in finance, then spread into recession, creating a European public debt crisis in 2011, and thereafter waves of austerity policies paving the way to a new great depression in Europe –organized protest has been barely visible at the European level.
Protest waves have emerged at the national level, often in very large demonstrations on the streets of those countries most affected by the crisis, together with defensive campaigns to oppose layoffs and governments’ austerity policies, as in Greece where these have turned violent. New forms of protest have also emerged in what has been described as the subterranean politics of the indignados and the “occupy” groups – with a new generation of activists acquiring new methods of resistance. But these have operated, with few exceptions, at the national level, but with no common perspective on how to contest European policies.
The political culture that supported global and European civil society activism in the 1999-2007 period - challenging neoliberal economic and financial power in the form of governments, EU and global institutions – has appeared irrelevant at the very moment when it could have emerged as a credible alternative to the crisis of European economies and politics. The eclipse of the European Social Forum (ESF) is one potent sign of this mismatch. The ESF had provided a meeting point and arena of debate at the continental level, bringing together established civil society organisations and grassroots movements.
This paradox is the result of two major factors. First, Europe’s mobilisations continue to be preoccupied by the immediate challenge of resisting the economic and political effects of the crisis at the national level. This is the level where the political process is most structured and visible, where the political system and civil society are ready to frame social responses to the crisis in well-tested forms - trade union protests, negotiations about layoffs and unemployment protection; political protests by opposition parties; anti-government protests by radical groups. None of these responses is able to rise to the European nature of the crisis and the political process addressing it. No common frame is available for defining this as a European-wide crisis, where a fightback might emerge which would have an impact on policies.
But what may be more important today is the lack of a democratic politics at the European level that could provide an ‘entry point’ or a space for contestation; Europe appears to be in search of the very “site” of politics where contestation can take place. The dispersed nature of European authority is a clear contributing factor, with power distributed between the European Council, the Commission, the European Central Bank (ECB). The emphasis on inter-governmental decision making during the crisis has put national governments (apparently) at the centre of the European stage. But in fact they have found themselves heavily constrained by supranational European authority - such as the ‘independent’ ECB, by the rise of German influence on EU policies and asymmetries in inter-governmental processes, and by the unchallenged power of finance in key areas.
As a result, the ability to imagine alternative European futures is yet to be developed. Activism needs to move from reacting to the effects of the crisis towards building a broader vision of a viable, alternative Europe. What emerges from the analysis of the trajectory of current mobilisation and of the documents produced by the social movements involved suggests that these different actors agree on the diagnosis of the problem but not on the prognosis. All the different movements are critical of the politics of austerity. They also all identify to a large extent those responsible for such politics, not only in national power-holders but also in the Troika (IMF, ECB, European Commission). However they take different positions when it comes to identifying the solutions to this, in accordance with their specific identities and ideologies.
Europe-wide anti-austerity mobilization
In the 2008-2012 period, the small number of Europe-wide events contrasts with the large number of protests conducted at the national level and with the opportunities to organise protests at the continental level in the frequent continental summits taking place over that period.
Two major types of these events stand out. The ‘traditional’ model of trade union protests against austerity at the European level were mainly conducted in Brussels - but on other occasions also in European cities like Budapest and Wroclaw. They have managed to mobilize a sizeable number of people. But these days of protest seem to have had very little impact on the policy agenda, and to have attracted very disappointing media coverage. The February 29, 2012 demonstration was not reported in many newspapers either in Germany or in the UK, only securing a short report in le Monde. These protests do not capture the attention of public opinion. By contrast, the ‘novel’ model of mobilisation that emerged with the international protests of 15 October, 2011, prompting dozens of events across Europe, not only generated a huge turnout, much higher than any trade union mobilization, but also received much more substantial media coverage than any of the trade union demonstrations.
Apart from this day of global action, however, cross border links among activists have remained modest. In particular, no role was played by the European Social Forum, which in previous years served as a platform for organizing European civil society, and as an arena in which to discuss different alternative policies. The Malmo Forum of September 2008 was held right at the time when the economic crisis exploded into view. But since then, there has only been one social forum in Istanbul in 2010. This Social Forum registered a very low attendance, marking a moment of crisis of the movement. The lack of coordination between different actors, grass roots and institutional, on the issue of the politics of austerity and possible progressive alternatives seems to have had a hand in this failure. With no high-visibility mass event, the search for coordination across countries and for developing common platforms took the form of activism among expert groups such as the Euromemorandum conference of economists working for an alternative economic policy in Europe, or of national events with a strong European focus, such as the “Via 7d’uscita” conference held in Florence on 9 December 201. Both events are part of a range of policy discussions which took place around this period of time, which by definition attracted little by way of turnout and minimal media coverage.
What is evident looking at anti-austerity protest events in Europe from 2008 onwards is the fact that this cycle of protest got off to a rather slow start. In the months after the outbreak of the financial crisis, many journalists, analysts and social researchers wondered out loud why no big protest events had greeted the outbreak of the financial crisis. But this is not surprising if one goes back to previous episodes in the crisis of capitalism. It took years for the labour movement to react to the Great Depression of 1929. Also in the crisis of the 1970s in Europe and in the US, there was a lag between the outbreak of economic problems, the emergence of a politics of austerity and a reaction from social movements. Grievances alone do not explain the dynamics of social mobilization. Instead mobilising always relies on the formation of a complex framework of action-oriented sets of beliefs and meanings that inspire and legitimate the activities and campaigns of a social movement, which often lag behind economic events.
Europe reacting to economic crisis
The first event which marked the beginning of the cycle of anti-austerity protests were the 2008 Greek riots. The riots which lasted for a less than one month and engulfed a number of cities in Greece, and sparked solidarity demonstrations all over Europe were considered the worst episode of violence since the fascist state had been defeated in 1974. The events were not sparked by the economy. It was instead the arbitrary killing of student Alexandros Grigoropoulos in the alternative district of Exarchia on December 6, 2008 by a policeman. Nevertheless, it was clear to many observers and explicitly stated by many participants that the outbreak of rage did not only have to do with police repression, but with the dire economic situation felt by many Greek youngsters. The nominal unemployment rate for young people was 21% at the time, while general unemployment was 8%. But many among the youth found themselves in precarious jobs with no security, and the economic crisis was spreading fear among many that they would soon lose them.
The second major event which represented some reaction to the economic crisis and the doings of the financial system were the anti-G20 protests which took place in London in April 2009. These protests attracted crowds of a few tens of thousands of people. They were important for two main reasons. Firstly, they targeted a summit in which the leaders of the 20 biggest economies in the world attempted to ‘save’ the financial system. The convened leaders agreed on a 1.1 trillion $ financial package of which $500 billion went to the IMF facility to lend money to struggling economies. Secondly, because they signalled for the first time the level of widespread outrage at the economic crisis and at the doings of the banking system, in a core country like the United Kingdom, one of the major bases of the global financial system.
Both the Greek riots in December 2008 and the anti-G20 protests in London in April 2009 happened before the governments of those countries and of Europe in general had initiated their programmes of austerity. In fact in most countries on the continent it was only in 2010 that such policies were pursued with more insistence, a process tat revved up with the outbreak of the European sovereign debt crisis, which began in October 2009 as Greek debt interest rates started to sky-rocket. Around the same time Ireland was also engulfed in a sovereign debt crisis as a consequence of the profound collapse of its housing market and the national government's bailout of its major national banks. Then other countries in Europe’s periphery (Portugal, Italy, Ireland, Greece, Spain), began falling under the attack of speculative investors and their debt ratings started to plunge.
Different governments in Europe used this situation as a justification for the harshest austerity policies since the Second World War, sparking in turn a wave of resistance protests in the form of trade union strikes, student movements, and anarchist and autonomist riots.
Let us review this complex timeline of events more in detail. In terms of trade union strikes, the country most affected has undoubtedly been Greece. In this country the protests started when the government of Georges Papandreu’s socialist party (Pasok) started a programme of cuts on public spending to rebalance its finances left in chaos by the outgoing government of Karamanlis. The deficit stood at over 12% of GDP. In February 2010 the Greek government unveiled a package of tough austerity measures including a public sector pay freeze. In April the prime minister also asked the European Union for a ‘support mechanism’, and met with then IMF president Strauss Kahn to seek financial aid through the Stand-By Arrangement programme. Moreover, between February and May three more rounds of austerity packages were announced, including pension reductions and increases on VAT, the last of which was approved by parliament on May 6. In response to the austerity policies of the government the trade unions called for a big demonstration on May 5, which was attended at least by 100,000 and during which three people were killed after Molotov bombs were thrown against a branch of the Marfin Bank. This sad event marked an ebb in protests even though strikes and demonstrations against the crisis continued in the following months. They re-exploded in February 2011 when the government passed yet another round of cuts. In 2011 alone there were 11 general strikes in Greece.
Other European countries also saw an intensification of strikes and resistance protests in 2010. Specifically in the UK and in Italy, a strong student movement was sparked off by the national governments deciding to cut university budgets. In the case of the United Kingdom, the decision to raise fees from £3,000 to £9,000 sparked one of the biggest student protests for decades. But the movement vanished after the law was passed in parliament. Similarly in Italy, the university reform introduced by education minister Gelmini created a huge movement which however lost steam once the law was passed.
Trade union strikes have taken place in several countries since late 2009 with sizeable waves of mobilisation in Britain, France, Italy, and the UK. These strikes and protests almost invariably addressed national policies, mostly targeting national governments as responsible for pushing forward an agenda of cuts on public spending which was to a great extent decided in Bruxelles.
During recent years the European Trade Union Confederation has tried to develop a continent-wide campaign in defense of workers’ rights and income. A number of Europe-wide protest events, the first of this type, have been organized, even though they have only received a limited amount of attention, and scarcely any impact on the European policy agenda. On September 29, 2010, the ETUC organised in Brussels what was considered to be the first noteworthy union demonstration at the national level. Around 100,000 people, representative of almost all the countries of the European union marched in the Belgian and EU capital. After this event, smaller protest events took place both in Brussels and elsewhere. Among others worth mentioning is the ‘Euro-demonstration’ in Wroclaw on September 17, 2011, the ‘No to Austerity’ demonstration in Budapest on April 9, 2011, and the European day of action on March 24, 2011. All these events drew only few thousand people and hardly made it into the media. All in all it is remarkable the very small impact which trade unions have managed to have on the policy agenda at the continental level.
Indignados and beyond
The real innovation in terms of social movement action in response to austerity emerged from the civic movements, and in particular the indignados as developed in Spain and Greece, with a limited spillover in Italy, and France. On May 15 (which became the movement’s name) the protesters gathered in central Madrid, and then in tens of other squares across Spain, making the point that they rejected Left/Right political labelling. They asked for ‘Democracia Real Ya’ (Real Democracy Now), the name of the organisation which had acted as a platform for a mobilisation mostly conducted online using Facebook and Twitter. Referring to the booklet Indignez vous! (2010) authored by Stephane Hessel, a nonagenarian French activist, which had inspired some of the initiators of the movement, they came to be known as the indignados, common citizens united in their outrage by the injustices of the economic and political system. The occupation soon spread to tens of Spanish cities, reaching even very remote rural locations. The camp in Barcelona was attacked by police on the May 27, sparking an even greater turnout. The camp in Madrid was abandoned on June 13. On June19 a huge demonstration took place in which up to three million people participated in several cities across Spain, showing the immense level of popularity the movement had obtained. After the main camps in Madrid and Barcelona were abandoned, the movement moved into neighbourhood assemblies. The assembly in Sol deliberated over a series of proposals, including ones which affect European policy, for example, the rejection of the continental Bologna Plan for university education.
These Spanish protests have had echoes in Portugal where in March the spontaneous citizen demonstrations of the ‘Geração à rasca’ took place, but also in France, in Italy and several other European countries, where some groups have tried to kickstart similar demonstrations. But Greece was the country where the movement managed to make sizeable inroads. On May 25, Syntagma square was occupied by the local indignants called in Greek Αγανακτισμένων (aganaktismenon). They initiated a series of popular assemblies, whose deliberations were published on the Real Democracy Now! website, the Greek equivalent of Democracia Real Ya. They called for peaceful demonstrations which saw the participation of tens of thousands of Greek citizens. On May 29, 100,000 protested in front of the parliament in Syntagma. On June 5, at least 200,000 people protested peacefully in the same location under the banner of the indignados. The Greek indignados movement served as a launching pad for the huge two-day general strike of June 28-29, when an estimated 500,000 people took to the streets, and big fights broke out with the police. The camp in Syntagma was evicted on that occasion, putting a temporary end to the movement. Big protests, though not with the same numbers as in June and July continued in the following months of 2011 in Athens, Thessaloniki and other Greek cities.
The indignados mobilisation escalated to the European level through the demonstrations called on October 15 under the slogan, “United for Global Change”. A march of indignados traversed Spain, France and Belgium collecting demands to deliver to the European Parliament. However, in the European capital the protests were quite small. Half a million people took part in the demonstration in Madrid and up to a quarter million in Barcelona. Italy, the country with the second highest turnout saw half million people marching in Rome. In this case though the demonstration was a quite traditional Left demonstration with parties and trade unions behind their respective banners and organised with a final rally. Clashes erupted between police and demonstrators. In Italy different groups have tried to follow in the Spanish path, and have tried to organise occupations and assemblies. But the movement has never taken off as it did in Greece, even though the level of economic hardship among young people in Italy and the politics of austerity pushed both by Berlusconi and his successor the technocrat Mario Monti would apparently favour the rise of such movement.
The indignados have offered a space where different groups of citizens affected by the economic crisis, could have their views heard, and channel their concerns about the dire situation of their countries. Crucial in these movements have been the assemblies, where participants used methods of consensus to reach numerous decisions, not only on the management of the protest camps and of protest actions, but also on the position of the movement on a number of policy issues.
Yet, as we have seen, looking at the proposals that emerged from the assembly in Sol, or the suggestions collected in the ‘book of the people’ produced by the activists who have walked from Spain to Brussels passing through France, the proposals produced through this participatory method crucially lack that kind of systematic focus which might turn them into a basis for goal-oriented campaigning. In fact, whether or not these movements should have demands at all is still an object of debate among activists themselves, as seen most vocally in the case of Occupy Wall Street in the US.
The relevance of Europe in all these actions appears to be minimal. In the original policy platform of the main Spanish group, Democracia Real Ya, the only direct mention of the European Union is the request for ‘compulsory referenda on laws imposed by the European Union’. There is no talk of more or less integration and any other reform at the European level. Another measure with continental repercussions is the request to introduce the Tobin Tax on financial transactions, petitioning against bank's malpractices and tax havens. The platform also asks for substantial welfare reforms such as the reintroduction of a euro subsidy for those out of work, but all these requests are made at the national level. The assemblies, the other main actor in the indignados movement, only managed to approve a minimum consensus document which was the product of a very tortuous process of elaboration and is not very substantive in terms of policy proposals.
Another document which worth mentioning was the first declaration of the assembly of Syntagma square. It states, “we will not leave the squares until those who compelled us to come here leave the country: the governments, the Troika (EU, ECB, and IMF), the IMF Memoranda and everyone who exploit us”. In Syntagma square one could see European flags with the stars replaced by swastikas, in one of the clearest signs of the feelings of many protesters with respect to the European Union. The ‘book of the people’ produced by the indignant march towards Brussels, on which they collected hundreds of proposals to deliver to the European Parliament does not have much significance in terms of a policy document. It has not been approved by any assembly. Yet, one finds a number of requests for political reform, for changes in the agricultural policy of the European union, protection of the environment, welfare state protection, better health and education. This ‘cahier de doleances’ possibly also highlights what has been the main weakness of the indignados movement, that is the low level of articulation of proposals.
The fragmentation of the identities, claims and demands appears that we witness across the board appears to be the result of a further major characteristic of these European mobilisations - the lack of a European political space.
Alternative policy visions
Three different visions, broadly speaking are driving actions and policy initiatives in response to the crisis in Europe:
- First, we have the vision of a European adjustment which envisages limited reform of the Monetary Union and financial markets – including the introduction of a Financial Transaction Tax, the creation of eurobonds, an extended role of the ECB and a less restrictive view of fiscal integration within Europe.
- Second, the reversal of European integration proposes to revive national political processes, and respond to the financial crisis with some debt repudiation, contemplating a break up of the euro and the return to domestic currencies.
- Third, a Europe beyond neoliberalism argues that greater European integration should not be based on the dominance of the single market and currency but on a vision of sustainable and more equal growth, drastically reducing the power of finance, eliminating tax havens, reducing the burden of debt, protecting welfare and labour rights, and introducing coordinated fiscal policies capable of avoiding a new great depression.
These three approaches are less mutually incompatible than might be thought, and the importance to attach to them depends on the gravity of the crisis. The proposals for EMU reform, the easiest to realize, if enacted at the start of 2011would have very likely been successful. But now that the crisis has become more extensive and more severe, they appear inadequate. More drastic measures to curb the freedom of action of the financial industry are more and more necessary and are increasingly gaining support among the political and economic élite. The proposals for a different model of European integration, with less power for the markets and an enhanced role for politics and democracy – at first blush, hard to achieve – become the more essential, and the more practical, as the recession worsens. If the crisis gets out of hand, in a perilous scenario of disintegration of the euro and of Europe, this could necessitate a return – amidst a sea of difficulties – to national economies with their own currencies.
The ‘founding fathers’ of the European Union, such as Romano Prodi, former President of the Commission, and Giuliano Amato, former Vice-President of the European Convention that prepared the draft Constitution, have harshly criticized the way European policymakers have handled the crisis. In lieu of the intergovernmental approach that held sway at the summit on Treaty revision in Brussels on December 9, they advocate a renewed federal model for a ‘United States of Europe’ with not only economic and monetary but fiscal and political integration. They want Europe to impose the Tobin tax on financial transactions, contend that the 60 per cent ceiling on the debt/GDP ratio be guaranteed collectively by the Monetary Union as a whole, and call for the issue of Eurobonds (EU securities to fund development projects) and a larger EU budget no longer dependent strictly on member state transfers. They propose a constitutional convention for the revision of the European treaties, granting observer status to representatives of employer and labour organizations, civil society and local and regional governments.
Some of these proposals rehearse those of the Spinelli Group’s manifesto Against the temptation of a Franco-German ‘coup de chefs d’état’. This Group embraces dozens of prestigious European figures, including Jacques Delors, Daniel Cohn-Bendit, and Italy’s new prime minister Mario Monti, as well as 101 Euro MPs from a range of political forces.
In Italy, the need for a new European policy approach led the industrialists’ confederation daily, Il Sole 24 Ore, to come out with a “Manifesto to put Europe back on its feet” with the endorsement of such eminent personalities as former President Carlo Azeglio Ciampi and Antonio Tajani of the People’s Liberty Party, European Commissioner for Industry. This manifesto called for true European economic governance, a central bank on the model of the US Federal Reserve, Euro project bonds for infrastructure, Euro Union bonds to lower the cost of the public debt, and a single credit market.
On the labour front, at its May 2011 congress in Athens the European Trade Union Confederation denounced the deepening spiral of debt, austerity and unemployment. Its emergency resolution read: “To get out of the crisis, Europe must help countries in crisis such as Greece with an ambitious investment and development programme to generate growth and employment and with that income and tax revenue. However, anybody sticking to the one-sided austerity plan, accepts the collapse of the Eurozone.”
In Britain, in a letter to the Observer on 5 June 2011, fifty economists including Sir Tony Atkinson asked the Government to develop a ‘Plan B’ for the economy comprising the reform of finance, higher taxes on the rich, measures for jobs and more power for workers, a green ‘new deal’ and industrial policy programmes.
Reversing European integration
Some grassroot protests, coalitions involved in more hardened resistance, and radical groups have reacted to the crisis with a fundamental critique of European integration and of the power of finance. The usefulness of the euro itself is questioned in France while the French debate has also pointed out the popularity of protectionist policies. Again in France, the criticism of dominant policies addressing the debt issue has been voiced by experts and groups, proposing debt cancellation. European appeals and initiatives have demanded debt cancellation for the most indebted countries, without however a specific articulation of policy proposals. The model for such actions has been the campaign against Third World debt which, however, faced a radically different challenge and context.
A variety of positions, highly fragmented and with little coherence, have argued that the constraints put by Europe’s austerity policies are so disastrous that it could be preferable to break up the Monetary Union, giving up the euro and returning to national economic sovereignty.
A post-liberal Europe
A radical critique of European policies, linking responses to the crisis with the perspective of a post-liberal Europe, has been proposed by expert networks, civil society groups and social movements in several EU countries. The 2012 edition of the annual Euromemorandum, backed by dozens of European economists, has called for limiting the freedom of action of the financial sector, enhancing the role of the European Central Bank as lender of last resort, replacing austerity with policies of increasing public demand, wage support, full employment and shorter working hours.
In France, a hugely popular denunciation of financial excess was the Manifeste des economistes atterrés. This manifesto dismantles the ‘false certainties’ of the virtuous functioning of markets and proposes severe restrictions on the financial activities that brought with them speculation and crisis. A new book by Michel Aglietta suggests that only a federal Europe can make the euro a sovereign currency and end the crisis. He calls for making the ECB a lender of last resort, integrating fiscal policy at European level, issuing Eurobonds, narrowing the gap between the production capacity of the European ‘centre’ and the ‘periphery’. Detailed analysis and proposals on the public debt problem are brought together in the volume produced by the ATTAC campaign (2011).
In Germany a thorough analysis of the mechanisms of the crisis and the missteps of European policy was set out by a hundred academic advisors to Attac Germany, the German affiliate of the international network that for years now has been urging the taxation of the financial industry and the abandonment of free-market policies. They denounced the spread of the crisis from private banks to sovereign debt, pointed to the risk of a crisis of hegemony that could bring new conflicts, and called for an end to the logic of growth, for managed default to reduce the debt, and for the taxation of capital assets and finance.
Even before the outbreak of the sovereign debt crisis, a volume published by the European Trade Union Institute entitled After the Crisis (Watt and Botsch, 2010) brought together the ideas of forty American, European and Italian economists – among them Paul de Grauwe, Robert Kuttner and Jacques Le Cacheux – on themes ranging from the tax on financial transactions to policies to stimulate demand, from controls on capital movements to protection for labour rights and wages. The Institute’s follow-up volume, Exiting from the Crisis, continues the discussion with a preface by the Nobel prize winner Joseph Stiglitz and contributions from thirty labour economists (Coats, 2012). The ETUI’s initiatives were presented at Beyond the crisis: developing sustainable alternatives, a conference organized at the European Parliament by the Socialist, Democratic and Green MPs on February 9, 2012. The discussion between economists, unions and politicians of various extraction was on how to deal with the crisis, reduce inequality, change our model of growth and develop the green economy. A common critique of the rules of European economic governance and the ‘fiscal compact’ adopted by the euro-area governments in December began to emerge, two issues on which the euro-parliamentary groups of Socialists&Democrats, Greens, and European Left (GUE-NGL) were united in opposing the decisions of the Council and Commission. The attack on the disastrous effects of the European policy of austerity being written into constitutions, is developed further in a volume by Hoang Ngoc (2011), a French Socialist euro MP, head of that party’s economic policy unit and an economics professor at the Sorbonne. The proposals include a different role for the ECB, Eurobonds, a public investment programme, the tax on financial transactions, and European harmonization of corporate taxes. Other papers offering analogous proposals have come from the Green and Left groups of the European Parliament.
In Italy, the future of Europe has been debated principally under the heading ‘La rotta d’Europa’ (Europe’s course) on the website Sbilanciamoci! and in the daily il Manifesto. The discussion has been extended to European level on opendemocracy. Starting with Rossana Rossanda’s initial article in July 2011, the debate has involved over fifty economists and politicians, collected in two e-books published by Sbilanciamoci! The initiative provoked a wide-ranging discussion in the social networks, leading to a forum entitled “La via d’uscita” (The way out), attended by 800 people in Florence on 9 December 2011. The forum issued a call for a European manifesto, ‘Another road for Europe,’ underwritten by the Florence gathering plus such figures as Elmar Altvater, Samir Smin, Zygmunt Bauman, and Mary Kaldor. This manifesto has influenced discussion and action in a number of countries.
The most persuasive and widely endorsed policy proposals for Europe that have emerged in these debates among experts and civil society networks can be summed up in three demands with which we shall close this survey: control finance, reshape the economy, practice democracy.
Activists and experts have long argued that financial investments cannot yield a real return of 5 to 10 per cent, that is far beyond the capabilities of the real economy. A series of measures have been proposed to curb the activity of global finance. On the taxation of financial transactions there is now an emerging consensus among EU governments, except for the UK under David Cameron, and the EU Commission is drafting a proposal for a Financial Transaction Tax directive.
The imbalances produced by capital movements can be mitigated, and even the IMF acknowledges that some action on this front is needed. China, India, Brazil and other emerging countries have all retained capital controls that have effectively sheltered them from the financial crisis.
Tax havens can be eliminated, but the G20 and the OECD have made no progress on that front. Drastic restrictions are needed on the scope for speculation on environmental assets – carbon dioxide emission permits – and essential raw materials, such as food commodities. The dangerous volatility of world food prices in recent years has been due to the operations of world finance.
The separation between commercial and investment banks needs to be restored, and European bank supervisors must not limit their action to imposing capital increases under the new Basel rules but must institute stricter rules against the most speculative risky assets.
The enormous resources of pension funds could be used to sustain economic growth and investment in the public interest, not financial speculation. Private pension funds could be directed towards less risky assets, and public pension systems could operate within public financial circuits, to guarantee the security of future pensions.
The rules governing financial investment should eliminate the role of rating agencies, as has been proposed in the US. The agencies have proven totally unreliable in assessing risk (Lehman Brothers is a case in point), they are prey to grave conflicts of interest with the corporations that control them, and their evaluation of the sovereign debt of countries in crisis has only aggravated instability. Europe should create a public rating agency that follows sounder, shared standards.
Other suggested measures address the sovereign debt crisis at European level. The public debt of countries adopting the euro as their currency should be guaranteed collectively by the euro area as a whole.
European countries in crisis could form a ‘debtors’ summit’ for collective negotiation of the adjustment plans with the private banks, Brussels and the IMF, as a counterweight to the excessive power of Chancellor Merkel in the EU’s decisions. Creditors and debtors are two sides of a single problem; Europe cannot allow, internally, any repetition of the way Third World debt was handled – a western creditors’ cartel organized in the Club of Paris dealing as one power with the single poor countries, forcing upon them the IMF’s structural adjustment plans. The debtors’ summit might make it possible to cope with the debt problem in a way that is sustainable for the countries in crisis, acceptable to the sound countries, and careful not to destroy the monetary union and the euro.
Such initiatives are all the more urgent after the European summit’s agreement on the ‘fiscal compact’ on 31 January. This obliges all states to reduce the amount of debt above 60 per cent of GDP by one twentieth each year for twenty years. Such measures can be taken only at the cost of widespread privatisation of public assets and severe social lacerations, with further cuts in public spending. In the midst of a serious recession, this would result in great depression in Europe.
Reshape the economy
‘Occupy Wall Street’ slogans have argued that the 99 per cent – the citizenry, the victims of the crisis – must take control of the economy away from the 1 per cent who now decide for everyone. In fact, studies on inequality have shown that 90 per cent of all Europeans are worse off now than a decade ago and that the richest 10 per cent have pocketed all the benefits of growth. In many European countries and in the United States, the degree of income inequality is now as extreme as in the 1930s. This unacceptable redistribution has yet to shape public perceptions and the policy debate. The need for the political system to intervene to alter the operation of the economy is likely to mount rapidly. A ‘great redistribution’ could be placed on the agenda, changing the groups to which austerity policies are applied, protecting labour and wages and defending the welfare system.
The policies of austerity that have been imposed on Europe and made even more rigid by the Treaty revisions decided at the end of 2011 must give way to new rules and policies that employ Europe’s resources to avoid depression, sustain demand, finance sustainable products and the ‘green’ conversion of economic activity, create jobs, raise wages and increase workers’ rights.
Proposals in the debate suveyed above have argued that fiscal policy must shift the burden from labour to wealth, with an ordinary capital tax and, in case of emergency, an extraordinary one. In most European countries government action is crucial to attenuating the inequalities engendered by the market, and the debate on redistribution is already under way. In France the head of the Socialist Party’s economic policy unit and a trade union leader have written a book entitled, Make the rich pay (Drezet and Hoang Ngoc, 2010). Taxation has to be shifted onto non-renewable resources and fossil fuels (with a carbon tax, above all) to favour more efficient, sustainable production methods. In Europe taxation has to be harmonized and new sources of revenue procured to finance spending at European level. Public expenditure – at national and at European level – must serve to stimulate demand, defend the welfare system, expand public goods and services. Part of this European expenditure can be financed by Eurobonds, which must be instituted not only for debt restructuring but in order to fund the ecological reconversion of the economy with investment that can both create employment and protect the environment.
Decisions on what to produce, how and for whom must not be left to ‘the market’ – which is to say, to the multinational corporations – but should be oriented by industrial policy and European and national programmes for innovation aiming at convergence of production capacity within Europe and at sustainable, efficient production with more skilled workers.
A key argument in European mobilisation has been that workers’ rights and welfare are constituent elements of Europe. After decades of policy approaches that have created mass unemployment, job instability and impoverishment, the top priority must be the creation of good, stable jobs at higher wages, and the defense of low-income earners. If Europe is interested in the consensus of its citizens – not just of finance, big corporations and the privileged 10 per cent – it must regain control of the economy and build its common strategies on these foundations. Coordinated policies on demand, supply and labour could reshape the European economy, breaking away with the apporach of the Stability and Growth Pact and the 2011 Treaty revisions.
From its birth the European Union has always suffered a democratic deficit; with the recent crisis this deficit has become dramatic. With the erosion of national sovereignty, representative democracy through national governments and political parties is increasingly unable to respond to problems. At European level the crisis undermines the legitimacy of the bureaucracies that exercise power without accountability – the Commission and the ECB – while the Parliament still lacks an adequate role.
European civil society has given rise to movements and practices of participatory and deliberative democracy, such as the Social Forums and the protests of the indignados. But these experiences need to address policy issues and develop a strategy for political change. The link to political processes has to be addressed; possibly the proposals emerging from European mobilisations could be brought up before the European Parliament, presented to the Union’s institutions and political forces, proposing a new Constituent convention to give voice to civil society and design the transformation of Europe.
Wide public opinion debates on the future of Europe can be stimulated. Novel forms of actions have also emerged; 5 November 2011 was ‘Bank transfer day’ for switching bank accounts out of the banks most heavily engaged in speculation to somewhat less toxic institutions. Important efforts are now directed towards rebuilding cross-border networks to exchange ideas, projects and initiatives and to build social alliances with unions, precarious workers, any economic agents open to change, and so forge the conditions for a new politics through which the powerless 99 per cent can speak and act.
In search of European politics
While the content and coherence of this set of proposals emerging from the debate among European networks suggest that alternative policies could lead to a viable political strategy for change, a clear disconnect is present between the patterns of mobilisation of activists, the proposals for alternatives, and the political agency that could bring them together in a strategy for implementing change. This returns us to the lack of a European political space. The lack of a European public space as an arena for common discussion and deliberation on shared problems is a well known weakness of the European construction, and has clearly emerged in this analysis of continental mobilisations, with obvious consequences for the failure to develop a common framework of response.
Even more important, however, could be the lack of a democratic politics at the European level that could provide an ‘entry point’ for contestation. The discussion on how an alternative could be achieved through political processes – at the European and national levels - has not yet started. However, after years of slow responses, European activism is picking up speed. In May 2012 the protest in Frankfurt against the European Central Bank and the power of finance is opening up a new period of intense cross border initiatives, with initiatives at the European Parliament, protests at European summits and plans for a large civil society gathering marking the 10th anniversary of the first European Social Forum in Florence. The search for the construction of a common framing and a common European political space is at the centre of current activism in Europe. This is a necessary step to allow the new subterranean politics forged through fragmented protests to emerge as a new force shaping the future of post-liberal Europe.
This article is based on work for the project on “Subterranean politics” coordinated by Mary Kaldor at the London School of Economics. The results will be published in next year’s Global Civil Society Yearbook
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