There are many on the left who are sceptical of the European Union. And rightly so: the European Union was designed primarily as a monetary union, whose sole purpose was to “encase” the globalised financial system that operates from within Europe, and protect it from the intrusion of democratic sovereign states. The architects of the system – from the Maastricht Treaty of 1992 to the establishment of the Economic and Monetary Union (EMU) in 1999 and the introduction of the common currency in 2002 – originated in neoliberal think-tanks, mainly based in the universities of financial entrepôts like Luxembourg and London.
As Otmar Issing, the first chief economist of the European Central Bank, put it: “many strands in [Friedrich] Hayek’s thinking... may have influenced the course of events leading to Monetary Union in subtle ways.” As well as academics, the architects of the system included prominent British Treasury civil servants and politicians.
It is this inbuilt architecture of the European Union – embedded in present treaties – that is being resisted today by both right and left-wing populism across Europe. As it has been designed, the system is undemocratic and unresponsive to the will of the people. It is a system based on the theories and policies of out-of-touch neoclassical economists (with strong past and present links to the London School of Economics) whose attachment to permanent fiscal austerity, insecure employment, low wages and poor productivity are fuelling the fires of populism and nationalism. Their economic policies have predictably led to political and economic divergence across Europe and to the rise of ugly politics.
