The Demise of the Neoliberal Eurozone Project

The sovereign debt crisis has put forth for all to witness the true nature of the European Project. Its banner of solidarity is pierced with the dagger of imposed austerity, and below that banner representative democracy of the nation-state is under siege. With each run on Italian, Spanish & even French bonds, another layer of legitimacy is torn away from pan-European institutions. What is to become of this European project, this supposed vanguard of peace and stability on the continent?

Under these circumstances, the predictable response from the center-left has been to suggest this is a crisis confined to the horrid leadership of Merkel and Sarkozy. When that is insufficient when scaled to the size of the crisis, the tendency is to then blame the so called “bond vigilantes”, as if they’re a fundamentalist group rather than an inherent part of a market economy that policymakers refuse to systemically question.

What is ignored by mainstream politics is the supremacy of the markets, regardless of whether center-right or center-left parties occupy a majority of parliaments & national assemblies. It’s a market supremacy entrenched by the European Project that has removed monetary policy from the representatives of each nation and entrusted them to European bureaucrats merely appointed, not elected.

The European Project has succeeded in removing representative democracy from its contest with the markets, a contest democracy was losing to begin with. This is plain to see with technocratic governments in Greece and Italy composed of unelected cabinet ministers headed themselves by unelected prime ministers; governments whose predecessors were driven out, in the case of Italy, not by voters but by wealthy investors spiking the interest rates Italy pays to refinance its debts.

The aversion to democracy in contemporary Europe was no better demonstrated than with the purposed Greek referendum on the bailout of the country. It wasn’t a matter of Merkel and Sarkozy stomping out this brief ember of democracy. The markets themselves revolted at the prospect of their affairs being influenced by such a thing as a popular vote. The markets, as we now know, got their way and are eased by the fact that Greece has a Prime Minister who was elected by no constituency in Greece. It was a profound moment of clarity, when the system could be truly observed by the public, that there was only a façade of democratic legitimacy and when democratic processes ceased to run alongside the will of the markets, there was no leading figure in Europe to be found to speak out in favor of the Greek people voting, even in an imperfect format, to decide their fate.

This is not to align with conservative euro-skeptics, however. But the path to a more tolerant Europe isn’t reached by making people even more distant from the decision making they’re subject to. With people across the continent unable to shape policy outcomes, the media and politicians have handed them dishonest rhetoric to hurl at one another. The roles of debtor in Greece and creditor in Germany have been simply used to initiate vicious stereotypes of both nations; stereotypes to distract from the crisis of a system neither the Greek people nor the Germans had a hand in creating.

What we face, and what we must address, is a system fully incapable of allocating vast financial resources to the benefit of the whole of society. This system is being preserved by the eurozone and its defenders through austerity and the resulting entrenchment of recession. The escalating suffering experienced in Greece, Portugal, Ireland and soon to be felt in Spain and Italy, begs those of us on the left to provide a decisive response. Suggestions to have taxes levied on the financial sector seem awfully small under the shadow of this crisis of capitalism.

This is beyond adjusting tax rates a few percentage points. Economists like Nouriel Roubini and Paul Krugman have explained at length the enormous flaws of the eurozone. Its demise is increasingly seen as inevitable, and it leaves us a serious question:

Will the break-up of the eurozone be followed and replaced by a new concept of Europe, one that radically shakes up the economic system that caused and then reinforced the crisis? Or will the eurozone be broken up by right-wing forces eager to scapegoat the weakest in their own nations while reawakening external national rivalries? It’s time we acknowledge these divergent paths before us and desperately avoid the latter.

By David Ferreria