Ann Pettifor ha resumido la actual (julio 2015) encrucijada europea de
esta manera:
“El camino hacia delante para los países atrapados en la Eurozona parece penoso. La
zona económica en su conjunto es un desastre-no hay otra forma de describirla.
Las alternativas hercúleas que los líderes de la Eurozona deberían
afrontar son éstas:
1) Permanecer con el corsé actual que constituyen las reglas
de la Eurozona
y su diseño. Los riesgos de seguir esta alternativa es que más y más países-incluyendo
países grandes e importantes como Italia y Francia- caerán en depresiones económicas
profundas con creciente e impagable deuda pública y desequilibrios
sustanciales. Con el ascenso de un partido fascista en Francia y de la derecha
y fuerzas populistas en Italia, las perspectivas no parecen favorables.
2) Abolir el euro (una tarea tremenda y compleja) y el
retorno a las divisas nacionales, con todos los riesgos políticos y económicos
asociados al desmantelamiento del sistema; pero con la posibilidad de que los
países recuperen su autonomía en política económica.
3) Crear una Eurozona más limitada con aquellos estados
cuyas economías están más integradas y convergen-bien creando el “Euro del
Norte” o abandonando a Grecia y, a su tiempo, otros estados que caerán en muy
graves dificultades.
4) Crear una unión fiscal y política-preferiblemente con sus
propias instituciones democráticas responsables, bien para todos los actuales miembros
de la Eurozona
o para una vanguardia inicial de países y preferiblemente a la vez cambiar el
mandato del Banco Central Europeo para hacerlo responsable antes las instituciones
representativas
Todas estas opciones están cargadas de dificultad. Pero permanecer
con el corsé de una unión monetaria diseñada para servir los intereses del
capital internacional a expensas de las empresas y ciudadanos europeos, entrañaría
no solo un fracaso económico de la escala del de los años 1920 y 1930, sino
también una conflagración política.
Sería mejor si los líderes europeos aprenden de la historia y
no la repiten. Sobre todo deben reconocer las profundas equivocaciones que
sostienen las visiones utópicas de los ideólogos neoliberales- antes de que
Europa se hunda en crisis incluso más profundas.”
(Ann Pettifor, Por qué el euro es como un mandato grande de patrón oro y fracasará como el patrón oro.)
Un diagnóstico parecido es el de Shahin Vallée:
“Con
independencia de lo que suceda en Grecia, el acuerdo del 13 de julio ha hecho
la perspectiva de una ruptura futura del euro mucho más probable. La cuestión
es si tomará la forma de una ordenada salida por parte de Alemania o de una
prolongada y económicamente más destructiva salida por parte de Francia y el
sur de Europa.”
El análisis de Pettifor resulta sumamente revelador
en su comparación e ilustración histórica. Aquí algunas de sus consideraciones
e hilo:
“Today
the architecture of that euro system devised by the Werner and Delors Committees
appears increasingly unstable. Many economists expect Greece to exit the Eurozone
in due course. Germany positively promotes this outcome. There are some economists
that believe the Eurozone as a whole will collapse, with Germany the first to
exit.
10 Is the Eurozone approaching a seminal moment like that day in September,1931 when Britain was the first to exit the gold standard, an exit many had believed impossible?
10 Is the Eurozone approaching a seminal moment like that day in September,1931 when Britain was the first to exit the gold standard, an exit many had believed impossible?
In this
brief review of the key elements of the European Monetary Union (EMU) and its parallels
with the gold standard, I want to show just how much the two systems hold in
common.
The
system’s architecture is now at risk of collapse. The inflexible “rules’ or
Maastricht criteria
are openly flouted not only by southern European countries, but also by Germany.
Eurozone debt as a share of GDP jumped to €9.4 trillion in the first quarter of 2015,
and at 92.9% of GDP is way above the Maastricht criterion of 60% of GDP. By this
measure the whole Eurozone is in non-compliance – and should be expelled from the
Eurozone. These public debt levels will continue their inexorable rise, thankslargely
(and counter-intuitively for orthodox economists) to “austerity” policies that are
largely deflationary.
The plain truth is that the Euro
is a product of utopian neoliberal economists and their ambitions for a monetary system
governed only by market forces. According to the ideology, market forces must be
beyond the reach of any European state. It is this utopian vision and its embodiment
in the “rules” of the Euro system that is deeply flawed, and is the cause of
economic failure and of social and political instability within the Eurozone.
What
are the “rules” of the Euro?
Here,
crudely summarized are the ‘rules’ that 19 Eurozone member countries must follow.
They must:
1.
abandon their own national currency, in order to adopt a Europe-wide currency over
which they will have no control and minimal influence
2.
accept that the value of this common currency, detached from any state, will be controlled
(sic) by technocrats, bankers and financial markets
3.
accept that the currency might be or become overvalued, relative to the EZ’s domestic
economies, or undervalued (as it is for Germany now)
4. agree to lower internal prices and wages as the sole way of correcting imbalances.Falling prices and wages will, it is assumed, make the nation’s exports more competitive
5. give
up oversight over Europe’s central bank, and instead delegate central bank governance
to unaccountable central bankers and technocrats based in Frankfurt
6. give up to the ECB and creditors, including the all-powerful actors in bond markets, the power to determine, or influence, interest rates across the spectrum of lending: for the base rate, short and long-term loans, safe and risky loans, andin real terms: i.e. relative to inflation
7.
accept that the ECB has a mandate to use monetary policy and operations for one primary
purpose only: price stability (a mandate that it has not honoured) and not full
employment, as is the mandate of the US’s Federal Reserve
8. agree to remove any barriers that limit the free flow of capital across the borders of the Eurozone – one of the foundational ‘four freedoms’ of the European Union
9. refrain from undertaking democratically-driven decisions to increase or cut public spending in response to a slump or boom
10. agree to limit (under almost all economic circumstances) government annual deficits (expenditure in excess of income) to 3% of the nation’s annual income (GDP)13
11.
ensure that the total stock of public debt does not exceed 60% of annual income or GDP
Finally
Eurozone governments must submit to these “rules” without any arrangements
for political or fiscal union and transfers between those within the“monetary
union” being put in place.
These broadly are the conditions attached to Eurozone membership, set out in the two current Treaties.
14 The rules and procedures are opaque and complex, making them hard for citizens to understand. As noted earlier, the Treaties refer to “economic and monetary union”, whereas the reality is that there is only a monetary union that lacks its essential “economic” counterpart.
So
how do the “rules” of the gold standard compare to those of the Eurozone?
1.
Abandonment of control over the currency
On
joining the Eurozone countries voluntarily give up control over the nation’s currency.
Under the gold standard, participating governments and their central banks effectively
lost control over the nation’s currency, and to a large extent over economic policy.
This “rule” of the gold standard – the removal of governmental and central bank
control over the exchange rate – was not exactly replicated by the Euro system.
Instead
all national currencies were simply abolished, and replaced by a currency that – as
now structured – is accountable to no government(s) or people(s), and is issued by no
state.
As
Eichengreen and Temin explain in a recent paper:
“The
gold standard was preserved by an ideology that indicated that only under
extreme conditions could the fixed exchange rate be unfixed. The euro has
gone one step further by eliminating national currencies.”
3. No co-ordinating body to
maintain balance and stability
The second important
characteristic of the gold standard system was that it had no international coordinating body
that could help stabilize economic and financial imbalances between countries in
surplus, and those in deficit. The Eurozone operates in pretty much the same way:
there is no coordinating institution set up to manage and stabilize economic and
financial imbalances between member countries
4. Unfettered capital mobility
A third “rule” of the gold
standard was one that gave citizens and firms unfettered freedom to engage in
international transactions. In other words, the freedom to buy or sell abroad, to move money (or
gold) across borders, regardless of the impact on the domestic economy. Private
bankers, traders and wealthy elites welcomed this freedom to move capital abroad.
It was capital mobility that made it easy for Europeans to trade with each other. But it was not until the Eurozone system was firmly established, and Greece had joined the Eurozone in 2001, that German, French and US banks felt sufficiently confident of Euro-wide implicit bailout guarantees to risk making larger-scale loans to poor, potentially unreliable Greek borrowers – including the Greek state. And it was capitalmobility, facilitated by their country’s entry into the Eurozone that gave wealthy Greeks the freedom to move their funds out of Greece, and to accelerate those flows without impediment when the country began to experience difficulties.
5. Deflation as a correction
to imbalances
Under the gold standard, a
scarcity of gold forced participating governments to deflate their economies.
Just as with the gold standard,
so with the Eurozone: an over-valued currency based on Eurozone (Maastricht) rules
can have the same deflationary impact on a member country. Even while GDP
collapses, and internal prices and wages turn negative as they are now in Greece, Greece’s
currency - the Euro - can be maintained at artificially high levels by the ECB. In a
deflationary environment an over-valued currency intensifies economic contraction.
Unemployment and bankruptcies rise, and as
demand falls, the money supply
contracts and wages and prices tumble further. Then, as Wynne Godley warned way back
in 1997,
“there is nothing to stop it
suffering a process of cumulative and terminal decline leading, in the end, to
emigration as the only alternative to poverty or starvation.
While
other members of the Eurozone may regard Greece as an outlier, and as a country
that has brought its difficulties upon itself, they too may suffer collectively from
the rigidity of the Euro system. Godley again:
“… [I]f
Europe is not to have a full-scale budget of its own under the new arrangements
it will still have, by default, a fiscal stance of its own made up of the
individual budgets of component states. The danger, then, is that the budgetary
restraint to which governments are individually committed will impart
a disinflationary bias that locks Europe as a whole into a depression itis
powerless to lift.”
As this goes to press the Eurozone is struggling to emerge from a prolonged period of high unemployment, falling real wages and prices, and low levels of investment. Some countries have faced depressions that have rivaled those of the 1930s. In fact, over the 10 years from 2004 to 2014, the average annual change in real GDP in the Eurozone has been just 0.7% (compared to 0.9% for the whole EU), and since 2007, the average change in Eurozone GDP is negative, at -0.1% per year (the figure for Greece is -0.4% per year)
6. Protectionism and the rise
of nationalism
Under the gold standard political
reactions were predictable: farmers and entrepreneurs fought back and
sought protection from the ‘fantastic’ and unaccountable machinery that was
the gold standard. Protectionism anddefensiveness became rife. And as
Karl Polanyi argued in The Great Transformationthe effect was the opposite to that
wished for by international creditors: national governments were lobbied by their
citizens to intervene, to raise tariffs, and to protect the domestic economy from the
fluctuations of the gold standard.
“the utopianism of the market liberals led them to invent the gold standard as a mechanism that would bring a borderless world of growing prosperity. Instead, the relentless shocks of the gold standard forced nations to consolidate themselves around heightened national, and then, imperial boundaries.”
In the early twentieth century,
heightened nationalism and protectionism intensified international rivalry and
conflict. These tensions climaxed with the First World War.Soon after the first shot was
fired, the gold standard was abandoned by many nations.It was revived again in the 1920s
under pressure from the world’s most powerfulbankers. In Britain it was
Churchill that agreed to enter the system, despite his own severe reservations about its
likely impact on British industry.
Once again the economic strains proved unbearable, as Europe and the United States endured financial crises, dramatic rises in unemployment, general strikes and stockmarket crashes. Finally the system collapsed in 1931 when Britain left the gold standard, largely on the advice of John Maynard Keynes – who was bitterly opposed to it. The United States under President Roosevelt followed suit in 1933.
Where now for the Eurozone?
The way forward for countries
trapped within the Eurozone looks bleak. The economic zone as a whole is a mess – there
is no other way to describe it.
The herculean choices facing
Eurozone leaders are these:
1) To remain within the current
“corset” that are the Eurozone rules and framework. The risks of taking
this path are that more and more countries – including big important countries
like Italy and France - will fall into deep economic depressions with rising
and unpayable public debt and substantial imbalances. With the rise of a
fascist party in France and of right-wing and
populist forces in Italy, the
prospects do not look pretty.
2) Abolish the euro (a huge and
complex task) and return to national currencies, with all the economic and
political risks associated with dismantling thes ystem; but with the possibility
of countries regaining economic policy autonomy.
3) Create a more limited Eurozone
of states whose economies are more integrated and convergent –
either by creating e.g. “the northern Euro” or by ‘shedding’ Greece, and in due
course other states who fall into very grave difficulties
4) Create a political and fiscal
union – preferably with its own democratically accountable institutions - for
either all the current EZ members, or for an initial vanguard of countries –
to create a system of economic as well as monetary union; and preferably at
the same time change the mandate of the ECB to make it more accountable
to democratic institutions.
All of these choices are fraught
with difficulty. But remaining within the “corset” of a monetary union designed to serve
the interests of global, mobile capital at the expense of European firms and
citizens, risks not just economic failure on the scale of the 1920s and 1930s – but also
political conflagration. It would be best if Europe’s leaders learnt from, and did not
repeat history. Above all they must finally acknowledge the deep flaws behind
the utopian visions of free market, neoliberal
ideologues – before Europe
plunges into even deeper crises.”
