Home > General Politics, Labour Party News, News from Abroad > Greece and Gordon Brown’s Gaffe

Greece and Gordon Brown’s Gaffe

Two stories dominated the news tonight – Brown’s gaffe and the Greek financial crisis. Both linked by a common thread – the economic consequences of a neo-liberal agenda for European unity.

The voter that Brown called a bigot was concerned about the combination of unemployment and the free movement of labour across the continent. From Brown’s standpoint, from the economic strategy that New Labour has followed, her views would have appeared as bigoted. Once New Labour had given up any socialist ambitions, the sole progressive pole open to it was a humanism based on liberal internationalism. The liberal internationalism of the market economy based on free movement of labour and capital.

For some years it appeared to have paid off. His successes during the ‘no-more boom and bust’ years were built on the easy availability of international credit and imported labour.

UK government policy towards Europe has, throughout the New Labour years been consistently neo-liberal. Successors to Thatcher, they built on the greatest foreign policy success of her and Regan : the dismantling of the social democratic economies of Eastern Europe. The resulting mass unemployment in Poland, created an external reserve army of labour for British capital. Almost alone in Europe, Britain insisted on immediate implementation of free labour migration from the East. The freedom that neo-liberalism brought to Europe was the freedom of primitive accumulation – the creation of a labour pool that was free of any existing means of livelihood, freed from their homes, free to serve business on demand.

For all Brown’s professed adherence to ‘post neoclassical endogenous growth models’, New Labour actually followed a policy that made good sense in terms of Marx or Solow : keep the labour supply growing as fast or faster than the growth of capital in order to maintain the rate of profit. In this context, spontaneous working class objections to increased competition in the labour market, are just bigoted objections to liberal progress.

At the same time they set their face against any transformation of the EU that would have strengthened the tax raising and spending powers of the European Parliament. The crisis in Greece, and shortly in Portugal, stems ultimately from this. The Eurozone is a monetary federation without the federal government tax and spend powers that have been essential to the functioning of earlier monetary federations like Germany or the USA. If the EU parliament had the power to levy income and property taxes across the Union, the current crisis in Greece would not be happening. A large part of the expenditure now met by the Greek Government would be being met by the Union out of general Union taxation: defence, pensions, perhaps medical costs.

Union taxes would, as in any other federal state act as a means of redistributing income between richer and poorer areas. Within the UK, Northern Ireland, being a relatively impoverished area, receives a greater per-capita share of central taxes.

But all this would have run counter to the neo-liberal agenda. Social democratic politics having been exorcised at the national level, could not be allowed to return at the Union level. Thus there was no question of the Union having the tax raising powers necessary to provide for example common EU pensions or an EU health service free at the point of need across the continent. Now workers at national level are refusing to let go of the few concessions they have won, and national opposition to EU-wide social democracy is causing problems because there’s no EU-wide capital safety net either.

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  1. Geoff Foote
    April 29, 2010 at 12:00 pm

    hello. I disagreed with your analysis, and David suggested I write here. 1) bad Marxist economics – the relation of labour supply to the rate of profit confuses labour supply with the variable compositon of capital? or the organic compostion? 2) use of bad concept – neo-liberalism is nonsensical idea. Result – if neo-liberlism is the enemy, then control on immigration follow. To me, immigration is not the problem. But neo-liberalism as a concept is a problem, illustrating bad thinking. will explore either problem if you’re interested.Right. So -There.

    • April 29, 2010 at 2:37 pm

      I realise you wanted me to suggest 1 or 2, try (1) for beginners.

  2. April 29, 2010 at 12:21 pm

    Go ahead, these things are worth arguing about.

  3. April 29, 2010 at 5:33 pm

    Oh for fucks sake, a ‘the social democratic economies of eastern europe’? Do you mean the authoritarian regimes running inefficient command economies married to a systematic oppression of peoples? Those economies and systems failed for a fucking reason you know. And no, that reason was not “neoliberal imperialism”, much as it would be nice if all your prejudices fitted neatly together.

    • April 29, 2010 at 11:01 pm

      I get stick from CP loyalists in Germany as well for calling the Eastern European economies social democratic, but I do so advisedly. If you look at the economic programmes of Atlee in India, Gottwald in Czechoslovakia or Ambedkar in India all in 1948 you see that they were, in essence, much of a muchness. They were all in their different circumstances following a basic economic model developed by German Social Democracy whilst in opposition prior to the Great War.

      Contemporary Communists are equally insulted that I call it Social Democracy, but that is what it was. There are actually very significant differences between the economic policies advocated by 19th century Communists, and those advocated by the German Social Democrats and later put into practice by successor parties of German Social Democracy like the Polish United Workers Party, or the Sozialistische Einheitspartei Deutschlands. The most significant difference was that the leading 19th century Communists advocated a non-monetary economy, whereas the Social Democrats advocated a monetary economy with predominant public ownership.

      I made no reference in my article to ‘neoliberal imperalism’, that is an interpellation on your part, though one could certainly argue that Tony Blair was an advocate of just such an imperialism in his African and Middle East policy.

  4. April 29, 2010 at 5:48 pm

    S’fair comment, seems to me. The economies of eastern Europe weren’t all that social – considering the amount of resources dedicated towards military build up – and certainly weren’t especially democratic. But with respect to Paul S, I think that this is subsidiary to the main point. I also think it does miss the high ideals embedded in those authoritarian and inefficient regimes, to which people still responded even as the supposed bearers of those ideals were being turfed out of office. Yeltsin’s Russian constitution, for example, had to include things like universal health care as a legacy of the Soviet State.

  5. Dave
    April 29, 2010 at 10:54 pm

    I think the post addresses a very urgent issue. If one wants a political union of any size along with a common currency the existence of a sovereign state — in this case a federal European state — that can transfer credits within it is imperative. The current configuration of the EU is not only economically unstable but politically as well because it presupposes that individual nation-states, in this case Germany, will bail out other ‘national’ economies.

    This will risk to further push the conflict into antagonisms between ‘nations’ rather than between classes, unless the Left forces can polarize the question along the latter dimension instead. Perhaps the join crises of Portugal, Spain, Ireland and Greece could lead the way to such cross-national working class politics.

    (I would agree that calling the Soviet-socialist economies as ‘social democratic’ is a misnomer.)

    • April 30, 2010 at 9:54 am

      Yes that is the key issue, how to get politics in the EU context from a national to a class basis. Ideally one needs a Europe wide Social Democrat party contesting the EU elections and the national elections. Key issues then are which major ticket items of government expenditure should move to the center. With the free movement of labour within the EU, the obvious targets would be a) social insurance covering unemployment benefits, health and pensions, and b) defence.

      On whether the term social democratic is wrong to apply to say the DDR, well I think that the nostalgia for the DDR now expressed in Germany is probably not dissimilar to sentiments that older people in Sweden might express for the glory days of Social Democracy there.

      “March 24 – Germany’s leading liberal news magazine, Der Spiegel, reported this month that nostalgia and “glorification” of the former German Democratic Republic (GDR) has seen a massive surge in recent years.

      A recent poll found that well over half (57 per cent) of citizens of the former GDR support the socialist state, while many reported that their lives “were better” under socialism than under current conditions.

      “Life was good there and we were happier and much better than in this re-unified Germany,”

      While many of the older generations who appreciate the benefits of socialism in comparison to the chaotic and exploitative nature of the current capitalist system, Der Spiegel reported that many younger Germans are now taking up the banner of the GDR.

      “Thank God that I was able to experience living in the GDR. Now many people here worry for their future. Here people have to lie and cheat in order to exist. We have here more dictatorship now than we ever had in the GDR,” one patriotic woman told Der Spiegel.”

  6. Jacob Richter
    April 30, 2010 at 2:20 am

    Paul Sagar probably doesn’t know about the left-communist Amadeo Bordiga, who mixed the 19th-century Communist economic view with an “authoritarian regime” / “not especially democratic” political view.

    The “democratic” part re. “Social-Democratic” Eastern Europe refers to the de jure Popular Front governments in charge: a ruling CP, a peasants party, a “national bourgeois” party (Catholic parties in Eastern Europe or Guomindang remnants in the PRC today), and so on.

  7. Jacob Richter
    April 30, 2010 at 2:26 am

    ^^^ That as opposed to the CPSU only in the Soviet Union; in both Official Communism and Anti-Revisionism, part of “achieving socialism” in one country means the liquidation of such Popular Fronts.

  8. Jacob Richter
    May 13, 2010 at 2:57 pm

    I’d like to ask a very, very belated question You said:

    “In commonsense terms, labour will be in short supply relative to capital, which will strengthen the bargaining position of labour and weaken that of capital. Overall the tendancies that Marx identified, and which came to fruition first in Britain (de te fabula natur), are now being played out on a world scale, and on a world scale, they will reproduce the rise of Labour that we experienced a century ago.”

    And:

    “My position is that as the world reserves of labour are used up the relative strength of labour will increase against capital internationally. Until this point is reached there remains the opportunity for profitable capital accumulation. Hence we can not say even now that capitalism has reached the end of its potential on a world scale. Projecting forward, over-accumulation of capital in China will be come marked in about 15 years, but in India and Africa the turning point will be some decades later.”

    I am actually concerned about Africa. There’s a huge reserve pool of labour there that, with sufficient capitalist development, could prevent labour from being in short supply relative to capital.

  9. Jacob Richter
    May 13, 2010 at 2:58 pm

    [Should have been "state a very, very belated concern" rather than asking a question, since my last paragraph was my concern. Sorry.]

  10. paul cockshott
    May 13, 2010 at 5:06 pm

    Africa is not so huge relative to China which will be the main capital exporting nation sending capital to Africa. I anticipate relatively rapid industrial development in Africa as a result.

  11. Jacob Richter
    May 14, 2010 at 2:29 am

    Outsourcing to Africa will mean even lower manufacturing and other “industrial” (primary and secondary) wages than the original outsourcing to China. And yes, I too notice the outsourcing from China itself.

  12. paul cockshott
    May 14, 2010 at 10:50 am

    You are right wages would be lower but my comparison is with the respite that africa gave french and british capitalism a century ago. Because China is so much larger relativeto Africa the rate of industrialisation will be faster and in consequence the respite for the chinese rate of profit shorter. You have to take the long view here.

  1. May 1, 2010 at 8:52 pm

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