01.12.2016

Integration and disintegration

Hillel Ticktin outlines the political and economic forces at play in the European Union

The ruling class is worried not only about the global effects of Brexit, but about the future of capitalism itself. There is a real possibility of other countries following the UK’s example, with the euro project itself folding fairly quickly afterwards.

The political-economic European Union allows for a more sophisticated form of control over capital and labour. Modern capitalism has long gone beyond the nation-state - the forces of production are today global, and interaction, common planning, interchange and regulation take an international form for developed economies, which are dominated by finance capital and modern industry. The World Trade Organisation is the overarching body and there are regional bodies like the North American Free Trade Agreement, but the EU and its core, the euro zone, has taken the process to its logical conclusion.

For labour, conditions are sub-optimal, whether inside such an economic alliance or outside it, because the political economy of these agreements is based on the classical operations of capital in subordinating labour. The overarching rule in the EU that there should be free movement of labour is to ensure competition among workers to keep the price of labour down and keep the unions under control, so it is not surprising that some workers see the EU as the enemy. On the other hand, individuals ought to have the right to move wherever they can find a niche to suit their talents and be reasonably rewarded. However, it is in the nature of capitalism to ensure that there is mass unemployment, with workers competing for jobs.

The denigration of the immigrants has created discontent in their home countries and among other sections of the British population. However, immigrants, of course, are not the enemy, but part of the reserve army of labour - used as unwitting instruments to contain other sections of the working class. The only way to deal with the latter is to invite them to join with the main body of the working class to fight capital.

The end of Stalinism in the Soviet Union and eastern Europe has been accompanied by the destruction of industry in those countries. Although it was generally uncompetitive in the world market, the new pro-market governments refused to build up their own nationalised industries. The result has been large-scale unemployment with little future for the new generations. It is not surprising that a million people from Poland have come to the UK, nor that one reaction to the situation in that country is the election of a rightwing nationalist government.

Looked at in terms of the European Union, the absorption of the countries of eastern Europe was a major political project, which could only alter the nature of the EU itself. There have been two clear results of this process. Firstly, unemployment has been relatively higher than in earlier times, and wage rises have been contained within the EU as a whole. For many, real incomes have dropped. Secondly, most workers do not understand why this has happened - in part, the left, which remains heavily influenced by Stalinism, is to blame for not counteracting rightwing propaganda. Thirdly, it has to be said that the reformist agenda which is put forward cannot work even at the most minimal level. Only a programme for a socialist world can now work, combined with a direct attack on the racism, xenophobia and rabid nationalism now spreading over the EU and beyond.

The rightwing regimes in eastern Europe are dependent on the western ruling class both financially and ideologically. Even though a country like Poland has a Eurosceptic government, it is bound to the EU in a way countries like the UK are not. The development of this relationship has helped to move the EU from being a Franco-German alliance to a union with Germany at its centre, using the eastern European countries as its hinterland. France has been in decline for some time. The UK has been the other crucial power in the EU, but it was semi-detached - not belonging to the euro zone and being outside the Schengen agreement. It was, nonetheless, very important to the balance of power, its influence being described as ‘liberal’: ie, supportive of the free market. The removal of the UK, therefore, can be regarded from one point of view as shifting the political balance against the right politically.

It is entirely possible that Italy will either be forced to leave the euro zone or decide to do so voluntarily. It has considerable government debt, no growth in productivity since 1999, high unemployment and high levels of discontent. This may well come to the fore in the December 4 referendum - if the government loses, this may precipitate an Italian withdrawal from the euro zone or even the EU itself.

Capitalism is now in a profound crisis, which goes beyond the question of Keynesian secular stagnation. Italy was only a forerunner of the more general decline in productivity in the USA, the UK, etc. Today, the only reason that products are not filling the storerooms with unsold items is that firms are able to restrict their production and supply. The increase in consumption is limited by the slow to negative rise in wages and salaries. On the other hand, automation is beginning to speed up. The technical basis of overaccumulation is clear.

Malaise

That, however, is only part of a more general malaise. Capital is restricting investment as part of this process and governments are imposing a policy of austerity at a time when capital is refusing to invest. This is a vicious circle, where governments refuse to act, because they regard state investment as undermining capitalism, while capital refuses to invest because demand is limited by lack of investment. The ultimate reason lies in the instability of the social order, where the working class cannot be controlled under conditions of full employment. At the same time, there is increased discontent, which is refracted through a series of complex protests, like voting to leave the EU.

When a social system is in crisis, then the contradictions in the system come to the fore and, instead of the poles of the contradictions interpenetrating or interlocking, they pull apart and the divisions in the society show themselves. In other words, the contradiction between capital and labour shows itself in the form of conflict. We live in a period of transition between capitalism and socialism, in which the productive forces continue to demand socialised control and a planned society, while the ruling class does its best to enforce the ‘free market’, in ever less propitious circumstances. But, without any coordinated strategy, the opposition is taking on a spontaneous and often negative form. Disintegration is the clear objective alternative to a system in process of supersession.

Disintegration can separate parts of existing countries into their formative communities, but it can also lead to chaos, as we are now witnessing most obviously in the Middle East. However, it is not just the Middle East. The irruption of millions of refugees into Turkey and Europe has been used by the right as a means of ideological and physical control.

We should, therefore, regard the breakaway from the EU as part of a deviant method of dealing with the crisis. Discontent in the UK was not just about immigration: the EU veto on the subsidising of ailing firms helped to add to the anti-EU mood. The fact is that the RMT union campaigned for Brexit, as did various leftwing groups. They may not have had much direct influence, but the fact that parts of the left took this stance would have helped to make Brexit more acceptable. However, the issue is not Brexit, but the drop in the standard of living and in prospects for the future. Workers took their revenge.

The fact is that neither Brexit nor remaining in the EU is a leftwing stance. However, the bourgeoisie generally wanted and needs to remain in the single market. As I have already said, the forces of production have gone far beyond the nation-state, so it is not just a question of trade, but of close interdependence in manufacturing, in services, in training and in planning.

There is no doubt that the exit of the UK from the EU is not in the interest of capital. On the contrary, without entry to the single market, British firms will be in trouble. This is not because there will not be trade, or because there will be tariffs. It is because the single market ironed out the various obstacles to competition which allowed firms to sell, or set up branches to sell, their goods and services. This required numerous regulations, whose effect was to make it much more straightforward for firms to set up a head office in one EU country, while operating in all the others. This process allowed large firms like the Japanese car companies to set up their factories in the UK, with the intention of selling throughout the EU. As the forces of production are global, this trend can only continue. The only alternative, within capitalism is backwardness and what is on offer from the right is a reactionary utopia.

The future

The euro zone, as every commentator agrees, cannot continue if the disparity in income continues among its members. Germany cannot go on accumulating an ever greater surplus taken from the other countries of the EU without generating a revolt. At the same time, it is refusing to underwrite the budget or balance of payment deficits of other countries. Wolfgang Schäuble, the German finance minister, has made it crystal-clear that debts must be paid. The considerable EU subsidy to eastern Europe, on the other hand, is clearly acceptable, although it comes in part from Germany. The present European Central Bank process of quantitative easing in the euro zone also involves the buying of bonds from deficit countries, so effectively subsidising them. In other words, it seems unlikely that Germany will change its policy officially, but it is possible that there will be a form of compromise in the name of the EU.

The gravity with which the ‘markets’ has taken the British exit vote would seem to indicate more that a break-up of the EU is regarded as a major concern, rather than the UK’s prospects. Furthermore, such a break-up is regarded as a further development of the existing crisis. The consistent failure of countries to pull out of the downturn, while following an austerity policy, had already led the International Monetary Fund to issue a series of reports calling for investment in infrastructure. Now the UK is reducing its austerity policy and proposing a reduction in corporation tax. These are straws in the wind, indicating that the ruling class has realised that it has to begin to retreat, if it wants to avoid much worse. The rise of the left in the Labour Party, and Bernie Sanders’ success in the USA, together with a series of labour struggles in France, etc, plus the election results in Spain, Portugal and Ireland, have indicated what may come.

Lenin stated that a condition for revolution was that the ruling class could no longer rule in the old way. That is clearly the case, but the working class is not yet a class - ie, a collectivity - and there is no party to lead it. However, we are witnessing a weakening and disappearance of older parties and the formation of new parties, even if some, like the Five Star Movement in Italy, are actually rightwing parties claiming mass support. The polarisation of the political spectrum is clear in Spain and Portugal, but asymmetrical in most European countries, with the formation of mass, far-right parties, without a parallel development on the left. The left remains divided into numerous sects and parties - in part a hangover from a Stalinist past, but also reflecting its failure to find a form which will relate to the working class as a whole.

There is no revolution in immediate prospect, but we might expect that events like the minor earthquake which has hit the world economy today will be magnified in the future.