Motion No2 and Europe

Scottish Socialist Party member Nick Rogers argues for a boycott of the euro referendum

On June 22 the SSP will debate how it should campaign in a referendum on replacing the pound with the euro. The discussion that is taking place in the party also allows us to focus our attention on the future development of the European Union and how socialists should respond to the process of European integration. In this contribution I will explain the thinking behind boycott motion No2 (Kelvin minority) and respond to some of the arguments that have been advanced. The euro In boycott motion No2 we argue that the SSP should oppose both the 'no' and the 'yes' campaigns in the referendum on the euro and present a positive case for reform of the EU as part of a campaign for a united socialist Europe. The referendum campaign on the euro will not primarily be a debate about dry, technical economic issues of currency exchange rates and levels of interest rates, but a contest for the future of British capitalism. If the referendum delivers a 'no' vote, there is no prospect of Britain joining the euro for at least another decade. And, given the probable course of events within the rest of the EU, Britain's status as a member of the EU is likely to be undermined. In the referendum campaign the traditional British right (the Conservative Party) will advocate a future in which Britain maintains its close relationship with the US and distances itself from the EU. They will seek to build an alliance led by the interests of small and medium-sized businesses that fear for their survival in an integrated Europe. Although withdrawal from the EU will not be explicitly mentioned by the mainstream 'no' campaign, this is the inevitable logic of their position if Britain keeps its distance from the euro-zone and a Europe in which the forces of integration become ever stronger. The far right envisages a future in which the clock is turned back to an idealised, all-white, culturally homogeneous nation, in which 'law and order' is imposed and dissidence suppressed. A militarised British state would seek to assert its national interest, whatever the cost to the rest of the world. It would be a dereliction of duty for socialists to add their weight to the 'no' campaign. And a missed opportunity to present the case for a socialist Europe. The 'no' campaign will inevitably appeal to the crudest national sentiments. The SSP's attempts to differentiate itself are likely to be swamped by the nationalist rhetoric that will fill the airways and column inches. Gordon Morgan and Joe Eyre propose that the SSP initiate an independent labour movement campaign. But those trade unions and left forces which opt for a 'no' campaign are not immune to the temptations of resorting to easy nationalist posturings. The Morning Star, which will surely play a crucial part in a labour movement campaign, has itself stooped to crude Germany-bashing. It illustrated with a photo of SS stormtroopers an article that presented the euro as a German plot to achieve by surreptitious means the domination of the continent that Hitler 60 years before had failed to impose militarily. This is why Mark Serwotka, Socialist Alliance general secretary of the civil servants union, the PCSU, and under disgraceful attack from his rightwing executive, opposed a motion at his union's conference calling for opposition to the euro. Above all, socialists would be making a fundamentally dishonest proposition to the working class. No capitalist nation-state is going to be able to reverse the tide of neoliberalism. Least of all a British state which remains in the vanguard of the neoliberal crusade. The days when manipulation of national interest rates and competitive devaluations of currencies provided any sort of solution to the problems of capitalist economies are long gone. Gordon and Joe illustrate the potential pitfalls of a socialist 'no' campaign with their analysis of the convergence criteria for joining the euro and the independence of the European central bank. They argue that the euro's convergence criteria are "one of the main reasons for the adoption of PFI by New Labour" (p19). Not New Labour's conversion to the ideology of neoliberalism. Not the development of a new capitalist dispensation in which what were formerly considered necessary concessions to an assertive working class are now being clawed back. How is it then that all those nations within the euro have higher levels of public expenditure and larger state sectors than a Britain that is currently under no requirement to meet the convergence criteria? Why is it that New Labour ministers do not offer up the convergence criteria as a ready-made excuse when defending themselves against their critics in the trade unions and Labour Party? The reason is that, if the treasury were to adopt the method of measuring public expenditure used in virtually every country that is a member of the euro, most of the public sector investment that New Labour is privatising would not count as public debt, whether measured by Gordon Brown's public sector borrowing requirement (PSBR) or by the Maastricht convergence criteria. In most of Europe public sector investment in capital projects does not count as current expenditure and is not included in measures of public debt. That is why trade unions, such as Unison, opposing PFI have argued strongly for a rewriting of the treasury's public spending rules to bring Britain into line with the rest of Europe. If that were to happen, convergence criteria or not, there would be no public expenditure excuse for New Labour's attempt to privatise and shrink the public sector. Gordon and Joe's eagerness to make a case against the euro leads them to provide New Labour with a fig leaf for its fiercely pro-capitalist ideology. Their analysis of the independence of the European central bank is also distorted by a rosy-eyed view of the options available within a national framework and a failure to acknowledge the opportunities for achieving change at a European level. They argue that, "If we join the euro, we will give up power to a committee of bankers forever", while "any Westminster government could reverse" Gordon Brown's transfer of power to the Bank of England (p5). At Westminster all the mainstream parties - Labour, Conservative, Liberal and SNP - are committed to maintaining the independence of the Bank of England. Not much chance in the foreseeable future of any change there - even in an independent Scotland. Within Europe a debate is taking place about the powers of the European central bank and especially the finance commissioner, who recently wanted to issue warnings about spending levels to the British and German governments. Some are arguing for strengthening the powers of the commissioner; others for relaxing the rules of the growth and stability pact which the commissioner is seeking to impose. Incidentally, while the executive board of the European Central Bank makes month-to-month decisions about euro interest rate levels (in the same way as the monetary policy committee of the Bank of England does for sterling interest rates), it is the council of finance ministers of the member-states which lays down the broad economic policies the executive board is obliged to meet. The council of finance ministers also decides whether to accept the advice of the finance commissioner, whether the deficits of member states are in fact excessive, and what steps should be taken if they are. The council of finance ministers recently decided to reject the report of the finance commissioner. Those who would have us believe that politics in the EU has been replaced by decision-making by technocrats have obviously forgotten the political negotiations that allowed Italy to join the euro despite levels of debt that apparently broke the convergence criteria. The reality is that political manoeuvring between different factions of the ruling class and fierce struggles between the working class and capitalist class take place as much at a European as a national level. And these are reflected, even if indirectly, within the institutions of the EU. The European Union Different analyses of the European Union and different interpretations of socialist theory lie behind many of the differences within the SSP on the euro. There is broad agreement on all sides of the debate in the SSP on the forces behind European integration. The evolution of the EU is driven by the needs of the development of capitalism. Specifically, the desire of large companies to be able to organise production, distribution and sales of their products and services on a continental scale without the burdens of customs barriers, different rules and regulations, and fluctuating rates of exchange between currencies. Hence the drive towards a single European currency. State structures that represent the interests of the capitalist class are hardly a new departure. We live in a global capitalist society in which capitalists form the ruling class and seek to impose their interests on other classes in society. This has been the situation for at least a couple of hundred years. The historical formation and evolution of the current nation-states in Europe and states across the world, just as much as the current development of the EU, has been driven by the requirements of capitalism. Gordon and Joe contend that the prospects for working class are worse in EU than within existing European nation-states. Yet at the same time they acknowledge that the basis for national welfare states and the accommodation that was sought with the working class in the post-World War II period no longer exists. If we are to defend the interests of the working class even within a capitalist society and win new reforms, it has to be done on the widest possible basis. Surely European institutions would have a better chance of holding transnational corporations to account? Gordon and Joe refer to the practice whereby companies operating in more than one country declare profits in the country with the lowest taxation levels, while claiming the highest levels of government financial assistance available (p12). They claim the euro makes this easier. But for decades the practice has been a common feature of the dealings of transnational corporations with third world countries, precisely because transnational corporations are able to play off different national authorities against each other. Only action at a continental, if not global, level can hope to tackle these types of issue. We should be arguing for stronger regulation of transnational corporations at a European level. There are a whole range of other issues that demand European action - environmental issues, the preservation of Europe's fisheries, regional aid, workers' rights, defence of welfare states. And for that matter, on many of these issues the current EU has developed policies that are in advance of what our New Labour government has to offer. Tony Blair spoke the truth when he described rights for Britain's workers as the weakest in Europe. Neoliberalism has made headway right across Europe, but the continent still reverberates to debates between the proponents of different capitalist models. This reflects a higher level of class struggle in many European countries than in Britain. And also a different conception of how to incorporate the working class into capitalism with commitments to workers' councils, restrictions on working hours, rights for temporary workers and the like. Many larger companies, forced to negotiate with trade unions, wish to see minimum standards imposed across Europe so that they do not find themselves undercut by smaller and medium-sized companies, which provide worse conditions for their workers. So it is worth repeating that politics still happens within EU and the class struggle still operates. Socialists should not fear joining the contest at a European level. Uneven development is a core feature of capitalism. We live with the consequences in a world economy sharply divided between nations struggling to survive economic meltdown, nations possessing incredible wealth and all gradations of development and underdevelopment in between. In all nations, though, class divisions scar the social landscape. Gordon and Joe are right to draw attention to this factor. They are wrong, however, to view the development of capitalism in an undynamic way. Divisions between rich and poor nations and regions can grow wider, but not always. In fact, Gordon and Joe can't quite make up their mind how events will pan out in Europe - whether production will concentrate "in the golden triangle of central Europe, or in semi-dependent, cheap labour states in east Europe" (p13). They are right to be cautious. In the last 30 years capitalism has shown the capacity to create huge new swathes of industry and production in formerly undeveloped regions (east Asia), while leaving a whole continent in desperate impoverishment (Africa). In Europe the period 1986-96 saw the share of wealth of the four poorest nations of the EU - Greece, Portugal, Spain and Ireland - rise from two-thirds of the EU per capita average to three-quarters. The nations of central and eastern Europe have been ravaged by the imposition of free-market capitalism. Their economies have been sold off to western firms on the cheap. Many of their workers reduced to penury. But socialists cannot advocate excluding these nations from the EU. That is to play right into the hands of the xenophobic right who resent the structural and cohesion funds that will flow eastwards and the rights the citizens of those nations will have to travel across the EU. Might Europe go to war with the United States? Again, Gordon and Joe raise an important issue. The EU is designed primarily to advance the interest of European capitalism. The objective of many of the EU's policies is to equip European companies to compete successfully with US and east Asian companies. The brewing trade war over US steel tariffs illustrates just how serious the contest between different regional blocs can become. The EU is also developing a common foreign policy. There are moves towards common military forces. Might inter-imperialist conflicts over trade issues and control over neo-colonial spheres of influence take on a military content in the decades to come? The possibility cannot be ruled out, but that turn of events seems a remote one. The United States has resented Japanese economic policies for decades, but Japan has remained entirely militarily dependent on the US. The EU, on the other hand, has provided an opportunity for vigorous inward investment by US and east Asian firms. It is more likely that capitalism, at the level of the real economy, will develop a truly globalised character. Already transnational companies operate globally. Will it continue to be possible to talk about US and EU capital as distinct entities? Quite possibly not. Is not finance capital increasingly global - if US-dominated? Is this not the real meaning of the current policies and domination of the IMF, World Bank and the WTO? Clearly the US is militarily dominant. Just this week Russia was brought within the US/Nato imperium. The former Soviet central Asian states already host US military bases - a consequence of alliances made in the Afghanistan campaign. Gordon and Joe would argue that this is a temporary balance of power that Europe will seek to redress. But is it not more likely a reflection of the evolving nature of the global economy? For the EU to compete militarily with the US would require a massive hike of at least 50% in European military expenditure. Will European political leaders be able to whip up the kind of European nationalism that would make such a transfer of resources away from welfare spending, etc politically possible? It is at least open to question. If, however, European integration fails, if conflicting nationalisms fight over the share of the imploding European superstate and economy, is not war a distinct possibility? War, after all, is a feature of the history and present of capitalism. And it will be a feature of its future as well. However, the wars of the last decade point to a more likely future as long as capitalism survives - military interventions to bring recalcitrant nations into line with the hegemony of global finance capitalism. Imperialist wars, in other words. A united capitalist Europe will play an imperialist role, even if subordinate to the United States. But so would any state that broke away from the EU. The imperative to attempt to protect its industries by keeping out cheap third world imports and to defend its overseas investments would remain. The Lomé Convention, by the way, allows for certain categories of imports by former colonies of European states to enter European markets at favourable rates. That is why the US challenged the EU's preferential treatment for Caribbean bananas. The US won the right for central American bananas, produced by US companies, to enter the EU with the same level of tariff. The challenge for socialists is to design policies that advance the interests of workers across the globe. In that way the working class can become a truly international class. Towards a socialist Europe The question that faces socialists is how do we organise to defend the interests of workers and to open up the road to a socialist society that releases the enormous technological and productive potential created by capitalism for the benefit of the peoples of the world. Socialists seek to overthrow capitalism, but they are obliged to use the tools provided by the very social system they challenge. That applies materially in terms of the social forces capitalism brings into existence, including the working class itself, but also politically in terms of the political arrangements capitalism creates. The creation of the EU provides the opportunity for the working class and socialists to organise on a wider scale. Engels' observations on Bismarck's creation of an imperial Germany - an imperialist, anti-working class entity if ever there was one - are relevant to the debate: "To develop their political activity fully, the working class needs a much wider arena than that provided by the individual states of Germany in its present fragmented form" (F Engels The Prussian military question). Marx and Engels did not advocate collaboration with Bismarck, as did their one-time comrade Lassalle, but they did seek to build an all-German socialist party and they certainly did not advocate the break-up of Germany. Today socialists also have to organise on the widest possible scale. Capitalists operate on an increasingly international scale. Nothing less will do for a socialist movement that has the ambition of creating an entirely new world. Gordon and Joe commit themselves to a United Socialist States of Europe. But on what should be done about the present EU they are highly ambivalent. In one section they welcome economic integration (p8). Elsewhere they accept that the SSP does not call for withdrawal from the EU "at this stage" and that the SSP has demands for reforming the EU (p15). But the whole tone of their analysis and the arguments they produce in relation to the euro are apocalyptic about the prospects for the working class within the EU. It will not do to raise the banner of a socialist Europe without providing clear answers about how we should seek to achieve it. If socialists turn their backs on the real developments within capitalism, they opt for utopian aspirations rather than grounding their actions in materialist reality. Theoretical confusions Gordon and Joe take a very odd position in relation to such theoretical questions. In the appendix of their document they claim: "It is a misreading of Das Kapital to conflate the development of capitalism to ever higher stages of concentration with the development of the working class"; and that, for at least 100 years, "successive developments of capital have merely extended the size" of the working class (p19). Gordon and Joe's interpretation is certainly at odds with my reading of Karl Marx's Capital. In the final paragraphs of the section on primary accumulation, for instance, Marx says that socialism "is brought about by the operation of the immanent laws of capitalist production, by the centralisation of capital. There is a steady intensification of the wrath of the working class - a class which grows ever more numerous, and is disciplined, unified, and organised by the very mechanism of the capitalist method of production." The development of capitalism over its whole history, including the last century, has had a profound impact on the development of the working class. Whole industries have disappeared and new ones been established with a parallel reformation of the working class. Whole nations have suffered economic decline, while others have entered the capitalist world market for the first time. Technology has not only enormously increased productive potential, but transformed the basis of capitalist production - with assembly plants on the opposite side of the world from where the components are manufactured and neither based in the main market for the final product. The development of capitalism not only presents socialists with the challenge of creating an international movement. It provides us with the means. When Marx in The communist manifesto wrote that, "The ever-expanding union of the workers ... is helped on by the improved means of communication that are created by modern industry", he gave the example of the railway. We have the internet and cheap air tickets. In the same section Gordon and Joe assert that the working class has acted as an international class for over 100 years (p19). It is true that workers' organisations and socialists have paid lip service to the ideals of international working class organisation for over a century. Sometimes the reality of the various internationals that have been in existence since 1864 has approached that ideal more closely than at others. But Gordon and Joe's claim is surely to fly in the face of the realities of history. Do the disintegration of the Second International, confronted with the mass killings and destruction of World War I, and the failure of the European working class to come to the aid of the first workers' state in Russia not warn us of the difficulties of building international working class solidarity? Do Gordon and Joe really believe that the massive differences in wages paid to workers in different parts of the world today, for instance, do not create barriers to building united action between workers in developed and third world nations? Not that we hesitate in our attempts to overcome these barriers but, if we do not have a clear view of reality, all our efforts will achieve very little. And do Gordon and Joe really claim that, even today, workers in different parts of Europe have a clear understanding that their interests as workers are the same as other workers all across Europe? Socialists still have much work to do in winning the support of the European working class before they can make that claim. There is nothing inevitable about our success in building a socialist society, as Gordon and Joe attempt to caricature the views of their socialist opponents in this debate (p19). We have a huge job of work in hand to build the organisations that are necessary to make a reality of our ambitions. But to ignore the impact of the development of capitalism over the last 100 years on the route we have to traverse is like trying to find your way around a major city with a 100-year-old map. For that matter, if Gordon and Joe are really convinced that a fully formed international working class has been in existence for 100 years, why call for a United Socialist States of Europe? What impediment exists to creating a global socialist federation once the international working class moves to overthrow its oppressors? At some level of their analysis they must accept that uniting the European working class may precede the realisation of a global working class movement. Or that the development of capitalism in creating political, social and economic structures at a European level may condition the course taken by the struggle for socialism. Conclusion In fighting the euro referendum the SSP must avoid becoming the prisoner of either of the mainstream campaigns. To launch a 'no' campaign, however independent we attempt to make it, will be to make arguments that draw their strength from a false analysis of the future that awaits the working class in a Britain on the road to withdrawal from the EU. An SSP 'yes' campaign would make it difficult for us articulate opposition to the way in which the euro is administered and opposition to Blair's plans for an even more neoliberal Europe and for a Europe that closes its doors to the rest of the world. A campaign to boycott the referendum, while emphasising our case for radical reforms to the current institutions of the EU and our objective of a united socialist Europe, will allow us to develop a clear and distinctive position. If Gordon and Joe and the other supporters of the 'no' composite support the case for reform of the EU and a united socialist Europe, they can clarify the terms of the debate at special conference by bringing forward an amendment to their composite that incorporates that position. Their composite currently paints an entirely negative picture of the possibilities for building a different Europe within the EU and in fact applauds the 'no' campaign in the 1975 referendum on membership of the EEC. The SSP's campaign should criticise the many aspects of EU policy that are anti-working class and expose the undemocratic nature of many of the EU's institutions. We should also build links with socialists throughout Europe and indeed the world to propose a different Europe in which the rights of the European working class are advanced and which builds non-exploiting relations with the developing nations of the world. We should advocate reforms that address the democratic deficit in Europe and create accountable European institutions that have the authority to take decisions to remedy the many immediate problems faced by the continent. We will find many allies in this task. As Gordon and Joe concede, many socialist parties in Europe do not refuse to engage with the EU, as does much of the British left. Few socialist parties within the euro-zone are advocating withdrawal from the euro. In a motion on the EU at their recent congress, Italy's Refounded Communist Party made an appeal: "The only hope for relaunching the idea of a united Europe as a democratic entity playing an active political role on the world stage lies in the actions of the mass movements, new social and political actors who must aim, alongside the battle to render the constituent Europe more democratic - and hence for a European constitution able to affirm people's universal rights and the active participation of citizens - to enhance the conquests of civilisation and the social model of our continent, the fruits of the struggles of the democratic movement and the lower classes stretching back over centuries." The SSP should take up the challenge to work with our comrades in Europe to build the pan-European organisations that are needed to win the struggle for a socialist Europe.