This post was contributed by Michelle Everson, Professor of Law at Birkbeck. She has written widely on European Economic and Constitutional Law and has advised the European Commission, the European Parliament and the European Central Bank on matters of European Law.
Professor Everson is hosting a week long debate on ‘Europe at the Crossroads’ at Birkbeck (13-17 June). For details and to book your place, please visit the ‘European Law on Trial’ website.
Every day this week, Professor Everson writes for Birkbeck Comments, offering up her thoughts, opinions, and analysis on the EU referendum. Read part 1 of her blog here.
What can we learn from European malaise?
In my time, I have been patronised by the very best of them, including in the late 1990s, Horst Krenzler, an eminence grise of the founding European Commission and, at that time, Chair of a working group on the Eastern Enlargement of the EU. Acting as Rapporteur for a mixed group of functionaries and academics, my frustrations with the – to me – all-too-perverse implications of sealing the liberated futures of newly re-instated nations by requiring them to submit wholesale to the established (and already vast) EU economic rule book, boiled over into the high-pitched question: ‘Why can’t we just give them a Marshall Plan?’ An outburst of general laughter followed, and then, ‘Young lady [I was young then], no-one will pay for it!’
A perception that latter-day surrender of the Union to economic rationalities of market utility dates to, and was precipitated by the unforeseen geopolitical earthquake that followed the fall of the Berlin wall, has much to recommend it. The final surrender of the Deutschmark to long-resisted plans to create a European currency within the Treaty of Maastricht of 1992 was the price that the Federal Republic had to pay for German reunification. By the same token, the EU’s decision to alter the rules of the game of accession to the Union by requiring the nations of Eastern Europe to adopt all European market regulation prior to beginning membership negotiations, cemented the enduring paradigm, whereby Eastern Europe is required to compete itself to economic parity with Western European States.
Not for Poland or Hungary, the long process of adaptation to European rules afforded to the privileged post-dictatorial nations of Portugal and Spain; a break with tradition that also has as its flip-side in an inevitable pressure on wages and social provision in Western Europe, as Eastern workers make full use of their competitive labour advantage. And finally, as Germany – under pressure both from unfavourable Eurozone interest rates and from the financial burdens of reunification emerged in the early 2000s as the sick man of Europe, economic conditionality first made itself felt when the then socialist Government bequeathed to us all the first lodestone of subsequent austerity regimes in its brutal curtailment of national welfare provision and simultaneous establishment of a debt brake on national expenditure.
If full truth be told, however, the destructive potentialities of economic rationality had already begun to afflict the European Economic Community a decade earlier as the rhetorical dominance of Thatcherism and Reagnomics extended throughout the Continent, colonising market integration logics to lever out distinct varieties of European capitalism from complex national patterns of sometimes corporatist, and sometimes welfarist economic-political organisation.
Campaigners for Brexit are obsessed to the point of absurdity with the safeguarding of a national sovereignty that is a simple chimera in our contemporary world of global economic interdependence. They pay little if any attention to the historical paradox that, whilst the then European Court of Justice had established its doctrine of the limitation of national sovereignty as early as the 1960s (in the now legendary cases of Van Gend en Loos and Costa v ENEL), a palpable loss of national territorial control only emerged with the success – originating at national level – of programmes of new economic liberalism in the 1980s. Far more than the Single European Act of 1986, establishing majority voting in the Council of Ministers for measures creating the Single European Market, it was this new predominance of the liberalising economic-political mind that created a beginning of the end of human self-determination, be that self-determination national, European or global.
That markets are never simply markets became very clear to me with regard to my then field of study: the integration of private insurance and finance markets. Comparing German with UK provision, I was left disquieted by the happy coincidence between demands for the capital-generating efficiency promised by a single European finance market and the concomitant integrative unravelling through legislation and case law of decades-long schemes of regulation with all of their underlying interest accommodations between consumers, industry and national economic policy. Certainly, in this case the already-liberal UK was not to be an immediate looser as the axe fell instead upon a largely stagnant scheme of German financial regulation, which had escaped the reformist zeal of the Federal Republic’s economically-liberalising post-war Finance Minister, Ludwig Erhard, and which seemed instead to serve more corporatist interests within a controlled economic policy of inward investment.
Yet, as the 1980s progressed into the 1990s, which also brought with them a sea-change in European competition policy away from range of market offer and towards economic efficiency, with its concomitant prising out of Germany’s local investment banks (Landesbanken) from their restrictively-controlled role of (state-supported) structural financing, we were all soon to pay a very high price indeed for the rolling out of a level competitive field by means of the flattening of distinct, nationally-embedded economies.
The example of insurance and finance markets may be a small one, but it was replicated across the Single Market, and also gains in vital significance when seen in the light of sovereign debt crisis and the EU’s own austerity regime imposed in order to shore up the Euro. A powerful analysis squarely lays the blame for the anti-democratic and economically self-defeating regime of New Economic Governance within the Eurozone on the shoulders of a German theory and ideal of ‘ordo-liberalism’. Working with the powerful mantra of ‘never again’, ordo-liberalism, it is said, seeks still, in its unfortunately-displaced act of memory politics, to fight the bogey of hyper-inflation experienced in Germany in the wake of the 1929 Wall Street crash, asserting its supreme goal of the constitutionalisation of monetary stability throughout the Eurozone within new European technocratic crisis law.
Contrary to the explicit terms of the European treaties, financial succour may be given to the debtor nations of the Eurozone, but – with the full blessing of the Court of European Justice (Pringle) – will necessarily be subject to the imposed brutality of an economic conditionality which makes even the International Monetary Fund think again. The hands of the European Central Bank will be tied by the constitutionalised principle of monetary stability, such that it cannot engage in the inflationary policies that might save the Eurozone without imposing unbearable pain upon its weakest members.
Finally, the air of permanent austerity is cemented within the Eurozone and far beyond as its members are required to constitutionalise a debt brake, and its non-members, or their politicians, seize on the rhetorical powers of financially self-restraining government to garner votes from a public bludgeoned in to believing that there is simply no alternative. Germany reaps and Greece weeps: German history, its painful remembrances, dictate the rules of the Eurozone game such that all Greeks – and with them all Europeans – who dream of a different way of doing things are left bereft, devoid of political voice in their vain battering against a tight mesh of legal and technocratic inevitability.
So far so German, but a slightly more nuanced tale may also be told: ‘Zutiefst unDeutsch’ is my ungrammatical and increasingly exasperated cry each time I stagger out of a Ryanair flight in Berlin, Frankfurt or Munich. This is all so unGerman. All those things that used to irritate me as much as I prized them: the ridiculously restricted shopping hours nonetheless balanced by service from an assistant who knew, after years of apprenticeship, exactly which vegetable peeler I might need to tackle my slightly woody asparagus; the sense of innovative ambition frustrated by centuries of craft and guild tradition counter-posed in equal measure by continuity and security.
All gone, or going, in the blink of an eye, or in the 30 years of an equalising and disembedding bastardisation of capitalism that has seen German financial institutions ejected from their drearily-constructive roles of fostering engineering enterprises in Dresden, Dortmund and Detmold and unpreparedly-launched instead upon a global financial market ruled by a myth as insane as it an opiate for the masses who have been ejected from their economic vocations, to now flit instead from zero-hours contract to zero-hours contract: Capital will beget Capital, world without end, Amen. Take a look at the destructive role played by WestLB, once the proudest and most constant donators of venture capital to Wolfgang in Wuppertal, in the Irish housing, and ask yourself this: did Germanness or unGermanness cause financial crisis in the first place?
Professor Michelle Everson
So what have we learned from Europe? That it is bad, or that it is good? In its ideological substance, it is neither, but it has been held captive for the past 30 years by an economic rationality that was born and nurtured at national level, is now dominant on a global stage, and is often seized upon by equalising institutions as a short cut to European integration. Yet, within the EU, we do at least have institutions – institutions that have betimes resisted bastardised capitalism, the extraordinarily measured European Court of Justice of the 1980s being a case in point. It is this that distinguishes Europe from the still-uncivilised global stage; meanwhile, European institutions provide us with the best framework within which we can begin the fight back.
Brexit campaigners would have us believe that with its sovereignty restored, the UK will bestride a global stage, operating autonomously and serenely within the World Trade Organisation here, and calmly concluding bilateral trade agreements there. The delusion is absolute: neither the WTO, nor international treaties possess ameliorating institutions; the Investor Protection principle – now being successfully resisted by the institution of the European Parliament within bilateral trade negotiations between the EU and the US (TTIP) – is not only the sine qua non of all existing bilateral trade agreements, but also the final bonfire of the vanity of national sovereignty, establishing the absolute primacy of all trade interests and requiring signatory states to compensate economic forces who have been so sadly inconvenienced by their (social as well as economic) regulatory protections.
Law on Trial 2016: The European Union at the Crossroads, runs at Birkbeck from Monday 13 to Friday 17 June. Book a free place here.
Listen to Professor Everson on the topic of the EU referendum in the latest edition of Birkbeck Voices
This post represents the views of the author and not those of Birkbeck
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