The Euro: German deceit & the poverty of economics

With the Eurozone ostensibly, ever on the brink and with crisis upon crisis frothing from an unshakable cauldron of melting capital, the world demands rethinking. Last Thursday's Newsnight defined the contours of the present debate: with such a polarisation in economic performance between member countries, just what exactly remains for the European Union?

Peter Altmaier, the German Environment Minister spoke of a willingness to preserve the EU through financial solidification, or a fiscal pact. In principle, this includes a provisional, central bank for the entire Eurozone, and numerous forms of relief for the debts of the struggling, peripheral nations. The latter comes after months of German insistence that the debts of Greece, Spain, Ireland and Italy required only government austerity, rather than continental support and is symptomatic of the sheer depth and scale of Europe's economic woes. On the other side of the table sat Joseph Stiglitz, the renowned, American Keynesian economist. Stiglitz insisted the German-enforced austerity had been a 'misdiagnosis', in its failure to resurrect growth and himself, proposed the very solution Altmaier and Merkel have resisted for so long - debt relief and fiscal consolidation. Among the factual blunders was Altmaier's laughable insistence that Greece, as a result of German-imposed reforms, was 'recovering'. This clearly is not true; Greek GDP fell by 6.5% in the first quarter of 2012, unemployment increased to 22.6% from 20.7% with youth joblessness at a horrific 52.7%, while the government's budget deficit - due of course, to the frequent lashings of austerity imposed upon the Greek state by the German-led EU - widened by 4.5%. You really couldn't make it up. Unfortunately, it gets worse. Stiglitz appears rather blind to the fact that debt relief, coupled with fiscal consolidation is a contradiction in itself. As Altmaier described, the fiscal consolidation proposed involves the infamous, neoliberal 'structural reforms' of state-slashing, welfare-thrashing punishment to be meted out to those nations in receipt of debt aid.  A punishment which incidentally, works in contradiction to the 'growth' promised by relief of debts, that Stiglitz also insists upon. It is of course, this dedication to bourgeois growth, fuelled by rising profits and falling labour costs, that unites both Keynesian and neoliberal here. The fate of people themselves, the application of resources and the resulting benefits and disadvantages - essentially, economics - holds little weight with these finance-obsessed, anti-visionary, so-called 'economists'.  As for the transfer of resources - and the way in which these resources are controlled - from democratically accountable legislatures, to a bureaucracy, neither Stilgitz nor Altmaier bothered commenting.

Tightening the European tap, is the latest attempt at reshuffling the deck of continental capital in order to, as David Harvey describes, 'circumvent' the current crisis and expand a greater financial avenue across Europe, through which capital may liberated and high profits reinstated. If the pact is passed, the inherent contradiction of fiscal consolidation may indeed result in a worsening of debts, let alone a recovery - dependent on the timing of relief and reforms, of course. Furthermore, no matter how these two tools are to be operated, the next ten years would see a strong rise in inequality across the continent, as state-spending - employment, welfare, infrastructure, etc - is rendered destitute across the periphery and thus the key, capitalist problem of the Eurozone, in its 'twin track' nature, is unlikely to be overcome. A demand-deficient, productively weak periphery versus a fiscally stringent core, would certainly remain the faulty propellent of the Euro. Yet as for all this, the Germans do not care; their trade-base relies, or relied, substantially on the flooding of domestically weak, peripheral markets and a conveniently undervalued Euro currency. For this, in Altmaier and co.'s eyes, the Euro, with its polarised membership, must be left intact.

The imperial essence of "Europe" continues to be exposed by the grip of economic destruction, while capitalists from across the continent flock to offer it protection. The future of the Eurozone, as events that rest outside of politicians' grasp take precedent, hangs in the balance.