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TWO VISIONS FOR EUROPE |
| There has been a fight between the advocates of two different ideals from the beginning of the European Union. |
Which stance it should adopt: the classical liberal vision, or the socialist vision of Europe? The introduction of the Euro has played a key role in the strategies of these two visions. In order to understand the tragedy of the Euro and its history, it is important to be familiar with these two diverging, and underlying visions and tensions that have come to the fore in the face of a single currency.
THE CLASSICAL LIBERAL VISION
The founding fathers of the EU, Schuman (France [born in Luxembourg]), Adenauer (Germany), and Alcide de Gasperi (Italy), all German speaking Catholics, were followers of the classical liberal vision of Europe. They were also Christian democrats. The classical liberal vision regards individual liberty as the most important cultural value of Europeans and Christianity. In this vision sovereign European states defend private property rights and a free market economy in a Europe of open borders, thus enabling the free exchange of goods, services and ideas.
The Treaty of Rome in 1957 was the main achievement toward the classical liberal vision for Europe. The Treaty delivered four basic liberties: free circulation of goods, free offering of services, free movement of financial capital, and free migration. The Treaty restored rights that had been essential for Europe during the classical liberal period in the nineteenth century, but had been abandoned in the age of nationalism and socialism. The Treaty was a turning away from the age of socialism that had led to conflicts between European nations, culminating in two world wars.
The classical liberal vision aims at a restoration of nineteenth century freedoms. Free competition without entry barriers should prevail in a common European market. In this vision, no one could prohibit a German hairdresser from cutting hair in Spain, and no one could tax an English man for transferring money from a German to a French bank, or for investing in the Italian stock market. No one could prevent, through regulations, a French brewer from selling beer in Germany. No government could give subsidies distorting competition. No one could prevent a Dane from running away from his welfare state and extreme high tax rates, and migrating to a state with a lower tax burden, such as Ireland.
In order to accomplish this ideal of peaceful cooperation and flourishing exchanges, nothing more than freedom would be necessary. In this vision there would be no need to create a European superstate. In fact, the classical liberal vision is highly skeptical of a central European state; it is considered detrimental to individual liberty. Philosophically speaking, many defenders of this vision are inspired by Catholicism, and borders of the European community are defined by Christianity. In line with Catholic social teaching, a principle of subsidiarity should prevail: problems should be solved at the lowest and least concentrated level possible. The only centralized European institution acceptable would be a European Court of Justice, its activities restricted to supervising conflicts between member states, and guaranteeing the four basic liberties.
From the classical liberal point of view, there should be many competing political systems, as has been the case in Europe for centuries. In the Middle Ages, and until the nineteenth century, there existed very different political systems, such as independent cities of Flanders, Germany and Northern Italy. There were Kingdoms such as Bavaria or Saxony, and there were Republics such as Venice. Political diversity was demonstrated most clearly in the strongly decentralized Germany. Under a culture of diversity and pluralism, science and industry flourished.
Competition on all levels is essential to the classical liberal vision. It leads to coherence, as product standards, factor prices, and especially wage rates tend to converge. Capital moves where wages are low, bidding them up; workers, on the other hand move where wage rates are high, bidding them down. Markets offer decentralized solutions for environmental problems based on private property. Political competition ensures the most important European value: liberty. Tax competition fosters lower tax rates and fiscal responsibility. People vote by foot, evading excessive tax rates, as do companies. Different national tax sovereignties are seen as the best protection against tyranny. Competition also prevails in the field of money. Different monetary authorities compete in offering currencies of high quality. Authorities offering more stable currencies exert pressure on other authorities to follow suit.
THE SOCIALIST VISION
In direct opposition to the classical liberal vision is the socialist or Empire vision of Europe, defended by politicians such as Jacques Delors or François Mitterand. A coalition of statist interests of the nationalist, socialist, and conservative ilk does what it can do to advance its agenda. It wants to see the European Union as an empire or a fortress: protectionist to the outside and interventionist on the inside. These statists dream of a centralized state with efficient technocrats—as the ruling technocrat statists imagine themselves to be—managing it.
In this ideal, the center of the Empire would rule over the periphery. There would be common and centralized legislation. The defenders of the socialist vision of Europe want to erect a European mega state reproducing the nation states on the European level. They want a European welfare state that would provide for redistribution, regulation, and harmonization of legislation within Europe. The harmonization of taxes and social regulations would be carried out at the highest level. If the VAT is between fifteen and twenty five percent in the European Union, socialists would harmonize it to twenty-five percent in all countries. Such harmonization of social regulation is in the interest of the most protected, the richest and the most productive workers, who can “afford” such regulation—while their peers cannot. If German social regulations were applied to the Poles, for instance, the latter would have problems competing with the former.
The agenda of the socialist vision is to grant ever more power to the central state, i.e., to Brussels. The socialist vision for Europe is the ideal of the political class, the bureaucrats, the interest groups, the privileged, and the subsidized sectors who want to create a powerful central state for their own enrichment. Adherents to this view present a European state as a necessity, and consider it only a question of time.
Along the socialist path, the European central state would one day become so powerful that the sovereign states would become subservient to them. (We can already see first indicators of such subservience in the case of Greece. Greece behaves like a protectorate of Brussels, who tells its government how to handle its deficit.)
The socialist vision provides no obvious geographical limits for the European state—in contrast to the Catholic-inspired classical liberal vision. Political competition is seen as an obstacle to the central state, which removes itself from public control. In this sense the central state in the socialist vision becomes less and less democratic as power is shifted to bureaucrats and technocrats. (An example is provided by the European Commission, the executive body of the European Union. The Commissioners are not elected but appointed by the member state governments.)
Historically, precedents for this old socialist plan of founding a controlling central state in Europe were established by Charlemagne, Napoleon, Stalin and Hitler. The difference is, however, that this time no direct military means would be necessary. But state power coercion is used in the push for a central European state.
From a tactical perspective, crisis situations in particular would be used by the adherents of the socialist vision to create new institutions (such as the European Central Bank (ECB) or possibly, in the future, a European Ministry of Finance), as well as to extend the powers of existing institutions such as the European Commission or the ECB.
The classical liberal and the socialist visions of Europe are, consequently, irreconcilable. In fact, the increase in power of a central state as proposed by the socialist vision implies a reduction of the four basic liberties, and most certainly less individual liberty.
THE HISTORY OF A STRUGGLE BETWEEN VISIONS
The two visions have been struggling with each other since the 1950s. In the beginning, the design for the European Communities adhered more closely to the classical liberal vision. The European Community consisted of sovereign states and guaranteed the four basic liberties. From the point of view of the classical liberals, a main birth defect of the community was the subsidy and intervention in agricultural policy. Also, by construction, the only legislative initiative belongs to the European Commission. Once the Commission has made a proposal for legislation, the Council of the European Union alone, or together with the European Parliament, may approve the proposal. This setup contains the seed of centralization. Consequently, the institutional setup, from the very beginning, was designed to accommodate centralization and dictatorship over minority opinions, as unanimity is not required for all decisions and the areas where unanimity rule is required have been reduced over the years.
The classical liberal model is defended traditionally by Christian democrats and states such as the Netherlands, Germany, and also Great Britain. But social democrats and socialists, usually led by the French government, defend the Empire version of Europe. In fact, in light of its rapid fall in 1940, the years of Nazi occupation, its failures in Indochina, and the loss of its African colonies, the French ruling class used the European Community to regain its influence and pride, and to compensate for the loss of its empire.
Over the years there has been a slow tendency toward the socialist ideal—with increasing budgets for the EU and a new regional policy that effectively redistributes wealth across Europe. Countless regulations and harmonization have pushed in that direction as well.
The classical liberal vision of sovereign and independent states did appear to be given new strength by the collapse of the Soviet Union and the reunification of Germany. First, Germany, having traditionally defended this vision, became stronger due to the reunification. Second, the new states emerging from the ashes of communism, such as Czechoslovakia (Václav Klaus), Poland, Hungary, etc., also supported the classical liberal vision for Europe. These new states wanted to enjoy their new, recently won liberty. They had had enough of socialism, Empires, and centralization.
The influence of the French government was now reduced. The socialist camp saw its defeat coming. A fast enlargement of the EU incorporating the new states in the East had to be prevented. A step forward toward a central state had to be taken. The single currency was to be the vehicle to achieve this aim. According to the German newspapers, the French government feared that Germany, after its reunification, would create “a DM dominated free trade area from Brest to Brest-Litowsk”. European (French) socialists needed power over the monetary unit urgently.
As Charles Gave argued on the events following the fall of the Berlin Wall:
For the proponents of the “Roman Empire” [socialist vision], the European State had to be organized immediately, whatever the risks, and become inevitable. Otherwise, the proponents of “Christian Europe” [classical liberal vision] would win by default and history would likely never reverse its course. The collapse of the Soviet Union was the crisis which gave the opportunity, and drive, to the Roman Empire to push through an overly ambitious program. The scale had been tipped and the “Roman Empire” needed to tip it the other way; and the creation of the Euro, more than anything, came to symbolize the push by the Roman camp towards a centralized super-structure.
The official line of argument for the defenders of a single fiat currency was that the Euro would lower transactions costs—facilitating trade, tourism and growth in Europe. More implicitly, however, the single currency was seen as a first step toward the creation of a European state. It was assumed that the Euro would create pressure to introduce this state.
The real reason the German government, traditionally opposed to the socialist vision, finally accepted the Euro, had to do with German reunification. The deal was as follows: France builds its European empire and Germany gets its reunification. It was maintained that Germany would otherwise become too powerful and its sharpest weapon, the Deutschmark, had to be taken away—in other words, disarmament.
The next step in the plan of the socialist camp was the draft of a European constitution (by French ex-President Valery Giscard d’Estaing Ginard), establishing a central state. But the constitution project failed utterly; it was voted down by voters in France and the Netherlands in 2005. As is often the case, Germans had not even been asked. They had not been asked on the question of the Euro either. But politicians usually do not give up until they get what they want. In this case they just renamed the constitution; and it no longer required a popular vote in many countries.
As a consequence, the Lisbon Treaty was passed in December 2007. The Treaty is full of words like pluralism, non-discrimination, tolerance and solidarity, all of which can be interpreted as calls to infringe upon private property rights and the freedom of contract. In Article Three, the European Union pledges to fight social exclusion and discrimination, thereby opening the doors to interventionists. God is not mentioned once in the Lisbon Treaty.
In actuality, the Lisbon Treaty constitutes a defeat for the socialist ideal. It is not a genuine constitution but merely a treaty. It is a dead end for Empire advocates, who were forced to regroup and focus on the one tool that they had left—the Euro. But how, exactly, does it provoke a centralization in Europe?
The Euro causes the kinds of problems which can be viewed as a pretext for centralization on the part of politicians. Indeed, the construction and setup of the Euro have themselves provoked a chain of severe crises: member states can use the printing press to finance their deficits; this feature of the EMU invariably leads to a sovereign debt crisis. The crisis, in turn, may be used to centralize power and fiscal policies. The centralization of fiscal policies may then be used to harmonize taxation and get rid of tax competition.
In the current sovereign debt crisis, the Euro, the only means left for the socialists to strengthen their case and achieve their central state, is at stake. It is, therefore, far from the truth that the end of the Euro would mean the end of Europe or the European idea; it would be just the end of the socialist version of it.
Naturally one can have an economically integrated Europe with its four basic liberties without a single fiat currency. The UK, Sweden, Denmark, and the Czech Republic do not have the Euro, but belong to the common market enjoying the four liberties. If Greece were to join these countries, the classical liberal vision would remain untouched. In fact, a free choice of currency is more akin to the European value of liberty than a European legal tender coming along with a monopolistic money producer. |
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The most important reforms are described with full details of policy and financing in the section [ principles of change | A MANIFESTO FOR CHANGE ]. These reforms are absolutely necessary to initiate positive reform of our political systems. Policy in all areas of state involvement needs urgent attention but must be part of an ongoing process of consensual change through a system of direct democracy and consultative referendum.
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