Home > Uncategorized > 20th anniversary for the euro — no reason for celebration

20th anniversary for the euro — no reason for celebration

from Lars Syll

When the euro was created twenty years ago, it was celebrated with fireworks at the European Central Bank headquarters in Frankfurt. Today we know better. There are no reasons to celebrate the 20-year anniversary. On the contrary.

euroAlready since its start, the euro has been in crisis. And the crisis is far from over. The tough austerity measures imposed in the eurozone has made economy after economy contract. And it has not only made things worse in the periphery countries, but also in countries like France and Germany. Alarming facts that should be taken seriously.

Europe may face a future with growing economic disparities where we will have​ to confront increasing hostility between nations and peoples. What we’ve seen lately in France shows that the protests against technocratic attempts to undermine democracy may go extremely violent.

The problems — created to a large extent by the euro — may not only endanger our economies, but also our democracy itself. How much whipping can democracy take? How many more are going to get seriously hurt and ruined before we end this madness and scrap the euro?

The euro has taken away the possibility for national governments to manage their economies in a meaningful way — and in country after country, the people have had to pay the true costs of its concomitant misguided austerity policies. 

The unfolding of the repeated economic crises in euroland during the last decade has shown beyond any doubts that the euro is not only an economic project but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now force on us.

austerity22But do the peoples of Europe really want to deprive themselves of economic autonomy, enforce lower wages and slash social welfare at the slightest sign of economic distress? Are​ increasing income inequality and a federal überstate really the stuff that our dreams are made of? I doubt it.

History ought to act as a deterrent. During the 1930s our economies didn’t come out of the depression until the folly of that time — the gold standard — was thrown on the dustbin of history. The euro will hopefully soon join it.

Economists have a tendency to get enthralled by their theories and models and forget that behind the figures and abstractions there is a real world with real people. Real people that have to pay dearly for fundamentally flawed doctrines and recommendations.

  1. Econoclast
    January 5, 2019 at 9:39 pm

    In this blog many times we are advised to reread Karl Polanyi’s classic, The Great Transformation. Good advice, which I am heeding. This week presented an excellent interview with his daughter, Kari Polanyi Levitt:
    http://www.globalresearch.ca/on-the-origins-and-legacies-of-really-existing-capitalism-in-conversation-with-kari-polanyi-levitt/5664584. I strongly recommend this interview for an erudite and deep look at the connections among politics, economics, and history.

    My view is that underlying both the euro and neoliberalism (and associated things such as austerity) is the power of unfettered multinational corporate capital. I try to include this view in everything I say to anyone about economics.

    • Craig
      January 6, 2019 at 12:51 am

      Yes, but what is the power behind the corporations, and what is the current paradigm of that power? Finally, what is the new paradigm that will replace the primacy of the old one and resolve its problems?

      • Econoclast
        January 6, 2019 at 1:42 pm

        Good questions Craig. No simple answers to post here. My point is to encourage all discussions of politics and economics to stop ignoring the elephant in the room, the dominant institution of our time. The power of modern corporate capital (an expression I prefer to the ideological “capitalism”) is 419 years old this year. The concept of corporate “personhood” is at least 150 years old. These are long times for the development of complexities, so none of it is simple.

        Its current expression of increasing dominance is rentier, or unearned, capital (as contrasted with capital that actually accomplishes something, the core of the “real” economy).

        The current fascination with “sustainability” offers some focus for investigating corporate power. Hyman Minsky’s work shows how it is unstable, different from Marx’s focus. If it is unstable, likely it is unsustainable, and so will an economy where that power is dominant. Perhaps not crashing for good in my lifetime, but still … .

      • Econoclast
        January 6, 2019 at 1:45 pm

        A good recent book on one aspect of multinational corporations is David Montero’s “Kickback: Exposing the Global Corporate Bribery Network”.

      • Craig
        January 6, 2019 at 8:59 pm

        I can certainly get behind curbing the power of multi-national corporations global reach (or even domestic ones who choose domination over cooperation). If corporations want to be legally considered individuals then they should be subject to the same legal sanctions as individuals and also be able to benefit from the policies I suggest….so long as they do not commit accounting fraud or any other economic vice. Humanizing the economy, like life, grants both freedoms and demands ethics.

  2. Helen Sakho
    January 6, 2019 at 1:56 am

    We are trapped in a dismal catch 22. Nothing new to say, offer or be “enthralled” by.
    Will this ever stop?

  3. James Beckman
    January 6, 2019 at 8:35 am

    Lars, monetary independence is the last thing the more conservative EU nations want, as they distrust the borrowing instincts of some others. We have no threat of war among us & numerically most EU citizens seem satisfied. But a free-spending US model will not work here because of productivity issues–forget about income distribution–it seems to me.

  4. Captain Nick
    January 6, 2019 at 2:14 pm

    EU’s great leap forward should not have been a common currency. In the first place because the EU does not meet most conditions for this institution as described by e.g. Robert Mundell. In the second place because financial markets are uncontrollable. 20 years ago, overall sentiment to take the first small steps toward a European army was probably present. Great advantage as compared to a common currency: an army is controlled top down. By now, the euro has wiped away this sentiment (must read: The Euro by Joseph Stiglitz), so any measure that would be advantageous for survival of the euro or even the EU is now politically quite hopeless. The euro stems from the same hubris as inspired Joseph Kennedy to have his daughter Rose lobotomized. By taking on a great and unnecessary risk he ruined her life, just as monetary dilettantes ruined the prospects of countless europeans and the EU.

  5. January 6, 2019 at 5:45 pm

    The Eurozone is run by technocrats, and singular ones at that–those that run banks now seem to be in cahoots with the corporations that try to run the economies. Corporations want to control the countries that they trade with (see NAFTA) and banks and corporations work together to collect their huge profits. Greece was compelled by the Troika to pay the banks (who should have done due diligence but did not) who had lent money to Greek politicians . The Greek economy is now consigned to “austerity to infinity” and the German banks haul in their misbegotten funds that they shouldn’t have lent in the first place. When a country cannot control its own money, it is no longer sovereign and becomes a plaything of the bankers and the technocrats. The future is not bright for either the Euro or the smaller European nations in the Eurozone. Each nation needs to control both its monetary and its fiscal funds.

  6. January 6, 2019 at 5:53 pm

    In this case for once, Economists predicted the problems and accurately shared them with politicians. Then France moved forward in the belief that crisis would forge a federation. Germany thought the economic assurances it got were for real. We’re paying the price.

  7. Grayce
    January 7, 2019 at 8:03 pm

    Corporate personhood misses one factor (at least) that refutes the legal equivalence of a corporation with a “person:” anyone identified for loss of liberty in the case of breaking the law. A corporation needs a designated felon or it is not a full person. To explain: the US Supreme Court settled the personhood question on first amendment rights of free speech (equals money). But examination of lawsuits shows that no matter what a corporation does, the sanctions available are also money in the form of fines. There is no comparison. Does a pile of money equal liberty for any individual? Imagine an executive suite where one person–even persons in rotation–is the CDF for a year, month, week or even a day: Chief Designated Felon. This takes fiduciary responsibility into the courtroom with real consequences for some one officer. Indemnity, bonding, and all the legal ideas that have emerged, would not protect the designated felon from taking the consequences for whatever the “person” did that was against the law, brought to trial, and convicted with penalty. Just the disregard for the Securities and Exchange Commission alone (US) would fill a jail. How would this work in the EU? Similarly, it would seem..

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