How Not to Fix Europe

Within twenty-four hours of the Brexit vote, Sigmar Gabriel — Social Democratic Party (SPD) chairman, German vice chancellor, and minister of economic affairs — and EU Parliament President Martin Schulz published a strategy paper aimed at dealing with the legitimacy crisis of the European Union and the rise of the far right.

Brexit prompted new hopes and fears that the European Union’s market-liberal forces are weakening and forced many EU leaders and mainstream media figures alike to call for renewal. In this context, Gabriel and Schulz have adopted — some might say stolen — the left-wing demand for a “re-foundation of Europe” that “belongs to its citizens.”

Is this a “passive revolution”? Are Gabriel and Schulz trying to absorb left-wing opposition into the status quo in hopes of stabilizing a shaky power bloc? Or is this the clarion call for the SPD to return to its roots and revitalize? Are they following the path cleared by the class-conflict-oriented, anti–Third Way social democrats like Jeremy Corbyn and Bernie Sanders?

SPD’s return to social democracy would signify a remarkable political shift. After all, in October 2015, Gabriel himself initiated the founding of the notorious “Gang of Five” — French prime minister Manuel Valls, Austrian chancellor Werner Faymann (who resigned in May), Swedish prime minister Stefan Löfven, and Gabriel and Schulz themselves — whose sole purpose has been to curtail the influence of Corbynism and dampen sympathies for other left-wing forces such as Podemos within continental European social democracy.

But this was before the SPD’s devastating electoral defeats — and the internal opposition they produced — in this March’s elections in Baden-Württemberg, Rhineland-Palatinate, and Saxony-Anhalt. During the party’s “Value Conference: Justice,” held May 9, Gabriel gave a fairly left-wing speech, supposedly signaling a new orientations going into the fall 2017 general elections.

For one, the social democrats will probably move the issue of poverty pensions — which will affect almost half of the population by 2030 — into the center of their campaign. This would mean rolling back some of the pension system’s disastrous partial privatization which his party legislated with the Greens in the early 2000s.

Furthermore, in a June 18 Spiegel interview, Gabriel announced his will to create an “alliance of progressives.” Many interpreted his statement as an attempt to renew debates about a national coalition including social democrats, Greens, and Die Linke.

But two facts make such an alliance unlikely: first, in polls the SPD has remained stuck at just 25 percent of voter support for a long time now; second, Die Linke has not benefited from the SPD’s decline.

As a consequence, Gabriel’s “alliance of progressives” does not even have a numerical majority in parliament at the moment — let alone the common political platform or mobilized social base that could enforce it.

So what does Gabriel and Schulz’s “European re-founding” actually amount to? Are they trying to build a common political platform for such a left-wing coalition? As usual the devil is in the details. But to understand these, it’s useful to return to the original call to “re-found” Europe.

Radical Roots

In 2012, three union leaders — Frank Bsirske, president of ver.di (the largest German service and public-sector union) and himself a member of the Green Party; Anneli Buntenbach, from the German Trade Union Confederation; and Hans-Jürgen Urban, a left-wing icon who serves on the presidential board of industrial labor union IG Metall — and two scholars — Steffen Lehndorff and Rudolf Hickel — wrote “Europa neu begründen!,” a call to “found Europe anew” by developing greater democracy and solidarity across the eurozone.

The initiative quickly found support among the left of Germany’s labor movement, as well as the entire IG Metall leadership (at least nominally) and managed to include even influential, left-liberal intellectuals such as Jürgen Habermas.

It challenged the European Union primary legislation’s neoliberalism in general and the “internal devaluation” strategy in particular. This naturally included criticism of what Urban has referred to as “German crisis corporatism.”

This original call to refound the eurozone has tried to establish an alternative to a false choice. On the one hand, it rejects the technocratic left-wing’s hope for a “Social Europe” reform, which seems untenable after the “Battle of Greece” and considering the essentially neoliberal nature of the European Union.

On the other hand, it opposes the conclusion — held by people like Wolfgang Streeck, Heiner Flassbeck, and Costas Lapavitsas — that the only realistic way to defend working-class gains like the welfare state and democracy is to return to the old state formation.

When compared to this “original” idea of a refounding of Europe, Gabriel and Schulz want to have their cake and eat it too. Their strategy paper has more style than substance. It is overloaded with poetic language about the “European Dream” and its promises of “peace, prosperity and freedom.”

And while they rightly mention mass unemployment and growing social inequality as the causes for the working class’s widespread political disaffection and anti–European Union sentiments, they seem to be unsure what the real problem is.

To start with, they seem like they cannot decide whether the problem is that the European Union is a train wreck for workers or whether it’s that it looks like a train wreck. As if the problem were subjective perception and a particular discourse about the European Union, and not the material reality of high youth unemployment, increasingly precarious jobs, declining real wages, and poverty pensions.

They write:

For decades, Europe has brought us peace, prosperity, and freedom. Never was Europe called into question. Instead, more and more people, whole peoples and countries were dying to become a part of this Europe. Until today. Today, however, many people don’t believe in this promise anymore, and more and more people are having doubts about Europe. [Emphasis mine.]

This goes hand in hand with the Third Way ideology that anti-worker policies are unpopular not because they were anti-worker, but because workers don’t understand them.

Old Discourse

The consequence of this hesitation to look reality in the face is that also their suggested solutions fall short of what a European refounding would have to entail. This becomes clear when one goes beyond the rhetoric and looks at the fine print. For instance, they criticize the Fiscal Compact — the newest reincarnation of the Stability and Growth Pact — for having failed both economically and politically.

“Slow growth, low investment activity, and an employment crisis,” they maintain, produced the European Union’s “political divisions” and the rise of nationalist forces. As a result, they demand “a change in economic policy and a growth pact for the European Union.”

But it turns out that Gabriel and Schulz don’t really want an alternative to the Fiscal Compact at all. They simply criticize that it doesn’t do what it says it does — create growth — so they suggest making it more flexible to allow for anti-cyclical stimulus packages that would create growth. The current economic policy, they maintain, is “too complex, too prone to mistakes, and too pro-cyclical.”

Further, their paltry funding plan for these stimuli reveals that they aren’t very serious about them at all. While the reversal in active industrial policy they call for sounds like a positive step, they plan to fund it with nothing more than a few closed tax loopholes and tax havens, and a Tobin-like financial transaction tax.

There’s not a single paragraph that demands higher taxes on the wealthy. They say, in the old neoliberal discourse, that these changes would help reduce the burden on labor, but everyone knows how minute the revenue would be compared to the size of national budgets.

While these anti-cyclical stimulus packages — were they properly funded —undo some of the damage austerity has wrought, most of Gabriel and Schulz’s other proposals suggest that they aren’t all that interested in building a more Keynesian social safety net.

Their explicit demand to tighten national belts through neoliberal balanced budget amendments and an “institutionalized mechanism for debt restructuring … during phases of economic recovery” continues the current austerity-oriented, new economic governance.

They not only embrace the European Union’s old “Sixpack” regulations — with their automatic sanctioning of public debt levels — but also the neo-constitutionalist memorandum policies — which seize national budgets to channel public tax resources into European big banks’ coffers.

Essentially, their suggestions boil down to the European Union’s general “internal devaluation” exit strategy minus the failed orthodoxies — neoliberalism with a pragmatic Keynesian face.

What's at Stake

And it is probably not too far-fetched to argue that their statesmanlike approach — satirized by Georg Kreisler’s “I like it, but I’m against it” and Kurt Tucholsky’s “on the one hand, but on the other . . .” — might help get them reelected too.

It did in 2013 when the Social Democratic Party criticized — mildly and only at the end of the election campaign — the memoranda of understanding that force the European Union’s internal periphery to adopt a host of austerity measures. The fact that the memoranda would not have passed without their support, of course, went unmentioned.

The most interesting thing about the policy paper isn’t what it says, but what it doesn’t say. For instance, not a single sentence mentions the role that the German export-oriented growth and competition model has played in creating the tremendous and growing imbalances within the eurozone.

Furthermore, while Gabriel and Schulz do bemoan mass unemployment, they ignore precarious employment and the massive increase in the low-wage sector. The notion of “good jobs” is completely missing.

Instead, if you read the strategy paper closely, you’ll find that “growth” is their solution to everything. I’ve already outlined how little that growth could actually be, given that they want to neither unravel the Fiscal Compact nor increase taxes on the wealthy to pay for non-private sector growth policies.

Further, by talking about growth, they are not talking about undoing the kind of systematic precarization policies which, under the moniker of “flexible labor markets,” the ruling social democrats — most of whom still lead the party — enforced in Germany with the Agenda 2010 in the early 2000s.

These same policies are now being implemented in similar ways in France by the SPD’s center-left sister party — François Hollande’s Socialist Party — against the will of most of the country.

In other words, Gabriel and Schulz do not challenge the general neoliberal push to increase the labor market’s competitiveness at all. Instead, they suggest its further entrenchment: every relaxation of austerity should be made dependent on increasing labor flexibility, or as they put it: “the arrival at reform-milestones.”

Finally, Gabriel and Schulz’s argument that “technocratic approaches to reform and muddling through are insufficient” is high comedy. After all, it is hard to conceive of a political duo more technocratic than these two.

Further, their self-declared “courage to try something greater” and their allegedly bold proposal for a “re-founding of Europe” looks a lot like the typical “muddling through” that capitalist states do while trying to manage crises.

Let’s go as far as to take Gabriel and Schulz’s notion of how to “regenerate enthusiasm for Europe” at face value. They want to pursue this by “democraticizing Europe.”

But their focus on procedural and input legitimacy ignores the research, including some produced by their own party, that highlights the importance of output legitimacy. That is, it would take real material benefits, not a new rhetoric, to change people’s views of the European Union.

Furthermore, Gabriel and Schulz’s institutionalist reform suggestions are hardly revolutionary. They demand that the EU Parliament become a real parliament and elect a European government just like in the member states’ legislatures.

But this demand for democratization comes from above. The disconnect between calling for increased democracy that would be enacted and enforced from elites crucially distinguishes them from the movement-oriented approaches to politics embodied by the original “Europa neu (be-)gründen” campaign or Corbyn, for that matter.

In fact, democratization would require exactly this kind of grassroots mobilization, because the social forces above have an interest in maintaining the status quo.

This extends beyond the short-term political opponents to the meager institutional changes to the European Parliament that Gabriel and Schulz suggest. It is not just the Merkel-Schäuble axis that needs to be considered here.

The point is that any kind of material democratization would have to tackle issues that would fundamentally threaten the eurozone’s ruling elite.

Like the question of the European Parliament’s budget rights and its ability to implement something like a European Marshall Plan — a policy the European Trade Union Confederation has demanded but which would violate existing EU primary legislation.

As a consequence, without massive mobilizations this kind of real democratization will never come about. A sincere call for democracy demands a refounding of Europe that is real instead of just a catchy slogan.