Latest Europhile advocacy beggars belief – surrender sovereignty to regain it

Today, I have a lot of travelling coming up. So time is tight. Regular readers will know my views on the Eurozone. I have held those views since the late 1980s when I was a young lecturer. Nothing has changed to change my opinion. It is an unmitigated disaster. And, in the face of all evidence to the contrary, the Europhiles on the Left and the Right continue to put out propaganda trying to defend their monstrosity. Here is a selection of the latest input from the elites on how the EU is the salvation of democracy and sovereignty and yet Eurozone Member States are to be treated like high risk car drivers – paying more for a pittance of fiscal protection from the technocrats. It really beggars belief.

ECB delusional

On March 28, 2018, ECB Executive Board member Benoît Coeuré demonstrated how far removed from reality the Eurozone elites have become when his contribution to the 2018 Schuman Repot on Europe – Taking back control of globalisation: Sovereignty through European integration – was published.

Need I say that Robert Schuman would turn in his grave at what has been going on in Europe over the last several decades. It is far removed from his visions for ‘Europe’. But that is for another day.

Benoît Coeuré quotes from the latest published (November 2017) – Standard Eurobarometer 88 – Wave EB88.3 – TNS opinion & social – which surveys “Public opinion in the European Union” on a range of issues.

He says that it shows that:

… seven out of ten Europeans now regard themselves as citizens of the EU – the highest level ever recorded for this indicator.

That is a very selective reading of the data.

First, as I explained in this blog – The latest scam from the European Commission – the ‘roadmap’ – Part 2 (December 20, 2017) – the Eurobarometer’s methods are questionable and border on pro-integrationist propaganda.

The Eurobarometer violates many rules that survey instruments should follow and the violations have been found to “steer responses in a pro­ European, integration­ friendly direction”.

The EU elites love to quote the Eurobarometer because they are fully aware of these biases.

Second, but even with those biases, the results do not support the rosy picture that the EU and its apparatchiks would like to present.

The following table samples some of the November 2017 results that the EU elites do not want to talk about.

They show widespread discontent on key measures including an attachment to the EU rather than Europe.

There is also considerable disparity in negative outcomes – see QA1.1 which explores attitudes to the situation in the respondent’s own country.

48 per cent of those in the EU think the situation is bad. Go to Greece and the proportion rises to 91 per cent, 77 per cent in Spain, 74 per cent in Italy, whereas in the stronger economies the situation is the opposite.

Divergence and polarity rules in the EU rather than its stated aims of increased convergence.

Further, 47 per cent do not think things are going in the right direction in the EU.

And, on questions of identification, hardly anyone primarily see themselves as being European. Whereas if you asked that question in Australia or the US, the overwhelming majority would identify themselves as being of those nations rather than the ‘states’ or localities they live in or were born in.

That makes a huge difference when it comes to creating policies that will integrate the ‘nation’ (federation). The lack of primary identification to ‘Europe’ by residents in the Member States is a major reason why the Eurozone architecture will never be effectively reformed.

Benoît Coeuré uses his selective interpretation of the Eurobarometer data to suggest that the EU needs to respond to the right-wing popularist movements, which are playing on what he calls “people’s basic fears about the risks of openness” or “globalisation and international cooperation”.

He considers the EU to be the correct vehicle to “manage globalisation”.

After documenting why people are fearful of “globalisation and open markets” – increased instability, lack of fairness, rising inequality, and compromising democratic controls – he concludes that:

Some of these concerns are based more on perception than on fact.

How so?

Well he claims that “financial shocks and widening income gaps”, for example, could just be the result of “technological change” – in other words, suck it up.

So the deregulation of financial markets under intense pressure from the huge investment banks and the revolving door between ‘Wall Street’, key EU positions, national government ministers etc and the out-of-control (illegal and irresponsible) lending that followed did not really cause the crisis.

The suppression of real wages under punitive legislative regimes and the deliberately caused mass unemployment and underemployment didn’t really cause the widening income gaps.

Technological change. Computers. We love the Internet. Computers!

This is all leading up to his principle conjecture – that to regain “sovereignty” a withdrawal to “national borders” is the wrong way to go.

He claims this will fail for two reasons:

1. “it deprives people of the economic advantages that trade and integration bring” – tell that to nations that are still smaller in GDP terms than before the crisis began and their public services and income support systems have been ravaged by austerity.

He quotes a 2005 study which purports to show that “the EU’s GDP per capita would be as much as one-fifth lower if no integration had taken place since 1950”.

While that particular study has problems, the results would not hold up if the analysis was updated to 2018. Countries like Greece have seen their real per capita GDP fall by 24.7 per cent between 2007 and 2016. While that is an extreme outcome, other nations have experienced large falls also (Italy, for example, minus 10.3 per cent).

2. “the act of renationalising policies will not allow a country to evade global competition” – this is the ‘nation state is powerless in the face of international capital’ argument.

We demonstrate in our latest book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017) – why this conjecture is false.

A nation can be fully integrated into “global value chains” without surrendering its currency and losing its capacity to manage its domestic demand via fiscal policy.

Benoît Coeuré thinks a return to national currencies will undermine the tax base of national governments. Again this is standard neoliberal scaremongering.

A national legislature can design a tax system in ways to militate against tax evasion. Companies might be able to evade income taxes through strategic locational decisions but they still have to sell into domestic markets, employ people in national economies and generate revenue within sovereign borders.

All three provide the appropriate ‘borders’ in which an inclusive tax system can be designed.

Further, and more importantly, the implicit assumption by Benoît Coeuré is that without the taxes, national government would not be able to spend freely.

But, of course, restoring currency sovereignty would mean a break from the dependency of national governments on tax revenue.

Then, whether to tax or not, would come down to other considerations – such as creating sufficient real resource space in which the government could spend and fulfill its socio-economic agenda without generating inflationary pressures through competition for resources with the non-government sector.

Benoît Coeuré’s solution – give up sovereignty to “regain sovereignty”.

How does that work?

He claims:

…the EU provides a regional answer to the “political trilemma” popularised by economist Dani Rodrik … according to which it is not possible to pursue democracy, national sovereignty and global economic integration at the same time.

The so-called trilemma has been skillfully sold as a narrative by right-wing think tanks and others who serve the interests of capital.

The so-called progressive politicians have fallen into the trap and have shifted their political parties closer and closer to their right-wing opponents, such that now it is hard to distinguish between the major parties in most nations.

The reality is that while the impossibility theorem beguiles the Left – its applicability as a binding constraint on government is limited.

It is as vapid as the statements made by these career politicians on both sides of politics that they serve the people.

I analysed it in detail in this blog post – The impossibility theorem that beguiles the Left (February 17, 2016).

By way of summary:

Dani Rodrik’s impossibility theorem is summarised the argument in his blog – The inescapable trilemma of the world economy.

A full academic argument is presented in his Journal of Economic Perspectives paper (published 2000) – How Far Will International Economic Integration Go?

[Reference: Rodrik, D. (2000) ‘How Far Will International Economic Integration Go?’, Journal of Economic Perspectives, 14(1), 177-186].

His basic idea builds on the tradition insight that students learn about in macroeconomics – the so-called “impossible trinity”, which says that a nation with links to the rest of the world (an ‘open-economy’) (p.180):

… cannot simultaneously maintain independent monetary policies, fixed exchange rates, and an open capital account.

For example, if a nation chooses to peg its currency and allow capital flows to enter and exit without restriction, then it cannot also, independently said its own interest rate.

Rodrik introduced a new type of trilemma, which he called “the political trilemma of the world economy”.

He says:

If we want true international economic integration, we have to go either with the nation-state, in which case the domain of national politics will have to be significantly restricted, or else with mass politics, in which case we will have to give up the nation-state in favor of global federalism. If we want highly participatory political regimes, we have to choose between the nation-state and international economic integration. If we want to keep the nation-state, we have to choose between mass politics and international economic integration.

While the ‘nation-state’ is typically thought of as a sovereign state with legislative powers, under the scenario where there is “true international economic integration”, the nation-state has to “to ensure that national jurisdictions — and the differences among them — do not get in the way of economic transactions”.

In this context, the political aspect of the ‘nation-state’ shrinks and policy making is increasingly taken over by technocrats advised by institutions such as ‘Parliamentary or Congressional Budget Offices’ which define fiscal and other rules that the polity has to meet.

Importantly, Benoît Coeuré uses the term ‘globalisation’ as a synonym to Rodrik’s “true international economic integration”.

Rodrik deliberately avoids using the term ‘globalisation’ and while the creation of multinational firms with increased vertical integration and global supply chains has been going on since the 1960s (if not earlier), he concludes that the world is “quite far” from what he calls “true international economic integration”.

He wrote that:

Contrary to conventional wisdom and much punditry, international economic integration remains remarkably limited. This robust finding comes across in a wide range of studies, too numerous to cite here.

In other words, the concept of a national border remains.

There is still exchange rate uncertainty despite increased deregulation, which has lowered the transactions costs of international trade.

There are still major “cultural and linguistic differences” that preclude a full mobilisation of resources across national borders.

Rodrik notes that “Investment portfolios in the advanced industrial countries typically exhibit large amounts of ‘Home bias;’ that is, people invest a higher proportion of assets in their own countries than the principles of asset diversification would seem to suggest”.

There is still a high correlation between “National investment rates … and … national saving rates”.

Capital flows do not behave as “theoretical models would predict”.

National borders remain cogent because, in Rodrik’s assessment, they “demarcate political and legal jurisdictions” that impose transaction costs, and hinder “contract enforcement” rules.

The point is that despite the flowering of global firms and supply chains, there is nothing like ‘true international economic integration’, which means the nation-state can still reflect local politics and these constructs that place power in the hands of unelected technocrats (fiscal agencies and central bankers) are unnecessary and the Left should oppose them at the political level.

Further, the trilemma as expressed is tautological.

Of course, it is a definitional truth that if we allow capitalism to have no limits, then nation-states either disappear as legislative vehicles with enforceable jurisdictions (and confine themselves to being servants of global profit making) and/or citizens lose any political rights.

But, as noted above, there is nothing inevitable about a trend to ‘true international economic integration’ and the current state of global capitalism is nowhere near that ‘pure’ state defined in neoliberal textbooks.

The actual challenge is not to cede national sovereignty to some mythical state of international economic integration but to resist the corruption of the national policy-making process by shifts to technocracies and to ensure that the voting systems, both by citizens for their elected representatives and by the representatives themselves in the legislative domain, is not corrupted by lobbyists working in the interests of specific capital elites.

Benoît Coeuré basic assertion thus has no foundation.

Member States of the EU can always reestablish their national currencies and defend their domestic economies while still being open to trade and any benefits that might bring.

Ceding authority to technocrats in Europe who impose harsh fiscal rules that create millions of jobless citizens is not a superior solution nor a road to regaining sovereignty.

Benoît Coeuré’s use of the word ‘sovereignty’ voids it of all conventional meaning.

The rest of his analysis is worse and avoids recognition that the EU provides a framework for regional divergence rather than convergence.

So-called economic integration (single market etc) has been a polarising structure.

Finally, while he claims “the EU gives its citizens more democratic control over globalisation than is afforded to people in other countries” the evidence is to the contrary.

The operations of the Troika demonstrated how unaccountable and unelected officials can run riot in a nation where the people voted in a government to explicitly reject austerity only to have the ECB use its power to deliberately create financial chaos to ensure compliance with the technocrats.

I am amazed at how brazenly shameless these Europhile propagandists are.

Greece will pay double!

As another example, in the last week, Madame Lagarde has been travelling around Europe touting the IMFs latest nonsense, trying to stay relevant.

In a speech at the German Institute for Economic Research in Berlin (March 26, 2018) – A Compass to Prosperity: The Next Steps of Euro Area Economic Integration – the Madame told the audience that the IMF was about to release its “new IMF staff research on the euro area architecture”.

She spoke of a “more unified euro area” as being the “compass for prosperity” and a “beacon of hope to the world”.

Where do these creeps get their scripts from?

Of late, more and more of these Europhile troglodytes (which is probably a too gentle word for these monsters), are running the ‘integration’ is good line.

Lagarde even pulled out the pathetic “the time to repair the roof is when the sun is shining” line that the Europhile Left is also using.

These characters are all cut from the same cloth even though the Left try to claim otherwise. Neoliberal and anti-democratic to the core.

They all want to preserve the corporatist domination of European citizens and deny the capacity of the sovereign state to advance the well-being of all their citizens rather than the banksters and the top-end-of-town types that swoop around government handouts and other forms of corporate welfare while demanding austerity for the rest of us.

On that theme, please see the following blog posts among others:

1. Eurozone policy failures laid bare (March 19, 2018).

2. The latest scam from the European Commission – the ‘roadmap’ – Part 1 (December 19, 2017).

3. The latest scam from the European Commission – the ‘roadmap’ – Part 2 (December 20, 2017).

The Madame proceeded to outline the “Next Steps of Euro Area Economic Integration”, which included “a move toward greater fiscal integration, starting with the creation of a central fiscal capacity.”

Okay, I know what that means.

It means:

1. A federal body is created that can use the currency-issuing and legislative capacity to spend and tax to offset asymmetric non-government spending shocks (negative or positive) across the regional space defined as the jurisdiction of the “central fiscal capacity”.

2. It means that such a body can permanently transfer funds to a region or Member State of the Federation.

3. It means that such a body will be elected by universal suffrage and be accountable to the voters at periodic elections.

But Madame Lagarde has a different meaning – that is, she disabuses the concept of a “central fiscal capacity” by proposing nothing more than a scam to force weaker states to give up more of their prosperity to favour the richer states.

She claimed in her speech that “creating a ‘rainy-day fund” would create a buffer to allow countries to draw upon in times of crisis.

The Member States would:

… contribute to each year to build up assets in good times.

Then, depending on the depth of a downturn countries would receive transfers to help them offset budget shortfalls …

By itself, the capacity may not be enough to solve the next crisis — but it certainly would help.

So a sort of partial ‘insurance policy’ paid for out of current national income.

The relief (limited) would be “temporary” rather than a “permanent pillow”.

So unlike true federations which provide on-going assistance to weaker members of the federation because they recognise, for whatever reason, that living standards will differ across the ‘states’ unless those transfers are made, Madame Lagard is promoting a short-term return of funds the ‘state’ has already contributed.

This is not a ‘central fiscal capacity’.

The real kicker came when she said that the IMF’s “two innovative approaches” here (further butchering the English meaning of innovation) would:

1. Force “member’s compliance with EU fiscal rules” – in other words, virtually eliminate their capacity to respond to a major negative shock anyway.

2. Force weaker nations to “pay a premium in good times” – as she said (the indecent woman) “a bit like raising the cost of insurance after a car accident”, which is a sop to Germany who deeply oppose any notion that a weaker nation would be supported on an on-going basis.

The IMF released a technical document to coincide with the speech (March 26, 2018) – A Central Fiscal Stabilization Capacity for the Euro Are.

It is a waste of time reading it. It is simply deplorable.

In it, though, some flesh is added the Madame’s “premium” talk.

We read that:

As a high-risk state, Greece should even pay more than twice the fixed contributions to a future European Financial Mechanism Fund.

Which keeps it in Eurozone servitude forever.

Go you Europhiles – get behind this, another one of your beloved ‘reform’ proposals to spend some time cogitating over at fancy lunches and conferences, drinking the best French wines and overclaiming on your expense accounts.

Meanwhile, more than 35 per cent of Greeks live “at risk of poverty or social exclusion” and 26 per cent live with “income poverty”.

The unemployment rate is still above 20 per cent (20.8 per cent in December 2017) and a generation of young people have been abandoned by authorities – jobless and with little hope.

A great system.

EU austerity bias to be entrenched

I thought this article from Brave New Europe (written by Anne Karrass) (March 30, 2018) – “Troika for everyone”? EU Commission again proposes financial rewards for cutting social welfare – summarised the delusion that exists among the Europhile Left very well.

It discusses the Franco-German initiative through the European Commission to entrench austerity and the “Troika for everyone” under the guise of the so-called – Euro Plus Pact – which includes the “Competitiveness Pact”, the “Open Method of Coordination” and “Contractual Arrangements”.

The ‘Pact’ was so blatantly anti-worker and required Member States to enact sweeping ‘structural reforms’ – code for wage and pension cuts, further deregulation of labour and product markets, attacks on employment protections and security, large-scale privatisations, further cuts in public spending and increased subsidies to the corporate sector – that there was a backlash at the Member State level.

It required the Stability and Growth Pact rules, which reside as annexes in the European-level Treaties, to be formally incorporated in national legislation – which would further reduce the flexibility of national governments in the Eurozone to defend their economies against negative non-government spending shocks.

In May 2015, the European Commission put the ‘Pact’ aside, after analysing the submissions of the Member States in terms of their National Reform Programs, which clearly showed an unwillingness to fully buy into the scam.

The EU’s European Political Strategy Centre analysed the submissions and produced its response (May 8, 2015) – Strategic Note #3: The Euro Plus Pact.

It said that the ‘Pact’ contrived as a “crisis response”:

… has since lost traction with Member States and suffers from a lack of political ownership … The Euro Plus Pact is largely dormant and receives little attention in Member States, as evidenced by poor take-up in the National Reform Programmes …

The case for reviving it is nevertheless strong …

To become relevant, the Pact needs to be firmly integrated into the European Semester and into the framework of EU law, to provide better incentives for Member State engagement. The overall positioning needs to be recast and incentives drawn up.

Which means?

That the democratic processes at the Member State level got in the road of the European Commission’s plan to wreak havoc on workers’ rights etc and so the process had to be taken out of the political struggle at the Member State level and be placed into the hands of the Troika technocrats – those unelected and unaccountable souls that dominate Europe.

So the European Commission just had to take a breath, let the storm cloud pass and then reintroduce this scam under the guise of another one of its ‘nice’ sounding initiatives – in this case, the so-called Roadmap for deepening Europe’s Economic and Monetary Union – (published December 6, 2017).

This resurrected the ‘Pact’ without and took discretion away from the elected Member State governments.

I critiqued that document and framework in the cited blog posts above (2 and 3).

The ‘Roadmap’ is just a less than transparent scam for imposing more or less permanent attacks on the conditions of workers and their families within Europe.

This is the point of the Brave New Europe article.

You read sentences in the European Commission’s document such as:

1. “in order to achieve greater resilience of economic structures and better convergence in performances”.

2. “be able to respond swiftly to shocks”.

None of that has any literal meaning (in interpreting the meaning of the words).

These sort of statements are just code for the governments of Member States being cajoled once again into introducing ‘internal devaluation’ policies, on a more or less permanent scale.

It also places Madame Lagarde’s waffling in perspective.

There is no intention of creating a federal fiscal capacity that would attenuate recessions and redistribute economic well-being to ensure convergence.

There is just the continuation of a punishing regime that:

1. Attacks workers and the disadvantaged in the weaker nations more than in the stronger Eurozone nations.

2. Makes the weaker nations pay more up front for a modicum of Euro-level funding when a crises hits – but those payments will be disproportionate to current economic prosperity.

3. Forces all nations to continually undermine workers’ rights and securities under the guise of cutting real unit labour costs and ensuring more of the income growth goes to the corporate cabal that rules the European Union.


All of this is coming from the elites that the Europhile Left think are worthy of support.

And they control a right-wing corporatist system that the British Left who oppose Brexit think is worth belonging too.

It beggars belief really.

Reclaiming the State – Big Discount

Pluto Books has gone mad this Easter.

All their stock is being offered at a 50 per cent discount, which is better than the author’s discount I can get normally.

That means you can purchase our new book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World – online, for half price (and the Paperback version comes with a free e-Book).

The offer ends on April 9, 2018.

That is enough for today!

(c) Copyright 2018 William Mitchell. All Rights Reserved.

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    24 Responses to Latest Europhile advocacy beggars belief – surrender sovereignty to regain it

    1. Paulo Marques says:

      Oh, so that’s what our (Portuguese) prime minister was all smiles signing the other day. Good thing the media were so diligent in following the Höpner school of thought so that we had no clue what we signed up for in this incredibly transparent European democratic process.

    2. slorter says:

      I see also our French workers are getting increasingly agitated with their neoliberal leader!

    3. Paulo Marques says:

      The french elected him, but have tried to give him a small leash. They don’t have the job precariousness and threats of bank bankruptcy southern europe had forcing a surrender, but do have with a very justified weariness of Germanic (elite) interests. I shudder to think of what will happen when they give up.

    4. Marco says:

      Estimado Paulo Marques, como está? Fiquei curioso com o seu comentário. Ajude-me aqui por favor. O que é a [Höpner school of thought], por favor? Utilizei o google mas não me ajudou muito. Um abraço amigo para si a partir da Finlândia.

    5. bill says:

      Dear Marco (at 2018/04/05 at 3:30 pm)

      Please communicate only in English. Otherwise, you exclude all those who cannot read Portuguese.

      best wishes

    6. larry says:

      I have two points to make. The first is that Rodrik slightly over-eggs his argument by his comparison with Arrow’s impossibility theorem. He has no real proof, while Arrow has (although in the first edition, it was fallacious). It seems that he wants his hypothesis to ride on the coattails of Arrow’s result without going through the hard slog that Arrow did, which I find objectionable. For instance, where are his axioms? Maybe I am expecting too much. After all, Arrow’s hypothesis was quite constrained, which assisted him in his formal objective. Moreover, I don’t think Rodrik needs to do this.

      My second point is this. I agree with your assessment of the flaws of the EU, Bill, but I do not go so far as your conclusion. My reason is this. Your conclusion depends as well on the assumption that the EU is immune to reform, which you stated in not so many words. My reluctance follows from an analogy that I would make as to whether the EU is effectively in the position that Germany was in in the twenties and thirties and where 1933 was a watershed. Pre-1933, it was not unreasonable to think that Germany could be reformed, whereas post-1933 reform was virtually impossible short of a catastrophe and a catastrophe did eventually come. Perhaps I am being risk averse or too optimistic. However, I do not wish to push my analogy too far; it is only intended to suggest that perhaps we have yet to reach our 1933 moment. You may feel we have. I am not sure.

    7. larry says:

      Addendum: I should have added that while Rodrik does not have an impossibility theorem in the strict sense, he does have an impossibility argument, which is somewhat different.

    8. Marco says:

      1) Thank you dear Professor Bill Mitchell.
      2) I am wondering what is [Höpner school of thought].

    9. Willem says:

      “Where do these creeps get their scripts from?”

      A fine and apt question.

    10. Adam K says:

      Let me wade into this discussion. The EU has been established on the premises of four economic freedoms – the freedom of movement of people (labour), goods, services and capital. There is one rule which is rather implicit – to preserve the privileges of the owners of capital (especially their right to harvest profits), the EU ensures that there is no state-based competition with the private owners of means of production. The essence of MMT is that monetary-sovereign states of the modern era can always create purchasing power “ex-nihilo”, that they don’t need to acquire pre-existing assets in order to spend. This has been strictly limited by the European Treaties imposing limitations on the size of budget deficits and to an extent on the size of the stock of government liabilities. Some of these have been written into the constitutions of the member states (such as Poland). Effectively they wanted to force the governments to operate as if they were under loanable funds theory (obviously it is like telling someone to fly a space rocket assuming that the Earth is flat, it crashed in Greece). This is what this intellectual garbage is for – it is an element of class consciousness of the upper class, fed to the “unwashed” in the name of spreading economic “scientific knowledge”. I have discovered this while investigating the roots of the foreign denominated mortgage loans scandal in Poland. Why would anyone re-denominate loans (originated in Poland by a Polish bank) onto foreign currency, telling people that the lent out capital came from Swiss savers? (This trick was achieved by the use of derivatives and the goal was to reduce the interest rate – by passing the exchange rate risk onto the borrowers, who got burned after 2008). Obviously the neoclassical theory assumes the uncovered interest rate parity which “has not been empirically validated”.
      There is no slightest chance of getting this unwritten policy of enforcing rights of the owners of capital changed, it is written into the DNA of the EU. The EU is an instrument of the capitalists and rentiers, enforcing their property rights, including the right to a profit from investment (the appropriation of surplus value). Changing this is a purely political problem. I am not aware of any cases of the rich voluntarily giving up one of their fundamental rights in capitalism except for the times of a war. All the revolutions happened after wars and I am not advocating one more revolution especially in Europe as it usually takes too much time and too much human blood spilled to see any beneficial changes (and often things never get any better if a psychopath like Stalin seizes power). Let’s forget about any peaceful changes (what people like Varoufakis advocate). This is not going to happen. Social democracy of the 1950s and 1960s? “To se ne vrati” (Czech: this won’t come back). Unless someone restores the USSR…
      The guys who cracked how things work are fascists, Catholic integrists and ultra-nationalists (in Hungary and Poland). They run a kind-of Keynesian policy of a balanced stimulus and they look after the interests of the lower-middle class. As long as they do not interfere with the rights of corporations to harvest surplus value, they are tolerated despite being essentially anti-European. We will see whether the recent anti-Semitic provocations of Polish PM Morawiecki haven’t in fact crossed the line (I hope he will be removed, even if the guy who removes him is an ugly neoliberal). This example shows clearly how the godfathers of the EU managed to ensure the cohesion – they locked the door from inside and threw away the only key through the window. The Greeks cannot leave because they are afraid of Turkey. The British can leave but everything will be exactly the same because otherwise the bankers from the City of London will suffer – so there is still enough time to undo the Brexit and even Corbyn may be an useful tool in correcting the “mistake”. People in Western Europe are constantly reminded – do they want another father Rydzyk (the guy who really pulls the strings in Poland, Kaczynski is only the front-end), ranting about unborn children being murdered in abortion clinics? In Germany this alternative to the EU would probably morph onto a Nazism-lite, getting rid of dirty Muslim migrants or whoever can be labelled as an enemy of the ubermensh. So there is no alternative to the status quo… Orban and Kaczynski are tolerated as scarecrows. The progressives in Poland are longing for Donald Tusk to come back and dislodge the medieval crowd dressed in black robes and the followers of the ONR (a Polish fascist organisation from the 1930s).
      When I was at a high school they were teaching us the usual Marxist-Leninist stuff about different kinds of democracy. Initially when I was young I believed that this was utter rubbish. When I grew older all I can say is that I found the Marxist critique of the Western system mostly valid. (Unfortunately the liberal critique of the Soviet system was also valid so there is very little wriggle room left). So let me recite the formula that Western liberal democracy is in fact a bourgeoisie democracy where power belongs to the owners of capital. Real, not fake or symbolic power. These people who believe that the ruling class – the 1% or how they are now called, can give up their power without a physical struggle and defeat, are simply naive, they don’t understand the rules of the game. It is like being the Palestinian guy who recently tried to breach the Israeli border. They didn’t just kill him in an ordinary way. They shot him from a tank to make a statement. The same thing happened on the economic plane to Greece when they objected to austerity.
      We should not be naive, the system cannot be fundamentally reformed, only some tinkering on the edges is allowed. Some may wait for another historic opportunity, for a great disruption from the outside, like China becoming the top dog. But this may not happen soon and what comes next (e.g. a nuclear war between the US and whoever else) may be worse than what was before. BTW it is Orban who according to NYT runs a Job Guarantee – lite program. Not any Social-Democrat. And he doesn’t care about the MMT. He only cares about the power of his clique and his psychedelic “vision” of the country… We need to take note of this… they know how to do it if they want…

    11. Paulo Marques says:


      It’s a glib callback to a recent response from Bill to a “friendly skeptic”, Martin Höpner, in which one of the arguments for not changing policy was that people can’t be trusted to be economically rational if the myths keeping them in place fall – phrasing mine. I commented with too much ire on that, which I’ll try to avoid in the future.
      The reference is because we’re kept in the dark, again, about policy – not that I ever trusted my vote to europhiles.

    12. J Christensen says:

      “We are grateful to the Washington Post, The New York Times, Time magazine, and other great publications , whose directors have attended our meetings and respected their promises of discretion for almost forty years.
      It would have been impossible for us to develop our plan for the world if we had been subjected to the light of publicity during those years; but the world is now more sophisticated and prepared to march toward world government.
      The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.” David Rockefeller (Bilderberger meeting in Germany June 1991)

      Whats happened in Europe is an indication of what’s in store for the rest of the world if we continue along with the “plan” of the “intellectual elites, and world bankers”.

    13. Curt Kastens says:

      @ Adam K,
      I found your comments about the Polish mortgage scandal very interesting.

    14. Adam K says:

      J Christensen:
      I doubt we can call these guys “a world government”, they would dream about it. The capitalist system is in fact decentralised and based on what Marx and Engels called the “class consciousness”. Because the system is decentralised, it is robust, immune to disruption. The fundamental principle is the way property rights are defined, what inevitably leads to monopolies and harvesting monopoly rents. In feudalism this was mostly the ownership of land, initially belonging to communities. In the modern times – take for example the so-called “intellectual property”. Did the Amazon guy “invent” a single mouse click (patent US 5960411, currently expired)? But he was allowed to patent it and now is the richest person on the planet. Unlike the people who invented the mouse (William K. English and Douglas C. Engelbart). Financial capital is just one of the forms of capital, the most visible and universal.
      The rise of China introduced an interesting disruption. They effectively “hacked” the globalised capitalist system. Yes there is an alternative now – but not in Europe (yet). We will see where it all goes in a few years time.

      Curt Kastens,
      And that scandal was one of the reasons PiS (the ruling party) was elected. I wrote a little bit about it in Polish and it was “injected” onto the public circulation of ideas by my friend. (I can “publish” it somewhere at some point as the drafts were in English). At least the bankers stopped using the argument that “the money you have borrowed had been saved by thrifty Swiss pensioners and you have a moral obligation to pay it back”. And nothing else has changed, there is a proposal (put forward by the office of the president Duda) to offer some limited assistance to these who are in financial hardship and haven’t emigrated from Poland yet. Because if they do anything meaningful about the loans, not only banks will lose equity but also the NBP (Polish bank) will lose foreign reserves. Because at the initial stage, commercial banks entered CIRS swap contracts to create synthetic CHF loans and had to sell CHF on the spot forex market for PLN to create a short position in CHF…

      BTW the blog site you have linked from your name offers and interesting line of critique of the MMT (“no such a thing as monetary sovereignty in the globalised world”) but again, it is all a question of political power. The Chinese have already reached the escape velocity in terms of economic development and they have nukes!

    15. J Christensen says:

      Adam K (Friday April 6, 2018 6:25):
      The capitalist systems built in supports, are the tools that enable such an effort. That the Bilderberg organization itself has an international character, is evidence that this is a cohesive group with broad political influence (policy settings and their effects speak for themselves about the underlying intent.) ; like minds no matter how far apart tend to attract and gather support for one another. The ability to manipulate major media coverage of their efforts, over decades, while undermining national sovereignty is of particular concern; it demonstrates that the news the public hears and bases political decisions on, hasn’t been trustworthy for longer than people under the age of about 70 have lived. If that doesn’t make for the ability to form at least a defacto world government, I don’t know why they would have wasted all that time and money pursuing such an effort. Other comments Rockefeller made much more recently would indicate that prior to his death he felt pretty confident about being very close to having achieved this goal.

    16. Adam K says:

      J Christensen,

      I agree that these guys have a lot of influence but you can physically remove them all and they will regrow like the kudzu weed. It is the system what matters. Please consider this:
      ” the U.S. Trade Representative had determined that China has repeatedly engaged in practices to unfairly obtain America’s intellectual property.” (D. Trump, 05/04/2018 according to Reuters)
      and this:
      “In some ways, China really is a bad actor in the global economy. In particular, it has pretty much thumbed its nose at international rules on intellectual property rights, grabbing foreign technology without proper payment. And to be fair, Trump officials do sometimes raise the intellectual property issue as a justification for getting tough.”
      Who said this? Oh yes, it was Professor Krugman, yesterday, on the NYT.

      So what is the whole thing about? The Americans think that they deserve the right to charge a monopoly rent on all the high-tech coming from China. They have defined a term “intellectual property” and started enforcing it. They want to re-establish the colonial system from the 19th century when the stupid (racially inferior) people living in the colonies would supply raw materials to England/France and the centre of the empire, inhabited by sophisticated white people would supply the colonies with “modern” industrial-made goods. China was never supposed to make anything more sophisticated than plastic boxes, t-shirts and sneakers. And maybe screws because nuts were to be made in South Korea. But the horse has already bolted because, unlike the British in the 19th century in India and China, the Americans cannot physically enforce their claims. They cannot even disarm North Korea.

      Do you think that both Trump and Krugman work for the same shadowy global government or that they share the same class consciousness? I find the second explanation more convincing. Because both the neocons and the liberals have enjoyed the fruits of Chinese cheap labour, they find the idea of the Chinese “coolie” learning how to design and build robots, abhorrent and revolting. In the worst case, the Chinese have to pay for the right to use “our”, “Western” intellectual property. This is the real and ugly face of the “universalist” American culture. Paul Krugman forgot that his grandparents were treated with the same contempt in pre-revolutionary Russia and Poland.

      What scares me is something different. Kissinger is really old. Brzezinski has already died. Rockefeller and Peter Peterson, too. At least people from that generation did understand very well what was going on. The people who lead the US now have the intellectual capacity of Donald Trump and John Bolton (and P. Krugman, sorry about this). Trump even got rid of some more “moderate” US Army generals, installing that Gnaeus Pompeius Magnus instead. The Chinese leaderships is perfectly capable to use the MMT “lens” to look at the economy, they just don’t talk about it. What kind of lens will the Americans use? The bottom of a “bourbon” bottle?

      What if that idiot presses the wrong button, “nuke” instead of “nurse”? Marx wrote: “Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce.” What if this time farce comes first?

    17. dnm says:

      @ Adam K

      Nice to see you commenting again. There are many things in what you said that could be discussed, but I would like to pick up on just one thing.

      The rise of China introduced an interesting disruption. They effectively “hacked” the globalised capitalist system. Yes there is an alternative now – but not in Europe (yet). We will see where it all goes in a few years time.

      There is some truth to the idea that the presence of the Soviet Union was a restraining force on the worst excesses of capitalism. The fact that a viable alternative political system existed was a challenge to western democracy, and governments responded by introducing policies to demonstrate its superiority.

      So far, the rise of the Chinese alternative has not stimulated any similar response. Why is that? Is it because the alternative model is clearly not for export?

    18. larry says:

      Adam K, I disagree with you statement that capitalism is immune to disruption. Unregulated capitalism, neoliberalism in its current form, is all too prone to disruption. Witness the 2008 GFC, though there were earlier disruptions. And because of its corruption of the political process, it can produce political disruptions.

      As for Marx and Engel’s depiction of the class system, it could be argued with some force that the class system that exists today is different from that which Marx and Engels were familiar with. Where they had seen owner-capitalists vs workers, we now have the 1% (or 10%) vs the 99% (90%). It is a class war but a slightly different one. I think this difference is important as it would hopefully inform the kind of resistance needed and where attention needs to be focused.

    19. larry says:

      Adam K, while i concur with the contention that it is the system that matters, you overstate your case that if you remove them all, they will regrow like rampant weeds. Think of what you said ecologically. If you remove a species, it will not regrow even though the system of which it was a part still exists. The system has been diminished. How diminished depends on how central to the ecosystem the species was.

      The bankers you are talking about are no doubt central to the financial system now operating. However, remove every banker and you will likely get a somewhat different banking system emerging in its place. The economic system, while disrupted, will not disappear nor could one say with any certainty that it would rebuild what had been before after the top incumbents of the system had been removed. As a caveat, if you remove the top tier, then those just under the top tier will, if nothing else changes, probably take over from the disappeared top bankers. However, in your thought experiment, can you really say that removing an entire group will lead to a system regenerating itself just as it was before? How disruptive would removing this group be to the system as a whole, as opposed to what is actually a parasitic subgroup?

    20. Adam K says:


      I agree that the Chinese don’t want to export their system. We need to compare this with the real threat posed by Bolshevik revolution and later the victorious Soviet army to the Western system. In 1920 the Bolsheviks were stopped on the outskirts of Warsaw by the desperate Polish army (with some foreign help). Despite Stalin murdering a lot of foreign communists during the purges of the late 1930s there were still a lot of communist sympathisers in Western Europe immediately before, during and after WWII. We need to keep in mind that the Soviet system was quite efficient in rebuilding Eastern Europe after the war. Economic stagnation only set in the mid-1960s. It was the threat of communism and fresh memories of the Great Depression what forced Western governments to run Keynesian macroeconomic policies. (The Great Depression led in Germany to the rise of Nazism, allowed to grow as a barrier to communism). Also – the Cold War and arms race required mobilisation of real resources on both sides what led to full employment in the US. I believe that the military-industrial complex in the US is trying to pull the same trick again by re-igniting the arms race but it might not work this time because of the inefficiency of fossilised large corporations in the US. Once the Chinese workers and lower-middle class reach the same level of prosperity as the lower-middle class in the US, the ideological war may be re-ignited again what might force the ruling oligarchy in the US to start sharing their wealth a little more – or will drive America towards outward fascism (apparently Madeleine Albright is publishing a book on this topic from liberal positions).

    21. Adam K says:

      Let me clarify and comment further on the points you have raised
      1. The GFC shows that the system is actually far more stable than in the 1930s. I was surprised that virtually nothing has changed after the crisis – it is “business as usual”, they still teach the same neoclassical stuff etc. Actually the presence of social media and the Internet disables the self-organisation of the society and AI is successfully used to brainwash people even further.
      2. I fully agree that the classes have changed since year 1850 and the economic system has evolved a lot. I wanted to mention that what remains the same is the underlying relationship between the ownership of capital and claims on the fruits of the labour.
      3. I was talking about removing the Bildaberg group only (“these guys”) not the whole upper class and I didn’t mean doing any physical harm to them. Stalin made experiments with killing certain social groups and my family was actually on the list to be physically removed (believe me or not but some of my ancestors were rich landowners). What happened after the fall of communism 51 years later is that the old rich group which was killed, deported or escaped has been replaced by the members of the corrupt communist oligarchy and plain criminals who fattened themselves on “privatised” state-owned assets. I won’t name the country, it wasn’t Poland but somewhere nearby. Again – the old semi-feudal social structure has restored itself, this time even more corrupt than 100 years ago. Another example is how quickly members of the Solidarity trade union who used to spend time in jail fighting for freedom for the whole society became a new corrupt ruling oligarchy in Poland and merged with former communists. I was a student organiser then, I saw this in front of my eyes, the accelerated transition when people started smelling big money. This wasn’t the worst. Resurrected fascists are even worse. Who would have thought…

    22. Robert says:

      @Adam K

      Speaking for myself, I’m both stunned and entranced by your eloquence.

      So much so that I can at present see no flaws (or none that matter) in your exposition. I’ll keep looking, though, because I don’t really want to agree with you 100% – it’s too depressing!

    23. Robert says:

      “There is no slightest chance of getting this unwritten policy of enforcing rights of the owners of capital changed, it is written into the DNA of the EU. The EU is an instrument of the capitalists and rentiers, enforcing their property rights, including the right to a profit from investment (the appropriation of surplus value). Changing this is a purely political problem.”


      But was there ever any chance of the EU developing along any other trajectory? Its spiritual begetters were all wedded to a non-Marxist (Catholicism-imbued) ideological perspective, which did not admit of the possibility of pursuing other than a capitalist path. The only question was the degree to which that approach might be infused with (the Mont Pélerin Society would have said) “be invaded by” elements having a more “socialist” character – such as the targeting of full employment, centralised collective bargaining under the aegis of government-inspired “social-partnership” and “mixed-economy” concepts (“mittbestimmung” in West Germany), and other ideas which were very pervasive in (Western) European thought during that post-war era

      All such trends and influences were of course anathema to Hayek and the rest of the Mont Pélerin gang, to be fought-against tooth and nail by every possible means.

      And we know how that battle turned out.

    24. Stone says:

      The Guardian published a really tragic example of neoliberal-brainwashed fatalism

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