The increasing uprising against Modern Monetary Theory (MMT) in the media is salutory because it means our ideas are now considered to be a threat to the mainstream economics (for example, Paul Krugman now buying into the carping) and to the heterodox tradition (for example, the British economists who self-identify with that tradition). The high profile debate around the Green New Deal has been associated with MMT and this has brought all sort of crazy attacks on MMT from those who think they are ‘green’ but haven’t traversed out of ‘Monetarist-type’ economics thinking. And then I note that apparently the Green New Deal is being expropriated by Europhiles to wedge those who consider Lexit and Brexit to be the only way to re-establish progressive society and politics. Apparently, the Europhiles are arguing that you cannot be both Lexit/Brexit and support the Green New Deal. Curious logic. And, of course, a desperate attempt by the Europhiles to grasp at anything to discredit both Brexit and MMT, given that there is a high proportion of MMTers who prefer Britain leave the EU and that the EU disappears in its current form. And so it goes. Wolfgang Streek recently published an interesting academic article that bears on this discussion. That is what this blog post is about.
In a recent UK Guardian Op Ed from Ann Pettifor (February 11, 2019) – The Green New Deal offers radical environmental and economic change – where readers are told that the Green New Deal framework will require:
… an ecological and economic transformation of the current system …
We also read:
The Green New Deal demands major structural (governmental and inter-governmental) changes (not just behavioural change) in our approach to the ecosystem …
The realism of the Green New Deal demand is precisely because it harks back to an era in which the global economy was transformed (almost overnight) by the revolutionary Keynesian monetary policies of an American president. These enabled his administration to deploy fiscal policy to transform both the domestic economy, but also the dust bowl …
The experience and success of the New Deal – deeply flawed in many respects – nevertheless assures us that transformation is possible …
And we know that can be done, because it was done before – by the popular will that backed Franklin D Roosevelt’s administration as it began (on the night of his inauguration in 1933) to dismantle the globalised gold standard system …
An umbrella that will hopefully unite and inspire vast numbers of green activists across the world – and in turn trigger state action to subordinate finance to the interests of society and the ecosystem – and thereby ensure a livable planet for future generations.
Note the emphasis on driving forces – governmental and inter-government.
Note the reference to “revolutionary” economics working into policy through the aegis of a democratically-elected head of a currency-issuing state.
Note the reference to the way FDR liberated his nation from international arrangements that restricted or violated the currency sovereignty of the US.
Note the reference to green activists etc working to “trigger state action”.
This is totally consistent with the Modern Monetary Theory (MMT) view and the view Thomas Fazi and I expressed in our current book – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).
Yet, the same Guardian author was on social media yesterday (February 13, 2019) telling the world that:
The two narratives are contradictory.
Europe (the EU) is not a state. It has no ‘fiscal’ capacity to pursue the “radical environmental and economic change” that is needed.
The Treaty that establishes the EU is pure neoliberalism that is the antithesis of the ‘radical’ economic changes that are needed.
The Eurozone is not a state. It also has no fiscal capacity and is the most developed expression of the EU’s neoliberal imperialism.
Note in the Guardian article, we are told the GND fight will come from “governmental and inter-governmental” actions.
The EU (and the Eurozone) is neither governmental or inter-governmental. It is a Treaty that subverts democratic accountability and the pigeon-holes the flexibility of the ‘state’ to operate in its own right and to enter ‘inter-governmental’ arrangements and accords.
Sure enough, the scale of climate change will require cooperation between states and inter-governmental accords.
And, in that respect, global dialogue is essential. Thomas Fazi and I outlined that approach to the problem in – Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, September 2017).
But to claim that those who want to ‘Reclaim the State’, which means nations have to exit stifling (neoliberal) arrangements such as the EU and the Eurozone and eliminate the democratic deficits that such arrangements engender, have to forfeit their claim on Green New Deal is far fetched and just reflects a confused narrative.
This is a narrative that wants to be part of the Green New Deal, which in the current period is being married with MMT (for obvious reasons), but hates the idea of Brexit/Lexit (and its association with some MMTers, such as myself).
So you get this sort of inconsistency entering the public debate.
It was distilled from his Adam Smith Lecture in Jurisprudence delivered at the University of Glasgow on May 30 2018.
One needs a library subscription to get the original. So I will try to present his view in a balanced way.
Wolfgang Streeck is an interesting character. He provided an endorsement on the cover of our book – Reclaiming the State – after being approached by the publisher.
He wrote: “Important… An essential building-block for a constructive debate on a post-Brexit democratic politics”.
So obviously our views have a strong mutual resonance.
He also gave an interesting interview to the Jacobin magazine (August 20, 2018) – Germany’s European Empire – where he argued that “politicians laud ‘Europe’ – while quietly using EU structures to advance German national interests”.
In the Jurisprudence article, he asks whether:
Europe as a whole ‘is still threatened with a repetition of those calamities which formerly oppressed the arms and institutions of Rome’.
His article probes the concept of “political scale” – “What is better for a political society, to be big or to be small, and better in what respects? How best to draw the borders between states that separate domestic from international political structures … Which problems should be internalised and dealt with in domestic politics, and which should be externalised and left to foreign policy?”
He reminds us of history and the work of Edward Gibbon who was “an English historian, writer and Member of Parliament” in the late C18th and wrote extensively about the challenges that are inherent in operationalising the concept of political scale.
His analysis of Europe and the role of the individual state (“powerful, though unequal kingdoms, three respectable commonwealths, and a variety of small, though independent, states”).
Edward Gibbon ultimately concluded that “functional decentralisations and territorial subdivision” (quote from Wolfgang Streeck) was preferable to alternative governmental structures.
Wolfgang Streeck tells us that:
230 years later, in by and large the same geographical space that Gibbon wrote about, among the collection of political jurisdictions that now exist in what was once the Western Roman Empire, we observe a deep crisis of a project of economic and political ‘integration’ that is fundamentally contrary to Gibbon’s plea for a Europe of distributed rather than centralised sovereignty.
In the Jacobin interview, he makes a good point that “In the language of the established centrist parties, everyone who could be dangerous to them is a “populist,” from Corbyn to AfD.”
In the Jurisprudence article, he considers the “‘populist’ revolt is about:
… the architecture of national and international governance in a global economy, including the place in it of less-than-universalistic social solidarity, political sovereignty, and cultural identity …
Fuelling these conflicts is an often passionate resentment by diverse social groups against what they perceive as hostile attempts to restructure their traditional communities and solidarities from the outside in order to fit them into an economistic system of political rule, moral identity and, importantly, international competition.
He quotes Jurgen Habermas who described Europe as a “technocracy that is working hard to make national societies ready for global capitalism.”
And that technocracy is hardly people-friendly. Its purpose, design and implementation is core neoliberal. That ideology is embedded in the Treaty that creates the administrative and policy infrastructure.
The Europhiles seem to think that a bit of tinkering here, and a reform there will alter the show and push it in a progressive direction.
They are dreaming.
The whole concept has to be abandoned, national sovereignty restored and a new intergovernmental dialogue opened to work out what a ‘European’ cooperation might look like to ensure there is political action at a scale commensurate with the problem.
The operations of a currency in a region that is differentiated by historical enmities, major cultural and language differences, and differences in infrastructure needs and demographic structure, is not of a scale that a ‘global’ or ‘Pan European’ is required.
Wolfgang Streeck recognises the conflict between “demands for a decentralised, distributed architecture of political rule, is related to global economic integration is a claim that is very much present in the economic literature on state size.”
Those claims for “global economic integration” of which the ‘Single Market’ is the European expression is justified by the assertion that the benefits exceed those where borders are relevant to regulate labour and capital movements.
Wolfgang Streeck, importantly, notes that the movement towards globalisation (supply chains etc) “came together with a neoliberal turn of postwar democracies”.
We examine the conjunction of those events in detail in ‘Reclaiming the State’. The point is that the progressive Left conflates the two developments – as if they are inevitably linked. They are not.
Please see this blog post – The Left confuses globalisation with neo-liberalism and gets lost (April 27, 2016).
The conflation meant that “governments withdrew from protecting their societies from foreign competition” and this, in turn, not only increased inequality, but also resulted in a conflict among the progressive movements, who, increasingly, became obsessed with identity issues and articulated, in the confusion, a belief that only pan-international movements could save the workers.
But that view is now being countered by the ‘populist’ uprising – “a communitarian response to the neoliberal competition regime that has neutralised the postwar welfare state” – which has “has become the most effective opponent of the ‘European project’, as embodied in the European Union and, in particular, its common currency.”
The problem for progressives, who have become lost in a Europhile cloud of confusion, is that the ‘communitarianism’ is being led by the Right.
The Right is leading the charge against the neoliberalism of Europe, which then introduces other undesirable elements (anti-migrant, social conservatism, etc).
The Right has filled the leadership void in the struggle against neoliberalism.
Wolfgang Streeck provides a brief history of how the ‘European Project’ emerged after the Second World War and emphasises the problems that will always preclude the creation of a true European nation (a United States of Europe):
No EU member country will voluntarily transfer its national state sovereignty to Brussels …
Moreover, dreams of integrated democratic European statehood forget that large political size comes with high political heterogeneity and must therefore be paid for, in order to be sustainable, with decentralisation – the larger a state, the more so.
The problem that the democratic legitimacy of a “cooperative international order” has:
… to allow democratic nation-states states to defend their societies and their politics against ‘unfair’, meaning socially disruptive, economic competition, with tools of their own rather than depending on the benevolence of lead nations or supranational bureaucracies.
Which is the anathema of the way the Treaties have constructed the EU. Its rigidity defies progressive reform.
Wolfgang Streeck concludes that:
Promises of a restoration of the democratic class compromise at supranational or international, let alone global level are illusory.
The obvious conclusion is that:
… the benefits of large size political rule tend to be oversold while its costs, including the political capital that has to be spent on instituting encompassing and centralised institutions of governance in the first place, are typically downplayed.
Small scale political organisation (for example, at the Member State level) have benefits:
1. “more homogeneous societies”.
2. “more democratic: problems of consensus-building under social heterogeneity are avoided, decision times are likely to be shorter, so is the distance between citizens and governments, and the results of political participation are more immediately felt”.
3. “Cultural homogeneity and high political responsiveness support egalitarian values and social cohesion, and citizens experience the national polity as a community- of-fate seeking survival in an environment it cannot hope to control.”
4. “Economically, small states are more likely than large states to forge cooperative alli- ances between domestic capital and labour”.
5. “may support industrial niche-building by providing for an infrastructure particularly suited to the sectors in which their economies, assisted by national industrial policy, choose to specialise.”
By way of conclusion, we understand that “political scale is not a matter or rational design”, which is why the one-size-fits-all European Project has missed the boat.
History, culture and language all dictate what acceptable political scale is for a group of people.
Progressives should support small scale democracy – where the polity is closer to the people and depoliticisation is less possible.
Trying to achieve the opposite – a “European superstate” – which not only “will never come to pass” but in the process “the attempt to get there must have disastrous consequences, for both democracy within participating countries and the relations between them.”
That is the point the Europhile Left cannot get their head around.
They speak of reforms – and a new idea pops up on a regular basis to much fanfare – but meanwhile, the neoliberal project continues and further undermines the democratic desires of the citizens.
And when the citizens protest, the state brings out the troops and breaks heads!
Wolfgang Streeck finishes on an eloquent note:
In conditions like these, the German saying applies according to which a sparrow in hand is better than a pigeon on the roof, and we may add: especially if that pigeon may turn out to be a starving imperial eagle.
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.