Contribution to the EReNSEP Conference 16/17 June in Barcelona
by Steffen Stierle
From the outset, neo-liberalism has been able to win over some of its potential adversaries and has thus established a hegemony. It is in this context that the abandonment of national sovereignty in favour of an international framework in today’s EU, and especially in the eurozone, should be seen – a framework in which democratic decisions for the adoption of a policy of de-commodification are no longer possible. Yet nation states have neither vanished nor become obsolete. They are the level at which political projects for social protection against the aggressive depredations of the market could be implemented if the alliance of emancipatory forces with neo-liberalism were to be terminated and replaced by an alliance with the forces of social protection. To be effective, such projects would have to involve a struggle for the restoration of national sovereignty. The most important step would be to leave the monetary union. The issues involved are presented in greater detail in the following paragraphs.
The Unholy Alliance of Emancipatory Forces with Neo-Liberalism
The industrialisation of the 19th century spawned a twofold transformation within society. On the one hand, commodification took place to such an extent that it threatened the very existence of society. Secondly, it gave rise to a countermovement that sought social protection against the aggressive ravages of the market with a view to preserving society itself. Karl Polanyi examined this double movement and demonstrated convincingly that the countermovement was a dispersed and spontaneous self-preservation response on the part of society (Polanyi, 1973 ).
This raises the question as to what is different today, in this age of globalised, finance-driven capitalism (neo-liberalism). Faced with a perverse degree of commodification – the unbridled power of financial markets, the flexibilisation of labour markets, the privatisation of vital assets such as water, and so on – the countermovement is putting up an astonishingly weak struggle.
US feminist Nancy Fraser goes a long way to explaining this state of affairs when she refers to a dangerous liaison between the forces of emancipation and neo-liberalism. In Polanyi’s double movement, the struggle against repression in the form of paternalism, racism, etc., does not play a part. This struggle did not acquire political relevance until the new emancipation movements entered the scene in the second half of the 20th century.
Many of the repressive elements that they attack are also elements of social protection, such as paternalistic structures in the welfare states of the post-war era, racist exclusion from welfare systems along national borders and consolidation of class structures due to corporatist welfare states (Esping-Andersen, 1990). Fraser notes that the liaison with neo-liberalism has paved the way for astonishing successes in matters of gender equality, sexual freedom, combating racism, etc., but has led at the same time to an extremely severe erosion of social protection through commodification. This, she argues, is the basis of neo-liberal hegemony (Fraser, 2013).
It is in this context that the transfer of powers from the European nation states to the EU and the accompanying renunciation of sovereignty should be considered. In times of neoliberal hegemony, nation states represent backwardness, antiquated sources of authority and exclusion, while the EU stands for internationalism, progress and openness.
On the Nature of EU Integration
The triumphant progress of neo-liberalism in the wake of these developments is a global phenomenon. Its European dimension has been the integration process within the EU since the mid-1980s. A construct was deliberately created in which all participants were locked into a trend towards neo-liberal policies. The common market imposes an economic policy of deregulation, the Maastricht rules impose a cautious procyclical fiscal policy, the European Central Bank (ECB) statutes impose a monetary policy focused on price stability.
It is important to note, that all this is not a matter of parliamentary mayorities. It is part of the EU Treaties and therefore shielded from democratic reconstruction, as the specialist of EU law Dieter Grimm explains: The European Treaties have “taken over the function that constitutions have in nation states. Constitutions revoke certain fundamental principles of majority decision-making as well as determining the institutions of the political entity, their spheres of competence and the political decision-making process. […] However, the European Treaties, which have been constitutionalised by the European Court of Justice, are not confined to such provisions. They are full of what, in the Member States, would be ordinary statutory provisions. […] When it is a matter of interpreting and applying them, the executive and judicature of the EU, that is to say the Commission and the ECJ, are on their own. The Council and the European Parliament, on the other hand, are not only excluded from the process but also have no chance of changing anything” (Grimm, 2017).
The single currency, moreover, has unleashed a wage and tax competition that piles additional pressure on the welfare state, on universal service provision and on workers’ rights as well as producing the economic imbalances that have been one of the main causes of the eurozone crisis since 2009/10. The political responses to the crises, however, reflect the neo-liberal lock-in and advance the interests of the dominant players in the finance-driven capitalist system. The Troika interventions, the quantitative easing by the ECB and so on are chiefly focused on the question of who is to be rescued and who is to foot the bill. Banks, multinationals and the wealthy are rescued, while workers, pensioners and owners of small businesses pay the bill.
At the same time, the crisis is being used to harden the neo-liberal lock-in, as exemplified by the Fiscal Compact, the European Semester, the Six-Pack and the Two-Pack. It is invariably about the same three elements: pressure on public spending, pressure on market regulation and creation of scope for the EU technocracy to stifle national budget policies. This process is not over, as may be seen from the proposals presented in documents such as the Five Presidents’ Report of 2015 or the European Commission’s reflection paper on Deepening of the Monetary Union of 2017.
On the Nature and Potential of Today’s Nation States
EU integration finally means a processes of ceding national sovereignty to an abstract, technocratic institutional structure, which works increasingly nonpolitical to implement those measures that it needs in order to keep finance-driven capitalism running and to serve the interests of its dominant players.
Yet today’s nation states were once created with similar intentions. They were superimposed on regional societies, which were often characterised by systemic solidarity and were not particularly market-focused, with a view to establishing exploitative structures. Instead of discussing the affairs of society locally, seeking common solutions and providing mutual assistance, people now had to pay taxes and leave politics to the abstract, remote state. To be able to pay these taxes, they had to produce for an anonymous market. To assert themselves in that market, they had to strive constantly for greater efficiency, and so it went on. In short, from a market-critical perspective there is little reason to glorify the nation state (Kropotkin, 2009 ).
It took centuries before a certain number of civil rights and functioning social structures could be established on the level of those nation states. The individual rights of the 18th century and the political rights of the 19th were followed in the 20th century by the establishment of social rights. Whereas individual and political rights were compatible with capitalism and became virtually essential throughout some stages of capitalist development, social rights posed a challenge to capitalism (Marshall, 1991 ). In this respect it was not by accident that the time since the late 20th century witnessed another, somewhat more abstract and greater superimposition on societies, namely that of global institutions and the EU.
While it would probably take centuries again to establish a comparable degree of social protection and democracy within the new higher tier, if that is at all possible, the nation states are by no means obsolete today. In 1950, the United Nations counted 91 states in the world, and by 1980 their number had risen to 177. In the age of globalisation they have increased again, reaching 202 in 2010. Most of them are small. The average population of a nation state is about 7.1 million. This process of forming nation states is not yet completed. Independence aspirations in Catalonia, Scotland, Flanders, Quebec and Kurdistan, for instance, show that, even today, many nations still regard statehood as a goal worth pursuing (Streeck, 2017; Wahl, 2017).
It is undoubtedly true that the nation states have suffered a certain loss of control in the wake of globalisation. That, however, does not apply in absolute terms or to all states in equal measure, as Peter Wahl explains: “The United States certainly has control of its conglomerates when the chips are down. That applies to banks just as it applies to the digital industry, where the likes of Google and Facebook have to submit readily to the NSA when required to do so. […] There would still be considerable leeway for Germany too. After all, the country has the world’s fourth-largest economy. The argument about loss of control is gaily misused to conceal a lack of political will to practise regulation. Even smaller countries, by forming alliances, are able to stand up to the power of conglomerates if the requisite political will is there. […] The financial crisis of 2008 was also dealt with nationally […] because only nation states had the financial, judicial and political resources at their disposal to provide at least for damage limitation and ensure that the worst did not happen” (Wahl, 2017).
Potential Power of Emancipatory Forces in Nation States
It is therefore far more realistic to combat commodification and repression in the national framework than to try to reshape the 27-member EU socially, democratically, peacefully, etc. In nation states there is a certain measure of democratic rights, common identity and capacity for social action. It is no coincidence that, in the years of crisis since 2009/10, almost every success in the realm of social emancipation, were achieved either nationally, for example the prevention by the Portuguese Constitutional Court of pension cuts and civil-service pay cuts in 2013, or regionally, as in the case of the prevention of health-sector privatisations in Madrid in 2012/13.
If this potential is to be rendered usable, it is vital that emancipatory forces abandon their liaison with neo-liberalism that is addressed above and enter instead into an alliance with the forces that stand for social protection. Repression and commodification must likewise be rejected so as to break the hegemony of neo-liberalism on the basis of Nancy Fraser’s ‘triple movement’.
Andreas Nölke reached the conclusion that there was considerable potential for such project. In his Grundlinien einer linkspopulären Position (‘Rudiments of a left-wing popular position’), he divides the map of political contention into two axes. The first describes the traditional left-right dichotomy, while the second distinguishes between cosmopolitanism and communitarianism.
Cosmopolitan positions are characterised by the fact “that they not only seek to localise unavoidable modernity in a globalised economy, cultural liberalisation and liberal business regulation but also in forms of government transcending the nation state and the global spread – by force of arms if necessary – of democracy and human rights. […] Communitarian positions, by contrast, emphasise the importance of local or national democracy and solidarity […] as keys to the preservation of a viable welfare state. [They] are highly sceptical of economic globalisation and international institutions that might put pressure on national democracy and limit economic policy choices, such as the TTIP framework or the European Union” (Nölke, 2017).
Nölke’s analysis thus creates a coordinate system with two dimensions. It reveals a representation gap in the left/communitarian quadrant. In the traditional left-right model left is inextricably linked with cosmopolitan and therefore not open for society protection. As a result, ordinary people, the ‘common man’ whom Polanyi places at the heart of society, have been turning their backs on the Left and either not voting at all or, as Didier Eribon impressively describes in his Returning to Reims (2013 ), turning to forces like the Front National.
The left-communitarian quadrant is the one in which an alliance between social protection and emancipation can be forged. The relative success of new players such as Unidos Podemos, Cinco Estelle and especially France Insoumise is explained by the fact that they operate – with varying intensity – within that quadrant and thereby attract votes both from the Right and from the ranks of the habitual non-voters.
The Relevance of Sovereignty and Political Freedom of Action Today
If such a political strategy is to have any prospect of underpinning a rise to power, there will be a need for freedom of political action at the national level through which a policy of de-commodification can assert itself in opposition to the ambient global scenario of finance-driven capitalism. The example of Greece (2015) shows that it is fairly immaterial whether a country is ruled by conservatives, social democrats or the Left if that government is not free to make its own political choices. Since the Troika invasion, however Greeks have chosen to vote, the result has always been a new austerity programme. Plan X, initiated by Yanis Varoufakis as Minister of Finance and developed by James Galbraith and others, was designed to enable Greece, by abandoning the euro, to achieve the sovereignty it needed to implement Syriza´s programme. The government decided against the plan, thereby effectively doing a political U-turn and replacing the programme by another Troika memorandum (Galbraith, 2016).
The euro is the tightest shackle for restricting sovereignty and binding governments to pursue neo-liberal policies. Wolfgang Streeck points that out: “The exclusion of devaluation as an instrument of national economic policy means […] the grafting of a uniform economic and social model onto all countries subject to the single currency; it assumes as possible, and drives forward, the rapid convergence of their social systems and ways of life. At the same time, it acts as a further engine for that worldwide expansion of markets and market relations which has been described as capitalist land-grabbing, as it seeks more or less forcibly to replace governments and their policies with self-regulating markets, in the mode of what Polanyi called ‘planned laissez-faire’” (Streeck, 2014).
The euro compels the members of the monetary union to engage in merciless tax and wage competition, forces them into constant internal devaluation and serves as the basis for the blackmailing capacity of the ECB and for the Troika interventions. It is surely the sharpest sword in the current armoury of European neo-liberalism. Exiting the euro area is a prerequisite for the abandonment of neo-liberal policies. From Jean-Luc Mélenchon’s and others Plan B to Galbraith’s Plan X to proposals for a reformed European Monetary System or for the introduction of parallel currencies, a wide raft of monetary strategies and options is circulating in the Left debate. An exit would pose problems, to be sure, and would surely be more difficult e.g. for Greece than for France. Ultimately, however, it is indispensable. Monetary sovereignty is the foremost prerequisite for the implementation of a national project of social protection and emancipation.
For smaller countries in particular, prime importance attaches to unlocking the euro shackle, since those countries are least able to assert themselves within the euro area and have therefore sustained the greatest loss of sovereignty. In the EU, small countries outside the eurozone, such as Denmark and Sweden, are faring better than those within it, such as Finland, Greece and Ireland.
The EU is peeling the next skin from the onion of sovereignty limitation. The common-market rules and their ultra-liberal interpretation by the ECJ and so on exert pressure in the same direction, even if the framework is not quite so rigid. As a result, small societies outside the EU – Norway, Iceland and Switzerland – are at least no worse off than inside (Streeck, 2017).
The third shackle is the global institutional structure, comprising the WTO and the whole panoply of free-trade agreements. The WTO seems meanwhile to be so weak that quitting it in the short term does not appear to be that crucial. Not being a party to agreements such as the EU-Canada Comprehensive Economic and Trade Agreement (CETA), the Trade in Services Agreement (TiSA), the Japan-EU Free Trade Agreement (JEFTA), etc., on the other hand, is important for a country seeking national political discretion. Since powers in the field of trade policy are largely centralised within the European Union, it would scarcely be possible to withdraw from these agreements (besides few chapters) without leaving the EU.
In conclusion, it may be stated that a departure from the path of neo-liberalism is possible only at the nation state level and presupposes a recovery of sovereignty for which a struggle must be waged with the EU/euro framework and that such an approach is liable to attract widespread support.
It would not be an obstacle to international cooperation; on the contrary, it is the prerequisite for an alternative, anti-neo-liberal integration project that would not be divisive but unifying. A Europe based on solidarity can only exist on the basis of sovereign nation states.
Nor is this approach an obstacle to the absolutely desirable restoration of powers to local communities but is actually a key to it. Responsible action and genuine democracy are best achieved if relevant decisions can be taken locally and those who are affected are involved in decission making directly. The influence of the EU construct permeates deep into local communities. The same, incidentally, applies to nation states, and that, in its turn, is one of the main generators of regional independence aspirations. The struggle for national sovereignty must therefore be regarded as a first step, which must surely be followed by a struggle for local self-governing rights within sovereign nation states.
- Brie, M., Polanyi neu entdecken, Hamburg, 2015
- Eribon, D., Returning to Reims, Cambridge, 2013 
- Esping-Andersen, G., The Three Worlds of Welfare Capitalism, Princeton, 1990
- European Commission, White Paper on the Future of Europe, Brussels, 2017
- Fraser, N., ‘A Triple Movement’, in New Left Review 81, London, 2013
- Galbraith, J., Welcome to the Poisoned Chalice, Yale, 2016
- Grimm, D., ‘Es wäre nicht hilfreich, die EU zu parlamentarisieren’, in IPG Journal, Berlin, 2017
- Juncker, J.-C. al., Completing Europe’s Economic and Monetary Union, Brussels, 2015
- Kropotkin, P., Mutual Aid, London, 2009 .
- Nölke, A., Grundlinien einer linkspopulären Position, Frankfurt, 2017
- Marshall, T. H., Citizenship and Social Class, London, 1991 
- Polanyi, K., The Great Transformation, Frankfurt, 1973 
- Streeck, W., Buying Time, New York, 2014
- Streeck, W., ‘Nicht ohne meine Nation’, in Zeit Online, 22 April 2017
- Wahl, P., ‘Die Linke, der Nationalstaat und der Internationalismus’, online at eurexit.de, 2017
 http://eurexit.de/wp-content/uploads/2017/02/Linke-Nationalstaat-Internationalismus.pdf (in German).
 See, for example, https://lexit-network.org/towards-a-new-european-monetary-system-not-the-solution-to-everything-but-better-than-the-status-quo.