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What happened to Europe during the financial crisis and why? How could failed ideas triumph?
"When, after the immediate effects of the worldwide fi nancial and economic crisis had been surmounted, a course was set for ‘austerity measures’ and ‘structural reform’ Nobel prize-winning US economist Paul Krugman (2010) characterised it as a ‘strange triumph of failed ideas’: ‘Free-market fundamentalists have been wrong about everything — yet they now dominate the political scene more thoroughly than ever.’"
Europe is the perfect case study in the triumph of the powerful in a competitive monetary union. As it turns out this is built into the very institutional nature of the European Monetary Union in the form of the 'Maastricht criteria'. The seeds of this pro-powerful, pro-elite institutional nature were built into the system back in the 1990s.
The euro zone, like the single market, is conceived as a union of states that compete with Divisive integration. The triumph of failed ideas in Europe – revisited 9 Steff en Lehndorff one another as if they were enterprises (Troost and Hersel 2012).3 This construction has already proved highly problematic for the single market – for example, because in the rules in accordance with which competition takes place social standards do not have anything like the importance of the free movement of capital – but for the Monetary Union it amounts to a knock-out clause: without, among other things, a common tax system, equalisation payments between economically stronger and weaker regions or a common economic policy – in short: without central state institutions that previous economic history had shown to be indispensable conditions of a monetary union – it can be assumed that the existing differences in terms of economic performance between the participating states will only increase rather than diminish, so much so that the construction of a ‘competition union’ between an export and surplus oriented core and a periphery dependent to a considerable extent on imports financed by external credit has unleashed a dynamic of increasing imbalances within the EU (Horn et al. 2009).
Competition unions don't work. Given the finite nature of our mother earth, we must collectively come to understand what science and history is telling us. We must change our institutional natures, from competitive to cooperative. This provides the only hope for survival, for equality, for freedom. The great majority will have to act in solidarity, learning from history, that competition works in favor of the powerful few. Cooperation works for everyone equally. This is the most imperative task, to find a way to transform all of our human created institutions, from competitive to cooperative within the next twenty years. A small number of powerful elite will use their existing powers, vested by the history of competitive design, to thwart we the people, the vast majority, the 99.9%.
The clash is ramping up as increasingly undemocratic processes and militarization of states increases the stakes for the vast majority to lose what little freedoms remain. Using the politics of fear, endless war against terrorism of our own making and inflicted in far greater measures by the "great powers", and intensifying economic measures that history shows makes the problems worse for the majority.
Naturally, the rescue path on which the ECB set out in 2012 is inconsistent, first, because, as part of the Troika, the ECB at the same time compels the endangered states to take medicine that only makes the illness worse. And second, it is undemocratic because in the extreme case the unelected ECB executive board can decide which bonds are to be purchased
without limit and which are not – in other words, whether states that are unwilling to kowtow to the Troika’s diktat are to be left to the mercy of ‘the markets’, while obedient crisis states can be protected with a firewall. Whatever the case may be without this ECB intervention the euro zone would probably already have broken up.
We do have the power of truth, history and science. Our challenge is to find a way to use our power to overthrow the failed policies of the elite.
"Divisive Integration: The triumph of failed ideas in Europe — revisited" - Edited by
Steffen Lehndorff - download the PDF book.