Not that any of us living in Europe really needed to consult the papers this morning to see who won the European Union’s parliamentary elections. Nor does it take a genius to interpret the results. Voters all across Europe are more and more inclined to believe that their economic hardship and the erosion of their “traditions” are a consequence of the free flow of capital, people, and goods between their communities made possible by their membership in the EU. Here in Bosnia and Herzegovina, where European and US enforced institutional arrangements preclude EU membership, the most disturbing results were those in neighboring Hungry, Slovenia, and Croatia. News from Italy, by contrast, tells a more hopeful story.
In neighboring Croatia, new to the EU parliament — no surprise here — the right wing HDZ (Croatian Democratic Union) received one more seat than the SDP. The single seat for Croatia’s Green Party (ORaH) is offset by a seat for the “Savez za Hrvatsku” party, Alliance for Croatia.
In Slovenia, the Social Democrats are down to one seat, although in most voting they are likely to be joined by the two new members from the centrist DeSus (Democratic Party of Pensioners). Far more disturbing are the electoral gains from the coalition formed by the NSi (Christian People’s Party or New Slovenia) and the SLS (Slovenian People’s Party), as though there were any doubts whether Slovenians are identical with Christians, i.e., Roman Catholics. The social liberal (ZARES) did not receive enough support. Nor did the Liberal Democratic Party or LDS. The newly formed Verjamem Party, meaning simply “I believe,” will in all likelihood vote mostly with the left. In effect this means that the right enjoyed a one seat gain in Slovenia since the last elections in 2012. It could have been worse.
But the really terrifying results came from Hungary. There the far right, openly anti-Semitic Jobbik party (Movement for a Better, i.e., Jüdenfrei, Hungary) joined with Hungary’s far right FIDESZ-KDNP (a coalition between the Federation of Young Democrats and the Christian Democratic Party) to form a super-majority. The Hungarian Socialist Party, the MSZP, barely registered.
The vision for a unified Europe took shape against the backdrop of two centuries of horrific continental war. In the 1950s, when Alcide De Gasperi, Jean Monnet, Robert Schuman, and Paul-Henri Spaak resurrected the idea of a unified Europe, the universal conceit was that ever greater economic, scientific, and technological efficiencies were delivering the developed world from its age-old love affair with war. More fluid boundaries for goods, services, and capital, and a single shared currency among all members could only hasten the arrival of global singularity, the convergence of all economies then predicted by most economists. Euro cheer-leaders could not imagine why or even how these efficiencies would come to be aggregated and privatized over the coming decades, rekindling the hostilities that economic disparities invariably provoke.
Their naiveté is understandable. Since everyone in a policy-making position in 1945 agreed the violence of the last century had been caused by social and economic disparities, it stood to reason that state actors would always step in to make necessary, purely technical regulatory changes whenever economic disparities threatened social or political harmony. A little more state spending here, a little more taxation there. All was good. What could go wrong?
What could go wrong and did go wrong was that in the late 1960s something entirely unanticipated and unwanted appeared on the economic horizon: competition. West Germany’s and Japan’s economies had for the most part recovered by the mid-1960s. But it was only in the late 1960s that competition between Japan, Germany, and the US began to place downward pressures on global prices. Continuing economic stagnation forced then US President Nixon in 1972 to take the US Dollar off the Gold Standard and let it float. As the value of the Dollar plunged, this made US goods more affordable both in the US and around the world. But this was only a temporary solution since it also meant that non-US goods grew more costly for Americans at the very moment that the Dollar was declining in value globally. As US investors attempted to recoup their losses, they were faced with the terrible realization that a global economic downturn had disastrous consequences for the very US heavy industries whose recovery and growth could have driven consumer demand. Manufacturing declined and with it so too did the wages that might have fueled global economic recovery.
In retrospect, the choices now seem straightforward. Two choices in particular stand out. One, investors could have simply accepted declining rates of profit. This would make it possible for consumers to enjoy a larger share of the pie overall, but it would mean that investors would have to make do with less both in real terms and as a percentage of their overall share in the global product. But the other alternative, the second, was to shift the regulatory burden off the shoulders of investors and place a larger share of this burden on the shoulders of consumers. In this way, opportunities and returns from investments would increase, but would not generate the kind of demand- and consumption-based returns that investors had enjoyed in the 1950s and 1960s. And as Thomas Piketty has pointed out, this would mean a dramatic increase globally in social and economic inequalities.
The EU was born in 1993, just as neoliberal economic policies were beginning to bear their fruit. A deregulated US economy managed by Bill Clinton was producing famous returns for investors in information and biotech. Privatization and deregulation were also the watchwords in the newly liberated South Africa, Eastern Europe, and the former Soviet Union. The thought that such prodigious returns as investors were now raking in might become a source of revenue to help reduce social and economic inequalities in Europe struck the architects of the new global neoliberalism as a formula for slaughtering the goose that was laying the golden eggs. And, no doubt, had nations taxed investment returns more highly than they did, this would surely have put a damper on economic growth. But it also would have ameliorated the already visible nationalisms springing up in France, Great Britain, and throughout post-Soviet southern and eastern Europe, not to mention Russia.
Of course, at the time, in the late 1980s and early 1990s, Samuel P Huntington and Francis Fukuyama were telling us that such nationalisms were precisely what one should expect from free citizens. The peace enjoyed during the previous half century since the end of World War II had been entirely artificial, fake and mostly corrupt, the consequence of state fiscal manipulation and not a genuine reflection of popular will. Nationalist violence will increase, no doubt; but it is a small price to pay for genuine economic freedom.
The New York Times quotes Corina Stratulat, a senior analyst at the European Policy Center, noting how nationalism is “part of the pathological normalcy for European politics” (http://nyti.ms/SEvnkn). However, there is a profound difference between the critical faculties of yesterday’s architects of European Union and its present-day custodians. In the 1950s and 1960s, these architects knew that it had been the free market orthodoxy of the 1910s and 1920s that had generated Europe’s profound social and economic inequalities, which, in turn, had played such a leading role in two terribly costly world wars and an equally costly revolution. Perhaps they too should have recognized in 1945 that these 70M casualties, not counting those in Germany’s death camps, were part of the “pathological normalcy” of European politics. They then might have spared us the attempts to remedy this pathology through fiscal policies designed to level the socio-economic playing field.
The far right is gaining ground politically in the EU today because neoliberal economic policy is inconsistent with economic union; the pursuit of the former undermines the latter. At some point this tendency becomes irreversible. Economic inequality generates a nationalism that undermines whatever economic efficiencies union may have produced. Which is why no matter where we look today political actors are screaming for autonomy, independence, self-sufficiency, and disentanglement. This we are told is what freedom looks like.
No one in this grand political casino shares more responsibility for what happens over the next decade than Germany’s Chancellor Merkel. For it was Merkel and her Christian Democrats who have proven so savvy playing the European nationalist card. But there is no such thing as a little bit of nationalism. If the Turks and North Africans are ruining the German educational system and undermining Germany’s “Christian” cultural values, then what role could economic policy possibly play in smoothing the playing field in, let us say, Spain, Greece, Slovenia or, dare we mention, Hungary? Germany’s Christian Democrats know how very dependent Germany has grown on Russian energy. So, by all means, let us not challenge Russian nationalism too loudly or forcefully, even if it costs Ukraine its eastern territories. Russian investments in neighboring Serbia are already large and growing. And they are significant as well right here in Bosnia and Herzegovina, where Serbian nationalists have expressed a commitment to protecting the interests of their ethnic kinsmen. Just a little more belt-tightening, a little more austerity, a little more privatization and deregulation; and everything will be good to go.
But that’s not really how it works. As the nationalists improve their standings in the polls, as neoliberal policies provoke the very conditions that breed nationalist discontent, economic growth and development become casualties in wars no longer fought with words. Chancellor Merkel is not the only Euro-cheerleader flirting with the enemy; she is simply the most important. Social Democrats and Greens everywhere need therefore to remind themselves and their followers why sharing the wealth, even when it takes a chunk out of private returns on investment, is preferable by far than the alternative. And the alternative, let us not forget can be very bleak indeed.