Mysterious Europe
Some brief remarks on Rober Boyer’s Seven lessons from the euro crisis
Cédric Durand
CEPN (CNRS/Paris13)
CEPN-LADYSS, 10 septembre 2015
Learning from the EU crisis with Boyer
A great intellectual opportunity for political economy
“Le réel, c’est quand on se cogne” (Lacan)
The limits of usual interpretations
Excessive public deficits
crowding out effect on private activity because of Ricardian equivalence
Mismanagement of interest rate
too low => bubbles, in fact pb with one size fits all monetary policy
The Eurozone not an OCA, thus doomed to fail
Is it so irrelevant ? Points to the necessity of a fiscal federalism and thus
democracy.
A different approach
Monetary and financial instability should be related to the real economy
National heterogeneities has to be taken into account
A complex web of “cognitive, economic and political factors”
OK but is it controversial ?
General assessment
Does Robert Boyer bites off more than he can chew ?
• The (correct) refusal of mono-causality lead to a multiplicity of
lines of arguments that are difficult to put together: are they
consistent ? How are they articulated ?
• A mismatch between rich and audacious developments and not so
trenchant conclusions
• Normatively, the text reveals a persistent Europeist candour. A
personal hypothesis: is the lack of trenchant a way to soften a too
deceptive reality ?
We need a spicier version of Boyer’s arguments
• A class perspective is inspiring: integration is not class neutral.
“it is possible for particular social groups to alter advantage by altering state
boundaries” (Wallerstein, 1979, p. 292).
• Boyer’s decisive insight about the changing hierarchy of structural
forms in the course of integration must be explored further
• Dynamics of class restructuring are at the origin of the euro crisis
Seven lessons
1.
2.
3.
4.
5.
6.
7.
It was dangerous to trust real Business Cycles models to assess the
epochal change brought by the euro
An open debate among different economic approaches would have
anticipated the imbalances
In the weakest economies, policy makers have not perceived the
radical institutional changes required by the euro
Polarisation of specialisation has not been alleviated by innovation
and industrial policy and this is the underlying origin of the crisis
Monetary stability may be associated to financial instability and a
major crisis: specific financial regulation were required to sustain the
euro
The euro, along with capital full mobility, has exacerbated the
productive imbalances across member states that leads to the
present crisis
The ECB has become the leader of the rescue of the Euro but no
other actor has the legitimacy and tools to develop an offensive
industrial policy at the continental level
Boyer’s 7 lessons on the origin of the
crisis reduced
Bad policies in the periphery (i.e. lack of structural reforms)
I generally disagree. The non-cooperative player has been Germany.
In Keynes view the adjusment of trade imbalances must rely also on the
surplus country
Lack of EU innovation and industrial policies
I agree with the statement considerable loss of room of manoeuvre at the
national level
But, could it be mitigated by EU innovation and industrial policies ?
Isn’t it wishful thinking without fiscal federalism ? And in this case, what is
the problem with productive divergence ? If we have a genuine unification,
there is no pb with transfers
Free capital flows
This is clearly a central element, but it is not a cause among other, it is the
most important feature of contemporary financial hegemony. The “raison
d’être” of the Euro.
A single currency without free capital flow within is not a single currency (ex:
currently Greek Euro are not really usual Euro are there uses are restricted)
Crises are an unintended consequences of financial capital political successes
complementary thesis 1
UNEVEN CLASS RESTRUCTURING AT
THE ROOTS OF IMBALANCES
THE cause of imbalances: diverging ULC
because of the retreat of German Labour
http://yanisvaroufakis.eu
Growth regimes, working class restructuring and imbalances
(Stockhammer, Durand and List, 2015)
Complementary thesis 2
FINANCIAL HEGEMONY IS THE RESULT
OF (IMPERFECT BUT SUCCESSFUL)
STRATEGIC POLICY MAKING BY BIG
BUSINESSES
What was the motive of the Euro ?
Against a (naïve) functionalist view
•
•
the will to reduce exchange rate instability
An harmonicist illusion, mask uneven distribution of economic
advantages
A class-strategic perspective
• the quest by Financial institution and TNC (via the European
Roundtable of industrialist) to the advantages of a domestic
World Money
Costas Lapavistas (2012)
• The implementation of a mechanism allowing to circumvent
past social compromises and force labour restructuration
Without european transfers and exchange rate adjustment, wages and public
spendings are the sole adjustment variables
“The European social model has already gone” (Draghi, WSJ, 2012)
Banking on World Money
(Net FDI stock, Lane and Mileni database)
40
France
Germany
30
Euro area
20
10
0
1990
-10
1995
2000
2005
2010
The Changing hierarchy of structural
forms in the course of EU integration
Boyer (2000, 2013) ; (Durand and Keucheyan, 2015)
The productive capital moment
Because of the national and global rise of labour and rapid industrial
development, the regulation of capital accumulation was mainly
subordinated to the economic and political management of the workforce
The transnational capital moment
The European roundtable at the command in the re-launch of the EU
integration in the 1980s
Domination of trade and competition issues
(Van Apeldoorn, 2002 and 2013 ; Ross, 1995)
The financial capital moment
Euro helped to complete the financial integration of the European
economy and to deepen financial markets, which, throughout the
continent, fostered the rise of financialised forms of corporate
governance
The Euro crisis resulting from huge regional imbalances => financial
stability as the expression of the dominance of finance over the other
structural forms
Changing hierarchy of structural forms and EU integration
(Durand and Keucheyan, 2015)
Uneven distribution of selectivities
across European statehood
Exclusive competencies of the EU
commercial policy,
competition policy,
monetary policy
(and, finally, the common fisheries policy)
Since 2008, densification of European institutions to
support financial hegemony (in sharp contrast with the
lack of any social initiative).
Compromises between member states and business and financial
organizations are made for the central purpose of reproducing
financialisation
ECB buying of national bonds only on secondary markets
Banking Union
ECB QE
A negative path of social integration
Limitations to the very possibility of a European social policy under the
current treaties.
• First, social policy is a subordinated policy. It has to negotiate "the diverse forms of
national practices, in particular in the field of contractual relations, and the need to
maintain the competitiveness of the Union economy.” (Art 151).
• Secondly, key dimensions of this policy are excluded, as the areas in which the Union
shall support and complement the activities of the member states do not cover “pay, the
right of association, the right to strike or the right to impose lock-outs” (Art 153) and
must not interfere with “the right of Member States to define the fundamental principles
of their social security systems”.
• Finally, the Fundamental Rights Charter is mostly non-binding, as it only applies to EU
member states in relation to their implementation of EU law (Art 52 of the Charter).
Worse, the minimal social Community acquis is currently undermined by the
Commission’s determination to revise some older directives and the more liberal
orientation the jurisprudence has taken within the ECJ (Dufresne & Pernot, 2013).
The highly dynamic process of negative integration (Scharpf, 2010 )
• memoranda, the fiscal compact and, possibly, the “reform contracts” proposed by
Germany follow such a negative integration path; all include very stringent constraints on
key dimensions of welfare (pension reforms, unemployment benefits, health benefits)
and on labour market regulations (Jolivet et al., 2013).
• Social issues are not addressed for their own sake, but, rather, operate as adjustment
variables under the heading of financial stability, macro-supervision of fiscal policy and
competitiveness