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Why the euro has to be abandoned if Europe is to be saved

Lars Syll

The euro has taken away the possibility for national governments to manage their economies in a meaningful way — and the population has had to pay the true costs of its concomitant misguided austerity policies.

The unfolding of the repeated economic crises in the Eurozone during the last decade has shown beyond any doubt that the euro is not only an economic project but just as much a political one. What the neoliberal revolution during the 1980s and 1990s didn’t manage to accomplish, the euro shall now achieve.

“Bandeira europeia – European flag” by institutogallaecia (licensed CC BY-ND 2.0)

But do the European people really want to (a) deprive themselves of economic autonomy, (b) enforce lower incomes, and (c) slash social welfare spending at the slightest sign of economic distress? Are increasing income inequality and a federal überstate really the stuff that our dreams are made of? I doubt it.

History ought to act as a deterrent to these outcomes. During the 1930s the European countries didn’t come out of the depression until the folly of that time – the gold standard – was thrown on the dustbin of history. Hopefully the euro will soon join it.

Economists have a tendency to become enthralled by their theories and models, and to forget that behind the figures and abstractions there is a real world inhabited by real people. These real people have to pay dearly for the economists’ fundamentally flawed doctrines and recommendations.

According to Wolfgand Streeck [1]:

“ Now more than ever there is a grotesque gap between capitalism’s intensifying reproduction problems and the collective energy needed to resolve them … This may mean that there is no guarantee that the people who have been so kind as to present us with the euro will be able to protect us from its consequences, or will even make a serious attempt to do so. The sorcerer’s apprentices will be unable to let go of the broom with which they aimed to cleanse Europe of its pre-modern social and anti-capitalist foibles, for the sake of a neoliberal transformation of its capitalism.

The most plausible scenario for Europe in the near and not-so-near future is one of growing economic disparities — and of increasing political and cultural hostility between its peoples, as they find themselves flanked by technocratic attempts to undermine democracy on one side, and the rise of new nationalist parties on the other side. These will seize the opportunity to declare them- selves the authentic champions of the growing number of so-called losers of modernization, who feel they have been abandoned by a social democracy that has embraced the market and globalization. “

1. Wolfgang Streeck is a German economic sociologist and is emeritus director of the Max Planck Institute for the Study of Societies in Cologne.

Source: Real World Econ Rev, 23 July 2020

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