(Louis P: This is excerpted from a long document by Allen Woods, an Enlish Trotskyist, at http://easyweb.easynet.co.uk/~socappeal/socialisteurope.html). I mercifully don't include the standard ultimatistic boilerplate--"the workers must..., etc.--that adorns much of the original. Woods knows his Marxism, but like most Trotskyists can't communicate his message beyond the ingrown, cultish milieu he inhabits.) Why Maastricht? In the pages of Capital, Marx already explained that through credit capitalism goes beyond its natural limits, expanding the market in the short term, only at the cost of undermining it at a later date. In the last boom in the period 1982-90, they used credit and public spending to avoid a recession. From a capitalist point of view, this was really irresponsible. The classical policy of Keynes was to use "pump-priming" to get out of a recession. To use such measures during a boom was quite unprecedented and showed just how afraid they were of the political and social consequences of a recession. In the event, they merely succeeded in postponing the recession for two years, while making it deeper and more prolonged. Now they cannot have recourse to those methods. On the contrary. The resulting levels of indebtedness - public, private and corporate - are still causing them problems at the present time. That is why they have cat aside the mask of liberalism to reveal the real cold, rapacious mask of capitalism, under the banner of "sound finance" and "balanced budgets", which is the battle cry of Maastricht. In their desperation to find a way out of the crisis, the bourgeois economists swing all over the place, supporting first one policy, then another. They understand nothing and foresee nothing. In the late 1980s, they thought that the boom would go on indefinitely. They did not predict the recession in 1990, or the subsequent recovery. Having embraced Keynesianism in the period of the upswing, they became fervent advocates of monetarism in the 1980s. But in practice, monetarism has already shown itself to be bankrupt. The Economist pointed out recently that those governments that were most enthusiastic about monetarist policies in the 1980s (Japan, Finland, Switzerland) all ended up with the biggest mess subsequently. The same thing will happen with Maastricht. They are cutting the market so severely that they can end up in a deep slump, without having experienced a proper boom. The Maastricht treaty is not about European unity, but merely an excuse for carrying out an attack on living standards and cut public spending. The same policy is being carried out by all the other capitalist governments, including the United States, which is, as far as we know, not contemplating adherence to EMU. The real reason is the burning need to reduce the very high public debt which is absorbing a disproportionate amount of the wealth of society and has become a monstrous ulcer gnawing at the bowels of the system. The public debt of Italy amounts to no less than 120 percent of the Italian Gross Domestic Product (GDP), and that of Belgium equals 130 percent of its GDP. These figures have no precedent in peacetime. They cannot be sustained. The interest repayments on these debts swallow up a great part of the national budget. Without these repayments, most of these countries would have a budget surplus. This fact alone shows the enormous increase in waste and parasitism which are inseparable from modern capitalism. These figures explain the policy of ruthlessly cutting down on state expenditure being pursued by all governments. It is not the product of malice or caprice, as some people imagine, but flows from the contradictions of the capitalist system itself. The capitalists find themselves trapped between the devil and the deep blue sea. On the one hand, if they permit the deficits to continue, they will be faced with the danger of uncontrollable inflation in the future. On the other hand, the policy of cutting state expenditure will cut the market and deepen the crisis. Despite this, they have decided to gamble everything on a policy of cuts. This world-wide phenomenon is what lies behind Maastricht. The capitalist system has gone beyond its limits and is now compelled to cut back, on pain of extinction. Whoever fails to understand this fact will never grasp the true significance of Maastricht or work out a real alternative to it. When Maastricht was unveiled in 1992, all the European governments and economists were euphoric. We said at the time that Maastricht was a "dead duck", that it could not work. How has that prediction worked out in practice? The problem is that the European capitalists are attempting to move towards union at a time when the general economic conditions are pointing in the opposite direction. If they could obtain a rate of growth of 5 or 6 percent, as they did during the period of upswing, then they could bring about monetary union without too much trouble. But with growth rates of 3 -2 percent or less, this is impossible. What lies behind the pleas for "flexibility" is the defence of the national interests of each state. If they agree on a common currency, they will disagree on everything that flows from it. Quite apart from this, there are a thousand and one other points of conflict - cross-border travel, passports, immigration, and so on. All this means that a Federal European state on a capitalist basis is ruled out. Especially in conditions of world economic crisis, which is inevitable in the next two years or so, all the contradictions will come to the fore. It is unlikely that the EU will break up completely because of the need to defend their markets against the USA and Japan. They have to "hang together or hang separately". But the movement towards European union will founder in a sea of national conflicts and bickering. The European bourgeois will have to content themselves with a series of bilateral agreements and shifting alliances, with Germany looking ever more to the East, and France moving closer to Britain and the weaker European states in an attempt to balance the growing power of Germany. Such a situation will be very unstable and pregnant with all kinds of explosions. This is what the bourgeois economists do not take into account. To them this is just like a mathematical problem or a game of chess. They are removed from the realities of life, and especially the class struggle. Already there have been strikes and general strikes in one country after another. This marks the beginning of the reawakening of the European working class. That is the most important thing to see. The policy of cuts has already begun. By the end of 1997, France will have nearly halved its budget deficit as a percentage of GDP in the space of three years. Italy will have reduced it by no less than two thirds over a period of four years. In Sweden, that former bastion of the welfare state, the budget deficit was 12 percent of GDP only three years ago, but is now down to three percent. From the standpoint of the capitalist system, this represents "progress", but for the mass of the population, it means a vicious onslaught on living standards and the conditions of life. The social consequences of this are now being recognised by all but the most obtuse sections of the bourgeoisie: " or now," writes The Economist, "those efforts have helped to create a grim landscape of slow growth, weak profits, and social anxiety." (The Economist, 18/1/97, my emphasis.) The strict application of the Maastricht terms would force the workers to accept wage cuts or job losses or both. It would be the end of the kind of welfare state to which the last two generations have become accustomed in Germany, France and Italy. It would signify the destruction of those elements of a semi-civilised existence which have been conquered by the labour and trade union movement over the last four or five decades, and the return of all the old nightmares of poverty and insecurity. But this policy does not flow exclusively from the logic of European monetary union, as the Eurosceptics would have us believe. In fact, it has already been applied in Britain - despite public show of hostility towards "Maastricht" of the main political parties in the UK. The German, French and Belgium workers take one look at the conditions across the Channel and say "Not for us!" But, using Maastricht as an excuse, the European bosses are attempting to put the clock back to what appears from their class point of view to be a golden age of "sound money" and balanced budgets - before the first world war! From a capitalist standpoint, this is a logical position. Or rather, to quote from Shakespeare's Hamlet, "Though this be madness, yet there's method in it!" The effect of such a policy will be to exacerbate all the contradictions and provoke an explosion of class struggle in one country after another. In effect this has already begun, as shown by the strikes and demonstrations in France, Germany, Italy and Belgium in the last two years. This is only the beginning. France The electoral debacle of the French Right shocked the international bourgeoisie. They did not expect it, and least of all the scale of the Left's victory, which transformed the biggest right-wing majority in the National Assembly for 150 years into a big majority for the Socialists and Communists. This result - together with the massacre of the Tories in the British general election - is a clear sign of the enormous volatility that exists in society, characterised by violent swings of "public opinion" from left to right and back again. It opens up a new and stormy period in the history of France, which Marx said was the country in which the class struggle is always fought to the finish. Under the strain of attempting to keep up with Germany, French capitalism is beginning to break down. In reality, France is far weaker than Germany. It does not have the same industrial base. Growth is miserably slow - a mere 1.3% in 1996, and unemployment is around 13%. Yet a cut in interest rates to assist economic growth is ruled out by the need to keep the franc in line with the D-mark. The policy of the "franc fort" (the strong franc) has aggravated the already severe problems of French industry and deepened the recession. This is exactly what the policy of Maastricht means! The public sector deficit was estimated at 4 percent of GDP at the end of 1996. The 1997 budget includes tax cuts in an attempt to encourage growth, but at the same time a freeze in public spending. On this basis, the reduction of the deficit will be minimal, yet Chirac insists he will meet the 3 percent Maastricht target. How? By taking into account the receipts from the sale of France Télécom. But this trick does not change the underlying position, since it is a one-off gain, whereas the deficit is permanent and structural. On the other hand, the freezing of public spending represents a cut in real terms, something unknown in France in recent years. The swing to the left on the electoral plane was prepared by a wave of industrial disputes. During the one-day strike by five million public sector workers protesting against a proposed pay freeze, a clear majority of French public opinion backed them. The European (12/10/95) pointed out that "an opinion poll in the daily newspaper Le Parisien showed that 57 per cent of French people were in favour of the strike action and only 26 per cent were opposed." This shows the beginnings of a change of mood in French society. The same phenomenon could be seen one year later in the magnificent strike movement of December 1996 The lorry drivers' strike was an astonishing movement which revealed the colossal power that lies in the hands of the workers. This group alone was able to paralyse the French economy (and even the rest of Europe) and bring the government to its knees. Although not traditionally among the most advanced layers of the class, the lorry drivers showed great spirit, militancy and determination, and won their main demands. What is more important, three quarters of the public supported them , despite the inconvenience caused by the strike. Likewise, most of the foreign drivers expressed sympathy and solidarity with their French brothers, although the strike was hurting them. As a result of the movement from below, there is the beginnings of a change in the unions. Force Ouvrière was formed as a right wing breakaway from the Communist CGT and was virtually a company union. But pressure from below pushed it into a militant position, actually to the left of the CFDT and CGT in the public sector strikes of December 1995. By contrast the CFDT, which had been on the left since 1968, had gone to the right. But this in turn provoked a big left wing opposition in the ranks of the CFDT, which has become organised as the Tous Ensemble ("All Together") group. This shows the beginning of a process of internal differentiation which will take place in all the trade unions in the period that now opens up. The polarisation to the left and right in society will sooner or later find its expression in the ranks of the labour organisations. Chirac decided to call an early general election, despite having a huge majority in parliament (464 seats out of 577 in the National Assembly), in the hope of securing a further five years in power, in order to push through the unpopular austerity policies that flow from this. Despite the explosive conclusions which will flow from this, the French ruling class is desperate to retain their position as the second in command in Europe, scrambling to keep up with its more powerful neighbour, while sweating and cursing under its breath. But despite the outward show of unity, the whole process is fraught with contradictions. It is increasingly doubtful that France will be able to join EMU at all. Relations with Germany are strained, despite all the talk of a Paris-Bonn Axis. One German official was recently quoted as saying during the French election campaign: "If the momentum shows itself to be strongly against reform policies (i.e. more cuts, AW), we have to ask which way the French government will go." (Business Week, 5/5/97.) The swift recovery of the Socialists stunned both the ruling parties and the foreign "experts" who had been complaining that Chirac had not been sufficiently zealous in cutting living standards in the pursuit of the Holy Grail of Maastricht. In reality, this was an entirely predictable development. However, Chirac did not really have any other option, since, if he had waited another year the situation would have been even worse. The French election, perhaps even more than the British, revealed the highly volatile mood that now exists in society, particularly the middle class, characterised by violent swings to the left and right and back again. As Lenin explained long ago, this is one of the symptoms of a profound crisis of society. Already sections of the French ruling class are talking about revolution, like the Gaullist former interior minister, Charles Pasqua, who in November last year, harking back to 1788 said "We are on the eve of a revolt." Germany In an attempt to reduce Germany's public sector deficit from 4 percent to 2.5 percent (an even lower level than the 3 percent required by Maastricht), Kohl proposed a programme of spending cuts of DM 70 billion (£30 billion), including a 2.5 percent cut in federal spending, in addition to other reductions at regional level. Among the measures proposed were a freeze in unemployment benefit, cuts in assistance with medical charges and reductions in pensions entitlement. There were also long-term proposals to increase the retirement age of women from 60 to 65. As if this was not enough, a series of changes in Germany's employment laws were proposed, with the aim of reducing the employers costs and giving them greater freedom to sack workers, and also to reduce the level of sick pay from 100 percent of normal earnings to 80 percent. The bourgeois governments always commit the error of confusing the working class with the leading strata of the trade unions and labour movement. When Kohl announced his programme of cuts, the German union leaders responded by calling a mass national demonstration. This was in fact the biggest demonstration since before Hitler, with 350,000 converging on Bonn on the 15th June 1996. But, typically, the leaders tried to water it down by giving it the innocuous air of a carnival with beer, sausages and balloons. The representatives of the capitalists could not restrain their jubilation. They had a good laugh, and carried on with their cuts. This is absolutely typical of the conduct of the trade union leaders internationally. Even when they are compelled by pressure from below to call a demonstration, they do everything in their power to limit it, to turn it into an empty gesture and a means of blowing off steam. As always, weakness invites aggression. Such behaviour (which for some inexplicable reason they regard as "realism") merely emboldens the employers to carry out further attacks. However, they completely misjudged the situation and the real mood on the shop floor. In reality, the "realistic" union leaders were out of touch. Even the shop stewards did not faithfully reflect the mood of anger and bitterness which had slowly accumulated in the class. This was revealed in the spontaneous wave of unofficial strikes which greeted this attempt to reduce sick pay from 100 to 80 percent of normal earnings, an important conquest of the German working class. Kohl's announcement was met by an explosion on the shop floor which left both the employers and the union leaders with their mouths open. The spark was ignited by the workers of Mercedes Benz, when the management announced in early October their intention to carry this cut into action, thus tearing up the collective agreement with the workforce. There were immediate walkouts, and Mercedes Benz was compelled to back down. There were mass demonstrations of steelworkers in the south west and North Rhine Westphalia. The most interesting thing to note here is the fact that up till now there was no tradition among the German workers of unofficial strikes. But that is changing rapidly. The mood of the workers was shown by the comments of a Mercedes shop steward from the Stuttgart plant, Tom Adler: "The pressure came from below. The morning after the management board decision to introduce the 80 percent, the morning shift went out on strike, It was a spontaneous movement not organised by the IG Metall nor by the local shop stewards committee. The late shift and the night shift also walked out spontaneously. the rallies outside the factory gate were well attended and expressed massive rage on the part of the workers, something I have never seen before with my fellow workers. This was a situation in which nearly anything would have been possible. The events in these days have demonstrated one thing: consciousness can develop in enormous leaps. Many workers have understood that something must happen. Many who were passive and reluctant only a day before joined the strike." (Socialist Appeal November 1996) The Mercedes workers succeeded in forcing the bosses to back off, but the latter will inevitably regroup and launch another attack later on. They have no alternative but to attempt to destroy all the gains won by the workers in the past 50 years. This is the beginning of an entirely new period in the German labour movement. Overnight, the old policies of class collaboration and "workers' participation" (Mittbestimmung) have been discarded by the ruling class. The workers have shown that they are prepared to take up the challenge. Now Kohl announces that "I have never nailed myself to the cross of 3%". The desperate exertions of Kohl to push through monetary union at all costs have provoked an open split between his government and the mighty Bundesbank. In a transparent manoeuvre to reach the 3% target by a bit of creative accounting, he has demanded that the Bundesbank revalue the state's gold reserves, thereby releasing a large amount of funds and reducing the deficit as by the wave of a magic wand. Unfortunately, the Bundesbank does not like such sleight of hand. Apart from any other considerations, such a blatant trick would make it difficult to argue for the exclusion of Italy, Spain and the other weaker states from membership of the exclusive EMU club on the grounds that they had resorted to trickery to fix their deficits when Bonn was doing just the same. No! The name of the game is not conjuring tricks, but an all-out assault on public spending and living standards, and the Bundesbank will accept nothing less!
