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Wolfgang Streeck: Why Europe Can't Function as it Stands

Wolfgang Streeck 7 November 2016

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Wolfgang Streeck, author of the just-published How Will Capitalism End?, was interviewed by Wolfgang Storz. They discuss a possible way out of the euro crisis, the importance of the nation state, a disingenous refugee policy, and his 'denunciation as a social nationalist'. 

This interview was originally published on OXI and translated by Flossie Draper. 

Storz In your furious article "Merkel’s new clothes", you bemoan an intellectual constriction on several major issues in Germany, amongst others on the matter of refugee policy, but also in matters of economic and European policy. Were there reactions to this, and if so, what were they?

Streeck My article deals with the extreme volatility of German politics, which is driven by internal political motives and which, together with an almost complete absence of interrogation from any opposition, shatters Germany’s relations with its European neighbours. In addition, it deals with the astonishingly widespread conviction in Germany that all Europeans share fundamental German convictions about “Europa”, in particular about the advantages of a hard currency and the dispensability of national sovereignty. I consider that dangerous—above all for “Europa”—and have stated that clearly. The vast majority of the reactions that I have received have been enthusiastic. There has been the odd instance, such as in the weekly newspaper Die Zeit, of the cliché reaction, which I have described in my article as part of the affliction of German public life: namely, to denounce someone who says such a thing as an aider and abetter of the AfD [(Alternative für Deutschland)], or as a social nationalist.

The Gaps In the Culture of Political Discourse

What does this constriction you talk of look like?

Denunciation is its principal tool. It is intended to shield one from having to answer critical questions. One believes oneself to be thus not only bolstering ones own peace of mind, that is, ones own coalition prospects, but also the democratic consensus. But on this point, at any rate, one achieves the opposite. Whoever banishes from the political centre[1] questions that strike most people as the epitome of healthy common sense, can’t then be surprised when promising attempts are made from outside this centre to repatriate them there. I consider the position of “open borders with no ceiling” to be, cautiously speaking, an idea that is not appropriate to circumstances. That I am therefore portrayed as someone who neither helps nor wishes to help anyone is something that initially, in my naivety, I could scarcely believe. The “oversized coalition” government has been complicit in cuts to UNHCR funding for refugee camps in the Middle East without ever being seriously confronted on the matter. Perhaps it had its reasons; we don’t know. And perhaps it also had its reasons for not immediately then sending ten planes a day to Turkey and Jordan in order to bring to Germany and provide for them there those who need it most—for instance families who don’t want to put their small children through the journey, by sea and by foot, to Budapest. Neither after that did anyone question them.

You write, and the following sentence gets to the heart of your remarks: “Behind all this stands an opaque (impervious, ed.), closed political system, held together by a myriad of bans on speech, thought and questions, defended with ‘all democratic means’ and come into its own during a ten-year maturation process as ‘System Merkel’.” You, Mr Streeck, as one of the most intelligent thinkers in this country, paint the picture of a formally democratic society willingly stepping into line better than any conspiracy theorist could. I therefore have this question: If this is really the case, then why? Surely it can’t be down to the Chancellor alone?

If there is one thing in my article that ought to be made clear, it is that it cannot be down to “the Chancellor” alone. She, or rather her political apparatus, harnesses the pathologies of a culture of political discourse that she neither created nor could have created. There is much to say on this culture of discourse, and a lot of detail to go into—there is no space for that here. I will only say so much: it deals with people rather than apparatuses, ideas rather than interests, and feelings rather than calculations, in each case only ever with the first to the exclusion of the second. Whoever talks of the apparatuses and machinery, the interests and claims to power, and the calculations and evaluations that stand behind the people, feelings and ideas, and utilise them, spoils the sacred atmosphere. But it is for this reason, above all, that one has an opposition in democracy, so that it can do exactly that, and with critical questioning lay bare the issues and motives that are expected to stay buried behind and beneath the sacred smoke of the official incense.

This is also a primary duty of independent intellectuals. They really ought not to participate as acolytes in any political high mass. There is always something to expose. Not every assumption is necessarily true, and sometimes the language gets gruff and offensive. To correct that is the duty of democratic public life: the collective sorting of right and wrong. To that end, we have freedom of speech and press, together with the constitutionally protected right even to kick over the traces, within broad limits. Thus, and only thus, are dangerous loops of collective sentimentalisation broken and pathological learning, aimed only at self-affirmation, overcome. If every person who speaks out in public has first to be mindful of not showing any weakness in the face of self-proclaimed custodians of “the lessons of history”, then democracy and public life come to nothing. And no one perceives that precisely this is also a “lesson of history”.

The Cornerstones of a Progressive Refugee Policy

You criticise the prevailing refugee policy and lament the fact that any critics would quickly be branded as right wing. What in your view would you outline as the cornerstones of a contemporary refugee policy that is progressive and at the same time realistic and suitable for Europe?

The most important thing would be to distinguish between economic interests and humanitarian obligations. I’ll begin with the humanitarian obligations. The airlift I described above, for the weakest and most in need, would be just the start. The next step would be the construction of hospitals, schools and small businesses in the region’s refugee camps; a project that can only be mastered by multiple rich countries working together. Then the people-trafficking industry would dry up, which at any rate helps only the middle classes of the affected societies come to Europe; all the others cannot afford the journey. Next, the democratic nations would have to end their tacit collaboration with despots of all kinds. It is well known that they attempt to cast off their surplus population, those who are sinking into poverty, as refugees, so as to have an easier job of it by doing so. There would, in addition, be a humanitarian obligation to actively condemn the senseless bombing campaigns with which our allies, for whatever frivolous reason, annihilate the governmental structures in the Near East and elsewhere. Not seldom is that connected with the expectation that the waves of refugees precipitated thereby be absorbed by “Europa”, in the guise of Germany—which ultimately also means financial assistance.

How would you describe the German economic interests in this regard?

They come about from the fact that we in Germany, as Meinhard Miegel has framed it, live in an “infertile habitat”—at any rate in one that doesn’t produce children in the numbers one believes it needs in order to meet the foreseeable demands of the labour market in the future and to drum up the necessary contributions to finance the pay-as-you-go pension insurance system. One can take whatever view on that one likes—what is certain, however, is that the Federal Government and the economists that advise them proceed on the assumption that over the next 20 years we “need” around 500,000 immigrants. That sinister hopes of wage suppression and undermining the minimum wage are no doubt also at play here, one hardly need stress. The goal is to let the workforce come to those places where the jobs are (or purportedly will be), rather than that the jobs should go to where the workforce is, which was famously once the leading principle of domestic regional policy. Immigration of this magnitude, and with the risk of a totally different labour market situation in ten years’ time, may well be necessary, or indeed not—either way, it has absolutely nothing to do with the fulfilment of humanitarian obligations. It ought to be justified by political considerations, not as a legal obligation and moral litmus test, that one can be sure a greater part of the population cannot pass because they will see their own interests as being under threat.  This could only be avoided through an open and contentious discussion of the economic for and against of mass immigration. Incidentally, the vampiric sucking of qualified workers away from other regions may well be a German interest—but a pan- or general European one it certainly is not. Countries with high unemployment and so-called “structural problems” need anything but that, whilst countries with high birth rates, such as Poland, don’t need it in any case. Whoever then reviles such countries, and from Germany of all places, as home to xenophobic nationalists and racists, perhaps so as to make the acceptance of amplified immigration in their own land seem a national obligation, can’t then be surprised if others no longer want to play along in a “Europa” of this nature.

More Europe – An Illusion?

Jürgen Habermas sees a solution to the European crisis in more Europe. You believe that to be illusory. What are your counterarguments?

To put it simply, no one other than the Germans, or rather, the—shrinking—Habermas community in Germany, really wants that. (By the way, apropos “more Europe”: Europe is a (half) continent with, according to my reckoning, a nigh on two-thousand-year history. Of this Europe, at any rate, I simply can’t get enough. Those who today hanker for “more Europe” have something else in mind though: namely, more power for the Brussels Schulz-and-Juncker construct of a non-democratic non-state without demos, or populus, or Volk, whatever you want to call it. I have to ask that the two not be equated).  First and foremost: every country envisions something different as regards “more Europe”, depending on their experiences and interests as a nation, and they are able to as well, because any discussion of the end goal of European integration is most torturously avoided amongst those who push for it—and with good reason, because otherwise the whole business would go up in flames. (That, by the way, is the reason why the hugely interesting British discussion on In or Out is ridiculed at home across the board: no one wants to pose the questions it deals with, because no one has an answer for them.) The small countries, for instance, are members of the EU because it is there that they see the surest way to maintain their national independence: the Danes with respect to Germany, the Balts with respect to Russia, the Irish with respect to Britain, and so on. The English, on the other hand, are in the EU to prevent its coalescence into a coherent entity, in accordance with their centuries-old policy of obstructing a “continental unifier”; the French, through integrating Germany into French politics, to be able to extend that process over Europe as a whole; the Germans, originally in order to once again attain entry into the circle of civilised nations through a transformation of their historically charged identity into one that is envisaged as “European”, and today, to be able to live out and assert as European their ethno-centric, idiosyncratic perspectives, which they take for granted (“culture of stability”, “culture of welcoming”, abolition of nations)—which is in fact an illusion. Where that’s meant to lead, is anybody’s guess.

Recent rhetoric has generally asserted that the goal should not be a “European superstate”; not even Habermas wants that, though he nevertheless demands from “Europa” that it be “democratic” and moreover should tame capitalism. How? Shrugs shoulders. If, however, we are not to have a “superstate”, must one not then retain the nation states, and, see TTIP etc., even strengthen them? Shrugs shoulders. How can one be against the superstate and at the same time against nation states? I contend that this ultimately amounts to a neoliberal agenda to divorce capitalism from democracy, or rather, to set the first free from the second. (Under certain assumptions one can seemingly even pass such an idea off as “leftist”.) If that is what this “more Europe” is, then thanks but no thanks. Can there be more “more”? [2] I can’t see it, especially as every European state has learnt from the experiences of recent years with the Euro and the refugee crisis that less national sovereignty for all would mean more supranational sovereignty for Germany.

Ways Out of the Euro Crisis

You see a problem with the Euro currency, and no solutions. Why? And what do you want?

The matter is actually quite simple: the Mediterranean countries can get nowhere, economically speaking, so long as they are in the Euro. That will split Europe politically, unless there are fundamental changes soon.  Because of their economic and social structures—that is, due to their political economy—the countries in the Mediterranean region need a soft currency. The Euro, however, is a hard currency. That is suited to a highly industrialised export economy like that of the Germans. The modernisation-orientated elite of the Mediterranean countries, including France, wanted the Euro as it is, because with it they hoped to be able to turn around their societies, which they define as backwards, and modernise them after a neoliberal model. That has—likely—failed. Today they would rather soften the Euro than “harden” their societies in a neoliberal manner; but that too doesn’t work, for the Germans and their allies stand in the way, unable to forego their “culture of stability” because their—relative, and in any case dwindling—prosperity is dependent on this.  The alternative, supposedly, is that debt relief, “Marshall Plans”, Junckerish “investment programmes” (already forgotten? Quite right!) fix it—but in comparison to the existential problems from within of inflationary national economies under a hard monetary regime, that’s all peanuts. The political consequences are fatal: whatever is decided on as to internal redistribution programmes, including in secret through the ECB or ESF, will always be too little for the recipient countries and too much for the taxpayers of the donor countries—and whatever is conceded to the donor countries by the recipient countries in the way of control over the use of their allocations will always be too much for the recipients, and for the donors, too little. Look at Greece—where the billions in bailout don’t go to the Greeks in any case, but to the banks that senselessly sold them credit.

You write in your essay that the Euro sucks the “economic blood” out of the other EU states “in the interests of the German trade balance”. How seriously is Europe harmed by the German economic strategy, that wants, indeed, to achieve not only a high export quota, but the absolute highest possible export surpluses?

It’s not about a “strategy.” The yearly surpluses are a calculative net balance between that which the Germans sell abroad and that which they buy from abroad, and at the prevailing exchange rate, at that. (They immediately become greater or smaller when thecurrency in which they are valued depreciates or appreciates). Nor do they sit in any kind of state budget or in the cellar of the German Central Bank, ready at hand for solidary international distribution; the game that is played here is called capitalism, not state monopoly of foreign trade plus liberty, equality, fraternity. That Germany is “World export champion” is due to it being over-industrialised for its size and its currency, the Euro, being undervalued (because of the differing structure and inferior “competitive ability” of the other countries that likewise work with the Euro and, latterly, also because of the monetary policy of the ECB).

What ought Germany to do differently?

The industrial sector, which is focussed to a very high degree on export, is still the most important, and what’s more the best, employer in Germany. Without exports, roughly 70 per cent of jobs in the German auto industry would be lost. This makes the unions enthusiastic supporters of that which you call “the German economic strategy”. On top of this, industrial jobs, unlike the majority of jobs in the service sector, are easy to outsource. German employers can at any point offset any weakening in their “competitive ability”, or more precisely, their profitability, by outsourcing jobs abroad. Even the mere threat is enough to bring staff and works councils “to their senses” when they demand wages that are too high. Therefore the claim from some leftists, including some union members and politicians in other European countries, that the German unions should, in the name of the “European idea” or international solidarity, raise the wages of their members so steeply that German industry forfeits export markets, is totally absurd. In place of this, the exchange rate regime would have to be altered, which in the EMU (The Economic and Monetary Union, ed.) is tantamount to an intensified gold standard. As soon as the German currency (and the currencies of the EMU member states) can once again be more or less realistically valued—and that is only possible through a breaking up of the Euro and through permanently variable exchange rates—the problem of German export surpluses solves itself.

Of course that wouldn’t be the end of all our problems. We live after all in the phase of decline of high capitalism—with secular stagnation, growing inequality and explosive levels of debt everywhere, not only in Europe or the Eurozone. Yet, the European countries that are today considered to be economically weaker would then at least have one more important card in their hand with which to defend themselves economically: they would once more have their own currency, they would once more have monetary sovereignty. And they would no longer be dependent on Germany renouncing her interests, let alone on German mercifulness, which cannot exist in the real world, or, at any rate, in nowhere near the necessary degree.

Europe Without Alternatives?

Which European idea do you belive in?

I don’t care much for beliefs; I sometimes hope instead for one thing or another, albeit as disciplined by realism as possible. As far as Europe is concerned, I hope that the idea, essentially indebted to German politics, and disseminated across many European countries, that today’s class struggle has to be waged between the European peoples and Germany and no longer between those dependent on a wage and those dependent on profit, soon ends up on the dung heap of Europe’s nightmare history.

Seeing as you no longer unconditionally believe in the Euro and the prevailing European idea, do you now feel yourself sidelined?

Not in Italy, France, Denmark, Holland, or England:on the contrary. Partly because in these countries, due to morally intrusive political taboos, the constriction of the public debate is less marked than in the fatherland of “indomitable discourse”.  As far as Germany is concerned, it’s therefore in fact annoying, when, on perusing the morning papers, one unexpectedly finds oneself pilloried as a “national socialist,” amongst other things, by people that are as clueless as they are vicious. As for the rest, even if it sounds somewhat demanding: if you can’t stand the heat, stay out of the kitchen, as the American saying goes. And whoever participates in the public debate, particularly as a non-politician, ought not to do this to win friends, but, on the contrary, if nothing else works, must rather be ready to lose friends.

You’ve advised influential people, amongst them even the former chairman of IG Metall [(the industrial union of metal workers)], Berthold Huber. Most notably, in an important post in the chancellery at the start of Chancellor Gerhard Schröder’s era, you collaborated on reshaping the labour market.  Today, behind closed doors, you are even accused of wanting to use the present radicalness of your old age to make good what earlier, in the vicinity of the powerful, you had a hand in.  

I would like neither to confirm nor deny your statements about with whom I spoke and when, on what topic in whichever “important post.”  I have my entire life been, and am still today, an adherent of strong unions. Their current weakness translates for me into a dangerous weakness of democracy. If anyone in the unions is interested in what I believe can realistically be done to counter this, I am at their disposal—in the worst event, to profess my helplessness. I have also devoted a good part of my academic work to contemplating possibilities of a social democratic solution, or rather handling, of the class conflicts in developed capitalist societies.  This also included “applied” research, for example on wage and social policy, labour market policy and vocational training, for which I see not the slightest reason to be ashamed. I was party also to the British discussion on the “third way”, assessing that perhaps that could be the last possibility of preserving viability for social democracy in government. However, at the start of the 2000s it became apparent that this was a misapprehension and that financialised capitalism’s trends towards liberalisation were too intractable for social democracy to ride. The financial crisis, especially, then opened my eyes once and for all to the fact that a “more radical” perspective is necessary; that is, one that gets to the roots of capitalism. Today I think that the social democratic wager that I was long counting on is lost.  That has nothing to do with “age” as you seem to presume, but probably with life lived and history experienced. Aside from that, please believe me when I say that, personally, I still feel in fine fettle.

[1] Translator’s note: German Verfassungsbogen – this is a fluid term used to describe those parties and organisations that are seen to fall within the “arch of the constitution”, i.e. the groups that are faithful to it (the political mainstream). Those who are considered to violate the basic principles of the constitution (certain fringe organisations) fall outside its scope.

[2] Translator's note: quotation marks added in by translator for ease of reading in English.

Translated from the German by Flossie Draper. Clarifications in square brackets added by translator.

Filed under: economics