The left and European Monetary Union

First published: July 1996

‘The completion of the socialist revolution within national limits is unthinkable. One of the basic reasons for the crisis in bourgeois society is the fact that the productive forces created by it can no longer be reconciled with the framework of the national state. From this follow, on the one hand, imperialist wars, on the other, the utopia of a bourgeois United States of Europe. The socialist revolution begins on the national arena, it unfolds on the international arena, and is completed on the world arena. Thus, the socialist revolution becomes a permanent revolution in a news and broader sense of the word; it attains completion only in the final victory of the new society on our entire planet.’ – Trotsky

The social explosion in France at the end of last year, and the new wave of cuts in public spending planned in Germany, France, Spain, Belgium and other states, show the contradictions in which those on the left who supported the Treaty of Maastricht now find themselves. They endorse the very agreement which is co-ordinating the attacks on the welfare state on a European Union wide level and, in doing so, place themselves on a collision course with every section of the European labour movement acting to defend the welfare state.

Within the labour movement, the most sophisticated arguments in support of European Monetary Union stress, quite correctly, that the international character of the productive forces (globalisation) requires an international strategy of the working class, that neither ‘capitalism in one country’ nor ‘socialism in one country’ provide a workable strategy in the context of the capitalist world market. As Perry Anderson puts it: ‘Purely national strategies are vanishing for every part of the political spectrum.’ Anderson points out that, over the last two decades, the labour movement has lagged far behind capital in the necessary international organisation of forces: ‘The new reality is a massive asymmetry between the international mobility and organisation of capital, and the dispersal and segmentation of labour, that has no historical precedent. The globalisation of capitalism has not drawn the resistances to it together, but scattered and outflanked them… the future belongs to the set of forces that are overtaking the nation state. So far they have been captured or driven by capital – as in the past fifty years, internationalism has changed sides. So long as the left fails to win back the initiative here, the current system will be secure.’ [1]

Indeed, the greatest strength of capitalism since the end of the post-war boom has been its ability to continue to hold together an international capitalist system in conditions of increased inter-imperialist competition. This contrasts with the period of breakdown of the world capitalist market between 1914 and 1945, but it is extremely fragile – depending upon other capitalist powers tolerating enormous outflows of capital into the United States, the lynchpin of this system. This capital outflow his amounted to $1 trillion since 1980.

The moves towards regional blocs in Europe, East Asia and North America are signs of increasing strain in this world capitalist system. They indicate that, left to itself – that is, were the working class to acquiesce in it – the attempt to recreate the pre-1914 system of imperialism will ultimately lead to a new outbreak of inter-imperialist conflict and blood-letting on a still greater scale than that from 1914 to 1945. This is because, while capitalism creates a world economy and division of labour, capitalist political power resides in individual states. While these may agree to divide up their influence in the world, such ‘agreements’ are on the basis on relative strength and, as relative strength changes, the division of the world must be reorganised to reflect those changes – generally with extreme violence.

The way out of this contradiction, which produced the inter-imperialist wars of the twentieth century, is represented in the existence of an international class – the proletariat, whose interests are international. The extraordinary genius of Marx was to understand and point this out 150 years ago. The international extension of the social division of labour in the capitalist world market and the purely national political framework of the bourgeois nation state constitutes one of the fundamental contradictions of capitalism. As the Communist Manifesto explained: ‘Modern industry has established the world market’ and ‘The need of a constantly expanding market for its products chases the bourgeoisie over the whole surface of the globe. It must nestle everywhere, settle everywhere, establish connections everywhere.’ [2] Marx’s analysis has stood the test of time because it so accurately understood the reality of the dynamic of capitalist economic relations.

Thus the most famous call of Marx and Engels in the Communist Manifesto – ‘Workers of the World Unite’ – was not a flight of rhetoric, but expressed the material reality of the proletariat; an international class in the emerging world capitalist economy.

Or as Trotsky expressed the same point: ‘Internationalism is not an abstract principle but the expression of an economic fact. Just as liberalism was national, so socialism is international. Starting from the worldwide division of labour, the task of socialism is to carry the international exchange of goods and services to its highest development.’ [3]

It was on this basis – a recognition of what the working class is – that Marxists, starting with Marx, not only stood for, but very practically created, simultaneously international, as well as national, political organisations of the working class. Thus Marx and Engels created the First International in 1864, Engels and Eleanor Marx helped to create the Second International in 1889, Lenin, Trotsky and Luxemburg the Third International in 1919 and Trotsky the Fourth International in 1938. Whatever the subsequent fate of each of the organisations, they expressed in their creation the attempt to bring the political consciousness and organisation of the working class into line with its world existence. For Marx, Engels, Lenin and Trotsky, Rosa Luxemburg and Eleanor Marx, defence of the interests of the working class was inconceivable on a purely national basis.

This reality was brought home with immense force by the World Wars of the twentieth century. As Trotsky, for example, explained: ‘On August 4, 1914, the death knell sounded for national programmes for all time. The revolutionary party of the proletariat can base itself only upon an international programme corresponding to the character of the present epoch, the epoch of the highest development and collapse of capitalism. An international communist programme is in no case the sum total of national programmes or an amalgam of their common features. The international programme must proceed directly from an analysis of the conditions and tendencies of world economy and of the world political system taken as a whole in all its connections and contradictions, that is, with the mutually antagonistic interdependence of its separate parts. In the present epoch, to a much larger extent than in the past, the national orientation of the proletariat must and can flow only from a world orientation and not vice versa. Herein lies the basic and primary difference between communist internationalists and all varieties of national socialism.’ [4]

It is because, Trotsky argued, ‘Imperialism links up incomparably more rapidly and more deeply the individual national and continental units into a single entity, bringing them into the closest and most vital dependence upon each other’, that ‘A programme of the international party of the proletariat can be built only if world economy, which dominates its separate parts, is taken as the point of departure.’ [5]

The attempt to revert to a national perspective for socialist strategy was an expression of the degeneration of the socialist movement. It was the basis on which the parties of the Second International subordinated the international interests of the working class to their own imperialist bourgeoisies in the carnage of the First World War. Just as national socialism destroyed the Second International, so too the Comintern lost its reason for existence and was politically destroyed and then organisationally dissolved on the basis of Stalin’s strategy of socialism in one country.

In the same way, today the socialist alternative to the European Union’s plans to dismantle the welfare state is not to be found among those who argue from the point of view of defence of ‘British sovereignty’. This amounts to a proposal to subordinate the labour movement to British capital. The Campaign Against Euro Federalism, for example, advocates a bloc with the Tory Euro-sceptics and anti-European sections of capital against the EU. The formerly Maoist CPB (ML) takes this argument to its logical conclusion and opposes the EU on this basis because: ‘Britain is today, and has been for nearly a thousand years, a sovereign country… no foreign power has held sway here’. Therefore ‘To assert and fight for the sovereignty of Britain should be as natural to workers as joining a trade union.’ [6]

In reality, Britain has not been a ‘national’ state for more than 300 years. The sovereignty for which the Tory Euro-sceptics, for example, hanker is that of a rapacious imperialist power, which until 1914 was dominant in the world and whose sovereignty was a prison for hundreds of millions of colonial subjects. Latterly, since 1945, these global pretensions were maintained through a junior partnership with the US. Any attempt to reconstruct such ‘British sovereignty’ is a reactionary dead end.

This approach would, therefore, align the labour movement with sections of British capital that are no less anti-working class than those who see the way forward as part of European capitalist integration. Furthermore, those advocating this course would split the British labour movement from its real allies, those fighting the introduction of capitalism into Russia, against imperialism in the ‘Third World’ and those defending the welfare state in western Europe.

In opposition to an economic and political strategy beginning at the national level – that of socialism in one country – Trotsky explained: ‘The completion of the socialist revolution within national limits is unthinkable. One of the basic reasons for the crisis in bourgeois society is the fact that the productive forces created by it can no longer be reconciled with the framework of the national state. From this follow, on the one hand, imperialist wars, on the other, the utopia of a bourgeois United States of Europe. The socialist revolution begins on the national arena, it unfolds on the international arena, and is completed on the world arena. Thus, the socialist revolution becomes a permanent revolution in a newer and broader sense of the word; it attains completion only in the final victory of the new society on our entire planet.’ [7]

To reinstate this fundamentally international character of socialist strategy is both to return to the classical positions of Marxism and, more importantly, corresponds to the international character of the capitalist economy.

However, to reaffirm that the only framework for socialist strategy is an international one is not the end of the matter. The working class has to develop and fight for its own international perspective, not subordinate itself to either the national or international perspectives of any section of capital. Socialists are not neutral or supportive of the international projects of capital. For example, no socialist could support Hitler’s plan for a ‘new world order’ after 1933 or Bush’s plan for a ‘new world order’ after 1989.

Nonetheless much of the labour movement’s approach to the European Union moves directly from the (correct) premise that it is necessary to start from an international perspective to the (false) conclusion that this requires acceptance of the European Union and the Maastricht Treaty.

The European Union is an organisation of international capital, formed, first, to rebuild capital in Europe after World War II and, second, since the mid-1970s, to strengthen European capital to compete against its capitalist rivals, particularly the United States and Japan. Even so, this economic competition is conducted within a strategic framework set by the US – expressed, for example, in NATO.

The view of European social democracy that the labour movement must support the international projects of European big capital – such as the European Union – in order that European capital can compete more successfully against the US and Japan, is merely the transfer of social democracy’s subordination to its ‘own’ national bourgeoisie onto a ‘European’ level. The TUC puts this very clearly: ‘There has been an emerging view in British unions that the future of UK jobs and prosperity depends on the European Union competing effectively in world markets.’ [8]

The problem with this is that the only way for European capital to eliminate the relative weaknesses it faces vis-á-vis Japan and the United States is through crushing blows against the working class and petty bourgeoisie in Europe. Capital in Europe faces four key disadvantages relative to the US and Japan: the fragmentation of Europe into a series of small states with correspondingly smaller scales of production and of markets; the strength of the labour movement in the form of the trade unions, mass social democratic and communist parties; the existence of the welfare state; the existence of a comparatively weighty petty bourgeoisie and the resulting lower level of productivity in agriculture and services. The Maastricht Treaty seeks to overcome these ‘disadvantages’ by starting to eliminate the West European welfare state.

Ignoring this reality, European social democracy has come forward today as the most explicit supporters of the Treaty of Maastricht, posing themselves as better able to pursue these goals than the more nationally oriented capitalist parties. Thus, as crisis-ridden European national capitals no longer provided an adequate basis for a social democratic perspective after World War I, it moved first to support US imperialism, and then, with the relative decline of the US, to support the European Union.

In 1914 the social democratic currents in Europe subordinated themselves to their national bourgeoisies in World War I, thus destroying the Second International. From the 1920s to the 1950s, European social-democracy orientated itself to US imperialism as the only capitalist class capable of funding capitalist reform in Europe. This political orientation of social democracy reflected the shifts in power between different sections of the international bourgeoisie. Following the 1914–18 war, European capitalism was incapable of regaining political or economic stability without massive support from US capital. After World War II facing an even worse balance of forces, again huge US intervention was necessary to stabilise capitalism in Western Europe. The US both militarily saved Western Europe at the end of the war – without it the USSR would have crushed Nazi Germany and capitalism in Europe would have been destroyed – and then rebuilt Western Europe economically through Marshall Aid and massive US capital investment.

The post–war structure of Europe, with capitalism dependent on US support and the dominance of the USSR in Eastern Europe was the material basis of, on the one hand, pro-American, Atlanticist currents within social democracy as well as, on the other hand, strong pro-Soviet currents in the labour movement.

It was the change in the international role of the United States in relation to Europe from the early 1970s, after the watershed of Vietnam – moving from aiding Western European capital to striking blows against the West European economies – that precipitated a change in the political stance of European social democracy, away from looking to US capital as a source of reforms and towards looking to European big capital.

By the end of the 1970s, Atlanticism was on the retreat in the West European labour movement and Euro-socialism in the ascendant. The material basis of Euro-socialism was the role of West Germany as the main paymaster of the EU and the main source of the capital which flowed into southern Europe after Spain, Portugal and Greece joined the union.

Over 10 years Euro-socialism rose to dominance, particularly in southern Europe, which benefited from a real redistribution of resources within the EU.

German reunification, however, marked not just the collapse of the regimes in Eastern Europe, but also the death knell of Euro-socialism. For capital, the creation of the welfare state in west Europe after World War II had been a concession made necessary by a relationship of class forces which made the advance of socialism from east to west a real threat. With the re-introduction of capitalism into Eastern Europe, the threat of socialism receded and with it the necessity of the welfare state. Virtually simultaneous with German reunification, therefore came the first steps to eliminate the welfare state, codified in the Treaty of Maastricht.

European social democracy found itself acting as the main political backers of a project which no longer gave reformist concessions, but, on the contrary, proposed to dismantle the most important reform won by the West European working class in the last 50 years – the welfare state. Thus German unification and the Maastricht Treaty also inaugurated the decline of Euro-socialism with the Italian, French and Spanish socialists one by one ejected from office.

Tony Blair represents a last gasp of Euro-socialism, made possible by the fact that John Major presided over the first attempt to take Britain into the European Monetary System and continues to pay the electoral price for the recession deepened by it. Blair’s sole economic strategy is to participate in EMU. But the political reality since Britain’s ejection from the ERM, is that he dare not openly fight for this for fear of losing the general election.

Thus the Labour Party leadership supports monetary union while reserving judgement on when Britain should participate – essentially because of fear of the electoral consequences.

The basic position of the Blair team on monetary union and Maastricht are spelt out in The Blair Revolution by Peter Mandelson and Roger Liddle. They support a single currency under the terms of Maastricht, the independent European central bank – which would remove key areas of economic policy from parliamentary control in each state and on a European level – and oppose any extension of the powers of the European Parliament over the Commission. Mandelson says that if the Eastern European states are allowed to join the EU they should have no representation on the Commission.

Ironically, given the way in which the Social Chapter was used to win TUC and Labour Party support for Maastricht, Blair now says British adhesion to the Social Chapter will only be on a ‘realistic timetable’ for implementing its standards, agreed with industry to avoid loss of competitiveness. The shadow Treasury chief secretary, Andrew Smith, stated to a meeting of Austrian bankers that non-participation in EMU could lead to the ‘marginalisation of our economic voice in the world’ [9]. It is, of course, inconceivable that statements such as these could be made without the agreement of Blair.

The reason for Blair’s relative caution on EMU is illustrated by an opinion poll for the Guardian, published on 9 May. 64 per cent opposed a single currency, including clear majorities of supporters of all political parties: 73 per cent of Conservative, 65 per cent of Liberal Democrats and 57 per cent of Labour.

Even the TUC – the most enthusiastic body of the labour movement for the Maastricht Treaty – is forced in its report issued in February this year, ‘European development and economic and monetary union (EMU)’ to acknowledge that: ‘The most serious threat to EMU is that it becomes identified with unemployment and recession’. Nonetheless the TUC argues that while the decision to ‘join EMU would be a long term decision, probably irrevocable’, through it ‘Britain would be teamed up with the strongest economies of the EU.’ [10]

The TUC concludes that Britain should not miss ‘the opportunity… to influence events at the heart of Europe. This would entail the aim of joining Germany, France and other countries in the Premier League of European integration’. In support of EMU, the TUC explains that it will ‘be seeking talks with the CBI, the Bank of England, consumers and others to work towards a national consensus on these issues’ [11]. To counter the ‘problem’ that EMU is identified with unemployment and recession – and welfare cuts – the TUC accompanies its stance with advice to the EU: ‘progress towards it should be accompanied by vigorous European-wide action to promote growth and employment and to interpret the convergence criteria over the whole cycle.’ [12]

Fundamentally, the TUC justifies its support for the Maastricht Treaty by arguing that: ‘the European trade union movement… has generally seen EMU as a necessary and legitimate goal in the EU. Underlying the support for EMU is the conviction that European, as opposed to just uncoordinated national, economic management is needed. The increasing economic power of multi-national companies in national economic life, the power of currency speculators and, broadly, globalisation, are seen as weakening the effectiveness of national economic decision making. EMU and a single currency for Europe are seen as part of the solution.’ [13] In other words, the labour movement must subordinate itself to big European capital and aid it in its competitive struggle with the United States and Japan, even though that means removing those social provisions which distinguish Western Europe from its rivals. This contradiction will become more and more explosive for the TUC.

The most ridiculous argument in the document is that EMU is necessary to avoid ‘those economic and social conditions that gave rise to fascist movements, which fed on unemployment, fear, insecurity and racism’ [14]. On the contrary, it is the 18 million unemployed in the EU and the sustained attack on the welfare state which provide the material basis for the rise of racism. Maastricht will make this worse not better. Indeed, the fact that the majority leadership of the West European trade unions and social democratic parties support a process which is impoverishing tens of millions of European workers, farmers and shopkeepers is the single most important political factor allowing the extreme right to advance.

The TUC’s perspective emerged even more bluntly in the course of evidence presented to the House of Commons Treasury Committee in April. John Monks explained that the TUC saw ‘lots of dangers in being left outside a single currency’. In response to Monks’ view that there was room for flexibility and economic expansion within the Maastricht criteria, Committee member Diane Abbott said: ‘German political opinion and, in particular, the Bundesbank is quite adamant they will not tolerate softening of the criteria and it has been put to us not just on this visit to Germany but on other visits that if German public opinion believed for a second that the existing criteria were going to be softened then public support for EMU in Germany would drain away. So people can make noises and communiqués until they are blue in the face but the harsh reality is that those are the criteria you are working with, they are not going to be softened.’

In the Hansard record, the general secretary of the TUC then made the point: ‘what are the consequences of not being in if it goes ahead’. Diane Abbott responded: ‘Germany has the highest unemployment since the war, for all of its low interest rates and price stability. I understand the political arguments for European integration. I am a politician. But are you telling me, as general secretary of the TUC, that you think mass unemployment is a price worth paying for European integration.’ John Monks replied: ‘No’.

Various reflections of the TUC’s view that the EU provides a route to respond to increasing ‘globalisation’ of capitalist production exist on the left. Typical is that of the pro-EU Workers’ Liberty magazine, which argues that since capitalism is everywhere and always attacking the working class, Maastricht is irrelevant. Workers’ Liberty write: ‘The Maastricht criteria involve cuts in social spending, but no alien force imposed those cuts on the various European Union governments. They wrote those cuts into a treaty because they all already wanted to impose them.’ [15] Yet Workers’ Liberty calls for abstaining in any referendum on EMU.

Another pro-Maastricht view is expressed by Tom Sibley who argues in the Islip Newsletter that it is possible to meet the Maastricht criteria by ‘increasing taxation on the rich and profits, by reducing defence expenditure, and by expanding demand, including social expenditure and activity in the economy’ and that the criteria are ‘agnostic about levels of public expenditure’. Theoretically this may be true, but the whole Treaty is angled in the opposite direction of cutting public spending, with the evidence clear in the assault on the welfare state taking place across Europe today.

But, argues Sibley, could European governments ‘really resist a campaign across Europe for full employment? And would not such a campaign persuade a timid Labour leadership in Britain to work for radical change at home and in Europe?’ [16] However, what Sibley does not recognise is that the prerequisite for such a campaign would be rejection of the Maastricht Treaty because it is a monetarist assault on the welfare state aimed at radically shifting the balance of forces between capital and labour. Such an analysis would lead the labour movement to struggle to prevent Maastricht proceeding, and would understand that those who had been unable to prevent such a defeat being imposed would not be in a very strong position to reverse its impact.

Perry Anderson, former editor of New Left Review, is the most sophisticated example of a second broad current in the labour movement, those who harbour no such confusions as to the anti-working class nature of the process of capitalist integration embodied in the Maastricht Treaty, but reserve judgement about what attitude should be taken to it because they believe the EU simultaneously embodies a potentially progressive dynamic, that of a democratic federal Europe capable of funding a social democratic consensus.

Thus Anderson explains in an article in the London Review of Books that: ‘The core of the Treaty is the commitment on the part of all member states save Britain and Denmark to introduce a single currency, under the authority of a single central bank, by 1999. This means an irreversible move of the EU towards real federation. With it, national governments will lost the right both to issue money and to alter exchange rates, and will only be able to vary rates of interest and public borrowing within very narrow limits, on pain of heavy fines from the Commission if they break central bank directives… European monetary union spells the end of the most important attributes of national economic sovereignty.’ [17]

Anderson correctly connects the Maastricht Treaty to the collapse of the regimes in Eastern Europe and German unification: ‘In reverse order, it was the collapse of Communism that allowed the reunification of Germany that precipitated the Treaty of Maastricht.’

Anderson, however, considers that: ‘The outcome of these processes obey no single logic. More than this: to a greater extent that in any previous phase of European integration, the impact of each is quite uncertain.’

Yet Anderson then underlines his view on the anti-welfare character of the Maastricht Treaty: ‘In a system of the kind envisaged at Maastricht, national macro-economic policy becomes a thing of the past: all that remains to member states are distributive options on – necessarily reduced – expenditures within balanced budgets, at competitive levels of taxation. The historic commitments of both social and Christian democracy to full employment and traditional welfare services, already sealed down or cut back, would cease to have any further institutional purchase. This is a revolutionary prospect. The single obligation of the projected European Central Bank, more restrictive even than the charter of the Federal Reserve, is the maintenance of price stability. The protective and regulative functions of existing national states will be dismantled, leaving sound money as the sole regulator, as in the classical liberal model of the epoch before Keynes.

‘The new element – namely the supranational character of the future monetary authority – would serve to reinforce such a historical reversion: elevated higher above national electorates than its predecessors, it will be more immune from popular pressures. Put simply, a federal Europe in this sense would not mean – as Conservatives in this country fear – a super state, but less state.’ Furthermore, the European institutions which are being created to administer the monetary union are voided of democratic content. As Anderson puts it, the European Commission, which has the sole right to initiate legislation and administers the EU’s budget, is a ‘body composed of 23 functionaries, headed by a President enjoying a salary considerably higher than that of the occupant of the White House’. In a review of the historian Alan Milward’s works on Europe Anderson rebukes as ‘quite notional’ Milward’s idea that European capitalist integration had some democratic foundations, pointing out that ‘At no point until – ostensibly – the British referendum of 1975, was there any real popular participation in the movement towards European unity.’

These observations by Anderson are accurate. They should imply a root and branch struggle on an international level against the Treaty of Maastricht. But this is not Anderson’s political conclusion. Returning to his view that the outcome of the ‘interconnected’ changes of the collapse of the regimes in Eastern Europe, German unification and the Maastricht Treaty ‘obey no single logic’, he argues: ‘Precisely the extremity of this prospect, however, poses the question of whether in practice it night not unleash the contrary logic. Confronted with the drastic consequences of dismantling previous social controls on economic transactions at the national level, would there not be soon – or even beforehand – be overwhelming pressure to reinstitute them at supranational level? That is, to create a European political authority capable of re-regulating what the single currency and single minded bank have deregulated, to avoid an otherwise seemingly inevitable polarisation of regions and classes within the Union? Could this have been the hidden gamble of Jacques Delors, author of the plan for monetary union, yet a politician whose whole previous career suggests a commitment to a Catholic version of social-democratic values, and suspicion of economic liberalism?’

This analysis begs the basic question posed to the labour movement by the Maastricht Treaty, namely – shouldn’t it unite to oppose a Treaty designed to dismantle the welfare state? Anderson never answers the question clearly.

On the contrary, he says that Maastricht could provoke overwhelming pressure to create a European political authority capable of regulating the financial markets and avoiding a polarisation of regions and classes in the EU, and therefore implies it should be supported.

Anderson cites the head of the European Monetary Institute, Alexandre Lamfalussy, saying that if monetary union was to work a common fiscal policy would be essential. From this Anderson asks: ‘Given, however, that budgets remain the central background of domestic politics, how can there be fiscal co-ordination without electoral determination? The election of a system of governmental institutions would not be possible without ‘a genuine supranational democracy, embodying for the first time a real popular sovereignty in a truly effective and accountable European Parliament. It is enough to spell out this condition to see how unprepared either official discourse or public opinion in the member states is for the scale of the choices before them.’

He moves on to suggest that if the pressure towards enlargement of the EU were to render its current institutional structure dysfunctional, might then ‘not widening inevitably mean loosening?’. That is: ‘The more states enter the Union, the greater the discrepancy between population and representation in the Council of Ministers will tend to be, as large countries are increasingly outnumbered by smaller ones, and the weaker overall decisional capacity will become. The result could paradoxically be the opposite of the British expectation: not a dilution, but a concentration of federal power in a new constitutional settlement, in which national voting weights are redistributed and majority decisions become normal. The problem of scale, in other words, might force just the cutting of the institutional knot the proponents of a loose free trade area seek to avoid.’

Is this scenario realistic? MEP Alex Smith argues, on the contrary, that the ‘move of massive proportions’ embodied in the Maastricht Treaty, which goes right to the heart of democracy itself ‘combined with the fact that none of the economic conditions for the achievement of monetary union exist’, poses the inability to meet the goal of a single currency. He concludes: ‘If the economics do not deliver, the politics of convergence will also fail – with a price which may well be catastrophic.’ [18]

One does not have to agree with this alternative scenario to see the flaw in Anderson’s logic. If one believes that Maastricht will mean that full employment and the welfare state will ‘cease to have any further institutional purchase’ is not the logical conclusion not to simply rely on the hope that the result will be ‘overwhelming pressure to reinstitute them at supranational level’, but to vigorously oppose the Treaty?

Anderson’s fundamentally correct international starting point should, more correctly, lead to the conclusion that successful working class struggle to defeat Maastricht on a European level is far more likely to lead to progressive advance.

This leads us to the third broad current, those who understand both the need for an international framework but also that the Treaty of Maastricht is a means of radically restricting democracy in order to dismantle the welfare state and alter the balance of class forces in favour of capital.

This view is gaining ground. It is starting to cut into the ‘Euro-Keynesianism’ middle ground of those who hoped that EMU would bring German living standards to Britain. This is reflected for example, in a confused way, in a recent survey of Labour MPs.

While 90 per cent of MPs and 93 per cent of MEPs, for example, disagreed or strongly disagreed with the statement ‘Britain should withdraw from the European Union’ and a further 88 per cent of MPs and 86 per cent of MEPs agreed or strongly agreed with the statement ‘the globalisation of economic activity makes EU membership more, rather than less necessary for the UK’, 78 per cent of MPs and 64 per cent of MEPs also agreed that: ‘The UK should not seek to meet the EMU convergence criteria if the result is increased unemployment in Britain’.

Fifty per cent of MPs (although only 28 per cent of MEPs) agreed with the statement ‘There should be a national referendum before the UK enters a single currency’.

The survey also showed large majorities of Labour MPs in favour of the European parliament having greater powers and against the view that the Council of Ministers should be the EU’s supreme institution. [19]

Similarly, John Edmonds commented at the Guardian’s conference on 2 December last year that Britain would face an ‘industrial disaster’ if it signed up for the single European currency before the economy was strong enough to sustain a link with the German mark. [20]

What this body of opinion has not yet grasped is that the Maastricht Treaty is designed to make ‘Euro-Keynesian’ policies impossible. Maastricht is an example of what Ken Livingstone recently called the free market model of political relations in the global economy: ‘The free market model states that no specifically political institutions are necessary to organise the globalised economy. Instead it argues that this will be accomplished by the market. On this model, the role of the state should be substantially reduced, and national economies opened to international market forces. This became the “conventional wisdom” of the early 1990s – promoted globally by the International Monetary Fund, in the United States by Newt Gingrich and the Republican Party and in Europe by the Treaty of Maastricht.’

In this way: ‘If the fundamental economic decisions are taken at the level of the world economy, and national economies must simply correspond to these imperatives, then national democratic bodies can no longer take decisions which have real content. All fundamental social and political decisions have economic consequences so such decisions cannot be operational if the economic framework which determine them is outside democratic control. Furthermore, there are democratic international institutions through which decisions may be taken. The free market model, if taken to its logical conclusions, would remove all mechanisms of democratic control over the economy.’ Therefore ‘there is not merely some slight “democratic deficit” in the Treaty of Maastricht, it constitutes a sustained attempt to destroy any possibility of a democratic model of integration in Western Europe in favour of the “free market” one.’ [21]

Within the current which understands both the anti-working class and welfare state character of the Maastricht Treaty and the need for an international framework, there nonetheless exists the view that the EU can be the vehicle for reform and progress for the working class in Europe. The problem is that no such reformist agenda of any seriousness is on offer in the EU. On the contrary, the EU is specifically structured to prevent the labour movement bringing about such pressure for reforms. This is why the European Parliament’s powers are so restricted and why the supreme decision-making body is the unaccountable Commission of 23 functionaries. John Edmonds tacitly acknowledged the dangers of labour movement reliance on the EU when, at the GMB’s annual conference, he said: ‘a few years ago, we thought that we only had to wait and the European cavalry led by Jacques Delors would come and save us from the excesses of our wretched government.’ But he added ‘Delors has gone and the right-wing barbarians have stepped up their efforts – unless we are careful, the European cavalry might end up fighting on the wrong side.’ [22]

Or as Roger Berry MP pointed out in relation to the idea that a substantially larger EU budget geared to reducing regional inequalities as a result of a single currency, the EU has ruled out this option. [23]

That the EU has ruled out an egalitarian redistribution of funds or that Jacques Delors did not defend the British labour movement against Tory attacks, is not accidental. The EU is not democratic because it is oriented to strengthening European big capital at the expense of the working class and petty bourgeoisie. The EU never has been, and will not become, a vehicle for international advance of the labour movement.

This framework of opposition to the EU obviously does not mean that the labour movement should not use any opportunities it offers to advance particular interests of the working class.

For example, this would mean supporting a referendum on a single currency, because after the experience of France at the end of 1995, such a referendum would most likely produce a vote against. It means judging proposals for reform of the EU structures on the basis of whether they help limit capital’s assault on the welfare state. Equally, contradictions between EU law and national law should be exploited to extend democratic rights. On such issues, socialists share the struggle, but not the illusions, of those attempting to use EU institutions to strengthen the position of the working class.

Secondly, it is vital that a basis for united action is created, between, firstly, those who are pro-EU in varying ways but against the Maastricht Treaty, and secondly, that section of the movement which opposes Maastricht but also the EU (even where this is wrongly posed from the standpoint of British sovereignty). Neither of these currents can themselves create a basis for unity – the former will ultimately be forced to choose between the interests of the working class and the EU, while the latter between international working class solidarity and the reactionary projects of the Tory Euro-sceptics. But both can be united in opposition to the impact of Maastricht. Such a united front is a real alternative for the labour movement to that currently represented in the leadership of the TUC and the Blair leadership of the Labour Party.

Maastricht presents the labour movement with the challenge to learn to politically engage with the operation of the international economy, and develop an economic and political strategy to defend its interests on this level. As Trotsky expressed it, socialists must understand the following: ‘The productive forces are incompatible with national boundaries. Hence flow not only foreign trade, the export of men and capital, the seizure of territories, the colonial policy, and the last imperialist war, but also the economic impossibility of a self-sufficient socialist society. The productive forces of capitalist countries have long since broken through the national boundaries. Socialist society, however, can be built only on the most advanced productive forces… From Marx on, we have been constantly repeating that capitalism cannot cope with the spirit of new technology to which it has given rise and which tears asunder not only the integument of bourgeois private property rights but, as the war of 1914 has shown, also the national hoops of the bourgeois state.

‘Socialism, however, must not only take over from capitalism the most highly developed productive forces but must immediately carry them onward, raise them to a higher level and give them a state of development such as has been unknown under capitalism.’ [24]

However, the fact that ‘Marxism takes as its point of departure from world economy, not as a sum of national parts but as a mighty and independent reality which has been created by the international division of labour’ [25], does not mean that socialists can subordinate themselves to the international political framework of capital.

To use Lenin’s terminology, a corporate political force accepts the agenda set by other social forces, a hegemonic force sets its own political agenda. The labour movement must act as a hegemonic force if it is to defeat the Treaty of Maastricht.


[1] A Zone of Engagement, Perry Anderson, Verso, 1992, pp366–7
[2] Manifesto of the Communist Party, Marx and Engels Selected Works, Lawrence and Wishart 1980 p38
[3] The History of the Russian Revolution, Trotsky, Monad 1980, p380
[4] Third International After Lenin, Trotsky, Pathfinder Press 1982 p4
[5] ibid, p18
[6] Britain and the EU: Time to leave, Communist Party of Britain (Marxist-Leninist), 1996, p2
[7] Permanent Revolution, Trotsky, Pathfinder Press 1970, p279
[8] ‘European development and economic and monetary union’, TUC, February 1996, p4
[9] Financial Times, 26 May
[10] ‘European development and economic and monetary union’, p1
[11] ibid, p21
[12] ibid, p1
[13] ibid, p8
[14] ibid.
[15] Workers’ Liberty, February 1996
[16] Islip Political Newsletter, April 1996 17.
[17] London Review of Books, 25 January 1996
[18] The Citizen, ‘Campaigning for Socialism newsletter’, April 1996
[19] Nottingham Trent University, Survey of Labour MPs and MEPs, 1996
[20] Socialist Campaign Group News, January 1996
[21] Socialist Campaign Group News, May 1996
[22] Morning Star, 11 June
[23] Socialist Campaign Group News, February 1996
[24] Third International After Lenin, pp52–3
[25] Permanent Revolution, p146