Those calling for a 21st century Marshall plan do so in hope, as conditions are very different now to the end of WW2
When bad ideas persist, it is wise to recognise that more than ideas are at stake. So it is with the debate over Europe's extended economic crisis. That obstinate European elites have responded to the deep economic downturn with policies that ensure continued stagnation is not just a matter of failed common sense. Nor is it just forgetfulness to ignore the turn to austerity at the onset of the downturn of the early 1930s, and its contribution to converting a recession into the Great Depression. The same can be said for the quick dismissal of calls for a new Marshall plan, in spite of that successful response to Europe's postwar reconstruction.
To grasp why austerity, rather than something akin to a new Marshall plan, is politically fashionable in Europe requires moving beyond the world of "discourse" and investigating the social forces and state capacities at play. What was so crucial in the postwar years was not so much the external threat of a war-weary and exhausted Soviet Union, as the internal danger of discredited European elites and radicalised working classes resulting in social upheavals that limited the spaces for the expansion of capitalism. A spectre was haunting western Europe and American elites after the war, and in that particular moment, squeezing workers further to generate funds for reconstruction could only makes things worse.
This is where the US state stepped in. The experience of the depression and war had led it to identify the interests of American capitalism with a more general expansion of capitalism abroad. The state capacities which developed in those years, along with the unique strength of the US economy as it emerged from the war, made it possible to act on that understanding. The Marshall plan – essentially the internationalisation of Franklin D Roosevelt's earlier New Deal – was intended to keep Europe open to American capitalism in the face of the postwar social threats.
Then, as later, US aid came with strings attached; indeed some labelled the Marshall plan "history's most successful structural adjustment programme". But the conditions then demanded were very distinct from those demanded today by the IMF-EC-ECB troika. After the war, the concern with stability led to an emphasis on European development with some sensitivity to popular needs, not austerity (as long of course as that development was towards an open liberal order). The US tolerated temporary capital controls, limits on its exports and foreign investment to Europe, and exchange rate adjustments, to offset American competitive strength – all the while leaving the US market open to European exports.
In contrast, European elites today may be nervous but they are not scared. Working classes, after a quarter century of defeat, are in disarray. The elite project is now exploiting this weakness to revive the confidence of financial markets and further deepen capitalism. The consequent liberalisation of markets repeatedly demands another pound of flesh from those already suffering – "discipline" in the ugly parlance of neoliberalism.
It is in this context that the latest and most detailed call for a new Marshall plan emerged, that of the Confederation of German Trade Unions (DGB). The DGB proposal cautiously looks to the creation of a new consensus. What better time, they respectfully ask, to combine the growing army of idle hands with the current availability of uniquely cheap funding? Why not sell government bonds to investors who are sitting on cash because other opportunities are unappealing? And in the name of both equity and investor security, why not back up these bonds with a special fund established through a tax on financial transactions and another on those with the greatest wealth?
What is missing from such policy proposals is the politics that might bring it about. To begin with, it is not clear that the incomplete state institutions of the European Union in fact have the capacities to pull off such a New Deal or Marshall plan. They certainly cannot do so if the German state is not on side, and to date the German state, unlike the postwar American state, remains parochially focused on its model of export-led growth based on internal wage "moderation", the European free trade area for its goods, and a euro that has ended the trade-balancing mechanism of a rising German currency. Tellingly, the DGB proposal avoids placing the onus on Germany to take a leadership role in addressing the crisis in Europe's uneven development (other than for Germany to initiate a wealth tax for others to emulate). Yet even if European state capacities were in place, absent the spectre of socialism or at least profound rebellion – unless, that is, until European elites are scared again – the likelihood of any significant reversal of direction remains remote.
With some exceptions (such as Greece), it cannot be new political parties or coherent new movements that will bring about short-term changes, for the very fact that the creation of such institutions involves a longer-term process. This suggests that a fundamental change in Europe's direction rests on some explosion from below: the anger of unemployed youth boiling over in the streets, occupations by desperate workers of workplaces and public spaces that are more than symbolic, direct challenges to the affront of banks to democratic governance. Whether such upheavals will be channelled towards a progressive reversal of austerity and a more egalitarian Europe, or will become prey to dangerous movements of the right, is an open question.
     |
 |
| READ THE ORIGINAL POST AT www.guardian.co.uk |