Editorial from the December 1997 issue of the Socialist Standard
It seemed that Chancellor Brown had come up with the perfect fudge: Britain will not join the Euro Single Currency for at least the duration of this parliament and then only if it is “viable”. Whilst the government attained the luxury of “waiting and seeing” the Tories could continue to tear themselves apart.
The logical corollary of such a policy has meant the government telling the capitalists to prepare for eventual EMU entry, which apparently will occur “when the time is right”. The party battle lines are now clearly drawn. The question is: will the Euro be New Labour's undoing?
The Euro is the EU's answer to a world becoming increasingly divided into regional trade blocs and spheres of influence. The idea is that a strong EU will give European capital its best chance of competing against the USA and Japan.That this bloc is likely to be dominated by Germany is a gamble some supporters of British capitalism are prepared to take.
Of course, many commentators talk of globalization and the efforts of the World Trade Organisation to reduce trade barriers but this only masks the fact that global capitalism is having a hard time of it. Yes, the world economy is globalized by virtue of the unprecedented capital flows flying around the world. But herein lies the problem. The vast bulk of these capital flows concern mainly unproductive “investment” in equities, government bonds and in currency speculation. Hence the recent situation of stock markets starting to crash around the world in order to “correct” what has been a massive overvaluation in comparison to real growth in the productive economy. The Euro is no solution to this.
With the capitalist class in Britain seemingly divided on the Single Currency and broader public opinion, sceptical to say the least, it currently seems that it would be a brave move for the government to advocate membership of something which is more of a political gamble than an economic panacea.
For the productive majority—the working class— whatever we are paid in we will still be exploited. With or without the Euro, capitalism will still mean economic crises, austerity and financial insecurity for the majority.