The euro and the sovereignty myth (2002)

From the January 2002 issue of the Socialist Standard

The euro debate is a dispute between rival sections of the capitalist class and is of no concern to workers

On 1 January in 12 of the 15 countries of the European Union new notes and coins came into circulation. After a shortish transition period these will replace existing francs, marks, pesetas, liras and the others and the same money—euros and eurocents—will come to be used throughout the whole area.

In terms of capitalism, it will be a historic event. As many people for years (more in fact) have used dollars and cents in a single area will now be using a single currency in another area. And that, of course, is what it is all about from a capitalist point of view. The capitalists of Europe have decided they have a better chance of winning out in the competitive battle on world markets if they get together as a single economic bloc. To do this, they have already created—some time ago now—first, a customs union, then a single market and, now, a single currency. They are still divided on whether to take the next step, a single economic policy which would require a single “economic government”. But some are determined to go down this road and envisage, at the end, a single, federal United States of Europe as a powerful state to rival the USA for world hegemony.

As far as us ordinary workers are concerned, it’s going to have no effect on our wages nor on our standard of living generally. The introduction of the euro will be as neutral—and as irrelevant—in this respect as was the introduction of decimal currency in Britain in 1971. So, there’s no cause to get worked up either way over the issue.

Having said this, it is clear that being able to use the same money throughout the greater part of Europe will remove one of the minor inconveniences that has existed up till now: having to change your coins and notes every time you cross a frontier (and having to pay the money-changers a commission for the privilege). Of course the major inconvenience of having to use money at all to have access to things which should be ours as of right will remain but, as long as the money system continues, it can’t be worse to have fewer currencies than more.

Divided capitalist class

So, joining or not joining the euro is nothing to get upset about. But there are people who do, especially in Britain. You can’t open a local paper there these days without reading a letter from someone complaining about “our loss of sovereignty” or about the disappearance of the queen’s head from “our” money (actually, it could still appear on the coins, but who cares?).

This reflects the fact that the capitalist class in Britain is split on the issue. A section, with capital investments mainly in North America, would prefer Britain to join the North American Free Trade Area (NAFTA) rather than become irrevocably tied to the European Union. They include the newspaper tycoons, Rupert Murdoch of the Times, Sunday Times and Sun and Conrad Black of the Telegraph, who have not hesitated to use their control of these papers to beat the anti-euro drum to defend their own personal capitalist interests. The Tory Party, too, has also decided to throw in its lot with this section of the capitalist class, perhaps unwisely since this section is only a minority.

The dominant section of the capitalist class in Britain want to join the euro, but they have a political problem. Their representatives, in the Labour and Liberal parties, have for some reason committed themselves to holding a referendum on the question. This was unwise, from their point of view, as this is to subdelegate a decision of vital interest to them to a population of workers that is largely uninformed on the issue and whose heads have been filled over the years with patriotic nonsense for other purposes. It is by no means certain that they would win a referendum, though they might be if they time it right and craft the question carefully and put the media organs they control into top gear. But that’s Blair’s problem.

The main argument put forward by the anti-euro section of the capitalist class is that joining the euro would involve a loss of “our” sovereignty. It may well involve a loss of their sovereignty but the rest of us have no “sovereignty” to lose. Certainly, we have the vote and we can use it to elect politicians to Westminister. But neither Parliament nor the government can control the way the economy works. They can try but if they go against the profit logic of the system they just make things worse. The most they can successfully do is go along with this logic.

What is sovereignty?

Old-fashioned radical liberals like Tony Benn (who, as he said of the Labour Party, is not and never has been socialist) who use the same argument concentrate only on the formal side of things. They emphasise Parliament’s “constitutional right” to control the economy, completely ignoring the fact that experience has shown this to be a purely paper right. The capitalist economy works according to certain economic laws which no government or legislative body can over-ride.

So the argument about sovereignty is not really about what the constitution may or may not say. It’s about the effective power that a capitalist state can exercise within the capitalist economy. Capitalism has always existed within a framework of competing states, none of which is strong enough to impose its will on all the others. States, as weapons in the hands of rival groups of capitalists, intervene to further the interests of the capitalists that control them. They do this by using state power to set up protected markets, raw materials sources, trade routes and investment outlets. In normal times their weapons are tariffs, taxes, quotas, export rebates and other economic measures. When they judge that their vital interest is at stake their weapons are . . . weapons. They go to war.

The extent to which a capitalist state can distort the world market in favour of its capitalists depends both on its industrial strength and on the amount of armed force at its disposal. This is why all states are under pressure to acquire the most up-to-date and destructive armaments that they can afford. In the jungle world of capitalism might is right. “Sovereignty”—the margin of independent decision-making that a state has—also depends on might.

Over the years capitalism has become more and more international, more and more globalised. This has tended to reduce the margin of manoeuvre open to states, i.e. has reduced their “sovereignty”. Fifty years ago, six West European states—France, Germany, Italy and the Benelux countries—realised this and decided to pool some of their economic decision-making powers in order to increase their total sovereignty. In the capitalist world, just as much as for workers bargaining over wages, “unity is strength”. Certainly, this involved the individual states concerned giving up some of their sovereignty but the objective was to increase the collective sovereignty of the members of the Common Market as a whole. Thirty years ago the majority section of the capitalist class in Britain, too, decided that this made sense and joined along with Ireland and Denmark. Since then Spain, Portugal, Greece, Austria, Sweden and Finland have also signed up.

Not our concern

The sovereignty argument is really an argument within the capitalist class as to whether they should give up some of the might of their state to be able to benefit from the greater might of a larger grouping. Tony Benn, the UK Independence Party and the BNP really seem to believe that a capitalist Britain would be better off going it alone. Murdoch, Black and the less stupid Tories are more circumspect. They realise that Britain can’t really go it alone, but has to be associated with some larger grouping. Their argument is about which this should be: North America rather than Western Europe.

The Trotskyists, who feel that they must have a “line” on everything, too, join in the argument, predictably alongside Benn and the Green Party, but also the UKIP and the BNP. They want a capitalist British state to have the full, paper power to pass the reformist programme they dangle before workers.

As socialists, we don’t take sides in this inter-capitalist argument. We don’t support one section of the capitalist class or the other, and we don’t have any illusions about the “sovereign power” of Parliament to pass reformist legislation that can make capitalism work in the interest of the exploited class of wage and salary earners. Capitalism just cannot be reformed to work in this way; so transferring some of the powers of the House of Commons to a European Parliament in Brussels or Strasbourg makes no difference.

Whether or not the British capitalist class join the euro is not a working-class issue. Let the capitalist class and their parties and supporters settle the matter for themselves. In the meantime we continue to campaign for the establishment of a world society without frontiers where the resources of the Earth are the common heritage of humanity and are used to produce the things we need to live and to enjoy life for us to take directly. Under these circumstances they won’t be any need for money and both the euro and the pound can join the Roman and Anglo-Saxon coins in local museums.

Adam Buick

Material World: The End Of National Sovereignty? (2008)

The Material World Column from the October 2008 issue of the Socialist Standard

Globalization versus National Capitalism

In 1648 the first modern diplomatic congress established a new political order in Europe, based for the first time on the principle of “national sovereignty.” This principle drew a sharp dividing line between foreign and domestic affairs. Each “national sovereign” was given free rein within the internationally recognized borders of his state. No outsider had any right to interfere. Recognized borders were inviolable. The “sovereign” was originally simply a prince; later the term was applied to any effective government.

National sovereignty facilitated the undisturbed development of separate national capitalisms – British, French, German, American, and so on. Interstate boundaries were stabilized. Governments were able to take protectionist measures to defend home manufacturers against foreign competition.

Even today the principle of national sovereignty is far from dead. It is enshrined in the United Nations Charter: Chapter VII authorizes the Security Council to impose sanctions or use armed force only in the event of a “threat to the peace, breach of the peace or act of aggression.”

National sovereignty undermined

But in practice national sovereignty has been deeply undermined – first of all, by the emergence of a global economy dominated by huge transnational corporations. International financial institutions such as the World Trade Organization and IMF have largely taken over economic policy making. Indebtedness leaves many states with merely the formal husk of independence.

Some groups of states have “pooled” part of their sovereignty in supranational regional institutions. The prime example is the European Union.

The old interstate system has also been destabilised by the breakup of Yugoslavia and the USSR into 26 new states, four of which lack international recognition. The decision of the West to recognize the independence of Kosovo from Serbia has set a precedent that makes it easier to carve up other states. Of course, the “independence” of Kosovo – occupied by NATO forces, governed by officials from the European Union, its constitution drafted at the US State Department – is purely notional. Russia has now retaliated by recognizing Abkhazia and South Ossetia. Although this will encourage secessionist movements inside Russia, blocking Georgia’s accession to NATO is evidently a higher priority (see September’s Material World).

Legitimising aggression

National sovereignty is not only undermined in practice, but also contested in theory.

Thus, in recent years the United States and its closest allies have sought to legitimise their military attacks on other states. True, such attacks are nothing new. What is new is open advocacy of the principle of aggression. The main rationales used are the prevention of nuclear proliferation, counter-terrorism and humanitarian intervention (see August’s Material World).

It is instructive to compare the Gulf War of 1991 with the current war against Iraq. The Gulf War, at least ostensibly, was launched in defence of the principle of national sovereignty, violated by the Iraqi invasion of Kuwait. The elder Bush resisted pressure to “finish the job” – occupy Iraq and throw out the Ba’athist regime – out of concern that it would lead to the breakup of Iraq and, in particular, a new Kurdish state that would destabilise the whole region. Such considerations have not deterred his son.

Globalisation of capital, fragmentation of states

Paradoxically, the fragmentation of states is a natural corollary of the globalisation of capital. From the point of view of the transnational corporations, states no longer have important policy-making functions. It is enough if they enforce property rights and maintain basic infrastructure in areas important for business. Small states can do these jobs as well as large ones. In fact, they have definite advantages. They are more easily controlled, less likely to develop the will or capacity to challenge the prerogatives of global capital.

Global versus national capitalism

All the same, there is nothing inevitable about globalisation. It has lost impetus recently, and may even have passed its zenith. One sign is the disarray within the WTO. Another is Russia’s change of direction: in contrast to the Yeltsin administration, which was politically submissive and kept the country wide open to global capital, the Putin regime reasserted national sovereignty, expelled foreign firms from strategic sectors of the economy, and ensured the dominant position of national (state and private) capital.

Global versus national capitalism has emerged as an important divide in world politics. This divide exists, first of all, within the capitalist class of individual countries. Thus, even in the US, the citadel of globalisation, some capitalists – currently excluded from power – are oriented toward the home market and favour national capitalism. And even in Russia some capitalists support globalisation.

Nevertheless, the pattern of political forces differs from country to country, and as a result the global/national divide is reflected in international relations. Here the “globalisers,” led by the US, confront in the Shanghai Cooperation Organization (Russia, China and the Central Asian states) an embryonic alliance of national capitals bent on restoring the principle of national sovereignty to its former place in the interstate system.

A different perspective

This context clarifies the difference between our perspective as socialists and the attitude of anti-globalisation activists. Being against capitalist globalisation is not the same as being against capitalism in general. We have ample past experience of a world of competing national capitalisms – quite enough to demonstrate that there is no good reason for preferring such a world to a world under the sway of global capital. The main problem with the movement against globalisation is that it can be mobilized so easily in the interests of national capital, whatever the intentions of its supporters.

To be fair, some anti-globalisation activists are aware of this danger. Acknowledging that humanity faces urgent problems that can only be tackled effectively at the global level, they emphasize that they are not against globalisation as such: they are only against the sort of globalisation that serves the interests of the transnational corporations. This then leads them to explore ideas of globalisation of an “alternative” kind. These ideas at least point in the right direction. Socialism is also an alternative form of globalisation – a globalisation of human community that abolishes capital.

Stefan