For Another Europe: A Class Analysis of European Economic Integration

Citation

Potts, N. (2003), "For Another Europe: A Class Analysis of European Economic Integration", European Business Review, Vol. 15 No. 1, pp. 55-57. https://doi.org/10.1108/ebr.2003.15.1.55.1

The main title of this work, For Another Europe, may suggest that this is just another similar book, in a long line of standard books on European integration. Such books tend to combine some conventional economic analysis with plenty of factual information to conclude in general that European integration is beneficial to all who participate in it. Business will benefit from larger markets and removal of national currencies; workers will benefit from EU social policy; EU competition policy will protect smaller firms from their larger rivals, poorer regions will benefit from EU regional policy; while the simply logic of Ricardo’s theory of comparative advantage will ensure that all will benefit from free trade in the SEM. Such books present the EU’s past actions, such as setting convergence criteria for Euro membership, as logical economic choices rather than messy political solutions, as in the convergence criteria case only to be disregarded when political conditions change. Alternatively, some UK authors who do not follow the pro‐integration party line tend to present the EU as not being free‐market enough for the UK to productively integrate with; we must save the Pound and prevent EU level fiscal federalism to save ourselves from paying for German and Italian pensions.

Carchedi’s work is no such, often apparently hastily written conventional text. It has a depth and a consistency, which suggests long years of research and reflection. As such it is not a light read, but how could the reader expect to be presented with a profoundly different insight into the process of European integration by a light read (so please potential reader persist, the reward is worth it). Carchedi argues that the working of the EU economy can not be satisfactorily explained by either conventional neo‐classical or Keynesian based economic analysis. Such conventional equilibrium approaches merely construct an abstract “ideal” picture of the economy. Such an “ideal” picture can only be held back by social imperfections such as trade unions, while differences between firms and classes are assumed away to present a mathematically tidy long run equilibrium. Carchedi argues that Marxist economic analysis is essential to understanding/uncovering the essential conflictual nature of the EU economy. Carchedi’s basic hypothesis is that European integration is led by/shaped to the interest of Europe’s leading capitals (businesses), who maintain their leading positions through innovating to perpetuate their technological leadership.

In chapter one Carchedi reviews the EU’s institutional development and decision making process, arguing that the European project has essentially been European capitals’ project, and as such is inherently anti‐democratic and anti‐socialist. Carchedi explains how since the mid‐1980s the European Roundtable of Industrialists (chief executive officers from Europe’s 45 leading transnational corporations) has successfully lobbied to ensure the SEM and EMU have been constructed to a neo‐liberalist policy agenda. Chapter two critically reviews mainstream economic theories of the benefits trade brings to all who participate in it. Once debunked such theories are identified as pro‐capitalist ideologies (seemingly plausible explanations really aimed at hiding, rather than revealing, the essential truth of life in the capitalist economy).

Carchedi introduces the reader to a Marxist theory of capitalist production in chapter three. In aggregate total profit in value terms must equal the total amount of surplus (unpaid) labour extracted from labour. For individual capitals (firms) the imperative is to gain a productivity advantage through technological leadership in order to realise as high as possible share of total surplus labour/profit. Carchedi explains how free trade between capitals with varying productivity levels leads to a process of unequal exchange, which rewards technological leaders at the expense of technological laggards. In their struggle to catch up countries with mainly technological laggard capitals are forced to devalue their exchange rates with countries where technological leaders are concentrated, enhancing the process of appropriation of value from technological laggards to technological leaders. Carchedi concludes that Europe’s leading capitals strive for European integration and “free‐trade” throughout the world in‐order to realise the highest possible rate of profit (value transfer from less productive capitals wherever they might be).

Chapter four applies Carchedi’s model of the capitalist economy to the question of Economic and Monetary Union. Initially statistics are employed, including notably patent applications, to illustrate how in the main German oligopolies lead in technologically advanced sectors and thus in general lead the EU economy. EU competition policy is identified as a policy aimed at producing “free” competition for the technologically strong. EMU is explained as a tool to enhance the international competitiveness of the EU through enhancing the fortunes of Europe’s leading capitals. Carchedi explains how permanently fixing EU members’ exchange rates through creation of the Euro will cement Europe’s leading capitals’ position in the SEM. EMU forces technologically laggard European Businesses, now unprotected by potential devaluation, to concentrate on making their workforces more flexible, i.e. extracting a higher rate and level of surplus value from them. As such the costs of EMU are borne by Europe’s labour, whose current weakness has made the whole project possible. Finally Carchedi explains how for the Euro to become a true world currency (opening up international seigniorage opportunities) the EU must back its economic strength with politically united military strength. Furthermore the EU economy must be run in such a way as to produce a strong and stable Euro (to the liking of Europe’s leading capitals). In chapter five, focusing on the geo‐politics of the Euro, an analysis is made of how the US appropriates value from international seigniorage through the Dollars status as the predominant world currency. The spread of Dollarisation in Latin America is identified as a strategic response to the challenge of the Euro.

Chapter six, originally titled “Trade, development and war”, puts the process of European integration in the wider context of the global economy, integrating both economic and military considerations. The international trading system is reviewed; revealing how it is shaped to the interests of the world’s leading capitals/transnational corporations. Carchedi explains how the EU seeks to perpetuate imperialist relations with non‐EU countries. The example of the Lomé convention is analysed to show how the EU maintains essentially traditional colonial imperialist relations with African, Caribbean and Pacific countries (i.e. they remain non‐industrialised primary producers). The example of EU relations with Central and Eastern European countries is analysed to identify a newer type of imperialist relations, dependent development. Dependent developing countries are allowed to achieve a degree of industrialisation. Export orientation is to the advanced capitalist economies; capital is often imported, while technology is sufficiently laggard to ensure perpetual value transfer to advanced capitalist economies. Carchedi proceeds to analyse how the Euro’s position as a world currency and the EU’s ability to dictate relations with non‐EU countries is held back by the EU’s lack of political unity and military power. Carchedi points out how US initiated NATO interventions on “humanitarian” grounds have escalated to accompany the introduction of the Euro as if to stress the USA’s continued military supremacy. Carchedi warns of US attempts to replace “communism” with “Arab fundamentalism” as the new menace to justify military intervention in the “developing” world. Clearly such a strategy is sadly strengthened by the terrible events of September 11th.

Carchedi analyses who gains and who loses from the CAP in chapter seven. Carchedi moves on to analyse the relationship between world hunger and the determination of international food prices. Finally the enormous environmental impact of the CAP is identified and considered. Chapter eight points out how EU social policies have been limited in scope and shaped by the interests of capital rather than labour. Carchedi explains how Europe’s labour should increase its collective strength through standing with “foreign” labour within the EU (both legal and illegal). Chapter nine concludes by ruling out the capitalist mode of production as a viable sustainable way forward for Europe or the world. The other Europe the author is looking for is an alternative social system based on the values of solidarity, egalitarianism and self‐determination, in short an end to capitalism. Such a new system may be ruled out as utopian, but as Carchedi points out, is not progress the realisation of utopias?

To conclude, I think this is a very impressive, thought provoking book: the potential reader does not need to be a revolutionary or a socialist to productively gain from reading it. The insight Carchedi brings to the workings of the EU economy should be equally relevant to all potential readers, no matter their political opinions. To be critical for the sake of it, I wonder if by concentrating on Europe’s leading capitals Carchedi has underestimated the influence of Europe’s wealth holders/rentiers. Finally in my opinion this book’s weakest point is its title, may I suggest “Where are Europe’s leading capitals leading the EU? A class analysis of European economic integration”, would have fitted far better.