Monday 24 October 2016

Neo-liberalism not the cause of Europe's rigid rule book

Published 07/04/2016 | 02:30

SUPPOSE the British trade union movement - not to mention Jeremy Corbyn's Labour Party - had decided to support Brexit? The result would have seemed a foregone conclusion. Even Scotland might vote to leave.

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This was certainly a fear in much of the Irish trade union movement - but not in all of it. Some would have liked to see things turn out that way. The EU has a wide range of enemies; from the nationalists of the English shires to the hard left, in trade unions and elsewhere.

Little Englanders one can understand, but why should the European project produce such hostility on the opposite side of the spectrum? After all, there is never an EU document which does not contain lofty aspirations about the social market, equality, gender balance, the environment and much else besides.

Indeed, one of the few practical, as distinct from emotional, arguments in favour of Brexit is that EU employee protection legislation (from some of which Britain is exempted) hampers growth and the supposed stellar potential of free British capitalism.

That does give most British trade unionists pause for thought. It seems implausible that a Britain free from EU rules on hours, holidays, part-time work and the like would grant its own workers more generous terms and conditions (although it is another question as to what extent the EU would agree open trade with an exited Britain which reduced existing protections).

Such thinking, however, is not universal on the left. Au contraire. A recent publication cites a description of the EU as "hotbed of neo-liberalism" - this being the new word for what was once described as capitalism red in tooth and claw.

It appears in a blog by Danny Nicol, Professor of Public Law at the University of Westminster, on the website of UK Constitutional Law, the body for experts in this field. It was brought to my, and others' attention, by that veteran critic of the EU, and its works and pomps, Dr Anthony Coughlan.

Euroscepticism in Ireland has taken an unusual course. In the early days, when the developments were essentially economic, the critics warned of the plan to create a European super state.

Latterly, when major political processes have actually been put in place, the criticism has been largely of economic policy.

These are two sides of the same coin; a point well-illustrated by Dr Nicol's piece, although his focus is on the economic. The "hotbed" quote is attributed to Marina Prentoulis of the UK branch of the left-wing Greek ruling party, Syriza. "Can you name an EU institution not dominated by neo-liberalism?" she told a meeting.

Dr Nicol can't, and wonders therefore what Syriza is doing in government implementing what he sees as neo-liberal "austerity." For him, Brexit is not enough: everyone should head for the exit, since there is no other escape from the neo-liberal flames.

This all seems a bit odd, set beside those lofty EU aspirations. The governments of western Europe over the years can hardly be classed as neo-liberal. Christian Democrats and Social Democrats alternate power in most of them, and make a great fuss of it, but a visitor from Mars - or even the United States - would be hard pressed to tell the difference.

So how did they come to create this supposed neo-liberal monstrosity? Here, Dr Nicol's list of monsters is instructive. It includes the prohibition of state aid to companies - particularly to state companies - the introduction of competition to public services and the banning of industrial action which "disproportionately" obstructs the free movement of goods, services, capital and workers.

One can see immediately, though, that these and most other EU policies are driven, not by economic philosophy but by the perceived need to prevent member states interfering with free movement in the single market by protecting domestic firms or subsidising favourites

The imposition of austerity on indebted countries by the troika - especially the Commission and ECB bits of the troika - have also been assailed as neo-liberal. But European attitudes to debt do not mirror political right and left.

Some of the most fiscally hawkish countries are bastions of social market economics, while in Britain, with its own currency, both Labour and Conservatives have taken a relaxed attitude to deficits - although the consequences of stringing things along indefinitely are beginning to cause strains.

That choice is not available to a euro country which can no longer borrow in the markets.

But there is plenty of scope to argue to be made the choices made about the overall fiscal stance of the euro area.

Again, the fact that it was so restrictive, while partly driven by philosophy, had more to do with the unwillingness of creditworthy countries to borrow more as the heavily indebted reduced their deficits. That, however, does not make it any less damaging. The restrictions imposed on national governments by the requirements of the single market are, in the long run, more troubling and harder to resolve.

To take an Irish perspective, it might be all very well to be able to give aid to favoured private and state companies, but we would lose out overall if bigger countries were able to do the same for theirs.

Hidden barriers are just as damaging to an exporting country. Many businesses have had the experience of seeing their products rejected on dubious grounds in other member states - usually in particular member states. Without effective policing, the open system would break down.

The result of such, however, is not always efficient, or palatable. The alarming truth is that the sovereign members of the EU have less freedom of economic action than the federal states of the USA.

It is also true, even if largely accidental, that what freedom there is extends more to policies traditionally associated with the right than to those of the left, so the critics have a point.

They might be less impressed by the irony we haver arrived at this position, not from by a fundamental belief in free competition, but by member states' fear of such competition from other states; especially the fear of the rich states of being undercut by poorer ones.

There is a strong case to be made that the current arrangements are not politically tenable, especially if further integration is required.

Things can only get worse unless member states have more freedom to choose domestic policies - provided they accept the consequences of such policies, as a result of the free movement of goods, services, workers and capital.

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