The 2015 failure by the Greek government to negotiate its way out of austerity gave new impulse to strategic debates on the Left. Much of the debate came to revolve around two poles. Wage the battle primarily at the European level, democratizing the Union, or have a left-wing government break free by exiting the eurozone or EU. Oftentimes, unfortunately, both approaches limit the Left’s strategic horizon to a better management of capitalism. More significantly, the underlying theories of change largely forego central questions of government and power. In the face of a European state under construction, a strong movement is needed, not to reform the Union, but to start over on different bases.
Common Currency, Increasing Divergence
Mid-2017, a slight aura of optimism made its reappearance in the rhetoric of the European establishment. Some growth finally returned. The European Central Bank, although still weary of low inflation, scaled back bond purchases from 80 billion euros to 60 billion euros. In the meantime, structural debates on how to reform the eurozone and the European Union continued. The 2008 financial crisis had shown that differences within and amongst member states could put the very existence of the eurozone at stake.
The eurozone was always far from an optimal currency area. In some peripheral countries, GDP per capita was hardly half of the European average. Competitiveness varies widely by most standards. Even before the crisis, in 2007 added value per working hour stood at 4,320 euros in the fifteen Western member states, but at only 1,463 in Slovakia. While Germany, France, and Belgium all have average hourly wage costs of over 30 euros, Slovakia or Latvia still do not make it to 10 euros. A 2015 Economic Bulletin of the European Central Bank claimed some convergence in the Union as a whole, but admitted that real convergence between the countries adopting the euro in 1999 and 2001 was nowhere to be seen. 1 Worse, the analysis even found “some evidence of divergence among the early adopters of the euro,” a trend confirmed in the 2017 Commission Reflection Paper on the Deepening of the Economic and Monetary Union. 2
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