Tuesday, 7 July 2015

The Conservatism Strangling Europe

Angela Merkel could save Greece, Yanis Varoufakis has argued. As her mentor Helmut Kohl foisted the euro on an unwilling German public, so she could follow him up with an even more widely loathed fiscal union. Superficially, Varoufakis has a point. Greece may be deeply unpopular among Germans, but Merkel is not. In fact, she is their favourite politician. And European economic policy often works as a substitute for German foreign policy: the place where big, if waning, leaders fatten up their legacies. Saving Greece might cost her some popularity at home in the short term, but it would propel her to hero status abroad. That halo would soon rebound and dazzle her countrymen.

But Merkel will not save Greece. Some mistake Merkel for a moderate eurosceptic, forever putting the brakes on any signs of accelerating integration. I don't think that's entirely true. Merkel is the authentic conservative the Bonn Republic never had, interestingly born in the East. 

What is the present moment, a conservative asks, but the merely visible culmination of all that glorious past? Franco Moretti describes the conservative-bourgeois novel as a form in which "the present becomes a sediment of history." For a conservative the present is "just the latest stage reached by the past," according to Mannheim. Even a conservative like Hayek, with his attraction to the vicious rationality of capitalism, failed to conceive of a just legal order which was not, in a sense, a blind inheritance from the past (undirected by anything as tyrannical as a centralised authority). In essence, for the conservative, law is a contingent accumulation of cultural artefacts. We do the work of aeons, applying just the tiniest daub of ink to a vast pile of letters. As banks totter and Greeks run out of food, the true conservative asks herself, "Why rush?"

Put differently, Merkel will not come to the Greeks' rescue because she is a blinkered Protestant moraliser. A new word was coined in the nineteenth century to describe the uncompromising conservative position towards politics, wherein the past always fully determines present possibilities and everything else is idealism: realpolitik. 

In the midst of a fortnight of uncertainty, something like realpolitikal resolve has started to eke its way out of Europe. Germany's present hero of hard-nosed realpolitik (there have been many) is Finance Minister Wolfgang Schauble. True, he has charms better suited to battlefields, but Germany is no longer allowed to initiate real wars. It has to fight proxy fiscal wars instead, and could for such a job have chosen no better general. 

Schauble let it be known last week that Greece may be ejected from the euro, as feared, but only temporarily. This thought is not new for Schauble or for the conservative wing of the German intellectual establishment. The history of the Federal Republic of Germany "is mainly its economic policy," wrote Werner Abelshauser. If that sounds tedious, it was perhaps deliberately so. Germany is characterised above all else by consensus - but not of the agonistic or dialectical kind. The German consensus is always-already existent, a necessary background against which decisions are made. The notion of consensus as a dynamic, self-transforming process is quite alien to many of it intellectuals (Jurgen Habermas is an exception).

No field of the social sciences is better equipped for such de facto relegation of politics to a pre-forged consensus than modern economics. And within that few national cohorts are as myopically fiscal as the Germans. The most respected in their number, like Hans Werner Sinn, have in fact long acknowledged the failures of the single currency. In his book The Euro Trap Sinn argues, as Schauble did recently, that Greece should be temporarily exiled, to return once the riches of devaluation have taken effect. As long as the carrot of readmittance dangles just out of reach the Greeks can be relied on to implement their own reforms. Greece will, in short, become a bit more like Germany - which is all Germany has ever asked. What of the eurozone itself? Sinn believes the Maastricht criteria and the Growth and Stability Pact were never rigidly enough enforced. A return to founding principles and strict implementation of that inheritance is what is needed. In other words, even stricter enforcement of the currency union's resemblance to Germany.

"Germany managed it," is the mantra of those who believe that Greece can possibly become the same as Germany. But there can only be one Germany in a currency union. Within a currency union, one country's current account surplus is necessarily another's deficit. As Germany exports more than it imports, the less competitive (who rely on trade within the eurozone) must necessarily import more. As Germany benefits from the internal devaluation of wage repression, Greek prices must necessarily remain high, no matter the level of cuts the Germans demand. 

If Greece is to become more like Germany, Germany must become... more like Greece. It must become less competitive and pay higher wages (at least in line with productivity). It must tolerate a little inflation (which follows from wage increases). It must let its trade surpluses decline (as other countries gain competitiveness over it). Fat chance, I suppose.

Sinn's - and perhaps Schauble's - hope is that, by forcing Greece out, Germany can dodge any rebalancing of the ugly, lopsided European economy the old fashioned way: through the competitive devaluation and neo-mercantilism currently ruled out by the single currency. This is a fantasy as naive in its way as Alexis Tsipras's belief that he can cancel austerity and keep the euro. Both share at least the delusion that the single currency has any future of benefit to offer most of Europe.

Greece's exit is, if it happens (and who knows if, when or how it will happen - truly, this is unprecedented), might be a messy disaster. It need not have been. An honest, managed exit might have worked far better. Moreover, it may not benefit progressive forces in Greece. Now, the most reactionary forces in Greek society are lining to feast on the carcass. The very idea that Greece will be only briefly submerged - as in a rechristening - to return later Rheinischized and ready to work, betrays a very Lutheran prejudice. The Greeks are much more likely to be consumed by the grizzly little experiment Germany's secular saints are cooking up for them.

What does Europe boil down to for its leading conservatives? Nothing but the accumulated mass of its treaties, and caked on top of that, the highly esoteric back-and-forth of its expert procedures.

Greece's no vote in its recent referendum  - sneered at across the continent - was a glimmer of another Europe. This was a Europe of ideals, a Europe with a future that amounts to more than an accumulation of paperwork, a Europe that eludes their control. They hate that Europe and they want to destroy it. 

Greece must say no yet again - no to Schauble's scheme and no to Merkel's priggish moralism. They are branches from the same tree: a fiscal conservative utopia that is strangling the continent.

Nobody can guarantee where Greece is heading after exit. But we can guarantee the slow death that awaits if it remains.

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