A controversial debate is currently going on in Germany’s Left Party “DIE LINKE” after its former chairman Oskar Lafontaine called for the re-introduction of national currencies, linked together in a new version of the European Exchange Rate Mechanism, to replace the Euro single currency. Just before Lafontaine announced this position at the end of April the party leadership had stated in its draft election manifesto for this year’s general election that DIE LINKE supports the Euro. Part of the background to this is the emergence of a new nationalist-conservative party, called the “Alternative for Germany”, which campaigns for an end to the Euro and the reintroduction of the Deutschmark or smaller currency unions. This party received a lot of publicity after its formal launch in April and stands at around three per cent in opinion polls. While so far the dominant forces within the German ruling class have moved heaven and earth to save the Euro as a means of maintaining their domination over Europe and the strength of Germany’s export-orientated economy, there is also a growing unrest amongst part of the German elite that the costs of the Euro – or at least for the crisis-ridden countries in the South - could become too high. Discussions about the pros and cons of the Euro and the possible necessity of an exit strategy have therefore also been going on amongst the German bourgeoisie and middle class. In this context the debate in DIE LINKE is potentially disastrous for a left-wing party. On the one hand a pro-Euro stance would be seen to tie the party to the wing of the ruling class that currently supports the Euro. But to give the impression that there can be a way out of crisis and austerity just on the basis of leaving the Euro without putting the whole capitalist mode of production into question, would open the door to allying the party with the capitalist opponents of the Euro. Sascha Stanicic and Lucy Redler, the two spokespersons for Sozialistische Alternative (SAV – German section of the CWI) in this article published on May 8 put forward a Marxist view on the current Euro debate and argued for a socialist alternative.
Oskar Lafontaine (former chairman of DIE LINKE) has suggested phasing out the Euro by reintroducing national currencies together with a European currency mechanism (such as the one the existed before the introduction of the single currency). This has sparked a long-overdue public debate and caused him to be subjected to a lot of criticism from within his own party. Lafontaine is correct to criticise the Euro. But he is wrong to assume that abolishing the Euro within the confines of a capitalist market economy would solve the social problems in Europe and would do away with the crisis-ridden nature of the capitalist system.
The EU and the Euro are projects of the ruling classes in Europe, in particular of the strong capitalist classes in Germany and France, to force through their own economic and political interests – against the competition in the USA, in Asia and elsewhere, and against millions of workers in Europe.
The SAV, just like the PDS (Party of Democratic Socialism, one of the predecessor parties which formed DIE LINKE) and many others on the left, opposed the introduction of the Euro. Under the slogan “No to the EUROpe of the banks and corporations”, we took a stand against the new currency which was used by the governments and capitalists to force down social standards and wages. At the time, we wrote: “Shouldn’t one, as a European, particularly on the left, support the Euro? No, we oppose the Euro for social reasons, not for nationalistic reasons. The conditions for participating in the common currency, the so-called Maastricht convergence criteria, made it very clear from the outset, whose interests were to be served by the introduction of the Euro: The banks and the corporations. The convergence criteria were not about full employment or liveable wages, they were purely monetary criteria (…) In this way, the participating countries obliged themselves to carry out massive programmes of cuts and deregulation (…) The Euro will drastically increase competition between workers in different states within the common currency zone. (…) The Euro will increase the gap between the poorer regions in Europe and those which are better off, because the struggle for a competitive advantage always works out to the disadvantage of the weakest.” (from: VORAN, May 2001).
Our starting point at this time was not a nationalistic one. We were not and are not fans of the Deutschmark. On the contrary, we have always explained that a genuine unification of Europe – one which would lead to democratic and social progress – will not be possible on the basis of capitalism. We also warned that a common currency would be used to increase profits on the backs of the general population and we also pointed out that it would fail under the pressure of the crises which are inherent to capitalism and the national antagonisms resulting from such crises – a process, which has now commenced with the fallout of the global economic crisis since 2007.
But the Euro is not the cause of the crisis. A look at Britain, Iceland and the USA is sufficient to demonstrate this – these countries have national currencies and are still, like many other countries, affected by the global economic crisis which has been unfolding since 2007. Of course, the Euro plays a role in how the Eurozone countries can deal with the crisis. The rules of the European Monetary Union and the fact that there is no possibility of revaluing or devaluing a national currency, restrict the room for manoeuvre with regard to taking measures against the crisis. For this reason it is no wonder that a discussion on the question of leaving the Euro is going on in the countries most affected by the crisis, such as Greece and Cyprus. The left in Germany has to clearly state that these victims of Merkel’s Euro policy and of the Troika have the right to leave the Euro – e.g. if they decide to do so in referenda.
But quitting the common currency and leaving the fundamental capitalist structure of the economy and the state intact, would not constitute a solution for these countries which have been bled dry by Merkel and the Troika. They would remain at the mercy of the international markets and the consequences of the expected devaluation of the new national currency would on the one hand mean cheap exports, but on the other hand it would make imports more expensive and possibly result in being cut off from international credit markets as well as rising inflation (prices increase, wages are worth less). This would lead indirectly to an impoverishment of the population in the same way as it is happening directly today with the massive cuts to wages and benefits. Why? Because the root causes of the crisis are to be found in the contradictions of capitalism itself. There are not enough profitable investment possibilities in the so-called real economy for the gigantic amounts of capital worldwide. Therefore, capital has gone over to excessive speculation, leading in turn to exorbitant debt and bubbles on the stock markets and in the property sector. As Marx and Engels explained, capitalism is a society in which crises come about in the midst of plenty. The Euro was, in essence, an attempt to achieve a better competitive situation for Europe’s capitalists in a time of increased international competition. Therefore, there was no flaw in the construction of the Euro, as Lafontaine claimed. Rather, the Euro itself is an expression of the “flawed” or rather “dysfunctional” capitalist economic system.
Position of DIE LINKE leadership
Lafontaine’s proposal has been met by a lot of criticism. Some people have tried to portray him as a nationalist. This is unjustified for two reasons. Firstly, his position is no more nationalistic than support for a Euro which is being used as a weapon on behalf of the German capitalist class all over Europe. Secondly, at least he expresses social and political demands which correspond to the interests of working people and the unemployed (even though he repeatedly makes the false claim that wages in southern Europe have risen by too much in the last years). At least Lafontaine has started a necessary debate, albeit providing the wrong answers to the questions it has raised. The reactions by sections of DIE LINKE’s leadership, speaking out in favour of the Euro almost on a daily basis and even including a commitment to the Euro in the current election manifesto draft, are much more problematic. In doing this, they miss an opportunity to distance themselves unambiguously from the cartel of pro-capitalist parties, CDU/CSU, FDP, SPD and Greens on the most important political issue of the moment and to prevent the large number of Euro-sceptics from being driven into the arms of nationalist forces like the “Alternative for Germany”. The Euro-sceptics are not all nostalgic nationalists. Most people associate the Euro with increased prices and the current crisis and have grown critical for social reasons. This makes it all the more important that a left force, representing the interests of the working class, adopts positions critical of the Euro.
Michael Schlecht, spokesman on trade union affairs on DIE LINKE’s national executive, has intervened in this debate with a contribution in which he calls for wage increases in Germany in order to save the Euro. His arguments for this point of view are highly contradictory. On the one hand, Schlecht argues that Germany has exported the crisis to other countries by cutting domestic wages and benefits (so-called domestic devaluation) and thereby increasing its competitiveness. He calls for higher wages, in order to reduce the size of Germany’s trade surplus, which he believes would lead to a worsening of the competitive situation of German companies. At the same time, he defends the Euro, because its demise would cause a massive rise in the (external) value of a German national currency – thereby undermining the competitiveness of German companies. Unfortunately, he neglects to say what the central problem is: Competition itself, i.e. the capitalist economy, which is based on competition and maximisation of profits.
This competition has a destructive effect – whether within a single currency zone or between economies with different currencies. This would also be true in a European currency system (in which exchange rates could be adjusted up or down within a controlled framework) of the kind Oskar Lafontaine is now suggesting. Indeed, Europe has been through this experience already: In the 1970s, Europe had the so-called “currency snake”, which failed under the strain of the first global economic crisis after the post-war boom. The European Monetary System, formed in 1979, fell apart in the recession of 1992. These experiences, just like the current Euro crisis, show that the centrifugal forces in Europe come to the fore in times of crisis, because the capitalist system is still structured on the basis of national economies and because the capitalist classes still have a national character. Even if there are national currencies, the stronger economies still have thousands of ways and means of exerting their dominance. A national currency may provide certain means of protection which are not available today. But the flipside of the coin would be inflation, rising interest rates making credit for poor countries more expensive and all the consequences that would ensue for the standard of living of the population. This would not put an end to austerity.
Katja Kipping and Bernd Riexinger (the joint chairpersons of DIE LINKE) have also spoken out in favour of the Euro. Kipping speaks of the necessity for coordinated European social and economic policy, common financial policy and the redistribution of wealth from top to bottom. She does not reveal how this is to be achieved within the confines of a capitalist economy based on competition. If no answer is given to this question, then every statement of support for the Euro is a negation of solidarity with those on the left, who are today questioning the Euro in Cyprus and elsewhere.
Capitalism versus reason
Lafontaine himself admits, that his previous support for the Euro was based on his misplaced hope that it could “force economic reason to prevail on all sides”. He doesn’t say what gave him this hope. And in the same way, the source for his hope that a European currency system would bring reason to a system which knows no rationality other than the maximisation of profits, is Lafontaine’s personal secret.
The positions both of supporters and of opponents of the Euro in DIE LINKE suffer from the illusionary notion, that a “reasonable” financial and economic policy can, within the framework of a capitalist economy based on the concentration of power and property, prevent economic imbalances from developing between national economies of different strength. This is also the problem with Sarah Wagenknecht’s (vice chairwoman of DIE LINKE’s parliamentary group and most prominent representative of the party’s left wing) argument that “nobody would need to think about a possible breakup of the economic union and about alternative scenarios”, if “Germany would make up for the years of wage losses and benefit cuts with above-average increases in real wages, higher pensions and better social benefits.” The ideas of Lafontaine, Schlecht, Kipping and Wagenknecht are all – each in their own way – akin to suggesting that one can share out the food fairly in a pool full of sharks.
Question the system
The answer to the question of the Euro versus national currencies must be answered with further questions: who controls financial policy and the economy? Who owns the banks and corporations? In whose interest is the economy run? If the working class of any country succeeds in establishing a socialist government, which nationalises the banks and corporations, introduces controls on the flow of capital, stops paying foreign debt, stops social cuts and starts massive investment in education, health, the environment and social programmes in order to create jobs, then that country will probably be thrown out of the Euro zone within a very short period of time. It will then be forced to introduce its own national currency, but this national currency would not in itself be the means of overcoming the crisis – this would be achieved by the socialist policies of such a government. And such policies would have to include an appeal to the peoples of Europe to follow their example, to chase out the capitalists and to build a new socialist and democratic union, politically and economically.
If referenda on the question of the Euro were to be held in any European state today, left parties would have to call for a no vote. The left in Germany would be obliged to stand in solidarity with them in doing so. Anything else would be a vote in favour of a continuation of the destructive policies of the Troika and the Diktats from Berlin and Brussels. But at the same time, they would also have to make it clear that this step alone will not solve any problems at all. For this reason, it is wrong for DIE LINKE to advocate “saving the Euro”, but it is also wrong of other forces on the left to simply call for an exit from the Eurozone. The answer to the question of the currency must be a socialist answer to the question of the system. This way of answering the question begins with an uncompromising struggle against the policies of austerity all over Europe. Rejecting job losses, privatisation, cuts and attacks on democratic rights must not, however, be connected with the illusion that capitalism can be brought (or forced) to reason – instead, these struggles must be linked to the idea of bringing down the rule of capital. The EU and the Euro are incapable of being socially reformed, in the same way that the whole system, basing itself on exploitation, is. Unfortunately, all representatives of DIE LINKE, who have contributed to this debate, shy away from the conclusion: a socialist democracy has become a necessity to which there is no alternative in order to put an end to this destructive crisis!