The euro crisis: German politics of blame and austerity – A neoliberal nightmare

Abstract

This article rejects a common misdiagnosis of the euro crisis. It argues that the main problem is not a ‘sovereign debt crisis’ but a design flaw in the EU structure. In a period marked by a global crisis of capital accumulation, this flaw threatens to become a nail in the coffin of European integration due to the absence of any mechanism to stimulate real convergence between the member states and calibration of the monetary, economic, and social aspects of the integration process. The article outlines the way in which current public debt levels can be explained by current account imbalances. Policies of regressive redistribution, meanwhile, have encouraged the formation of large private asset holdings. It is against this backdrop that the role of Germany, as the main creditor country in the euro zone, is critically assessed. Germany's approach to debt management – making solidarity conditional on tough fiscal discipline and public sector reforms – is criticized not only for being a major factor undermining the survival of the Euro, but also for eroding democracy both within the nation states as well as on the European level.

Keywords:

• European Union
• euro crisis
• democracy
• Germany
• austerity

Notes

¹This is the basic idea behind the ‘greening’ of capitalism and the numerous versions of a ‘Green New Deal’, an issue which is of utmost importance (see Mahnkopf 2012) but which cannot be taken into consideration in this article.

²These are the criteria set out in the Treaty of Maastricht that must be met by European countries if they wish to adopt the European Union's single currency. The three most important are: inflation of no more than 1.5 percentage points above the average rate of the three EU member states with the lowest inflation over the previous year; a national budget deficit at or below 3% of gross domestic product; national public debt not exceeding 60% of gross domestic product.

³This expression has been introduced by the French thinkers Pierre Bourdieu and Ignacio Ramonet to describe the claimed supremacy of neoliberalism as an ideology, and might be translated as ‘single thought’.