A Plan for Europe: Decent_Europe_

This afternoon (Athens time) I shall be appearing at the TEDx Academy (Athens) to deliver my fifteen minutes worth of ideas about how to transform Europe. Here is what I plan to say:

1. Introduction

When Gandhi was asked what he thought of Western civilisation, he famously replied that: “…it would be a very good idea”.

If asked what we think of the European Union today, we could do worse than remarking: “What a splendid idea! If only we could pull it off!”

United only in name, Europe is in a process of slow burning disintegration. The Euro Crisis is operating with the vicious determination of a termite colony eating into the foundations until nothing but an empty shell will be left of what, until recently, was hailed as the lofty ideal of a United Europe.

In every Agatha Christie novel, when a party of upper class people gather together is some chateau, the reader knows what to expect: a series of murders. These days, when we hear that our political leaders will gather together, we too know what to expect: A comedy of errors, wrapped up in triumphant rhetoric which, in a short few weeks, proves to have been nothing but harmful waffle. Serial errors that produce serial failures along the path of European disintegration.

To err is of course human. But to mess things up spectacularly, we need an elite (made up of Presidents, PMs, ministers, opinion makers, bureaucrats) who steadfastly refuse to treat a systemic crisis systematically. By now, enough evidence has been amassed to render their continued denial inexcusable.

Humanity does not surprise itself very often. It did once in 1929 and then once more in 2008. 1929 ought to have taught us two lessons that are current now: That the first victim of a systemic crisis is the common currency of the era – the Gold Standard then, the euro now. And that its second victim is truth and civility: Once such a Crisis begins, a Hobbesian war of all against all is unleashed blinding everyone to the causes of our collective woes – making hard for us to even recognise the systemic crisis in which we are embroiled, and for which we share a portion of the blame.

Thrillers usually feature a smart detective who removes one after the other the masks of the various characters. But good detective stories do not end with the unveiling of the perpetrator. They go beyond that, reaching their apotheosis at the moving moment when the hero inadvertently unmasks himself, ending up in puzzlement in front of a pitiless mirror. The same is happening in Europe today. We are all being unmasked by this Crisis: Unscrupulous bankers, amoral politicians, enthusiastic bureaucrats, uncritical citizens, cynical academics, conniving entrepreneurs. Trouble is, the more masks fall the greater our dejection while the human costs are mounting and can only be sensibly measured in terms of lost generations.

At no time has it been as crucial to transform and get transformed!

2. THE FALSE DILEMMA

It is only fairly recently, around a century ago, that doctors managed reliably to save more people than they killed. Till then, the disease was preferable to the proffered cure. Similarly with the Crisis of the Euro – a system that was never designed to withstand a Global Crisis like that of 2008.

For 18 months now Europe is trying to prop the euro system up by administering a poisonous remedy. It built a hopeless scaffold that put extra pressure on the collapsing edifice. It created the European Financial Stability Facility in the image of Lehman Brothers’ infamous derivatives: A toxic bailout fund by which to support a collapsing monetary system. A bit like tying together two heavy stones hoping that, together, they will float more readily.

Now that most can see the error of Europe’s ways, a new Jerusalem is being promised: The Federal Option. Many well meaning Europeans, and some friends from further afield, issue a roll call of ideas along Federalist lines:

Fiscal Union, Federal Treasury, a European Economic Czar, Centralised disposal of national assets, Loss  of National Sovereignty, Treaty Changes

The worst aspect of this Federal Option is that it is… self-defeating. Federalists beware: To canvass federal moves as an antidote to the present Crisis is to ensure that Federation will never happen!

Why? Because however fast we move toward federation, the crisis will outrun us, the euro will collapse before the Treaties are changed and, then, in the smouldering mess that will remain there will be nothing left to federate.

There is a second reason too: Federation is too important to be subsumed into a short-term struggle to save bankers and deal with public debt. A United States of Europe deserves more than institutions that were devised on the run and under pressure from Moody’s and Fitch. It will only be worth having:

  • when Europeans can begin to countenance an electoral system which asks of Germans and Greeks alike to vote among Greek and German candidates
  • when it is possible to discuss the dissolution of national armies and their merging into a single European Defence Force
  • when your views and mine are assessed on their pure merits and not on who you are, what accent you present them in, whether you are German or Greek – when, in other words, the lost virtue of Ancient Athenian Isigoria is revived Europe-wide
  • Symbolically, we shall know that we are ready for a decisive Federal Move when we can agree on what actual image to print on our euro notes, in place of abstract bridges and gates that exist nowhere in Europe, symbolising the lack of common symbols

3. THE ALTERNATIVE: DECENT_EUROPE_

So, if the current path leads to UNCONTROLLED DISINTEGRATION and AUTHORITARIAN FEDERALISM is not a cure, what next?

I submit that before  answering the question we better agree on a number of principles that should govern our immediate future. Here are two such sets of seemingly opposed principles:

  •  An End to the Perfectly Partitioned Europe of Maastricht while
  • strengthening both National Sovereignty and National Responsibility
  •  No False Solidarity based on Pretend Bail Outs or Inane Austerity, and a great big NO to Pointless Debt Buyouts while
  • promoting Integrated Investment and Integrated Management of Public Debts and Bank Losses

In short, Decentralised Europeanisation. Or, to coin an acronym, Decent_Europe_

What does all this entail?

It entails an Automated Integration of Three Spheres, that will take place at the Centre of  Europe. That is the meaning of Europeanisation. At the same time, it entails decentralisation of everything else. Thus, Decentralised Europeanisation.

What are the Three Spheres to be integrated – Europeanised?

A. EUROPEANISED MANAGEMENT of EXISTING PUBLIC DEBT

B. EUROPEANISED BANKING SECTOR

C. EUROPEANISED INVESTMENT POLICY

This is not the time or place to delve into how these Three Spheres will be Europeanised. You can find the details here: A Modest Proposal for Resolving the Euro Crisis.

BUT it is the time and the place to highlight two features of the proposed Europeanisation of the Three Spheres:

  • Each of these Three Spheres will be Europeanised by an existing institution, which means that there is no need for cumbersome Treaty Changes and the associated political bickering
  • Each of these three institutions can be given a clear, technical task to perform; a task that can be achieved with minimal discretionary power on behalf of bureaucrats or politicians.

To give a flavour of how these three institutions will Europeanise our Three Spheres,

  • Think of a Europe in which the European Investment Bank ensures that Europe’s surpluses are maintained by investing part of them into profitable enterprises in the deficit regions.
  • Imagine that the European Central Bank manages existing debt rationally. That it deflates the debt mountain not by buying debt or printing money but by mediating between international investors and member-states, effectively becoming the Debt Convertor of last resort.
  • Dream of a European Financial Stability Facility were to keep Europe’s banks under a leash while recapitalising them when necessary.

Once these Three Spheres are Europeanised, it will be possible to demand that each member-state runs a balanced budget within which it will find a new opportunity to exercise full national sovereignty in selecting its own path regarding income distribution and developmental priorities.

Decentralised Europeanisation promises to make possible that which is impossible today: For each nation to plan for a sustainable future within a Europe that is worth fighting for.

At the same time, Decentralised Europeanisation will guarantee that European integration becomes irreversible.

As this fact sinks in, Europeans will at long last have a sporting chance to forge, relieved from the angst of the Crisis, Europe’s continental consolidation. Then and  only then will we be in a position to talk sensibly about:

  • Transnational political representation
  • A European Army and common foreign policy
  • Euro notes featuring non-fictional symbols
  • More generally, truly federal institutions that are more than mere copies of  American ones

4. Conclusion

Myth has it that Sibyl of Cumae offered Tarquinius Superbus the nine books of wisdom. Tarquinius thought that the asking price was exorbitant and said NO.

Sibyl then started burning one  book after the other until Tarquinius relented, agreeing to buy the remaining  three at the original price which no longer seemed exorbitant to him.

The euro crisis is copying Sibyl’s strategy. But our leaders are allowing our common heritage to burn down in its entirety.

They keep saying NO while paying lip service to a Centralised, Authoritarian Federation that will never materialise and which, even if by some miracle were to materialise, it would simply add a democratic deficit to all the fiscal deficits and banking losses that we are drowning in.

We still have time to salvage our ‘three remaining books’. But not much!

Decentralised Europeanisation (Decent_Europe for short) can stem the Crisis now.

It can usher in a new era in which Europeans – Northern and Southern, Western and Eastern – can look into one another’s eyes and recognise a partner again.

If we miss this chance, Europe will only manage to drag the planet into a despicable mire for the third time in a century.

We have a duty, an overarching obligation, to prevent this.

This column was first published on Yanis Varoufakis’ Blog

  • Jonathan

    Good, but lacks the courage to push forward to the logical conclusion. The comparison with the Gold Standard is apt, but countries managed to recover from the Great Depression when they abandoned it. The world did not fall in on Argentina when it abandoned its (not exactly) currency board. The logic is clear – allow the euro zone to break up as rapidly and as orderly as possible and thereby allow countries to regain some national economic autonomy. Any assertion that further European integration is feasible and would be constructed in such a way as to provide a better alternative is just that – simply assertion.