August 20, 2017

The European project

An article by Edward Goldsmith for the John Muir global network, uncovering the true nature of the ‘European project’ – to create a deregulated corporate playground no matter what the human cost.

Date uncertain, estimated 1995–1996.

If there has been opposition to the Maastricht Treaty, the Treaty of Amsterdam, and the adoption of the single currency, it is above all that they are the essential steps in a carefully worked out strategy designed to create a European superstate. To suggest the opposite is absurd as already the European Union has its own Government, its own Parliament, its own Court of Law, its own Central Bank, and its own currency.

In addition plans are afoot to create a common legal system applicable to all member countries, to harmonize the tax laws, and to create a single European army. All that would then remain would be to create a common educational system and a single European language, and the totally artificial superstate will have been set up lock, stock, and barrel – though its chances of lasting more than a few years seem remote.

However, this is not the only reason why one must oppose the European agenda. Its priority has always been an economic one – to create a single market from which all barriers to the free movement of capital, goods, services, and people, would be removed, and from which cultural differences, in particular as they affect consumption patterns, would be progressively attenuated if not eliminated.

Few people seem to realize the implications. The reason is that we have all been taught that free trade, on whatever scale, provides the only means of increasing our welfare and prosperity, for it is only in this way that we can maximize competitivity, root out uncompetitive companies, and hence maximize efficiency. Hence it is only in this way that we can maximize the availability of the cheapest possible goods and services, which is the key to maximizing per capita GNP, the ‘standard of living’ and human welfare.

However, this assumption needs to be seriously reconsidered. One reason is that people are not just consumers (or producers for that matter). Humans evolved over millions of years as members of extended families, small cohesive communities, and looser societies. If these key social units break down, and if the specific religio-cultures that hold them together and regulate their relationship with the natural environment disintegrate, we end up with an atomised and anonymous mass society whose behaviour becomes increasingly aberrant.

This is precisely what we are seeing today and it is the inevitable consequence of the socially and ecologically irresponsible economic policies we are pursuing with ever greater commitment. The truth is that the principal method used for increasing competitivity and efficiency is to cut costs. This means that salaries are being slashed, full-time jobs replaced by part-time jobs, long-term contracts by short-term contracts and men by women who are generally paid less and are more willing to work part-time.

At the same time the Welfare State is being systematically dismantled, ironically just at the time when poverty and unemployment are increasing and the need for it has never been greater, especially as current policies cannot but further disrupt families and communities that have traditionally provided the most basic and most sustainable form of security. It also leads to transnationals scouring the globe in search of cheap labour, cheap resources, lax labour and environmental laws, and of course government subsidies.

This notion of subsidies cannot be over-emphasized. Even though the GATT agreement was supposed to remove all subsidies – and the removal of subsidies is the battle-cry of corporate lobbyists – TNCs that dominate the global economy have succeeded in avoiding the removal of subsidies on those activities in which they are particularly involved such as infrastructure projects, scientific research and development, exports, and many others. Because of their great power and ability to influence and in many cases control government policies, they are able today to obtain direct and indirect subsidies that have become simply outrageous.

According to the Worldwatch Institute (see Roodman, The State of the World 1988, page 171) there are world-wide, subsidies worth at least $650 billion, the equivalent of 7 percent of all government revenues, to support logging, mining, oil-drilling, large-scale and largely unsustainable livestock grazing, fishing, energy-generation, and motoring – precisely those activities that are causing the most disastrous damage to the world’s natural environment and that are rapidly making this planet correspondingly less habitable.

The ability of TNCs to cut costs has been drastically facilitated by ‘deregulation’ that has become the order of the day. Both in Europe and the rest of the world deregulation involves abolishing laws and regulations that increase costs to industry, regulations that have largely been set up precisely in order to protect labour, pensions, the unemployed, local communities, local economies and the natural environment.

With the signing of the last GATT agreement any such laws and regulations are vulnerable to being classified as ‘non tariff barriers’ and hence declared ‘GATT illegal’ by a secret panel of the World Trade Organization, which is totally dominated by transnational corporations whose stated object is to subordinate all social, ecological, and human considerations to the overall goal of maximizing trade.

Of course this whole enterprise can only be of short duration. One reason for this is that the IMF policies, and in particular the structural adjustment programmes that since the beginning of the 1980s have been imposed on Third World countries that seek to borrow money from that institution, are designed not only to enable these countries to earn the foreign exchange necessary to pay the interest due on borrowings from Western banks (the IMF is above all the debt collector of the Western banking system), but also to incorporate these countries into the global economy.

These two functions are assured by a number of expedients.

  • The first is to force these countries to remove all barriers to often highly subsidized Western imports, with the inevitable result of killing the manufacturing sector of their domestic economy.
  • The second is to force a borrowing country to reorientate its economy, in particular its agriculture, towards exports which can only deprive the small companies that cater for the domestic economy of key resources such as finance and agricultural land.
  • The third is to insist that non-productive expenditures such as welfare, education, etc., be eliminated, which causes terrible poverty and misery and at the same time has the effect of reducing effective demand within the domestic economy.

These three expedients alone will serve to incorporate the country in question into the global economy, for a while at least, but at the terrible cost of destroying its domestic economy without which it cannot survive economically. The case of Japan is illustrative. Though that country has never been subjected to a structural adjustment programme its domestic economy has nevertheless completely collapsed with consequences that we read about in the financial columns of the our newspapers every day, and even though Japan has an export surplus of nearly a $100 billion a year.

Perhaps the most serious consequence of the demise of the domestic economy is the massive unemployment that this must give rise to. The highly automated transnational corporations that dominate the global economy provide but an insignificant proportion of the jobs required in the world today.

According to the Institute of Policy Studies in Washington DC, the 200 largest TNCs that control between them 28 percent of world trade employ less than 1 percent of the world’s workforce. It has even been suggested by a number of my colleagues in the International Forum on Globalization in San Francisco, that the global economy (if it lasted) could eventually function with less than 20 percent of the world’s workforce, grossly inflated as it will be by the hundreds of millions of small farmers, artisans, shopkeepers and small businessmen that will inevitably be put out of business as globalization proceeds. This in itself will create poverty, misery, and destitution, on a previously unknown scale, a situation that no economic system can possibly survive.

It could be argued of course that the European Superstate that we are creating will provide some sort of protection against the worst consequences of the global economy. This may be true to a limited extent, but in general it is not the case. Originally the companies whose persistent lobbying led governments to create the European Common Market favoured a measure of protectionism within ‘Fortress Europe’.

Slowly however the mood changed and the accent became very much more towards accommodating the needs of the large corporations based in Europe, or at least operating in Europe, that cater for the global rather than the domestic economy. Significantly the substance and text of the act that set up a single market in Europe in 1994 was above all the work of such corporations. Particularly active among them were the Chairmen of Fiat and of Philips.

Unfortunately the European single market is too small to sustain competitive corporations today. In the economic climate we have created only the global market is sufficient. On the other hand the European market is still too big for an economy that satisfies the requirements of the families, communities, societies, and ecosystems outside of which human life is insecure, meaningless, unfulfilling, and totally non-sustainable.

This suggests that if we are at all interested in solving the ever more daunting problems that confront us today and try seriously to improve our welfare on this planet, we have no alternative but to shift our society to the opposite course, i.e. towards the development of a loose network of local economies in which small and medium companies rooted in the communities in which they operate cater for well protected local and regional markets.


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