jacobian

Aug 14, 2024

The Current Conjuncture

Europe is currently experiencing an enormously important historical moment. There are multiple crises which are interlocking to create increasing social instability. The situation is currently unstable, the trajectories are not fixed and there is more than one possible future. Unfortunately this instability is likely to become very turbulent before a definite trajectory is found.

The core problems which Europe faces include economic malaise, deindustrialisation, inflation and cost of living crisis, high rates of migration which destabilise social cohesion and ever increasing climate instabilities which exacerbate all of the other critical weaknesses.

These problems have risen almost inexorably because of the impotence of any group in society to challenge them. The reasons for this impotence are themselves complicated and tied in with geopolitics, economics and historical realities. They are essentially a reflection of the impotence of the European ruling elite to form any coherent solutions, but also the impotence of any challenger to wrest the reins from the elite and drive a different course.

To cope with these problems it is necessary to constitute a new political frame, with a new political protagonist, whose sights are set directly on the fundamental disease which gives rise to these multiple symptoms.

The Post War Compromise

World War II had left Europe in ruins. Enormous death tolls and capital destruction created a need for industrial redevelopment and labour shortages were widespread. The USSR enjoyed positive sentiment from a segment of the Western intelligentsia for having defeated the Nazis in much of Europe. And this was not just with the Socialist-leaning working class but far more broadly included even elements of the establishment. To further increase the threat to the Capitalist order in Europe, mass Communist parties were ascendent in France and Italy and would likely have even taken power if not for the careful interventions of the United States.

The ruling class of Europe found it convenient to create an historical compromise between themselves and labour. This deal left finance capital in a weak position relative to their position prior to the war, and meant that they had a smaller share of rewards relative to both industrial capital and the working class. This was the golden age of social democratic Europe.

But it was not to last. This deal began to unravel already in the 1970s, as neoliberalism became a strategy taken up by elites frightened by high inflation and the consequent rat-race of forced investment. As an investor having to constantly bet on high growth to beat inflation is high risk. Much better would be to apply the age old strategy of rent extraction.

Rent, is income earned by controlling access to an asset. It is not like the investment in startups or industrial firms in that you are not hoping to improve production by introducing new innovative goods or better cheaper techniques of producing them. Instead rent is the process of capturing something which is difficult to make a commodity. Rent of a house or land is a good example. One can not simply make another 4th Avenue apartment in New York. Once captured, the asset can be used for rent extraction. But rent is not just about land. It can apply to “regulatory capture” where some producer has a legal advantage, or so called monopoly rent in which supply is controlled by being the only producer.

The most important source of rents however is finance capital. The rise of financialised capitalism has proceeded differently in different countries, with the UK being a vanguard in Europe. However no country has been untouched, and some countries, such as Sweden, which had been one of those most deeply skewed towards productive capital and the working class, have proceeded towards financialisation faster than any other.

This change has had deep consequences throughout European economies. It has weakened its productive capacity relative to other developing economies, but most especially China. This creates a very threatening long term prognosis which elites have variously approached with a “China is about to collapse” wishful thinking, or a “We must join the US in stopping China” a dangerously escalatory game without a likely success scenario for Europe.

In addition the system of deep financialisation in Europe would likely have been impossible, except for the special role played by the United States. Deep financialisation of the kind we have seen in the West, with its attendant off-shoring of industrial production is only possible within the aegis of dominating unipolar power which can ensure that industrial countries are not themselves sovereign. For if they are actually sovereign then they can start competing outside of the imposed financial control of this non-productive capital.

This brings us to the problem of the rise of sovereign developed China. China is increasingly independent of the need of Western markets, Western investment or Western technology. It has itself become a true sovereign economic and political power.

So what then is this finance capital to do in order to protect itself and its interests?

Finance capital has preferred to take a short termist view and seek a “safe space” for capital with low risk and handsome rewards. Property booms have been the result in both the US and in Europe with banks holding portfolios that are overwhelmingly focused around property.

On a macro scale such a strategy is dangerous as productive capital is necessary for the healthy function of capitalism which must necessarily rely on economic growth, something with which rent is in direct competition.

Rent seeking, in contrast to the funding of production, is purely parasitic. The choke point that it utilises to ensure safe returns acts as a tax on all other productive capital and ultimately passes this cost on to consumers. Worse, this parasitism threatens to kill the host on which it depends, for without endogenous production, or at the very least, a constellation of industrial states under vassalage, the strategy will suffocate itself.

Finance capital knows no country, and has no sentimental allegiance. It is not like industrial capital in which fixed capital assets represent geographic ties which are difficult (though not impossible) to move. It deals with many spheres of production and is exceedingly mobile. It’s one fundamental tie is to the profit rate, but in being tied in this way it finds natural alliance with the political regime which establishes the financial world system itself and that is the world hegemon: the United States.

So Western finance capital is naturally in alliance with the United States, and so much so that we can see even the financial firms of Europe, acting in conjunction with the US to manipulate the European political class in US geopolitical interests, often directly laying waste to the interests of European industrial capital and driving ever greater numbers of citizens into economic distress.

The rise of China presents a problem not just to Europe, but also to the United States. The United States, as leader of the world order, has sought to square this circle by cannibalising its developed allies. It will force the political class in Europe to allow extreme rent seeking in Europe, paying enormous amounts for military hardware and energy, while it uses Europe as an economic ballast.

This sharp divergence in interests with regards to European politics, the European public and the future of Europe with the United States geopolitical and economic objectives should be seen as the core problem from whence everything else flows. Without settling this issue, all other issues become insolvable. For sovereignty itself does not lie with Europe, instead decisions are being made on behalf of Europe and the interests of the United States dictates not only that they not be solved, but that they be exacerbated. Europe is to die on its sword for a short-term recovery of US power.

The Enfeeblement of the Protagonist

The politics of change always needs a protagonist. It requires a group or coalition of groups with enough shared interests and ideas that they can change a sclerotic order and replace it with something more vital. Of course depending on political persuasion and ideology these protagonists have been articulated variously.

Socialists of all stripes, from Social Democrats to Communists, have relied on the strength of the working class as the social base from which to achieve their aims. By contrast, the mass-based right and centre, Christian Democrats and the like, traded more often on the preservation of cultural and social norms as a way to bridge the elite with a broad base which could challenge what would otherwise be a dominating working class.

In Europe these tendencies balanced against each-other stably in an environment of high growth, high employment and weak finance capital with significant levels of state industrial planning. With everything on the up, nobody was sufficiently pressed to turn over the apple cart. And thus was the balance in Europe formed for most of the post-war period until at least the 1990s, and its echoes continue to inform much of the political landscape.

However, the process of financialisation has completely changed the underlying dynamic, and the political fragmentation that most countries in Europe are experiencing is a result of this outcome.

The working class is much less important than it was historically, with significantly less power. This fact results as a combination of de-industrialisation and rapid inward migration. De-industrialisation has increased the proportion of the population engaged in tertiary and service labour, sectors in which the working class can exercise little power via the threat to withdraw labour.

At the same time the rapid influx of working-age migrants helps to increase the available pool of labour. As most familiar with basic economics understand, a vastly increased supply has a tendency to devalue a good and such is the case with labour. This is in sharp contrast to the conditions of scarcity of labour present on the close of World War II and the resultant capacity of labour to negotiate, which goes some way to explaining the share returned to labour during the 50s, 60s and 70s.

At the same time, the political elite are almost completely dependent on the largess of financiers who do not have any worry about industrial capacities but only that their avenues of rent in the real-estate market be maintained, and that they not be subjected to too much regulation.

As a result of the mass immigration and deteriorating economic prospects of broad swaths of the population, the right has been on the rise in numerous European countries. We can see this occuring in places as diverse as Sweden, Germany and Italy.

However, the success of Meloni in Italy gives us a clear indication of the impotence of the right to effect any substantive change. Meloni has joined with the US in carrying out actions which undermine European sovereignty while at the same time not even carrying out the one policy which gave her a mass base – stemming the large tide of migration into Italy. The rest of the right will likely follow suit unless their understanding of the root causes becomes less confused.

There are two outliers that are worth mentioning. One is the SMER and its leader Robert Fico and the other is Fidesz and its leader Viktor Orban. While the former is social democratic and the latter from the populist right, both promote reasonable approaches to migration and target economic policies which improve the conditions of the majority. Both might be technically described as a kind of socially conservative patriotic social democracy. A clue to an approach which might serve Europe better as a whole.

But for now, we have a venal elite who have no contract with society or the health of Europe and yet are in control and collaborating with the US to further the destruction of Europe. Meanwhile no mass-based group, working class or otherwise, has the capacity to put a halt to this trajectory.

The New Protagonist

From whence can a political alternative arise? The protagonist must be constituted of a new political orientation. One that does not yet fit easily into the pre-designed “left” and “right” boxes that are currently presented as alternatives to the centrist financier leadership of Europe.

Substantial political change in Europe requires that a fraction of the elites break from the current consensus. Without an elite fraction the exhausted working class, in all of its fragmentation, and the broader workers of the tertiary sectors, grey economy and those who have been completely declassed are simply unable to find forward motion. At a bare minimum, any political antagonism will require capacities, and these capacities will also mean funds.

There are ample reasons why this break might occur among different elements of the elite. Not all of the elite are engaging in rent and elaborate financial schemes. There is a fraction engaged directly in productive capitalism. Industrial capital is in the process of an almost complete liquidation due to the radical increases in the cost or production and under heavy competition even in those sectors in which Europe used to have a significant lead.

This cost of production increase is due both to upward wage pressure from increased cost of living for workers, and a related increase in the cost of energy, which is being forced up by the United States. The United States wants to keep Europe from purchasing cheap energy from Russia, and instead wants Europe to purchase much more expensive energy from the United States.

Industrial capital can resolve the wage crisis by encouraging mass migration, but ultimately this victory will prove pyrrhic as it dissolves the social fabric of Europe itself, leading to severe social instability, which is never ultimately good for business. And perhaps some of these elites will want to preserve what was of value of European civilisation and European leadership.

Even more importantly, the fraction of the elite who are capable of breaking with consensus will find they are incapable of action in and of themselves. The rentier capitalists, and the edifice which helps to hold up US interests in Europe, is simply too powerful to be swept aside easily.

Despite this, there is a solution to the dilemma. An ideologically awkward but strategically fruitful alliance is required between productive capital and the broad working class, including both industrial labourers and tertiary labourers.

The Strategic Alliance

It seems likely that some more traditional alliances along this axis will be attempted, for instance, trying to create a cross-class unity on the basis of traditional social norms or cultural affinities. However, as with the attempts of Meloni, these will not prove fruitful in themselves because they don’t address the core strategic problems that we face.

And none is more central than the fact that the counter-politics must be transnationally European. There simply is no nationalist escape from the crisis, no matter how it is attempted. Every country in Europe is simply too small, even the largest, to survive without a more coherent European strategy. This is perhaps the greatest weakness in the political programmes of Fidesz and SMER, although doubtless they are aware but find the riddle too difficult to solve.

The strategic alliance is that of productive capital and the working class. They must join together in a direct attack on finance capital, geopolitically imposed energy costs and rent.

The industrialists will need mass based support to take on the retrenched finance class, and they will have to give real, not merely symbolic, improvements to the working class in return. These should include a programme to achieve full-employment and state assisted reduction in housing costs. Essentially a programme aiming at reduction of the cost of living.

The alleviation of the cost of living crisis would give rise to improvements in general conditions, reduce upward pressure on wage costs and improve the efficiency of productive capital. With such mass improvements on the table, the defecting elites could rely on a mass-base willing to sweep parasitical capital out of the way on their behalf. Europe could return to focusing on industrial competitiveness, something which is fundamental to the exercise of sovereignty and thereby democratic and pro-social politics.

The Technical Economic Dimensions of the Strategy

Attacking rent-seeking in Europe means carefully dismantling the real-estate market and creating a more carefully constrained banking sector. How precisely to do this will require serious consideration as many European countries, especially those in Eastern Europe, have high home ownership rates which makes the subject touchy among a significant segment of the general population.

Where there is a will, there is a way. There are mechanisms which can help here — namely forcing haircuts on mortgages while ratcheting down property prices.

To do this requires a much more public financial approach, whereby productive capital uses the state to create financial institutions, or takes over existing financial institutions. This can also help productive capital to negotiate better and more reasonable approaches to funding the necessary supply chains. It is essentially a dirigisme approach which has proved effective in European history, not to mention in modern China.

Dirigisme or its cousin, indicative planning, involves strategic planning of core sectors of the economy. With some control over the direction of investment, the state need not be reduced to merely playing with the interest rate. Investment can be increased in strategic areas, or pulled back to cool off in overheated areas. While economists in the West have gone very chilly on this approach, China is using it to effect a virtually business-cycle-free growth trajectory that has left Europe in the dust.

Perhaps one of the greatest challenges facing Europe will be the national and supranational contradiction. A strong Europe will need fiscal power, not merely monetary. Fiscal unity is a prerequisite for this line of attack. It should be clear now, at any rate, how costly was the European malaise in the wake of 2008 as compared to what obtained in the United States – a direct result of this institutional misalignment. How to square that with regional sovereignty and democracy is tricky. China has largely devolved decisions to regions and this seems to be effective so perhaps a careful study of their approach can yield some solutions.

With some power of investment planning in hand, public housing, with cost rent, and completely universal access should be made the core of the strategy in attacking the cost of housing. This deeply re-orientates the structural dimension of the housing market, divorcing a large segment from rentier finance, and putting hard downward pressure on the remaining land and rent market.

While housing is important, in general “welfarism” should be replaced with universal public services, without means tests and targeting of full employment. Programmes such as universal public funded vocational training act as a commons to provide the population with the skills required to be healthy and productive. Similarly, public transport can reduce upward wage pressure while also reducing congestion and making transport generally more efficient in both time and energy.

The scale of current migration needs also to be faced directly. Healthy societies can enjoy immigration, but not without bound. Populations from other cultures need to be assimilated, or fissures develop on ethnic boundaries and democracy becomes impossible.  Europe needs to forcefully excuse itself from the various US military adventures which have destabilised North Africa, the Middle East and elsewhere, leading to huge numbers of displaced people. Foreign NGOs encouraging migration need to be treated as foreign propaganda organisations. Instead of pursuing disruptive policies of intervention and regime change, policies should encourage development in Africa, Central Asia and the Middle East. This could even potentially be done in concert with China.

While productive capital has a short term advantage in increasing the supply of labour, middle and long term destabilisation mean this strategy is short-sighted. Instead, labour’s agreement to wage restraint must be the accepted bargain.

Energy, likewise, needs to be made cheap and abundant. This also will prove a complicated problem, but Russian gas is certainly better than the alternative of overpriced US gas, and vastly better than coal, which Germany has been turning to in earnest. Nuclear energy needs serious appraisal, as France has demonstrated much greater energy sovereignty as a result of its reliance on nuclear power, and has seen much less energy inflation, acting as a major exporter of power to the rest of Europe.

The European unions should be encouraged into a pan-European social partnership with a “bill of workers rights” and an agreement to wage restraint over a reasonable time horizon. This will ensure that productive capital can remain competitive and fulfil the workers’ side of this bargain.

And lastly, farming and agricultural production must be considered as a crucial dimension. Food sovereignty is literally the most critical link in the chain of sovereignty itself. Allowing this to be traded on the international financial markets and manipulated to produce goods which are primarily for export must be carefully and intractably resisted. Any disruption in international supply chains should be survivable, and the sure road to failure on this front is to divorce food production from European economic strategy.

What Ideology for European National Liberation?

Such far ranging changes to the current political-economic structure of Europe will require fortitude of purpose. Any political movement which challenges these features of our current social structure will be under enormous stress. To survive these stresses will require an ideology with the deepest roots possible, given that it must be constituted newly, and a clear “north star” which helps inform the direction of travel.  In effect, it must be a focus on European historical values and a bold egalitarianism which can be mined from this history.

There is a substantial body of European commonality to draw from due to a shared historical and cultural influences, from the culture of the palaeolithic hunter gatherers, the neolithic farmers through to the Indo Europeans. It includes the residue of the various European empires: Roman, Carolingian and Napoleanic. The various historical movements of the twentieth century for democracy and republicanism. And perhaps most importantly, a deep shared Christian heritage which helped establish a common meta-ethnic basis in a concept of human universalism.

These influences have ample sources of egalitarianism and in fact even more specifically, an antipathy to finance capital’s vampiric influence. For instance, the prohibition of usury was justified on Christian grounds, far before the modern era. Of course the movement must be secular as well given the variety of national cultures, but this secularism should be understood as formed meta-ethnically from this broader shared culture.

The importance of civic virtues must be emphasised, of not only rights, but responsibilities of the individual  to the public good. Civic duty is required for a prosocial environment and its elimination as a virtue has had a debilitating effect on our societies. The right to liberties should be coupled with the duty to contribute socially. Concepts such as “he who does not work neither shall he eat” should be married with a social responsibility to full employment such that “he who would like to work, should be able to”.

This shared basis is universalist in scope affirming the innate value of all people, but it is not  multiculturalist. Having a commitment to a shared basis necessarily requires rejecting other ideological and cultural templates to the extent that they do not share the same content. This also includes the modern ultra-liberal religions which elevate various groups as somehow special, sanctified or needing special and not universal protections, such as we see with the LGBTQ movement. The opportunity for fissure and fragmentation on extreme cultural liberalism needs to be halted by specifically rejecting it as a value. This does not require dehumanising or engaging in chauvinism but it does mean that a strong stance against attempts by the current elite to wipe away all prior social norms does not go unchallenged.

In order to enjoy a cultural environment within the political movement which can have mass support, any attempt to push these new extreme social liberal values will have to be completely stopped. Instead the focus must be on the universal and the economic material interests which we likewise share.

The mass democratic impulse which goes back to Athenian democracy and so animated the enlightenment of Europe needs serious revival. But to have democracy, requires first to have sovereignty and Europe is not sovereign. To obtain sovereignty we must strike at what has created severe European dependence.

We must drive out the corrosive influence of the military and political domination of Europe by the United States, dismantle the US networks of NGOs that are used to manipulate the political environments of Europe in ways that fragment and weaken European states and press them into subservience to US interests. We must develop an independent military, but also an independent military supply-chain which is not commanded and dictated by the United States.

We must aim for a Democratic Union of States of Europe, not an EU, but a true republic with both fiscal and monetary powers, with the ability to control its own military resources and ultimately which can make its own decisions. This decisive break will prove most difficult, but it is Europe’s only hope for democracy.

The Political Dimension

The aforementioned pact requires a shared political perspective. This will require the cooperation of the fraction of the elite who desire it, but they must also retain the understanding that success against such a significant antagonist as they currently face can only come in partnership with broad support. And indeed, none of the technical aims are possible without first creating this political alliance for either party.

This means a new political party must be founded, and one which is truly European. It can have in its charter the defence of national character and regional culture, but the party must understand that the reconditioning of finance, property relations and the relationship with labour must occur on the European scale.

The first step should be a conference of those from defecting elites or forward looking labour institutions to come together to form a greater understanding of both the political commonalities and probable platform which might allow this alliance to work.

At this point, there should be a careful formulation of the tactical steps, taking into account the need for flexibility in the face of a rapidly changing political climate. It is impossible without greater understanding of all of the institutions, state political environments in the respective states and economic questions, to answer these problems in summary. It will require more brains and more resources to answer and should be performed as research conducted by some arm of the party.

The party should aim to take European power, and this means not only at the EU level itself, but it must also aim for significant European states. Especially Germany and France. With only one state it is unlikely to be possible, but with two it may prove sufficient to push things at the general European level.

A Scientific Strategy

These strategic concepts and the strategic plan are the result of taking the social science of civilisation seriously. Research into what leads to civilisational collapse and what leads to economic and cultural flourishing has given us important clues as to how to proceed to recast political-economy in ways that are likely to work. The demographic structural model of Jack Goldstone, and the empirical research of Peter Turchin, which deal with testable models of social stability, and civilisational collapse and recovery, forms the main line of reasoning.

The crisis we are experiencing may seem obvious to those experiencing it, but the dangers which may be exposed by this crisis are hard to understand without looking at the precise basis for thinking this is a crisis of civilisational scale. The political malaise and economic weakness are a direct result of a degenerate elite whose own interests are divorced not only from that of the broader population, but even from their own potential legacy. They are irresponsible, venal and short-termist. This can be uncovered by looking at how close to social crisis Europe has moved using the structural demographic model as a lens.

That defecting elite fractions, counter-elites, will have to be involved for the kind of deep structural changes required and that to achieve supremacy over elite competitors requires a mass strategy is also something which is nearly a transhistorical law. The type of ideology required and the structural reforms that must be undertaken by such a counter-elite, are however outside the scope of the model and require additional theoretical conception and evidence.

That Europe is falling behind economically is not controversial, but the focus on productivism is perhaps less broadly accepted. Comparison to China’s economic growth and technological development can provide us with some of the best support for the idea that suppression of the interests of finance, and focusing on productive capacity leads to better outcomes. To do so does require rejecting the more propagandistic coping strategies of US elites which like to believe their own myths about China’s backwardness which defy obvious material reality.

That finance does not in itself produce has been papered over with many explanations of how it increases productive efficiency in its manner of allocation. Yet this is taken as nearly axiomatic and the empirical evidence, even of Europe’s own history, falsifies it.

The shape of the ideology must be fiercely egalitarian if it is to obtain mass support and crucially if it is to address the problem of the hyper-extension of finance capital’s position. Without addressing this, further structural progress can not be made in improving the economic productivity, efficiency and growth of Europe, and if this cannot be done, there will be no great surplus to share with the general population.

The Path Forward