Exit Stage Left? What Scope for Progressive Politics against the EU?

Review essay: Costas Lapavitsas (2019) The Left Case Against the EU, Cambridge, UK and Medford, Ma: Polity Press.

By Dr Andy Storey

“The EU is not a nation state over whose mechanics the Left could give battle… It is a transnational juggernaut geared to neoliberal and hierarchical motion.”[1]  This claim, made near the end of Costas Lapavitsas’ stimulating new book The Left Case Against the EU, summarises his core argument, and it is an argument he makes with great élan and to considerable effect.

However, shortly before that passage, he also makes the following claim: “The Left must not try to implement policies that are against austerity and in favour of working people while also attempting to stay in the EMU.” The difference between these two quotes is important in the sense that much of the author’s argument is less against the whole corpus of EU membership and more against what one chapter calls “the Iron cage of the Euro.”

What we might term the narrower case made against Eurozone membership for movements wishing to implement progressive policies is pretty much unassailable.   So long as the European Central Bank (ECB) maintains its “monopoly power… over the final means of payment and the provision of liquidity,” then left-wing governments are faced with a choice between trying to resist neoliberalism and confronting a liquidity crisis when the ECB threatens (as it likely will) to turn off the money tap for non-compliance with neoliberal strictures or insistence on serving the needs of financial capital (see below).

Syriza in Greece (of whose left wing Lapavitsas was a member) folded in favour of neoliberalism when the ECB made that threat, a tragic capitulation that continues to haunt the European Left.  He offers a biting, but accurate, summary of the debacle: “Eurozone membership has devastated Greece… The self-interest and arrogance of its ‘partners’ has been more than matched by the venality and cowardice of its own ruling elite.”

Lapavitsas remains obviously (and wholly legitimately) marked by this experience and is determined to warn other Left forces against utopian delusions of how social justice could ever be reconciled with membership of the euro.  I generally agree with him on that, but that is not the same as saying that pressing for exit from the Eurozone (and/or the EU as a whole) is necessarily the best choice for every particular country (or for Left forces therein) at any particular point in time; this is a point I will return to.

The book pinpoints German export capital as the dominant force driving the current form of European integration, which is not just “structured in the interests of capital and against labour,” but structured in the interests of specific fractions of capital based around the aforementioned German export sector.[2]  That sector has benefited in at least two specific ways from EU integration and expansion – the global competitive advantage conferred by the artificially suppressed value of the euro;[3] and the ability of German capitalists to transfer production to central and eastern European locations entering the single market, the latter serving to keep down labour costs (including in Germany itself).

German export strength has thus been built not on the country’s supposed prudence and thrift, nor on particularly high levels of public or private investment, but rather on the design and development of the EU.  As Lapavitsas puts it, “It is not the economic strength of German capital per se that has made the country hegemonic, but its economic strength within the institutional framework of the EU.”[4]

For Lapavitsas, this explains why the key priority of German policy-makers during the European financial crisis was the preservation of the euro regime, as well as salvaging the profits of those German banks which had recycled German export surpluses into loans to the European periphery.[5]  The costs of the crisis were thus to be borne by austerity regimes imposed on the debtor nations. To Lapavitsas it is the height of folly to have expected the German hegemon to have behaved differently, or to expect it do so in the future: “the German establishment will not allow changes that threaten its ability to generate external surpluses.”

It is certainly unarguable that the crisis response was based on “cold calculation rather than solidarity.”  And indeed Lapavitsas could have strengthened that argument by looking in greater detail at non-Greek examples, such as the way in which the ECB forced Ireland to nationalise, and then repay in full, the debts of private banks.[6]  As Irish economist Colm McCarthy has put it:

“[T]he country was the victim of a straightforward stick-up, perpetrated by Jean-Claude Trichet’s European Central Bank in Frankfurt … Trichet threatened two successive Irish governments with the withdrawal of liquidity support to the banking system in 2010 and 2011, unless the government paid numerous billions to unsecured and unguaranteed bondholders in bust banks which had already closed for keeps.”[7]

However, the ECB was, in the case of Ireland, acting (probably) more in the interests of the European financial sector as a whole than of German export capital in particular.  Indeed, ECB policy has not always been perfectly aligned with elite German interests – witness the resignation of prominent German economists from the ECB and apparent opposition from the German Bundesbank president to the ECB’s decision to, essentially, supply money to compliant member states in contravention of its own constitution.[8]

While this is an issue (occasional tensions between Germany and the EU institutions) one might have expected to see addressed more in the book, it is not, however, a distinction that significantly undermines Lapavitsas’ core argument.  Regardless of whether it is serving German interests at any particular point in time, the ECB will tend to serve neoliberal interests (or simply the interests of the financial sector) more broadly and a radical government that seeks to pursue an alternative course will be undermined by virtue of an “absolute ideological hostility… toward left-wing ideas and policies” on the part of the ECB and other EU institutions.  Without control over its own currency, any left-wing government will inevitably meet the same fate as Syriza.

At the same time, it is somewhat surprising how little (with the partial exception of the European Court of Justice)[9] Lapavitsas has to say about those other institutions – the elements of what Stephen Gill famously dubbed European ‘disciplinary neoliberalism’, and which include neoliberal biases in the design and implementation of EU liberalisation directives, competition policy, state aid rules and the negotiation of trade and investment treaties with third countries.[10]  Had he done so, he might have constructed a more formidable case against what I earlier referred to as the whole corpus of EU membership, rather than EMU alone (which is his principal focus).

He does touch on these wider factors towards the end of the book when he discusses how a Left economic approach (perhaps led by a post-Brexit Labour government in the UK) would have to embrace “an industrial policy based on public ownership and a range of economic controls [which] would run directly counter to the logic of the single market.” It is, as Lapavitsas points out, precisely for this reason that the EU is insisting post-Brexit UK will have to accept the acquis communitaire, including those legal limitations on economic policy that would rule out the types of interventionist, redistributive programmes proposed by Corbyn and McDonnell.[11]

In any event, the essential first step for most countries, as far as Lapavitsas is concerned, is to break the ‘iron trap’ of the euro, which is a constraint that the UK at least does not have to operate under.  But here we are confronted with other political realities that render the broadly compelling economic arguments more problematic than Lapavitsas perhaps allows.[12]  As an erstwhile Syriza comrade of Lapavitsas has noted, “Having the same currency as the most advanced countries has a tremendous power over people’s imagination.”[13] Kouvelakis goes on to note the grip Eurozone membership continues to exert on the popular imaginations of people in countries including Greece, Spain and Portugal. He adverts to the way in which that membership has come to be seen, by many in those countries, as a badge of ‘modernity’, of democracy (a bulwark against the return of a relatively recently experienced authoritarianism), of membership of the ‘West’ more generally. Himself a member (like Lapavitsas) of Syriza’s Left Platform, Kouvelakis concedes that “those of us who’d been in favour of exiting the euro since the start of the crisis tended to underestimate” this popular appeal.

Lapavitsas does acknowledge these arguments around modern/Western/liberal identities but does not seem to see them as major constraints to his proposed programme of economic liberation from the shackles of EMU. Yet popular support for the euro and the EU is extraordinarily high in most countries and it can be argued that Greek people wanted continued euro membership even at the price of their continued oppression at the hands of the EU.  Certainly the retreat/betrayal of the Syriza leadership did not occur in a vacuum. According to Eurobarometer survey data collected in May 2015, 69 per cent of Greeks supported membership of the single currency, with only 29 per cent against.[14]  (The equivalent figures at that time for the Eurozone as a whole were 69-25, for Italy 59-30, for Portugal 62-31, for Spain 61-31, and for Ireland 70-14).[15]

I suspect Lapavitsas’ response to this might be to say something along the lines of “OK, then we have to engage in a long-term, serious task of political education to persuade people that the perceived merits of retaining the euro are less than its costs,” which is an honest and wholly defensible position, and certainly preferable to pretending that a contradiction does not exist and pinning one’s hopes on pie-in-the-sky projects for democratic, left-wing reform of the Eurozone.[16] But, and here we come to another political challenge, the Left taking up this task would not be operating in a binary contest between itself and the forces of EU neoliberalism, but rather in an environment where right-wing Euroscepticism is also on the rise.

While Alex Callinicos is surely correct, echoing Lapavitsas, to argue that “Progressive alternatives are unlikely to gain traction unless the existing EU is broken up,”[17] a problem is that these are not the only alternatives which may gain traction in such a scenario.  There is no guarantee that the Left joining more vigorously in the anti-EU battle would not result in victory still being claimed by a Right that might remain the numerically stronger and more dominant force on the Eurosceptic side. It is precisely that prospect which has caused left-wing Norwegian activists to ask whether “it really is possible to promote a progressive nationalism without legitimizing the chauvinistic nationalism of the right-wing populists.”[18]

In countries like Germany especially,[19] but in many others also where xenophobia and racism are potent forces, some suspicion of nationalism is understandable, bearing in mind that it is the reactionary forms of nationalism that have usually, to date, taken the lead in Eurosceptic movements.   The Left must ask itself: will disintegrative and potentially inward-orientated tendencies that might be enhanced by national ‘exits’ (even if they were to be in part driven by the Left) do more, in the end, to politically boost the Right than the Left? For those of us driven by human rights concerns, this has to be a critical question: it is the already most marginalised and vulnerable in society – migrants and refugees in particular – who invariably bear the brunt of a rising Right tide.

Lapavitsas, to his credit, is acutely aware of the challenge the Far Right poses, and part of his project is to try and reclaim the ‘traditional’ ground of the Left, to undercut the claim that only the Right can “speak the language of sovereignty and security for the people of Europe” (or perhaps, more broadly, for people who find themselves in Europe).  But that does not mean the project is certain to succeed, and he himself acknowledges that had Greece abandoned the euro and defaulted on its debts then “it would have been impossible to predict which political forces would [have emerged]… to challenge for power.”  One can lament the timidity of the Syriza leadership and yet still concede that the Left must confront difficult and risky political choices here.

At the same time, the question of migrants and refugees also highlights much of what the Left opposes about the current EU governance regime, and here it is also greatly to Lapavitsas’ credit that he lambastes the EU not just for its economic torture chambers (Greece especially) but also for its reactionary approach to ‘outsiders’.  This approach includes cynical deals with Turkey,  Libya and elsewhere that deny many asylum seekers the ability to access Europe at all, and consign them to locations of egregious abuse,[20] coupled with a set of wider military policing actions that have turned the Mediterranean, as Lapavitsas puts it, into “a graveyard for thousands.”

The Left finds itself, in a sense, caught between the Scylla of authoritarian EU neoliberalism (including the violation of the rights of non-Europeans) and the Charybdis of right-wing nationalist reaction that could make things even worse.  Navigating a path through these treacherous straits represents a very formidable challenge indeed.  And while it may not map out a precise course, Lapavitsas’ book makes an important contribution to the Left’s attempts to chart these waters.


[1]  Unless otherwise indicated, all quotes are from Lapavitsas (2019).

[2]  The by now voluminous literature on (or closely related to, even when critical of) ‘varieties of capitalism’ in Europe arrives at broadly similar conclusions: see, for example, Gambarotto, F. and S. Solari (2015) ‘The Peripheralization of Southern European Capitalism within the EMU’, Review of International Political Economy 22 (4); Jessop, B. (2014) ‘Variegated Capitalism, das Modell Deutschland, and the Eurozone Crisis’, Journal of Contemporary European Studies 22 (3); and Johnston, A. and A. Regan (2016) ‘European Monetary Integration and the Incompatibility of National Varieties of Capitalism’, Journal of Common Market Studies 54 (2).  Lapavitsas’ book makes surprisingly little reference to this literature rooted in critical political economy perspectives.

[3]  Donald Trump’s often idiotic trade advisor Peter Navarro had a point, for once, when he accused Germany of exploiting an undervalued euro to gain an unfair advantage over both the US and other countries in Europe: https://www.ft.com/content/57f104d2-e742-11e6-893c-082c54a7f539

[4] Brigitte Young has recently made a similar argument: ‘From Sick Man of Europe to the German Economic Power House.  Two Narratives: Ordoliberalism versus Euro-Currency Regime’, German Politics (2019).

[5] On the protection of the German Banks, see especially Helen Thompson’s brilliant analysis in‘Germany and the Euro-Zone Crisis: The European Reformation of the German Banking Crisis and the Future of the Euro’, New Political Economy (2015) 20 (6). Neil Dooley has sought to at least qualify such arguments by emphasising the role played by non-German banks, including those of Spain, France and the UK: ‘Who’s Afraid of the Big Bad Wolf?  Rethinking the Core and Periphery in the Eurozone Crisis’, New Political Economy (2019) 24 (1); Dooley believes the German role is overstated.

[6]  Indeed he might have drawn on his own previous work, documenting how the ECB in 2013 blackmailed Cyprus to accept economic reforms under threat of a liquidity shutdown: Flassbeck, H. and C. Lapavitsas (2013) ‘The Systemic Crisis of the Euro – True Causes and Effective Therapies’, STUDIEN, published by the Rosa Luxemburg Foundation.

[7] https://www.independent.ie/opinion/columnists/colm-mccarthy/its-fun-to-love-europe-right-now-but-foolish-to-trust-too-much-36446962.html

[8] Thompson, op. cit.

[9]  Lapavitsas does recognise the significance of the Maastricht Treaty’s (re)interpretation of the ‘four freedoms’ of the EU as individual (or corporate) rights to be upheld against collective interests.

[10]  ‘Constitutionalising Capital: EMU and Disciplinary Neoliberalism’, in Bieler, A. and A.D. Morton (eds) (2001) Social Forces in the Making of the New Europe: the Restructuring of European Social Relations in the Global Political Economy, Palgrave; also Storey, A. (2014) ‘Chronicle of a European Crisis Foretold: Building Neoliberalism from Above in Europe and Options for Resistance from Below’, in Fioramonti, L. (ed) Civil Society and World Regions: How Citizens are Reshaping Regional Governance in Times of Crisis, Lexington Books.

[11] Alex Callinicos takes up some of these same issues vis-a-vis Labour in ‘Brexit Blues’, International Socialism (2018) (162).

[12]  I deal in more depth with some of these political challenges in ‘Between Scylla and Charybdis:  Europe, Nationalism and Left Politics’, a chapter in the forthcoming (2019) volume by Holmes, M. and K. Roder (eds) The European Left and the Financial Crisis, Manchester University Press.

[13]  Kouvelakis, S. (2016) ‘Syriza’s Rise and Fall’, New Left Review (97).

[14]  http://data.europa.eu/euodp/en/data/dataset/S2099_83_3_STD83_ENG

[15] http://data.europa.eu/euodp/en/data/dataset/S2099_83_3_STD83_ENG; these broadly positive attitudes towards membership of the Eurozone have since been maintained or even deepened: http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/STANDARD/surveyKy/2143, with the partial exception of Italy: https://www.politico.eu/article/italy-most-adrift-from-eu-study-finds/

[16]  https://diem25.org/

[17]  Callinicos, A. (2017) ‘Britain and Europe on the Geopolitical Roller-Coaster’, Competition and Change 21 (3).

[18]  Attac Norway (working group on Europe), ‘The EU Debate in Norway: Left Positions and Recent Developments’, available through http://lexit-network.org/

[19]  Straub, H. (2017) ‘Comparatively Rich and Reactionary: Germany between “Welcome Culture” and Re-established Racism’, Critical Sociology 43 (1).

[20] Human Rights Watch (2016) ‘EU Policies Put Refugees at Risk: an Agenda to Restore Protection’, available at https://www.hrw.org/news/2016/11/23/eu-policies-put-refugees-risk

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