Indiscreet charm of the Bundesbank smashes ERM Maastricht in flames?
Socialist Outlook newspaper1990sPhil HearseTranscribed or corrected by hand from the printed page.
THE DECISION to allow the European Exchange Rate currencies to operate in new 30 per cent margins means the temporary abandonment of the drive to a single European currency.
A single European currency goes to the heart of the vision of the European capitalist unity. To compete with Japan and the United States, leaders of capitalist Europe want to see Europe eventually become a single economy. A single economy means common laws. And common laws eventually point the way to a common state.
The plan for a single currency has been put back for years. It reveals 'fault lines' not just in the ERM, but in the whole Maastricht process itself.
The fatal flaw in Maastricht has always been that although the European capitalists see the need for further integration to fight Japan and the US, the immediate needs of the different European states vary widely. Thus the question has always been on whose terms will unity be achieved?
Because Germany is the economically most powerful European state it has always been likely that German views would prevail. That means a strong deflationary, 'Euro-monetarist' line, restricting growth.
Germany needs high interest rates to suck in investment to complete reunification with the east and combat inflation. The ERM could only survive if the rest of Europe accepted high interest rates, further pushing their own economies into recession.
There have always been huge obstacles on the Maastricht road, but writing off the drive to European capitalist integration is premature.
There are huge stakes for the European capitalists. Not only do they have to face bitter competition from Japan and the US, but there is the prospect of China emerging as a major world economic power. The only state which has other potential options is Germany.
Debate
Indeed there is a fierce debate in the German political establishment on just this point. The alternative to economic and political European union is the option of trying to dominate central and eastern Europe.
This however is fraught with political dangers. France would react violently by any attempt by Germany to go it alone.
It would mean an attempt by Germany to hold its own as a major imperialist power at the expense of its near neighbours – a course which resurrects unfortunate historical memories for the European capitalist classes.
Two weeks ago France cut its interest rates. Effective de-linking of the currencies opens the possibility of renewed growth policies in some European states.
It means that there is a chance, but only a chance, of avoiding some of the worst excesses of deflation and attacks on the working class which Maastricht monetary targets would have imposed.
But without a working class fightback we shall see one form of capitalist attack, the Maastricht road, only replaced by another.