An interesting article in The Telegraph by Ambrose Evans-Pritchard appears, as far as it goes, to be in basic agreement with the modern monetary theorists' view on Greece and the Eurozone more generally. Hat tip to NeilT in a comment at billy blog.
I am guessing -- The Telegraph being a conservative paper -- that there may be an anti-Europe sentiment behind it. (?) English readers may be able to set me straight on that.
Modern monetary theory (MMT) is neither pro nor anti Europe. It simply suggests that ideally there should be either (i) currency sovereignty for individual nations or, if sticking with the common currency, (ii) a fiscal authority that performs transfers between nations as necessary, analogous to the U.S. federal government's relationship to the states.
However, in terms of democracy, (ii) is problematic unless and until Europeans embrace a kind of United States of Europe in which the national electorates indicate their preferences over macroeconomic policy. Currently, democracy is national while currency issuance is supranational, making any transfers between nations undemocratic. For now, (i) seems preferable, because it gives each nation sovereignty over its currency and more democratically determined fiscal policy. But (ii) could conceivably work in a democratic manner if Europeans have the political will to bring about.
Aside from what may be differences in motive on the common currency question, Evans-Pritchard's argument closely resembles the MMT perspective on Greece. Here, I won't elaborate on that argument, but do recommend reading the article. Instead, I will stray off topic a little.
There is one long-term political consideration on which my own perspective, one that is critical of capitalism, differs from the MMT and Evans-Pritchard perspectives, both of which seem concerned with preserving capitalism. Evans-Pritchard writes:
Everything we know from labour studies is that the early twenties are crucial years, shaping lifelong career paths and earnings ten to fifteen years beyond. The worst economic crime you cannot commit is to leave 58pc of youth grinding away their days in frustration in cafés, if they can afford the coffee.
This view is expressed repeatedly in MMT research as well, and there is little doubt that it is correct. The effects on the employment prospects of the victims of long-term unemployment are severe and the functioning of capitalism and the wage labor relation are likely to be undermined for some time to come if European governments persist with the current policy approach.
Even so, from a left perspective of moving beyond capitalism, there may be a silver lining in this cloud. With more time to reflect, many youth may begin to question the purpose of their lives and come to challenge the dominant ethos.
Needless to say, that does not mean that I have any sympathy at all for the current policy approach in Europe. It should be possible to transcend capitalism without inflicting needless hardship on anybody. There is absolutely no need for it. The point is simply that one objective effect of the policy approach may be to nudge society in the direction of greater individual freedom from wage labor and capitalist social relations.
In terms of bringing about a change in ethos, I have indicated in the past that I would like to see a move to a basic income guarantee, ideally in conjunction with a job guarantee (a JIG). The basic income seems to be gaining some ground in academia and policy circles, including support from several "Nobel Prize" winning economists. It is a policy that holds some attraction on both the right and left. For example, a recent issue of the academic journal Basic Income Studies is focused on possible right-libertarian philosophical foundations of such a policy.
In my view, there would be benefits for small, innovative, socially progressive enterprises, partly because people, with basic needs met, would be free to opt for more fulfilling employment, even if at lower pay, and also because individuals and voluntary associations of individuals would be better placed to take a risk on new ventures, especially if the basic income were coupled with expansion of the commons, such as free internet, all research output open access, etc.
A basic income would also hopefully undermine the wage labor relation over time by freeing individuals from their dependence on capital for employment opportunities. It would serve as an acknowledgment that much production is already done outside the wage labor relation, such as unpaid housework, child care, caring for the elderly, volunteer and charity work, freeware development, and so on. It would also be a recognition that capital and capitalist states, though sometimes, are often not the best determiner of what is socially productive and what individuals could best be doing with their own time (see, for example, here and here).
With these considerations in mind, increasingly I find myself wondering about the long-term motives of the left in Europe. Greek and French "socialists" are now pushing through austerity and it mainly seems to be the far right – a disturbing trend -- beginning to mount an opposition. Maybe the left are smarter than I give them credit for, but I understand Evans-Pritchard's point in the following passage:
The EIB [European Investment Bank] and Commission could intervene with all kinds of investment and trade support to cushion the blow. An orderly transition is not beyond the wit of man. It would restore the basic competitiveness of the Greek economy at a stroke.
We all know the reason why this is not being done. The ideologues running monetary union cannot bring themselves to contemplate any step back in the Project, just as they would not admit yesterday in the Commission’s economic report that they have gravely misjudged the effects of fiscal tightening (the fiscal multiplier) and have therefore miscrafted their entire austerity strategy.
We are not dealing with rational people. We are dealing with a religious order, and these monks are becoming an increasing danger to Europe’s societies and democracies.
Margaret Thatcher’s advisers were tagged Sado-Monetarists in the early 1980s but they never inflicted anything remotely close to this level of suffering. The strange silence of the Left on this is baffling. Sooner or later my Fabian friends will have [to] make up their minds whether they are for the workers, or for the "bankers ramp" — as old Socialists like Peter Shore used to describe monetary union. (emphasis added)
I would be curious to read people's thoughts on this. Is there method in the European left's madness or have they just gone mad?
If there is method to the madness, is it in service of the ruling class and for the preservation of capitalism, or to provide an impetus for long-term socially progressive change?