Italy has a new populist government, avoiding new elections at least for awhile. But this new agreement, which merely shuffled anti-Eurozone economist Paulo Savona to a lesser cabinet position, settles nothing. There is trouble brewing--big trouble.. As John Cassidy notes on the New Yorker website:
"In the short run, the sight of a new government emerging in Rome may bring some calm to the financial markets, which have been rattled by the possibility of another Italian election, and even bigger gains for the populists. Looking further ahead, however, there is great uncertainty surrounding not just Italy but the entire nineteen-nation eurozone. For the first time since it was formed, in 1999, the monetary union will be confronting a government in one of its core member countries that is implacably opposed to many of its rules and policies.
As part of Thursday’s agreement, Matteo Salvini, the leader of the League, agreed to the appointment of an economy minister who isn’t an avowed supporter of withdrawing from the euro. (Salvini’s initial choice, the economist Paulo Savona, is a confirmed Euroskeptic.) But Salvini and Luigi Di Maio, Five Star’s leader, are both committed to remaking the E.U.’s economic treaties and introducing expansionary tax and spending policies. Both of these things will place them on a collision course with the authorities in Brussels, Berlin, and Frankfurt. And at this stage, neither side seems likely to back down."
In this situation, what should the left, marginalized in Italy as in a number of other European countries, do? UK commentator Paul Mason recommends the following in his article on the Italian crisis:
"The only chance the left has is to, first, break mentally with the chains of eurozone fiscal rules and with the neoliberal strictures of the Lisbon Treaty. It needs to accept that the eurozone has become a means for suppressing growth in southern Europe, and a game rigged in favour of Germany. It needs to say so because these things are true – and because its refusal to say them has handed powerful arguments to a bunch of racists and loudmouths.
Second, the left needs to out-populist the M5S: in discussions with Italian leftists I’ve noticed a blank refusal to understand why their own supporters are switching to the new movement. Some of its demands are straight out of the playbook of a horizontalist left: the universal basic income, the limitation of MPs to two terms in parliament, the anti-corruption drive and so on. There is a mindset inside the Democratic Party similar to the one you find among Labour councillors in the north of England – an assumption of the right to rule, a closeness to powerful institutions. As a result, M5S and its supporters are always written off as closet right-wingers and the struggle to split populism along its class lines is never pursued.
The showdown between a LN/M5S government and the Italian and Eurozone machines is an opportunity for the left to propose strong and urgent reform – both of the Eurozone and the Italian state.
To advocate Italy leaving the Eurozone, given the structure of Italian debt, would be economic suicide. Rather the left in Italy needs to put forward a plan to reform EU governance and to change the rules of the Eurozone to promote growth in the periphery. President Macron of France has already tabled a weak version of the latter, while numerous left proposals have circulated for the creation of a two-speed Europe – always of course opposed by the unelected Commission and the German government.
And here is where the Italian left has powerful allies, should it want them, in the beleaguered social democratic, green, radical left and left nationalist parties of Europe.
The elements of a pan-European left programme would not be difficult to enumerate. They are:
- Revise the Maastricht Treaty rules, allowing governments to breach the 3 per cent deficit target in order to invest in infrastructure.
- Widen ECB quantitative easing to target growth in the periphery and to incentivise Germany and other north European states to borrow and spend, rather than to promote EU-wide stagnation.
- A new treaty to replace Lisbon, which positively promotes state intervention, aid and ownership of key industries to build a high-welfare, high wage model across Europe.
- A major crackdown on offshore finance, drawing trillions worth of capital out of the tax havens into the real economy in Europe.
- A Europe-wide labour market policy aimed at attracting high-skilled labour, distributing refugees and deterring low-skilled economic migration. For clarity, that means immigration controls at the borders of Europe and an evening-up of minimum wages and social welfare benefits across the EU27.
Who’s against all that? The centre-right for sure, and also the neo-right of eastern Europe. Unfortunately, up until now, it’s been the social democrats and some green parties too, who’ve essentially drunk the Kool Aid of free market economics.
As a result, clearly not all countries would sign up to a Europe that enacted the five bullet points above. However, that is no tragedy if, as a result of a new treaty, a two-speed Europe emerges, leaving the semi-democracies and outright xenophobes of eastern Europe to a second tier.
I think, however, it is possible to get the Austrian and French social democrats to back such a plan, and - if they are prepared to turn their attention to it - Jeremy Corbyn’s Labour and the ruling Syriza party in Greece, which is looking and acting more like a social democratic than a radical left party right now. In addition, most of the European United Left–Nordic Green Left (GUE-NGL - the radical left group in the European Parliament) could sign up to this, and such Green parties prepared to wake up and smell the organic coffee of a revolt against the status quo.
I’ve advocated in these pages before, that the Party of European Socialists, GUE-NGL and any other takers should stand a united Spitzenkandidat in the 2019 European Parliament elections. But the Italian crisis, if it kicks off in Autumn 2018, brings forward the crunch point.
Unless the Italian social democrats a) rip-up the Lisbon Treaty inside their heads and b) seek a pan-European front to force open the Lisbon and Maastricht settlements they will experience outright political extinction."
Some may find Mason's prescription too aggressive. I don't. Only left unity around a program to change the rules and restore growth will allow the left to out-compete the populists, not to mention the right. Mason's recommendations are sensible about where such unity might initially be found. You start with that and build from there. There is no alternative--that is, if want the left to be effective, gain support and solve people's problems. Otherwise, the left may continue sinking slowly into the sunset.