The formation of the eurozone represents “the wildest experiment in financial history,” according to C. J. Polychroniou:
the eurozone was to involve the inclusion of independent states, with highly diverse economic systems and cultural settings, that were required to give up national currency sovereignty in exchange for a “foreign” currency without the backing of a treasury or a central bank ready to act as lender of last resort in the event of a financial crisis.
And with the eurozone mired in recession (the latest numbers from Eurostat are here) and a deep depression in Greece, it might look like a failed experiment. But it only looks this way, Polychroniou suggests, if you think of economic growth and the wellbeing of the average worker as among the primary goals of the project. The setup of the EMU is not the result of some set of technical errors or oversights. It is consistent with a long-developing attempt, culminating in the Maastricht Treaty, at transforming a social market economy into a laissez-faire market economy: “it stemmed,” Polychroniou writes, “from the very premises of the fundamentally neoliberal economic thinking that had begun to take hold of the mindset of European policymakers in the 1980s.” If anything, he argues, the struggles in the eurozone, particularly on the periphery, are being seized on as an opportunity to accelerate this transformation, with Germany playing the role of “neocolonialist” in the process:
Germany has adopted toward the indebted eurozone member-states the same policy it carried out with regard to East Germany after unification: the destruction of its industrial base and the conversion of the former communist nation into a satellite of Berlin. The bank rescues masquerade as the rescue of nations, and are followed by the enforcement of unbearable austerity measures to ensure repayment of the “rescue” loans. Then comes the implementation of strategic economic policies aimed at reducing the standard of living for the working population and the shrinking of the welfare state, complete labor flexibility, and the sale of public assets, including state-controlled energy companies and ports. This constitutes the German strategy for pillaging the debt-laden economies of the Mediterranean region.
Read it here.