Criminalising Keynesianism? Not why Cameron deployed his veto!
The dust won’t settle from last week’s bust-up in Brussels for some time, with many describing David Cameron’s isolated refusal to take part in EU Treaty reform as a fundamental change in Britain’s relationship with the EU. Quite a few on the left are judging Cameron’s decision as – while diplomatically inept and for all the wrong reasons – the right decision. He’s not the only one who doesn’t see Treaty reform as what Europe needs, although what we want to see from Europe is a strategy for growth rather than, as some have described it, the criminalisation of Keynesianism.
And the deal is unlikely to be a crucial one anyway, because it doesn’t address the problems that actually face Europe and the rest of the developed world. ETUC General Secretary Bernadette Segol said:
“Europe needs a social compact, guaranteeing non-intervention of the EU in wage setting mechanisms, the autonomy of social partners, protecting and promoting our social model. ETUC will demand that a social progress protocol be included in any revision of the Treaty or in any new Treaty.”
What the EU26 (if consultations back home result in countries like Sweden and Hungary sealing Britain’s isolation) have agreed to is a series of changes that will make it more and more difficult for EU member states to grow their way out of recession, insisting on budget deficit limits and centralised control that some have suggested offend against democratic principles (because they effectively limit what electorates can tell their govermments to do with the economy) as well as Keynesian economic theory. They agreed to seek to embed these principles in Treaty change and reform of member states’ constitutions at some time in the future, although it is difficult to see how the British Government can change their position, and it is quite likely that various countries would have to hold referendums that would see the moves rejected.
But has the UK’s relationship with the rest of the EU really changed fundamentally? Clearly Cameron has been isolated, although it’s as likely that the rest of the EU will now make concessions to draw the UK back into the fold as extract revenge, as some have warned. And the main demand that Cameron advanced – a sort of permanent get-out-of-jail-free card for the City of London’s financial interests may not stay such a sacrosanct part of UK Government policy when people who aren’t in such hock to hedge fund donors replace the current Prime Minister (those donors may even abandon him first, if the EU26 proceed to implement a financial transactions tax that the City cannot evade, as now seems more likely than ever).
The deployment of the British veto – although likely to be popular in opinion polls in the short-term – has inevitably not addressed the insatiable appetite among Tory sceptics for a referendum on UK membership of the EU, nor made it easier for Cameron to bind the traditionally pro-EU Liberal Democrats to coalition. It’s quite likely that this will be viewed in retrospect as yet another Tory Maastricht moment: which did more damage in the long run to the Conservatives than it did to Britain’s unendingly ambiguous relationship with the EU.
None of this last week’s drama will resolve the essential problem of the European Union and the wider world economy, which will remain a deficit in demand and an insufficiently regulated financial system, rather than public sector deficits that are to be targeted by widespread and now enforced austerity. If Europe continues to fail to grow, or even falls back into a general recession, governments which voted for the deal on the table last Thursday night may find their electorates teach them that there is nothing as ephemeral as a political deal, and throw the growth deniers out. ETUI senior researcher Andrew Watt has set out what an alternative EU economic strategy could look like.