Depreciation: an alternative to austerity

Life, the EU and the IMF are obliging the government in Bucharest, which initially wanted to say goodbye to austerity, to adopt a so-called “disciplined” budget which will certainly please not only Mr. Hollande, but also Mrs. Merkel. It may be recalled that once upon a summertime, the issue of the president’s suspension had become synonymous with the end of austerity. Even if it is only politicians on the continent’s periphery who view things through the old-fashioned prism of the Europarties, Bucharest’s constant citing of these groupings is – in the absence of any other convincing arguments – an abiding source of legitimacy. Mr. Ponta’s reasoning is as simple as can be; last Saturday, he told Digi24 that if “the president of France has favoured discipline rather than austerity, let me do likewise.” We might be tempted to believe that with his frequently effective wordplay, he is lulling us with a “God forbid” and professed regret for the criticisms levelled at Germany. At the same time, the fanatical espousal of austerity also highlights the tension between social justice and market laws. The aim of this policy of austerity imposed by Brussels is to exempt the central European states from transfer costs – which are somewhat natural in a union which claims to be a political one too – and to make the states on Europe’s periphery attractive only for global capital.
Taking control of the market, and not citizens, is the sole priority of the policy of austerity, which not even the socialists oppose any longer. The fundamentalist devotees of this rigid economic mechanism dismiss social justice as a “political” justice as if it were a particularist policy and regard the market economy as an apolitical and incorruptible model. It would have been better to have a dispute with the EU not over an institutional conflict, but over a courageous budgetary policy geared towards social justice first and foremost.
What is often forgotten is the fact that while a market functions through indecision, a social policy – even a controversial one – is the outcome of packages of active measures. Unlike political decisions, which are left to politicians, market decisions appear to fall from heaven. The subjugation of European nations merely under economic rules appears to be an act of faith, and the social protests against austerity appear to be an insurrectionist movement. However, the destiny shaped by neoliberal and economic forces will gradually eliminate the last vestiges of political expression as technocratic governments bereft of national mandates are installed across Europe. This package of pointless reforms could last for many decades and will culminate in the country’s alienation from politics, turning us – for the first time in our history, on account of a blind faith in the laws of economics alone – into willing serfs.
Instead of contenting ourselves with this neoliberal policy, we should remind ourselves of the tool of currency depreciation. The right to depreciate is an institutional measure by means of which the governments on Europe’s periphery would show their respect for their own impoverished peoples, who could create a commonality of economic destiny. If a country’s economy is no longer coping, it devalues its currency, as this makes it more difficult for foreign exporters to export to it and makes it easier for domestic manufacturers to export their goods. This creates investment opportunities and new jobs to the detriment of the workforces of other nations. In other words, depreciation prevents competitive countries from forcing less competitive countries to cut the pensions of citizens who already earn less so that a small domestic élite can keep buying goods from competitive countries at fixed exchange rates. A European economic community with variable exchange rates would also have the advantage of obviating the need for negotiations over structural reforms, compensation or other forms of assistance. It would put an end to the imperialistic government of less developed economies by competitive economies.
The country’s trade deficit, which is being financed through foreign loans, is the tribute that Romania has to pay in order to preserve jobs in central Europe. An eastern European anti-austerity bloc would instead export – if our industry is destroyed – inflation, allowing social reforms to be paid for by central Europe without us having to reach out for hypothetical funds any longer. Let us not forget that for decades on end, France, Italy, Portugal and Greece were able to finance generous social policies by devaluing their currencies, thereby allowing these costs to be borne by European countries with strong economies. Abandoning the euro does not mean abandoning Europe, but it would at least guarantee a minimum level of sovereignty without which democracy and social justice cannot exist.

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