Ernest Mandel

EEC: The Common Market in Crisis

(June 1974)

Written: June 1974.
Source: Inprecor no. 2 (June 20, 1974) pp. 14 -18.
Transcription/Markup: Martin Fahlgren in 2015 for the Marxists Internet Archive.
Copyright: This work is in the Public Domain under the Creative Commons Common Deed. You can freely copy, distribute and display this work; as well as make derivative and commercial works. Please credit the Marxists Internet Archive as your source, include the url to this work, and note any of the transcribers, editors & proofreaders above.

Once again the Common Market is going through a serious crisis, probably the most serious since its formation. This crisis was manifested in the failure of the “common float” of the currencies of the nine member countries, in the British government's decision to renegotiate the terms of Britain's membership in the EEC, and in the Danish and Italian decisions to suspend free importation of commodities originating from Common Market countries. Earlier, the crisis had been expressed in the most dramatic fashion by the inability of the governments of the member states to work out a common position when faced with the “oil crisis” or to negotiate a joint agreement with the oil-exporting countries.

To understand the origins of this crisis, one must first of all understand the real nature of the Common Market. The EEC is a transitory and hybrid phenomenon of international economic integration of nine imperialist countries (at the beginning, six imperialist countries). These countries decided to allow unlimited circulation of commodities and capital within their national borders. But they created neither a common bourgeois state, nor a common government, nor a common currency.

The institutions with which they endowed the Common Market are pseudostate institutions capped by a “commission” that has only consultative power, except in the strictly limited realms of circulation of capital and commodities. The real power in the Common Market rests with the “council of ministers.” And, in practice, even this body lacks the power to enforce its decisions on any government that chooses to violate them.

The transitory and hybrid nature of the Common Market corresponds to the transitory and hybrid nature of the economic phenomenon that it expresses on an institutional political level: the progressive internationalization of the holdings of big capital. During the past twenty years there has been a process of European interpenetration of capital that has gradually expanded in breadth. We have seen the birth of industrial groups whose holdings are no longer those of a “national” bourgeoisie, but are instead shared among the bourgeoisies of various European nationalities, no “national” faction commanding a controlling share. (Dunlop-Pirelli and Agfa-Gevaert are two examples.)

But while this process of European interpenetration of capital is incontestably going on, it is far from having reached the point of no return. In certain cases, it has failed. The Fiat-Citroën experience in the automobile industry is a case in point. That new European supertrust was dissolved. In other cases, the process has taken the form of a single, controlling “national” capital absorbing a number of firms. The absorption of the French pharmaceutical company Roussel-Uclaf by the German Hoechster Farben trust is an example. In most branches of industry, “national” monopolistic trusts are continuing to act by means of international cooperation among European firms rather than by means of a real fusing of interests.

Thus, the internationalization of capital within the Common Market began by going beyond the stage of “national” monopolistic trusts. American, European, and Japanese multinational firms have accumulated unquestionable power. But the internationalization of capital has not yet reached the point that capitalist groups axised around “national” bourgeois states have lost all influence or all capacity to react. The result of the struggle between groups demanding a bourgeois state on a European scale and groups still attached to the national bourgeois state has yet to be decided. That is the indispensable background to understanding the present crisis of the Common Market.

The Common Market is a supranational institution lacking real state power just at a time when the state has become an indispensable instrument not only for maintaining the political and social power of capital, but also for permitting the realization and expanded reproduction of capital. We have always predicted that the fundamental contradictions of such an institution would break to the surface as soon as there was a generalized recession in capitalist Europe. It is exactly at the time of a serious economic recession that the intervention of the bourgeois state into economic life becomes decisive for saving the system.

Big capital of each of the member states of the Common Market is then confronted with a clear alternative: either create a real European superstate capable of working out an anti-crisis policy on an international scale, or fall back on an anticrisis policy on a national scale. In either case, the Common Market goes by the boards.

In the first case, it would be replaced by a federal capitalist state extending over all the capitalist countries prepared to take this step; it would have a common currency, a common government, a common policy on public works and employment, a common budget, and a common fiscal policy. In the second case, it would break up under the blows of a massive return to protectionism on the part of all (or most of) the “national” bourgeois states of Western Europe.

It is obvious that the European multinational trusts would react to a serious economic recession by demanding a superstate on a European scale, for the simple reason that it is only on such a scale that their interests in the “struggle against recession” could be effectively served. This would also apply to those trusts that are already internationalized from the standpoint of holdings of capital, and to those that are still controlled by the bourgeoisie of a single nation but whose field of action already goes too for beyond a “national” field even on the level of production. The Philips electronics trust, to take one example, could not be protected from the effects of a serious economic crisis by measures taken solely by the government of the Netherlands or solely enacted within the territory of that one country. For this trust, an effective “antirecession” policy would have to be an “antirecession” policy at least within the nine Common Market countries as a whole.

Nevertheless, it is equally clear that in the absence of a real government and a real state power extending over all the nine countries of the Common Market (or over most of them), the more severe an economic recession is, the more the bourgeoisie of each separate country will find itself obliged to act against recession on a purely national level. The real choice with which the bourgeoisie would be faced would be, in effect, between “national” action or inaction, that is, between national action or no action at all. Given the relationship of forces between Capital and Labor in Western Europe today, it is unthinkable that any “national” bourgeoisie would stand by passively in face of the aggravation of an economic recession and a rise in unemployment. Under these conditions, passivity would provoke a social and revolutionary crisis of unprecedented gravity for the survival of the capitalist system.

That is why our prediction has always been that the Common Market would not pass the test of a serious economic recession unless it had succeeded in transforming itself into a real European government by the time the recession came.

Crisis of the common market: product of recession

The events of the past six months confirm the accuracy of this analysis.

An economic recession is now under way in most imperialist countries. It is already serious in the United States (where the gross national product has fallen by 6 percent in the space of five months), and it has begun in Britain, Italy, and Japan. West Germany is teetering on the brink of recession. France is the only big imperialist country that has not yet been affected.

Unemployment is on the rise in all imperialist countries. It is likely that during the winter of 1974-75 the previous postwar record in the imperialist countries – which was 10 million, set in the winter of 1970 – will be broken by a wide margin. The total number of unemployed in all the imperialist countries will probably approach 15 million.

Under these conditions, in the absence of a real government with real state power on the scale of the Common Market, it was inevitable that the bourgeoisie would move toward antirecessionist measures on a national scale, that is, toward protectionist measures. This is what was done in a spectacular manner by Italy and Denmark. The governments of these countries imposed de facto limitations not only on imports in general, but also on imports originating from Common Market countries in particular.

It is sometimes asserted that this crisis might be “exceptional,' that it might represent a “temporary accident” provoked only by the “oil crisis,” which is said to have created significant balance of payments deficits in several European imperialist countries (especially Britain, Italy, and France).

This argument is incomplete and specious. In fact, the balance of payments deficits of some Common Market countries is almost completely “compensated for by the no less spectacular balance of payments surplus in West Germany. The Benelux countries are also (still) enjoying a not unimportant surplus. The real nature of the “balance of payments crisis” thus emerges in a wholly different light. The Italian, Danish, and British governments have been obliged to resort to protectionist measures because of the refusal of the countries with large surpluses to pool (either wholly or in part) the exchange reserves of all the countries of the Common Market. Such a “pooling” of exchange reserves is obviously unthinkable without u common currency, a common economic, monetary, and fiscal policy, and a common employment policy; that is, without a common government and a common “superstate.”

West German big capital faces unhappy choices

The nature of the dilemma with which European big capital is confronted is especially striking in the case of West German imperialism, today the most stable and prosperous of all imperialisms. Of all the great imperialist powers, West Germany has experienced the lowest rate of inflation, the most rapid expansion of exports, the most significant balance of payments surplus, and the lowest rate of unemployment (although the unemployment rate has increased seriously since 1970-72). When Helmut Schmidt succeeded Willy Brandt as Social Democratic chancellor, most observers stressed the “Atlantic” inclinations of the new government chief as compared to the “European” inclinations of his predecessor. But in a matter of just a few weeks – when Schmidt held his meeting with the new French president, Giscard d'Estaing – this estimation had to be abandoned.

German big capital now finds itself caught between two evils, and it is hard to decide which is the greater and which the lesser. If it opts for a “new push for the Common Market,” it will have to absorb both the balance of payments deficits and the effects of accelerated inflation of three of its major partners – France, Italy, and Britain. The health and consolidation of the Common Market would then be purchased at the price of putting into effect the old slogan of the French bourgeoisie at the time of Poincaré and Clemenceau: Let the Krauts foot the bill! And this despite the fact that this time there is no military or political force capable of backing up this demand.

But if Helmut Schmidt should decide to refuse to foot the bill, as he proclaimed he would during the ceremony installing him as Chancellor, the consequences for Bonn will be no less disastrous. The protectionist measures would then threaten to spread from Italy and Denmark to France and Britain, and even to other countries as well. The cumulative effects of these measures (and of the retrenching measures they woo Id provoke in turn) would deal a decisive blow to the single pillar of the “prosperity” of West German capitalism: soaring exports. (In the domestic market, sales of consumer goods are already on the decline.)

The partners of the German Federal Republic would then certainly succeed in “exporting” the recession to West Germany if West Germany did not export its exchange reserves to its neighbours. The recession would create a serious social crisis, and the pressure to deal with this crisis by turning on the faucets of inflation of credit would become irresistible. But increasing inflation in order to ameliorate the crisis would worsen the balance of payments deficit and provoke the evaporation of exchange reserves. Therein lies the dilemma.

The role of the state in inter-imperialist competition

Some may reproach this analysis with having made concessions to the Kautskyite myth of “superimperialism.” When we assert that several European imperialist powers could “peacefully fuse” without the reality being that one is absorbing the others by force, as German imperialism tried to do during the first and second world wars and French and British imperialism tried to do in the aftermath of the two world wars, are we not postulating the possibility of interimperialist contradictions being peacefully overcome instead of intensified? In reality, those who oppose our analysis on this basis are revealing a formal and empty schematism of thought that borders on sophism and is a thousand miles removed from a dialectical appreciation of objective reality. What Lenin counterposed to Kautsky was the thesis of the aggravation rather than amelioration of interimperialist contradictions taken as a whole, and not the thesis that the contradictions between each of the individual imperialist powers must always intensify. We believe that Lenin's thesis remains absolutely correct and conforms to the events now taking place. Interimperialist contradictions are in fact intensifying rather than easing, and this, it may be noted in passing, belies not only the theory of superimperialism, but also the theory that North American superimperialism's sheer weight would crush all its competitors, reducing them to pure and simple satellites.

Lenin never advanced the theory that interimperialist competition would necessarily have to go on among a number of imperialist powers that are eternally equal in strength. During his own lifetime, Lenin saw the elimination of two great imperialist powers: tsarist Russia overthrown by the October Revolution and Austria-Hungary dismantled by the defeat of 1918. To assert that a fusion between a certain number of imperialist powers is impossible “because of the intensification of interimperialist competition” would be to lose sight of the fact that the fusion could be provoked exactly by the intensified competition itself.

Let us look at the recent example of the “oil crisis.” It provoked a general rush on the part of all the world's big trusts not only toward sources of oil and uranium, but also toward sources of other so-called raw materials. The manner in which the governments of the various imperialist countries maneuvered and are still maneuvering to facilitate achieving the goals of “their” trusts once again admirably confirms the correctness of the Leninist theory of imperialism and the state. But it is obvious that the stronger a state is politically, militarily, and financially, the more it can facilitate the access of “its” trusts to sources of raw materials. Now, while it is true that the West German state is financially powerful and that the French, British, and Italian states are moderately powerful financially, taken separately they are weak politically and virtually nonexistent militarily. The Japanese state, also very weak militarily, compensates at least partially for this weakness with a great concentration of political power and a consequent ability to maneuver and to make quick decisions. The results of all this were not long in coming. In the rush for rare raw materials from October 1973 to April 1974, American and Japanese trusts scored important gains at the expense of European trusts.

So the real import of the theoretical discussion can be understood. The “revisionism” is to be found not in our camp, but in the camp of those who oppose our thesis on the European interpenetration of capital. For what they are suggesting in reality is that the big European trusts are unable (or worse still, do not desire) to defend their interests in the interimperialist competitive struggle by utilizing state instruments adequate to the task. And what does this theory imply if not that these trusts are lined up behind American interests, that is, the thesis of ultraimperialism (or its superimperialist variant)?

What we are asserting, however, is that interimperialist conflicts and contradictions among American, Japanese, and European trusts are intensifying and becoming exacerbated. That is why there is a long-term tendency toward European interpenetration of capital and toward the creation of an imperialist superstate in Europe. Those are the indispensible weapons that the European trusts need if they are to have some chance of success in the intensified competitive struggle.

In following this reasoning, we are making no concessions whatever to the myth of “territoriality.” There are those who polemicize against our position by operating in fact with the abstraction of “trusts established on the territory of France, of West Germany, etc.” forgetting that irreconcilable conflicts of interest have developed between the European trusts and their American counterparts and that the bourgeois state cannot remain neutral in those conflicts – nor can it stand above the fray as an “arbitor.”

Either the bourgeois state defends the interests of the European trusts, no matter how ineffectively; that is, the interests of Philips, Siemens, ICI, Hoechst Bayer, Péchiney, Saint-Gobain, Fiat, Royal-Dutch Shell, British Petroleum, Thyssen, Diamle Benz, and so on, as well as the sectors of financial capital that support them. In that case the question that is posed is deciding what state instrument can be the most efficient weapon in this intensified interimperialist competition. Or else one denies that these groups either want or are able to endow themselves with a state to defend themselves against U.S. imperialism. (This sort of argument is extremely weak, being supported by no demonstrable empirical evidence.) And those who hold to that argument are led, whether intentionally or not, to the Kautskyist theory that there is an ultra-imperialism that unites all the trusts and crushes all those who oppose them.

European interpenetration of capital goes on

To estimate the future of the Common Market, then, it is appropriate to refrain from all superficial and short-sighted impressionism. The long-term tendencies on the economic, social, and political level must be grasped, as well as the contradictions within those tendencies. Just as in the past it was incorrect to affirm lightly that the economic integration of capitalist Europe had become “irreversible,” so today it would be wrong to rush hastily to the conclusion that the Common Market is in the process of decomposition or that it is already dead.

In spite of the failure of the Fiat-Citroen merger (which, incidentally, poses the question of a Citroën-Renault or Citroën-Ford merger, for the European automobile trusts do not seem capable of getting through the current crisis in the automobile industry by functioning in an independent manner), and in spite of the crisis of the institutions of the EEC, European interpenetration of capital is continuing. In face of the passivity of bourgeois governments and the disarray of the institutions of the “community,” European big finance capital has not ceased taking action. And nearly all its actions move in the direction of a greater and greater push toward European interpenetration of capital.

Thus, the “energy crisis” gave rise to a new European financial company to take its place among the many joint financial-banking groups created during the past decade. The Banque de Paris et des Pays-Bas, the Société Générale, the Schweizerische Kreditanstalt, the Midlands Bank, the Amsterdam-Rotterdam Bank, and the Belgian Société Générale de Banque have created Finerg, whose goal is to facilitate the financing of large-scale investment projects in the energy field: creation of atomic reactors, oil prospecting in the North Sea, research on new sources of energy, and so on. This is a project that once more confirms the long-term economic logic that underlies the European interpenetration of capital: the growing inability of “national” trusts, even the strongest ones, to find sufficient capital and material assets to undertake some of the technologically advanced projects without whose realization the competitive race with U.S. and Japanese imperialism would be irredeemably lost.

In the negotiations with the semicolonial countries and the bureaucratized workers states, the big monopolistic European trusts are loudly demanding sufficient “European” governmental support to allow them to come away with the choice deals. While American diplomacy has paved the way for a spectacular reentry of the Rockefeller trust into the Egyptian market, European diplomacy has unquestionably scored some points in the Soviet Union, North Africa (steel, automobiles, and natural gas), Black Africa, and Brazil. So the cause is far from having been lost. More than ever, the future of the Common Market depends on the outcome of a battle being waged by living economic, social, and political forces. That is, it depends on certain real relationships of forces and not on any predetermined fate or “iron law.”

The workers interests are not those of capital

In this grappling between real material interests, the working class and the workers movement must above all preserve their political independence and not identify with any of the battling bourgeois groups. Neither “national interest” nor “the European ideal” are anything but disguises donned by various capitalist groups in order to lead the workers to abandon resolute defense of their own interests against those of big capital .

Those who oppose European interpenetration of capital and the creation of a European “superstate” in the name of defending the “national sovereignty” of the existing bourgeois states are identifying themselves with conservative and retrograde capitalist interests that will be unable to preserve their holdings (through a policy of austerity, deflation, and protectionism) except by seeking to reduce the buying power and standard of living of the working class. Those who call for a “European response” to the “American challenge” and who demand a “European state” to “block the advance of the multinationals” are in reality counterposing a plan to strengthen European multinationals in order to stop American multinationals. The working class has no interest in strengthening its own class enemy, nor in assuming that European supertrusts would be more “liberal” or “reformist” than the “national” supertrusts that exist today.

In its own way, the crisis of the Common Market expresses the growing incompatibility of the expansion of the productive forces and the survival of the bourgeois national state. We put forward only one historic solution to this incompatibility: the Socialist United States of Europe. To achieve the Socialist United States of Europe it is necessary to prepare the working class to seize upon each decisive weakening of its own bourgeoisie, on each sharp prerevolutionary crisis, with a view toward creating a real revolutionary situation, that is, with a view toward struggling for the conquest of power. The socialist revolution can still be initiated on the scale of a single country. In fact, for the time being, because of the uneven development of the relationship of forces between the classes and because of the still-national character of the state and repressive apparatuses, it is possible to initiate the socialist revolution only on a national scale.

But at the same time, the growing internationalization of capital (of the “employers” in the most immediate sense of the word) imposes on the European workers and workers organizations a greater task of jointly cooperating, making alliances, and carrying out actions on a pan-European scale – even for the most immediate demands, like wage increases. In this way an international class struggle is little by little developing in the image of the international organization of capital. Revolutionaries must not merely take part in this international class struggle. They must be its most lucid, energetic, and enterprising advocates, carrying out many initiatives of contact and collaboration on the level of factory delegates and combative trade-union militants of companies owned by the same multinational trusts or in the same branch of industry in the various European countries.

The combination of the two phenomena – revolutionary crisis breaking out first on a national scale and workers struggles expanding little by little internationally – entails a dynamic of progressive interaction of revolutionary crisis on a European scale that will be superior to that of the periods 1917-1920, 1934-38, or 1944-47. That is what makes the program of the Socialist United States of Europe not only objectively necessary, but practically possible as well. And, to an ever-growing extent, the Socialist United States of Europe will become a credible goal, first to the broad vanguard, and later to the toiling masses as a whole.

Last updated on 13.10.2015