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The Contradictions of European Capitalism: An interview with Joachim Becker – Part II

Notes from the LeftEast editors: this is part II of a two-part interview with Joachim Becker,, professor of Economics and Business at Vienna University and deputy head of the Institute for International Economics and Development, was conducted by the Croatian activist and writer Domagoj Mihaljević. 

ć: How do you see developments in the post-Yugoslav territory, especially given that  currently a potential crisis is lurking around the corner with the bankruptcy of Agrokor, the largest regional retail-chain?

Becker: In Croatia, the Agrokor crisis is shaking the agro-industrial complex, which is, alongside the tourism-real estate nexus, one of the two pillars of the Croatian economy. Though of Croat origins, Agrokor is almost a Yugoslav company with a strong presence in Slovenia, Serbia and Bosnia-Herzegovina as well. Agrokor’s expansion was based on credit – and this has proved to be its Achilles heel. Agrokor is well connected to the Croatian government – particularly through the present Minister of Finance, Zdravko Marić, a former top manager of Agrokor. In record time, a special law for “strategic companies” in trouble, the so-called “Lex Agrokor”, was passed.

It seems that the suppliers and workers are to pay the highest price for Agrokor’s problems. Several Croatian industrial companies in the food sector are in a very precarious position because of Agrokor’s crisis. It makes sense to stabilise a domestic retail chain plus agro-industrial complex. However, that should be done in a very different way. The state should take a stake in Agrokor and use it as a developmental tool. This would require a different type of state. The Croatian state is far away from even a modest form of developmental state.

Mihaljević: Across the whole post-Yugoslav space we have seen austere labour restructuring, after consumption-fuelled and debt-led economic development, come tumbling down. In many regions young people are leaving in thousands, governments are becoming more authoritarian, European authorities are backing oligarchs as they see them as factors of stability amid growing political tensions. Meanwhile unemployment, poverty and dispossession are displaced through nationalist discourse, and left forces remain marginal and squeezed by dismal conditions. What is your outlook on these developments? Where do you see possible rupture points?  

Becker: Though the economies of the post-Yugoslav states have recently recorded growth rates, their structural weaknesses, particularly in manufacturing, continue to exist. Unemployment is high, particularly in Bosnia-Herzegovina and Kosovo. The states have a strong oligarchic imprint.

In recent years, there have been a number of social protests, at times even over long periods (e.g. in Macedonia or, against Beograd na vodi in Belgrade). The triggers of the protests have varied – from a big real estate project in Belgrade to authoritarian tendencies in Macedonia. The bad socio-economic situation has always lurked in the background.

A common trait of the protests is their weakness at the level of political organisation. Protests usually have not translated into political alternatives. An exception is to some extent Slovenia, but there the economic structure is still more solid. In Zagreb, a left-coalition “Zagreb je naš” – with local activists – was elected for the first time into the local parliament. I think that the development of more permanent organisational structures is one of the prerequisites for translating protests into real changes.

Mihaljević: Across large parts of Europe the political centre is collapsing and social-democratic parties are falling apart. In western European countries we have seen the rise in leftist movements and political parties, the latest being Corbyn in Britain and Melenchon in France. But in the east authoritarian, right-wing figures are consolidating their power. How do you interpret these political tendencies in Europe?

Becker: The left is relatively stronger in Mediterranean countries though not in Italy. In countries like Greece, Spain and Portugal, the Communist tradition was strong. The Communist parties were a central force in the resistance to fascism and military dictatorship. The memory of the right-wing dictatorships is still relatively fresh. Though social democracy emerged as a strong political force from the mid-1970s onwards, relevant currents to the left of social democracy subsisted in all three countries.

PASOK and PSOE discredited themselves through their late acknowledgement of the crisis and their turn to austerity during the global crisis. This opened new spaces for left-wing forces. Syriza proved to be able to liaise with the protest movements against austerity. In Spain, activists of the protest movements acknowledged the limits of protests politics alone. Podemos was founded as a party political response to those limitations. The party has sought new organisational forms combining political activism and strong social media activities. The balancing of the internal currents has proved to be problematic. The relationship with the long established Izquierda Unida has been another thorny issue as has been the relationship to social democracy.

Syriza was voted into government in 2015. In line with the desires of many of its voters, the party tried to combine continued euro zone membership and an anti-austerity stand and assessed the chances of such a policy too optimistically. The euro zone group forced Syriza to choose between the two. Without having seriously prepared for leaving the euro zone and under enormous pressure, Syriza opted for remaining in the euro zone and accepted structural adjustment.

In Portugal, a government of the Socialist Party supported by the Communist Party and Bloco de Esquerda was formed on an anti-austerity consensus. In the past, the relationship between the Socialist and the Communist Party had been extremely tense. It was an extraordinary step by both parties. The Socialist Party has insisted that it would not accept leaving the euro zone. The space for manoeuvre within the euro zone has been larger in Portugal than in Greece. There have been real departures from austerity, e.g. regarding wage policies. However, the left-orientated government has not been able to deal with the underlying structural problems of the Portuguese economy within the constraints of euro zone membership.

In France, the Socialist Party has split and the Macron wing has clearly sided with the right. Not much of the Socialist Party is left. The question is now how far Mélenchon will be able to build a broader left. The recomposition of the left in France still seems to be in its beginnings. In the parliamentary elections France insoumise gained significantly fewer votes than Mélenchon received in the presidential elections. This is partially due to the French electoral system, but shows as well the challenges ahead for France insoumise. The French left is deeply fragmented.

In other core countries of Western Europe, like Germany and the Netherlands, left-wing forces have been able to consolidate their position in face of the move to the right and the decline of social democracy – a very steep one in the Dutch case – but have not been able to expand significantly. Their social agenda resonates with the young – and this is a sign of hope.

A clear social policy agenda is, however, not enough. The left parties are weak in developing economic alternatives. Questions of production are almost absent from their political agenda. On the position on the EU, they are often deeply divided between those who aspire to transform the EU and those who regard this as a “mission impossible” because of the strong institutional bias in favour of capital and neo-liberal policy making patterns.

In the British elections, Corbyn was able to sidestep the issue by focussing consciously and credibly on a social agenda. His electoral advance should permit a more permanent move of the Labour Party to the left – though the party remains divided between left-wing activists and the liberal party apparatus.

In parts of Eastern Europe, most significantly in Poland, neo-liberal social democracy has even turned into an extra-parliamentary force. In Poland, a young left party with a clear social agenda and proposals for strengthening public structures in the countryside, Razem, has emerged. It clearly breaks with neo-liberal policies. Its attempt to build a third pole beyond conservatives and liberals is quite ambitious, but not easy to realise. So far, Združena levica in Slovenia, which emerged out of the anti-crisis protests, has been the only party to the left of social-democracy that has made it into the national parliament in the region. The Slovenian trajectory has been atypical in many respects.

Many of the traditional Christian Democrat and conservative parties are eroding as well. Their neo-liberal turn has alienated the popular classes as it has done in the case of social democracy. In many countries, a national right has become more assertive. Its positions bring together neo-liberalism and national-conservatism in various combinations. Some formations are even openly fascist.

In Western Europe, most of the nationalist right-wing parties pretend to defend the interests of domestic mostly small- and right-wing capital. There are, however, two important exceptions to this, FPÖ (Freiheitliche Partei Österreichs) in Austria and N-VA (Nieuw-Vlaamse Alliantie) in Belgium, which is the core component of the national government. They are rather in line with the demands of the big, often foreign-controlled capital groups. Smaller capital is rather close to Christian Democrats in those two countries. In the core countries, the nationalist right tends to defend conceptions of core Europe and, at times, it takes an even stronger, though often ambiguous position against the EU. While the nationalist right in West Europe takes clear stances against trade unions, it tries to attract the popular classes by promising “protection against immigration”. Their anti-migrant campaigns have become increasingly focussed on “Muslims”.

In Eastern Europe, the nationalist right features more prominently in the strengthening of “national” capital vis-à-vis the transnational capital that dominates key economic sectors. In Hungary, those efforts are mainly confined to some service sectors while the ruling Fidesz continues to lure foreign capital in export manufacturing. It pursues aggressive anti-labour and workfare policies. The key components of the present growth model and the subordinate position of Hungary in the European division of labour are not questioned by Fidesz.

In Poland, the ruling PiS is more ambitious in its developmental agenda. It argues that Poland might be trapped in the middle income-gap. It sees the reliance on low wages and foreign capital as problematic. However, its economic policy alternatives are not clearly established. The party has, however, re-established formal consultation forums with trade unions and capital and increased the minimum wage.

Both Fidesz and PiS aim at restoring the “traditional family” – and their social policies are designed for this goal. Both also display authoritarian tendencies. In particular, they have tried to get political control over the court system and weakened the partition of powers. Public media have been brought under the control of the ruling party. Clipping the wings of oppositional NGOs has been high on the agenda as well. The two parties are close in their political positions on EU integration as well. They aim at strengthening the role of national governments in the EU. The East European nationalist right shares the stand of West European nationalists against refugees and non-EU migrants, but are in conflict with their West European counterparts on migration in the EU.

The nationalist right is not only governing in several countries – alone or as part of coalitions – but has deeply influenced the public discourse. Christian democrats and, to some extent, even social democrats have taken over elements of the right-wing nationalist discourse and policy proposals, particularly regarding migrants, refugees, and border controls.

Mihaljević: The French presidential elections are over and although the political centre completely fell apart, the French ruling class managed to secure its candidate in the position of power. But snap parliamentary elections were called in Britain and the German parliamentary elections are happening in autumn. What will be the effect upon the current state of affairs in the European Union?

Becker: The Brexit referendum has put disintegration openly on the agenda. I expect very messy and complicated negotiations. The British Tories are divided on Brexit strategies, and Theresa May’s weak electoral result is likely to bring those rifts even more into the open. The other EU countries have diverging priorities in the negotiations with the UK as well.

The incipient official debate indicates that strong forces in the core countries view the euro zone as the core of the EU and advocate a multi-speed EU. A tightening of neo-liberal economic governance plus, possibly, some special budgetary funds for the euro zone seem to be a rather likely prospect. Such a move would strengthen technocratic decision-making in the euro zone, reducing spaces for democratic economic and social policy making and marginalising social forces like trade unions even more. The neo-liberal thrust of economic and social policies has been a key cause for the increasing alienation of the popular classes from the EU. This alienation is likely to deepen – and it is a key challenge of the left as to how to react to this alienation.  The monetary union cements patterns of uneven development. The Commission proposes nothing that would seriously counter these patterns of unevenness. Such a construction of the euro zone does not seem to be viable in the long run.

Accentuating the key role of the euro zone as the core of the EU would deepen the divide between the countries inside and outside the euro zone. This divide already played a role in the alienation of British conservative forces from the EU. In the present configuration, the multi-speed EU project is aimed at marginalising member states in Central Eastern and South-Eastern Europe. Though it is not the intention of the partisans of the multi-speed EU, deepening the divide between euro zone and non-euro zone countries will give added impetus to disintegrative tendencies. Given the present constellation of forces, the right is more likely to take advantage of that than the left.


By Domagoj Mihaljevic

Domagoj Mihaljević graduated from the Faculty of Economics and Business of Zagreb University. His research interests include history of socialist Yugoslavia, political economy of transition and the theory of state. He has written for Zarez, Bilten, Slobodni filozofski, the Croatian edition of Le Monde Diplomatique, and Austrian Kusrwechsel.