Best,

Mark

The reason I mention the Marshal Plan was not to propose that Germany provide a Marshal Plan for Europe as this would be disastrous. Germany remains the economy that is keeping the European economy afloat, should she start to use this economic advantage to endlessly bail out other European countries, it would destabilise the core economy of Europe the result of which would be a far deeper crisis and probably the collapse of the single currency. My reason for mentioning the Marshal Plan was to show that Germany claims that her post-war economic rebuilding and strength can be attributed solely to a strict austerity regime simply are not true. Similarly, the reframing of the European crisis as a crisis of government borrowing and spending, in the case of Ireland and Spain, is simply incorrect and offensive as both had very small amounts of structural debt before the crisis.

My main point was to show that these lines of German rhetoric are counter productive and that her lack of socially orientated polices has merely served to alienate people in Europe. I believe that austerity is necessary, but alone it will achieve nothing. There are, however, other options beyond Keynesian style direct economic stimulus. See my conversation with Mark, above, in which I make clear the reasoning for my critique of Germany’s Europe policy.

Dear Mark,

As I mentioned, the original source of publication for this article was an issue of Irish Political Review in which an editorial already dealt with these issues. I was focusing therefore on another aspect of the argument; ways in which German policy and rhetoric could become more socially orientated and be perceived in less of a negative light without having to supply large amounts of funds. It is important because Germany is failing to see the importance of the propaganda war and the point of the article was to show how the propaganda war and the economic crisis could be fought from the German side without major expense. The international mass-media is very much on the side of Anglo-American finance capital but the tone and rhetoric of Germany (particularly in reframing the crisis as purely an issue of borrowing and bad state policy in countries where this was not the case such as Ireland and Spain) is that even left wing and non-mainstream media sources are criticising German policy. This is also the case with social change NGOs and grass roots activists across Europe. While the mass-media will not change its mind on which side it will support, these other, vey valuable forms of support are being lost.

I agree with you that ‘austerity’ and ‘Keynesianism’ are not the only solutions and I believe that I laid this out in the article. I am actually quite opposed to this resurrection and redefinition of Keynesian theory, a theory that was largely discredited after it had caused a global debt crisis which many developing countries are still enslaved by to this day. The use of this dual polar argument conveniently eliminates the possibility of more left leaning, socialist or redistributive policy options and breaks the situation down to a simplistic debate: ‘borrow and spend more’ or ‘don’t borrow and spend less’ which is, of course, ridiculous. The point I wanted to make was that, without major restructuring within states, there are many socially orientated policies that do not fall under the banner of Keynesian economic stimulus but that would, nevertheless, create stimulus in the context of necessary austerity. My point is that austerity alone will not work because the problem is a multifaceted systemic problem that is not simply due to too much spending and therefore labelling it merely as a spending issue solves nothing.

I agree that redistributive polices are the way forward but also be aware that the nature of neo-liberal capitalism is that once the system is set up governments, to a level, are beholden to it. If you free up capital (not to mention the fact that finance capital is particularly mobile by its very nature) then implementing anti-capitalist policies at the height of crisis can do more harm than good. The first steps have to work within the neoliberal system while gradually regulating and reigning in its power at the EU level which requires a high level of unity, and this element of the treaty I agree with completely.

The left could do a better job of analysing the propaganda. But Merkel could certainly do a better job of promoting the German line and this should be done by proposing alternatives to the austerity vrs Keynesianism argument and by promoting the genuinely progressive policies that the Germans are leading the way with such as financial transaction taxes and regulation of the European financial sector.

Thank you for your comment and I am sorry it has taken me so long to respond.

I had not intended to define NGO as ‘entity that does not receive government funding’. It is the combination of majority government funding, a blatant political agenda that suspiciously reflects United States foreign policy interests and preferences and the prominence of former government officials, politicians and military on the board of the National Endowment for Democracy that makes it difficult to define it as an NGO by anyone’s definition. Usually when an organisation receives the majority of its funding from government it would ensure that its board does not consist of government or former government figures in order to perceived as a genuine NGO but this is not the case with NED. It is true that many religious NGOs have an agenda but this agenda is usually far more transparent and out in the open. The NED is far more illusive in describing its clearly right-wing and highly political agenda.

You are correct that Freedom House is a far less nefarious organisation than NED but it cannot be denied that the organisation has used its monopoly on ‘freedom statistics’ to promote a right-wing notion of what freedom is. Left-wing countries with regular free and fair elections are defined by Freedom House as less free than right-wing autocratic regimes.

Firstly, I never provide a personal email address as I prefer for disputes, debates and discussions on my articles to take place publicly on my blog as, usually, this allows for a more civilised form of discussion. I find that this demonstrates my willingness to have my work critiqued and it gives me a chance to respond to such critiques publicly. I never shy from debate and I normally respond far more promptly to such comments. Secondly, the original version of this article was titled “Growth, Austerity and the Fiscal Compact Treaty”, it appeared in Irish Political Review and it was merely a slightly longer version meant more particularly for an Irish audience as it dealt with issues of the Treaty referendum.

On the topic of the article itself, I believe that you completely misconstrued my point. Part of this may have been due to the fact that CounterPunch published the heading “Bailing out German Banks” above the title of the article when it was merely meant to be the heading of the first paragraph. I believe that this skewed the argument I was trying to make and I have contacted them about changing it.

I am not arguing that Germany needs to endlessly fund deeply indebted European countries and I can promise you that I did not intend to demonise Germany. I agree with you completely that there is currently a battle going on between Anglo-American predatory finance capitalism and the social European desire to regulate and reign in this beast, a path that is being led my Germany. In the same issue of Irish Political Review that my article originally appeared is a very interesting editorial written by Philip O’Connor which describes this battle and, I believe, accurately suggests that these same Anglo-American capitalist forces are trying to force Germany to act as an ATM for indebted countries in order to destabilise the Euro’s core economy and ultimately destroy the common currency and German demands for the regulation of finance and the introduction of a financial transaction tax. This battle is being waged in the form of a propaganda war that includes the more dubious elements of the anti-austerity campaign. I am trying to make the point in this article that Germany’s current Europe policy is causing her to walk straight into this trap.

I mention the Marshall Plan as only one of many capital injections that Germany received during her reindustrialisation. This was not to suggest that Germany should provide capital injections to indebted countries but, rather, that she should not continue to suggest that austerity alone allowed Germany to rebuild and become a strong economy after the war. Similarly, my point in demonstrating that Germany’s debt pre-crisis was significantly higher than Irish and Spanish debt was to show that the current German line that every indebted country got into this position because of irresponsible spending, borrowing and government policy simply is not true. The problem with these issues is that if these debts are owed in a large part to German banks and Germany actively seeks to rewrite history in explaining the crisis it creates the impression that Germany only cares about repaying her own banks. This is the exact impression that the propaganda campaign being waged by Anglo-American finance wants to create as it poisons populations against German policy in Europe. I believe that there are many issues Germany will be much softer on at a later date and that her current priority is not repaying her own banks but restabilising the Eurozone and restoring confidence in European economies. This won’t happen if Germany caves on issues such as debt forgiveness and austerity now, as these factors are unfortunately necessary in order to restore confidence. But, by allowing the impression to persist that Germany simply wants her banks repaid through oppressive austerity regimes, Merkel risks the whole project. This impression is causing serious anger in countries undergoing severe austerity regimes and in Spain and Ireland the suggestion that irresponsible borrowing and spending got them into this mess adds insult to injury. The social unrest and political instability this anger is causing only serves to further deepen the crisis.

My point was to show that there are elements of the German social model that could greatly contribute to the growth debate and they don’t cost anything to implement. To Merkel advocating vocational internship programmes and new partnerships between the public and private sectors are not priorities in the midst of crisis but in this she fails to realise the importance of winning the propaganda war. At present it appears that every progressive policy is pushed for by someone else and eventually Germany either concedes to or blocks it. Merkel needs to add to the growth debate with cheap or free policy prescriptions and stop trying to reframe the causes of the crisis in insulting terms while rewriting the role of austerity in German history. None of these things require Germany to pump her money into indebted countries but they are all vital policies if financial regulation and the common currency are to win out over the interests of Anglo-American capitalism. It is vitally necessary for the future of the European project that serious civil unrest and political instability are avoided and, at present, Germany’s demand for austerity and debt repayment without any other socially orientated policy prescriptions is a recipe for just such a disaster.