For those that missed it first time around.
The EU as a mechanism to transfer surplus from its “South” to its “North”In other words, competitiveness at the core Euro countries, which are characterized by higher levels of labor productivity than in the South, mainly depends on keeping wages and prices under control, so that German commodities continue to be competitive (because of their higher quality and so on) compared to similar commodities produced in East Asia and beyond. On the other hand, compettiveness in the European periphery, which consist of countries with lower levels of labor productivity, like Greece, mainly depends on improving productivity through new investment on R&D. Therefore, the competitiveness problem in the South is mainly a development problem and refers to the need of creating a strong productive base, which will not be formed within the process of uneven capitalist development (as today), but within a process of social control of the economy to create a self-reliant economy.
Yet, despite the fundamental difference concerning the causes of low competitiveness between the “North” and the “South” of the EU, in the framework of the post-Maastricht Europe, a common policy was adopted for all member countries––a policy that was determined by the needs and the interests of the North. Thus, the Single Market, did not mean the unification of peoples, as the EU propaganda presented it, not even the unification of states, but simply the unification of free markets. ‘Free markets’, however mean not only open markets (i.e. the unhibited movement of commodities, capital and labour), but also flexible markets (i.e. the elimination of any obstacle in the free formation of prices and wages, as well the restriction of state role in the control of economic activity, which implies the drastic restriction of the element of ‘national economy’.
This was the essence of the neoliberal globalization characterizing the new institutional framework of the EU, i.e. that the state control of the domestic market of each member state (which was drastically restricted within the Single Market of 1992) was not replaced by a corresponding EU control of it, apart from some (mostly nuissance) regulations on uniformity, etc. In other words, the new institutions aimed at the maximization of the freedom of organized capital,, whose concentration was facilitated in any way possible, and the minimization of the freedom of organized labor, whose co-ordination was restricted in any way possible and mainly through the unemployment threat.
If Germany is indeed the country which was on the receiving end of the greatest benefits from joining EU and the Eurozone, whereas the countries of the European South received the least benefits out of it, this was far from accidental or due to the bad designing of the Eurozone as, post-Keynesians and other reformists (including the Euro-Left!) argue. When the Eurozone was institutionalized at the beginning of the new millennium Germany already enjoyed relatively high levels of labor productivity and competitiveness and the new currency essentially has ‘frozen’ the relative deviations between the advanced North of the Eurozone and the much less advanced South (parts of which were in fact underdeveloped).
Then, the Single Market itself, under conditions of a common currency, brought about a relative equalization of commodity prices and a certain increase in wages in the South, as workers were struggling to maintain the real value of wages and at the same time to narrow the gap in wages with Northern workers. On the other hand, German employers were in a much better position to suppress wage rises because of the difference in labor productivity they enjoyed due to advanced technology and investment in R&D, but also due to better relative prices. As Wolfgang Münchauput it, “Germany entered the Eurozone at an uncompetitive exchange rate and embarked on a long period of wage moderation.
Macroeconomists would say Germany benefited from a real devaluation against other members”. If we add to this, that the countries in the South no longer had the power to devalue their currencies, whereas Germany did not have any need to devalue its currency as long as it could keep wage rises in pace with labor productivity increases, then we can understand why (and how) the Eurozone essentially functions as an economic mechanism to transfer economic surplus from the countries of the European South to those in the North and particularly Germany.
linkTo make this simpler, independent nations can use the tools of wages, prices, currency valuation and tariffs to control their own trade balance.
If an economically weaker country enters into 'free trade'(gives up it's right to use those tools to protect it's own trade balance) with economically stronger countries, then a trade imbalance in favor of the economically stronger nation naturally develops. Without restrictions within the Eurozone to prevent those trade imbalances from occuring, the stronger nations feed on the weak.
Not only do the weaker nations not benefit from the economic union, they are destroyed by it.
That is what has happened to all the weaker nations in the EU; Greece, Spain, Italy, Portugal and Ireland.
"For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." - Patrick Henry
The level of injustice and wrong you endure is directly determined by how much you quietly submit to. Even to the point of extinction.
