3. Germany’s Ordoliberal Austerity and the European Disunion

Ordoliberalism represents neither a coherent body of economic, sociological and legal thought nor its principles are adopted and implemented in their purity by ordoliberal policy-makers. The transposition of ordoliberal thinking onto the various EU/EEC Treaties entails a certain transformation of its theoretical principles as they are put into policy practices and mediated by all sorts of agencies and bureaucracies. As Nicos Poulantzas argued in his last theoretical statement, State, Power, Socialism, there is always a “structural distance between theory and practice”, between theory and the real. The same goes for all theories, including Marxism. This is an aspect missed by all those who do not recognise the ordoliberal character of EU Treaties and the dominant-imperial position of Germany in them. See, for example, some of the chapters in the otherwise fine book edited by Josef Hien and Christian Joerges (2017), Ordoliberalism, Law and the Rule of Economics. In this regard, a far more balanced approach is that offered by Andy Storey (2017), “The myths of ordoliberalism”.

Francois Mitterrand’s famous “U-turn” in the early 1980s remains a key event in the turbulent history of the EMS. Mitterrand, who assumed power in 1981—the same year with Andreas Papandreou’s PASOK in Greece—on the basis of an expansionary Keynesian agenda allied with the French Communist Party, abandoned Keynesian reflation and nationalisations. Unable to defend the Franc within the EMS and in midst of rising unemployment and debt, Mitterrand gave up on his socialist promise in March 1983 and embraced a moderate neoliberal platform. As Donald Sassoon noted, “had the French elected a laissez-faire neo-liberal government, as the British did in 1979, its manufacturing sector would have collapsed forever, as the British has done” (Sassoon 1996: 555). However, as Marc Lombard argued, Mitterrand could have not made any concessions to neoliberalism had he not hesitated to operate outside the rigidity of the EMS framework (Lombard 1995). Greece, under veteran socialist Papandreou in the 1980s, put up a better resistance to neoliberal tide, but being a small country with limited capacities was unable to streamline developments in Europe. Scandinavian countries, too, although they pursued demand-led policies throughout, could not influence development in the European core, already dominated by EMS/Germany’s monetary policy.

Note, that current account represents the external creditor/debtor status of the country. It is not a fiscal magnitude. Fiscally, both Ireland and Spain were sound, for example, yet, same as Greece and Portugal, they received bailout funds from the “troika” (IMF, EU and ECB). As we have shown elsewhere, the Eurozone crisis is primarily a balance of payments crisis, not a fiscal crisis (Fouskas and Dimoulas 2012, 2013, 2016).

The falling rate of profit in the real economic sector and problems in the US balance of payments structure was the result of a number of concurring factors, such as the global competition between Japan, the USA and West Germany and the Vietnam War. See, among others, Brenner (2006) and Arrighi (2007).

It should be noted, however, that the first testing ground of the neoliberal doctrine was a Latin American country, Chile, after the fall of Allende (Harvey 2005).

For a pristine and comprehensive definition of austerity in a historical perspective, see Blyth (2013).

When Yanis Varoufakis Greece’s seven-month Finance Minister (January 2015–July 2015) tried to test his “Plan B”, he found out that even the General Secretariat for the Public Revenue based in his Ministry of Finance was controlled by the creditors, who refused to provide him with the tax codes he wanted in case Greece’s negotiations with the troika failed (Varoufakis 2015, 2017).

This has started from the USA with the Wall-Mart and expanded quickly to the UK and elsewhere. This is the very meaning of Tony Blair’s “stakeholder society”, launched in Britain in the late 1990s and embraced by the ideologues of “Third Way”, such as Anthony Giddens. In this respect, Blair, as a fair-weather neoliberal of the Labour Party, contributed far more than Thatcher’s Tory party in embedding ordoliberalism in the UK.