Preparing for Plan B in Paris

January 29, 2016

Terrorist attacks postponed the European Left’s “Plan B” summit from November to January. The meeting during the weekend of 23-24 January 2016 attracted more than 300 participants and a large number of media people. [This is a translation of my report from Paris and analysis of the options of the Left in our historical conjuncture, published in the weekly People’s News 4/2016].

The dramatic events of July 2015 led to the emergence of a new European political movement. Syriza surrendered in the debt negotiations immediately following the referendum, in which a clear majority of Greeks had voted no to Troika’s debt memorandum. Syriza’s sudden adjustment to the will of the Troika has been considered an outright coup, as the “Plan B” manifesto highlights.

In addition to people like Oskar Lafointane and Yanis Varoufakis, the manifesto has been signed by many of Europe’s best known Left politicians. The theory behind the manifesto theory can be summed up in terms of a single interpretation of the events of summer 2015. Syriza’s turnaround was due to the fact that they did not have a contingency plan for the possibility that the EU bodies and Germany say coldly no and show the door to Greece.

The basic idea of Plan B is simple: a credible negotiating position requires the option of acting otherwise. A backup plan is needed in case the EU cannot be made more democratic, socially responsible or economically sound. If plan A fails, you must be able to withdraw from the euro and develop national solutions. However, the Left has widely dreaded strengthening any form of narrow-minded nationalism, which has the potential of leading to the escalation of conflicts and, eventually, even to wars.

Many key figures of Syriza did not accept Alexis Tsipras’s decision to comply with the hard will of the Commission, the ECB and the German government. Zoe Konstantopoulou, who served as the Greek Parliament President in the first half of 2015, used strong words in her Saturday speech to condemn Syriza’s turn and the subsequent policies of Tsipras’s government. The debt memorandum approved by Syriza runs counter to basically all the objectives of the Left and violates the most basic labour and human rights. Syriza has shared the fate of its predecessor PASOK and turned, in no time at all, into a mere instrument for implementing the political programme of the Troika.

What was perhaps especially noteworthy in Paris, however, was the absence of Varoufakis. Originally scheduled as the main speaker of Sunday morning, Varoufakis was replaced by Stefano Fassina, former finance minister of Italy. Fassina defended the development and furthering of plans A and B side by side.

In the beginning of January Varoufakis published his own manifesto, which aims at democratizing the EU by 2025. Varoufakis’s DiEM 25 movement will be launched on February 9 – in Berlin. Critics of this Plan C insist that this is a mere return to the original Plan A, which has already demonstrated its own hopelessness.

Those more optimistic, however, believe in the power of the new broad-based movement. Varoufakis and his supporters can also rely on ethico-political cosmopolitanism. Flirting with nationalism is like playing with fire under the current circumstances. On the other hand, some may see in these divergent opinions and debates also a typical Left tendency to be divided into yet smaller orthodoxies that consume their energies in mutual struggles.

In his rhetorically masterful, but also a bit bombastic Sunday’s closing speech, the French Left Party founder and MEP Jean-Luc Mélenchon underlined the openness of the new movement. Between the lines one could read a fair dose of bitterness toward the former Greek Minister of Finance. Mélenchon himself has turned from a federalist to an EU-critic, who now wants to dismantle many of the Union’s powers. Mélenchon no longer believes that the Union could be changed to the better.

What would the plan B mean in practice for a member state? If for instance Greece withdrew from the euro, the common currency as such would not disappear. Even if the euro was dissolved entirely, we need a vision about organizing the monetary system of Europe and the world. Oskar Lafontaine and many panellists entertained the idea of returning to the European Monetary System of the 1980s or even to the earlier Bretton Woods system. More exotic proposals were heard as well, such as parallel and accounting currencies, which could retain the euro.

One of the strongest speeches in favour of Plan B was given by Kostas Lapavitsas, a well-known Greek professor of economics at SOAS in London. In one of the Saturday panels, he argued for a “progressive exit” and “progressive nationalism”. His argument was originally developed with Heiner Flassbeck in a little book called Against the Troika, released in September 2015. The book is written in plain language, critiquing austerity policies and the design of the EMU from a post-Keynesian perspective. I largely agree with their analysis, at least as a partial explanation of the euro crisis.

It is Lapavitsas’s political analysis that leads to his nationalist conclusion. The EU has shown its coat: it will force all dissident governments to the neo-liberal order and discipline. However, none of the Left’s backward looking proposals would undo globalization. The forces and mechanisms that led to the failure of the Swedish wage earner funds proposal in the 1970s and to the failure of Francois Mitterrand’s socialist project in the 1980s are still in place, perhaps even stronger now. The same applies to the financial forces which almost succeeded in overthrowing the European Monetary System in the early 1990s. Moreover, the conservative longing for the past golden age will not help in bringing about a new rise of the Left in Europe or the world.

The main problem lies in the discrepancy between the territorial state and the open world economy. State/societies form parts of the worldwide division of labour and are dependent on the economies of scale that only the world markets can provide. Financial and productive capital moves globally. Individual state actors tend to look at things from their own limited point of view and therefore often succumb to the fallacy of composition. This fallacy follows from the assumption that what is possible for one, is possible for all, or at least for many actors, at the same time.

The economic policies of states are often contradictory. For example, if countries try to simultaneously export their economic problems abroad by increasing the amount of exports in relation to imports, and especially if they thereby resort to internal devaluation, the result is bad for everyone. This is because the size of the total export markets and thus the aggregate efficient demand in the system as a whole decline. Our destinies are irrevocably intertwined with each other. Therefore, attempts at returning to “progressive nationalist thinking” or to one of the monetary arrangements of the past few decades cannot form the basis of a lasting and sustainable solution.

Yet, there is a reasonable response to the Left aporia. A backup plan is needed, but the return to national solutions cannot be more than a mere tactical threat and a possibility, not an end in itself. By requiring referenda on the euro, it is possible to politicize the current EMU. The precondition is that the opportunity to withdraw from the euro is genuine. In discussions in Paris, Fabio De Masi, Die Linke’s MEP and one of the original signatories of the manifesto, verified that a euro-exit would not alone solve our current economic problems or dissolve the processes now threatening democracy. The overall vision of the Left must be broader as well as more ambitious and far-reaching than “progressive nationalism”.

The EU is in a multi-dimensional crisis. The question about the future of the euro is at the core of the crisis, although it is not the only reason. For example, the President of the EU Commission, Jean-Claude Juncker, gave a speech on 15 January, which was rather gloomy and in effect anticipated EU’s disintegration. Despite awareness of the looming crisis, the Commission continues to follow and impose the same old recipes. Progressive learning is yet to take place in the EU.

It is now more than ever necessary to participate in these debates about the euro and the future of the Union. The process continues. The next “Plan B” event will take place in only a month in Madrid. From then on summits will be held every six months.

Heikki Patomäki
Professor of World Politics and a member of the Board of the Left Alliance.