Euro blues

The first thing to say about the elections to the European parliament is that the turnout across Europe was almost exactly the same as in the last time in 2009 at 43%. Despite the campaigns of anger by the Eurosceptic and far right parties against the EU, voters continued to show a lack of interest in the EU parliament and doubt that EU institutions were relevant to their lives. The NO VOTE party won again. Voter turnout has steadily fallen since 1979 when it was 62% with the no vote party starting to win from 1999 when the euro emerged.

Voter turnout is not uniform across Europe, however. Around 90% Belgian/Luxembourgists eligible to vote turned out (although that figure was the lowest so far). Belgians have a vested interest in the EU, with the Commission based in Brussels and with the country’s unity partly dependent on the continuation of the Union. The only other countries with a turnout greater than 50% were Italy, Malta, Denmark, Greece and Ireland. Significantly, of these, only Greece experienced an increase in voter turnout over 2009. Also countries with strong Eurosceptic parties like the UK, France or Finland saw an increase in turnout, but in all cases with still an abysmally low turnout. What was shocking was the very low turnout in most countries of Eastern and central Europe: only 13% of eligible Slovakians voted.

Of course, all the media hype is about the roaring success of the anti-EU, anti-immigration parties in France and the UK. UKIP has polled about 27% of the vote (only 36% turned out), beating Labour, which will end up with about 26%, and pushing the governing Conservatives into third place for the first time at 24%. So UKIP’s share has jumped about 11% pts from 2009, Labour’s is up about 10% pts and the Conservatives have dropped about 4% pts. The junior partner in the UK’s governing coalition, the Liberal Democrats, halved their share to about 7% and finished behind the Greens.

It was a similar story in France, where the racist, ex-fascist party, Front National (FN) took 25% of the vote on a reduced 43% turnout, beating the opposition centre-right parties (21%) and governing socialists (just 14%). There were also good results for Eurosceptic, anti-immigration parties in Denmark and Finland. But there were also defeats for such parties in Belgium, the Netherlands and in Italy, where the Five-Star movement under Beppe Grillo finished well behind at 21% compared to the governing centre-left Democrats under new shining star, Matteo Renzi, with over 40%. And in Ireland, Sinn Fein did better, but not as well as expected and the two large centre parties held their own comfortably.

The overall outcome for the European parliament is still going to be business as usual. The centre-right and centre-left groupings combined took more than 50% of the EU vote, but their share has declined. Together they will have about 400 seats out of 751, but that is down on the last time, especially for the centre-right. The success of some of the rightist parties and the fragmentation of politics in Europe will be expressed in a large increase in smaller party groups and independents.

Those parties left of the social-democrats generally did better than in 2009. In Spain, a leftist party came from nowhere to poll 8% along with the Communists with 10%. Of course, the biggest success was the win for Syriza in Greece, with nearly 27% of the vote over the ruling New Democrats with 23%. Yes, the fascist Golden Dawn also did well with just under 10% but the combined anti-austerity vote (Syriza, Communists etc) was over 50%.

Why did the likes of UKIP or the FN do so well? Well, I reckon there are several reasons. The most obvious one is that European capitalism has been through a major economic collapse in 2008-9 that has continued with a depression in incomes, employment and public spending. So for five years or more, the majority of households in Europe (including the likes of the Netherlands, Sweden and the UK) have suffered a loss in living standards not seen since the 1930s. In Greece, Spain, Portugal and Ireland, unemployment has broken records, particularly for young people.

Governments in Europe have imposed austerity across the board and when defeated in elections, the opposition parties have continued those anti-labour measures. France is the clear example. The socialists under Francois Hollande won an election on promises to tax the rich and preserve pensions and wages. It has done the opposite. Disillusionment with the government is overwhelming.

Public opinion pollsters have found that, of those who voted for the likes of UKIP or the FN, about one-third were just fed up with all the main parties and another 10% were protesting against the existing government. In France, apparently over 40% of white working class voters went for the FN. Yes, there is a layer of voters who are anti-immigrant, nationalist and even racist. But this layer remains relatively small in the broad sweep of things. Take the UKIP vote in the UK. Of those who voted in the UK EU election, nearly three-quarters voted for other parties and less than one in ten who could have voted did so for UKIP. Similarly even in France, only one in nine voted for the FN.

When it gets to national general elections, with higher turnouts and electoral systems not based on proportional representation, these nationalist anti-immigration parties will do less well. Indeed, the local election results in the UK did not produce the same success for UKIP as the EU elections did – the EU does not seem relevant to most people (except UKIP supporters) and so a vote against the ruling elite is easy to make.

The crisis in the Eurozone has been blamed on the rigidity of the single currency area and on the strident ‘austerity’ policies of the leaders of the Eurozone. But the euro crisis is only partly a result of the policies of austerity being pursued, not only by the EU institutions, but also by states outside the Eurozone like the UK. The Euro crisis is a product of the slump in global capitalism and the subsequent failure to recover is the same. Profitability in most capitalist economies is still well below the peak of 2007 and for economies like Italy and Slovenia, it is still heading downwards.

In all these countries, governments are implementing an agenda of ‘labour market reform’, spending cuts and privatisations designed to hit labour’s share in the national output – there is more misery to come. But it is not just the politicians of austerity that have driven or aim to drive down labour’s share. Government policy based on the Keynesian ‘alternative’ of debt restructuring and devaluation of the currency has led to the same result. Iceland’s supposedly Keynesian policies have produced a larger fall in labour’s share than in austerity Spain or Portugal.

Restoring profitability is key for economic recovery under the capitalist mode of production. So which pro-capitalist policy has done best on this criterion? Let’s compare Greece and Iceland. Iceland’s rate of profit plummeted from 2005 and eventually the island’s property boom burst and along with it the banks collapsed in 2008-9. Devaluation of the currency started in 2008, but profitability in 2012 remains well under the peak level of 2004, although there has been a slow recovery in profitability from 2008 onwards. Greece’s profitability stayed up until the global crisis took hold and then it plummeted and only stopped falling last year. Profitability in ‘austerity’ Greece and ‘devaluing’ Iceland is now about the same relative to 2005 levels. So you could say that either policy has been equally useless.

Europe’s economy is still not recovering. Indeed, deflation as in Japan is now a serious risk.

The ECB is now under pressure to launch an injection of credit into the Eurozone economy similar to the measures adopted by the Bank of Japan in the last year, designed to stop deflation and boost growth. Such ‘quantitative easing’ measures will not succeed in restoring trend growth. But they may keep the stock market and bonds buoyant and weaken the euro so that deflation is avoided as import prices and dollar-based profits rise. The European election results will not lead to any break-up of the EU or the Eurozone, but they don’t help to sustain the EU or the euro either.