#08 - European unity: between capitalist rivalries and economic necessity

Nov 1992

Maastricht or the Major puppet show

After the royal family, the so-called "Maastricht debate" is probably by now the biggest tree-killer in Britain. Jacques Delors, the European High Commissioner and arch-enemy of the Sun, seems to be conspiring to take over its page three. If it were not for Europe, newspaper magnates would be at a loss these days. So would most politicians. Maastricht has developed into such a "sensitive" issue in the politicians' world that Major did not even dare mention the M.. word in his parliamentary bill on the Treaty. In fact it is the only issue over which the present government ever got itself anywhere close to real trouble.

Yet, as "sensitive" an issue as it may be in the politicians' world, the Maastricht saga has been going on for much too long by now for anyone to take it seriously. No wonder politicians are having a hard job trying to keep it alive among the electorate. With good reason too. Isn't Europe an irreplaceable gimmick to divert people's attention from today's real problems? It is totally harmless because, by its very nature, Europe is beyond the reach of British politicians. It cannot backfire because whatever happens, the sinners are sitting hundreds of miles away from Westminster, in Brussels or Strasbourg. And it can take the blame for almost anything, from the present currency debacle to the growth of drug trafficking - what next, the spread of Aids? In short the Europe scarecrow is a politicians' dream.

Nor is this a strictly British phenomenon. Throughout Europe politicians have discovered the wonders of an issue on which they can make a vehement and vocal stand - for or against does not really matter - without this having the slightest consequence in the real world. The Danish politicians even took the gimmick one step further. After the no-vote in the referendum they organised over Maastricht, they can now have it both ways. On the one hand they can blame Europe even more vocally for all the ills in the world, particularly for Denmark's growing unemployment. On the other hand the referendum result provides them with a perfect joker to play at Europe's bargaining table, from which, of course, they never planned to withdraw. As to the Swiss politicians, the no-vote in their own referendum is unlikely to prevent them from seeking the best possible terms for the country's trade with the rest of Europe, whether the electorate likes it or not - and this can only mean some form of agreement with the EEC.

However, many British politicians are still unconvinced by the performance of their Danish and Swiss colleagues. Would a referendum be such a safe device, they ponder? After all they have the other example of France, where President Mitterrand engineered his referendum over Maastricht as a means to split the ranks of his opponents, both within and without the ruling Socialist Party, and to encourage realignments among politicians towards a future "presidential majority". Given the Socialist Party's appalling standing in the polls, Mitterrand had no reason to fear a display of division within it. But both Major and Smith have good reason to fear the same happening in their own parties. Of course these sophisticated calculations have nothing to do whatsoever with Maastricht and Europe. But who said the "Maastricht debate" had anything to do with Maastricht, or even with Europe for that matter?

In Britain, for the time being, Maastricht remains mostly a convenient smokescreen to blame difficulties on a conspiracy of the European Commission and EC rival states. Thus the currency crisis of Black Wednesday last September was laid at the door of Britain's membership of the Exchange Rate Mechanism (ERM). The culprit was said to be «an extraordinary turbulence » on the foreign exchange markets which, according to Lamont, had been orchestrated from abroad. A sinister role was assigned to the German Bundesbank which, by maintaining high interest levels and dropping hints about the need for a devaluation of the pound, had put the screw on the British treasury. But, significantly, official sources had nothing to say about the hundreds of millions netted by the (very British) City banks thanks to the speculative outburst.

The truth is Black Wednesday had more to do with the overall weakness of the British economy, the massive rise in unemployment and the growing budget deficit. Against such a background no wonder the market eventually showed the British pound overvalued. What is really surprising is rather that it did not happen earlier. Ironically, it was probably partly Britain's membership of the ERM which postponed the day of reckoning, by providing the pound with the temporary protection of stronger European currencies. And, in the end, Major's decision to withdraw from the ERM was rather due to the government's inability to abide by the minimum budget and financial discipline required by the ERM than the imaginary threat that the ERM was portrayed as being for the British economy.

The squabbling around Maastricht and Europe is a farce. But it is not an innocent one. For it is taking place on the background of the second most serious economic crisis experienced by the capitalist world this century. Most of the arguments which are being floated about may have to do with the rivalries between politicians. But all of them - from Lord Tebbit's championing of "British democracy" to Major's obsessional insistence on "subsidiarity" as opposed to federalism - involve whipping up nationalism as an antidote and an insurance against the possible risk of the crisis being blamed on the system itself and on its politicians. As past European history shows, in the context of a deep economic crisis, even the most farcical brand of nationalism can eventually turn into a deadly instrument in the hands of the capitalist class, yielding fascism and world wars. Were the world economic crisis to take a sharp turn for the worse, the on-going puppet show around Maastricht could contribute to create such a nationalist climate.

Very real stakes for the capitalists

There is much more, however, to Europe than the current storm in the politicians' tea-cup. The building of Europe as a single economic unit aims at providing an answer to some of the European capitalists' long-standing problems - the need to free Europe of one of the main obstacles to its economic development, that is its outdated national borders; the need for a "Europe without frontiers", at least as far as the movement of goods, services and manpower is concerned, in order to escape the limitations of the existing national markets, allow large-scale rationalisation in the sphere of production and unlock the door to a potential market of nearly 400 million.

On the other hand the same capitalists have been living for so long off the back of their national markets - and more importantly off the back and under the protection of their national states - that they are afraid of losing their old protection and of the consequences of real exposure to international competition. In most respects European capitalism is already much too senile to find the dynamism needed to face such risks.

This is nothing new. These contradictory aspirations account for the long drawn-out saga of European unification stretching back nearly half a century. The more and more urgent need for a larger market keeps clashing with the determination of each national bourgeoisie to safeguard its own patch. This has produced over 40 years of discussions, agreements (many of which are not respected), diplomatic incidents and retaliation. As the prolonged wrangles over Maastricht show, this is a story with no end in sight.

It is very unlikely that the European bourgeoisie will ever prove able to resolve these fundamental contradictions over Europe. It is even more unlikely given the crippling effect of the world economic crisis. At best any unified Europe which may eventually arise as a result of Maastricht, the Delors Two Package or Son of Maastricht will be a puny, sickly creature. It will be a compromise between the many different constraints and requirements imposed by the various national bourgeoisies, between their greed and their fears. It will include so many opt-out clauses and exceptions to the general rule that its operation is more likely than not to remain constantly threatened with paralysis. In any case it will be far from even fitting the needs of the capitalist system itself, that of unifying Europe in the way that, for instance, the United States of America was unified in the last century by the bourgeoisie.

Above all, such a unified Europe will be organised for the benefit of the capitalists, not in the interests of its inhabitants. To build a Europe in which the whole population could benefit from pooling together the best cultural, human and material resources available, will require a social revolution. Only a class that has no stake in maintaining the existing competitive economic and political strongholds can really free Europe, and the whole world, of its obsolete borders. And this class is the proletariat. The only unified Europe will be built by the working class taking power. It will be a socialist Europe.

So today, on the eve of the opening up of the Single European Market on January 1st 1993, how far are the capitalists really prepared to go to ensure the success of their venture? Will Maastricht be the launching pad for a politically united Europe, at least in capitalist terms? Or is the attempt going to peter out, as all previous attempts? And, whatever happens, what are the consequences for the European working class?

Trying to override the limitations of existing national markets

Since acquiring their modern shape towards the end of the 19th century, the states of Europe have pursued an endless rivalry. The rivalries of the four main players, namely the British, German, French and Italian bourgeoisies, shaped the history of Europe in the 20th century. Each has sought to grab the largest possible share of the market at the expense of the others.

Both world wars stemmed from these rivalries. But they resulted also from the inequality of the competition. In this respect Britain and France held a considerable advantage because of the colonial empires they could tap, while Germany and Italy had to make do with a smaller market even though their industries were younger and more dynamic. By reinforcing this inequality after World War I, at the Treaty of Versailles in 1919, the victorious powers (Britain, France and the USA) made it almost inevitable that there would be a second world war.

In fact World War I had an unexpected consequence for the European bourgeoisies. It brought the USA onto the world market in virtually every sector. While the Europeans were busy fighting each other, the American bourgeoisie rose to the first rank. A little later on Japan, the last and youngest of the big players, emerged. As a result of these two new competitors industrial competition was stepped up worldwide.

Because competition ultimately involves the need to reduce costs by introducing new technology, it requires an increase in the scale of production. It thus became less and less possible for European companies to rely on their own national markets to guarantee sufficient profits. In order to trade successfully they needed to be able to rely on a larger "home" market to which they would have full and free access. In the aftermath of World War II, with Europe relegated for a while to virtual dependence on the USA, such a "home" market, equivalent in size to that of the USA, became an urgent necessity for the European bourgeoisie if they were to regain their former position. Of course the continuing existence of national borders to protect national industries presented a major obstacle to the setting up of such a market.

Starting as far back as the 1860s with the introduction of the gold standard, measures have been taken to overcome the limitations of national markets. This was done, incidentally, by common consent, without so much as a treaty, in order to overcome the instability of currency exchanges. Other regulations from the same period, such as the setting up of international post and telegraph links, a standard rail gauge from the Pyrenees to the Vistula, and European railway timetables, all had the aim of promoting trade across borders.

Paradoxically it was the USA after World War II which gave the initial push for greater European integration. This arose out of Marshall Aid which was intended to set European states on their feet again and provide free circulation for American goods throughout Europe. Instead of concluding separate bilateral agreements with recipient countries, the USA insisted that these countries should coordinate their economic activities in the Organisation for European Economic Cooperation (OEEC launched in 1948) to maximise the benefits of the programme. It paved the way for the GATT agreements which made European states reduce tariffs and quotas on American goods. All this, together with the Bretton Woods agreement which had given the dollar world recognition as the dominant currency, helped cement America's economic domination over Europe.

The same period saw the birth of another instrument of the USA's imperialist policies in Europe, the North Atlantic Treaty Organisation (NATO) which was launched in 1949. The purpose of NATO, set up at the height of the Cold War, was to get all European governments to contribute to the financial effort needed to sustain a permanent military occupation of Europe against the USSR and the so-called "Communist threat". Of course NATO was also a major channel for American arms manufacturers to sell their deadly high-tech toys in Europe, which enabled them to control the European arms market for many years. In Britain, strident anti-communists like Ernest Bevin, Foreign Minister under the then Labour Government, agreed with the policy and kowtowed to Washington even if they would have preferred the Americans to foot the whole bill.

Meanwhile new attempts were being made at establishing closer links within Europe outside the military sphere. In 1948 a Congress of Europe gathered in the Hague, involving over 100 delegates from 16 European countries who discussed proposals like the creation of a European Assembly. Then, on 5 May 1949, one month after the signing of the NATO Pact, agreement was reached in London to set up a Council of Europe with offices in Strasbourg, the French frontier city lying on the border with Germany.

Despite the Council's stated aim of achieving "greater unity" among member states, too many vested interests stood in the way. Among the big players, France and Germany were the warmest supporters of unity. Understandably too, as their economies had been almost totally disorganised by the war and they had lost most of their pre-war share of the European market. To make up for the time lost and to boost their export trade in Europe without having to wait for their economic reconstruction to be completed, these countries needed some form of agreed sharing of this market between the European countries.

But not so for Britain, which, although not opposed in words to the principle of European unity, consistently vetoed all practical measures. For Britain held a relatively special position in Europe at this point. It was the only country in which industrial production had not just been maintained, but actually increased during the war. It had suffered relatively less from war damage and it had retained, if not its colonial empire as such, which was shattered by the war, at least its former colonial market and sphere of influence. Moreover, in the aftermath of the war, Britain had benefited from Germany's defeat by taking over parts of its previous markets, particularly in Portugal, Spain, Greece and Scandinavia. No wonder the British government was not too keen to make things easier for its competitors by accepting any alterations to this new deal.

If British distance towards greater economic union could be explained by its pretension to remain a major power, the same argument did not apply to many others who nevertheless failed to go much further. For instance Belgium, Holland and Luxembourg, whose exiled governments had discussed, as early as 1944, ways of harmonising their domestic economies with a view to forming a customs union, the future Benelux. In January 1948 the internal customs duties were supposed to be abolished. But by maintaining discriminatory excise duties, protectionism was retained. Customs and excise officials lost the customs part of their job description but retained their tax duties! While progress was slow in the Benelux, at least it was progress of a sort. But in Scandinavia four years of talks led in 1950 to complete breakdown. At the last hour, Norway pulled out of the proposed customs union - possibly as a result of pressures by Britain.

The European Coal and Steel Community - a rescue operation

With Britain continuing to cold shoulder Europe, a first attempt was made in 1950 to integrate Europe's industries without British participation. Proposals were drawn up by Robert Schumann, France's foreign minister, to place Franco-German coal and steel production under a common organisation (to be called the High Authority and with a Court of Justice to adjudicate disputes). Membership of this proposed European Steel and Coal Community was to be open to all European countries.

There were urgent reasons for such a scheme to be implemented. Both industries had in fact been experiencing acute difficulties in several countries simultaneously, namely an acute shortage of coal and an oversupply of steel. France was keen to secure a stable share of the European market for its less competitive industry. Germany, on the other hand, was keen to find a way round the restrictions imposed on its heavy industry since the end of the war, particularly, by regaining control over Saarland, a major coal and steel area still under French military control.

Britain, on the other hand, with its much larger coal and steel industries rejected any idea of membership. Britain's recently nationalised coal and steel industry, although bought from its former owners at a prohibitive price, was antiquated. It was still largely dependent on the maintenance of wartime regulations while its control of foreign markets was too fragile to stand up to a sharper competition. As usual though, British politicians wrapped their decision in nationalist arguments. Clement Attlee, the then Labour prime minister, using words that Major would not disown today, argued it was inconceivable for Britain to accept that «vital economic forces should be handed over to an authority that is utterly undemocratic and responsible to nobody. » But what Labour had really in mind was to avoid stiffer competition forcing them to step up the rationalisation and job-cutting programme they had already started in these industries. And it was no doubt much more acceptable for Attlee to expose the threat of an "undemocratic" authority sitting somewhere in Europe, than to admit the rather "undemocratic" way in which Labour was busy trimming down the industry in Britain, under the cloak of nationalisation, for the sole benefit of the capitalists.

The ECSC, bringing together the Benelux, Italy, France and Germany, proposed a five-year transitional period during which tariffs would be dismantled and trade restrictions removed. Thereafter a free common market was intended to operate. In fact national protectionism constantly interfered with the smooth running of the market. Thus by 1955 Belgian coal and Italian steel still enjoyed substantial protection against German imports. In France coal mines continued to benefit from subsidies that contravened ECSC rules and it was not until 1961 - ten years after the signing of the treaty - that France finally removed the licensing system which protected its market against coal imports.

Despite these setbacks production and volume of trade had shown significant increases by the late-50s, though how much was due to the ECSC and how much to the generally favourable trading conditions was harder to say. The fact was though that the completion of the first significant step towards closer European economic co-operation had taken no less than fifteen years.

The build-up to the treaty of Rome

Apart from the ECSC, various other areas within Europe's national economies could have been integrated on a sector by sector basis provided the will existed to do so. During the early 1950s, following the pattern of coal and steel, initiatives were proposed at the Council of Europe concerning transport, agriculture, health, the postal services and communications. But a European agreement, even of just a minority of states, proved elusive.

During this period, the only significant effort, and most prominent flop, was the aborted European Defence Community (EDC). The whole affair had its laughable side. Thus the Americans, under the pressure of increasing military expenditure as a result of the Korean War, demanded of its NATO partners that their military contributions should be stepped up. Otherwise West Germany should be rearmed. This received a cool response in Paris and a counter-proposal that a European Defence Community should be formed with an integrated command, leaving Germany on the sidelines. The scheme was accepted by the USA but not by the British who eventually refused to have anything to do with such a plan.

Those most in favour of the scheme were the European arms dealers and manufacturers. The post-war demilitarisation of Germany had eliminated their old German competitors. The threat of German rearmament was therefore a direct threat on their profits. Of course this was not the way politicians sold the EDC scheme to the electorate - rather they used nationalist arguments about the need to prevent Germany from raising its head again.

But given the impatience of the Americans, the delay could not be indefinite. The French dragged their heels as long as they could. Eventually under renewed US pressure and a crushing military defeat at Dien Bien Phu at the hands of the Vietnamese nationalist guerillas, they backed down and agreed to German participation in NATO. Thus collapsed the short-lived EDC project. It was eventually to be revived under another name in 1991, but this time, ironically, as a joint operation involving France and Germany only.

In March 1957, at last, a European Economic Community or EEC, was eventually established as part of the Treaty of Rome. It was the result of negotiations which had begun less than two years earlier at Messina in Southern Italy with proposals for «a fresh advance towards the building of Europe ». The mere fact that an agreement had been reached reflected a change in the world situation, with the relative expansion of the world market which had recently started. Increased competition was no longer seen as a problem as long as everyone had access to the larger market. In addition concessions and carrots were offered to everyone. Possibly the biggest winners in this respect were the French capitalists, in return for their agreeing a slow abandonment of protectionism. The other attraction to the French was the prospect of playing the dominant role in the proposed joint nuclear energy research programme within the framework of Euratom, a European organisation set up by the same Treaty. With nuclear energy predicted as the energy source of the future, France, the only country among the Six with a nuclear capacity, could expect to gain proportionately. In fact the joint nuclear research was quickly undermined as Germany and Italy embarked on their own nuclear programmes - in order to prevent France from becoming too dominant in the field!

But at this point, the new EEC was little more than a shell without much content, involving more statements of intention than actual commitments. But it was a framework of a kind, with some limited decision-making powers, within which more discussions were to be held, on a permanent basis. And this alone could be seen as a gigantic step towards a united Europe, at least compared with the un-ending squabbles of the previous years. In the end however, the relatively successful beginnings of the EEC were cut short. By 1966, following a series of crises, the Council of Europe decided that all decisions would have to be unanimous. As a result very few decisions were ever made...

Agriculture - rationalisation for the benefit of the big players

In 1968, a decade after the Common Market had come into existence, all internal tariffs were abolished and a single external customs duty was enforced. This was a boost for some of the biggest operators who were able to coordinate marketing at EEC-wide level. However for the most part respective national bourgeoisies were able to shelter behind a battery of national rules on safety regulations and production requirements. This effectively kept out foreign competition as it has continued to do so, despite attempts at EC standardisation.

In the same year the principle of the free movement of labour was also introduced. But the effect of this measure was very slight especially as professions and state employees were excluded. On the one hand the closed ranks of the professional middle classes were unwilling to allow foreign competition. On the other hand state "security" would admit of no dilution. There was no saying what these foreigners might get up to, even if they were part of the same EEC!

However 1968 did see the introduction of one measure which was to become synonomous with the Common Market in many people's minds. This was the Common Agricultural Policy (CAP). This originated primarily from the needs of the big food-processing companies. In the same way as Europe's industries were too small and dependent on national markets to be able to compete with US counterparts, so in the sphere of agriculture. In addition, agricultural techniques and output were rather outdated. As a result agricultural prices were high, much higher than their US equivalents. This put the powerful food processing industries and farm product exporters at a disadvantage. What they wanted was access to cheap agricultural products whether produced at home, elsewhere in Europe or outside Europe altogether.

In the late 60s European agriculture was a maze of national, and even, often regional, regulations and mechanisms aimed at making up for the wide differences in productivity and mechanisation between regions and farming activities. To make matters worse, state subsidies were often determined by circumstancial political reasons - for instance to gain votes at a time when the farmers' vote was still important in most countries - rather than any rational plan. Incentives for modernisation were either non-existent or inefficient. With few regional exceptions the result was an increasingly costly agriculture with production stagnating.

In many ways the CAP was the implementation at the level of Europe of a policy that no national state, with the possible exception of Holland, had the nerve to implement by itself for fear of an electoral backlash. It created an extremely complicated system of subsidies and compensations. The aim was to even out differences by providing incentives for those who could afford to modernise while forcing out those who could not. A comprehensive system of price-fixing was instituted providing artificially a price for every agricultural product, not unlike what was being done at that time in the USSR. The so-called "market" prices were then defined within a tight band around the official price. In addition imports were taxed so as to be brought up to the same price level as European prices while export companies were offered subsidies to be able to match prices on the world market.

To absorb overproduction without risking a collapse of the market, each government undertook to buy up a pre-determined share of the surplus. Hence the origins of the food mountains. To prevent uncontrolled production, long-term plans were made to phase in a system of incentives to reduce production.

The main beneficiaries of the CAP were firstly the big farmers who netted large subsidies as a result of their ability to invest in modernising their farms; secondly, food giants like Allied-Lyons, Unilever, Nestle and BSN that were able to reduce costs enough to become competitive on the world market against their US rivals. The main losers were the smallest farmers who were put out of business and often joined the ranks of the working class. In the two decades that followed well over 5m farming jobs disappeared.

As productivity increased, so did agricultural production. But the market, and its ability to absorb this increase, remained virtually unchanged leading European food mountains to reach gigantic proportions, just like in America. Very early on the CAP was therefore extended to include compensation for not working the land and not raising cattle - similarly the latest set of measures adopted as part of the CAP in 1992 will result in 15% of the existing farmed land being set aside in Britain.

As to prices, they did go down enormously at production level. Though very much less so for the consumer. Since the early days of the CAP, prices have increased owing to the mushrooming of intermediaries between the farmer and the consumer. For instance, next year, while the price of wheat is expected to fall by 30% in Britain as a result of productivity increases, the price of bread is predicted to go down by at most 4%.

Ever since the introduction of the CAP there have been on-going demonstrations by farmers, similar to those staged in the latter part of this year by French and German farmers. These have often brought together smaller farmers threatened with bankruptcy; but also bigger farmers seeking to increase their pickings from EC subsidies. Each time Brussels has received the full wrath of the demonstrators.

Yet, in fact, the on-going rationalisation of agriculture has little to do with the EEC as such. It is not different to that which has been imposed by the American state on its own farmers, ever since the depression of the 1930s, nor even to that imposed worldwide by the growth of industry on craftsmen back in the 19th century.

Above all, the real problem is not rationalisation as such. After all who would really want to be a poor farmer having to work up to 18 hours a day, if an alternative existed? And does not increased food production show how rationalisation could solve the worldwide food problem? The problem lies with such rationalisation being carried out on a capitalist basis. Thus a relative handful of capitalist operators and farmers make fortunes while smaller farmers are driven off the land in droves with no other prospects. So food surplus is stockpiled and eventually rots or is burnt: not because nobody is hungry anymore but because those who hunger have no money to pay for it. Unlike the claims of the demagogues trying to buy the support of the small farmers by fuelling opposition to Europe, in the end this has nothing to do with Brussels but everything to do with capitalism.

Europe and the crisis

One of the main functions of the modern capitalist state is to protect the interests of the national bourgeoisie from external threats, to provide it with the ways and means of making profits and to cushion it as much as possible from the ups and downs of the world economy. Each state has its own infinite variety of direct and indirect subsidies to its national companies. They all maintain permanently an enormous and largely artificial market for their national companies through state procurements. For example, in 1990 these state procurements amounted to 15% of the combined GDPs of the EC member states. And of course, they all use their own laws as a means to protect their national companies from foreign competition. The capitalist state is therefore always protectionist. But in a period of crisis, such as the current one, protectionism becomes rampant. How this has worked out in practice over the past twenty years makes a gang of squabbling schoolboys seem virtuous by comparison.

One of the most effective devices for slowing down imports from EC neighbours has been to implement strict VAT compliance. The twelve EEC countries have between them ten different VAT standard rates and six different luxury rates. So the grounds for customs control are numerous. This has generated a huge paper bureaucracy considerably slowing down the circulation of goods. Despite the creation of a single European market next year, VAT rates are not due to be standardised until 1996.

However even assuming that the VAT hurdle has been successfully negotiated, our hopeful exporter is not out of the customs area yet by a long shot. A whole bureaucracy has been created to enforce rigourously national norms and standards. The intention of the Common Market pioneers to create European standards never got very far. In 35 years since 1957 only 130 norms have been standardised across Europe, mainly because unanimity was required on the Council of Ministers for a proposal to become law. During the same period 8,500 norms have been adopted by British Standards, with 13,000 in France - a modest record compared with Germany's 19,000 norms...

Germany has used a 16th century brewing "Purity Law" to ensure that foreign beers with "impure" substances are banned from German territory. Belgium, on the other hand, has banned German-made margarine on the grounds that Belgians might confuse margarine with butter. Over in Ireland all foreign plastic teats were banned which could not resist the test of a powerful steel jaw...

As the economic crisis deepened so the guerrilla warfare intensified. Quality controls became a favourite device. State agencies ordered rigorous inspection of products with a limited lifespan. For instance fashion fabrics were sent away that had gone out of fashion by the time the tests had been completed. To protect the Danish fishermen, Danish customs kept French oysters over Christmas for inspection. By the time they were released they were certainly only good for the dustbin. The longest running saga was probably the jam war which rumbled on for years before the 1988 truce regulated the precise permitted amounts of pectin, citric acid and fruit across the continent!

Other delaying tactics include the limitation of locations where particular commodities can be cleared by customs, thereby creating incredible bottlenecks. Thus all Japanese video recorders had to pass through customs at Poitiers, a small town in Central France. This undoubtedly left Thomson, the French state-owned video manufacturer millions better off.

The Single European Act

The Single European Act goes back to 1985. Its initial draft laid out plans to abolish EC frontier posts, harmonise product standards and open up the markets for public procurement to foreign competition. It was the logical follow-up of all previous attempts to open up markets to genuine competition. The Act is set to begin on 1st January 1993. In theory it means that it should be as easy for a British company to trade in Italy as, say, to trade in Kent. In fact leading European businessmen played a big role in its drafting. They were worried about Europe's lag in high tech investment. Only by creating large companies which operated at the level of Europe would it be possible to achieve the economies of scale to compete with the Americans and the Japanese.

In preparation for 1993 Europe has seen a spurt of cross-border deals and mergers. For instance Siemens of Germany and Britain's GEC jointly acquired Plessey, while GEC merged part of its production with Alsthom of France. Britain's Metal Box has merged with its French opposite number. And so on. In 1988-89 there were no less than 492 such deals. 90% of these mergers involved firms with combined sales of over £800m. Altogether these merged firms had sales of at least £400bn - or not far short of Britain's Gross Domestic Product for the same year.

Whether this will produce the calibre of companies necessary to match the foreign competition is still unclear. In the past many of these companies have had cosy relations with their governments rather in the way, for example, Renault and British Aerospace have grown fat over the years. Both Renault and BAe receive massive orders from the French and British states respectively, on top of billions of cash subsidies.

Even if such large state subsidies are becoming sparser as a result of pressure from the European Commission, they could be replaced by European subsidies which the EC is providing for research into those high-tech areas where Europe lags behind. These include JESSI for advance microchips, RACE for telecommunications and ESPRIT for information technology. Between 1990 and 1994 companies will receive nearly £4.8bn from the EC plus extra funding from member states. Already there have been complaints from the big players that such funding is inadequate.

As far as state purchasing being opened up is concerned, the current spate of mergers could provide an excuse for keeping things more or less as they have always been. By merging, conglomerates are under no compulsion to start rationalisation or restructuring. Instead there can be a division of spoils with the British partner picking up British government contracts and the French partner picking up those of their government. This could explain the link up between the French Alsthom which makes the famous TGV High Speed Rail and the British GEC which would qualify for the British share of the orders being generated by the Channel Tunnel.

In fact, although much of the thinking behind the Single Market is aimed at meeting American competition, such thinking becomes increasingly meaningless in today's world of multinationals. In Britain, for instance, two-thirds of foreign investment is American and in France 35% of employment in industry and 44% of profits is created by US companies employing 20 or more employees. It could even be said that the most "European" companies are those American companies like Ford, General Motors and IBM which exist practically everywhere in Europe...

Finally, as 1st January 1993 approaches, a whole series of exceptions and exemptions have been worked out which will help protect certain interest groups for several more years, if not for much longer. For instance member states, having previously agreed to get rid of border checks on January 1st, have now decided to keep them for two more years. The British customs, having gone along with travellers merely "waving" their passports as they entered the country, reinstituted passport inspection a couple of months later. In the case of duty-frees and duty paid allowances, it was the airports, ferries and travel operators that complained about their likely loss of revenue. If the new ceiling of 90 litres of wine, 110 litres of beer and 800 cigarettes seems a generous quota for personal consumption where duty has been paid, it is nonetheless illogical that there should be any restrictions in a so-called Single Market. But for the time being this market remains single only in name.

What's new in the Maastricht treaty?

Detractors of the Maastricht treaty have painted it as the last stop before direct rule from Brussels. The reality is rather different. In theory, for years real decision making power, at the level of long-term strategy at any rate, has lain with the Council of Foreign Ministers who represent the interests of the various member states. The fact that they so frequently quarrel - leading to all-night sessions, bleary-eyed press conferences the next day and few decisions - is a true reflection of the actual power of the Council.

The treaty of Maastricht is unlikely to change that very much. However it does attempt to address the present irrelevance of the European Parliament where MEPs languish in well-paid comfort complaining that no one ever listens to them. National parliaments would be encouraged to play a greater role in EC affairs, there would be more liaison with the Euro-Parliament and as more and more legislation becomes based on euro-guidelines, as intended, for instance, by the Social Chapter, the Euro-Parliament would pass laws which applied all over the EC. But all this is couched in extremely cautious and noncommittal terms. All sorts of exemptions will enable countries to opt out of their "duties".

As to the more liberal aspects of Maastricht, the Social Chapter (from which Britain has received an opt-out thereby qualifying it for the title of "sweatshop of Europe") sounds more grandiose than it is. It was watered down so many times, partly in the hope that it would prove acceptable to the British government, that little remains with regard to wages, working hours, health and safety and job security. In the event of workers' complaints there is no easy redress but recourse through the European courts in a procedure which will take years. On the other hand national governments have been quick to seize on an aspect of the Social Chapter, namely equal treatment for men and women at work, to impose reductions in women's working conditions. Thus the British government plans to raise the age of retirement of women from 60 to 64, while only reducing male retirement by one year. And in France the government is in the process of unbanning nightwork for women. Finally, though the right of EC citizens to work anywhere in Europe is confirmed (but largely theoretical due to unemployment), the architects of Maastricht are busily slamming the door on the right of anyone to work in Europe who originates outside.

The other important change proposed by Maastricht is the timetable for achieving a European currency unit (the ECU). On first sight such a measure might seem to be plain common sense. After all when consumer organisations made an experiment in late 1991 they found that currency exchange ate away most of the euro-traveller's spending money without him in fact spending a penny. This apparent impossibility was achieved by travelling through all twelve EEC countries in turn and each time changing all of one's money into the local currency. £1000 was only worth £400 by the time the traveller out of Heathrow touched back down again two days or so later. The difference was pocketed by the exchange dealers.

But what may seem so logical to the traveller who wants to make his holiday money stretch further, is not actually what is intended by the introduction of the ECU. At least not until the far-flung future. The plan is really designed to create a single European financial market to rival North America's and Japan's. This electronic ECU will favour the big banks and the multinationals. On the other hand capitalist laws being what they are, such an economic union requires at least the same budgetary and financial discipline as the ERM. This means enormous pressure on the more troubled economies like Britain and Italy to bring their budget deficits, trade imbalance, inflation and so on into line with the strongest economies. It is one reason why there is currently so much resistance to a timetable for completion of monetary union. The other resistance comes from the banking system itself which would rather have the best of both worlds - the profits from currency trading as well as the dividends of a much larger financial market based on the ECU.

British capitalism: a "special" case?

The British bourgeoisie's postwar reluctance towards a more united Europe was due to the particular interests of British capitalism. First and foremost, the British bourgeoisie tried very hard to regain some of the ground lost since the "good old days" when Britain was the world's most powerful country. So, after 1945, its policies were entirely focused at superseding Germany and France as the dominant industrial and financial power in Europe. This could only involve setting itself apart from the rest of Europe and using all the resources of its former colonial and financial power to isolate its competitors. So Britain turned down the possibility of joining the Coal and Steel Community, cold-shouldered the proposed European Defence Community and was a spectator at the signing of the Treaty of Rome. However only a few years after the formation of the Common Market, prime minister MacMillan was filing a British application to join. What had changed?

The answer seems to be that the creation of the Common Market more or less coincided with the beginnings of the collapse of the Commonwealth as British capital's private playground. Part of the price paid by Britain to the USA for Marshall Aid was to allow the dollar to be used as well as sterling in the British Commonwealth. As a result non-British and particularly US goods were beginning to displace those "made in Britain" all over the old empire. All the more so as the postwar nationalist upsurge throughout the Third World resulted in Britain loosing political control over most of its former colonies. As to the richer countries of the Commonwealth - Canada and Australia in particular - they were finding the USA increasingly more attractive than "old" Britain.

The British bourgeoisie had therefore hardly any choice but to turn to Europe, even if this meant making compromises. Already, only two years after the Treaty of Rome, Britain had played a major part in setting up the European Free Trade Association (EFTA) which planned a free trade zone in seven West European countries that had not joined the Common Market. But, Britain apart, these were all small countries (Scandinavia, Austria, Switzerland, Portugal and Ireland) existing on the edge of Europe. They were not comparable to France, Germany or Italy.

But the British had dithered for too long. For several years France had had an old adversary of Britain as president - General de Gaulle. He understood very well that the British ruling class were not going to abandon their old ties with the USA and the Commonwealth, especially as France was busy preserving its special relationship with former African and West Indian colonies. The British would also want to bend the EEC's rules to have the best of both worlds. Britain would be the "Trojan horse" for the USA to dominate Europe.

Although other members were not enthused by de Gaulle's "Non", they were not going to challenge it, bearing in mind France's crucial role at the centre of the Six. So Britain was forced to stay out in the cold for another decade. By then the first oil crisis had begun to restrict the world market and increased the pressure for European consolidation. This finally paved the way for British membership in 1973, along with Ireland and Denmark.

After two decades of EC membership Britain has earned the reputation at Brussels for dogged self-interest. This has sometimes driven the community towards a near-deadlock. It led to renegotiation of the accession treaty under the Wilson government in the mid-70s, confrontations between Thatcher and the rest of the community in the 80s until Britain's contributions were reduced and, moving up to the present, repeated disagreements over the build-up to Maastricht. However Britain's basic membership, from the point of view of the politicians and big business, has never been in doubt. So why all the grumbles and John Bull-style petulance?

In fact the problem all along has been the underlying weakness of the British economy. With a Gross Domestic Product which is only half the size of Germany's and three-quarters that of France, it is quite simply no longer in the big league although no British politician dare admit that. On the other hand Britain is too large and too important a financial partner to be written off by the others and it is a 60 million strong market. Hence the concessions to Britain's "special interests" made time and again by EEC politicians.

At Maastricht special opt-outs were negotiated for Britain in two of the three main areas, namely the economic and monetary union and the Social Chapter. Britain will go along with moves towards economic convergence (though even that may be postponed in the aftermath of Black Wednesday) but will be under no compulsion to join the single currency projected for 1999. As far as the Social Chapter was concerned, Thatcher would have nothing of it insisting that British employers and employees should «settle employment conditions themselves ». We already know what this conceals: British workers have the longest working hours in Europe for some of the lowest wages.

Europe - a threat to the working class?

Opinion polls have consistently shown that the EC's 375m inhabitants were extremely hazy about the contents of the Maastricht treaty's 61,000 articles. And though referenda have been carried out in Denmark, Ireland and France, it was the general state of the economy and the politicians response that loomed larger than the Maastricht fineprint.

In fact as far as European big industry is concerned, Maastricht ratification is less important than the Single Market. As we have seen, the new Europe that is likely to be produced will be a far cry from the unfettered market some would like to see. But it offers good prospects to the majority of big business. The spate of mergers and acquisitions has gone so far that in reality a single capitalist Europe already exists. The 1st January 1993 will merely formalise these links. These will not be jeopardised by any referendum result.

For the bosses Maastricht and the Single Market provide a ready-made excuse for any number of cost cutting measures. They can be blamed directly on European competition or on Brussels legislation, such as that insisting on equality of exploitation for the sexes. But at the end of the day the real problem for workers, as for the small European farmers, is the operation of capitalism itself. It is the bosses' insatiable lust for profits, not the Brussels bureaucrats, which is forcing people out of work. If Europe did not exist, some other excuse would have to be invented.

Despite this, large sections of the Left have in recent months joined forces with the Far-Right to oppose the Maastricht treaty. For instance, readers of one British Far-Left newspaper, were met with a massive headline «Maastricht, Non » on the eve of the French referendum. "Hard-Left" Labour MP, Dennis Skinner loses no opportunity to stir up anti-German feeling. This rallying of the forces of the Left against moves towards European integration is nothing new in Britain. Throughout the period leading up to Britain's joining in 1973 and for many years afterwards, it was the policy of the union leaderships who were using the supposed European threat to jobs as a scapegoat for the increasing attacks of employers on the working class and their own failure to lead any fightback.

Such a policy ignores the reality of the crisis. Unemployment has been growing worldwide for years due to the efforts of the capitalist class at maintaining and even boosting its profit despite a stagnant world market. Saying "no" to Maastricht and to Europe amounts to saying "yes" to protectionism. It means going along with the blackmail already used again and again by the bosses which says that workers should agree to sacrifices, by earning less and paying more, in order to help out "their" national economy against foreign competition. It amounts to doing the bourgeoisie's dirty work.

Such a policy may make sense for reformists like the Left in the Labour Party or the Stalinists, who cling to the illusion that capitalism can be somehow reformed. Nationalist calls for protection hark back to the supposedly good old days. This conveniently forgets that that era was one of colonialism and captive markets and has disappeared for ever. Arguing such a line makes no sense for revolutionaries who know that capitalism has its own logic which, whatever happens, within or without an EEC, with or without political integration or the Single Market, aims at making the working class foot the bill of the crisis. The only solution for workers is to get rid of the whole profits-based system. Capitalism must be destroyed, not patched up.

Nationalism versus internationalism

Given the scale of the crisis any number of events could lead to an intensification of nationalism in Europe. Even without any economic catastrophe to spark it off, there is plenty of evidence that whole social layers today could turn to nationalist demagogues out of economic frustration and lack of perspective. And successes by nationalist demagogues could set in motion a process of furious overbidding which could then escalate in a dramatic spiral. For instance the Lombard League in Italy has a hare-brained programme which would hive off the industrial north of Italy from the less-developed south. This does not make sense, not even in capitalist terms, as Italy has been run as a single country for over a century. But in the short space of 6 months tens of thousands have flocked to join the League's ranks, while the League has become the largest single party in several Northern cities. And while these successes are still solely in the electoral field, they could also become the basis of a social mobilisation against Southern Italian workers first, and then against the working class as such.

Today the world market is infinitely more integrated than it was fifty-odd years ago on the eve of World War 2. In today's European motor car you are likely to find components made in half a dozen countries. Were the government, say, to put import quotas on luxury German cars like BMW in order to give Rover and Jaguar a boost, they would immediately harm Oxford Automotive Exhausts which numbers BMW as its biggest customer after Rover. Of course such action would immediately invite retaliation and the dangers of a full trade war.

The ultimate logic of protectionism is complete self-sufficiency. This was the path taken in Germany under Hitler. It meant the development of costly import substitutes which was fine for the bourgeoisie who had put Hitler there but was paid for by workers in reduced living standards, not to speak of concentration camps for political opponents. In the end it provided no solution for a capitalism which had outgrown the national market, no escape from world war.

The fact that almost half a century after the last war the European capitalist class has only been capable of coming up with a series of half measures to overcome the limitations of national markets is an indication that capitalism cannot meet the needs of the world economy today. Thus even unification in the sense of the USA is beyond the capacity of today's politicians in Europe. And even if European integration was much more advanced it would probably only hasten the looming trade war with Japan and North America.

With the world beginning to slide into a Thirties-like situation, we are at a turning point. Sitting back and watching the fumbling attempts of the bourgeoisie's politicians to grapple with the insoluble can only leave the working class hostage to fortune in an endgame in which it will have to pay the ultimate price.

Alternatively the working class can use its skills and determination to try and change the whole basis on which society is organised. Western Europe with its 400 millions is the richest part of the planet. It does not take much imagination to imagine how the wealth of the European bourgeoisie could be used for the benefit of the whole population if the present dead hand of capital were removed.

Europe, birth-place of capitalism, has been the cause of two world wars this century. Its bourgeoisie has exported capitalism to every country on the planet in its lust for profits. Despite this, its intellectuals speak proudly of European "civilisation". But Europe is also the cradle of the world working class where generations of class fighters have sought to overthrow the power of capital.

It was the Russian Revolution in 1917 which opened a new perspective for the world working class in the years that followed. Of course this perspective did not go far or deep enough - in the end the bourgeoisie was able to recover. But today it would not take much for a revolutionary working class in Europe to implement such a policy for a United States of Europe. If somewhere in Europe the working class seized power, the revolution would spread quite naturally.

Today all the economic preconditions for a united Europe have already been achieved. What is preventing this coming about is the ceaseless competition between a relative handful of European bourgeois who exploit the rest of us. For the European working class those limitations do not apply. If the bourgeoisie is overthrown, competition will itself be removed. This could renew the perspective for humanity which was provided in 1917. Creating a Europe without frontiers will be the indispensable first task of the proletarian revolution, the first stage on the road to a single unified world made for all women and men.