The Man Who Knew All Along What the Shot in the EU Was

Of God knows how many thousands of articles written about the crisis in the EU, nothing approaches the sharpness and clarity of Nasser’s 6-part series on the subject. It is impossible to understand the goings on in the continent without reading it. In the very first post, he nailed the issue:

• The problem was the falling rate of profit in the advanced European countries. Profit generates the “wealth”. So, the problem was the decline of relative wealth in industrial Germany, France and Italy.

• (The overall wealth might fall but share of a particular group could rise if through socio-political means such as taxes, they could raid other groups' shares. So there is no contradiction in saying that the overall level of wealth has fallen but the absolute number of millionaires and billionaires has risen)

• The rate of profit could increase: i) if the labor produces more with the given level of wages; or ii) the wages are cut for the same level of production.

• The EU was created to lower the wages in all Europe by bringing the workers from the “periphery” low-wage countries such as Greece, Hungary, Portugal and Ireland into the pool.

• That was the main reason for the creation of the EU. All else is secondary.

• The plan is now unfolding, only that the crisis is used to lower the wages even in the industrial countries.

Financial Times, July 9, 2012, under the heading Call for French business boost

French business urgently requires shock treatment to cut labour costs and boost its flagging ability to compete on international markets, top economists and business leaders have warned François Hollande.

The “Economic Circle”, a non-partisan group whose members include those working in institutions such as the European Central Bank as well as advising the government itself, said France required a “supply shock”.

“The immediate difficulty is above all the weak profitability of the great majority of businesses which inhibits their capacity to innovate, to export, to invest and to create jobs,” the Economists’ Circle said. “[We must] improve this profitability by a massive transfer of social charges on to [tax].”

Pierre Moscovici, finance minister, told the weekend conference that tackling labour costs by reducing social charges was “not a taboo” and suggested that if a consensus was reached in the social partners’ discussions, some action might be taken.

You note that:

1. The “immediate difficulty is above all the weak profitability of the great majority of businesses”. The geniuses do not know it, but the root of that “difficulty” is the fall in the rate of profit.

2. Look at the agenda of the conference that the newly elected socialist president has set. It includes “the economic and social issue”, including labour costs, employment terms and pensions. This one tops the “heads I win, tails you lose” proposition by one. “Labor costs” means cutting the wages. “Employment terms” means throwing the workers out at will and without much of a severance. “Pensions” means cutting their retirement benefits and making them work longer.

3. The finance minister is being a tad disingenuous, not to say outright coy, when he says that “tackling the labour costs [is not] a taboo”. It is more than a not-a-taboo. It is the agenda.

That’s what’s coming in France, the path set by the donkey that is speculative capital. Whether its palan is called Sarkozy or Hollande matters not a bit.