When Europe went bankrupt

(originally published in Major Card)

Right at the beginning of Vargas Llosa's masterpiece,Conversations in the CathedralA Peruvian man asks his friend:

And when did Peru mess up?

The conversation assumes that Peru has messed up, is messed up. The question is when, from when, to try to understand why and for whom.

Today it is widely accepted that Europe is in trouble, that it has ruined itself. There are different diagnoses, some attributing it to the laziness of those in the South, that the Mediterranean air and the siesta have made them live beyond their means (something we heard for so long in Latin America). Others, due to the rigidity of the German Central Bank, which dominates the troika and imposes itself on other economies.

The remedies differ slightly, but at their core, they're all bitter. Because everyone accepts that Europe has messed up.

What is a phenomenon of immense proportions represents a setback in civilizational dimensions, because the European welfare state was a solidarity-based construction that had become a global benchmark.

Ending it thus implies a return to the times of social exclusion and abandonment that Europe had left behind.

When did Europe fall apart? Could this moment be pinpointed to the outbreak of the so-called First World War, the most savage war in the midst of what is considered the most civilized world, when the inter-bourgeois contradictions that Lenin predicted would dominate world history at the dawn of the new century were dramatically confirmed?

It would also be possible to locate this moment in the division of social democracy between warmongers and pacifists, with the Second International officially abandoning the pacifism and internationalism that had characterized the left until that moment, opening wounds that would never heal.

It would also be possible to pinpoint the moment when Europe stumbled, when it spawned monstrous fascist and Nazi regimes within its borders and was unable to defeat them, having to resort to external support.   

But none of that would explain the current turnaround, because after all that, Western Europe was able to build welfare states, which, over three decades, were one of the most generous social constructs humanity had ever known.

It was then, after that moment, that it becomes necessary to pinpoint the moment when Europe made the turn that led it to its current predicament. I would locate that moment in the transition from the first to the second year of François Mitterrand's first government in France. The victory, finally so celebrated, of the French left in the post-war period afforded Mitterrand a first year of government focused on nationalizations, the consolidation of social rights, and a solidarity-based foreign policy oriented towards the Global South.

But the world had changed; Teagan and Thatcher imposed a new model and a new international policy, with France suffering the consequences of this new scenario firsthand. One possibility was for France to strengthen its alliances with the periphery, with Latin America, Africa, and Asia, leading the countries that were suffering most severely from the upheavals of globalization. The other, which prevailed, was the radical change in orientation of the French socialist government, adapting to the new neoliberal wave in its own way, joining as a subordinate ally to the bloc led by the US and Great Britain.

This shift, which consolidated the new neoliberal hegemony on a global scale, ushered in a model of governments and social democratic forces assimilated to the hegemony of models centered on the market and free trade.

Spain under Felipe Gonzalez quickly embraced this new social democratic orientation, a move followed by other governments, paving the way for this path to extend to countries in Latin America such as Mexico, Venezuela, Chile, and Brazil, among others.

This new political line already pointed towards the condemnation of the welfare state – a model that contradicted the Washington Consensus, centered on social rights – and which sooner or later would make Europe pay the price. European unification itself took place under this orientation, with national consultations focused not on the political unification of Europe, but on adherence to the creation of a single currency, imposing a fundamentally monetary character on this unification.

The crisis that began in 2008 affected a Europe that was already extremely weakened, because it was immersed in neoliberal consensus, which prevented it from reacting as Latin American governments did. Latin American governments acted inspired precisely by the regulatory models that had been hegemonic in Europe for three decades, reacting positively to the crisis.

The rest is the current state of Europe: the destruction of the welfare state, adding fuel to the fire, and taking neoliberal remedies for a neoliberal crisis that only deepens and prolongs itself.