Money over democratic politics?

The growth of Prussia and the post-Maastricht unification of Europe

Prussian economic hegemony

Yanis Varoufakis draws attention to the way Prussian economic hegemony in the 19th century was the key driver in the formation of the German Empire and echoes the process of German hegemony in the eurozone now:

In 1993, with the Maastricht Treaty fully operational, the dominant storyline was that German reunification, following the fall of the Berlin Wall, was just one part of a pan-European unification project that was to begin in the realm of money: the eurozone. (page 212)

Money over democratic politics!

Concerns about German dominance, which President de Gaulle, Margaret Thatcher and others had harboured and which had hung in the air in France and elsewhere for years, were now dismissed on the basis that East and West Germans wanted to be re-united only while losing themselves in a border European union. (page 212 continued)

Democracy and subsidiarity

Subsidiarity was much discussed in the early 90's when the LODE project began, especially in the context of the Maastricht Treaty.

Subsidiarity is a principle of social organisation that originated in the Roman Catholic Church. In its most basic formulation, it holds that social and political issues should be dealt with at the most immediate (or local) level that is consistent with their resolution. 

The Oxford English Dictionary defines subsidiarity as, "the principle that a central authority should have a subsidiary function, performing only those tasks which cannot be performed at a more local level." 

Subsidiarity is a general principle of European Union law and it, coupled with another Christian democratic principle, sphere sovereignty, led to the creation of corporatist welfare states throughout the world.

In Neo-Calvinism, sphere sovereignty, also known as differentiated responsibility, is the concept that each sphere (or sector) of life has its own distinct responsibilities and authority or competence, and stands equal to other spheres of life. Sphere sovereignty involves the idea of an all encompassing created order, designed and governed by God. This created order includes societal communities (such as those for purposes of education, worship, civil justice, agriculture, economy and labor, marriage and family, artistic expression, etc.), their historical development, and their abiding norms. The principle of sphere sovereignty seeks to affirm and respect creational boundaries, and historical differentiation. 

Sphere sovereignty implies that no one area of life or societal community is sovereign over another. Each sphere has its own created integrity. Neo-Calvinists hold that since God created everything “after its own kind,” diversity must be acknowledged and appreciated.  

The concept of sphere sovereignty has become a general principle in European countries governed by Christian democratic political parties, who held it as an integral part of their ideology.

Varoufakis continues his analysis:

Jaques Delors, the former French finance minister and driver of the eurozone in his capacity as president of the European Commission, made a big song and dance about the need to limit the influence of large countries through the principle of subsidiarity: the idea that realms of policy that could be dealt with reasonably competently at the level of the nation state should be delegated to the national governments to design and implant for themselves. Decentralisation was to be the brake on German and French domination of the union.

At the same time, plenty of commentators were drawing parallels between European monetary union and the manner in which Germany itself had unified - not in 1991 but over the course of the nineteenth century. Prior to 1833, what is Germany today encompassed a multitude of different sets, city-states and jurisdictions, each with its own standards, time zone and currency. Tading across these multiple borders was nightmarish and the reason that Germany was so far behind Britain in terms of industrialisation, innovation and governance. German unification began with a customs union known as the Zollverein, an 1833 agreement between the various territories promoted as a first step towards freer trade and much needed economic integration.

One shrewd observer at the time was deeply concerned with the Zollverein. Chancellor Klemens von Metternich of the Austro-Hungarian empire was a key figure in the so-called Holy Alliance, the league of Austrian, Prussian and Russian monarchies whose common purpose was to impede any political movement and prevent any change that might jeopardise the established scheme of things. Metternich could not fail to notice that the Zollverein treaty had been driven by Prussia, the dominant German kingdom, and excluded the Austro-Hungarian empire. just as Beijing today sees as a major threat the American drive to forge a Pacific-Basin free trade zone that excludes China in the form of the Trans-Pacific Partnership (TPP), Metternich too felt that Prussia was up to mischief. (Page 213)

Something Donald Trump did right?

An update on TPP: 

President Trump signed a Presidential memorandum to withdraw the U.S. from the TPP on 23 January 2017. U.S. Senator John McCain criticized the withdrawal, saying "it will send a troubling signal of American disengagement in the Asia-Pacific region at a time we can least afford it." U.S. Senator Bernie Sanders applauded the move, saying "For the last 30 years, we have had a series of trade deals[...] which have cost us millions of decent-paying jobs and caused a ‘race to the bottom’ which has lowered wages for American workers."

Varoufakis continues, quoting Metternich's letter to his emperor:

Within the great Confederation, a smaller union is being formed, a status in state in the full dense of the term, which will only too soon accustom itself to achieving its ends by its own machinery and will pay attention to the objectives and machinery of the Confederation only when convenient . . . [O]n every question that comes before the Diet [the Confederation's parliament] (and not only commercial affairs) [it] will act and vote as one according to prior arrangements. Then there will no longer be any useful discussion in the Diet; debates will be replaced by votes agreed in advance and inspired not by the interests of the Confederation but by the exclusive interest of Prussia . . . Even now it is unfortunately easy to determine in advance how these votes will be cast on all the questions where the interest of Prussia conflicts with that of the federal body.

Following this quote of Metternich Varoufakis shares with his reader the sense he had of finding himself in an almost identical situation in dealing with the deliberations of the Eurogroup in 2015, when he was finance minister of a Greek government trying to prevent a doctrine of austerity being imposed upon his small country.

Metternich could have been writing about the manner in which matters of crucial importance for various eurozone member states, especially those with large deficits and unbearable debts, were settled on the basis of modern Prussia's 'exclusive interest'.

He then sets out how this was a bizarre echo of what had happened in the process of the process leading to the unification of Germany in 1871, where Prussia persuaded the smaller German states in the German Confederation to enter into new arrangements in the Zollverein because they would be better off in the union, and where they would have say in matters as they arose.

Just as subsidiarity was presented as the guarantee against the possibility of an emerging dominant power in the Maastricht Treaty process leading to the Economic Community becoming the European Community, so too Prussia promised a decentralised power, that turned out to be a well laid trap.

The German constitutionalist Heinrich Triepel observed that 'a looser association of states encourages hegemony more than a tight one . . . the more unitary elements predominate in a federation the more inner firmness there is, and the greater are the obstacles to the creation of a hegemony'.

In the context of an economic crisis however, the systemic solutions in a looser association of states requires centralisation, and the central institutions are created with the most powerful state's interests and requirements.

This is what happened in Germany after 1833 says Varoufakis, and makes a comparison with the recent 2010 euro crisis:

This is what happened in Germany in 1833. It is also what happened in the eurozone after the Maastricht Treaty begat the 2010 euro crisis: every incantation of the merits of subsidiarity and decentralisation precipitated a wave of authoritarian, unaccountable rule from the centre.

In 1871 the centralising process that Metternich had so feared gave rise to the German Empire.

A Europe without war?

From the Maastricht Treaty back to the Potsdam Conference of 1945, and then further back to the Treaty of Versailles of 1919 the question of how successful politics can function as a means to achieve hegemony in Europe without a war has been significantly shaped by two world wars.

Such a question may also belong to the thinking of Prussian military theorist and author of "On War", Carl Philipp Gottfried von Clausewitz and in particular his well known aphorism:

"War is the continuation of politics by other means."

If we return to the proclamation of the new German Emperor of the new German empire we also return, again, to the Palace of Versailles.

On 10 December 1870 the North German Confederation Reichstag renamed the Confederation the "German Empire" and gave the title of German Emperor to William I, the King of Prussia, as Bundespräsidium of the Confederation. The new constitution (Constitution of the German Confederation) and the title Emperor came into effect on 1 January 1871. During the Siege of Paris on 18 January 1871, William accepted to be proclaimed Emperor in the Hall of Mirrors at the Palace of Versailles.

Varoufakis points out that: 

In 1871, as Bismarck was proclaiming German unification and crowning the Prussian king emperor of the German empire, France's government army was entering the French capital to commence a pitiless battle against the revolutionaries of the Paris Commune, killing tens of thousands in the process.

A Sentimental Education

Flaubert in the Ruins of Paris: The Story of a Friendship, a Novel, and a Terrible Year by Peter Brooks.

From a distinguished literary historian, a look at Gustave Flaubert and his correspondence with George Sand during France's "terrible year"--summer 1870 through spring 1871

From the summer of 1870 through the spring of 1871, France suffered a humiliating defeat in its war against Prussia and witnessed bloody class warfare that culminated in the crushing of the Paris Commune. In Flaubert in the Ruins of Paris, Peter Brooks examines why Flaubert thought his recently published novel, Sentimental Education, was prophetic of the upheavals in France during this "terrible year," and how Flaubert's life and that of his compatriots were changed forever.

Brooks uses letters between Flaubert and his novelist friend and confidante George Sand to tell the story of Flaubert and his work, exploring his political commitments and his understanding of war, occupation, insurrection, and bloody political repression. Interweaving history, art history, and literary criticism-from Flaubert's magnificent novel of historical despair, to the building of the reactionary monument the Sacré-Coeur on Paris's highest summit, to the emergence of photography as historical witness-Brooks sheds new light on the pivotal moment when France redefined herself for the modern world.

What can "Sentimental Education" teach us today? According to Brooks, it reveals;

“the tragicomic inability of human beings to produce the results they seek in management of public affairs.” The antidote, Flaubert believed, is to understand human motives through what he called “science” — essentially the social sciences — and through “novels of the analytic exactitude sought by Flaubert.”