By Amartya Sen,
in "Le Monde"
Published July 4th, 2011
When, in 1941, Spinelli, Ernesto Rossi and Eugenio Colorni signed the famous manifesto Ventotene, they called for a "free and united Europe". The declaration of Milan that followed in 1943, founding the European Federalist Movement, reaffirmed this commitment to a united and democratic Europe. All this was part of a natural extension of the quest for Europe's democratic movement launched by the European Enlightenment, which, in turn, inspired the world.
This is why it is very sad that one is as little concerned about the danger that now threatens the democratic system of Europe, which manifests itself insidiously by the priority given to financial imperatives. The tradition of democratic public debate is undermined by the unchecked power held by the rating agencies that de facto democratic governments to dictate their programs, often with support from international financial institutions.
It is appropriate here to distinguish two different issues. The first is that the journalist and economist Walter Bagehot (1826-1877) and the philosopher John Stuart Mill (1806-1873) considered the need for a "government by discussion". As guardians of financial maintain a realistic view of actions necessary, the democratic public space should they listen most attentively. This is important!
But that does not mean that we should give them the supreme power or they can dictate their law to democratically elected governments, but that Europe has no organized resistance. The power of rating agencies can not be contained and framed by politicians exercising executive power at European level. Yet for now, such power does not exist.
Second point, it is unclear how the sacrifices imposed by the knights of finance to countries in difficulty is the decisive remedy to ensure the long-term sustainability of their economies, or even that these sacrifices are able to ensure that the euro area as part of an unreformed financial system and built a club in the single currency composition unchanged.
The diagnosis of economic problems as established rating agencies did not change the status of absolute truth, contrary to recent claims. For the record, the work of certification of financial institutions and businesses made by these agencies before the economic crisis of 2008 was so dismal that the U.S. Congress planned to take legal action against them.
Since now most of Europe seeks to curb as quickly as government deficits through cuts in public spending, it is essential to consider realistically what are the implications of the measures adopted for this purpose, both on the lives of people on creating revenue through economic growth. What is lacking at present, in addition to a more ambitious political project, it is a more developed economic thinking on the impact and effectiveness of this strategy of minimizing losses in "blood, sweat and tears" .
The moral of the noble "sacrifice" has undoubtedly exhilarating effects. This is the philosophy of the corset "adjusted": "If Madame is at home in it, it certainly need to Madam size smaller." But if the calls for fiscal discipline mechanically translate too harsh and drastic cuts, we may not only impose more hardships than necessary, but also kill the goose that lays the golden egg growth.
This tendency to ignore the role of growth in production revenue is expected to be among the first issues to sift through critical thinking and that of Great Britain to Greece.
In Britain, it would thus question the relevance of the measures initiated by the government (but public debate has been really encouraged by the way), while in Greece, these are measures imposed by the outside that are implicated in a country whose margins to challenge the injunctions of the lords of finance are very minimal.
These budget cuts to maximum potential to reduce public spending as well as private investment. If this also results in a reduction of stimulus for growth, government revenues would, too, fall painfully.
The link between growth and government revenue has been widely observed in many countries from China to Brazil through the United States and India. Again, lessons can be drawn from history. Many countries had at the end of World War II heavy debt and worrying, but economic growth has eased the burden quickly. Similarly, huge deficits that Bill Clinton found to his taking office in 1992 melted under his chairmanship as a result, in large part to rapid growth.
How some countries in the euro area are they found in a situation as disastrous? Absurd decision to adopt a single currency, the euro, without further political and economic integration has certainly played its part in this crisis, even beyond the financial irregularities committed by countries such as Greece or Portugal (the Beyond that, well, this culture of "excess credit" has rightly emphasized the former European Commissioner Mario Monti and the European Union allows these irregularities to be committed with impunity).
In their defense, the Greek government, and in particular Prime Minister George Papandreou, doing everything they can and against the political opposition, and we must also salute their efforts to get Greece to the culture of corruption that plagues business and economic relations.
However, neither the long-term benefits of major reforms undertaken by Greece or Athens painful willingness to meet the requirements of the guardians of international finance will provide Europe to question the relevance of conditions - and Calendar - imposed on Greece.
Today, this austerity in the eyes of the financial attractions of short term, but it is not at all certain that these guards see with clarity how Greece could return to growth, for the time when she knows a rather brutal recession. In addition to the braking of the economy induced by the huge budget cuts carried out in order to maintain at all costs the membership of Greece in the euro area, the very characteristics of the euro are Greek goods and services at high prices and often not competitive on international markets.
It gives me little consolation to recall that I was strongly against the euro, while being very supportive of European unity for the reasons outlined Altiero Spinelli was so hard. My particular concern was the fact that each country to decide freely and giving up its monetary policy and exchange rate revaluation, all of which in the past have been of great assistance to countries in need. This allowed not to unduly disrupt the daily lives of people in the name of a fierce determination to stabilize financial markets. Certainly one can give up monetary independence, but when there are also political integration and budget, as is the case for American States.
The great idea of a united and democratic Europe has changed over time and was passed into the background of democratic politics to promote absolute loyalty to a program of financial integration inconsistent. Rethinking the euro area would raise many problems, but the difficult issues need to be intelligently discussed (Europe must commit itself democratically to do so) by taking into account realistically and concretely the different context in each country.
Drift with the wind blowing a financial and economic thought obtuse serious deficiencies, often uttered by agencies pitiful display of results in terms of anticipation and diagnosis, is the last thing Europe needs it.
We must halt the marginalization of the European democratic tradition: it is a necessity. We do not exaggerate enough.
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