The failure of neo-liberalism” “

The spring summit of the European Union is traditionally dedicated to economic questions. The following issues, among others, are on the agenda of the European Council of 25/26 March: the “Lisbon Strategy” aimed at turning the EU into “the most competitive economy in the world by 2010”; EU financial prospects for the next decade; and the problems of production, competitiveness and welfare linked to enlargement from 15 to 25 members. These issues will then be re-examined during the following weekend in the great mobilization promoted by the CES, the European Confederation of Trades Unions. Gianni Borsa, SIR correspondent in Brussels, has discussed them with John Monks , general secretary of the CES since May 2003. Born in Manchester in 1945, married with three children, he graduated in economic history. Involved in the British trade-union movement for 35 years, Monks loves music, soccer and cricket. In a few weeks’ time the European Union will enlarge its borders eastwards and southwards, welcoming into its fold ten states with economies and living standards very far from the EU average: how can this gap be filled? “The enlargement of the Union is a huge opportunity. The differences in wages and living standards between Western Europe and the nations that are about to be annexed to the EU are however enormous. There’s also the risk that the international economic system will try to exploit and perhaps even reinforce these differences, pitting one nation against another. This strategy has already been manifested in the area of the taxation of business income, a field in which certain nations about to enter the EU are reducing their tax rates to absurdly low levels, so as to attract foreign investment capital. But by doing so the governments of these nations will not have in the short term the necessary resources to invest in the area of the professional growth of their labour force, thus condemning their economy to remain caught in the trap of the low wages-low productivity mechanism”. How can this be avoided? “We in the European Confederation of Trades Unions are convinced that limits ought to be posed to competition, which is a good thing in a free market so long as it is channelled in the right direction. In particular there’s a need for stronger rules on the social dimension of Europe, so as to exclude competition based on low wages, long working hours and dangerous working conditions. The same goes for the level of fiscal competition on movable income such as savings and business income. Europe has the duty to establish minimum standards of taxation and needs to reinforce its policy of social cohesion. Massive investments in the area of education are also needed”. In Europe there’s a feeling that the economic trend is improving. GDP is growing, but not the number of jobs: is it a genuine recovery? “We are really very sceptical about the current economic recovery in Europe. What we are witnessing is the total failure of the ‘single thought’ that is proclaiming the substantial reduction of government interference in the economy. European policymakers have followed this model and so have not used their resources to give a further boost to the economy. Fiscal and monetary policies, for example, have remained neutral and the reduction of interest rates in the euro zone has arrived too late and to an insufficient degree”. Are you blaming the neo-liberalist theories? “The policy of laissez faire, laissez passer is proposed as a response to the reinforcement of the euro. But if urgent steps are not taken to implement a political action, we fear that the recovery in the euro zone could once again be put back on hold. And if we make some comparisons, we can ascertain that in the USA and in the UK macroeconomic policies have been energetic and decisive”. The European Council in Brussels in mid-December failed to approve the Constitutional Treaty… “The new Constitutional Treaty is a fundamental step and the failure to approve it does not represent a good start. We hope in a positive conclusion of the negotiation”.