The Alternative Economic Strategy: A time to go European

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6 Citations (Scopus)
Original languageEnglish
Pages (from-to)43-71
Number of pages29
JournalCapital & Class
Issue number2
Publication statusPublished - Jun 1985

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Teague Paul 6 1985 9 2 43 71 The internationalisation of economic life imposes increasingly recognised constraints on labour movement activities, both at the level of industrial negotiations and in the scope of national economic policy. Part of the answer lies in extra-national initiatives, especially in Western Europe. But it would be wrong to see in European policy an escape from acute problems of policy at national level. This article examines present labour movement thinking on Britain's economic relations with Western Europe, sagemeta-type Journal Article cover-date Summer 1985 search-text Paul Teague The Alternative Economic Strategy: a time to go European controversial to say that industrial production and the division of labour are being thoroughly reshaped on a global basis. Equally non-contentious, for socialists at least, ought to be the observation that this process of internationalisation has substantially reinforced the citadels of capital. The British economy has become deeply enmeshed in this process. Transnational companies now dominate the vast majority of industrial sectors in Britain. These companies have opened up both industry and employment to the full impact of the worldwide restructuring of capital. At the same time, however, British financial institutions in their role as 'off-shore banker' have worked to facilitate the process. The statistics bear out Britain' s central role in the development of transnational capital. The United Kingdom has the biggest share of USA multinational companies investment stock in Europe, taking 51% of the total. In money terms, this amounts to over $20 billion. Between 1963-1979 there was an overall decline of some 769, 000 workers in manufacturing industries in the UK. Within the same period, however, the number of people employed in foreign transnational companies increased by 435, 000. In 1963, 7% of the total manufacturing workforce was employed in foreignowned companies, the figure now stands at 14%. Transnational companies presently contribute 40% to Britain' s GDP. The penetration of the UK' s industrial base by inward investment has been equalled by an upsurge in the overseas activities of UKIT IS HARDLY The internationalisation of economic life imposes increasingly recognised constraints on labour movement activities, both at the level of industrial negotiations and in the scope of national economic policy. Part of the answer lies in extra-national initiatives, especially in Western Europe. But it would be wrong to see in European policy an escape from acute problems of policy al 43 national level. This article examines present labour movement thinking on Britain' s economic relations with Western Europe, Capital & Class 44 owned transnational companies. In 1981, for example, the foreign investment of these companies incresaed by over 40% to 5 billion.' The Labour Research Department conducted a survey of the activities of UK multinationals in manufacturing. The main conclusion reached was that ‘since 1978 the top British manufacturing companies have cut their UK employment by more than 470, 000. But at the same time they have expanded their non-UK workforce by almost 40, 000.' 2 In other words, it was not simply the recession, but the desire to restructure internationally, which prompted the transnationals to enact their much-publicised rationalisation programmes. Trade is a further indicator of the dominance of transnational companies within the UK economy. Approximately four-fifths of UK exports are produced by enterprises with overseas subsidiaries. In 1981 these subsidiary concerns purchased 50% of UK exports. Furthermore, about half of the UK exports in the same year were made by a mere 72 firms. 3 The policies of Britain' s financial institutions have accentuated the process of internationalisation. Since 1979 when the Conservative Government abolished exchange controls, there has been a marked acceleration of overseas portfolio invstment by British-based financial institutions. Between 1979-1981 the flow of private overseas portfolio investment increased from 909 million to 4, 100 million. The amount of pension funds invested abroad has risen by 100% in five years, from 10 billion to 20 billion. It is thus hard to dispute that capital' s dominance of the world economy has reached a new and more intense level, or that Britain is at the very heart of the process.' These transformations have created major problems for the British labour movement. The major restructuring plans begun by transnational companies in recent years have caused thousands of redundancies and highlighted the weakness of the trade unions in the face of this process. The simple truth is that trade unions have not been able to construct an effective countervailing strategy. They have remained impotent and vulnerable. One key problem is that faced with an announcement of closure by a multinational, the trade unions are automatically placed in a defensive and weak position. In a representative case, trade unionists actively campaigning against closure by a multinational write: ‘Evidently closure situations where union countervailing power is most urgently needed are also ones where the methods available to labour to hamstring a multinational are at their weakest'. 5 Even at the level of analysis, writers who are sympathetic to the cause of labour have been unable to outline a coherent and workable strategy. Some obviously think the task so difficult that Alternative Economic Strategy they do not even attempt to construct any guidelines for action. For example, Tony Lane after a detailed and precise narrative on the strategies of Dunlop to reorganise its production worldwide, concludes with the following statement: ‘The author of this paper has no answers to the problems and questions raised by the case-study. In the short term at least perhaps the most that could be hoped for would be measures which tie foreign investment to bilateral trade agreements. This however is to open the discussion into an area of which this writer has no knowledge.' 6 Similarly, a recent publication, The Job Crisis and the Multinationals, surveyed the role of transnational companies in the job losses in the West Midlands.' The book gives a vivid picture of how the international activities of such firms have brought the local economy to its knees. But in terms of developing a strategy which could challenge such processes the book is rather weak. The last section details in uncritical fashion a number of traditional approaches to the problem - e.g. the need for international trade union collaboration, planning agreements, etc. The limitations of these policy options are not called into question. It is self-evident that the left is on much firmer ground when analysing the strategies and practices of transnational companies, then when finding ways to counter them. Indeed, the major tendency of left economists has been to search out the key dynamics and features of the internationalisation of capital. This paper will have a different focus. It will examine the various strategies and policies developed by the left to bring the process of internationalisation under control. The major theme will be that most of the strategies put forward to harness the dynamics of international capital are deficient, and that a major rethink has to take place on the subject. It will be suggested that the establishment of a new set of extra-national policies at the European level would constitute a novel and effective approach. There will be three main sections to the paper. The first will examine the conventional strategies of the labour movement in response to the internationalisation of capital. The conventional strategies consist of two differing approaches. One advocates national policies and instruments to challenge transnational companies. The other argues for action at the international level. These two different positions will be examined in turn. The second section will detail and analyse recent calls for a more European-orientated economic strategy. In particular, it will ask whether the case put forward for a European strategy would place the left' s approach to the new integrated world economy on a more sound footing. The last section will draw out some conclusions from the preceding discussion, and develop the theme that the construction of extra-national policies at the 45 Capital & Class 46 European level should be a major aim of the labour movement at the present time. Conventional strategies: the national approach The national approach is a widely held approach on the left. It perceives the nation-state as the most appropriate context in which to harness the activities of transnational companies. The main emphasis is on trade unions and a socialist government acting together to align the multinationals with overall policy objectives for the economy. For example, planning agreements to control large enterprises supported by selective trade controls which could also shelter Britain from intense international competition were the main approaches to international problems in the alternative economic strategy formulated by the left during the seventies. There are three basic assumptions behind the analysis. Firstly, that outside the national context the trade unions will automatically lose much of their bargaining strength. Secondly, that trade unions acting in isolation cannot confront the issues thrown up by international capital, and that therefore the need is for some form of alliance with labour or social democratic parties. The third and central premise is that national economic and industrial policies can shield a state' s economy from the intense forces and pressures of international capitalism. 8 This last assumption highlights the continuing influence of 'Keynesian' formulations on the left' s strategic economic thinking. The most pervasive notion is that instruments of economic policy-making must be established at the level of the nationstate. The theoretical shortcomings of this position were the major theme of a recent article by Hugo Radice in Capital and Class. 9 The applicability of this national model to guide genuine social and economic reform is called into question by the failings of the French Socialist Government' s initial economic programme, and the debacle of the Labour Party at the last general election. Clearly, the economic programme presented to the British electorate at the last election by the Labour Party was seriously deficient. The programme was a straightforward Keynesian one, sparsely seasoned with ideas from the AES. The underpinning economic logic was exactly the same as the one used at the 1964 General Election. No account had been taken of the fundamental changes in the world economy since that date. Small wonder the electorate rejected the proposals out of hand. A much more serious and immediate problem for socialist economists is the experience of the French Socialist Coalition Government over the past four years. It is clear that the Government' s first economic programme went deeply wrong. The initial euphoria has been replaced by desperate attempts to claw back electoral popularity. Alternative Economic Strategy Unfortunately, the Mitterrand administration is looking increasingly like the crippled sibling of the 1974-1979 Labour Government. It is therefore worth giving some details of the French experiment. 47 The French experiment The French Socialist Party, in alliance with the Communist Party and other socialist parties, took office in May 1981, and immediately embarked upon an ambitious macro-economic programme. The expansion strategy was three pronged: the economy was given a boost by an increase in public expenditure; consumption was raised by a series of measures aimed at alleviating low pay; and interest rates were held down through subsidies to encourage industrial investment. As a result, the French growth rate increased by 2% to become the highest in the industrialised countries apart from Japan, and unemployment ceased to rise. However, there were costs: in one year France' s current account deficit expanded three-fold, from FFR 26bn to FFR 78b; the inflation rate was amongst the highest in Europe. The most ominous indicators, however, revealed that the reflationary programme had failed - the strategy of demand management had not succeeded in producing an increase in investment or sustainable growth in the French economy. As a consequence, the priorities of economic policy-making were reordered - the central concerns became the curbing of the balance of payments deficit and the lowering of the inflation rate. During 1982 France underwent several rounds of re-alignment within the European Monetary System which, in total, amounted to an 18% devaluation. The Government introduced a policy of freezing prices and wages in its endeavours to reduce inflation. These policies brought about a mild improvement in the economic situation. However, they were insufficient to arrest the balance of payments deficit. This caused the French Government to devalue the franc further in 1983 and to enact even tighter fiscal and monetary policies. The austerity programme was now in full operation. These policies precipitated a series of political crises. The Socialist Party suffered a series of damaging electoral defeats in recent local and European elections. Moreover, in these electoral contests the ‘new right' emerged as a strong political force in France. The shift in Government economic policy has also led to increasing strains within the left. This culminated with the departure of the Communist Party from the Government. The initial radical economic and political strategy is now completely defunct. Different explanations are put forward for the failure of the Capital & Class 48 Socialist Government' s first economic programme. The first is that the policy was jettisoned by capitalist sabotage via an investment strike and speculation against the franc. This view is rather conspiratorial. While the French capitalist classes were hardly enamoured with the socialist strategy, there is no evidence of a systematic attempt to undermine the economic programme. A second and more plausible argument is that there was a mismatch between the Socialist Government' s economic policies and the peculiarities of the French economy. In particular, the first economic programme placed little emphasis on rejuvenating the mature industries which predominate in the French economy. A more cogent explanation, however, is made by David Cobham: in his assessment of economic policies under the Mitterrand regime he states ‘it should be said that the failure of the Mitterrand expansion does not imply the inevitable failure of “ socialist” policies in general, but rather the inadequacy in the present economic environment of a particular kind of socialism whose Keynesian character has its roots in the 1930s and 1940s, is heavily coloured by the political establishment of the 1950s and 1960s and has not yet come to grips with the changed economic environment of the 1980s.“ 0 In other words, conventional socialist economic thinking has to undergo fundamental revision. While the French Government' s macro-economic programme was being blown off course by the new international economic environment of the 1980s, it is extremely interesting to note that the same process of internationalisation was carried further by developments within French industry. During the Mitterrand regime there has been an escalation of direct overseas investment by French multinational companies.” Recently released figures show that the stock of French direct investment in the United States alone has increased by 65% from 1980. Most of this increase occurred when the Socialist Party was in office.‘ 2 In money terms the amount invested adds up to $6 billion. Furthermore, there has been a spate of joint ventures between French and foreign-owned companies (particularly Japanese) over the past few years, increasing the number of ’ trojan-horse‘ imports within France. The industrial sectors most affected by such developments are computers, electronics and telecommunications.’ 3 These events add further weight to the assertion that conventional socialist economic strategies have little influence over the dynamics of internationalisation. The argument so far calls into question the conventional strategy devised by European socialist parties and trade unions in response to the internationalisation of industrial and economic activity. The strategy is built upon the concept of the national economy. It is becoming increasingly recognised that the orthodox Alternative Economic Strategy national economy approach is limited in the face of the new international economic environment. One response is that it is the particular policies that need changing, not the underlying premises of a national programme. There are two main revisions to the national economy approach. One argues that a greater emphasis must be placed on protectionist policies. The other advocates a full-blooded nationalisation programme. The next sections will examine the nature and applicability of these two revised versions of the national economy approach. 49 Revisions to the national approach: the protectionist option From the ‘right‘ of the labour movement, the economist Nicholas Kaldor has put forward the view that the only way to stem the de-industrialisation of Britain, and the effects of intense international competition is to construct a rigorously protectionist economy. Kaldor accepts that his proposal is contentious. The key example in support of his case is the change of policy in Britain in 1932 from deflationary measures to general import controls. This change in policy produced immediate and startling results. Kaldor writes ‘manufacturing output expanded by 7.8% a year in the following five years, manufacturing productivity rose by 3.9% each year and manufacturing employment by 4.7% each year.’“ From this evidence Kaldor concludes that a similar approach should be adopted to reverse the effects of the Thatcher Government' s monetarist policies. Kaldor is not alone in advocating such a course. The left-wing grouping within the French Socialist Party CERES has reached similar conclusions from its analysis of the failure of the French Government' s economic strategy. CERES believes that the policies introduced were insufficiently protectionist. The protectionist case cannot be lightly dismissed. However, the argument underestimates the economic changes occurring in the post-war period. A first example is changes in international trade, in particular the fragmentation of the operations of transnational companies, in which their production of goods and services is dispersed across national frontiers. Take for instance the production of Ford cars: many of the component parts for certain car models are made in several European countries, and then imported into Britain for assembly. Under a highly protectionist system the Government would be in a quandary. If they refused to import component parts from Fords Germany, the result could well be the closure of Ford plants in Dagenham. However, if the Government declared such imports permissible then the import system would be put into jeopardy. An even greater threat to the import control paradigm is the increase in CEC 26/SUMMER 85–D Capital & Class 50 the number of ‘trojan-horse' imports. Many multinationals have opened up new industrial plants within various European states (e.g. Nissan establishing a factory in Britain), which can give their owners complete access to home markets. These schemes would unquestionably make a considerable dent in the operations of a protectionist system. 15 We must also consider the effects of international financial integration on a thorough-going protectionist strategy. Since the second world war the role of the pound in world exchange markets has declined, and the Sterling Area has ended. The most important development in this period has been the emergence of the Eurodollar credit markets. In 1980 outstanding Eurodollar deposits amounted to 1, 200 billion dollars - which is approximately four times the entire monetary stock of the whole of the USA. 16 These changes in the financial system, coupled with the floating of exchange rates, have led to much more centralisation in the international money markets. The sheer intensity of these worldwide financial linkages would make it difficult to introduce tight controls on currency convertibility, which would tend to undermine a protectionist strategy. Furthermore, an effective national regulation policy for the financial system would almost certainly prove to be very costly. This is because there would have to be constant interventions in the money markets, and high interest rates to maintain control over convertibility. The result would be that a protectionist regime would find it difficult to operate a cheap money policy, which would be required to boost industrial investment, etc. Finally the extensive import control model is too isolationist. The key dynamics of the present recession are international. The introduction of a trade policy to reduce foreign imports into Britain could well have the effect of worsening the recession in other countries by causing a decline in their exports. Furthermore, if a country unilaterally embarked upon a policy of protectionism it could suffer retaliatory action from other countries. The truly international nature of the present economic crisis has caused many previous advocates of the import control solution to change their position, the most important being the Cambridge Economic Policy Group, which now argues for a European-wide reflationary programme. 17 Consequently, the Protectionist Option has limited value in the present climate. Further revisions to the national approach: the nationalistic option The alternative economic strategy places central importance on a system of planning agreements to harness the operations of Alternative Economic Strategy multinationals. However, the effectiveness of this instrument is now being called into question. The reappraisal was largely sparked off by the experience of the last Labour Government, which implemented only one voluntary agreement. Some left economists are now calling for more radical policies. For example, Ben Fine, in a very rigorous article, rejects the notion of planning agreements and argues for a full-blooded nationalisation programme. He concludes that the major problem with this proposal is of a political, not economic, nature- ‘one conclusion to emerge from our analysis is that the relationship between the AES and the MNC' s is not a technical one of economic policy but a political one which struggle can be embarked upon now.' 18 Fine' s analysis is certainly provocative, and will no doubt spark off debate within the left. The arguments, however, are not water-tight. Firstly, he considerably underplays the extent to which the aspects of internationalisation described above could frustrate a government attempting to implement a fully-fledged nationalisation programme. It would not be sufficient for such a government to be armed solely with ‘political will'; a deep understanding of the workings of international capital would also be essential. Even then the success of a nationalisation programme would most certainly not be assured. Moreover, the simple act of bringing industries under public control does not necessarily guarantee control over multinational companies. For example, under the Socialist Government in France, the nationalised Renault Car Company has actually expanded its overseas production. In other words, the problem of curbing the functioning of multinational companies extends beyond the principle of public ownership. Secondly, it is unconvincing at present to have a widespread nationalisation programme as the central plank of a socialist political and economic strategy. A programme of nationalisation on the lines called for by Fine would have to command general public support, and the political consciousness of the labour movement in particular would have to be at an 'extremely high level. Major changes would have to occur in the prevailing attitudes of antipathy towards nationalised industries. In taking up his position, Fine is in effect suggesting that there is no need for a transitional programme in Britain; there can be a straight move from a highly developed capitalist system to an embryonic socialist society. It must be remembered, however, that the system of planning agreements etc. were not drawn up for their precision, but to accommodate a fundamental assessment of the political and economic structure of Britain - the assumption that an intermediate stage between capitalism and socialism is necessary to reorientate the economic institutions and values towards 51 52 socialism, and to consolidate popular support for socialist programmes. Nothing has happened to call this reasoning into question. On the contrary, the present political climate merely reinforces the need for a transitional programme.' 9 There can be little doubt that the neo-liberal policies of the Thatcherite government have struck a deep chord in wide sections of the population. 20 In this context, Fine' s formulations appear to be misplaced. They do not confront the dominant political tasks facing socialists at this juncture because the call for a full-blooded programme of nationalisation has limited appeal. 21 The above argument has dealt with the variety of positions put forward with the objective of controlling the processes of international capital from the standpoint of the national economy. It has tried to highlight some of the problems and flaws within these writings. The overriding conclusion is that the labour movement will have limited success in influencing the direction of the multinational companies if policies are introduced solely at the national level. Put differently, the labour movement is facing a completely new situation which will necessitate some radical revisions in its orientation and practice. It is essential that strategies and programmes are developed which go beyond the nation-state. In the next section the analysis will shift onto the international plane. The conventional international activities of the labour movement will be examined to try to assess their effectiveness. Conventional strategies: international trade union action There has been a long tradition of activity by national labour movements at the international level. There are a number of features to this international activity. At one level, it is intensely political. The first half of this century witnessed a whole series of solidarity actions by trade union and working class organisations at the international level. International working class solidarity reached its high-point during the Spanish Civil War when workers of all nationalities joined the international brigades in their thousands. This rank-and-file working class internationalism has been distorted by a continual political battle in the years since 1945, between and within World Labour organisations. As a result, there is a major gulf at present between national and international trade unionism. The situation is not as bad within the International Trade Secretariats (the bodies which organise trade unions within specific industries on a global basis). This has allowed space for some analysis on the role of international trade unionism in the face of multinational corporations etc. One major argument developed over the last decade calls for supranational trade union organisations. The underlying supposition is that as capital has Alternative Economic Strategy become international so must labour. 22 The proponents of this argument recognise that the creation of supranational trade unions will be a continuous process, starting with activity within individual transnational companies, and ending up with a substantial transfer of power and authority from the national to the international level. It is envisaged that any new supranational trade union organisations would co-ordinate activity on a wide range of industrial relations matters, including wages. It is clear that a quantum leap would be required to change the existing international trade union federations into such high-powered supranational entities. There must be considerable doubt about the feasibility of such a project. One can also question some of the assumptions behind these arguments. In particular, one should challenge the most fundamental premise - the notion that trade unions in themselves can develop an effective countervailing force to the operations of multinationals. Much too often the trade unions are heralded as the dominant force through which socialists can make inroads into transnational capital. Such an approach comes dangerously close to a form of international syndicalism. 23 Another variant of this international syndicalism is the strategy which places the activity of multinational combine committees or worker councils as the central instrument of opposition against multinational corporations. A recent study has clearly shown that combine committees et al are of very limited strategic value. The committees are classified as communication networks for the dissemination of information on company plans etc.24 This is not to say that combine committees or such like are unimportant. Of course they are important, and their role in the present context is very necessary. Their present activities of collecting and disseminating information, and on occasions coordinating industrial action, are very fruitful. However, the limitations of such organisations should be recognised. The combine committees et al should not be viewed as the main vehicle to confront the supremacy of transnational capital. The basic problem is that the theories which see the problem of making inroads into the new international economic and industrial structure in this way, are both incomplete and inadequate. The powers of multinational companies are so vast that trade unions could only play a part in any strategy which aimed at gaining a leverage over their operations. The greatest merit of the national approach is that it realises the necessity of working in conjunction with other political forces. The existing work of international trade union organisations is too isolated, which has made them ineffectual; in reaction the old argument that trade union activity should be continued at the national level has been repeated. 53 Capital & Class 54 The central conclusion from the above is that the conventional strategies devised by the left to curb the dynamics of transnational capital are deficient. National economic and political instruments are not adequate to tackle the issues and problems arising from the new intricate pattern of global production. The international activity of trade unions are also too weak in the face of this process to effect any meaningful change. Furthermore, even if trade unions became more powerful at the international level their impact would be limited. This is because most of their actions are reactive in character, which leaves intact the ability of multinationals to initiate industrial and economic strategies. In essence, the power of transnational companies rests on this inability to initiate. Therefore, if the labour movement is going to be successful in gaining some control over international capital it must develop a new international political and economic strategy. Revisions to the international approach: the project for European recovery Fortunately there has been some movement in this direction. A group of academic economists and politicians associated with the Socialist International have written an important report: ‘Out of the Crisis - A Project for Europe on Recovery'. 25 This group, under the auspices of the Forum for International Political and Social Economy (IPSE), has opted for a median European point between the national and international policies and programmes. In doing so they are making the basic assumption that Europe is sufficiently self-contained politically and economically for positive policies to be developed. There are three main tenets to the IPSE' s alternative European Economic Strategy: reflation, restructuring and redistribution. The starting point for the group is its belief that the present economic crisis in Europe has been greatly exacerbated by monetary policy. The direct consequence has been a substantial increase in the levels of unemployment throughout Europe. The cornerstone of any recovery programme, IPSE argues, is the restimulation of demand by injecting substantial amounts of money into all aspects of the economic structure - industry, infrastructural projects, and public services. What marks its formulations off from previous Keynesian demand management is that the envisaged reflation would take place on a co-ordinated European basis. Co-ordination is the lynchpin of the entire strategy, because it is believed that national reflationary programmes would produce very little benefit for the country which adopts them, the main beneficiaries being other countries whose exports would increase. The report explicitly recognises that the days of Keynesian demand management at the national Alternative Economic Strategy 55 level have passed. The main burden of this projected European reflation programme would fall on the larger national economies, West Germany, Britain and France. These countries would reflate their economies, generating a demand for imported goods and services, and thereby increasing the exports of third countries. This action would be followed by reflationary packages in first the intermediate economies, and then the smaller ones. This ‘locomotive operation, it is envisaged, would start off a cycle of growth. Alongside this reflationary package, the report argues for policies aimed at restructuring industry in the European Communities. These policies are necessary because capitalist economies, as presently structured, are thought to be incapable of meeting the need for growth, employment and rising living standards. There are various dimensions to the restructuring programme. Firstly, much more public control ought to be exercised over the financial sector, which the IPSE argues, has been the major source of monetarist policies. The big banks and other financial institutions may be forced to adopt policies which blend with the overall economic strategy - less rigid borrowing conditions, a more positive attitude towards industrial investment and a reduction in their inflation phobia. The report also calls for some form of European monetary organisation to promote stability between different currencies, and to safeguard against bouts of speculation. The second element of the restructuring programme is the establishment of an industrial planning system within each European nation. It is pointed out that major industrial sectors are dominated by vast monopolies and conglomerates which can fix prices, and exercise considerable economic and political muscle. A system of planning agreements, or similar instruments, needs to be introduced to ensure that this power does not frustrate the overall objectives of economic policy. The report hopes that such arrangements could be established voluntarily but suggests that if necessary, legally binding agreements should be introduced. This system of industrial planning should extend from national to local and international levels so that the European strategy is uniform and coherent. The final aspect of the project for European recovery is redistribution. The report claims that any economic programme which aspires to be democratic and progressive must include concrete proposals to redistribute wealth and resources to the poorer regions and people of Europe. The redistributional policies outlined by IPSE are both spatial and social in character. The chief economic mechanism proposed is the use of ‘development Capital & Class 56 deficits'. Under this system poorer countries would be allowed to pursue policies such as import tariffs, subsidies, tax reliefs, etc. IPSE argues that this system would also benefit the richer European countries in the long term, because as the poorer economies became more developed there would be an increase in the demand for the products of the former. Out of the Crisis: A Project for European Recovery is an ambitious attempt to reorientate the labour movement' s approach to economic policy-making. The call for a European-wide programme is clear recognition that the conventional national and international strategies of the left are limited in the present economic climate. However, some of the proposals put forward in the report are not fully worked out. A case in point is the lack of discussion on the European Monetary System (EMS). The strongest component of the IPSE report is the desire to break the dominance of the neo-liberal economic ideas which have been embraced by many European governments. IPSE thinks that the way to do this is to re-establish reflationary policies as a viable alternative economic measure. Reflation is thus the cornerstone of the IPSE Project. And the lynchpin of this reflationary strategy is the existence of a European monetary agency. Although this agency plays a central role in the entire construct, its nature and functions are left rather obscure by the report. It can only be presumed that IPSE is referring to the EMS or some variant of it. But the EMS has been consistently derided by the British left, who see it as a mechanism to enact monetarist and deflationary policies. This aversion may be somewhat misplaced, since the EMS, as an instrument of economic policy, could equally be used to promote expansionary measures. The real issue is who controls the instrument. This question is not tackled in an explicit manner by the report. Consequently, it is uncertain whether IPSE is recommending that the British left urge its opposition to the EMS, or that it should support an alternative monetary agency at the European level. The question of the British labour movement' s opposition to the EMS has been approached in a more direct manner by other left economists. David Fishman argues that the EMS could play a potentially progressive role. 26 His central thesis is that creating a third currency bloc around the EMS would undermine the dominance of America in the world economy. For this reason, Fishman concludes that the left should support the EMS. Two other economists, Francis Cripps and Terry Ward, have also argued strongly for British membership of the EMS. They even go further than Fishman and state that the authority of the system should be increased. 27 The argument is that a strong EMS would make it very unlikely that a European currency would experience a ‘loss Alternative Economic Strategy of confidence' during a reflationary period. Furthermore, Britain' s membership would more effectively check the tendency of the German D-mark to dominate the system. The idea of a strong EMS is attractive. Certainly, it would ease some of the inevitable problems of a joint inflationary programme. However, one issue which would require careful consideration before Britain joined the EMS is a parity for the pound against other European currencies which would reflect the relative weakness of British manufacturing industries and the coming end of North Sea oil. 28 Other facets of the Report are defective, particularly the discussion of the EEC. No matter how one views that entity, it is surely only common sense to say that any proposed pan-European economic strategy must clearly define the role, if any, of the EEC. However, in IPSE' s account, the discussion on the EEC is extremely brief and non-conclusive. Failure to confront such a central question can only give credence to the argument that a European strategy is naive and unworkable. This is a serious weakness, and the point will be taken up below. Certainly, any European strategy, to be viable, needs to gain a legitimacy amongst the people of Europe, especially from the different national labour movements. The Report, to its credit, does state that ‘if the Project to reflate, restructure and redistribute is to gain credibility at the international level and especially in the smaller European countries it will do so mainly through the advocacy by parties and trade unions.' 29 But apart from this general statement there is no discussion of how labour movements can actually forward this new European strategy. At best, IPSE assumes that trade unions will grativate in an almost voluntaristic manner to the new European programme; at worst it views the implementation of the programme as a technical economic exercise. While in essence, the IPSE Forum advocates the creation of associative economies within Europe it fails to realise that this will entail associative links being forged between different economic groups such as trade unions within and between nation-states. In short, IPSE is much too vertical and ‘macro' in its approach to a European programme. 30 The absence of any detailed analysis of how the Project for European Recovery can be transformed intoa popular strategy puts the entire report at risk of being dismissed as impractical. Indeed, it is for this very reason that a comprehensive European alternative economic strategy cannot solely rest on iPSE' s writings. Nevertheless, the Forum must be congratulated for placing the idea of a European strategy on the agenda for socialist parties and trade unions in different countries. The excessively vertical formulations of IPSE have been heavily criticised by John Palmer who puts forward a different 57 Capital & Class 58 approach to the question of a European socialist strategy. In several articles he calls for a European strategy on a horizontal basis. In particular, he advocates European-wide agitational campaigns on jobs and welfare rights e tc. to be initiated by the labour movements within different nation-states. These campaigns should closely follow the paradigm set by the European nuclear disarmament movement. Palmer is critical of strategies aimed at reforming the institutions of the EEC; he disparages Francis Cripps and Terry Ward for stating that the Labour Party should support Britain' s entry into the EMS. Such initiatives he dismisses somewhat glibly as ‘making capitalism work better'. 31 Palmer' s arguments are partly valid but too general. Firstly there are problems in simply calling for European-wide demonstrations against unemployment and so on, not least because similar campaigns at national level had limited success. Secondly, Palmer underestimates the changes that would have to occur in national trade union attitudes. A recent study of British trade unions' responses to the EEC has shown total disarray on the issue. 32 The biggest problem with Palmer' s arguments is that he concentrates too heavily on the horizontal features of a European alternative strategy. This runs a real danger of becoming purely trade union action. Certainly such activity will have its role, but it should not acquire the status of a fully-fledged European socialist strategy. The latter must try to outline how the left would solve the employment crisis, and the necessary restructuring of industry within Europe. Palmer' s agitational approach gives an unhealthy emphasis to purely negative, reactive action. Rather than counterposing horizontal and vertical features of a European alternative economic strategy, the need is to integrate the two dimensions. The dichotomy between the two is false, reflecting a constant tendency within the British left to concentrate on action at state level at the expense of activity within civil society, or vice versa. The key point is to view the vertical institutions and decisionmaking apparatuses as a mechanism to transfer power to the horizontal terrain. This in turn will give a greater legitimacy for further action in the vertical dimension. Consequently the most fruitful course is to explore ways in which IPSE' s programmatic approach and the horizontal agitation and pressure called for by Palmer, can be strengthened and combined to form a much more comprehensive strategy. The analysis so far has mainly been taken up with a review and critique of different labour movement approaches to the processes of transnational capital. The conclusions reached so far are that both the conventional national and international strategies put foward to control the behaviour of multinational companies are defective. This is because the writings are either conceptually Alternative Economic Strategy flawed, or that they underestimate the intensity of the new international economic climate. The analysis also examined whether recent writings calling for a European strategy could place the left' s approach to the problem on a more sound footing. It was argued that while the European level provided a better context to face the dynamics of international capitalism, present accounts of an alternative European strategy were deficient. The following notes make no attempt to supply these deficiencies, merely to indicate a few of the relevant factors. The first problem which must be tackled in any European alternative economic strategy is the role of the EEC. Diplomatic attempts to sidestep this question merely make strategic discussion abstract and unconvincing. It is certainly true that the European Commission has undertaken, in the main, a non-interventionist economic strategy, and because the member-states have been very reticent to transfer powers to the European level, the majority of initiatives have been of a negative nature. Clearly, at present, the potential for a positive economic programme of EEC level is limited. The central question, therefore, is whether the EEC can be sufficiently reformed to embark on such a programme. Some on the left believe that it cannot, and as an alternative suggest that the UN Economic Commission for Europe (ECE) should be the body which co-ordinates any left alternative strategy. 33 The main reason for selecting this organisation is that it encompasses all European nations, East and West, and as a consequence any initiative would be genuinely comprehensive. Undoubtedly this is an attractive point. Against this, however, one must consider the fact that the present functions of the ECE are nebulous. It does not undertake any meaningful activities apart from drafting reports and documents on the economic and industrial situation in Europe. For such an organisation to be reconstituted with the capacity to introduce positive extra-national policies would take a long period of time, and require the establishment of a new set of structures and institutions. In reality it would mean setting up a new international body. Moreover, if the body was going to acquire any authority it would mean that the countries within the EEC would have to agree either to withdraw from it, or assign it only a peripheral role in European affairs, or to abolish it totally. It simply would not be possible for the EEC to exist with its present set of powers and functions alongside an ECE with the capacity to initiate reflationary programmes and industrial policies. There is not the space for both. Accordingly, while a reformed ECE may look an attractive option on paper, the existing political and economic reality within Europe does not make the The role of the European Economic Communities: problems and prospects 59 Capital & Class 60 scheme a viable option. The basic point is that the very existence and operation of the EEC create enormous barriers to the development of any alternative economic institutions. This should not be surprising as Tom Nairn cogently points out in his seminal dissection of the British labour movement' s case against membership of the EEC -'a realistic focus surely demands a more complex, less facile attitude towards ‘capitalist' Europe. A future ‘Socialist Europe' may be very different from and far better than all this. But it cannot credibly be visualised as having no real connection with the present bedraggled sordid reality.' 34 In other words, an alternative strategy cannot be established in a detached and abstract manner paying no serious attention to the dominant structures and processes currently in existence. On the contrary, it is the dominant features of European society, such as the EEC, which must constitute the starting point. The fact is that the British labour movement' s debate on the EEC has been conducted at a very abstract and superficial level. Within the framework of a nation-state trade unions fundamentally insist that there cannot be a simple leap from capitalism to socialism. Society, it is emphasised, must undergo a transition; existing social, political and economic structures must be reshaped, remoulded, but not smashed, to usher in the new order. Yet in relation to Europe thinking is either highly absolutist in character, (the EEC must be smashed or no transitional strategy is feasible), or the reforming programmes are remarkably simplistic, (the EEC must change from a rampant capitalist institution to a genuine socialist organ in one almighty act). The point here is that the space for a European-wide programme of positive policies is occupied by the institutions and operations of the EEC. The potential to abolish that entity and rebuild a more favourable body is remote. In short, if any alternative strategy is to be implemented it must succeed in reordering the priorities of the EEC. This, of course, is not to state that the EEC can be transformed into a fully-fledged institution for the development of radical policies. This would be a serious miscalculation of the institutional and class constraints which exist at the European level. The development of associative economies A guiding principle in any exercise to revamp the orientation and policies of the EEC could be the development of associative economies. The associative economy model sets out to pose an alternative to the notions entrenched within the economic discussion of the EEC. The aim is to undermine the fundamental premise upon which many of the economic debates are conducted - the assumption that the only options open are either national based policies or supranational European ones. The traditional Alternative Economic Strategy ‘Europe' enthusiasts have succeeded in framing the debate on the EEC within Britain around this national/supranational paradigm, to the extent that much of the left' s analysis has accepted the national/supranational dichotomy as the starting point for any commentary on the nature and workings of the EEC. How often has the argument been put forward that any extension in the role of the European Communities will lead automatically to a decline in the sovereignty of the British political process? Of course, that may well be the case, but it does not have to be. In other words, by accepting the paradigm constructed by fervent pro-Europeans, now largely concentrated in the SDP, the left has viewed the ‘national alternative' as the only viable option, and as a consequence it has acquired the image of being xenophobic, and ‘little Englander'. Small wonder that the arguments on the EEC within the labour movement during the last decade have been intensely uncreative, and the policies wholly negative. Consequently, the need is for the left to develop its own policies, and this is indeed the value of the associative economy approach. The left should recognise extranational industrial policies which are not alternatives to, but supports for, national strategies. Throughout this article the argument has been put forward that it is insufficient to concentrate on solely national policies. However it does not follow from this that no radical policies can be enacted at the level of the nation-state. There are political trends which are at present eagerly embracing the idea of an alternative European economic strategy because of their failure to enact meaningful social and economic reforms at the national level. But a European programme should not be viewed as a substitute for the inadequacies of past social-democratic governments. 35 Clearly, substantial and quite crucial economic and social reforms can be achieved via national economic mechanisms; as a consequence national policy formation will remain the central focus of attention. The need for economic and social reforms beyond the nation-state is to help safeguard national programmes from constraints imposed by the dynamics of the interational economy. In short, the nation-state will remain the fulcrum of any economic strategy. The extra-national approach aims to move away from the assumption inherent in the national/supranational paradigm that actions within and beyond the nation-state are mutually exclusive. The concept of extra-national policies is largely an unexplored area; certainly the AES - of whatever kind - has not touched upon this subject. Yet institutions which could be directed towards an extra-national pattern of intervention already exist in some areas of the European Community, e.g. the European Social and Regional Funds, and the European Investment Bank. These 61 Capital & Class 62 programmes and services operate on the basis that they complement, not undermine, national measures. It is this principle, albeit in a more meaningful form, which ought to be extended into central sectors of the economy. Obviously such extra-national policies in themselves will not be particularly socialist. The crucial role of such policies is to facilitate the implementation of more radical measures within the nation-state. During the seventies the dominant theme within the EEC was the establishment of central European institutions and policies to promote economic convergence amongst member-state economies. 36 But in the main these policies failed because of differing conceptions of convergence: the richer countries emphasised convergence of economic poliices which implied uniform measures such as controlling inflation; however, the poorer nations talked about the convergence of economic performance, which meant the reduction of national income disparities between member states. 37 This conflict contributed to the political inertia which characterised the EEC throughout this period. The failure of the strategies of centralisation has led to a new debate on the nature and direction of the European Communities. The left must intervene in this debate: it must develop a principled positive policy for Europe, and move away from the opportunistic and pragmatic outlook of the Labour Party leadership. The pronouncement of Roy Hattersley that britain ought to remain within the Common Market but adopt a firm ‘Gaullist' strategy and refuse to introduce measures it dislikes, hardly presents a visionary European policy. The principle which the left should focus on in any reappraisal is the establishment of associative companies, through the formation of extra-national policies. The establishment of extra-national economic policies Reflation. A reflationary programme ought to be a major feature of any alternative economic programme for Europe. However, it would be incorrect to view a reflationary programme as either the panacea or unproblematic. There are major political and economic obstacles to the introduction of such a strategy. The strong adherence of European governments to neo-liberal economic policies would have to be broken, and at least two out of the ‘Big Three' (West Germany, Britain and France) would have to be active supporters. Some underlying economic conditions in Europe are certainly conducive for reflation. There is a unique level of mutual interdependence. About 70% of total exports by European countries go to other states in the same region. However, this general fact unmasks some of the specific Alternative Economic Strategy problems in relation to a synchronised European reflation strategy. Any policies to expand demand on a European-wide basis would have to be introduced in a very co-ordinated manner. If the programme lacked integration, the countries initiating the reflationary cycle could experience an excessive increase in imports from their partners relative to exports, causing downward pressure on the exchange rate, leading to inflation and other financial problems. This is what happened when West Germany reflated its economy by 1% of GNP in 1978, to initiate a cycle of growth. A similar situation could develop if individual states over reflated relative to other states. 38 A reflationary programme would also have to take precautions against sparking off a world-wide inflationary process, or causing economies to overheat by increasing their exports too sharply. Furthermore, some assessments suggest that Britain would benefit the least out of all European countries from a reflationary programme. 39 This is essentially because Britain is in a trading deficit with other EEC countries. To offset some of the inequities, Francis Cripps suggests that a mechanism to shift trade balances could be introduced as an adjunct to the reflationary strategy. In theory, trade adjustment policies could solve some of the problems arising from expansionary measures; however, the practicality of establishing such policies has to be questioned. In the absence of any trade adjustment or equalisation policies, the working of the EMS becomes all the more important in the management of financial pressures. It is clear from the above that reflation on a European-wide basis is not straightforward, and that its impact would be uneven. Nonetheless, in certain circumstances, it is an indispensable step in reversing the trend to contraction and unemployment. The question of ‘competitiveness'. A European economic strategy must go beyond the enactment of reflationary policies. The dominant themes in the economic thinking of the EEC must also be addressed by the strategy. In particular, a clear response has to be worked out to the central argument of the European Commission - that the present task is for the EEC economies to maintain or regain competitiveness by establishing a completely integrated internal market. This remains the goal of the Eurocrats in Brussels: the new European Commission has set as its top priority the total liberalisation of the internal market. The creation of a single market within Western Europe has been strongly supported by representatives of European capital. A group calling itself G16, which brings together top European industrialists and bankers, has been lobbying strongly for the removal of barriers hampering intra-EEC trading. 40 The logic behind this policy is that a European-wide common market could lay the conditions 63 Capital & Class 64 for industry to become more competitive because it could induce proper economies of scale, make production more efficient, etc. The argument is a classical free trade one. The fetish with obtaining a completely liberalised internal market would have to be curbed by an alternative strategy. In any event, the actual attainment of such a goal must be doubted. Further advancement towards a total common market would primarily come about by reducing the costs and bureaucracy involved in transporting goods and services across frontiers. The central objective of EEC policy over the past twenty years has been greater freedom and movement of goods across customs posts. 41 This policy has had only limited success, and there are no sound reasons for believing that this will change in the near future. On the contrary, the present creeping protectionism between member-states would indicate that such a strategy is not very realistic. Therefore, the goal of a fully liberalised internal market is dependent on policies which have a small chance of being introduced at the present time. Moreover, the persistent focus on the internal market blurs the fact that there has been a continuing increase in intra European trading since the inception of the Common Market. The table below details the trends. Intra-Community trade has in fact multiplied 23 times between 1958-1980. This increase in mutual interdependence has not led to any marked or dynamic effects on European economies. Therefore, in terms of past trends it is entirely legitimate to question whether any further liberalisation of the Common Market will have any significant impact on employment creation, or better industrial performance. Furthermore, the strategy of creating an open internal Intra-Community trade of total exports 1958 1982 48 49 46 72 71 41 71 49 46 52 1958 6 3 3 22 17 3 21 16 4 5 % of GDP 1973 9 8 7 29 35 6 25 10 5 10 1982 13 8 10 35 43 9 33 13 5 13 FR of Germany France Italy Netherlands BLEU United Kingdom Ireland Denmark Greece EUR 10 (source: Eurostat) 36 28 34 57 53 20 84 58 50 35 Alternative Economic Strategy market at this juncture would be shortsighted, bearing in mind other problems in the world economy. Presumably, the strategy of liberalisation is partly geared to winning a greater share of existing world trade. Leaving aside the technical difficulties of European industry gaining such a competitive edge, this policy would almost certainly compound many of the deep-seated problems and inequities in the world economy. Of the existing total of EEC exports, 68% are accounted by six sectors (metals, chemicals, mechanical and electrical engineering, motor mechanics, agro-industries), in other words medium technology markets. If the EEC countries improved their share of these markets it would be to the direct detriment of third world countries. This would add further problems to the already intractable World Debt crisis. The main conclusion is that to talk the language of ‘negative integration' at present is misplaced, and that more positive policies are required to turn around high unemployment and low growth in Europe. The development of employment and industrial initiatives, displacing the logic of economic competitiveness, must be the main theme of any alternative European strategy. Along with reflation, employment and industrial measures should constitute the major aspects of extra-national policies. The European Commission already operates some positive employment policies. In regions and areas where there is exceptionally high unemployment, the EEC offers a job subsidy of 33 1/3 of total costs to employers if they take on new workers. The European Social Fund also makes available money for co-operative development schemes and training initiatives. These measures ought to be extended and integrated into an overall employment strategy. The European Commission has also given its support to the introduction of a 35-hour working week throughout Europe. This policy has not been agreed by the Council of Ministers however, mainly as a result of the opposition from the British Government. There are obvious advantages to introducing a shorter working week on a synchronised European basis, all members would have to incur the inevitable costs arising from the scheme at the same time. This policy alone would have a sizeable impact on the levels of unemployment in Europe. Clearly, this particular measure would play a prominent part in any extra-national employment strategy. While the European Commission has developed some positive programmes, albeit on a small scale, via the Social Fund, it has ruthlessly applied the laws of the market economy to many of the problems of the mature industries (steel, shipbuilding, textiles) in Europe. The consistent theme of the Commission has C< C 26/SUMMER 135-E 65 Towards a European employment and industrial strategy 66 been that these industries must undergo rationalisations and cutbacks to ensure that supply balances with world demand. An extra-national strategy would have to approach the problems of mature industries in a different light. Some of the ideas developed by David Metcalf and others could constitute the basis of an alternative approach. 42 In particular, Metcalf suggests that there should be a move away from the present narrow financial profit and loss calculations to a wider resource cost and benefit analysis. Metcalf' s discussion neglects the fact that calculation in a capitalist economy is not a free choice - narrow financial criteria are forced on agents exactly by financial pressures. Nevertheless, a variant of Metcalf' s approach could be one side of a more positive policy at the European level. Many of the problems facing particular mature industrial sectors are common to all member-states. The introduction of a resource cost and benefit approach could help unite EEC countries around common policies to deal with common problems. To supplement the above approach, some trade restriction policies may be necessary to curb the impact of industrial policies pursued by individual countries. However, a thorough-going protectionist policy should not be introduced. The advocates of this course of action tend to overestimate the need for European protectionism. Europe' s trading relationship with the rest of the world is not a cause for alarm. The export/import ratio for EEC manufacturing has deteriorated during the seventies, but not to any substantial degree. Furthermore, a recent study concluded that the impact of protectionism on European trade in manufacturing goods would be negligible: in the author' s words, ‘the impact effect of protectionism, at any reasonable level of tariffs, would be small. With a high degree tariff of 50% or more, the effect on trade would be substantial: but it would be comparatively small in relation to manufacturing output and still more to GDP. Moreover, the Community' s position in the world economy is such that a substantial increase in protection must have adverse effects on the level of activity in the rest of the world.143 A fully-fledged protectionist scheme therefore would be of limited value. However, many aspects of progressive, interventionist EEC policies are bound to run counter to the strategies of transnational companies. For example, a major trend within the USA and Japanese multinationals is towards centralising research and development of new technological ideas within their respective home countries, and then farming the results out to different countries for production. The effect is to concentrate the control of these key industries of the future within Japan and the USA, Alternative Economic Strategy and to reduce other countries to ‘branch plant' economies. Such processes could be constrained to some degree by introducing trade regulation policies for transnationals. These policies could be enforced if it was thought that the parent company of a multinational operating in Europe was frustrating interventionist policies. The effect would be to limit access to the European market, pressuring the company because most multinationals are dependent on sales within Europe. Such trade regulation policies could be a potent weapon for influencing the behaviour of transnational companies at EEC level, even though no individual European country is strong enough to adopt them on its own. Constraints on concentrations of private economic power can be reinforced by the encouragement of industrial and economic co-operation within the public sector and in support for socially responsible private initiatives. Some institutional reform at the EEC level would be necessary. In particular, a new powerful Directorate of Industry would be needed to influence and induce industrial co-operation. And this Directorate ought to have close and intimate links with a revamped and stronger European Investment Bank. The Bank, rather than competing with national financial institutions for investment possibilities, should develop a new set of criteria for the allocation of its funds. In particular, the Bank should move away from the standard ‘rate of return on capital employed' criterion to a set of guidelines which aim at increasing employment, productivity and gross fixed capital formation within European industry. There would be considerable advantages from establishing industrial and investment institutions at the European level. These bodies would complement and enhance the operations of state enterprise agencies which exist in some form or other amongst the member-states, with the notable exception of Britain. 44 And, in general, a vibrant economy within Europe is an important condition of socialist support because of its ability to secure the present standard of living, etc. There is, of course, nothing inherently socialist in the above policies - but a thorough-going socialist programme at EEC level is as meaningless today as the purely national roads to socialism. The crucial factor is the relation of labour movements to European policies. There are various dimensions and levels to this concept. Firstly, associative links need to be fostered to ensure that campaigns etc., agreed to at the European level, are meaningful. For example, last year the European Metalworkers Federation agreed a resolution that if a trade union in one country succeeded in attaining the 35-hour week other national trade unions would refuse to undertake any extra-production work which the firm Presenting the argument 67 Capital & Class 68 might transfer from one plant to another. 45 This resolution could easily remain a dead letter if greater bonds are not built between the European labour movements. Secondly, a possible effect of creating strong associative links could be to promote more trade union initiatives in relation to working conditions. For example, whatever success was achieved by German workers in their campaign for the 35-hour week could act as a catalyst for other unions to take action. Thirdly, a crucial dimension to associative links will be to initiate co-ordinated and joint campaigns. For instance, last year German and Italian trade unions in the automobile industry launched joint action also to achieve a 35-hour week. 46 If associative links had been in existence, there are no sound reasons why such action should not have included French, British and Spanish workers. Furthermore, some quite exciting proposals are being negotiated by trade unions within particular multinationals with the assistance of socialist local authorities. 47 In short, associative links are fundamentally about widening the policy vision of different labour movements to include extra-national activity within their ideas and strategies. To actually establish associative links there need to be changes in the structure and orientation of labour movements at the national and European levels. National movements must begin to approach the problems and potential of their own industry in a new manner. In particular, they must begin to address industrial issues in terms of what they would do if they had political power. At the European level the various trade union bodies must become much more open and dynamic entities. This will entail them ceasing to be mere appendages of the European Commission, and having a more direct campaigning role. To connect these changes in trade unions into a wider political strategy, revisions will also have to be made in the practice of socialist parties at the European level. Left Euro MPs, both individually and as a bloc, should pay less reverence to the European Parliament and other institutions, and take on a more campaigning role in relation to extra-national policies and initiatives. The Socialist International should form a European section which would increase the links between European socialist parties. The analysis above has separated the vertical and horizontal features of the development of associative economies. Of course, the separation is artificial: alliances are needed between forces within both arenas on issues of common concern. An obvious issue at present on which a strong joint campaign ought to be deveoped is the proposed Vredeling Directive, and the question of industrial participation in general. These proposals which Alternative Economic Strategy have emanated from the EEC Commission have been stoutly opposed by the multinationals and business organisations throughout Europe. The trade union response has been somewhat muted, and no effective campaign in support of the proposals has been launched. One Sunday Times report vividly highlighted the difference between business and trade union organisation: ‘on Tuesday taxis swept up to the (European) Parliament building bearing the most formidable galaxy of professional lobbyists Strasbourg has seen … the union lobby consisted of pleasant individuals from the European TuC handing out leaflets.' Clearly, greater attention must be given to coordinating activity between trade unions and political parties on such issues. This article has attempted to set out the case for a greater European dimension within the alternative economic strategy put forward by the British left. The main purpose of the article is not to devise a blueprint but to question the purely national framework of much economic and social policy discussion and to generate debate on the most appropriate forms of extra-national policies. Throughout, the key assumption has been that the left must tackle head-on problems thrown up by the present economic and unemployment crisis; in the words of Robin Murray, ‘The main issue in the UK at the moment is restructuring. Capital through monetarism is carrying through their version of restructuring at the expense of labour with enormous waste and with fearful consequences as far as the state of the world economy is concerned. The task of socialists is to resist this version and instead to work through alternative versions which we have called restructuring for labour.'48 In other words, the creativity and imagination which undoubtedly exist within the left should be turned to the construction and implementation of alternative strategies. I would like to thank John Grahl, acting for the editorial board of Capital and Class, for very helpful advice and assistance. The article, and myself, have enormously benefitted from his contribution. Conclusion 69 1. Department of Trade and Industry, Multinational Investment Strategies in the British Isles, London, 1983, p. 17. 2. Labour Research, May 1983, p. 123. 3. British Business, 27 May 1983, pp. 366-7. Notes Capital & Class 70 4. For a highly readable account of the extent of British financial involvement in the international economy, see Lawrence Harris and Jerry Coakley, The City of Capital, Oxford, 1983. 5. Chris Baldry et al, ‘Fighting Multinational Power: Possibilities, Limitations and Contradictions', Capital and Class no. 20, p. 161, 1983. 6. Tony Lane, ‘Dunlop and World Tyre Industry', Communist Party Economic Bulletin no. 10, Spring/Summer 1983, p. 47. 7. Frank Griffin and Andrew Nickson, Job Crisis and the Multinationals: The Case of the West Midlands, 1984. 8. None of the widely-known publications on the alternative economic strategy - Sam Aaronovitch, The Road from Thatcherism; CSE, ‘The Alternative Economic Strategy', The Socialist Economic Review 1982 put forward any detailed or clear proposals on the type of policies which the left should support at the international level. 9. Hugo Radice, ‘The National Economy - A Keynesian Myth?', Capital and Class no. 22, 1984, pp. 111-40. 10. David Cobhan, ‘France Macro-Economic Policy under President Mitterrand: An Assessment', National Westminster Bank Review, March 1984, p. 50. 11. Julien Savary, The French Multinationals, Pinder/IRM, London, 1984. 12. Economist, ‘French multinational companies', 15 September 1984, p. 75. 13. Financial Times, 17 January 1985, survey. 14. Nicholas Kaldor (1982), The Scourge of Monetarism, p. 64. He develops a similar theme in the Fabian pamphlet, The Economic Consequences of Mrs Thatcher, 1983. 15. For an account of how the EEC has assisted the development of the ‘Trojan Horse' process see the Institute for Research and Information on Multinationals, Multinational Companies and the EEC, no. 1/2, July 1984. 16. W. P. Hogan and I. P. Pearce, The Incredible Eurodollar, 1982, p. 3. 17. Francis Cripps and Terry Ward' s article, ‘Government Policies, European Recession and Problems of Recovery', Cambridge Journal of Economics no. 1, March 1983. 18. Ben Fine, ‘Multinational Corporations, the British Economy and the AES', Communist Party Economic Bulletin no. 10, Spring/Summer 1983, p. 32. 19. For a detailed argument on the need for a transitional programme, see Geoff Hodgson, The Democratic Economy, Pelican, 1984. 20. Dexter Whitfield, ‘Sale of the Century', Marxism Today, October 1984. 21. Hugo Levie and Sue Hastings, Privatisation, Nottingham, 1983. 22. Charles Levison, International Trade Unionism, 1972. 23. Werner Olle and Wolfgang Schoeller, ‘World Market Competition and Restrictions upon International Trade Union Policies', Capital and Class no. 2, 1977. 24. Christopher Baldry et al, ‘Multinational clsoure and the case of Massey Ferguson, Kilmarnock', Industrial Relations Journal vol. 15, no. 4, 1984, pp. 17-27. 25. This group consisted of 25 academic economists and politicians. It has met informally over a ten-year period. The co-ordinator of the ‘Out of the Crisis' project was Stuart Holland, and most of the British members were drawn from the Department of Applied Economics at Cambridge. 26. David Fishman, ‘A Radical View of the European Monetary System', Politics and Power no. 1, 1980, pp. 175-84. 27. Francis Cripps and Terry Ward, New Socialist no. 6, July/August 1982, pp. 22-5. 28. Doug Jones, ‘Is there a case for joining the EMS?', Guardian, 30 May 1984. 29. Stuart Holland, Out of the Crisis: A Project for European Recovery, p. 151. 30. John Grahl rightly emphasises this point in his view of the strategy in Communist Party Economic Bulletin, Spring/Summer, no. 11, 1984. 31. See John Palmer, ‘New Vision of a Socialist Europe', New Statesman, 18 May 1984, and New Socialist no. 9, 1983, pp. 15-19. 32. Paul Teague, ‘Labour and Europe: The Response of British Trade Unions to Membership of the European Communities', unpublished PhD, LSE, 1984. 33. Tony Benn, ‘Labour must not be in the market for capitalist benefit', The Guardian, 25 July 1983, p. 9. 34. Tom Nairn, Europe Super Power or Failure, Amsterdam, 1976, p. 79. 35. Anew concensus is emerging around the SDP and the Labour Right about the necessity of a European strategy. The Left must not allow this strategy to deflect from the need to enact meaningful reforms at the national level. 36. For a study of the EEC economic policies during the seventies see M. Hodge and W. Wallace, Economic Divergence in the European Communities, 1981. 37. Yao-Su Hu, Europe under Stress, 1981, gives a detailed account of the reasons why no convergence occurred between member-state economies. 38. See OECD Economic Outlook, ‘The importance of International Economic Linkages', no. 33, July 1983, pp. 16-21. 39. Francis Cripps, ‘Britain, Europe and Macro-Economic Policy', in Jenkins, Roy (ed.), Britain and the EEC, Macmillan, 1983. 40. See Economist, ‘Bosses want the Common Market Brussels never built', 26 May 1984, pp. 75-6. 41. In 1980 the European Parliament started to take proceedings against the European Commission because of its failure to achieve any meaningful advances in EEC transport policy. 42. David Metcalf, ‘Employment and Industrial Assistance', in A.P. Jacquemin, European Industry: Public Policy and Corporate Strategy, 1984. 43. Ann D. Morgan, ‘Protectionism and European Trade in Manufactures', National Institute of Economic Review no. 9, August 1984, p. 57. 44. See Peter Maunder, Government Intervention in the Developed Economy, 1979. 45. Financial Times, March 1984, p. 12. 46. Financial Times, 6 April 1984, p. 12. 47. A very good example of this is the GLC aiding the trade unions within the multinational firm Kodak to develop an alternative plan for the firm. 48. Robin Murray, ‘Pension Funds and Local Authority Investments', Capital and Class no. 20, Summer 1983, p. 103. 71

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