Mélenchon on the debt crisis

29 Aug

Jean-Luc Mélenchon, left-wing candidate in the 2012 French presidential elections, sets out his ideas on the European debt crisis and France’s own debt problems. Currently sitting in the European Parliament, and uniting a number of those groups and parties to the left of the Socialist Party in next year’s elections, Mélenchon is as good a measure as any of what the French left has to offer by way of economic policy.

In his interview with Le Monde, Mélenchon makes a number of points, none of them very convincing. He argues that the solution to the markets’ attack on Eurozone economies is to have the European Central Bank lend to governments at the same rate at which it lends to banks. This would avoid having countries like Spain and Italy financing themselves at prohibitive rates via the markets. He also calls for a harmonization of both fiscal and social policy at the European level and the introduction of new forms of European protectionism. These could include social and ecological tariffs on goods imported from outside the EU, plus a ban on any out-sourcing of economic activity that would mean a cut in production inside the EU. Mélenchon’s left federalism is a welcome example of imposing a political project onto the economy and onto markets but two problems in particular stand-out. It may be his vantage point as an MEP that skewers his analysis but Mélenchon’s faith in European federalism poses some obvious problems of democracy. This is a point that has been made before on The Current Moment: further European integration in response to the crisis will only lead to a political crisis further down the line given the lack of any obvious democratic accountability for decisions made and institutions created at the EU level. The second problem is Mélenchon’s Euro-chauvinism. By arguing for European-level protectionism, Mélenchon resembles a sort of re-heated version of Ernst Mandel. Back in the 1970s, Mandel, a leader of the Belgian Troskyist movement, claimed in his 1970 book Europe versus America that the economic crisis was leading to a consolidation of European business such that the future would be marked by competition between Europe and the US.  Mélenchon welcomes this idea, implying that only behind a protectionist wall can the European economy survive. This kind of argument, the false hope of Euro-chauvinism, leaves us cold. It pits us against US, Chinese and Brazilian economies in the same manner of earlier nationalisms. We have already seen it emerge in Europe with German diatribes against Greek profligacy and Mélenchon’s embrace of it chimes with the nationalist traditions of the French left.

Mélenchon ends the interview with an idea about how government deficits can be reduced through higher taxes on top-end incomes and big companies rather than through austerity budgets. By doing this, he says, a clear message would be sent that there are limits to accumulation in France. Mélenchon is right to point to the problems of a tax system that systematically favours the rich. But as an alternative to austerity budgets what’s needed is not a plan for redistribution but rather a plan for growth. Mélenchon leaves unanswered the critical question of how to boost growth in moribund Eurozone economies. His analysis is made entirely within the parameters of contemporary political economy. He says the crisis is a systemic one and yet suggests that a lot more government is a solution to too much market. A real alternative needs to find a way of combining an argument about redistribution with one about growth and productivity.


2 Responses to “Mélenchon on the debt crisis”

  1. brent August 29, 2011 at 1:01 pm #

    I’m no economist, but it seems to me that several of JLM’s points are growth-friendly: 1) a reasonable protectionism that imposes environmental and social costs on imports should encourage domestic production; 2) stabilization of capital costs by direct ECB loans to debtor governments should calm financial markets; and 3) redistributive tax policies should encourage demand. Doesn’t all this qualify as a strategy for growth?

    • Current Moment August 29, 2011 at 2:43 pm #

      Mélenchon would probably argue something like that. But two points stand out. One is that the argument is presented more in terms of redistribution and fairness than in terms of growth. In his interview, Mélenchon said clearly that the measures were intended to send a message to the private sector about the “limits to accumulation” in France. The second point is that Mélenchon doesn’t address the problem of a lack of private sector investment. Instead, he relies purely on the state to dig France out of the downturn. A question to ask of him, and one we have debated on The Current Moment in the past, is whether redistribution alone has enough of a multiplier effect to counteract a stagnant private sector. Unlikely.

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