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Why Left-wing Advocates Of An End To The Single Currency Are Wrong


Until recently those advocating an end to the euro area and the return, in some form or other, to national currencies have tended to be on the political right. Their main concerns have been what they see as the slide towards a “transfer union”, the bailing-out of allegedly spendthrift governments, and the undermining of the independence of the European Central Bank and its commitment to price stability. Supporters of these positions had largely been sceptical from the outset about abandoning the D-Mark and other “hard” currencies and throwing them into one basket with the softer money of countries seen as having what was euphemistically called a different stability culture. Looking at the political program of the new anti-Euro party in Germany, Alternative für Deutschland, reveals some other issues: resentment of the bailing out of financial institutions at the tax-payers’ expense, and also the belief that the crisis measures imposed on the deficit countries in the name of saving the euro bring unnecessary hardship and/or threaten social and political breakdown.[1]

On the European Left, criticism of the way that the Euro crisis has been approached has been very different. Left-leaning economics commentators and left-of-centre political parties have criticised the focus on the supposed misbehaviour of the crisis countries, the systemic failings of the euro-area architecture and thus the need for solutions based on European solidarity, the need for expansionary fiscal programmes rather than austerity, and for the central bank to play much more active role in restoring economic growth. Saving the euro and getting back to balanced growth as soon as possible have been undisputed policy goals.

This is changing, however. In Germany the party Die Linke seems increasingly to be moving to a position of favouring an orderly break-up of the euro area. Moreover, a number of progressive economists – unlike those on the Right, with a history of advocating monetary integration in Europe – have come to the conclusion that the euro project is doomed and only its orderly resolution can save Europe from years of depression and immiseration, if not worse. Their position overlaps with the right-wing critics at least on the latters’ secondary concerns: the plundering of taxpayers and the suffering of the populations in the crisis countries in southern Europe.

Having consistently taken issue with liberal-conservative critics of the euro since the outbreak of the crisis, I now turn to the critique of the anti-euro position on the left. I believe it is misguided. First of all I briefly set out the position of these critics. I then show that both in economic terms and from a normative left-of-centre political perspective these positions should be rejected.

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