With the victory of anti-austerity forces in both France and Greece yesterday signs are emerging that the tide is beginning to turn against the cruelty and economic insanity of the budget-cutting, belt-tightening neoliberal program. Much work remains, of course: France’s new President François Hollande must resist austerian pressures from Germany’s Angela Merkel and the European Central bank, while Greece has to determine whether it can even stay in the Eurozone, given the criminally callous demands that are being asked of its citizens. Paul Krugman today observed that this is a real advance, because the "Merkozy" austrity alliance between France and Germany is broken, removing one massive roadblock to Keynesianism. His prescriptive recommendation is also sound; while Krugman has always been partial to breaking up the Eurozone as a solution to the crises in its various countries, neglecting the negative long-term effects that would have on the critical project of European integration, he now that those negative consequences would be too great and offers an alternative: Germany and the ECB have to stop focusing on inflation and accept the need for stimulative expansionary monetary policy. That would be a good thing.
The elections in France and Greece illustrated why European integration is so important: rabid nationalism is still a strong undercurrent in Europe and needs to be contained by the larger regional institutions. The elections both showed the dark underside of several years of economic crisis and failed austerity approaches: anti-immigrant, bigoted right wing parties had strong showings in both countries. The US is not immune from this, even through some American commenters like to hector Europe for its racism (always such a laugh coming from an America with its history of racist slavery, Jim Crow, and continued racial exclusion of blacks!). Further austerity will not only continue to fail as economic policy, it will threaten another round of ultra-nationalism. But note how Norway has, en masse, rejected the terror of it's own racist fringe in the resounding denunciation of Anders Behring Breivik. I will assert that there is an obvious connection between the Scandinavian model, which gives people economic security, and the rejection of racism; people are less subject to demagogic blaming of minority scapegoats when their lives are secure and prosperous.
During the Cold War there was a group of French radicals who argued that we are faced with a choice between democratic socialism or barbarism: if the advanced nations do not all adopt the Scandanavian model, and push past it to start building real alternatives to competitive, exploitative, alienating capitalism, then we will ultimately descend, perhaps gradually but perhaps rapidly, deeper into savagery. People want to live good, meaningful, secure lives, and they want to contribute to making the rules by which they will live. That entails economic democracy, not our current oligarchy (which is democratic in name only).