In ‘Briefings for Brexit’ (20 May 2019) Professor David Blake, of the Cass Business School, has a long and fascinating article comparing the EU in practice with a German Plan for a European Economic Community, which was developed at the University of Berlin in 1942. There are striking similarities with the European Economic Community that was introduced in 1957 – and which became the foundation of the European Union. The article is here:
In this post we rely largely on quotations from the article, and from the Plan, with few comments from us, though as usual we offer links to relevant posts from our blog. We are not saying the EU is Nazi, just that there is a very Continental (Franco-German) approach to European ‘solidarity’ that is alien to the UK/Anglophone/Common Law approach.
“What is particularly interesting is that the very same term ‘European Economic Community’ (EEC) was adopted by the principal Founding Fathers of the European Union, Jean Monnet and Robert Schuman. There are striking similarities between the Plan and the EEC.”
“The 1942 Plan has had…a significant impact on both the economic philosophy underlying the EEC and the political thinking behind the European Union (EU) itself. At its heart is a strong dislike of what is described variously as English/Anglo-Saxon…economics” (our emphasis)
Professor Blake quotes Dr Heinrich Hunke, war-time President of the Publicity Council of German Industry, in the Introduction to the 1942 Plan: “The existing failures of clarity arise in the first case around the concept of the control of the economy, the degree of solidarity and neighbourly support, the development of individual strengths, the concern over the maintenance of living standards…”
These expressions are remarkably similar to those used by EU leaders: “Europe can only work if we all work for unity and commonality” and “Solidarity is the glue that keeps our Union together.” and “Being European, for most of us, also means the euro … Our European budget is living proof of financial solidarity. The euro is an expression of solidarity.” (from Jean-Claude Juncker State of the Union-2: Critical Examination).
Hunke had a lot more to say, including: “There can be no doubt that the concept of economic control, or rather economic leadership, is…new. A new, unitary concept depends on it. The Anglo-Saxon economy is no longer classic but obsolete…A new ideological and terminological concept has arisen…State economic leadership… forms the core of the new theory and practice. It replaces the autonomic egotism and the automatic, self-acting laws of the Anglo-Saxon theory….State economic leadership signifies…the creation of a uniform economic understanding and attitude, the allocation of decisive tasks through the political leadership and the final decision of the state in all questions of economic power”. (our emphasis)
Walther Funk, war-time Reichs Economics Minister and President of the Reichsbank, in his Plan chapter, The Economic Face of the New Europe, wrote: “If now instead of Germany we consider Europe, we come naturally, impelled by pure economics, …to very similar conclusions. Once again, it is technical, economic development which presses unstoppably towards the formation of a great continental economic area…[T]he unification of the European economy will come because its time is here and now…If one only considers the natural potential of our continent, it becomes apparent that Europe, in fact, meets all the requirements of a complete, self-sufficient economic area.” This is outdated, access to world markets is crucial to relative prosperity and advances in travel and communications is now far simpler and more efficient.
Professor Hunke is excited by this prospect: “The concept of the large economic area has proved to be viable. I see no obstruction which can seriously stand in the way of its realisation. For the formation of large economic areas follows a natural law of development.”
From Jean-Claude Juncker State of the Union 2017: “If we want the euro to unite rather than divide our continent, then it should be more than the currency of a select group of countries. The euro is meant to be the single currency of the European Union as a whole”
Hunke makes promises of the benefits of an economic community, many of which we have become familiar with from EU propaganda. These promises (unfulfilled by the EU) come with a price (paid by both businesses and their consumers): “It should not go unrecognised that the system of community economic endeavour naturally requires on-going state Directives in a larger quantity than those to which businessmen in many European states were previously accustomed…The complicated economy of our century needs state control”. (our emphasis) By “state” he makes it clear that he means the proposed “European Economic Area”, or ‘Europe’ as both he and the EU call it.
Professor Blake: “You can see immediately here the similarity with the EU’s Single Market in goods and labour, with the aim of creating an efficient self-sustaining internal market that maximised resource allocation in all parts of the EEC.”
Edward Spalton, an early translator of the Plan, quoted and linked by Prof. Blake, went further: “[T]he changeover from free trade in food from all the world to the highly protectionist, minutely officially controlled, mind-bogglingly complicated CAP was a profound culture shock. Something so detailed obviously had to have an ideology behind it, but nobody could tell me what it was. It was entirely alien to the common-sense system we had known before…The EEC’s biggest project and budget item [the CAP] was squarely founded on principles and policy objectives, decided in Berlin by 1942”.
The German Plan also envisaged a common currency throughout Europe. This was incorporated in the Plan by Walther Funk, from earlier ideas: “It will certainly be no easy task to bring the currencies of Europe together. …But they can be brought into stability amongst themselves and then with currencies outside Europe. But this task is only possible if we first bring the European national economies into order and thereby stabilise the internal worth of their currencies. Then, with co-operation in trade policy, the external values can be brought into line.” This is exactly in line with EU thinking, and action in the form of European Monetary Union (the euro).
Funk has more pre-echoes of EU policy, though expressed a little more openly than would be acknowledged today: “It is unavoidably essential to have a tight, prudent public expenditure policy, as in the private economy. Above all, there must be a sensible control of production and demand, a control over money and credit and of consumption. We will deal with all these things in one way so that no upheavals occur…We have everything in hand through the authoritarian means of the state to bring these things promptly to order.” (our emphasis) The key word here is “control”, with “authoritarian” being the confident expression, at the time, of a German victory. We might argue that Germany has indeed been victorious, under the wing of the EU, if not quite in the way Funk and the Plan had in mind.
From Jean-Claude Juncker State of the Union 2017: “This is thanks to an intelligent application of the Stability and Growth Pact. We ask for fiscal discipline but are careful not to kill growth. This is in fact working very well across the Union…”
Professor Blake points up more links with the past: “German obsession with fiscal discipline is as strong today, extend[ing] to German insistence on EU-wide fiscal discipline. This is enforced by Germany’s refusal to allow the EU to become a ‘transfer union’…[I]n the federal EU, Germany – which has an enormous trade surplus with the other member states as a result of the uber smart way it arranged for the Deutschmark [aka Reichsmark] to convert to euros at the most favourable possible conversion rate – refuses to make fiscal transfers to deficit member states, such as Italy.”
In the final chapter of the Plan Professor Hunke argued that: “Europe is a community of living space, a single economic area. The desire for security from crises can no longer be achieved by independence from each other, but only through the common improvement of Europe’s individual national economies”. This too is echoed by Juncker in his State of the European Union 2018 (for example: “We need more solidarity not for solidarity’s sake but for the sake of efficiency.” and “The euro must become the face and the instrument of a new, more sovereign Europe.” and “European sovereignty is born of Member States’ national sovereignty and does not replace it. Sharing sovereignty – when and where needed – makes each of our nation states stronger.”
Professor Blake then quotes extensively from Funk’s critique of “capitalism…which is now nearing its end”. Funk concludes that: “The will towards European Community effort, as it is forged under hard wartime conditions must become the leading concern of the basic, ruling economic theory in peacetime too. That means a constant effort to understand the great objectives and coming tasks and to get stuck into them. It also means a readiness, in certain circumstances, to subordinate one’s own interests to those of the European Community.” The rhetorical echoes of Continental philosophy, and the contrast with the Anglo-Saxon variety, are strong here and can also be found in EU publications (see The UK is Different for more examples). As Professor Blake puts it: “the Plan’s notion of ‘economic freedom’ is diametrically opposed to the idea of liberal economic thought propounded by economists and philosophers in the UK over centuries.”
Professor Blake then summarises the “striking similarities between the 1942 Plan and the European Economic Community”, with a long list, which opens with, “[t]he establishment of a centralised, highly bureaucratic system of administration in the form of the European Commission” and concludes with, “[t]he concepts of solidarity and neighbourly support, so long as members fit in with the Plan.”
He points out that: “Some of the above quotes [in his list of 20 similarities] come from the Plan, while others come from the EU website – it is hard to differentiate.”
Neither Professor Blake nor we are arguing that the EU Project is directly based on the German war Plan. But the underlying similarities are remarkable, and the ideology is identical. Professor Blake asks how it turned out in practice and offers some answers, noting particularly the disparity between continental countries, which may find it easier to accommodate the cultural revolution that the EU represents, and the UK, which has a long and distinctly different set of cultural traditions.
“So much about recent events surrounding Brexit become much clearer when you understand the Plan. The way the EU conducted the Brexit negotiations is entirely consistent with its underlying philosophy – this is not a club that you can leave once you have joined… Similarly, the language used by people like Juncker – when he said that the British were ‘deserters’ who needed to be punished – could have been lifted directly from the Plan. But most significant of all is the realisation that the hostility to Anglo-Saxon economics is both long-standing and widespread on the continent and that the democratic deficit in the EU – widely acknowledged even by strong EU supporters – is here to stay.”
“Believers in liberal economic values and democracy cannot possibly compromise on these points. It should now be clear that the only way out of this mess is a clean-break Brexit – which involves leaving the Customs Union, the Single Market and the jurisdiction of the ECJ…We can begin to trade with the EU on World Trade Organisation terms – which is how we trade with most of the rest of the world. We can later work on a comprehensive free trade agreement with the EU – which is what the EU offered before they realised that they could get away with the toxic WA [Withdrawal Agreement]. This is the only way to avoid being drawn into the kind of political union envisioned in the 1942 Plan.”
(We covered some of this, more lightly, in What’s Hitler got to do with anything? May 2016)
In 1940 the Conservative Party was struggling with the question of how the UK should respond to Germany. Walther Funk, prior to his contribution to the Plan, had this to say (http://www.eu-facts.org/en/roots/06_economic_reorganization_europe.html)
“The question of the future general economic order in Europe must therefore be answered as follows: after the victorious conclusion of the war we shall apply those methods in economic policy which won us our great economic successes before the war and especially in time of war, and we do not contemplate again allowing the operation of the unregulated play of forces which involved the German economy in very great difficulties. We are convinced that our methods will prove to be of great advantage not only to the Greater German economy, but also to all European economies which naturally stand in close trade relations with Germany.” The very great difficulties today are being experienced by others and the great advantage seems to be mainly to Germany.
“Regarding the question of the basis of a new currency … It stands to reason that the Reichsmark will have a dominant place.” And “The price level will have to be adjusted to that of Germany. But a currency union will bring about a gradual levelling of living standards.” Germany successfully adjusted the Euro to suit a very competitive Deutschmark rate which hasn’t help level standards.
We finish with a comment from John Longworth, who was sacked as Director General of the CBI for expressing a personal view that Britain should leave the EU (Daily Telegraph, 18th May 2016):
“In 1940, at that moment when our nation was in most jeopardy from a European “project” centred on Germany, the Conservative party was split.” “The Prime Minister, Neville Chamberlain…thought it economically rational to make peace with Germany…By contrast…Winston Churchill, thought differently. He persuaded the Cabinet that once a country capitulates, it never recovers. And the rest, as they say, is history. Except here we are again.”
Now the Conservative Party is struggling with the question of how the UK should respond to the EU. With the help of good leadership the earlier struggle was eventually resolved successfully (though at great cost); now good leadership is absent and capitulation is on the cards.