The EU is a capitalist region, socialized by a great number of social-democrat measures.These are gradually being dismantled on the national level. Even France under Sarkozy is working on it. They are unsustainable in the basically capitalist global market. And also simply because they do not favor the perceived interests of the capital owners, who basically demand one thing only: ever higher profits.
The fact that consumers ultimately need to have the money to be able to buy the goods and services produced by these companies - thus enabling them to make any profit at all -, is understood by some politicians, but not by the CEO’s of individual companies, whose over-riding goal and prime worry is to make sure the figures go up.
In the capitalist structure this means a constant increase in morbid capital, which ultimately results in crisis (cf. our article ‘Turning morbidity into a homerun’). By arranging more credit for consumers, one can postpone the crisis for a while (giving companies in the meantime a chance to suck even more profit out of them), but there comes a point when consumers have over-reached themselves, whereupon they begin to massively default. A double crisis then results, such as we have right now.
Solidarity is not Solidarism
One of the principles driving the EU is what they call ‘solidarity’. It is basically a social-democrat principle. One of its objectives is the realization of the idea of ‘cohesion’, which means that all member-states should be enabled to reach a minimum social-economic level, which at present is set at 75% of the average European level. Poorer member-states are helped by the Union to reach and maintain this level. This is done by means of social-economic stimulus-packages, which basically re-distribute tax-income from richer to poorer member-states. Finland, Ireland, Spain and Portugal have all greatly benefited from these programs.
But, as will always happen with income re-distribution schemes, the richer member-states (basically the major capital-owning states) are complaining. The high taxation feeding these schemes is hurting the profits of their national companies, which have to compete in the global market and so have cogent reasons to demand tax reductions (on top of their profit motives). So, the circle is complete: as is happening on the national level, the inter-European income re-distribution schemes are also gradually being reduced or will even be dismantled.
Now, the idea of ‘solidarity’ as applied in the EU should not be confused with the third economic system we choose to call ‘Solidarism’ (the Just Third Way). True it is, that the basic idea behind European ‘solidarity’ is the same as what drives Solidarism, i.e. the desire to achieve peace through social and economic justice. But Solidarism holds that this can only be achieved when capital ownership is structurally diffused, both nationally and internationally. Without this the economy will remain unstable and peace insecure.
To tax, or not to tax ...
Taxation could be used to diffuse capital ownership, but we do not recommend it. First of all, there’s no need to use taxation, as it can be done by means of money creation. And secondly, Solidarism favors small government and low taxation. The main goal is to diffuse capital ownership, so that everybody will receive a second income from capital. That makes it only natural that we would want income to be taxed at the lowest rate possible. As a rule of thumb we might say that income and profit tax over and above 10% (the Biblical tithe) means that government is still too big. As we see it, government should shrink to only those things which by common consent are best done collectively and without which ordered society would be impossible.
Unconscious application of some Solidarist thinking in EU
Without being aware of it, the EU’s founders did to a certain extent make use of Solidarist thinking to build the Union. They figured that future wars in Europe could be avoided, if capital ownership were diffused among the European states. If German capital owners, for instance, held stock in French companies and vice-versa, Germany and France would not go to war against each other anymore. On the contrary, it would be in their mutual interest to create a larger market and tighten their inter-relationship. This worked. Inter-European capital investments soon grew into the Common Market, which gradually grew into the European Union. And peace resulted. Although anything is possible in human affairs, at this stage it seems very unlikely that the European nations would go to war against each other. Which goes to show how important the diffusion of capital ownership is. Although there was only diffusion among the capital owning elites of the European nations (and not among the people of these nations), it did lead to peace.
Solidarism will also lead to peace between rich and poor. Anybody rejecting our proposals as a way to achieve such peace, should come up with a better idea really. Or shut up.