3 How to effect the transformation
We will now shift the focus to specific policy measures. We will present these
one by one and while explaining how each measure helps to achieve the
broader objectives we have described.
3.1 Monetary reform
European monetary policy is dominated by the European Central Bank (ECB).
This institution, operating outside of any democratic control, is charged
with ensuring the monetary conditions for the continued reproduction of
European capitalism. The removal of the bank from democratic control, and
the imposition of strict anti-inflationary policies, represent one of the key
victories of late 20th century liberalism. Of itself, inflation is not necessarily
against the interests of the poor and working classes, provided that wages
keep up with prices. The people who are hit hardest by inflation are the rentier
class whose holdings of money and interest bearing assets depreciate. Since
these people are opponents of socialism anyway, a socialist government might
not worry about any financial loss these people suffer, were it not for the other
social effects of inflation.
Uncertainty about future prices can lead to a social psychology of
instability leading to a loss of confidence in the social order. For this if for
no other reason, it is desirable that a socialist government in Europe follow a
policy of price stability. Indeed, our proposals to replace money with labour
vouchers are tantamount to a long term policy of declining prices.
Given an objective to establish a socialist economy based on the
equivalent payment of labour, monetary reform is a step towards this goal.
We suggest that the ECB be placed under a legal obligation to maintain
a stable value of the currency in terms of labour. A prototype for this could be
the successful monetary policy of the British Labour Government after 1996.
At that time the government placed monetary policy under a committee of
expert economists (the Monetary Policy Committee) rather than politicians,
and gave them a clear legal obligation to achieve a particular target rate of
inflation. One might have expected this policy to be severely deflationary, but
Transition to 21st Century Socialism in the European Union
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