Changing the “Grundgesetz” to overcome the Euro Area Crisis

Paris, August 11th, 2013

Reflecting on the disastrous economic situation in so many euro area countries again and again I could not escape the feeling that the German World Championship on exports is very much at the root of the situation. On my old MIME site I had referred to the criticism of Michael Schlecht, member of the German Parliament (Die Linke) against Merkel, “Merkel rollt über Europa”. And this is indeed what she is doing and most likely she will be reelected! A scandal that is that the German Left has no alternative.

When searching now on the discussion on the violation of the balance of foreign trade I found again some important information on Michael Schlechts homepage. He quotes former chancellor Helmut Schmidt on the issue. It turns out that Schmidt (age 92) had given a speech at a SPD party congress already in december 2011 in which he had attacked the arrogance of Merkel and Westerwelle (German foreign minister). Here is an exerpt of his speech at the Swiss “Tagesanzeiger”, indeed a very decent and balanced view on the situation. Schmidt beats them all! His SPD party comrades should take courses on my Marxian economics. This would enable them to develop a vision for victory against the German reaction. At the moment they are just a part of it!

The austerity policies forced upon the highly indebted euro area member states is partly due to the imbalances of trade within the euro area.

The problem stated by Schmidt:

“At the same time a serious error of development has shown up, namely sustained enormous surpluses of our trade and our current account. Surpluses making for years about 5 percent of our national product. (…) All of our surpluses are in fact the deficits of others. The claims we have towards the others are their debts. It is an annoying injury of what once we had raised to the legal ideal of “external economic equilibrium.” This injury must trouble our partners.” (translated by the editor, emphasis added).

He is referring to the so called “Stabilitätsgesetz”, a law of a keynesian spirit to stabilize the economy which was introduced in 1967 after a first crack in the “Wirtschaftswunder”. It introduced the legitimacy of public debt in order to stabilize the economic development. It’s first article sets as the objective of the governments economic policy the attainment of the four goals of price stability, full employment, economic growth and balanced foreign trade.

Or, it is precisely the balanced foreign trade objective, which is neglected and which imposes incredible costs on Europe. It is not that Germans should sell less. No, they have to buy more imports. Why don’t they follow the Americans in this aspect at least.

So the answer to Merkel’s unlawful strategy must be to make her responsible and to sharpen the legal control. I therefore propose a change of the German constitution or simply a change of the “Stabilitätsgesetz” in order to save Europe, a law which obliges the German government to establish balanced foreign trade. Any reduction of this surplus will create jobs in Europe and diminish the debts of the European partners.

As one can see I am certainly not the only one who proposes this, but I am the only one who has come to this conclusion via a Marxian analysis of labour values and exploitation. And I am the only one – even the macro-economists close to the trade unions like Eckhard Hein etc. defend the productivity rule of wage increases! – who tries to solve the issue via the reinforcement of the trade unions and the establishment of economic democracy. This is the gist of the demand for the introduction of investment contributions as part of the salary. Those funds can well be used in the European setting to compensate for trade imbalances.

Here is the proposition of the new law, article or whatever is most suitable:

Proposition of a “Law to Enforce the Balancing of  Foreign Trade”

In the interest of maintaining peace in the world and the promotion of European integration, in particular the avoidance of quasi-colonial economic practices, the federal government is responsible to establish a balanced current account in Germany’s economic relations with countries with which the Federal Republic of Germany is engaged in a monetary union or has agreed upon fixed exchange rates or the adjustment of the balance of payments has to be achieved by balancing financial transactions.

To ensure balanced  trade, the federal government coordinates its economic and trade policies in close collaboration with its trading partners.

Paris, 11.8.2013

Klaus Hagendorf

The original proposal in German:

Gesetz zum Ausgleich der Leistungsbilanz

Im Interesse der Erhaltung des Friedens in der Welt und der Förderung der europäischen Integration, insbesondere der Vermeidung quasi-kolonialistischer Wirtschaftspraktiken, ist die Bundesregierung verpflichtet, gegenüber den Ländern, mit denen die Bundesrepublik Deutschland  eine Währungsunion oder feste Wechselkurse vereinbart hat, eine ausgeglichene Leistungsbilanz zu gewährleisten oder ausgleichende Finanztransaktionen zum Ausgleich der Zahlungsbilanz herbeizuführen.

Um den Handelsausgleich zu gewährleisten, koordiniert die Bunderegierung ihre Wirtschafts- und Handelspolitik in gegenseitigem Einvernehmen mit ihren Handelspartners.

Paris, 11.8.2013

Klaus Hagendorf



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One Response to Changing the “Grundgesetz” to overcome the Euro Area Crisis

  1. eurodos says:

    “Merkel rolls over Europe!” Surely that’s so, but she is not alone. It is not pure coincidence that the Olympic Games in Sotchi coincide with ruthless bloodshed – this time in the Ukraine – aimed at weakening Russian political impact.
    Those who have a little memory: 1980 boycott of the Olympic Games in Moscow (in support of the “freedom fighters” in Afghanistan, 2008 Olympic Games in Beijing (war in Georgia). This time it is Kiev.
    Here is a somewhat more balanced view of what is happening there. Although it was written already in January it still gets the point:
    “Support Ukrainians but do not legitimize the far-right and discredited politicians!”


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