The United States, due to the right conservatives being always majoritarian in matters of foreign and military policy, has been pursuing a unilatera...

The capacity to guarantee such common goods constitutes the most convincing argument to legitimate the hegemony of one country over the others. For this reason, the United States has also lost its hegemony in the Gramscian sense, namely as a revered moral, cultural and political leadership: together with the American hard-power, also its soft-power declined. Should the United States have adopted less aggressive and more responsible policies, this process would have been slower, but hegemony would be lost all the same, because the world economic power has spread, whereas in 1945 it was concentrated. For the same reason, it is ludicrous that other countries aspire to the role of hegemonic power and that the US policy be dictated by such a fear. Simply, the era of hegemonies is finished. The globalization's raison d'état is cooperation. The political doctrine that democratically organizes cooperation is Federalism. The one that would like to organize it in an authoritarian way is imperialism.

Unfortunately, as too many times has been said and had to be repeated, reason prevails only after all other roads have been tried. In America's reaction to the financial crisis, the Wall Street logic has arrogantly prevailed over not only the Main Street's one, but also over the one of the White House. Political interest would require a strong cooperation between the United States and the European Union, to bring finance back under control and reestablish the conditions of monetary stability necessary to develop on new bases the real economy, but national States are unable to impose themselves over the transnational companies. So, Wall Street has waged the current financial war that has as its immediate aim the sovereign debts of some European States, and as a strategic aim the euro and the monetary stability policy pursued by the ECB. It can be explained by the necessity to issue public debt instruments at the world level, that for the present year are estimated to amount to 12 trillion dollars, of which 4.7 for the United States, 3 for Japan and just 1.4 for the so much vituperated European sovereign debtors. To those who think that the wars waged by bankers are less lethal than the ones entrusted to generals, I suggest to go and check the slump in life expectancy at birth (approximately ten years) that followed both the financial crisis in South East Asia and the one in Russia. In countries without a welfare state, the destruction of family savings is tantamount to a carnage, and yet neoliberal economists express their sorrowful surprise for the fact that the emerging countries, after those crises, felt the need to accumulate huge foreign currency reserves.

In the meantime, Democrats and Republicans reached an agreement to bring the US budget deficit up from 7 to 8.5% in 2012, despite the US longtime unsustainable indebtedness, relying once more on the dollar's exorbitant privilege, a Paretian residue of an era already passed. It is a fact that less and less Treasury Bonds are bought by the US traditional creditors (China, Japan, oil-exporting countries), and more and more have to be bought by the Fed, with transactions that could eventually lead to a veritable monetarization of debt. The total amount of such transactions, by now in the trillions of dollars, ominously brings to mind the Weimar Republic. The confidence of the creditor countries has been progressively reduced by the inability of the USA to subject itself to budgetary discipline, to increase public and private savings and to regain international competitiveness. A country can pay its debts only with exports: this lesson by Keynes in his The Economic Consequences of the Peace (1920) should be kept in mind by the creditor countries too. The BRICs in particular have already reached agreements allowing them to settle their accounts in their respective currencies, without resorting to the dollar; they brought down the dollar's share in their reserves from 70-80% to 50-60%, and on last March 29 announced that they want to set up a development Bank (similar to the World Bank) that will not have the dollar as the reference currency. Finally China, by allowing a greater oscillation in exchange rate, made a further step towards the internationalization of the renmimbi.

The European Union deserves better grades in proficiency with respect to the USA, but not in behavior. Overall, Europe has a balanced balance of payments (hence it is not responsible for global imbalances), a quite sustainable net foreign debt (hence it does not put any pressure, unlike the US, on world finances), and domestic savings sufficient to finance a great part of its sovereign debts, even at the high interest rates imposed on its weaker members. The European Union has made, after the crisis, formidable progress in its integration process, even though, seen from the other shore of the Atlantic, it appears slow and limited. What appears Byzantine in the eyes of Americans, used to the decisional speed of a State by now more centralized than federal, is instead the cruising speed of European politics that, after so many civil wars, makes one step after another through laborious procedures ensuring consensus, to be reached among 27 member States and others on the waiting list. Consensus-seeking constitutes the distinctive trait of the EU integration process, that makes Europe a “gentle force”¹.

All this explains, but does not justify, the fact that after 67 years since the end of WWII, despite the efforts spent then by the United States for the unification of the old continent, even conditioning the Marshall Plan's aids to the creation of a free market, Europe is not yet in a position to give Kissinger the famous telephone number to call in case of crisis. National States cede sovereignty to the European level only when forced to by crises and contradictions otherwise insolvable. The European industry could not develop without a market of continental dimensions: then came the European Common Market. The market could not survive if every State remained free to make competitive devaluations: then came the monetary union. The latter cannot survive without an adequate European budget: the fiscal union will come, and will imply a political union, because the lesson of the American revolution remains vital: no taxation without representation.

The fiscal compact has been underwritten with a new treaty to overcome a British veto. Twenty five countries out of twenty seven (all those belonging to the Eurozone plus eight) have thus demonstrated their will to proceed towards a closer political integration, submitting their respective budgets and economic policies to common discipline and controls (reciprocal and from the Union), and committing themselves to bring, within twenty years, their public debts down to the level of 60% of GDP (with flexibility clauses for the economic cycle) and each subscribing its part of the Funds set up to face speculation: the European Financial Stabilization Fund (temporary) and the European Stability Mechanism (definitive since 2013). This decision has made available one trillion dollars to protect the sovereign debt of the countries driven into difficulties by the high interest rates required by the markets. Another trillion dollars has been provided by the ECB to European banks (accepting securities as collateral) to avoid possible liquidity crises. The threshold between monetary union and financial solidarity has thus been passed. As to financial regulations, four new European Authorities have been already made operative: the Committee for systemic risks, presided over by the ECB President, and three Supervisory Authorities – a European Banking Authority, a European Securities and Markets Authority, and a European Insurance and Occupational Pensions Authority. The reform of accounting procedures and the adoption of the Basle III regulation are under way.

Europe is still lacking an adequate public budget and a European government of the economy, an absence that the markets are highlighting every day. Krugman is right (and with him many others) in believing that austerity policies alone, in the course of a recession, are pro-cyclical and could even not allow to reduce the debt/GDP ratio, because the reduction of the denominator could be higher than that of the numerator; but he is wrong in suggesting expansive policies to the European national States (in this case to Germany for all the others) and a lax monetary policy to the ECB. Keynesian policies at national level are no longer possible, because the integration of European economies is now so advanced that the expenses of one State go to the advantage of all the others, a thing that cannot be asked to political leaders who are legitimated by the national vote (this is also the substance of the caveats to financial solidarity put forward by the German Constitutional Court). He is also wrong in calling for an even more permissive monetary policy, because the central Bank can finance the banks, as it is doing, but cannot orient development. We need instead not growth (more cars, television sets, etc.) but development (investments towards a new post-fossil model of production and consumption), as Galbraith already explained in The Affluent Society (1958) and Spinelli submitted to the European debate with his PCI, che fare? (1978). Only the European Union can finance and manage: 1) the production of public goods and the protection of common goods no longer within reach of the national States and even of the super-power; 2) a plan of sustainable development aimed to support research, innovation and development for energy saving and the conversion from fossil to renewable energies. It would suffice to double the present budget of the Union (from a net 1% of GDP – the treaties would allow 1.27% – to 2.5%). With a 5% budget (still quite far from the American federal budget, which appears to be the result of an imperial centralization) we could merge our diplomacies and armies, making huge resources available, and allowing for a better competitiveness in the industrial sector too. Many of such actions require not only European, but worldwide cooperation. Europe should represent those positions, with a single voice, in international institutions (UN Security Council, IMF, WB, WTO, etc.). For the time being, it can do so only at the WTO, because Brussels has an exclusive competence on trade. We have a “missing Europe” situation in all the other cases.

Many people who consider themselves realists refuse to look reality in the face. The 20/80 model, according to which 20% of the population consumes 80% of the planet's natural resources, thanks to a cumulative process of hyper-consumption and hyper-indebtedness, is finished. The countries with an aging problem must save and export more (instead of advising Germany to relaunch internal demand!). The emerging and developing countries must increase internal demand and the welfare state, to be in a position to save less and export less.

How do Europe, the United States and all the famous Western World think to lead or at least not to hinder the epochal adjustments that become necessary? In one sector at least their supremacy is still unchallenged: the international monetary system is still in their hands. Can one expect them to create the conditions for a rebalancing of decisional weights and of the weight of currencies in the SDR basket, adding to it the renmimbi? Or will they be looking at Asia creating its own monetary system, not linked to the dollar? All depends on: 1) the US capacity to regain Gramscian hegemony, by sitting at the table with the other countries with no marked cards, and abandoning the (ever more uselessly costly) clothes of the emperor; 2) Europe's willingness to play its role in a unitary manner (la Grand Brétagne, comme l’intendence, suivra)².

The spontaneous evolution of the international monetary system towards a multi-currency model, accepted by Bergsten, Eichengreen and others, is unfortunately compatible with Rodrik's very dangerous idea to govern globalization by re-nationalizing policies. There must be, instead, a new international conference, like that of Bretton Woods, to re-found the international monetary system on cooperative bases, the only ones compatible with globalization, following a line of thought that from Keynes' bancor leads to Robert Triffin's SDRs, to the euro, to the Chinese proposal for a world currency as an evolution of the SDRs (2009), to the initiatives of the Triffin Foundation (Iozzo, 2010-11) and to The Palais Royal Initiative (2011). As Tommaso Padoa Schioppa, supporter of the latter, wrote, “the ghost of the bancor is wandering over the world”. The formation of regional monetary areas is necessary, but not sufficient, to guarantee development and monetary stability, to subject all players to the same rules, to give the creditor countries a reserve currency not dependent on national issuing centers; in sum, to “make globalization work”³. Such an initiative can still be Euro-American, maybe for the last time.

¹ Tommaso Padoa Schioppa, Europe: A Gentle Force, Bologna, Il Mulino, 2001

² “L'intendance suivra” is a phrase attributed to Gen. Charles De Gaulle (or even Napoleon), translatable as “(Our Army's) Administration Services will follow”, meaning in a political context that political decisions are paramount, and once made all the rest will happen in accordance. In this case, the French phrase means that Great Britain will certainly join later a EU decision. (Translator's Note)

³ Joseph Stiglitz, Making Globalization Work, W. W. Norton, 2006