A-Infos (en) Italy, FDCA Cantiere #29: The Draghi Plan: Old Recipes to Support Capital - Cristiano Valente (ca, de, fr, it, pt, tr) [machine translation]

* The chaos of the capitalist economic system, aimed solely at greater 
profit, continues its inexorable trajectory. ---- Centralization and 
concentration of    capital, reduction of wages, financing of national 
and supranational government groups to support industrial oligopolies, 
customs duties, continuous increase in military spending. ---- In 
capitalism, an industry either expands or disappears. A trade cannot 
stabilize. Greater productivity and greater competition lead to 
monopoly. The commercial and competitive war of the capitalist economic 
system is the logic of war.
Only an internationalist battle can avert the threats of war and a real 
advancement towards the emancipation of the working masses. *

The Draghi Plan on the future of the competitiveness of the European 
economy, presented on 9 September by the former President of the ECB to 
the President of the European Commission in Brussels, Ursula von der 
Leyen, and subsequently to the European Parliament, represents the 
economic and therefore political guidelines on which the union of States 
and therefore the European bourgeoisie will move in the coming years on 
the global chessboard. This scenario is increasingly characterized by a 
strong gap between continental economic blocks, "first and foremost" the 
USA, China and Russia, due to an acceleration of competition and 
industrial competitiveness. To fill this gap, the remedy that the former 
Governor of the European Bank, and former Prime Minister of the Italian 
Council, indicates is a plan of massive public and private investments, 
with annual uses of around 800 billion euros for at least five years. In 
particular, in this study Draghi highlights the gap of the European 
Union in productive investments that concerns advanced sectors such as 
digital, defense, security, energy and aerospace. The reasons given are 
a fragmented policy and a lack of coordination at European level, 
especially in the field of research and development. In this regard, it 
should be remembered that the United States boasts a centralized federal 
budget, about 13 times larger than the European one, where uncoordinated 
national subsidies predominate. This lack of coordination between 
countries is, for President Draghi, also at the root of the energy 
crisis that has strongly contributed to the recent inflationary 
flare-up: Europe is the world's largest buyer of gas, but unlike what it 
did for vaccines, during the pandemic, it was unable to aggregate its 
negotiating power, implementing individual state supply plans with 
bilateral agreements. Another critical aspect highlighted is Europe's 
inability to innovate, while China has long since stopped copying and 
started to lead global innovation. Here is what Draghi writes about it: 
“Europe is stuck in a static industrial structure, with few new 
companies    emerging.... Because EU companies specialize in mature 
technologies, where innovation potential is limited, they spend less on 
research and innovation (R&I) – €270 billion less than their US 
counterparts in 2021..... Innovation is stuck in the next phase: we fail 
to translate innovation into commercialization, and innovative companies 
that want to grow in Europe are hampered at every stage by inconsistent 
and restrictive regulations.....With the world on the brink of an AI 
revolution, Europe cannot afford to remain stuck in the “middle 
technologies and industries” of the previous century. We need to unlock 
our innovation potential. This will be crucial not only to be leaders in 
new technologies, but also to integrate AI into our existing industries, 
so they can stay at the forefront.”
The analysis continues to indicate this lack of strategic vision of a 
complete European continental economic and political pole also in other 
areas, but especially in the defense sector. It is highlighted that 
while China has quintupled its military spending in the last twenty 
years, Europe spends a third compared to the United States and a large 
part of European purchases of military technologies comes from American 
imports. This gap not only weakens European industrial autonomy, but 
confirms and further strengthens the US military industry. The space 
defense sector, for example, is dominated by the United States, while 
Europe continues to invest crumbs, making itself increasingly marginal 
even in a crucial area for future security.
In this regard, with the addition of the classic hypocrisy typical of 
all bourgeois classes, true sorcerer's apprentices and with the classic 
Jesuitical way of doing world peace, we can literally read: "Peace is 
Europe's first and foremost goal. But threats to physical security are 
increasing and we must prepare. (bold by the Editorial Staff) The EU is 
collectively the world's second largest military spender, but this is 
not reflected in the strength of our defense industrial capacity. The 
defense industry is too fragmented, which hinders its ability to produce 
at scale, and suffers from a lack of standardization and 
interoperability of equipment, which weakens Europe's ability to act as 
a cohesive power. For example, in Europe twelve different types of tanks 
are produced, while the United States produces only one” and also    
“...Europe must react to a less stable geopolitical world, in which 
dependencies are becoming vulnerabilities and one can no longer count on 
other entities for one's security.... The EU must also respond to a 
radically changed security context along the borders”
With regard to the deep crisis that the European automotive industry is 
going through, increasingly evident and clear, from the crisis of 
Wolkswaghen in Germany    and that of the Stellantis group in Italy and 
in the United States of America, the study reminds us that from 2000 to 
2022, the global share of motor vehicles produced by Europe fell from 
31% to 15%, while China saw a significant increase, going from 4% to 
32%. confirming a loss of competitiveness in one of the sectors 
historically most relevant for our continent:
“According to ECB simulations, if the Chinese electric vehicle industry 
were to follow a subsidy trajectory similar to that applied to the 
photovoltaic solar sector, the EU’s domestic production of electric 
vehicles would decrease by 70% and the global market share of European 
manufacturers would fall by 30 percentage points. The automotive 
industry alone employs, directly and indirectly, almost 14 million 
Europeans”
Linked to the automotive sector    is also the cost of producing 
batteries which in the EU is more than double that of China and Europe, 
moreover, is also lagging behind in the field of transport 
infrastructure. In the last decade, investments in this sector have 
decreased by 14%, while they have increased by 45% in the United States 
and have tripled in China. This delay is also reflected in the field of 
new technologies, such as “cloud computing” and artificial intelligence, 
where Europe has missed the advanced technology train, remaining 
marginal on the global market. The European financial system also has an 
excessive dependence on local banks to support businesses, which thus 
avoid the discipline and transparency of stock market listings. This 
structure perpetuates inefficiency and does not allow adequate access to 
diversified sources of capital, further limiting business growth. The 
picture that emerges is of a Europe that is increasingly losing the 
ability to innovate and invest in strategic sectors for the future. If 
we do not intervene with ambitious and coordinated plans, this is the 
central recommendation of the plan, the risk is that the continent will 
lose further ground, compromising not only its economic competitiveness, 
but also its security and strategic independence. These are, in extreme 
synthesis, the objectives that the former governor indicates as a 
development plan for the coming years for a Europe that, an economic 
giant, with its "440 million consumers and 23 million businesses, 
representing approximately 17% of world GDP", from a political point of 
view is an aggregate that is not yet complete. In this regard, a 
European political organization is recommended that is no longer based 
on the unanimity of the votes of individual member states, but that can 
increasingly include a "qualified majority vote". We will return in our 
next interventions to the greater details of this Plan, which also 
invests and indicates other important sectors of development including 
the resumption of an energy plan that includes nuclear energy, convinced 
that the indications contained therein will be a reference and 
discussion for the coming years, even if its concrete feasibility, that 
of a politically and economically cohesive European hub, will depend on 
many other unknowns and internal processes within the current individual 
European states, which may accelerate or delay the choices indicated by 
the Plan. Ultimately, the development and affirmation of a new European 
imperialist pole is not yet underway, even though this is an objective 
clearly indicated by the Draghi Plan and hoped for by large sectors of 
the business community, especially large private and public groups.
In this sense, it is enough to recall the recent statements of the 
French President, Emmanuel Macron, on the possibility and necessity of 
sending "our soldiers" to Ukrainian soil, as well as the previous 
statements of Mario Monti, senator for life, former President of the 
Council of Ministers of the Italian Republic, Minister of Economy and 
Finance, European Commissioner for Competition, champion of liberal and 
pro-European convictions, on the necessity of "bloodshed" in the 
processes of unification and political and economic integration. (1) But 
for the moment we are interested in highlighting that once again the 
fundamental and implicit characteristic of the capitalist economic 
system presupposes processes in which competitiveness and greater 
productivity represent the first processes of a commercial war that 
inevitably leads to a confrontation and a military clash. It is no 
coincidence, as we have seen, that the Defense sector is particularly 
included in this study. Just like the reference to a need for a vast and 
robust public funding, which has never completely disappeared, but which 
represents a definitive overcoming of that narrative that for almost 
forty years has been the leitmotif of the various state government 
groups, both left-wing and conservative, on the need for a minimal 
State, on the small and beautiful, on widespread and molecular 
entrepreneurship. Let us briefly follow the Plan again. On the need for 
robust public funding it is stated: “... the private sector will not be 
able to provide the lion’s share of investment funding without public 
sector support.....To maximize productivity, joint financing for 
investment in European public goods will be necessary” as well as on the 
need to increase the scale of production and therefore the greater 
centralization and concentration of capital, also ideologically 
overcoming the tale of small is beautiful: “The lack of a true Single 
Market also prevents a sufficient number of companies in the wider 
economy from reaching sufficient size to accelerate the adoption of 
advanced technologies.... compared to the United States, the EU has 
proportionally fewer small and medium-sized enterprises and more 
microenterprises. However, there is a close link between the size of 
companies and the adoption of technologies. US data shows that adoption 
increases with company size for all advanced technologies.... Size 
drives adoption because larger companies can spread the high fixed costs 
of AI investments across a larger turnover, have more skilled management 
to make the necessary organisational changes, and can deploy AI more 
productively thanks to larger data sets. In other words, a fragmented 
Single Market puts EU companies at a disadvantage in terms of the speed 
of adoption and diffusion of new AI applications.”
Finally, of particular importance is the reference contained in the Plan 
to an inevitable economic policy that uses “pragmatically” both 
protectionist practices towards some products and markets and a free 
trade policy, which should simultaneously guarantee new outlet markets 
and foreign direct investments (FDI).
As already said, we will return with greater analytical capacity to the 
various details and sectors that this Plan indicates, but from this 
first reading it appears to us, on the one hand, evident the hypocrisy 
and contradictoriness of a compassionate capitalism that aims to 
reconcile competitive needs and social cohesion, on the other, given the 
large overlap with the Plan of the fundamental directions of the 
so-called progressive and left-wing parties and coalitions, starting in 
Italy with the PD and the CGIL,(2) the further reformist utopia, which 
by imagining the possible development of the capitalist economic system 
and the development and guarantees of the needs of the working masses, 
favors and becomes an accomplice of the worst protectionist and/or free 
market policies, according to the particular needs that they want to 
defend. from time to time, without ever resolving the question of the 
real emancipation of the working masses in a continental and 
internationalist vision. The capitalist economic system has its 
invariances and its intrinsic inevitability. Starting from the first 
industrial revolution in England, clearly with the profound changes in 
the technological level reached today, the debate and the needs of the 
different national bourgeoisies follow the same arguments and even some 
of the vocabulary used in today's economic literature.
Already in the second half of the 19th century, England, referred to as 
the “workshop of the world”,(3) similarly to how China is referred to 
today in economic literature, had opened its national market to the 
continent's cereals, asking in exchange for free access for its 
industrial products to the continental markets. The debate and the clash 
between the different national bourgeoisies focused, as today, between 
supporters of free trade and supporters of protective duties for the 
different national production sectors.
In the face of such invariance, it is necessary to reconfirm the 
criticism, reflections and approach that the organizations of the 
workers' movement have always supported, identifying and putting on the 
agenda the overcoming of the capitalist economic and political system.
Here is how, at the end of the 19th century, F. Engels    addressed the 
issue of free trade and protective duties, highlighting the 
contradictions and the impossibility for the capitalist economic system 
to overcome its intrinsic contradiction: “But no country will be able to 
return to free trade at a propitious moment when all or nearly all of 
its industries can challenge foreign competition in the open market. The 
necessary transition will be urgent long before such a propitious moment 
is even hoped for. The urgency will appear at different times in the 
various commercial sectors, whose interests will cause the most edifying 
disputes, lobby intrigues and parliamentary conspiracies. For the 
mechanic, the engineer and the shipowner, the duty on raw iron raises 
the price of their goods, preventing their export; the cotton weaver 
would be able to exclude English fabrics from the Chinese and Indian 
markets if the duty on yarn did not raise the price of his thread; and 
so on. When a national industry has completely conquered the internal 
market, then exportation becomes indispensable. In capitalism, an 
industry either expands or disappears. A trade cannot stabilize. The end 
of expansion is the beginning of ruin. The progress of mechanical and 
chemical inventions (incessantly replacing human labor and incessantly 
increasing and centralizing capital) creates in every stagnant industry 
a traffic jam of workers and capital, which finds no outlet because the 
same phenomenon is common to all other industries. Thus, moving from 
internal to external trade becomes vital for the industries involved; 
but it clashes with the acquired rights, with the interests of others 
who are even more advantaged by protectionism than by free trade. A long 
and tenacious struggle follows between free traders and protectionists, 
which passes to the professional politicians, who lead the traditional 
political parties, whose interest is that the conflict continues rather 
than ceases”(4)

Notes:

(1) “We should recover an obsolete word: sacrifices. Can we really 
advance in European integration, withstanding two wars on our borders, 
without sacrifices? Italy was not made without bloodshed”. Interview 
with Corriere della Sera, May 6, 2024
(2) “How I would like you...just and free, democratic and supportive. 
Dear Europe, let's start from here”    by Ivan Pedretti. Edizione Liberetà
(3) Protective duty and free trade. Friedrich Engels (1888) Preface to 
the 1888 US edition of Karl Marx's “Discourse on Free Trade”.
(4) Idem

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