by das monde
Mon Dec 13th, 2010 at 07:23:50 PM EST
This is from a Bloomberg Businessweek article Can the Euro Survive?:
It's been known for years -- centuries, really -- that monetary unions are hard to hold together [....] As theorized by Robert A. Mundell, the Nobel Prize-winning economist at Columbia University, a monetary union can't survive without something very close to political union, including free mobility of labor to nations where jobs are more available, flexible wages, a tax system that transfers funds from the winners to the losers, and strict rules preventing members from running up big budget deficits.
Now that we know what "free mobility" and "flexible wages" mean: If these neoliberal components are indeed vital for monetary unions, what was the hope for labouring masses? It was actually "third way" Europe's labourists and socialdemocrats who did the final push for euro. Did they already think along the same theory?!
Or how those theories actually work? Why cutting budgets and labour "flexiblity" are essential to monetary unions? How is this explained rather plainly?
Theories can take suitable assumptions and say anything convenient. If you allow a jump to this judgement source:
Classical theorists like Smith aver that products derive their value from the labor that goes into producing them, and that labor, itself, is bought and sold. Wages, which are the price of labor, have a natural price which is the price needed to enable labor to subsist and to perpetuate itself without either increase or decrease. These dogmas are known as the labor theory of value and the subsistence theory of wages respectively. Some revealing implications can be derived from them.
First notice this oddity: labor produces products and the amount of labor expended determines their value. But labor is paid not the value of the products it produces but merely a subsistence wage. I defy anyone, economist or not, to justify that principle on moral grounds [....]
Second, the subsistence theory of wages describes a condition similar to that used by animal husbands in dealing with livestock. Classical economics treats labor as animal husbandry treats cows. Can treating a fellow human being as a farm animal ever be morally justified? Where is sympathy found in this? Working people, labor, those who create all the culture's wealth, are nothing but farm, factory, and when necessary, cannon fodder.