WITH the Trump administration adopting brutally repressive measures not just against immigrants but even against US citizens, a tendency has emerged within American liberal circles to look towards Europe for providing a “third way”, a “model” different from both China and the US, the two major powers in contention in today’s world. American liberals of course were never enamoured with China; so their rejecting the Chinese “model” is not surprising. But with democracy getting attenuated within the US itself, they see in Europe a potential for combining economic success with effective democracy, human rights and social justice. For this potential to be realised, Europe, they believe, must set its economy in order while keeping the far-right forces at bay.

While European democracy may appear attractive to American liberals, to third world eyes it has always been associated with imperialism, and this continues to be the case even after the formal end of colonial empires. Britain has been an active accomplice in most plots carried out by US imperialism against “recalcitrant” third word governments that have sought or exercised independent control over their own natural resources, from Mossadegh in Iran, to Lumumba in Congo, to Saddam Husain in Iraq. As for France, decolonization was never completed in Francophone Africa, with French troops continued to be stationed in most formally independent former French colonies. When Thomas Sankara of Burkina Faso sought to get rid of French troops, he was overthrown and assassinated in a coup suspected to have been strongly backed by France; it is only now that a renewed effort is being made in some West African countries including Burkina Faso to get rid of French troops.

The support extended by Europe to the genocide in Gaza is part of this pattern; and, what is more, several European liberals have fallen in line, at least implicitly, with their governments’ support to the genocide, as was evident for instance when German film-maker Wim Wenders, the jury chairperson at the Berlin film festival, when quizzed on the question of this genocide, said that politics should be kept apart from films.

Let us however forget all this; let us also forget the fact that Europe is responsible for the scuttling of the Minsk agreements that could have prevented the Ukraine war, and is today the most vocal opponent of any peaceful settlement of this dispute. Let us forget its complicity both in the effort to extend NATO right up to the Russian border and in the overthrow of Viktor Yanukovych that was aided and abetted, as even the US-based Cato Institute admits, by the liberal Obama administration. Let us only examine the narrow argument about the possibility of Europe’s providing a “third way”.

What this argument generally assumes is that Trump’s  shenanigans are entirely because of his personal failings; what it does not ask is why at all did such a person come to power in the US and why in Europe too the liberal middle ground appears to be collapsing, as it did with the election of Trump  in the US. Put differently, the argument does not link Trump’s election, or Europe’s political prospects, to any underlying economic causes, in particular to the current state of capitalism.

The most striking feature of contemporary capitalism that characterizes both the US and Europe is an immense decline in the share of the working class in national income. In fact this decline in share has gone so far that Joseph Stiglitz even suggests that the real wage of an average American male worker in 2011 was lower in absolute terms than in 1968. In Europe too, according to the European Central Bank, real wages, which had fallen sharply in absolute terms in 2022-23, had not recovered their Q4 2021 level by Q4 2024; and the energy crisis in Germany arising from the Ukraine war has only added to the woes of its working class. Going beyond the specific fluctuations, however, there has been a general wage shock for European workers (as indeed for American workers) arising from the decades long phenomenon of neo-liberal globalization, where the mobility of capital has made these workers subject to the baneful impact on their wage claims, of massive third world labour reserves. The anger of the workers in the advanced capitalist countries against the liberal political regimes that had been the promoters of neo-liberal economic regimes is therefore both significant and understandable; the weakening of liberal political forces in all these countries, of the so-called “middle” between the far-right and the left, is the direct result of this.

In fact, these “middle” elements, whether it is Hilary Clinton in the US, or the New Labour in the UK, or Macron in France, or Friedrich Merz in Germany, have also been remarkably unaware of, and hence unsympathetic towards, the plight of the workers in their respective countries; and many of them have been former employees of big business like Merz who had been with the financial giant Blackrock. The workers therefore have turned towards the far-right or the left; and where the left has been thwarted by the machinations of this “middle”, as was the case with Jeremy Corbyn in Britain or Bernie Sanders in the US, they have moved in large numbers towards the far-right. It is only in France that a united left has managed to thwart such machinations and has emerged as the strongest political formation while pushing the far-right led by Marine Le Pen to second place.

Reversing the sharp decline in the share of workers in the nation’s income, which constitutes a necessary condition for getting their support and hence for preserving democracy against the far-right onslaught, requires active fiscal intervention by the state. But such intervention is impossible in a world where there are no capital controls, for any such intervention then would give rise to a capital flight from the country attempting it. In other words, any reversal of the sharp decline in the share of workers in national income requires a withdrawal from the neo-liberal regime, which only the left can bring about; the far-right may promise an improvement in this share but will necessarily betray this promise, since the far-right requires for its success the support of monopoly capital which obviously would not countenance a decline in its income share.

The American liberal circles which are pinning their hopes on Europe to provide a “model”, a “third way”, and would like its economy to undergo a transformation, do not touch on this basic point. Namely, that the spontaneity of capitalism that neo-liberalism restored after the post-war phase of Keynesian state intervention, entails an immanent income-inequalizing tendency which has brought distress to the working class and whose fall-out has been the rise of the far-right. Europe cannot serve as a “model” of any sort unless this spontaneity is overcome through intervention by a government responsive to the needs of the working class, that is, by a government of the left which alone can pull the economy from the clutches of neo-liberalism by imposing capital controls. These circles may see the need for some retreat from the current level of globalization; but capital controls go to the essence of neo-liberalism.

Not just European economies, but the world economy as a whole has reached a critical moment today, where the preservation of democracy requires the coming into power of governments that are sustained by the support of the working class (or, in the case of third world countries, the support of the working people as a whole, consisting of the workers, peasants, rural labourers and petty producers). The limits to government action in Europe arise not because of the nature and level of European integration but, as with every other region of the world, because of the straitjacket of neo-liberalism. The problem with liberals, which is also true of the American liberal tendency we have been discussing, is that they are insufficiently cognizant of this fact.

Europe’s predicament today is thus no different from that of America. True it has had a different history and hence a different economic legacy from America arising from the very different correlations of class forces at the end of the second world war; but all such differences have been overwhelmed at present by the commonality of exposure to the immanent tendencies of neo-liberal capitalism. The fall-out of such exposure demands not the pursuit of some European “model” as distinct from what has been happening in the US, but an overcoming of neo-liberal capitalism. Donald Trump, it must be emphasized, has not effected this, notwithstanding his tariff aggression: he remains loyal to the essence of neo-liberalism by his commitment to free cross-border capital flows, especially financial flows.