Social Democracy and the Europe of Tomorrow
Sassoon, Donald
By the late 1950s all West European socialist and social democratic parties (I shall use the terms interchangeably) had abandoned in practice, and some in theory too, the idea of socialism as an...
...These policies required expenditure to modify the disguised terms of trade within the country: tax incentives, direct grants, subsidies, special programs...
...In insisting on this social dimension of European economic integration, the West European left would strengthen emerging social democratic forces in the East, struggling to halt the development of an untrammeled market economy...
...Both would be defending national, that is "regional," interests...
...Outside the prosperous borders of Western Europe, in Eastern and Central Europe, the situation could not be more unstable...
...In a large trading bloc, in which all transactions are conducted with a single currency, there is less dependence on external trade...
...In France, the driving force behind the treaty, only a tiny majority approved it...
...EMU is a carefully constructed document with clear goals and the institutional mechanisms for achieving them—however shaky things may seem after the exchange-rate crisis of the summer of 1993...
...The balance of payments is less important...
...The current travail of social democracy seems to suggest that a radical overhaul of policies and outlooks might be profitable...
...Within the EC there are no more national currencies...
...But no one can win battles they don't fight...
...On the social democratic left, nonetheless, although there is plenty of Europeanist rhetoric, there is no European strategy...
...In some instances, an entire nation might find the gap between itself and more prosperous lands increasing...
...To be effective, social democratic strategy must build on traditional social democratic commitments, that is, to welfare reforms and full employment within a regulated market economy under the direction of democratic institutions—whether at the national or European level...
...This is inevitable: democratic parties respond to their electorates...
...Two referenda were required to bamboozle the Danish electorate into acquiescence...
...It is based on widely accepted principles, many already included in the EC treaties, many rooted in the common heritage of social democratic thought but acceptable also to Christian democrats...
...Elections are for a national parliament...
...All transactions are in ECU...
...As a peculiar multinational state, it will have constituent "sub-states" (for want of a better term), some coterminous with a nation (for example, Denmark, most of France and Italy) and some multinational in themselves (such as Britain and Spain...
...Of course such consensus politics entails acceptance by all parties—including opponents of socialism— the basic features of a civilized society—yes, a society in which inflation is less than x percent, but also one that eliminates the fear of ill health, poverty and want, the indignities of sexual and racial discrimination, and the dangers of environmental damage...
...In Italy the right-wing populists of the Northern League have made inroads into a hitherto moderate electorate unwilling to cough up funds for the apparently never-ending reconstruction of the South...
...Only multinational companies, which have an interest in pitting nation against nation while escaping all forms of national and supranational control, stand to profit...
...Budget deficits in Italy, Greece and Belgium are horrendous...
...The free-market scenario for the East is a disaster for social democracy on both sides of the former iron curtain...
...The Social Protocol, binding on all except the British, is not a charter but a framework for action on social security, social protection and some aspects of industrial relations...
...Careful textual analysis of the treaties is unlikely to reveal any significant social content...
...Leaving aside the issue of hyper-inflation, whose disastrous consequences are obvious, it is not clear why a modicum of inflation is regarded as such a threat to economic stability as to warrant the privileged treatment it receives in the EMU treaty...
...an increase in prices affects only the competitiveness of those firms that export out of the bloc...
...And possibly Sweden and Austria when they join the EC...
...Why not the WINTER • 1994 • 99 The Future of Europe same degree of top-to-bottom commitment to the environment and social rights, to the struggle against unemployment, to equal treatment for women, to help for the handicapped, to safety at work, and so on...
...It is no secret that the pledge on price stability was due more to political and "cultural" than to economic factors...
...Its guiding principle is "the open market economy with free competition...
...There will be, at the European level, a different, potentially far more serious, issue: the exacerbation of regional variations...
...At issue are political and institutional constraints that cannot be disregarded...
...In constructing a novel type of federal state, the standard debates between centralists and federalists are to be expected...
...They must insist that its guiding principles—on a par with price stabilization— should include full employment, social and environmental constraints, nondiscrimination, and decent welfare policies...
...It may be objected that such social integration would leave very little room for party politics...
...No successful federal state has ever been peacefully established with such varied national communities, divided by language and tradition...
...Usually it was objected that they would make the country in question less competitive or that taxpayers would not stand for them...
...The present plan charges nonelected institutions—such as the central bank—which are more or less divorced from popular control and uninhibited by elections, with ensuring stable prices, balanced growth, and free competition...
...EMU offers a sharp contrast to the generalities of EPU...
...The tenet of social 100 • DISSENT The Future of Europa convergence, which is closely related to the older democratic commitment to equality, requires the development of transnational democratic institutions, such as the European Parliament, together with transnational political parties and transnational trade unions...
...WINTER • 1994 • 101...
...And a significant majority of Labour and Conservative supporters in Britain are against further European integration...
...They will now have to invent the basis for the national and local administration of a decentralized welfare system...
...A Constitution of Europe is unlikely to come about in a traditional way, that is, through a constituent assembly...
...Those who believe that a frankly federalist option is too ambitious should bear in mind that every major step toward further European integration has been the consequence of a grand political design...
...In other words the unequal growth that has characterized the internal development of most European countries will be reproduced on the European level...
...This tentoone ratio is about twice the U.S...
...The more European integration advances the greater will be the pressures on national parties to defend specifically national interests...
...European socialists should think of the developing EC in the same way as the constituent assembly for a new state...
...The last attempt in this direction, the French socialist government of 1981-83, provided the resting place for the political ambitions of national social democracy...
...Today this conception is bankrupt: the epoch of construction of social democracy in one country has come to a close...
...At present, East Europeans imagine the West to be a colossal shopping mall, the successful result of free enterprise...
...Even among nationalists, at least in Europe, economic integration is celebrated because it allows for the viability of new—and sometimes very small—states...
...In an integrated Europe, social convergence and redistribution may be opposed on tax grounds but not for the sake of competitiveness...
...This was sustainable so long as the nation formed some sort of community...
...Britain and Italy have left the Exchange Rate Mechanism (ERM...
...Some national 98 • DISSENT The Future of Europe governments will face considerable differentiations of income and wealth within their borders...
...The creation of a single market with a single currency, the establishment of a common commercial law, the elimination of many physical barriers to trade, the erection of common European technical standards, of Community-wide public procurement markets, and the end of transaction costs cannot fail to bring about major economic gains (though these are unlikely to be distributed according to any equitable criteria...
...The Norwegian electorate will prove as recalcitrant as the Danish 94 • DISSENT The Future of Europe when they are asked to ratify Norwegian entry...
...It would offer to Eastern and Central Europe and, indeed, the rest of the world, the model of an advanced society radically different from the neoliberalism peddled by the IMF (International Monetary Fund...
...It will develop in an ad hoc and largely unplanned manner, for there are no real historical precedents...
...If this is the situation in a nation-state, is there any reason to think that an effective regional policy could be funded centrally, by a transfer of resources from prosperous European areas to depressed ones...
...How should European social democrats think about European integration...
...Without it Germany would never have accepted EMU, as the French realized...
...in minority governments in Belgium, Denmark, and Norway...
...There are social democratic pessimists, who under the guise of realism point out that the prospects for a social democratic pan-European strategy are extremely limited...
...Liberal constitutions establish minimum rights that cannot be violated by any government and are therefore removed from normal party competition, but this still leaves room for argument among political parties...
...It will, actually, renew what used to be called the social democratic consensus, the politics of that golden age in the fifties and sixties when even conservatives favored full employment and did not regard unions as subversive organizations...
...cohabiting in France...
...The dream of a united Europe will recede for a while...
...What of Eastern Europe...
...The struggle to entrench social rights will provide a pan-European dimension for the left and thereby set the agenda for left politics in Europe for the foreseeable future...
...They should not boycott it or lag behind...
...The likely enlargement of the EC to include Sweden, Norway, Austria, and Finland will create the largest and richest market in the world: 360 million consumers in 16 countries...
...In other words regional unemployment variations in Europe are 100 percent more severe than in the USA...
...On the other hand, there might be an economic disaster that will bring about severe social tension, massive pressures for emigration, nationalist persecutions, and political and social upheavals as unpredictable as they are dangerous...
...Ecologically directed growth, high wage costs, and high taxation in the West would redirect labor-intensive, low-productivity investment toward the East...
...To achieve these objectives it was thought necessary to control the nation-state and its "sovereign" administrative machine...
...Inside the European Community (EC), the irreversibility of interdependence is now widely accepted...
...But there is a big "if...
...What was a tolerable grumble by taxpayers in the prosperous sixties became a generalized cry of outrage in the seventies and eighties...
...First of all, they will have to recognize that national differences and conflicting interests will persist for a long time...
...But the consequences of this would be untold social problems on both halves of the continent...
...spread...
...Democracy in the full sense (not simply as the will of the majority) is thereby strengthened...
...Should EMU ever come into being, however, a large part of European trade will be "domestic," that is, within the European Community...
...Similarly there will no longer be intra-European "interest rate problems," for the obvious reason that the depositors will be faced with an ECU market competing with the yen and the dollar...
...Residents of more prosperous areas sanctioned, grudgingly perhaps, the fiscal implications of this policy, for example, higher taxes...
...Talk about budgetary and monetary convergence conceals the enormity of the existing differences: in 1991 the unemployment rate was 24 percent in southern Spain but only 2.7 percent in Baden-Wurttemberg...
...its outcome is still uncertain...
...Portugal, Italy and Greece do not satisfy any of the five criteria...
...Other goals are sound public finances and sustainable balance of payments...
...This national obsession is inevitable...
...Socialists, they argue, are in bad shape throughout most of Europe: in opposition in Germany, Sweden, Greece, and Britain...
...Equality of social rights meant that the depressed areas had a good chance of obtaining a higher degree of welfare funding than the others...
...Social democrats and Christian democrats together constitute a clear majority of the West European electorate...
...Price stability is only one of the five criteria of "convergence" (required of EC member states) established by the EMU...
...If the Twelve proceed with the construction of a "social democratic" European space, that is, an integration of their welfare systems "upward" on the basis of environmentally regulated growth, it will be even more difficult than it is now to absorb the Eastern and Central European economies into an expanded EC...
...Historically, nations facing these problems have been able to defuse discontent either by repression or by ensuring that the whole population had equal political rights...
...The anti-inflationary guiding principle is thus a constraint on national as well as supranational policies...
...It may be sufficient to point out that the construction of any regime entails the establishment of fundamental rules usually embodied in a constitution...
...If all governments follow the same guidelines why bother to elect them...
...It is possible that the priority given to the antiinflationary battle belongs to a phase of transition from the nation-state to the integrated continental bloc...
...It will not be a utopian fight...
...Politics is still predominantly national politics...
...On one hand, the Eastern economies may be turned into free-enterprise areas dominated by a savage and primitive capitalism, characterized by low wages, supervised by more or less stable semi-authoritarian governments—a Slavic variant of Taiwan and South Korea—with a lower level of productivity and regulation than the newly industrialized Asian countries...
...But such decentralization, to succeed, also needs clear guidelines from the center...
...The alternative to a movement of capital from West to East is large-scale labor migration from East to West...
...Foreign-exchange currency storms, such as that of September 1992, which blew British sterling and the Italian lira off course or that of July 1993, which nearly destroyed the ERM, will be far less likely because speculators will not be able to gang up against individual currencies, which will no longer exist...
...Someone may be proud to come from Iowa, but this is not the equivalent of being Danish or Irish...
...European social democratic strategy cannot be limited to entrenching, in one form or other, its basic principles...
...This is a serious objection that cannot be dealt with here entirely satisfactorily...
...In the first place it is not new...
...Even within national communities, solidarity is not a strong currency: many West Germans who welcomed reunification were alarmed to discover that—contrary to what they had been told—patriotism costs money...
...The American example, where a civil war was fought on the issue of centralization, is of little help...
...Britain, whose government openly aspires to be Europe's Taiwan, has opted out of the Maastricht's social protocol...
...and deprived of an overall majority in Spain...
...The criticisms of the old welfare state, from across the political spectrum—its centralized and bureaucratic structure, its paternalism, its frequent indifference to individual needs—have been digested by the more innovative sectors of European socialism...
...This proportion of intra-regional trade will certainly grow, making the EC more "introverted" than the United States or Japan...
...This is not the case at present...
...This strategy has distinct advantages...
...But should the left dream this dream...
...Thus a reasonable level of inflation (say, below 10 percent) would not cause excessive worry...
...Furthermore the clout of the EC in world trade will be greater than that of any other trading bloc...
...There is no simple way out of the dilemma...
...The most realistic alternative is to give the electorate in the East a reason to support social democrats or their equivalent in their own countries...
...In the absence of any guiding criteria (other than price stability) these differences will become the fundamental issues in the internal politics of the EC...
...The Question of Democracy Though the present battle cry on both left and right is decentralization, what the EC really needs is further centralization...
...Parties face a national electorate...
...Commitment to price stability requires constraints on national economic decision making...
...For them, a period of backwardness seasoned by a local version of Victorian values, a few carrots and plenty of sticks, low wages and hard work: this is the necessary premise, the preparatory Purgatory for a better future...
...They would be penalized in one region if they disregarded its interests...
...Western socialists, who have had nothing to say to a potential democratic socialist movement in the East, ignore these issues at their peril...
...There is no easy solution...
...This conservative image of capitalism must be challenged: access to the EC and to the possibility of a Western life-style should require (since it in fact depends on) not only acceptance of a market and democratic institutions, but also social rights, full employment, non-discrimination, and qualitative growth...
...Unequal Development Let us imagine that, by 1999, all twelve EC members are part of the single-currency area with, perhaps, the currencies of the other West European states converging into an ERM-type mechanism...
...Emphasis on price stability as an indicator of successful government economic performance has not been produced "spontaneously" by the electorate...
...Rules of convergence should not be limited to prices and budgets but should also apply to regional growth, levels of unemployment, social benefits, discrimination legislation, working conditions, and so on...
...It stipulates that the economic policies of member states must be consistent with these guidelines...
...The ERM was in danger of final collapse after the wave of speculation against the French frame in July 1993...
...Similar constraints, the left must argue, have to be established for regional and social policies...
...They should not be afraid of being innovative, while realizing that the "document" to be produced must gain wide respect and stand the test of time...
...It would enable the European right, led by Britain's Conservative government, to destroy the welfare state by deregulating the labor market to conform to the American model...
...The precondition for success, of course, is that the social dimension must WINTER • 1994 • 95 The Future of Europe become the center of the EC's agenda...
...The aim is not simply to reproduce across Europe what social democracy attempted on the national level...
...Their adherence to them will be supervised by a European Central Bank whose independence is established in no uncertain terms: it receives no instructions from the EC's council or the commission or the various national governments...
...in total disarray in Italy...
...A more integrated Europe, with a revitalized social democratic left, might become a beacon for social advance in the third world...
...Would inflation be as bad in such a large market as it may have been in a far more exposed and smaller national economy...
...Unstable prices are not necessarily a cause of concern for investors—what worries them are adverse changes in relative prices, and what is adverse for one may be helpful to others...
...It may be unrealistic to assume that citizens in Stuttgart or Paris will willingly yield "their" money for regional aid to Greece or Yorkshire—after all, they are not so keen for it to be directed to Saxony or Corsica...
...And it might also suggest to Americans, now free from the cold war, new and more promising models of social organization...
...They would also, inevitably, clash with nationally based parties...
...Instead, we have hybrid "national strategies" that seek to defend national interests within an integrated Europewide community...
...This is not a plea for an inward-looking little Europe...
...If they did not do so they would expose themselves to attacks from their national opponents...
...Transnational Europarties would have to balance "regional" variations as present-day national parties do...
...Some conservatives, however, will find the first quite positive...
...Plans "which will never work" have set the agenda by dangling goals before the old European cart-horse, making it move forward...
...Other performance indicators have been assigned a subordinate role: growth rates, balance of payments, and unemployment, not to speak of infant mortality, number of university graduates, crime rates, pollution levels, toxicity of tap water, literacy, health, and so on...
...One may ponder why inflation is regarded as such an evil when everyone knows how complex it is to identify the winners and the losers...
...Democratic institutions forced national politicians to adopt measures aimed at resolving regional problems...
...Within Europe there will be no further balance-of-payment problems in the same way as Idaho or Alabama or Bavaria or Yorkshire have no balance-of-payment problems...
...As long as there are no really democratic pan-European institutions, as long as the European Parliament has limited powers, there will not be an institutional framework for the full development of a European strategy...
...It has been constructed through a political debate...
...Furthermore, government resistance to these policies in the eighties and nineties has seldom been justified on ideological grounds (Thatcher's Britain was an exception...
...Anti-inflationary paranoia may turn out to be temporary...
...The century-long struggle of the European left for political regulation and social reform of the economy is forgotten...
...The present crisis of European integration, the growing balkanization of Eastern and Central Europe, the horrendous slaughter in the former Yugoslavia point toward a dismal future...
...Thus the contest for a social space in the EC, far from being a merely internal matter, is a new form of internationalism...
...Although everyone in Brussels (the EC's unofficial capital) is busy denying it, the most likely prospect is a two-tier Europe centered on a Franco-German monetary area plus the Benelux countries...
...In politics, the dominant groups set the agenda...
...They should negotiate, make alliances, try to devise the most effective forms of control and enforcement...
...I see no substantial difference between this and a written constitution...
...European Monetary Union To what extent are social democratic principles embedded in the economic and political plans agreed to at Maastricht...
...They should try to inscribe in its articles the central coordinates of their beliefs...
...If a large continental trading bloc is established, the price competitiveness of EuroWINTER • 1994 • 97 The Future of Europe pean exports will not matter as much as it does now to the individual states...
...What had been short-term aims in the pre-1914 programs of social democracy had now become the only goals: income redistribution, equality and social justice, full employment, the welfare state and the mixed economy...
...Two major scenarios are currently envisaged...
...And this, of course, would increase the obstacles to social reform in the United States...
...Social democracy is then faced with a critical dilemma...
...The chances of all twelve accomplishing this by 1997 are slim...
...Some 59 percent of the trade of member states is with other member states...
...Members must also align their long-term interest rates, national budget deficits, public debt ratio and exchange rates...
...These must rest on a consensus so wide that revisions will not be undertaken lightly...
...This would allow regional parties to maintain their own national outlook, to develop national policies, and to lobby the commission and the Council of Ministers as well as the European Parliament in defense of their electorate's interest...
...What will this European Community look like...
...This would seriously damage any prospect for a return of full employment in Western Europe or the maintenance of existing levels of social protection...
...The successful introduction of social rights would enhance the democratic process...
...Its "primary objective" is price stability...
...Superior to the communist Hell, this prospect opens the way to the distant but heavenly delights of consumer capitalism...
...It guarantees minimum standards that cannot be eliminated by a majority of the electorate and gives the minority (here the underprivileged minority) a stake in the system...
...In relatively small export-dependent countries such as the United Kingdom, France, and Germany, not to mention Sweden and Austria, inflation causes a systematic increase in the price of export items and hence balance of payments problems...
...If the first scenario is unpalatable, the second is intolerable...
...By the late 1950s all West European socialist and social democratic parties (I shall use the terms interchangeably) had abandoned in practice, and some in theory too, the idea of socialism as an "end-state" or "final goal...
...The EPU is a much more modest document full of good intentions: "harmonious and balanced development of economic activities," "non-inflationary growth respecting the environment," "raising standards of living...
...The process of ratifying the Maastricht Treaty has been far longer and more painful than expected...
...It would eliminate the possibility of a return to full employment in Western Europe, severely weaken trade unions, contain wages, and narrow dramatically the fiscal reserves available for expanded social programs...
...This much is, however, certain: the neoliberal model of European integration (that is, Margaret Thatcher's)— get rid of constraints, rip the shackles stopping enterprising capitalists from creating wealth, and so on—is a recipe for European disintegration...
...In circumstances combining unequal development and power shifts to central institutions, clashes between, say, a ruling German Social Democratic party and a ruling Spanish Socialist party are inescapable...
...Unfortunately, all this is true...
...Pensioners and others on fixed incomes could be protected by linking their benefits to the inflation rate...
...Inflation in Germany and Holland is too high...
...From Jean Monnet to Jacques Delors, innovative visions have gone hand in hand with hard-headed realism...
...The Economic and Monetary Union (EMU) and the European Political Union (EPU) treaties are in fact asymmetrical...
...The more it reaches toward a social democratic agenda the vaguer EPU becomes: the EC will have "a policy in the sphere of the environment," will contribute to the "attainment of a high level of health protection," will contribute to "education and training of high quality," "to the flowering of the cultures of the Member States" and so on...
...In the United States there are no serious language divisions (so far), and state borders do not have the significance they have in Europe...
...It seems, therefore, that it would be in the long-term interests of all concerned that significant powers be transferred to the European Parliament, now a weak institution...
...It would offer a society in which the values of solidarity prevail over the cacophony of cash registers...
...Low wages in the East would not provide sufficient demand for a growth of manufacturing in the West...
...The alternative is for the left to adopt a clearly federalist approach that accepts the Maastricht rules of convergence in prices, currency, interest rates, and public spending but insists that such constraints on national decision makers are insufficient...
...The primary objective of price stability is thus completely removed from everyday political debate, making it impossible to deny that inflation, at a particular moment, is a more serious threat than unemployment...
Vol. 41 • January 1994 • No. 1
