• On the European Social Model

  • Walter Baier | 26 May 09 | Posted under: Theory
  • Since the beginning of the 1990s the concept of the “European Social Model” has characterised the position and perspective of official EU policy. What is the meaning of this concept?

    The European Commission defines the European Social Model (ESM) as “characterised by democracy and rights of the individual, absence of tariffs, market economy, equal chances for each and everybody as well as social security and solidarity.” (B. White Book, Social Policy 1994).

    The European Trade Union Confederation provided an even more resolute definition. It describes the ESM as characterised by its tendency to establish a “very high level of social protection grounded in solidarity, by the central role of public services, the high status of collective agreements and various models of co-determination, [which are based] on the indispensable compromise between market forces and the democratic state.” (B. ETUC, 1995)

     

    At the heart of this formulation is an erroneous conception of the welfare state, which is the core of any understanding of the ESM. The welfare state represented great progress in living and working conditions, but it is fundamentally not the sum total of social institutions and public budgets. It represents a specific power relation in society. And it is essential to realise, as Asbjörn Wahl pointed out in his lecture on the “Nordic Model” at the transform!-seminar last month in Stockholm, that: “... the welfare state as we know it was not only a product of power relations in general, but the result of a very specific historic development in the 20th century….Contrary to being the result of social dialogue and tripartite cooperation, as many in the labour movement will have it, the welfare state was the result of a long period of hard struggle and class confrontation.” (W. 2f)

     

    Indeed, talking about the rise and decline of the welfare state implies talking about social struggles, class struggles, struggles for gender equality and for affirmative action and democracy. However these struggles did not result in a single ESM but in a very diverse social geography.

     

    In general, we may distinguish at least five different versions:

    First: The northern area, highly influenced by long-lasting social-democratic rule and by well organised moderate trade unions. Sweden, especially, was for decades the great inspiration for other parts of Europe, for both the moderate left and the moderate right. But Norway, with its big state economic sector, and Denmark, with its well organised small scale trade unions, also played a role in this model.

    Second: The centre-west area, consisting mainly of Western Germany, the Netherlands, Belgium, Luxembourg, Switzerland and Austria. In most of these cases, there was not only a traditionally moderate social-democratic party but also a strong Christian-democratic party very influenced by the 19th-century, essentially corporatist, Catholic social doctrine of the reconciliation of, and harmonious co-operation between, capital and labour.

    Third: Great-Britain. Here the Labour government of the late 1940s introduced, besides nationalisation of steel and coal, a system of free health care which exists to this day but has been systematically undermined. For a very long time trade unions dominated the Labour Party and strongly resisted any variety of what some interpret as modernisation and flexibility. Subsequently, “New Labour” under Tony Blair adopted neoliberal ideology. Today we call the state of affairs in Great Britain the “Anglo-Saxon model”, since it is closely related to that of the US.

    Forth: The south, that is, the countries bordering the Mediterranean. It includes a tax financed general state health system but weak social insurance systems with weak transfer intensity. Traditional patriarchal family structures still play an important role as a social support system; country-wide minimal social protection, on the other hand, barely exists.

    Fifth: The east. Eastern Europe was, in the first half of the 20th century, less developed than Western Europe. It for the most part provided the wealthier countries with inexpensive mining and agricultural products, and it had to import expensive products of foreign industry, although there was some modern industry in Czechoslovakia and Hungary. After WW II, and in the context of the victory of the Soviet Union, state socialist systems - with their particular concepts of collective ownership of the means of production, forced industrialisation and separation from the world market - were implemented, which despite lower national income per capita enabled the countries in question to introduce many aspects of a welfare state, which would not have been possible under capitalist conditions.

    Along with the final collapse of their socialist economies nearly all aspects of the welfare state were abolished. Nowadays the east is a kind of “American Sector” of Europe. These countries are mainly characterised by having the most uncontrolled free enterprise system conceivable, with an enormous lack of collective responsibilities. This region contains more poverty than in any other part of Europe today, but also more shamelessly opulent wealth for the happy few.

    Thus the concrete form taken by thewelfare state differs very widely, so that at first sight the notion of ESM would seem to be defined negatively, i.e. in contrast to the neoliberal model of unrestrained capitalism emanating from the US.

    Erik Meijer, in a paper given at the Stockholm conference, proposed five main domains in which welfare state regulation can be identified:

    First: For income it can at a minimum mean: 

    Guaranteed income for older people who cannot continue to work after the age of 55, 60, 65 or 70.- Guaranteed income for people who cannot get paid work due to a lack of available jobs. - Guaranteed income for people who are temporarily unable to work because of illness. - Guaranteed income for those who cannot work due to a handicap Contributions for raising children, especially if parental income does not suffice to give children a fair start.

    Second: For provisions it can at a minimum mean:

    An educational system that tries to give all children and young people access to all the benefits of society. - A health-care system that provides everyone with what is needed to stay healthy or recover from illness: the care of a general practitioner, hospital or rehabilitation institution. - A housing system which provides everyone - the poor and better off, young and old, large families or handicapped people - with permanent dwellings of acceptable quality, so that no one lives in slums, much less goes homeless. - A combined system of special housing and care for the elderly who cannot live without professional help. - High-quality public services, such as good inexpensive public transportation, including urban and long-distance rail and full-schedule bus systems for less densely populated rural areas.

    Third: In terms of protection for working people it can at a minimum mean:

    Protection against being fired without just cause and without compensation for lost income during the subsequent transition to a new job. - Protection against low wages, unsafe working conditions, excessively long work weeks and dangerous jobs. - Creation of jobs to provide labour for limited capacities, for instance to support public service, for safety and the cleaning of public spaces. - Creation of jobs for disadvantaged groups or regions in general, using Keynesian instruments, not depending on companies with vested interests but using sources of tax income.

    Forth: In terms of other kinds of protection it can mean:

    For housing, protection against the loss of a rented dwelling. - Consumer protection, including product safety, food safety and the right of withdrawal from transactions using unfair selling methods. - Insurance regulation to prevent private insurance companies charging premiums when they do not pay claims. - Protection of the environment against pollution or neglect, instead of the creation of clean and green zones only for the rich who are able to distance themselves from endangered areas.

    Fifth: In the area of taxes it can mean:

    Progressive taxes, and thus the complete opposite of a “flat-tax” in which everybody pays the same amount regardless of income. If you have high income or major assets you have not only to pay proportionally more, but you must pay a much higher percentage of your income in taxes than those with less income and assets do. - The tax system can even be a tax-credit system and thus be used to reimburse you for health insurance, child-raising and study expenses or health care insurances. - The tax level as a whole has to be sufficient to enable the authorities or other bodies who receive this revenue to pay all the income guarantees, provisions and protections mentioned above.

    The trade unions and political left continue to be oriented to the ESM, by which they mean a combination of democratic decision-making, social regulation and public services as well as a comprehensive system of social security.

    In the 2000 Lisbon summit, the heads of the EU-member states, the majority of whom were social-democratic prime ministers, gathered to announce that in order to secure a “Social Europe” the EU would have to become the world’s most competitive knowledge-based innovative economic region by 2010.

    Moreover, this goal, it was assumed, would only be achievable through the application of neoliberal labour-market reforms, namely the famous “flexicurity” concept which in its most direct expression aims at as much labour-force flexibility as possible with the lowest tolerable level of social security.

    The flexicurity approach was adopted by the European Parliament and the Council

    and incorporated in the Employment Guidelines for the New Lisbon Strategy 2008/2010.

    These new labour-market policies are accompanied by other directives such as a new working-time directive adopted a few weeks ago by the Council with proposals for a more flexible and longer working life (up to the age of 67). These proposals form the basis of the national Labour Market Reform Programmes for the member states. The effect on labour legislation of internal market rules laid down in the EC Treaty was shown by the rulings of the European Court of Justice in Laval, Viking and Ruffert. These verdicts concern the right to take industrial actions.  

    “Open Method of Coordination”

    Therefore, there can be no question of defending a traditional social model; rather we must work for a new form of ESM.

    When it comes to the theoretical understanding of these processes of change in the welfare regimes it seems reasonable to situate it in the framework of the transition to a post-Fordist mode of production, or more specifically to a post Fordist-regulation system. This terminology, which derives from the so-called “Regulation School”, distinguishes three different patterns of development of the reproduction of any concrete capitalist society that can maintain a balance, albeit it permanently fragile and contradictory, in other words, that can balance the permanent disequilibrium characteristic of capitalist development.These regimes of accumulation and modes regulation are technological paradigms, the mode of accumulation and the mode of regulation and this trinity actually fits very well with Antonio Gramsci’s concept of “historic bloc”.

    It has been convincingly demonstrated that the traditional social state and welfare regime, together with the Keynesian macro-economic regulation propagated by reformist mass parties, its bureaucracies, corporatism and class compromise, corresponded to the needs of the long period of Fordist capitalism after WW II. And it is worth adding that the Fordist class compromise always had reflected both the result of a persistent class struggle and the requirements of capitalist reproduction, as class struggle is always a component of capitalist reproduction and points at the same time to the necessity and possibility of another world.

    However the world has since changed.

    Jörg Huffschmid highlights the financialisation of the global capitalist system which took place in the last quarter of the 20th century as one of the current mega-trends caused firstly and foremost by the almost continuous redistribution of income and wealth from the bottom to the top. 

    Secondly, by the politically emphasised trend towards capital-funded pension systems,

    Thirdly, by the build-up of financial assets because of a relatively generous loan policy on the part of the banks

    Forthly, and finally by the dynamic internalisation of financial flows and investment which obviously premises the regime of liberalised capital movements replacing the former system of capital control established in Bretton Woods at the end of WW II.

    Most of the complex system of regulations, which were used to tame market forces and thus to create the preconditions for the development of the welfare state, have simply been removed. This policy of deregulation has led to the development of a speculative economy in which more than 90 percent of international economic transactions are speculative - mainly currency speculation - and to an unprecedented redistribution of wealth – from public to private, from labour to capital and from the poor to the rich.

    And it seems that this system is now entering a stage of long-term and deep crises, which would definitively and dramatically change the social and political context of the struggle for renewal of the welfare state.

    Thus my presentation of various proposals and alternatives must be based on certain economic considerations.

    Following the structure of the problems generated by the strategies of financial-market protagonists, proposals for political resistance and counter-measures can be divided into three groups:

    • -Restricting speculation through direct rules for financial investors, for instance through transparency requirements or limiting leverage.  
    • Protecting employees and firms against harmful financial-investor activities, for which it is essential to prevent in the case of PE the transfer of loan-servicing obligations to a firm whose acquisition was the motivation for the loan, or to withdraw money from the acquired firm in the form of extra dividends or bonuses.
    • In order to reduce over-accumulation it is necessary to limit financial speculation and to protect firms against exploitation by financial investors 

     

    Let me emphasize: A more comprehensive strategy to reduce the influence of financial investors in the economy and society must address the roots of this financial pressure. The most important of these are located outside financial markets, namely in an increasingly one-sided distribution of income and wealth, and in increasingly capital-funded social-security systems. 

    A long-term strategy to tame financial markets and to re-embed finance in a framework of reasonable and socially sustainable economic development ought therefore to reverse these trends: It must, in the first place, initiate a redistribution of income and wealth from top to bottom through higher (minimum) wages and social expenditure and at the same time through higher taxation of wealth, profits and high incomes; and, second, it should base pension systems on public schemes which are de-linked from the dynamics and risks of financial markets.

     

    However, as I already pointed out, the emergence of finance-market-led capitalism, as dramatic as its impact on the social and welfare state systems has been, is not the only new challenge the radical left has to face.

     

    Implementing and using new technologies also requires a new organisation of labour, demands new skills and tends to create new types of personalities and new social relations. What Antonio Gramsci called a “passive revolution” also implies profound changes in people’s behaviour and culture, and it thus also creates new subjectivities. In this respect, as Giovanna Capelli explained, we have to accept as a given the feminist critique of the traditional universal social and welfare model and its understanding of “universalism”.

    “Universal” has to mean that welfare is guaranteed to men and women, the employed and the unemployed, the healthy and the sick, producers and non-producers, in other words the individual, the person as he or she exists. This deep and wide concept of universalism, which is not a closed and limited one, grants social and political rights not only to national citizens but to residents. The discovery of who is included in this idea of the universal, which is rooted in the plurality of bodies and lives, is the fruit of the deconstruction that the women’s movement has performed vis-à-vis the paradigm of Western democracy, constructed by the healthy white male worker.

    Feminism has also questioned classic economics which uses the GDP to measure the wealth of nations, as GDP does not take into account the immense social value created within the patriarchal division of labour by women in the sphere of social reproduction. This is not an abstraction but has to do with everyday life. In Italy, for example, according to a recent survey 77% of domestic and care work is performed by women, while in 14 years the time men spend providing care has increased by 16 minutes. In other words, for Mediterranean welfare the entry of women into the labour market has not yet reshaped the gender division of labour.

    Therefore the renewal of social policies must take the individual

    This broad understanding of universalism would require:

    1) a welfare model granting, as we have said, rights for the whole population and not just specific categories, sectors or classes;

    2) that welfare is based on progressive general taxation;

    3) that the linking of social rights to wage labour is abolished so that the new universalism actually aims at every man and woman, the individual as he or she exists;

    4) the acknowledgement of the work performed in the sphere of reproduction as necessary to sustain the society, the recognition of which would lead to a new division of labour, income and wealth among the genders;

    5) rejecting the transformation of social questions into problems of public safety, which have caused poverty to be treated as anti-social and a danger to society.

    Asbjörn Wahl identifies three immediate tasks:

    a) Acknowledging that we still are in a defensive struggle means that we have to defend the achievements which were won through the welfare state. This means fighting privatisation, deregulation and attacks on our social-security provisions, opposing the undermining of the universal social systems which have been developed in many countries and preventing them from being replaced by means testing and other humiliating needs tests. It also includes fighting for a financing model which is based on a progressive taxation on the haves rather than on individual user fees for the have-nots.

    b) An important part of neoliberal strategy is the attempt to institutionalise its policies at the transnational level. When such institutionalisation succeeds, the interests behind these market-oriented solutions are able to avoid and overrule democratic structures and processes at the local and national levels.

    That is why we have to confront the institutionalisation of neoliberalism at the international level or through agreements within international institutions like the WTO as well as at the European Union level.

    c) Democratising and further developing our social services/institutions in a user/producer alliance. Although popular support of public services is broad and comprehensive, there is also widespread discontent with many aspects of them, such as limited accessibility, bureaucratic structures, lower than expected quality, etc. Democratic and organisational reforms are decisive in this regard and can, if successfully managed, work to reinforce barriers against privatisation and political attacks in the future.

    In particular, it is important to develop the alliance between the trade union movement and the social movements of women, of environmentalists, of people living in precarious conditions without papers, without homes and without social rights, which have developed over the last decade.

     


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