• The Welfare State, The European Union And The Future

  • Por Erik Meijer | 25 May 09 | Posted under: European Union , Social Democracy
  • People are not equal, but all people need to be accorded equal value. And it is just this equal value that is permanently in danger, not only for traditional reasons like natural disasters, wars and slavery, but also as a result of a colonial history, geographic differences and, last but not least, today’s free market.

    In modern history, the state began as what Karl Marx described in the 19th century as “the ruling class’s instrument of suppression”. It included military defence, police force and tax collection and everything to defend the interests of the privileged minority. This state was of no use to the majority of its population. Since then, the social struggle of the working class combined with the opportunity for all adults to participate in political elections has created a different type of state. Even if it was still a bourgeois capitalist one, an important aim was to make capitalism more viable for the majority of the voters. 

    If you support the equal value of all people, the welfare state is the most moderate avenue of organising civilisation and solidarity. Different kinds of welfare state can be promoted, created and defended for various reasons. I do not opt, to begin with, for a limited definition of the ideology, instruments and aims of the welfare state, or for the social forces which support it. It is not so useful to describe exactly which models of welfare state we can consider, or which we eventually have to exclude. More important is a general description of the results we expect.

    In my view, the welfare state is a universal patchwork which can contain every measure to correct capitalism in the interest of broad layers  of the population. It resists or limits practices of the capitalist ownership of the means of production and the accompanying striving for maximum profits in private companies. It provides continuity in jobs, income, housing, care and education for all, which is especially important in times of crisis or when a tendency to growing differences in income prevails, but not only then ! It is also a way not to conform to what has developed in the most important capitalist country of the world, the United States of America. There, with the exception of the relatively short period of the “New Deal” under the Democratic President Roosevelt in the 1930s and 40s of the 20th century, the equal value of people is constantly abused, as many US citizens have no guaranteed income and lack sufficient public-service provisions.

    The aim of welfare states is always to protect those people who do not have real control of economic ownership and profits, people at risk of poverty or who lack provisions.

    It can emerge as a result of class struggle, supported or organised by trade unions, but it can also be a response of the ruling powers to revolutionary agitation and uprisings. It can be part of the reform policy of a social-democratic government, but in other cases it is an attempt of sections of the political right to prevent any kind of class struggle and change in industrial ownership relations, as occurred in the period of the communist alternative. It can even be a part of ideologies which themselves are not at all left. In the middle of the 20th century conservative Roman-Catholics and even the fascists practised some elements of the welfare state as a way to make capitalism more viable for the broad masses who could not participate in it.

    Contents

    So the reasons why a welfare state has been built can vary widely, and their histories can differ. They can include a range of different things, centred on income, provisions, protection of labour and other kinds of protection and taxes. I will try to describe the different elements it can include, and what they have in common. To that end I divide the welfare state into five categories, to distinguish them clearly:

    1. For income it can at a minimum mean:
    a. Guaranteed income for older people who cannot continue to work after the age of 55, 60, 65 or 70;
    b. Guaranteed income for people who cannot get paid work due to a lack of available jobs;
    c. Guaranteed income for people who are temporarily unable to work because of illness;
    d. Guaranteed income for those who cannot work due to a handicap;
    e. Contributions for raising children, especially if parental income does not suffice to give children a fair start. 

    2. For provisions it can at a minimum mean:
    a. An educational system that tries to give all children and young people access to all the benefits of society;
    b. A health-care system that provides everyone with what is neededto stay healthy or recover from illness: the care of a general practitioner, hospital or rehabilitation institution;
    c. 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;
    d. A combined system of special housing and care for the elderly who cannot live without professional help; 
    e. High-quality public services, such as good inexpensive public transportation, including urban and long-distance rail and fullschedule bus systems for less densely populated rural areas.

    3. In terms of protection for working people it can at a minimum mean:
    a. Protection against being fired without just cause and without compensation for lost income during the subsequent transition to a new job;
    b. Protection against low wages, unsafe working conditions, excessively long work weeks and dangerous jobs; 
    c. 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 revenue.

    4. In terms of other kinds of protection it can mean: 
    a. For housing, protection against the loss of a rented dwelling;
    b. Consumer protection, including product safety, food safety and the right of withdrawal from transactions using unfair selling methods;
    c. Insurance regulation to prevent private insurance companies charging premiums when they do not pay claims;
    d. 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. 

    5. In the area of taxes it can mean:
    a. 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;
    b. 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;
    c. The level of taxes as a whole has to be high enough to make it possible for the authorities or other bodies which receive this revenue to pay for all the income guarantees, provisions and protections mentioned above. 

    All those measures together also constitute the main basis for what has been, for a long time now, the demand for a “Social Europe”, expressed mainly by trade unions and social-democratic politicians. Later I shall explain why this “Social Europe” is in serious danger, especially after the EU Lisbon summit in 2000. It is in danger as a result of neoliberal ideology; however, there is resistance at all levels. 

    Undermining

    On the one hand, the development of welfare states in Europe has been influenced by general processes in society, like global colonial expansion outside Europe, the transition from an agrarian to an industrial society, urbanisation, crises, poverty, and economies changing from being selfsupporting to export-oriented. On the other hand, the countervailing power – depending on the ideology inside the working-class movement and the way trade unions organised themselves and attract a high number of members – reacted on these processes.
    These factors are in turn important in the struggle for the defence and the continuation of existing welfare states. To continue and to improve the welfare state we need on the one hand a large section of the population fighting for it, and on the other hand a situation in which those forces promoting pure undisturbed capitalism are relatively weak.
    The last thirty years have not favoured  the maintenance of those elements of the welfare state constructed in the preceding period. A vast propaganda offensive was aimed at convincing us that the welfare state is an expensive old-fashioned restriction of personal freedom, which ought to be abolished in favour of liberalisation and a global market. Especially since the more radical alternative of communism collapsed nearly 20 years ago, for the political right and for enterprise owners the welfare state no longer has to be accepted as the lesser evil, all the more so that at the same time there was the rise of neoliberalism and neoconservatism under Thatcher and Reagan. In their view, the number of workers in social institutions or for collective interest has to be sharply reduced, to make up the lack of workers in the employ of private companies and to promote economic growth for new sectors.
    Indeed, if the economy is strongly affected by globalisation, and there is fear of immigration and of Islam, and if fuel prices and tax-reduction dominate national politics, it becomes very difficult to unite the population to fight for the maintenance of positive past achievements. This situation can arise if the workers are relatively content as a result of a high and growing level of national income, if their ideological awareness is relatively low, if the working-class organisations are relatively weak and if everyone thinks only of what seems profitable today instead of considering tomorrow’s needs. Then traditional right-wing politicians and new right-wing populists can temporarily attract an electoral mass base for their political objectives, including far-reaching reductions in the welfare state.

    Diversity Inside Europe

    The rise and fall of welfare states inside Europe is a process that exhibits considerable diversity. It was and is a result of struggle and opportunities at the national level, although the developments inside one country highly influence the situation in neighbouring states. 
    The welfare state was never created by the European Union or by the three preceding European Communities which contained at an earlier stage only a small number of states. The welfare state cannot be improved or abolished by the European Union, although it incessantly tries to interfere in it.
    Inside Europe, welfare states have risen and fallen in very different ways in different regions. Generally, the welfare state is considered to be more or less a “northern” invention with less influence in the southernmost part of Europe. In the matter of the welfare state and the claim of a “Social Europe” we may divide the continent into five regional areas:

    I. The northern area, highly influenced by long-lasting social-democratic rule and by well organised but politically moderate trade unions. They had the greatest success in reforming capitalism. 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. These models partially influenced areas II and III. But they had little influence in areas IV and V.

    II. The centre-west area, consisting mainly of West Germany, the Netherlands, Belgium, Luxembourg, Switzerland and Austria, but in some respects also Ireland, France and Italy. Beyond social democrats and liberals a third power exists here, those who today call themselves Christian-Democrats, often making up the strongest political formation. Its social policy during the 1940s, 50s and 60s was dominated by Roman-Catholic ideology, originally strongly linked to its own trade unions. At times they shared government power with social democrats; at other times they were in competitive struggle with them to attract or maintain workers allegiance. For decades they espoused an essentially corporatist, Catholic social doctrine of the reconciliation of, and harmonious cooperation between, capital and labour. Sometimes these ideas were fed by a militant right-wing populism which did not represent big capital but small shopkeepers and farmers in fear of falling to the condition of dependent workers. Especially in the Netherlands, they created organs, half-state and half under the control of trade unions and employers associations in control of the economy and the social system. In the main, social democrats and the top trade union officials supported this kind of solution. 

    III. Great Britain. Great Britain reacted to the shortcomings of capitalism somewhat later than the USA did in the 1930s. The Labour government of the late 1940s introduced, alongside 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. The notion of a wide gap between the social classes and the necessity of permanent class struggle was more rooted here than it was in the north and centrewest, and was more comparable to the situation in the south of Europe. However, in Britain, first the aggressive right has beaten Labour and the trade unions; 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. Nevertheless, the rank and file within the Labour Party and the Trade Unions Congress want to defend the remnants of welfare state. And even inside the US we see growing resistance against the social and economic models of Reagan and Bush.

    IV. The south, that is, the countries bordering the Mediterranean. There the trade unions have a relatively low level of membership, but they are the most militant and class-conscious of Europe. They reject corporate models of structural and harmonious cooperation between capital and labour. However, they are somewhat isolated from political influence, chiefly because the communist parties allied to them in their countries have lost their traditional mass base. The social democrats who inherited most of the communist electorate lack the strong organisation, creativity and coherence of the analogous parties in northern Europe. Besides, the southern countries have a lower standard of living, and some of them suffered under fascist dictatorship until the 1970s. As a result, the welfare state there is underdeveloped or in some respects barely exists. However, as a consequence of their specific history they have a greater state influence on the national economy, an average lower age of pensions and many religious institutions in the field of care.

    V. The east. During the first half of the 20th century the East of Europe was less developed than the West. Its countries mainly provided the more wealthy countries with cheap mining products and agricultural products, and they themselves had to import expensive products of foreign industry, although there was some modern industry in Czechoslovakia and Hungary. This was a sure way to remain poor and backward. Moreover, many of the countries in question were governed by dictators and lacked freedom for trade unions or left-wing parties. The small left was revolutionary but isolated. After 1945, and only under the influence of the enormous victory of the Soviet Union in World War Two, they were able to take state power. In the period of state power it was the concept of collective ownership of the means of production, the limitation of private luxury consumption, forced industrialisation and separation from the world market which enabled them to introduce many aspects of a welfare state. The economic model they adopted made this affordable even with their lower per capita national income. Under capitalist circumstances they had never been able to afford this. However, notwithstanding their relative autonomy vis-à-vis the world market, they finally did make themselves ever more dependent on foreign patents, foreign loans and international trade. Along with the final collapse of their socialist economies nearly all aspects of the welfare state were abolished. Nowadays the east is, at is were, the “American Sector” of Europe. These countries are mainly characterised by having the most uncontrolled free- nterprise system conceivable, with an enormous lack of collective responsibilities. The region contains more poverty than in any other part of Europe today, but also more shamelessly opulent wealth for the happy few.

    The European Union

    Does the EU play a positive or a negative role in regard to the concept of the welfare state? The three original small European Communities of only six member states, which preceded today’s EU, comprised mainly area-II countries; the later expansions took in areas II and IV. The two areas with the most anomalous systems, on the one hand area I in Sweden and, on the other, area V in the east, only joined the EU in the most recent period.
    Since the 1960s social democrats and trade-union leaders within the smaller Europe of that time have held the view that the European Community could better strengthen and defend the system of welfare states than could their national governments. A united Europe was to become the main weapon against the power of multinational companies, the influence of US investors and Japanese expansive economic systems grounded in a more radical exploitation of labour. This was the origin of an intense identification with the European Union, including the continuing uniformity and centralisation within the EU. In the 1960s, the main slogans of the moderate left were “For a social Europe!”, and even “More Europe!”. 
    The moderate left was not prepared for the possibility of the EU having a further and very different stage of development, that is, becoming an instrument of the free market and the interests of multinational companies. And even the far left’s aspirations did not fundamentally differ from those of the moderate left. There was only a difference in the degree of optimism. Social democrats and trade-union leaders were more or less sure of a positive outcome that did not necessitate social conflicts, as a result of their great influence on government. By contrast, the far left held that only a clear victory in a continuing and international class struggle would in the end guarantee such a result. However, the far left also felt ever more firmly that EU membership would positively influence the final outcome.
    During the 1980s and especially the 1990s this situation changed dramatically. In parts of Western Europe the neoliberal ideas promoted by Reagan and Thatcher were advocated. In the eastern part of Europe the system dominated by the Soviet Union collapsed. Since that time, a radical alternative to the welfare state has ceased to exist, and so capitalist interests no longer need to accept the welfare state as the lesser of two evils.
    Although social democrats continued to wield great influence in the governments during the ongoing process of European integration, it was the right and the big enterprises which took over the initiative. The European Round Table of Industrialists, the Bilderberg meetings and a range of transatlantic think tanks were the locuses in which the right developed its alternatives. Their alternative was: do not focus on income distribution, collective provisions and social protection, but only pay attention to forced economic expansion; and therefore grant more freedom to multinational companies, foreign investors, and reduce labour costs. This means: withdrawal of the state, and especially withdrawal of the state in the form in which it had been influenced by the workingclass movement of the 20th century. Since the 1990s a range of EU decisions have tended in the direction of economic growth by means of a large-scale free market. The result is forced liberalisation, abolition of the freedom to change society in a more socialist direction.

    Four examples of this tendency follow:

    1. The Lisbon Summit of spring 2000 was announced as aiming at a “Social Europe”. This summit, dominated by social-democratic primeministers, concluded that the striving in all recent years for a “Social Europe” is reducible to economic growth and more jobs. In order to achieve the world’s most competitive economy by 2010, public transport, energy and postal services will have to be privatised. So, in the end, their “Social Europe” is a copy of neoliberal Europe.  

    2. As a part of this Lisbon Strategy, in the summer of 2000 the European Commission proposed the introduction of a Europe-wide obligation to offer public transportation services for tendering by private companies. The existing monopolies of state-owned and municipality-owned services are to be eliminated. An important goal was a farreaching reduction of labour costs, since the salaries of truck drivers or drivers of passenger buses working for private employers are lower. When the European Parliament appointed me as its rapporteur on this issue, I had the opportunity to help mobilise trade unions, national unions of local communities, consumers and environmental organisations and the governments of the larger cities. We needed to struggle for seven years before we could establish a situation in which there is a kind of free choice between tendering and so-called in-house production.

    3. The European Parliament accepted proposals to reduce state pensions in favour of company pensions and individual agreements with an insurance company, using the argument that the money thus saved is needed to finance private companies who take an entrepreneurial risk.

    4. The European Commission tried introducing a ports directive to abolish the protection of skilled and well-paid workers in our ports and to replace them by low-paid seamen from abroad. Only as a result of the broad resistance of the port workers did the European Parliament in the end, surprisingly, reject it. In this climate, it is clear that if trade unions continue using the old slogan “More Europe” to support their demand for a “Social Europe”, they are committing a grave error. Most experience has shown that we cannot in general win improvements at the European level if we cannot win them at the national level. The European Union is a distant government with low voter participation and less opportunities of influencing the final results. At this large-dimension level only the big international companies are well placed to lobby for their interests. We need to resist this. Yes, it is true that we can sometimes win the struggle, but it is always only on a defensive level and always more difficult than waging the struggle at home.

    The Bolkestein Directive

    In the EU, the welfare state is under a further attack in which the leading forces in the EU are trying to achieve their main economic objective: “the free market for goods, capital, services and persons”. The attack on the welfare state or, to put it in another way, on “Social Europe” continues along two fronts:
    First, the free market for services. Until 2006 the chief steps to expand the free market occurred in the area of free markets for goods and capital. In 2004 the European Commission launched its proposal for a free market in services. Services make up 70 % of the EU’s economic activities. After important public sectors like energy, postal services, television, telecommunications, transportation and railways were liberalised and privatised in the 1990s and at the beginning of the new century, the European Commission proposed in 2004 the so-called Bolkestein Directive, officially called the Services Directive. Underlying it was a more farreaching idea: European competition between national laws for social protection, and competition between national collective agreements. So one does not need to abolish good laws and good agreements. They can simply be defeated by having bad laws and agreements compete with them, on the basis of the rules obtaining in a “country of origin”.
    The Services Directive was finally adopted, but due to the opposition of left-wing parties and trade unions – with huge demonstrations in Brussels and elsewhere – it was realised in a more moderate form. Services of general interest – including social and health services – and labour-law rulings, such as the country-of-origin principle, were exempt. The European Commission promised to come back with separate proposals on these sectors. But the main goal, the free market in services, was achieved.
    In 2007, the European Commission presented, as it had promised, the finishing touch: to liberalise the last areas of welfare-state services involving health and social services of general interest. The new proposals cover sectors like social housing, childcare and support for persons and families. Only a few sectors are excluded, such as police, the judiciary and some statutory social (not economic) services. All other social services of general economic interest are going to be subjected to the internal market’s competitive rules. What will happen to those services when they are subordinated to the dynamics of competition and free market has partially already been seen in the Netherlands – in health and care services and in the liberalising of social housing.
    The second front is the creation of one united, flexible, liberal, deregulated European labour market. On the one hand, by the free movement of persons – they can work where they want to work – and, on the other, by companies which are dispatching workers where services are provided. Several proposals were made by the European Commission in the framework of the Lisbon-Strategy agenda aimed at developing Europe into the world’s most competitive, innovative knowledge-based economy. To improve the supply of labour and increase productivity the labour market has to be modernised. In 2004 the Commission proposed the White Book on modernising labour markets. Modernising was understood as follows: in this globalising world it is no longer possible to have work on a basis of normal stable contracts; labour relations on an individual basis are thus attacking the position of unions, collective agreements and the right to take industrial action. Because of the huge opposition mainly from the United Left GUE/NGL, the advocates in the two biggest parliamentary groups EPP and PSE had to retreat on this issue. The European Parliament decided in 2006 that normal full-time and stable labour contracts are to remain the standard.
    In 2006 the second proposal for a  more flexible labour market was tabled: the flexicurity approach. Its main principles are: employment protection and the right to find another job in a fast-changing working environment, supported by labour-market measures like life-long learning, are exchanged for legal job protection rights. This 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 like a new working-time directive adopted this week by the Council with proposals for more flexible and longer working life (up to the  age of 67). All these proposals are the basis of the national Labour Market Reform Programs for the member states.
    The effect of internal market rules laid down in the EC Treaty on labour legislation was shown by the rulings of the European Court of Justice in Laval, Viking and Ruffert. Those judgments involved the right to take industrial action against wage dumping, against flag of convenience, and against the right of the German federal state of Lower Saxony to lay down rules of sub- ontractors in public-building contracts. Fundamental union rights, like the right to enter into collective agreements, the right to take industrial action or to strike, and more generally to decide on one’s own national system of labour relations and social model, are now under attack by the internal competitive market rules.
    The debate on the Social Model is predictably growing. That is why the European Council proposed adding the special Social Clause to the Reform Treaty and also why the European social democrats, always defending “Social Europe”, decided in April to propose a Social Clause. The problem is, however, that these Social Clauses do not serve as real protections against the internal market rules, since the clauses refer to the Charter of Fundamental Rights as included in the Reform Treaty. It was the European Court of Justice rulings which demonstrated that the only defence would be a new horizontal Social Progress Clause that is enshrined in the Reform Treaty, recognising the right of member-states to decide on their social model with fundamental rights – the rights to provide for higher standards – on social policies and industrial relations and public services, as a part of the Treaty in effect regarding internal market rules. 

     


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