• Renewal of the European Social Model

  • By Joachim Bischoff | 10 Jan 13 | Posted under: European Union
  • Europe is shifting into greater public view. On the one hand, party political actors are announcing that social Europe is our democratic answer to globalisation. On the other hand, the process of the constitutional treaty has been blocked. In referenda and parliamentary votes, the majority of the member countries ratified the Constitutional Treaty; in France and in the Netherlands, the present concept was clearly rejected by popular referenda. Ultimately, the process is completely open; it is unclear how enlargement can be combined with a deepening or stabilisation of the European economic and social union. It takes little imagination to predict continued confrontations over the shaping of the European Union in the near future.

    The trade unions and the political left continue to swear on the “European social model” and in that context intend a combination of democratic decision-making, social regulation, public services and public property as well as a comprehensive system of social security. In reality, however, in the name of improving the competitiveness of firms in Europe, a restructuring of social-state regulation of all European national states is being pushed through. Therefore, it is not a matter of defending a traditional social model, rather trade unions and the political left may work for a new form of European social model and in so doing can rely, despite all neoliberal deregulation and privatisation, on the fact that large popular majorities favour a social-state regulation of capital. The general conditions of the dissolution, and possible rediscovery, of a European social model will be elucidated in what follows.

    1. European Social Model – Norm and Reality

    The political “career” of the European social model is a recent phenomenon (Kaelble 2004: 31 f.). Since the beginning of the 1990s, this notion appears as the position and perspective of official EU policy. It was defined against two realities: on the one hand, against the recently imploded state socialism of the Soviet type by which the “short 20th century” (Eric Hobsbawm) came to an end; on the other, against the neoliberal model of unrestrained capitalism radiating from the Anglo-Saxon countries. The political actors knew that the answer to these challenges could no longer be found within the nation-state framework but required an intensification of the European integration process. It was thought that the social model would reveal itself as the superior developmental path through its coupling of economic dynamism to social security.

    Despite this classification, it is difficult to put forward a more detailed substantive clarification of the notion of European social model and the political strategy to be derived from it. This for several reasons.

    The nation-state development of the welfare systems during the postwar decades led, first of all, to quite different articulations of the social state within Europe. The differences involve the financial structure and social-security levels of these systems, with the most significant differences being between the Scandinavian welfare states and the more rudimentary social states of Mediterranean type, as well as the involvement of social actors, for example in countries with a somewhat more corporatist tradition of participation.

    Secondly, compered to these differences, those with the Anglo-Saxon social-state model paled. “In the majority of cases, the USA’s social state is comparable to some of those found within the social space of the societies of Europe. The diversity within the European Union is often larger than the difference between the European average and the USA.” (Alber 2006: 227). Most important, however, is another conclusion drawn by Alber: “neither globalisation nor the open method of coordination (based on the Lisbon strategy) led to a comprehensive convergence of the EU members … Instead of a unified European social model, we find a motley assemblage of nation-states with marked peculiarities as well as different developmental paths” (227).

    Thirdly, from this follows the conclusion that the “European social model” does not describe a social reality, but indicates rather a normative goal: “a mixture of values, achievements and hopes that with respect to their form and degree of realisation are different in the particular European states” (Giddens 2006:1).

    Does this mean that the European social model is fiction rather than social reality? Not at all.

    First of all: different paths of welfare-state development in Europe testify to a plurality of social conditions. Only if the European social model is understood as an undifferentiated or monistic concept does it stand in contrast to the actually existing pluralism – otherwise, we should expect different models of welfare as well as different developmental paths of capitalism.

    Secondly, in comparing European social states to the USA, one tends to lose sight of the different dynamics of the economic and social development. While financial market capitalism in the Anglo-Saxon world developed with a clear historical advantage and in the 1990s was able to impose itself as the socio-economic leader, the continental European countries found themselves in a complicated, crisis-ridden transformation process.

    Thirdly, although the European social model is certainly also a normative frame of reference, it is also a matter of serious, fiercely disputed politics. Anthony Giddens correctly notes: “Almost all supporters as well as opponents agree that the European social model is under great pressure at present – or even threatens to fail” (Giddens 2006, 2). The present threat has to do with the transitional period through which the system of socio-economic regulation of the highly developed capitalist countries is passing. Giddens points to the fact that general developmental trends were responsible for the comprehensive transformation of the social system at the end of the 20th century. Quite obviously, the member countries of the European Union, but also the European economic and currency union, find themselves in a grave situation of upheaval with the result that the ideas and demands for a European social model also include normative goal conceptions.

    2. Reinterpretation of Competitive Policy

    The former president of the European Commission, Jacques Delors, and the former Danish prime minister Poul Nyrup Rasmussen at this point consider the European integration process to be in great danger: “The road of the ‘market-radical’ Brussels commission is not the future for Europe. Our social Europe is in danger, because according to the assertions of the conservatives, the European states are no longer able to afford their social system. The only answer of the market-radical European Commission to the challenge of 18 million unemployed and 68 million poor people in Europe is the liberalisation of the domestic market.” (Delors/Rasmussen 2006).

    Indeed, the EU Commission under Jose Manuel Barroso enormously aggravated the crisis of the European integration process. The attempt, by way of a constitution, to force Europe to implement neoliberal strategies failed in the plebiscites in France and the Netherlands. Broad transnational resistance formed against the liberalisation of the services market, even if the resistance failed to avert the process. Europe is increasingly perceived on the continent as a deregulation community. EU institutions are seen in a negative light, and participation in elections to the European Parliament has reached historic lows.

    The understanding of the European model, which was still the guideline for action of the three Delors commissions in the decade between 1985 and 1995, changed considerably in subsequent years. The strategy of an interventionist regulation was abandoned in favour of a system of general control that alters the structures of national social systems by way of the opening of markets and the “Open Method of Coordination” (OMC) introduced into employment policy since Amsterdam (1997). “The central function of European integration no longer consists in stabilising the national development models, but in promoting and driving ahead their market and competition-oriented reorganisation.” (Bieling 2004: 129) Through the priority given to internal market development under Delors, the European level was transformed into an arena for neoliberal deregulation. The so-called reforms of financial and capital markets in Great Britain and the USA were taken up by the EU. The EU-driven liberalisation of financial markets also created a broad, liquid market whose resources could be drawn upon for a capital-market-oriented reconstruction of the European corporate landscape.

    At the turn of the millennium, during the brief moment in which almost all governments of the EU member states were led by centre-left coalitions, this supply-side reinterpretation of the European social model became the political programme of modernised social democracy. “From welfare to workfare”, was the slogan of New Labour. The interventionist approach of social policy regulation was buried; competitive coordination was placed on the agenda. “At the latest with the decisions of the Lisbon EU summit in the year 2000, the Third Way became the dominant strategy in the EU.” (Drager 2003: 203) The “Third Way” here indicates a strengthening of competitive capacity through supply-side and deregulation policy and the reconstruction of social-security systems without at the same time moving towards a pure market economy. Realisation was supposed to take place in the framework of the so-called Lisbon strategy. The goal was to turn the EU as a global player, by 2010, into the “most competitive and dynamic knowledgebased economic region of the world – an economic space capable of achieving lasting economic growth with more and better jobs and better social cohesion.”

    3. The Reconstruction of the European Social Model to Serve Financial Markets

    In the second half of the 1990s, a finance-market embedding of the European social model was initiated, which was coupled, starting in 2000, to the Lisbon strategy, among other things. The notion of the social model remained as a normative orientation, but was filled with new political and strategic content. This can be illustrated in the fields of labour market policy, pensions and health policy.

    Growing Precariousness of the “Labour Society”

    The harshness of the new labour regimes, the attacks against the labour laws in all European states and the intentional precariousness of labour relations were imposed at an almost breath-taking speed. The connection between work and social security – the great achievement of Fordism – was dissolved. Instead of speaking of an “erosion of gainful employment society”, we must speak in the 21st century of the “collapse of a whole structure”, “of the passage to a completely different regime of work organisation in a society that is completely dominated by the market” (Castel 2001).

    The political consequences of this change are far-reaching: “When unemployment today in numerous countries of Europe reaches such high rates, and precariousness seizes a large part of the population, not only workers and employees in trade and industry but also journalists, teachers and students, then work becomes a rare commodity that one yearns for at any price and that delivers the employees to the employers at any conditions, who then considerably use and abuse this power given to them, as one can see every day” (Bourdieu 1998:99). Precariousness is the expression of a social relationship of power. The neoliberal strategy of insecurity signals the reconstruction of social security systems, the growing repression of the unemployed and so-called marginal groups (migrants, refugees), the expansion of low-wage areas and attacks against jobs negotiated by collective agreements.

    A solidaristic European social model can be constructed neither on the basis of a high rate of long-term unemployment nor in the midst of a mentality characterized by resentment. 

    The Pension Market: Pension Funds

    One crystallization point of the social confrontations in the member states of the EU is the reconstruction of the pension systems according to the three-column-model of the World Bank: public pension systems that are successively reduced to minimum security levels, company pension models which however have come under pressure after the end of the New Economy, and private pension funds.

    The policy coordinated by the EU consists in the prolongation of work lives (including restrictions on early retirement regulations), decoupling old-age security levels from the development of social security (and from gainful employment, i. e. lowering of pension levels), expansion of private old-age security systems.

    The Health Market

    “By way of the Euro, finance regimes (with growth and stability pacts and the key note now given to the European Central Bank) and the competition-policy reorientation of Lisbon, there was the implementation, in economic, fiscal and employment policy, of pre-conditions and constraints on action that reach into neighbouring policy fields and thus also into health policy.” (Gerlinger/Urban 2004: 268) The health system in the meantime is considered one of the “key elements of the strategy of economic and social modernisation of Europe”. In that respect, the “reforms” are focused mainly on “measures for long-term financial resilience”, meaning measures for devolving costs to the consumers, price and quantity controls, budgeting etc., in other words, the stepwise privatisation of health services which as a result need to be paid for by private insurance.

    4. Failure of the Lisbon Strategy

    Despite the enormous pressure to reconstruct social systems in Europe, by at the end of 2004 a high-ranking commission under former Dutch prime minister Wim Kok proclaimed the failure of the Lisbon strategy. The neoliberal instruments of the Lisbon strategy – de-regulation and  ncreased flexibility of the national labour market, financing of social insurance, unleashing of financial service, market opening of service areas – did not strengthen real economic development. In March 2005, at the spring summit of the European Council, the heads of state and government of the EU determined the basic outlines of the second stage of the Lisbon strategy. The main points are, first of all, the strict focusing of politics on the two goals: growth and jobs; second, the stronger involvement of the member countries in the realisation of the strategy; and, third, the simplification of procedures. Ecological quality and the social quality of workplaces fall prey to the concentration and simplification of the strategy.

    The “market radicalism” (Delors/Rasmussen) of the Barroso commission will continue the negative development of Lisbon. In all member states of the EU, there will be – through the combination of national deregulation programmes and the Lisbon strategy – a continued transformation of the social security systems, resulting in an increasingly greater gap between poor and rich and an exacerbation of social conflict. These political strategies not only come up against growing rejection, as seen in the struggles mounted by the trade unions; the disquiet of large parts of the population is growing. It is expressed in the manifest political crisis of the European Union.

    One proposal of how a changed European social model could be fitted into today’s financial market capitalism was made by Anthony Giddens. In addition to the transition from “welfare” to “workfare”, he proposed a radically new financial basis for the social constitution of Europe: “A renewed European social model has increasingly to rely on fees … for pensions, by way of health up to university study.” (Giddens 2006:12) That way, the road towards the privatisation of social security systems and public services would be accelerated. And by way of gradual privatisation, the financing of these markets would be pushed forward. The extension of finance market capitalism to the lucrative markets of retirement allowances and pensions as well as health and care services would be the consequence.

    A renewed European social model must have a different economic and social basis than that of financial market capitalism.

    5. Rediscovery of the European Social Model

    The rediscovery of social security or the social state is on the European agenda. An effective social reform policy is necessarily tied to a radical change of course: without turning away from a forced moderate wage policy, no lasting domestic growth can be planned. By way of an expansion of state expenditures for public investment and qualitative changes of mass consumption, on the other hand, it will be possible to obtain full employment. In contrast to the earlier approaches to economy-wide global steering, these measures need to be tied to long-term structural policy. That means: it is not a question of more economic growth within the traditional income and consumption structures, but of the development of a socially and ecologically sustainable way of life.

    A policy of restructuring must concentrate on four central dimensions: On the one hand, pushing back the wide disparities in income and wealth; second, social and business guidelines that are capable of regulating unlimited flexibility in a new way. Third, the precariousness of wage-labour sectors and the increasing weight of income from interest and wealth must be taken into account in any reform of the social security systems – ultimately, the financial basis of social security needs to be extended beyond work incomes also to profit-derived forms of income (interest, pensions, incomes from wealth) in order to realise a universal security system for all members of society. Fourthly, a new regime of capital traffic controls is needed, in order words, the control and taxation of international financial flows.




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