donderdag, oktober 27, 2005

Carrying on regardless: European social democrats fumble the post-referendum crisis

NB. You might want to print this one off if you, like me, prefer a more commodious reading apparatus, such as paper - as it was seven pages in Word when I wrote it.

European social democrats haven't rediscovered their socialist roots at all with this new waffle about protecting 'Social Europe' - they've just rediscovered the language of solidarity and equality following their summer of defeats at the hands of the extra-parliamentary left. They want to woo back their base, but they remain as committed to neo-liberalism as ever.

European social democrats aren't quite running scared yet, but a good number are looking over their shoulders as the various domestic examples of the anti-neo-liberal left - the 'Gauche du Non' - who had quite eclatant successes in the French and Dutch referenda on the European Constitution and have even begun to poach left-wing votes at the fringes, viz. Germany's new Linkspartei. For all the humbuggery about No votes being expressions of nationalistic provincialism and xenophobia, it was quickly conceded by soc-dem strategists after the votes that 'No' voters were not anti-European, so much as fearful of the transplantation of the European social model with an 'Anglo-Saxon', or neo-liberal, one, and so their parties had better 'shore up their base', and quick-like.

Thus at the start of the month, the Party of European Socialists - the centre-left grouping within the European Parliament that gathers together the MEPs from member states' Labour, social democratic and socialist parties - launched 'A New Social Europe', its response to the post-referendum crisis - a half-day conference accompanied by the publication a discussion document, 'PES - Social Europe: First contributions to the debate'. The pamphlet aims to kick off a discussion 'between PES member parties on how to combine Europe's traditional levels of social protection…with international competitiveness'.

In the pamphlet, the traditional brusqueness of the There Is No Alternative (but liberalisation and deregulation) discourse has disappeared, replaced with cozy platitudes about Social Europe. Liberalisation and deregulation are still there, and there remains no alternative, comrades, but now the discourse is peppered throughout with words such as 'solidarity' and 'equality' and 'Horlicks'. Okay, so there's no mention of Horlicks at all, but the booklet's tone remains all warm and fuzzy. However, just like the nourishing malted food drink, this only temporarily masks the bitter aftertaste that comes with the repeated mention of 'flexibility', 'reform' and 'competitiveness'.

Franz Müntefering, the chairperson of Germany's SPD, may have caused the financial press to have kittens when in April he sought to woo left-wing voters abandoning the SPD by describing foreign investors as 'a plague of locusts', and he may have begun his short essay for the PES pamphlet, 'Modernising the Social Market Economy', with a load of waffle about the strong needing to protect the weak, but ultimately he's the same old Neue Mittel partisan he has been for years:

'Preserving the social market economy…requires…courage to implement changes.'

'With the reforms of Agenda 2010 [the social restructuring that produced the massive protest movement that gave birth to the WASG and subsequently the Linkspartei], we…implement[ed] this strategy…with a sense of courage.'

'The SPD…have had the courage to act in spite of having to cope with the resistance of many.'

'If we go on implementing this policy and advance together and with courage…then this will benefit…the social market economy in Germany…[and] in Europe.
He's one courageous man, that Frankie, mentioning the word a full four times in a two-page article.

Similarly, Greek PASOK MP and former European Commissioner Anna Diamantopoulou begins her contribution with a entirely sensible, neo-Keynesian call for financing of large-scale European infrastructure projects as a method of priming the European pump, but she quickly back on-message, repeating the neo-liberal myth that inflexible labour markets are the cause of high unemployment - rather than the inevitable product of overcapacity, capital flight, economic sabotage by investors or all three - and calls for labour market reform and invents a wretchedly disingenuous neologism in the process: 'flexi-curity'.

Meanwhile, UK Deputy Prime Minister John Prescott, in addressing the conference, seems to have never received the memo about the new touchy-feely talking points, launching as he did straight into a 'We're so great, us in the UK, and you lot'll stop sucking so hard as soon as you're more like us' lecture on the godlike qualities of the British economy. You'll have heard the laundry list of New Labour's achievements before - 'record levels of employment', 'lifted almost a million children out of poverty,' 'turned water into wine,' 'raised Lazarus from the dead,' etc., etc. What goes without mention, natch, is how many of the jobs created are McJobs, the massive growth in inequality under Blair and that in any case it's all just based on irrationally exuberant consumers buying Stargate: Atlantis DVD box-sets and Philips Men's All-Body Shavers with money they don't have. And it goes without saying that he didn't mention economists' worries that the wheels are about to come off the British economy.

While a number of continental social democrats have noticed that 'the rejection of the proposed EU constitution in the recent referendums [sic] in France and the Netherlands [has] raised difficult questions about the direction the EU should take…[with] Europe's citizens worried about jobs, quality of life and growth,' as Vladimír Špidla, the Commissioner for Employment, Social Affairs and Equal Opportunities and founding member of the Czech Social Democratic Party puts it in his contribution to the PES document, New Labour seems to be carrying on regardless, with the same prescriptions and discourse as ever.

But those who naively believe that there could be a change of course under Gordon Brown would do well to peruse the contribution to the debate of Douglas Alexander, the UK's minister for Europe and ally of Mr. Brown.

The solution to the European crisis remains for both Blair and Brown the Anglicisation of Europe's economies, and Mr. Alexanders' pamphlet, 'Europe in a Global Age', published this month by the Foreign Policy Centre, sets out in some detail the Brownite vision of the future of social Europe.

In response to the crisis, Alexander recommends a prescription of four elements: social and economic restructuring, trade liberalisation, remove agricultural protections and export subsidies, and a rejection of Europe as superstate. He warns against 'overregulation' and introspection, approvingly quoting the New York Times' evangelist of neo-liberal globalisation, Thomas Friedman.

Claiming to concern himself with the welfare of the twenty million Europeans out of work, he says that such high rates of unemployment are due to 'something in European social structures which inhibits work and economic gain' and that the continent must embrace necessary change of an Anglo-Saxon nature: 'It's a sobering and challenging insight that if the EU were an American state, it would be 46th out of 50, at about the same level of wealth as Alabama.'

No fewer thank six times does Alexander attack greater European political integration, saying, 'the EU must confidently assert its own identity as neither a nation state nor a superstate,' and that '[a] superstate…is not where the future lies…The best description and prescription for today's European Union is a close Union of nation states, working together in those many areas where co-operation can add value' Indeed, the entire final chapter is devoted to extinguishing the hopes of those who dream of an ever closer political union. Furthermore, however many peacekeeping or other military missions the EU may be engaged in overseas, 'Nato remains the primary guarantor of Britain's defence,' not any future European force.

Indeed, the document is so critical of Europe, one could be forgiven for thinking the minister for Europe isn't a pro-European, but actually, the rationale for Alexander's Superstate-phobia is that while he recognises that only as part of the EU can little Britain compete with the continent-sized economies of the US, China and India and is thus happy to encourage the completion of a single market, the democracy, or at least closer political integration that must accompany such economic integration has the danger of imposing on the UK continental social protections.

This is why Alexander is at pains to point out that in fact there is no such thing as a single European social model, but rather there are four different paths to social protection in Europe. He cites a report by economist Andre Sapir, of the Vrije Universiteit Brussel, for an EU finance ministers' meeting last September (as did, by the way, John Prescott, and The Economist's Charlemagne in a recent column on European social policies tellingly entitled 'Choose your poison'), who divided European welfare systems into four types: the Continental one, typified by French and German generous benefit systems and strong worker protections; the Mediterranean version, seen in Spain, Italy and Greece, in which there are some of the strongest worker protections laws in Europe, but relatively weak benefit systems, as until recently the family in these more strongly Catholic and Orthodox countries was seen as the safety net more so than the state; the Nordic edition, found in Scandinavia and the Netherlands, which has traditionally offered strong benefits and income redistribution, but has seen considerable deregulation of worker protections over the past decade; and finally the Anglo-Saxon (including Ireland) model, in which there is weak social protection and weak job protection.

Sapir concluded that, given the competitive pressures of globalisation and the demographic pressures of an aging population, only the 'Anglo-Saxon and Nordic models are sustainable, while Continental and Mediterranean models are not and must be reformed in the direction of greater efficiency by reducing disincentives to work and to grow.'

Predictably, Alexander spends a great deal of time attacking the Common Agricultural Policy, and he is right. Agricultural protectionism by both Europe and the US has criminally brutal effects on farmers in the developing world. Closer to home, the 40 per cent of Europe's budget that is spent on the CAP could certainly be spent more wisely - a Europe-wide childcare programme, perhaps? Nonetheless, one suspects all this talk of concern for third-world farmers is just a screen for a defence of the UK rebate.

More broadly, Alexander would like to see at the European level and by other member states deregulation that 'eases the burden on business and promotes competitiveness', a recognition of 'the importance of the transatlantic marketplace' and the 'liberalisation of trade in services', by which he means advancement of the GATS.

This last prescription is of particular concern. The EU is currently engaged in negotiations surrounding the progression of a General Agreement on Trade in Services. The GATS is a trade agreement enforced by the WTO, established in 1994 at the conclusion of the Uruguay Round of the GATT.

The negotiations are as transparent as molasses, but under pressure from progressive NGOs such as France's Attac, as well as trade unions and student groups, information surrounding the GATS has to some extent been revealed.

It is the first multi-lateral agreement on services and covers the grand expanse of the service sector. It aims at 'progressively rising the level of liberalisation' of the service sector with the ultimate aim of full liberalisation of trade in services and the elimination of government non-tariff 'barriers' to international competition in the services sector such as regulations, laws, quotas and standards.

As Maude Barlow, of the Canadian altermondialist NGO Council of Canadians describes the process:

'Essentially, the GATS is mandated to restrict government actions in regards to services through a set of legally binding constraints backed up by WTO-enforced trade sanctions. Its most fundamental purpose is to constrain all levels of government in their delivery of services and to facilitate access to government contracts by transnational corporations in a multitude of areas, including public health and education.

'Infrastructure areas like transportation and telecommunication are included alongside financial services, architecture, electronic data processing services and tourism. Basic public services like education, health care and water also fall under the conditions of GATS.'

And what areas of government services are included? In advance of the 2000 GATS talks, the US conferred with the Coalition of Service Industries, the trade association representing the sector, asking what it would like to see included in a comprehensive GATS agreement. The European Commission did the same with the European Services Forum. The priority areas for the two groups, according to Ms. Barlow's research are health care; hospital care; home care; dental care; child care; elder care; education - primary, secondary and post-secondary; museums; libraries; law; social assistance; architecture; energy; water services; environmental protection services; real estate; insurance; tourism; postal services; transportation; publishing; and broadcasting.

In short, Alexander's 'completion of liberalisation of trade in services' would see the entire public sector apart from the police and army pried open.

Maude Barlow again:

'The U.S. has made its position clear. "The mandate of the negotiations is ambitious: to remove restrictions on trade in services and provide effective market access, subject to specified limitations. Our challenge is to accomplish significant removal of these restrictions across all services sectors, addressing measures currently subject to GATS disciplines and potentially measures not currently subject to GATS disciplines." In non-trade jargon, this means that the 137 members of the WTO have agreed to open up all of their service sectors to free trade laws and the same WTO enforcement powers that have struck down health, food safety and environmental laws in dozens of countries.

'Simply put, the "commons" - or what's left of it - would be under full assault. What used to be areas of common heritage, like seeds and genes, air and water, culture and heritage, and health care and education, would now be slated to be commodified, privatised and sold to the highest bidder on the open market.'

This is New Labour's response to the challenge from the left? This is the UK Presidency of the European Union's response to the post-referendum crisis and its prescription for the defence of Social Europe?

If Sapir, Prescott, Alexander and Charlemagne are all comfortable in disaggregating Social Europe, let's deconstruct the much vaunted Anglo-Saxon model. First of all, there is no one Anglo-Saxon model. The US and UK may have both significantly weakened job protection, but even Blair's Britain has not seen its social provision stripped to the bone as has happened across the Atlantic. Furthermore, if we look further afield, the other Anglo-Saxon economies are just as varied, with Australia akin to the UK and Canada and New Zealand more akin to the Nordic or Continental models, but Canada's economy is putting along reasonably fortissimo at the mo, with little Franco-German stylee economic grimness.

As a little pamphlet from the late Robin Cook's cupboard, 'A New Deal for Social Europe', points out:

'[O]n any objective analysis, there is no correlation between levels of labour market regulation, taxation and public spending on the one hand, and economic performance on the other. If there were, the Danish Swedish Finnish Dutch and Austrian economies would be amongst the least successful economies instead of being amongst the best performing.'

You couldn't fit a Kleenex between Blair and Brown's perspectives on Europe, but there are others in the Labour party who to some extent recognise the political terrain they have lost to the anti-neo-liberal left. Published a few weeks before Alexander's 'Global Age', 'New Deal' was written by a handful of the soft-left wonks, including David Clark, a special advisor to Robin Cook; and Stephen Twigg, the director of the Foreign Policy Centre and parliamentary secretary to Robin Cook when he was Leader of the Commons; as well as ETUC general-secretary John Monks; London mayor Ken Livingstone and former transport commissioner Neil Kinnock. But in reality, the New Deal document, a lively, fighting piece of work, is entirely Robin Cook's. Cook is doing battle with Brown over Europe from the grave.

'The New Deal for Social Europe was really the brainchild of the late Robin Cook,' says Sarah Schaefer, the director of the Europe Programme at the Foreign Policy Centre, 'as he had considerable credibility with the trade unions and the left, but was strongly pro-Europe. The failure of the Yes side in the French and Dutch referenda had inspired him to formulate a progressive argument in favour of Europe.'

Apart from a sprinkling of items, there is little in the way of policy prescription in the document that the anti-neo-liberal left would find disagreeable. In the introduction, the authors say, 'Europe must be more than a marketplace for the free movement of goods, services, labour and capital. It must be an instrument for regulating markets in the public interest.'

'It is bound to be criticised by sections of the press as pro-European and because it rejects the Brownite point of view,' says Schaefer, 'but it was warmly received at the recent Labour Conference - largely because it was seen as Robin Cook's legacy.'

In contrast to Alexander's work, the New Deal document argues straight away for further political integration, and explicitly takes on Alexander's preference for the nation-state:
'Those who are happy for the fate of humanity to be determined by the invisible hand of market forces or the aggregate of private choices believe they have nothing to fear from a world in which politics remains purely national. Indeed, they prefer conditions in which the decisions that matter are beyond the sovereign reach of elected governments.'

In contrast, the authors believe that the European Union is a powerful enough actor that through it, citizens can once again direct their governments to do their bidding, more resistant as it is than the nation-state to the Banshee mistrals of global markets.

As diplomatically as a document whose authorship includes Neil Kinnock can do so, it takes the Labour government to task for its emphasis on market liberalisation in its relations with Europe: 'Tony Blair said that he wanted a political and social Europe, not just a free trade zone…But words are no substitute for action and the positions taken by the British Labour government on, for instance, working time and information and consultation rights for employees have too often appeared to conflict with that aspiration.'

The document also debunks the myth that Britons are less 'social' than those on the continent, pointing out through a series of surveys that in fact, 'in a number of key issues, British opinion often emerges as more egalitarian and socially progressive than several other European countries,' and so we can indeed talk about a commonality of social beliefs across the union, regardless of Andre Sapir's models.

Futhermore, the document notes that those countries that have 'benefited most from glbalisation have done son by ignoring key tenets of neo-liberal ideology'. The governments of China and India remain heavily interventionist and employ capital controls, and the US uses its dollar reserve status to run external deficits that would otherwise force a country to deflate its economy. One might add that the US too, under Bush has engaged in an expansive programme of military Keynesianism, priming the pump in a much more destructive fashion than a Europe-wide childcare programme, and series of large-scale infrastructure projects would.

The document calls for 'a new international economic order', with a global system of managed exchange rates and capital controls. The single currency makes Europe such a force in the global economy as to be able to press for such reforms. Parallel to this, argue the authors, could be an international clearing union, as a mechanism for managing global trade imbalances, and the integration of labour and environmental standards into world trade rules. Indeed, the authors go so far as to call for avenues of 'redistribution that replicate the European Union's social and regional policies on a global scale.'

However, the report's solution to the economic malaise of France and Germany is where it runs aground, arguing wetly that increased investments in R&D, skills and lifelong learning will, erm, do something.

This, of course, does nothing to deal with the much more fundamental problem facing the two countries: that investment decisions remain in the hands of investors, who in times of crisis remain too timid to make the correct investments that will pull the economy out of the slump, or, in the current case of France and especially Germany, who engage in acts of economic sabotage aiming at disciplining the workforce and broader nation into accepting massive structural change.

Nonetheless, the report offers a pair of robust policy recommendations as practical options for counter-cyclical economic management with which the hard left would find it difficult to disagree: a European childcare guarantee, the establishment of a European Recovery Fund (originally advocated by the Labour Party ten years ago) or using the European Investment Bank's lending facility to fund new infrastructure projects.

The report is however dead wrong in its concluding paragraphs on 'Strengthening European Democracy', in which it declares in some genre of act of willing suspension of disbelief, that there is no lack of democracy at the heart of the Union. As Susan George, the vice-president of Attac France, says in an article explaining the reasons for the No's victory in her country in the inaugural edition of Europe's World - a sort of Foreign Affairs journal just for Europe - the proposed constitution 'perpetuated a Commission that is independent of the will of the people, and a Parliament that cannot even initiate legislation, much less levy taxes.'

However, the report does at least recommend the Union proceed with the creation of a position of President of the European Council as was proposed in the Constitution, but have the position be subjected to a direct Europe-wide election. Such a thought must strike fear into the heart of an Alexander, a Brown or a Blair - an elected President of the European Council? B-b-b-but that would mean that a social democrat or worse could theoretically be elected to the position, and no matter how impotent the office may be, could you imagine the horrible effect that would have on UK markets?

For all this, is the document anything more than a propaganda exercise aimed at winning over left-wing eurosceptics in the UK?

Alas, probably not. The FPC's Sarah Shaefer, which published both documents, admits that 'the difference is more in tone and emphasis than in content' despite all the markedly different policy prescriptions. After all, she points out, Neil Kinnock may have co-written A New Deal for Social Europe, but he also wrote the preface to Europe in a Global Age.

'The two perspectives are not as opposed to each other as many would like them to be,' says Schaefer.

'They're really aimed at different audiences: the Global Age document is targeted at a foreign audience, part of an attempt to persuade the continent to adopt the British model, while the New Deal document is targeted at a domestic audience, aimed at building a progressive case for Europe and in particular at persuading the trade unions.'

The authors of the piece, or at least Cook, Twigg, Clark and Livingstone, may genuinely (have) believe(d) in what they have written, but then they aren't minister for Europe in the Foreign Office as Douglas Alexander is.

Thus, in response to the post-referendum crisis, British social democracy where it counts is carrying on as if nothing has happened. But continental social democrats, who in the leadership, to a greater or lesser degree are really just as neo-liberal as Blair and Brown, have acted no differently. In response to the victory of the No, deaf to the votes of a clear majority of his own party's members, Francois Hollande, the leader of France's Socialists, a week after the referendum purged the party leadership of all those who supported the No campaign. 'Clearly we've rather pissed off voters and our supporters. The solution? More of the same.'

In fact, there are about five different ways Europe's social democrats and socialists have reacted to the crisis:

1) There is the Blair/Hollande steady-as-she-goes reaction. The Titanic of neo-liberal social democracy is heading for the iceberg of popular opinion.

2) The Laurent Fabius/Franz Müntefering reaction. They know the ship's headed in the wrong direction but are only pretending to do but not actually going to do something about it. Fabius was a leading No campaigner in France, but everyone remembers his tenure as Prime Minister in the early eighties under Francois Mitterand and the austerity measures he introduced, and knows that his championing the No side was a simply a path to challenging Hollande for the 2007 presidential nomination. Frankie 'Locusts' Müntefering can call foreign investors whatever phylum, genus or species of pest, plague or vermin he wants, but he'll still support the Hartz IV and Agenda 2010 reforms German capital demands.

3) The Cook/Livingstone reaction. They know the ship's headed in the wrong direction and don't believe the ship should be headed in that direction anyway, but in the end remain part of the crew - ship officers even - and are loyally going down with the ship. Their job is to convince everybody to stay calm even though they know that Attac France and the Linkspartei have torn a gaping hole in hull.

4) The Oscar Lafontaine reaction. The ship's headed in the wrong direction and he knew it from the start. He loves the old boat, but he's grabbed a lift in a life-raft that's turned out to be a sturdy little dinghy in the end.

5) The Marie-George Buffet reaction. We thought she had grabbed the same life-raft as Lafontaine, having somewhat revived the previously moribund French Communist Party by taking a leading role in the No campaign, but it seems like she's trying to row back to the Good Ship PS because while it may be sinking, it's, um, bigger than Bescancenot's catamaran.
To torture the metaphor just a little further, then - all the reports and conferences on a new social Europe are thus, ahem, just rearranging the deckchairs.

Europe's social democrats have abandoned the Old-Labour/traditional-SPD, Keynesian, democratic socialist political terrain that had delivered them to power not a few times over the past century. It should not surprise them if forces to their left retake that terrain, and meet with similar success.