The British Labour Party has a new leader. Like his German and French counterparts, Ed Miliband has drawn a line under past mistakes and claimed a new beginning. He has promised a society where social justice is not sacrificed to economic efficiency, but where both mutually reinforce each other. This is good.
Yet, most curiously for a new generation leader, whose parents and grandparents fled Nazi persecution across Europe, there was not a word about the European Union in his speech to the Labour conference. This is odd. For there can be no modern social democracy without a coherent strategy for Europe. Maybe in the UK’s climate of rampant Euroscepticism, it was smart to stay clear of Europe in a leader’s maiden speech. We need to understand, however, what fuels this hostility to Europe and what it means for the design of an alternative social democratic programme.
There are two forms of Euroscepticism, one from the right, one from the left. The neoliberal fear is that the European Union is a dirigiste monster that undermines self-regulating markets. In her 1988 Bruges speech, Margaret Thatcher famously said: ‘We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.’ Since then, times have changed, and the Barroso Commission has been working hard to dismantle Social Europe.
However, the self-regulating market does not create the open society that neoliberals like Hayek and others have dreamt of. In fact, the opposite is true: Neoliberalism generates a closed society that becomes protectionist, xenophobic, chauvinistic and reactionary. The reason is that when liberals have shrunk the state, they also have rolled back democracy as a mechanism for internalising the side effects of unfettered market dynamics. A different mode for maintaining social coherence is therefore needed, and the only instrument we know, other than democracy, is the surrender to customs, morality, and tradition. National identity as a political programme becomes an instrument of repression: dissenting minorities have no tools to oppose this domination, because they are excluded from the identity of the mainstream.
This bias in favour of the familiar is damaging European integration and it is increasingly poisoning Europe’s Left. Left-wing Euroscepticism sees the European Union as a neoliberal machine of market liberalisation and a threat to the cherished model of the European welfare state. Mostly, these critics of European integration seek to defend the model of the welfare state that has grown in specific national contexts of social struggles and institutional set ups. They speak of a European Social Model, but they mean the one they are familiar with at home. Here, too, the bias in favour of the familiar generates anti-European chauvinism. What is needed is a new articulation of the welfare state in the context of integrated European markets, where free flows of goods, services, capital and labour contribute to higher prosperity. To articulate such a programme is no mean task.
Europe’s social democracy needs to rethink, not its purpose, but the instruments for its actions. The purpose will always remain the same: more fairness, more justice, more equality, more freedom – because these are the things that make a good society. From the mid-9th century until the late 1970s, European social democrats have struggled to conquer the nation-state and make it more democratic. Controlling the state was central to their strategy of passing legislation that would ensure that markets serve socially desirable ends and would protect those who lost out under the forces of change. Under the influence of Keynes, they also have used the state to stabilise and enhance their economies’ productive potential. This has created a variety of social welfare states with clearly distinct national characteristics.
However, with the European Single Act and the creation of the euro, the economic environment has changed. The purpose of full market integration must be seen in the context of globalisation: economies of scale in the large European market were necessary for European firms to prevail under conditions of global competition, and they were the best guarantee for sustaining Europe’s welfare and prosperity. The single market is an instrument for economic efficiency gains. Yet, European integration has not only produced winners, but also losers, primarily in the non-tradable and public sectors of the economy, and more generally because policy-makers have fallen prey to the neo-liberal policy consensus. As a consequence, European authorities dance to the tune of TINA (‘There Is No Alternative’), while the losers find no other voice but populist agitators and Euroscepticism. Caught between the two, social democracy has become silent.
If we take Ed Miliband seriously, European social democrats need a new and integrated strategy. They must embrace European integration wholeheartedly, because it is the driving engine of innovation, efficiency, productivity and wealth creation. But they must also create the new institutional tools, which allow them not only to regulate European markets in the common interest, but also to improve the material conditions of the losers of European integration. Social justice, after all, is about social redistribution.
The European single market has increased economic efficiency, but it is impeding the capacity of nation states to redistribute wealth between the rich and the poor. This is what has to change. A return to national welfare states is certainly possible, but it comes at the price of lower wealth creation. This may not bother Tory Grandees who are always on the winning side, but it cannot be a perspective for social democrats.
This is why a new generation of British Labour leaders must take Britain back into Europe.