Europe needs a new eco-social paradigm if it is to ward off the populist sirens and offer a positive vision for the continent.

We have as a global community to respond to the consequences of climate change, the need to achieve sustainability. A radical shift to a new economic paradigm in a decarbonised world—an eco-social political-economy perspective—is required to achieve what we have agreed as principles.

The scale of the change that is required is similar to that which occurred in the late 1980s and early 1990s in central and eastern Europe and, as an invocation to the moral future of peace together, similar in scale, scope and significance to that advocated in the Ventotene Manifesto, widely regarded as the birth of European federalism.

Unrestrained greed

Consideration of a new ecological-social paradigm, based on economic heterodoxy, is available to us in the scholarly work of Ian Gough and others—work that recognises the limits of the world’s natural resources, as well as the role that unrestrained greed has played in creating the climate crisis.

In Heat, Greed and Human Need Prof Gough outlines how the alternative paradigm is rooted in the concept of human need over insatiability. It champions notions of gender equality, income, wealth and resource redistribution, and a reconfigured social consumption and investment strategy that transfers resources and technology from developed countries to developing countries as the key means to achieve this eco-social welfare state.

The eco-social policies that underpin such an economic paradigm must concurrently pursue both equity and social justice, as well as sustainability and sufficiency goals within an activist innovation state, with substantial state investment and greater regulation and planning. Furthermore, socio-economic measures are also required to negate any adverse impacts of the ecological transition for the poorest in society and to ameliorate, rather than threaten to deepen, growing levels of inequality. Difficult the transition may be, but it offers an approach that is garnering support as our best gesture towards intergenerational justice.

Gough’s eco-social political economy emphasises responsible economics, understanding that the concept of accelerated economic growth ad infinitum is inherently flawed. Scholars such as Gough are recovering a discourse and a political-economy discipline that had fallen prey to an uncritical embrace of neoliberal refrains. It advocates an economic model of pluralism which emphasises the finite nature of the Earth’s natural resources and the role that rich nations must play in ameliorating the crises in which we find ourselves.

As Gough puts it,

Consumption and consumption-based emissions, ignored by the green growth agenda, must be given equal priority in the rich world … Issues of global equity, almost entirely absent from international climate negotiations so far, must be discussed and confronted … ‘Affluence’ has a class as well as a national dimension.

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Kate Raworth’s book Doughnut Economics is yet another example of the works that provide a powerful conceptual framework emphasising social and ecological boundaries in humanity’s 21st-century challenge to meet the needs of all within the means of the planet.

In other words, it offers hope by showing us how we can, as a global community, ensure that no one falls short on life’s essentials (from food and housing to healthcare and political voice), while ensuring that collectively we do not overshoot our pressure on Earth’s life-supporting systems, on which we fundamentally depend—such as a stable climate, fertile soils and a protective ozone layer.

Returning to the European Union and our shared future, while the EU has imposed binding emissions targets for 2020 and 2030 on all its member states, we must now go further in Europe and plan for full decarbonisation of our economies by 2050, encouraging the rest of the world to follow suit, and urging in the strongest possible terms the USA to reconsider its decision to leave the international Paris agreement on climate change—a decision which, to my mind, is inexcusable, ill-informed, profoundly myopic and threatens future generations with catastrophic climate consequences.

In dealing with socio-economic impacts of climate change, we must be conscious of the need for a ‘just transition’ for workers and communities to ensure that we are all part of a sustainable, low-carbon economy and benefit from decent and green jobs. This will mean that those affected by the closure of unsustainable carbon-intensive electricity production, for example, must be offered reskilling opportunities to enable them to find suitable jobs in other areas, such as the green economy, or opportunities with sustainable incomes in other parts of society. Beyond that, there must be good social policies that ensure no loss of citizen participation rights.

Turning point

It is a source of encouragement that, after decades of mainstream economic commentary championing the belief in the inevitable, and often extreme, unregulated versions of the market, privatisation and a smaller role for the state, we now appear to be experiencing a turning point in the economics discourse thanks to the insightful contributions of economists such as those whose works I have mentioned, as well as Mariana Mazzucato and Sylvia Walby.

Mazzucato, in her books The Entrepreneurial State and The Value of Everything, effectively rebukes the austerity-fuelled worldview that, in order to restore growth (after the 2008 financial crisis), reducing deficits by cutting public spending is fundamental, arguing instead that government spending in key investment areas such as education and research and development is a key driver of economic growth.

As Keynes argued over 80 years ago, if governments cut spending during an economic slump, a short-lived recession can become a fully-fledged depression—precisely what occurred in Ireland when the economic recession of 2008 turned into an economic depression in 2009, with an economic recovery delayed until 2014.

Many decades before the emergence of contemporary political economists I have mentioned, the spiritual fathers of creative thinking in the public sector, Keynes and Polanyi, called on policy-makers not just to think in terms of economic policy exclusively about counter-cyclical spending as a way to reduce the impacts of recessions and avoid over-heating economies, but also to think strategically, to identify which investments can help shape citizens’ long-term prospects for the better.

Polanyi went so far as to argue, in The Great Transformation, that far from being in the grip of any inevitabilities, free markets are indeed the products of government interventions, outcomes of public and private actions. This astute observation has been conveniently cast aside in much of the austerity-based neoliberal commentary analysing the recent economic crisis.

The instrument that is the state must be repossessed by its citizens if we are to transform societies for the benefit of the citizenry, for the state still holds the capacity and much of the resources for democratic control of a nation’s economy and finances. This is but one form of an epistemological challenge to the neoclassical economic orthodoxy that espouses with rigidity the assumptions of rationality and individualism as the equilibrium nexus.

Populist reaction

The Brexit vote in the United Kingdom, the election of Donald Trump in the United States, the growth of nationalist and anti-immigration parties in Europe and, most recently, the ‘yellow vest’ insurrection in France all represent at source a populist reaction to the rising inequality, stagnant incomes and economic insecurity which have become the dominant trends in many industrialised countries, as has been keenly noted by John Evans in Social Europe:

They reflect a growth of relative deprivation, where significant segments of populations feel that, whereas others have gained from economic and social change, they and their families have lost out—and they fear a future of even greater insecurity. Sharpening divisions appear after decades of the weakening of intermediary institutions, notably trade unions, whose economic role was to act as a brake on rising inequality and whose political role was to provide voice to those feeling unjustly treated and to negotiate solutions to their grievances.

Brexit, Trump, nationalism and street violence all represent answers that we may perceive as inimical to an important question: how to reforge agreement on redistributive justice for those who have lost out, either objectively or subjectively, from globalisation, technological innovation (including digitalisation), so-called innovation (including the casualisation of labour) or responses to climate change. How then might we regain trust? What are the consequences of a legacy of dismissed or weakened mediatory institutions?

Evans asserts that

a new social accord is essential, in workplaces and communities, to rebuild trust in fractured societies. It must reduce income inequality, support purchasing power and median incomes, address job quality and counter the spatial concentration of discontent. Above all, it will entail reconstructing and reinforcing intermediary institutions, such as unions, which can provide voice and collective solutions.

Seminal contribution

Jürgen Habermas, he indeed of the Frankfurt School, has made a seminal contribution in his move beyond the pessimism that we may have taken from Adorno in his fine collection of essays on the EU The Lure of Technocracy. Habermas articulates a coherent and wide-ranging defence of the project of European unification and of possible parallel developments towards a politically integrated world and society.

Habermas is harshly critical of the incremental, technocratic policies advocated by several member states that have been, and continue to be, imposed on the populations of the economically weaker, crisis-stricken member states, which has had the effect of undermining solidarity across the EU. He argues an alternative—that if the technocratic, austerity-centric approach is replaced by a deeper democratisation of European institutions, the EU has the possibility of fulfilling its core founding principles and ensuring that ‘rampant market capitalism can once more be brought under political control at the supranational level’.

Habermas defines a continuum in which capitalism and democracy are presented, if not at opposing ends of the spectrum, very much in conflict with each other, and he discusses with frightening accuracy the abject spectacle of a capitalist world society fragmented along national lines.

Does this mean, then, that there is emerging, or perhaps has already formed, a fundamental incompatibility of democracy and capitalism, especially a capitalism that is so heavily enmeshed with an unfettered globalisation which itself lacks legitimacy among much of the citizenry? Unlike Wolfgang Streeck, who articulates a more pessimistic conclusion, Habermas asserts that two interventions would improve the democratic basis of the union: joint political framework planning and revisions to the Lisbon treaty to democratically legitimise the corresponding competencies, ‘in particular, equal involvement by Parliament and Council in the law-making process and equal accountability of the Commission to both institutions’.

This is because, as Habermas puts it, ‘a generalisation of interests that cuts across national borders is only possible in a European Parliament organised by parliamentary functions’. He argues for more profound political integration in Europe, so as to create a shift in the balance between politics and the market, which is continuing to the present day in the wake of the neoliberal self-disempowerment of politics.

This disempowerment of politics manifested itself during the 2008 financial crisis and subsequent economic recessions across the EU as pressure being exerted by the financial markets on the politically fragmented national budgets, which fostered a collectivising, pejorative self-perception of the populations affected by the crisis. Habermas asserts that the response by markets, lead governments, key international organisations and the mainstream neoliberal commentariat all contributed greatly to the sinister, punitive grounds on which assistance was offered to ‘programme’ countries by ‘turning the “donor” and the “beneficiary” countries against each other and fomenting nationalism’.

Such an impasse repeating itself could be overcome if pro-European parties conduct joint-transnational campaigns against the falsifying representation of social questions as national questions. It also requires, he argues, ‘extending the monetary union into a supranational democracy’ which could provide the institutional platform for reversing the neoliberal trend of recent decades. Above all, Habermas has argued (in Europe: The Faltering Project) for a policy of gradual European integration in which key decisions about Europe’s future are put in the hands of its peoples, rather than the ‘neoliberal orthodoxy’.

Investing in communities

Looking ahead, my vision is of a Europe with excellent public services at its core. Good jobs in the public sector mean quality services for citizens. We must remember that the services the public sector delivers are not a cost to society but an investment in our communities. This message must be taken to the heart of Europe. What is unaccountable is the speculative flow of insatiable capital—a global, unregulated, financialised version of economy that represents the greatest threat to democracy, the greatest source of an inevitable conflict and the greatest obstacle to us achieving an end to global poverty or achieving sustainability.

Responding to the necessary transformation of this relationship between economy and society is an urgent priority, in times that are marked in the absence of an adequate and inclusive discourse by the rise of an ever-more rancorous rhetoric—one which is frequently founded in despair, alienation, anomie and exclusion, which produces statements from the unaccountable that seek to divide us against one another on the grounds of ethnicity, religion and nationality.

This Europe we seek must be one in which such hateful squabbles are replaced with openness, inclusivity, cohesion, solidarity and a recognition that the shift to a new gendered, ecological-social paradigm of wealth creation and distribution is pursued together and without delay—not just for our benefit in the European Union but for the future generations whom we would wish to inhabit a peaceful, harmonious world that is supported by a sustainable vision of economy and society, and enriched by a diversity of cultures.

This is an edited extract from a lecture by the author at the University of Leipzig on July 4th 2019.​