D(e)F: If you could change one thing about the functioning of the EU, which would it be?
Colin Crouch: The thing that currently most needs changing in the functioning of the EU is its focus on a solely market-making agenda, and its consequent neglect of the compensatory social agenda that this requires.
D(e)F: How would such a compensatory social policy look like? Could you specify some concrete measures which in your opinion would help to come to a more balanced agenda?
CC: The starting point has to be recognition that whenever we make markets (which we often need to do, in the interests of improved efficiency), we do some damage – environmental damage is the most obvious, but another example is increased stress in people’s lives produced by tougher work regimes. Sometimes this damage just has to be accepted; sometimes we ought to compensate those harmed; sometimes the harm is so great that the market activity has to be regulated. Sometimes market-making itself needs the support of non-market institutions.
A compensatory social agenda
This has been recognised at earlier stages of Europeanization – for example the social charter that accompanied the Maastricht Treaty, or the interest in combining labour flexibility with new forms of labour security earlier in the present century. At present however European policy-makers are pressing on with intensifying markets with little thought to the consequences – as the treatment of working people in Greece and the other southern European countries and Ireland shows.
The most important step in an alternative direction would be a European strategy for the Social Investment Welfare State. This idea, which has been developed by scholars in a number of western European countries, combines the traditional roles of social policy with advancing the positive contribution it can make to economic efficiency. This would certainly mean changes for the more conservative welfare systems in Europe, but through constructive strengthening rather than the destruction being meted out today by EU policy trends.
A European strategy for social investment
D(e)F: The core idea of the social investment approach is to overcome the dichotomy between social equality and economic growth. By focusing on new forms of social policy that increase social inclusion, employability and ‘flexicurity’, it aims to make both objectives compatible. Still, social investment requires an active State and a large amount of public spending, for example on education and professional training. In your opinion, should this public spending take place on a European level, which would require a much higher EU budget? Or should the EU rather use its existing instruments, such as the European Semester, in order to prompt its member states to engage in a more active social policy on the national level?
CC: I think we need a combination of both approaches. In the first instance, we need the EU to recommend the social investment approach with existing instruments (as you say), but also to ensure that other elements of European policy – such as the competition directorate and the European court – are not undermining social policy and impeding the social investment strategy. Social investment, rather than simple destruction of existing social policies, needs to be the challenge set for countries like Greece who need help from European institutions. Much of this is about the reorientation of existing spending, but there may also be a need for increased spending where this can be funded by tax increases – especially in those countries where taxation at present is not very redistributive.
But there is also a need to develop funds for social investment at the European level – much of which could be achieved by redirecting spending from some existing programmes that are probably of less social and economic value than social investment. The development of a single European market and the level of political integration that we already have requires a similar growth of European citizenship rights. Otherwise Europeans will cease to identify with the European project. At present there is very little that one can point to and say: ‘I am entitled to this because I am a citizen of the EU’. Rights based on the themes of the social investment strategy would provide a modern form of social policy highly appropriate for this purpose.
Europe’s split personality
D(e)F: As you mentioned before, the structural reforms that the EU pushed on with in Greece and other countries affected by the euro crisis have been biased towards market-making only, neglecting the social dimension. However, in the ‘Europe 2020’ strategy adopted in June 2010 by the European Council, some social-investment goals – such as reducing the share of early school leavers or lowering the number of Europeans living in poverty – figure quite prominently. What are the reasons for this mismatch between official rhetoric and concrete policy? Or, put in another way: What impediments are there to really implementing a more socially balanced agenda?
CC: There is something of a split personality in the European integration project – this has always been there, but today is one of its more difficult moments. The main emphasis of European policy-making has always been market-making, and that has been no secret and is a valuable project. But alongside it, also from the very start, has been the idea of an ever-wider union. This mainly includes social policy – not just a European level of policy, but also some harmonisation and mutual recognition – and also other symbols of shared citizenship.
And the vision of the founders in linking the two was correct. If Europe is just about markets, we shall never develop the ideas of shared destiny among European people that are essential if we are to limit national antagonisms and act together in relations with other powerful world regions. To see what happens when a country’s leaders never permit the European project to mean more that some trade deals, just look at the United Kingdom, in danger of being pushed into leaving the Union in a mood of populist xenophobia, despite the realisation of the majority of the country’s political leaders that we need to be part of Europe!
An intolerant form of neoliberalism
The split personality is becoming increasingly important because of the growing dominance of an intolerant form of neoliberalism at the level of the EU and many of its member states. When the main political conflict was between a moderate liberal conservatism or Christian democracy and social democracy there was much room for compromise. Conservatives leaned towards the market but accepted the role of social policy; social democrats were mainly concerned to increase the role of social policy, but accepted the importance of the market economy.
As moderate conservatism is replaced by aggressive neoliberalism, there are moves (in the EU and in individual nations) to residualise, marketise and privatise social policy. Some of the aspirations that imply such policy remain, but they are contradicted and ignored by the main thrust of market making. This is the stage we have now reached, and it leaves us full of contradictions.
International technocrats and social inequality
D(e)F: In the past, many important social achievements took place during the 1960s and 1970s, which are usually seen as the heyday of national democracy. By contrast, the surge of neoliberalism during the 1980s and 1990s is often associated to globalisation and the increased power of technocratic international organisations, such as the International Monetary Fund (IMF) and the World Bank with their strictly market-oriented ‘Washington Consensus’.
However, the harsh austerity measures during the euro crisis were decided by the democratically elected heads of state and government in the European Council, whereas Olivier Blanchard, chief economist of the IMF, raised serious doubts about this strategy since late 2012. Recently, the IMF even published a paper in which they justified public redistribution policies in order to mitigate the damaging effects of inequality to economic growth (link). Are we entering a period in which international technocrats care more about social inequality than elected national governments do? How do you see the relationship between social policy and democracy today?
CC: You raise an excellent question there, but I am not sure that you are quite correct. The austerity measures were worked out partly by the European Council, but also by the European Central Bank and the IMF. So the IMF is developing something of a split personality here. Perhaps more significant is that the so-called Troika (European Commission, ECB, IMF) really had a fourth limb: a group representing the private banks who had lent money to the countries in difficulty. It was they who were really being rescued by the bail-outs, not the populations of the countries concerned. This fact is rarely mentioned; neither is the existence of this ‘fourth limb’.
Is this perhaps the key to answering your question? When institutions like the IMF or OECD are writing general reports, they reach the conclusions decided by their technocrats. When it comes to real action, whether by democratic governments or anyone else, the corporate lobbies get to work, and ensure answers favourable to their interests.
After the European elections
D(e)F: The recent European elections were mostly commented as a victory of Euro-sceptic and right-wing populist parties, but they also brought an upswing of the Party of the European Left, whose parliamentary group GUE/NGL will grow from 35 to about 50 members. Moreover, whereas Christian Democrats and Liberals suffered severe losses, the Social Democrats approximately maintained their number of seats. Do you think that this balance shift will have repercussions on the European social policy? What expectations do you have for the next five years?
CC: You make a very interesting observation here, about Christian Democrats (and similar parties) and Liberals taking the biggest hit. Another important point is that the shift to the far right was mainly in prosperous countries of the North West: Austria, Denmark, France, the UK – not in the southern countries that had suffered most from austerity policies. In these the shift was more to the left. This suggests strongly that the main cause of the shift to the right was hostility to immigration, as immigrants mainly go to the wealthier countries.
This makes the likely policy response very complex. There could be a shift now to greater concern for the situation of workers who may wrongly perceive immigrants to be the cause of their insecurity. This could mean a stronger European social policy. However, against this will be the temptation of social democratic parties to follow the right in an anti-immigrant line instead. This tendency will be strengthened by the new force given to British Eurosceptics’ arguments that there should be less European social policy, not more. There is much to fight for in the coming months and years!