A social investment pact for an anti-social Europe

6 Jul

Recent news about the Eurozone has been dominated by pictures of protesters in the streets of Athens. Europe has become synonymous with austerity and cuts. The message from Brussels, Berlin and Paris is that fiscal rectitude is the only way out of the crisis.

Some within the tradition of European social democracy are arguing against this current. They claim that more competitiveness needs to be complemented by what they call ‘social investment’. The call for a social investment pact has been made by a number of prominent figures within European politics and within the academy. A recent article by Frank Vandenbroucke, Anton Hemerijck and Bruno Palier was entitled ‘It’s a social investment pact that Europe needs!’ Vandenbroucke is a member of the Belgian senate, former social affairs minister and a prominent figure within the Belgian socialist party. Hemerijck is dean of the social sciences faculty at the Free University of Amsterdam and Palier is a researcher at SciencesPo, Paris.

The term social investment itself dates from the end of the 1990s and refers to attempts at mitigating the social costs of labour market reform. It is the missing ‘social’ component to what many on the left consider heartless supply-side policies. Vandenbroucke and his colleagues claim that before the current crisis, European governments were reasonably successful at raising labour market participation rates through welfare reform whilst also protecting social provision. This is what they call “flexi-security”. The idea of social investment is included in the European Union’s long-term economic plan, Europe 2020, a set of employment, growth and social policy objectives that follow on from earlier plans, such as the Lisbon Strategy of 2000.

The impact of social investment on inequality across Europe is difficult to determine. Central is the idea of an equitable reform of public services but whether this has been achieved anywhere in Europe is much contested. It is certainly true that over the last decade welfare state reform has not followed a rigidly neoliberal line, ruthlessly forcing people off welfare and into precarious and poorly-paid work. The term social investment captures a distinctive feature of contemporary welfare state reform in Europe that points to something ideologically more complex than what the term ‘neoliberal’ would allow.

But there are reasons to be wary of a call for a social pact for Europe. For a start, there is a major gap between those calling for this social pact and those for whom it is intended. As argued elsewhere on this blog, the specific content of reforms, whether it be financial or social, will reflect those involved in conceiving and implementing them. There is something paternalistic about a set of ideas and policies that rest on such a gap between proponents and recipients. It is also odd to push the idea of social investment at a time when mainstream politics seems so anti-labour. In a recent wave of public sector strikes in the UK, British Labour Party leader Ed Milliband declared the strikes “wrong” because they were an inconvenience for working parents. Milliband, no doubt, is a firm supporter of the idea of social investment.

It is also unclear whether the social investment idea is anything more than an attempt to soften the bumpy journey towards a more unequal society. The focus is on helping individuals “adapt”, re-skill and manage their transition towards a more flexible labour market. That leaves the biggest question relevant for social equality – wages and the distribution of the social product across society as a whole – untouched. With a Eurozone growth model based on wage restraint and recycled export revenues, what contribution can social investment make? The idea of a social investment pact appears more as a complement to an anti-social Europe than a real challenge to it.

5 Responses to “A social investment pact for an anti-social Europe”

  1. ian zuckerman July 6, 2011 at 3:12 pm #

    you guys make an excellent point about the disquieting gap between the proponents of a social pact for Europe and its putative beneficiaries. Your more general argument that reforms will reflect the interests and worldview of their architects is very prescient, and remarkably absent from the larger debate. At the same time, this post leaves me wondering what you mean when you say we should be “wary” of the idea of social investment. Wary as in cautious and circumspect, or as in antagonistic and doubtful? For example: are you saying that (1) there is still a meaningful political distinction between the European welfare state such as it is, and the harsher neoliberal model? Or is (2) the reality that the former is a mere conduit for the latter – as your last sentence seems to indicate. Is your general point that (3) the welfare state had a contingent political value of its own that nevertheless should not be confused with socialism, or any real self determination of the productive members of society? Or are you saying (4) that since social and anti-social Europe go hand in hand, we must be equally opposed to both sides of the same coin?

    • Chris B July 8, 2011 at 7:11 am #

      Good points Ian. There is a broader debate to be had about the problems of the welfare state today and about the particular circumstances under which it was created. Should Europe’s ‘social model’ in fact be defended in principle? This will be an ongoing theme of the blog. But the specific point about the social investment pact seems to be that it is being proposed today as an alternative to the austerity and cuts being imposed by national governments and reinforced by powers granted to the European Commission. Taken as such, the question is: what kind of alternative is it really? Its effects on social equality are limited and tend only to really be felt in societies (e.g. Sweden) that are already pretty equal. And ideologically it seems aimed at easing the transition towards more flexible labour markets and less social protection. As such, it doesn’t seem like much of an alternative but rather a complement to what we call ‘anti-social Europe’ – a model based on keeping wages low and maintaining growth through consumer credit and government subsidies to business. So ‘wary’ as in against it.

  2. Lee Jones July 11, 2011 at 9:50 am #

    Interesting post (and congratulations on the new blog, which I’m following with interest).

    I want to pick up on this point you make about ‘neoliberalism’. It’s certainly true that European policies don’t rigidly follow ‘neoliberalism’ as conceived in theory. It is important to distinguish between neoliberalism in theory (Hayek, Freidman) and neoliberalism in practice. The latter is distinguished by a series of social compromises that would-be neoliberals are compelled to make in order to secure a degree of market-led reform. These compromises vary from place to place, reflecting the balance of social forces in any given conjuncture.

    So, to take an example, public spending actually rose under both Margaret Thatcher and Ronald Reagan — from £85.7bn (1979) to £515bn (1989) and from $509.9bn (1980) to $979.9bn (1986) respectively. This clearly contradicts the ‘small state’ dogma of pure neoliberalism. But it does reflect the compromises they had to make, and the underlying class project of neoliberalism. Although state spending grew, what it was spent on shifted enormously – away from social spending, infrastructure development, etc, and towards corporate subsidies, the military-industrial complex, and unemployment benefit as joblessness grew as a result of their reforms. The net result was – as intended – a massive shift in power and wealth towards the capitalist class, reflecting the basic project underpinning the thrust towards ‘deregulation’.

    Does this mean Thatcher and Reagan weren’t ‘neoliberals’? If not, one would still need some term to describe what they did – and what all their successors have done. David Harvey has arguably given the best treatment of neoliberalism, describing it as a class project designed to break up nationally-based class compromises established after WWII and radically shift the balance towards capital; and an ideological approach to policymaking characterised by faith in market-based solutions. This describes basic Western policy since the late 1970s fairly accurately. The difference between neoliberalism-in-theory and neoliberalism-in-practice is that the latter is more complex and has to be pursued through political leadership. In practice, would-be neoliberals know they cannot get everything they want, and are forced to compromise; they go as far as they can, trying to avoid the total breakdown of social peace, and then come back for more later – that is the record of successive phases of ‘reform’. As you say of ‘social investment’, ‘The focus is on helping individuals “adapt”, re-skill and manage their transition towards a more flexible labour market’ – this approach underlines the same faith in the market, mediated through the need to maintain the social peace required to secure the reproduction of capitalism. It is very ‘third way’ in its approach – which itself is a variant on neoliberalism-in-practice (as made clear in the writings of Giddens).

    Sorry, that was longer than I’d intended. Keep up the interesting work.

    • Chris B July 11, 2011 at 11:48 am #

      Lee, I certainly agree an orthodox small state neoliberalism has hardly taken hold of rich world economies. If anything, the orthodoxy is the one reflected in the social investment pact: a belief both in the market and in the need for government intervention to regulate it. Perhaps we can call this neo-Keynesian, or something like that. What I like about Harvey is how his account of neoliberalism doesn’t take it as an economic doctrine but rather as a process of state and social transformation. What I doubt is whether there is a group of committed neoliberals, pushing forward their agenda and making periodic strategic compromises along the way. This it seems is a little what you’re describing and my feeling is that it’s less coherent and less ideological than that. The whole Third Way idea, for instance, isn’t a calculated attempt at reconciling market with social protection, though that is perhaps how it works out in practice. Rather, it’s explicitly post-ideological, ditching the idea of thinking in terms of class compromise altogether. What you are describing (strategic class compromise) fits better with the post-First World War stabilization strategies and post-Second World War corporatism. What has emerged out of the 1980s I think is distinct. What we’re hoping to do here is find out how it is different. Hopefully that is what will come through the posts. Tentative, I know, but that is the stage at which we’re at.

      • Lee Jones July 11, 2011 at 12:26 pm #

        Perhaps I’ve put it a bit over-starkly. Class compromise doesn’t have to be ‘strategic’ – in fact I don’t think I used that word – and it doesn’t have to be conscious either. It’s just that, if a set of forces try to implement market-led reforms, and others resist, the outcome is a result of the struggle they engage in – hence it is ‘compromised’. The violent struggles of the 1980s are now avoided by proponents of ‘reform’ who try to take into account the possibility of resistance and achieve their goals in more cautious, piecemeal ways – as I say, coming back time and again to get what they want, when the next crisis hits. So, from that perspective, it is indeed quite incoherent and very uneven in its outcomes. And yes, there isn’t a group of diehard neoliberals sitting in government plotting a particular outcome – the agents who are operating also have other values and interests too. There are very few ‘pure’ neoliberals-in-practice.

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