Social Europe Journal Vol. 4 No. 1

Volume 4 • Issue 1

Autumn 2008

Suggested Donation 5� Social EuropeJournal

www.social-europe.eu

Contributions byPoul Nyrup Rasmussen

Stefan CollignonFritz ScharpfJohn Monks Roger Liddle

Giuliano AmatoChristophe Rouillon

Lewis Baston

After the GlobalEconomic Meltdown

– A Chance for a moreSocial Future?

Social Europe Journal • Volume 4 • Issue 1 • Autumn 2008

Editorial BoardGiuliano Amato Former Italian Prime Minister

Karl Duffek Director Renner Institute

Elisabeth Guigou Former French Europe and Justice Minister

Zita Gurmai President PES Women

Stephen Haseler Chief Editor

Poul Nyrup Rasmussen President of the PES

Angelica Schwall-Dueren Vice Chair SPD Bundestag Group

Giuseppe Vacca President Gramsci Foundation

Jan Marinus Wiersma Vice President Socialist Group European Parliament

Henning Meyer Managing Editor

Editorial team

Jeannette Ladzik Assistant Editor

Ben Eldridge Design & Layout

Please make sure that there aremore issues of ‘Social EuropeJournal’ by paying the suggested5€ donation for this issue. Visit ourwebsite www.social-europe.eu formore details and payment options.

Social Europe Journal is publishedby the Global Policy Institute atLondon Metropolitan University onbehalf of Social Europe Forum.

In cooperation with / supported by:


Editorial

Henning MeyerManaging Editor

THE FINANCIAL CRISISand the looming reces-sion are the top themes

on the political agenda and willprobably remain the crucialissues for quite some time tocome. With the economic andfinancial crisis came a mood forchange. It was this mood forchange that helped BarackObama to take the last steps onhis voyage to the White House.

And also in Europe, citizensknow that the current turmoilrepresents the end of an era and the dawn of a new one. But what will this new era looklike? There is widespread con-fusion and concern about theshape of the remodelled socialand economic system of thefuture.

With this issue, we wouldlike to start structuring the cur-rent debates and help to devel-op a clearer picture of a possiblefuture; a future that is moresocially, environmentally andeconomically sustainable thanthe past we have just leftbehind.

Poul Nyrup Rasmussen andStefan Collignon go right to theheart of the crisis in their con-tributions. What policy changesare needed in view of the eco-nomic meltdown? What doesthe economic crisis mean forsocial democracy as a politicalphilosophy? These are the cru-cial questions answered byRasmussen and Collignon.

The second part of the jour-nal features the start of a newdebate on the issue of SocialEurope. Is there a SocialEurope? If yes what is it? Weprovide our own definition andstart a debate around an inter-view with the renowned socialscientist Fritz Scharpf.

We conclude this journalissue with articles on publicservices in Europe and an essayon the interesting question ofwhy we were so interested inthe US Presidential election andat the same time pay relativelylittle attention to our electionshere in Europe.

This is the last issue of 2008.We hope we can kick-start thepolitical discussions outlinedabove and take them to the nextlevel with a new structure andnew partnerships in 2009. Staytuned for more Social Europe!


ContentsHow Europe can tackle the financial crisis Poul Nyrup Rasmussen

The Dawn of a New Era: Social Democracy after the Financial CrisisStefan Collignon

What is the European Social Model?

‘The only solution is to refuse to comply with ECJ rulings’Fritz Scharpf

European Court of Justice (ECJ) and Social Europe: A Divorce based on Irreconcilable Differences?John Monks

The European Social Model and the ECJRoger Liddle

Making Social Europe EuropeanGiuliano Amato

2009: A Crucial Year for the European Dimension of Public Services Christophe Rouillon

Why are we all so interested in American Presidential elections?Lewis Baston

58

151622

273032

36

THE FINANCIAL CRISIS – andlooming recession - is a definingmoment and a huge challenge

for social democracy in Europe.To those far-leftists who take pleas-

ure in the troubles of capitalism I say itis ordinary, hard-working families whoare worried about their pensions, theirsavings, their homes and their jobs. Itis not the rich who are at risk but thehard-earned standard of living of ordi-nary families. We must act decisivelyto protect ordinary citizens, now andin the longer-term. This is our task andwe must be fully focused on it. It is atask which needs to be tackled in threemajor phases:

• stabilising the immediate crisis

• taking action to ensure that as thefinancial crisis turns to economicdownturn, recession does not bringlarge-scale unemployment

• reforming the financial markets,with new and better regulation toreduce the risk of further financialcrises

Time will tell if October’s governmentinterventions – led by Gordon Brown –will be enough to stabilise the financialmarkets and save our citizens’ hard-earned money in wobbling banks.What seems clear is that GordonBrown’s approach of bringing ownercapital to boost liquidity is a far morepromising – and fairer - approach thanthe Bush administration’s initial plan

to simply relieve the banks of their baddebts.

But calming the financial climate hasto be followed up immediately withaction to stop the coming recession.European governments need to give theeconomy a boost by investing in jobs.We have already seen a commitmentfrom the UK’s Labour government to doprecisely that. Other governmentsshould, and probably will, follow theirexample. While it is not easy to investgovernment money at a time when taxrevenues may be going down and wel-fare payments are likely to increase, ifmoney can be found to save the banksthen money must be found to createnew jobs. If the crisis has taught usanything it is that the market cannot doit alone. Government intervention inthe economy is necessary to avoid mis-ery – and the risk of recession creatingwidespread unemployment is truly mis-erable for ordinary citizens.

In any case, there are multiple bene-fits from investing in green growth –renewable energies and energy efficien-cy. Insulating houses and other build-ings is labour intensive (and so createsjobs), contributes to the fight againstclimate change, saves money wastedon lost energy, and reduces heatingbills for the poor. Other investments inpublic transport, education, new tech-nology, and public services such aschildcare and provision for the elderlywould all make our societies better forall as well as contributing to economicgrowth. Investments would be moreeffective if they were coordinated

How Europe can tackle the financial crisis

5 Social Europe Journal Autumn 2008

Poul Nyrup RasmussenPresident of the Partyof European Socialists,and author of thereport on financialmarket reform recentlyadopted by theEuropean Parliament

across Europe, and carried out, wherepossible, simultaneously. Greater eco-nomic policy coordination – within theEurozone and beyond - would alsohelp. To assist growth EU memberstates should be encouraged to usefully the flexibility allowed in therevised Growth and Stability Pact. TheGlobalisation and Cohesion Fundsshould be used flexibly to boostgrowth. A new smart green growthstrategy for Europe could create mil-lions of new jobs in the coming years.

The third phase of tackling the crisisis new regulation of the internationalfinancial markets. Here I believeEurope, as the world’s largest economy,can and should take the lead. Whileworking closely with US Democratsand others – as the Party of EuropeanSocialists (PES) has been doing overthe last 18 months – we cannot affordto wait for global agreement on regula-tion. More or less everyone agrees thatwe do need new and better regulation.The question is what regulation andcovering who?

Today’s financial crisis is the resultof excessive and risky debt, combinedwith incredible greed and conflicts ofinterest, made worse by the lack oftransparency in our money markets.These are the problems that need to betackled. The PES has been asked by itsprime ministers to draw up a roadmaptowards new regulation. Already repre-sentatives of our socialist and socialdemocratic parties have agreed thatEuropean reform should be based onseven pillars:

1. Universal legislation covering allfinancial players. Many investment

banks and prime brokers, and allhedge and private equity funds areexempt from the rules of trans-parency and disclosure that applyto the rest of the market. As theyaccount for around two thirds ofall new debt, it is obvious theyneed better regulation if we are toavoid new debt crises. Supervisionacross the financial markets mustalso be reinforced. PresidentSarkozy – as President of theEuropean Council – and EuropeanCommission President Barrosohave finally confirmed to me in theEuropean Parliament that theyagree to this demand.

2. A new high standard of trans-parency and disclosure includingdebts, amounts of fund andsources of funds, identification oflarge shareholders, executive payand bonuses for all similar finan-cial actors including private equityand hedge funds

3. Compulsory ‘capital requirements’for all financial players, like thosethat already apply to banks andinsurance companies. This meansthat to reduce extreme risk takingand excessive debt all financialplayers need to have and keep acertain amount of capital, corre-sponding to the risk they take

4. Rules to prevent excessive borrow-ing – including big excessive debtcaused by big private equitythrough ‘leveraged buy outs’ - andto protect viable companies fromtoo much capital being paid out toshareholders or to service debt

5. Limits on pay and renumeration,and mechanisms to ensure thatearnings reflect losses as well asprofits

6. New rules to prevent conflict ofinterests


‘While working closely with USDemocrats and others – as the PEShas been doing over the last 18months – we cannot afford to waitfor global agreement on regulation’

7. Protecting workers interests suchas by ensuring that employees areinformed and consulted during alltakeovers including leveraged buy-outs and by obliging pension fundsto inform employees how theirpensions are invested

These seven pillars could form thebasis for a new European financialmarket that is cost efficient, transpar-ent, competitive and finances in aneffective way the long-term investmentneeds of the real economy.

Many but not all of these proposalsare contained in my legislative reportadopted recently by the EuropeanParliament, and passed with the agree-ment of conservatives and liberals whountil the crisis struck argued that themarket was already adequately regulat-ed! This type of report is always acompromise, so my report did not con-tain everything that we social democ-rats wanted. For example, we proposeda publicly owned European CreditRating Agency which would offer gen-uinely impartial advice on credit wor-thiness, a system of registration andauthorisation for managers of hedgeand private equity funds and a com-mon European Financial SupervisoryBody. All three proposals were rejectedby the conservatives and liberals.

Another reform which I believe isnecessary is to end the loophole of off-shore tax avoidance. It has always beenwrong that investment fund managersworking in the EU can register off-shore simply to avoid tax. It is evenless acceptable when taxpayers’ moneyis being used to save the financial mar-ket. The least we can expect is that theindustry now pays its tax dues likeeverybody else. It has been calculatedthat the tax revenues lost through off-shore tax avoidance could pay for theMillennium Development Goals to beimplemented.

There is a clear need to renew thearchitecture of world financial gover-nance. There are important issues to be

resolved about the future role of theIMF, the World Bank, the FinancialStability Forum, and modernising thewhole Bretton Woods structure. That iswhy I took the initiative to write a let-ter in May, signed by nine formerprime ministers, to President Sarkozycalling for a world financial conference– similar to the world financial summithe has been recently calling for.

But reforming global financial archi-tecture is a long road. Europe, withGordon Brown in the lead, were fron-trunners in the first actions to tacklethe immediate financial crisis, to avoida meltdown of our banks. Now Europehas to continue taking the lead byimplementing clear regulation of ourfinancial markets. The EU, as theworld’s biggest economy, can take alead in framing its financial marketswith sounder regulation. The EU cando so in cooperation with the US andothers so as to move in a commondirection, converging over time. That iswhy the Party of European Socialistsopened talks with US Democrats onfinancial market reform more than ayear ago and established a ‘FinancialMarket Reform Network’ with US andJapanese Democrats in June this year.

The times ahead are tough. But wecan take courage. The solution to thecrisis is social democratic. The worldneeds more than ever before a modernsocial democratic deal between the mar-ket and fair rules for social justice.Conservatives who for years said thatwhat the market needed was less rules,less regulation, less ‘red tape’ do notknow what to do now the market hasfailed them. Social democracy has thepotential for renewed relevance. Wemust move decisively to show we haveworkable answers. If we succeed we canmove from better international financialmarkets to a better globalisation.


ANEW ERA IS dawning.The financial crisis of2008 is not the end of

capitalism. Capitalism datesback to the Medici revolution,which invented modern bank-ing, but since then it has gonethrough many different regimesand articulations. The 2008 cri-sis marks the end of the Reagan-Thatcher counter-revolution.Neoliberalism and monetarismare dead. Even Nicolas Sarkozynow calls for the re-foundationof capitalism.1 This does notmean that thousands of policy-makers are not continuing toimplement old recipes, helpless-ly watching their loss of controlover events. Antonio Gramscionce said a crisis is when theold is dead, but the new not yetborn. With the election ofBarack Obama new paradigmsin policy-making become possi-ble. Yes, we can reconcile mar-kets and social justice; we caninvent a new social model for

Europe. We can integrate thereal and financial economy. Buthow? European social democ-rats were able to shape variousepochs to different degrees.How can they adapt to the newsituation? Those who are ingovernment or wish to form itwill have to become the archi-tects of the new Europe afterhaving served as fire brigade inthe crisis.

A new perspective forEurope’s left needs to integrateeconomic and political normsand values into a coherent proj-ect for society. Since World WarII, three paradigms have domi-nated political and economicthinking in the world. In theEast, Marxism rejected marketsand democracy; in the West,Keynesianism laid the founda-tions for social democracy andpolitical liberalism, whileFriedman’s counter-revolutiondeveloped a neoliberal ideologyfrom the theories of monetarism.

Friedman’s anti-Keynesianrevolution was not primarilydirected against the welfarestate, although he did think that‘most hardship and misery inthe United States today reflectgovernment’s interference’.2 Hismore fundamental attack soughtto establish the superiority ofthe market economy over cen-tralised planning. In this he wasright. Today, after Deng

The Dawn of a New Era:Social Democracy after the Financial Crisis

Stefan CollignonProfessor of Political Economy at S. Anna School of Advanced Studies,Pisa and President of the ScientificCommittee of Centro Europa Ricerche (CER), Rome

‘With the election of Barack Obamanew paradigms in policy-makingbecome possible. Yes, we can reconcilemarkets and social justice; we caninvent a new social model for Europe’


they became dysfunctionalwhen the neoclassical-Keynesian synthesis startedusing fiscal policy as if moneydid not matter. The vulgarisa-tion of Keynes opened the gatefor Friedman. A misguided viewof markets led to the deregula-tion of financial institutions.Believing that money servedmainly as means of exchange ingoods markets rather than as theultimate asset for the extinctionof debt justified the creation ofliquidity, which has fuelled theenormous financial bubble inthe American economy.Fortunately, the EuropeanCentral Bank has been morecareful, but does it operate fromdifferent intellectual founda-tions? Today, we need a newparadigm for economic policiesthat links markets to security,that renews the promise ofmodernity and progress; a para-digm that marries economicfreedom to social justice, equali-ty to solidarity. After havingextinguished the fire of thepresent crisis, we need to builda house that is fireproof.

Economic paradigms shapepolitical norms and values. TheFrench revolution has definedmodernity by the twin values ofliberté and égalité; later, theCommune de Paris added frater-nité. With the Declaration ofHuman and Civil Rights itenshrined individual rights as aprotection against authoritarianrule and the tyranny of majority.Emancipated citizens becamethe sovereign in the modernstate. Free and equal individualswould conclude the ‘social con-tract’ of the republic by whichthey determined the laws thatwere applicable to themselves.The political division into a ‘lib-eral right’ and an ‘egalitarian

and in ensuring that the promis-es stipulated by financial con-tracts are fulfilled. It ignoredthat our real economy was char-acterised by oligopolistic andnot by perfect competition. Theproblem with neoliberalism wasless that it advocated unfetteredmarkets; it was that it did notunderstand how markets workin reality. The truly alternativeeconomic paradigm of a mone-tary economy was first elaborat-ed by John Maynard Keynes; ithas subsequently been fine-tuned by Joseph Stiglitz andothers4: money is credit, abridge to the future, and not aveil. Tomorrow’s reality is deter-mined by today’s promises.Because the human condition ischaracterised by fundamentaluncertainty, money is a precau-tionary instrument to secureaccess to goods, services andresources in a risky world.Therefore money is a constraintto our actions in the presentand in the future. And competi-tion means striving for money,income and profit. It is fre-quently distorted by informa-tion asymmetries and does notnecessarily lead to the uniqueequilibrium of welfare whereeveryone is better off.5 In thisperspective, economic policymust aim at reducing uncertain-ty and insecurity. The financialcrisis has reminded us all: with-out financial stability marketscollapse. But more importantly,the generalised uncertainty inthe economy as a whole, includ-ing prospects for effectivedemand and employment, willreduce growth, jobs, incomeand wealth.

The legitimacy of Keynesianmacroeconomic policies and themodern welfare state werederived from this insight. But

Xiaoping and the fall of theBerlin Wall, we are in onesense, all Friedmanians.3

But this concession does notwarrant the adoption of theerroneous monetarist paradigm.Friedman did understand thatmoney was crucial to the func-tioning of a market economy. Sodid Marx. But they bothremained confined to the classi-cal economic paradigm, where-by markets are places forexchange of ‘real’ goods, whilemoney was simply a veil thatcovered the reality. Until todaysocialists all too often keepmaking the same mistake. Marxdrew the radical conclusion thatcapital and therefore moneymust be abolished. Not surpris-ingly, the ‘new’ economy ofcommunism resembled the old:resources were allocated byhierarchy, and not by contractsbetween free and equal individ-uals; markets and consumerchoice were suppressed.

Friedman and his followerstook another track: if moneywas a veil, it could distort.Inflation was the main cause ofdistortions. Monetary policytherefore had to ensure pricestability so that marketsremained transparent and effi-cient. Only in the absence ofinflation would prices send outthe right signals to firms andconsumers. Perfect competitionwould push profit maximisingentrepreneurs to provide opti-mal welfare. Markets’ ‘invisiblehand’ (Adam Smith) would thenyield a unique equilibriumtowards which the economywould naturally gravitate. Therewas no role for governments orregulation.

This paradigm did not recog-nise the important role thatmoney has in creating markets


rule norms of freedom andequality. But norms may bevalid even when they are notfacts. Indeed, the never-endingstruggle for freedom and equali-ty, which has defined socialdemocracy for 150 years, drawsits legitimacy from the discrep-ancy between modern normsand values and their non-reali-sation in the real world. It wasthis insight that led EduardBernstein 100 years ago to callfor the pursuit of a more practi-cal, piecemeal movementtowards a socialist state withinthe context of a parliamentariandemocracy. And Jean Jaurèsacknowledged it by saying: ‘TheRepublic is the humus of social-ism’. Today a European democ-racy must become the humus ofSocial Europe.

The financial crisis of 2008 isan opportunity to rethink theshortcomings of the neoliberalparadigm. The financial prob-lems were not caused by ‘exces-sive greed’, as moralistic conser-vatives would argue. Instead,the romanticised version ofmarkets and money thatFriedman and his followersadhered to did not allow poli-cies to deal with the systematicinteraction between the mone-tary and ‘real’ economy. Theyderegulated markets and pushedstructural reform agendas thatslowed down productivitygrowth instead of raising it.They did bring inflation down,but then flooded the world with

and medical care have becomehuman rights that can only berealised through the democraticuse of power in a state of law(Rechtsstaat). Regulating financial markets today may be necessary to overcome theeconomic crisis, but it is not sufficient as a new paradigm for a Social Europe.

The emergence of modernsocial democracy cannot be sep-arated from the existence ofmarket economies and thereforefrom the institutions of moneyand finance. Modern socialdemocracy has gone beyondMarxism, without forgetting thatcapitalism endogenously pro-duces injustice. For the politicalnorms of modernity will only berecognised as valid and legiti-mate in a society where con-tracts are concluded by marketparticipants who interact as freeand equal partners. These polit-ical norms give priority to free-dom and equality over fraterni-ty, to contractual relations ofsolidarity over the patriarchalhierarchy of community andthey emphasise democracy asthe only system which allowsindividuals to control the col-lective as free and equal citi-zens. Thus, the modern state isdemocratic and not authoritari-an, because it returns powerand sovereignty to citizens whoare the collective owners ofpublic goods, of the res publica.No doubt, reality often looksdifferent. Power relations over-

left’ follows different interpreta-tions of the modern world:Liberalism gives priority to indi-vidual freedom, socialism toequality. Both are children ofmodernity. But let us under-stand that how we interpret theworld is how we change it.6

The modern vision of societyserving individuals stands inclear contrast to the conserva-tive, anti-enlightenment view,7

whereby society is a hierarchi-cally structured whole in whicheach individual has a pre-assigned role and status and towhich they have to surrender.The conflict between these threepolitical paradigms has dominat-ed European history for over 200years. At times, liberalismentered into an alliance withconservatism and became‘neoliberal’ and nationalistic;modernity was preserved in‘political liberalism’, whichrecognised the equality of citi-zens as democratic right holders.On the other side, socialists fellfor communitarian conservatismwhen equality did no longermean recognition of the other asan equal in all her or his diversi-ty, but rather the surrender toconformism and hierarchy. Buttrue social democracy is a mod-ern and progressive force: itembraces individualism by fight-ing for human and civic rights; itbreaks up the barriers of tradi-tions and customs; it seeks theemancipation from communityby developing the freedom ofindividuals; and it recognisesthat individual freedom is onlypossible when the formal equali-ty of legal rights has a materialsubstance in wealth. This is whyindividuals need the state notonly as a set of rules and regula-tions, but as a system of rights.Access to food, clothing, shelter,


‘The financial crisis of 2008 is an opportunity to rethink the shortcomings of the neoliberal paradigm’

social democratic governmentsto correct market and govern-ment failures. A modern socialdemocratic paradigm mustrethink government action ininformational terms: How cangovernments structure incen-tives for individuals and firms?How can information becomemore accessible? How caninequalities (asymmetries) inaccess to information be over-come for workers at the workplace, for consumers in markets,for citizens in the public sphere?

A new social democratic par-adigm must start with the recog-nition that freedom and equalityis founded in marketeconomies. In modern societieswealth is created by thestrength, creativity anddynamism of free and equalindividuals who are guided intheir behaviour by informationand trust. Markets are the insti-tution that can facilitate theflow of information, providedthere are rules that maintaintrust. But once wealth is creat-ed, it is not necessarily distrib-uted in a way that people willconsider as fair. This may justi-fy corrections. As manifested inthe recent financial crisis, rulesfor transparency and regulationsthat minimise informationalasymmetries can be remediesfor market failure. But whichrules are acceptable? Standardsof fairness and justice, whichapply to everyone, can onlyemerge from free and open pub-lic debates about what is in thecollective interest. They requirean institutional frameworkwithin which each citizen hasan equal right to make a contri-bution. Once that is in place,citizens can deliberate togetherabout the objectives they wishto achieve collectively. They do

outcomes that reduce welfarefor everyone. These informa-tional asymmetries also domi-nate monopolistic competition,which may yield many marketequilibria and not only oneoptimal solution as Adam Smithbelieved.

A modern paradigm for socialdemocracy must use the intel-lectual advances of recent years.The theory of monopolisticcompetition has shown that‘market failures’ are virtuallyall-pervasive in ordinary markettransactions.8 The reasons aremultiple, some related to infor-mation asymmetries, some tothe existence of externalities.The former have dominated thefinancial sector. The latter areparticularly relevant for politi-cal decision-making in Europe.The more decisions are decen-tralised, the higher the likeli-hood that ‘coordination failure’will prevent individual actionsto achieve social welfare. Forexample, while relocating jobsmay be good for one company,it can devastate a region. Thesemarket failures justify govern-ment interventions. Socialistshave known this for over 150years. They have claimed thenationalisation of the means ofproduction, they have takenstrategic participations in com-panies, and they have regulatedmarkets. But unfortunately, thelogic of information economicsalso applies to governments andcan cause ‘government failure’.Thus, the traditional interven-tionism of ‘market socialism’9

has not necessarily producedbetter results than the neoclassi-cal economics of liberal-conser-vatives. In fact, both camps fre-quently use the same analyticaltools. This has undermined theconfidence in the ability of

liquidity that fueled asset pricebubbles. Keynes would havetaught them long ago that pro-duction depends on credit, andcredit on trust, and trust on rep-utation. This world of beliefsbecomes a house of cards, whenreputation sustains speculation,a fickly lightening in the dark-ness of uncertainty. The crisishas taught us painfully whathappens, when trust disappears.Ordinary workers lose their jobsbecause bankers are scared.Financial stability requires rulesand regulations that focusbankers’ minds on assessing thevalidity of investment projectsand whether they can yieldprofits to service debt.

Modern economic theoryemphasises the role of informa-tion and uncertainty. A newpolitical paradigm must inte-grate these insights when itdefines a framework for marketregulation. And the modernrules for monetary policy laythe base. Inflation is dysfunc-tional for efficient marketeconomies. As Friedman sawcorrectly, it makes ‘noise’, mean-ing that producers and con-sumers cannot easily identifythe significance of price signals.The Maastricht Treaty hastherefore correctly assigned theobjective of maintaining pricestability to monetary policy inEurope. But this is only a neces-sary requirement for the exis-tence of efficient markets; it isnot sufficient. Access to infor-mation is at least as important.If information is asymmetricand non-transparent, becausesome people know and othersdo not, markets cannot operateoptimally. Adverse selectionand moral hazard, which maybe rational at the level of indi-vidual decisions, will produce


to the people. The assembledheads of governments have allkinds of interests but cannot, bydefinition, represent the generalinterest of the European Union.This Europe is the opposite ofwhat the founding fathers hadin mind when they embarkedon European unification.

Without doubt, the continuousinteraction between ‘communitymethod’ and intergovernmental-ism has contributed to the rapidprogress in European integra-tion. Governments have delegat-ed crucial national policy com-petencies to the European level,such as the EuropeanCommission or the EuropeanCentral Bank, because theywere aware of the benefits thisproduced for their citizens.They often were right. ButEuropean policy-making hasnow reached a degree of depthand interdependence wherenation states alone can nolonger sufficiently legitimisepolicies that do not grant citi-zens their ultimate right of sov-ereign. As long as democracyremains confined to the nationstate, European institutions willnot be able to muster supportfor the policies they pursue.Europe must ‘dare more democ-racy’, to take up Willy Brandt’sfamous formula. But here again,new thinking for the new ageis required.

found, while top executivesmake fortunes. These citizenshave no choice over policies.They have to accept what gov-ernments and their bureaucra-cies negotiate on their behalf.Not surprisingly, the approvalrate of the European Union hasslowly and gradually beenfalling. It stands today around50%, while it was closer to 75%twenty years ago. The recentreferenda in France,Netherlands, and Ireland allhave signaled discontent withthe way the European Union isrun. Some political leaders maywish to argue it away and blametheir predecessors for negativevotes, but they are missing asimple fact: if citizens in theEuropean Union are dissatisfiedwith a particular set of practicalpolicies, the only means theyhave to oppose them is to turnagainst the European Leviathan‘in Brussels’. Europe’s institu-tions stifle political controversyand partisanship. Citizens havelittle to no choice between alter-native policy packages. Yes,every five years they can votefor the European Parliament;but who believes seriously thatit makes a fundamental differ-ence to their lives? TheCommission President is select-ed like the pope: in smoke-freesecretive meetings betweenchiefs who are not accountable

not have to agree about concretepolicies, but they need to achievea consensus that the democraticinstitutions are fair by offeringequal rights to every citizen.

The aspect of democracy is ofparticular importance for a newsocial democratic paradigm inEurope. For decades, govern-ments have behaved as if theywere benevolent planers thatwere implementing ‘the rightpolicies’ in order to make peo-ple happy. But few questionswere asked what it is that madepeople happy. This does nolonger work. The debate about aEuropean Social Model is also adebate about the content of hap-piness, about how people wantto live: how much personalcomfort are we ready to sacri-fice for saving the planet? Dothe rich not feel happier when‘wealth is spread around’(Barack Obama)? Do they notlive more secure lives whencrime rates are lower? And arecrime and poverty not correlat-ed? Does fairness not affect thesubjective quality of everyone’slives? These and many otherquestions will only find ananswer after long drawn outdebates and public deliberation.We increasingly find that citi-zens’ input into the policy-mak-ing process is a value in itselfthat raises individual happiness.

This brings us to the issue ofpolicy-making in Europe. Foryears Europe stood for peaceand prosperity. But this associa-tion is increasingly put intoquestion. Peace is taken forgranted and neoliberal policiesare proclaimed to be the onlyroad to prosperity. But many cit-izens only find that theirincome is stagnating, real wagesfalling, jobs insecure, newemployment nowhere to be


‘For years Europe stood for peace andprosperity. But this association isincreasingly put into question. Peaceis taken for granted and neoliberalpolicies are proclaimed to be theonly road to prosperity’

Citizens will accept the chosensolution, even if in minority,because they had an opportuni-ty to participate and contributeto the preference-buildingprocess. But Europe does nothave democratic institutions inthis sense. Policy decisionsreflect a consensus among gov-ernments and their bureaucra-cies, not among citizens. Publicdebates do not usually takeplace across the EuropeanUnion, but only in the isolatedhoney combs of nation states.Nor is there any public choiceby citizens. Like in pre-modernmonarchies, governments nego-tiate policies with governmentsand states are the sovereign, notcitizens. Of course, exceptionsexist. The European Parliamenthas responded to public criti-cism of the so-called BolkesteinDirective on services. But as arule, citizens are treated asspectators in a football match:they are supposed to supportthe local club with applause,but certainly not as owners ofpublic goods that they all ownjointly.

If Europe’s social democracywants to meet the challenge ofmoving into a new era, it needsto become the advocate, the car-rier and the implementer of aproper European democracy.10

From the beginning, socialdemocracy was internationalist,treating citizens as the sover-eign, while conservativesthought of them as cattle.11

Today, European social democ-racy must fight for individuals’freedom to take political deci-sions at the European level.They must acknowledge thatEuropean citizens are equal citi-zens with equal rights to decidewhat they consider their bestinterests. European democracy

done by one group of compa-nies or individuals may be seenas a welfare loss by many oth-ers. So what to do? The conser-vative response is to appeal tomorality, customs and commu-nitarian identity. They argue,individuals should conform towhat the prevailing and conven-tional sense of ‘proper’ behav-iour. Deviation is sanctioned.But in Europe, communitarianidentity means national identityand national interest. This con-finement prevents minority dis-sent from crossing borders andforming majorities. Pan-European alliances are blockedbecause individuals are identi-fied with their country and haveto surrender to their govern-ments’ interest. Jacques Delorsonce gave a beautiful examplewhen monetary union was hotlydebated: ‘Few Germans believe inGod, he said, but all believe inthe Bundesbank’. Yet, Germany’sformer chancellor HelmutSchmidt had always been avocal critique of the Bundesbank,just like the German tradeunions. Thus, according to thecommunitarian logic, HelmutSchmidt was not a German.

In a modern democracy citi-zens are the demos, the sover-eign. Together individuals makeup their minds, about whatpolicies they consider as opti-mal. They have an interest indoing so, because they are allaffected by the policy decisions.Hence, the question of whichpolicies should be decided atthe European level will beanswered by looking at who isaffected and by measuring thescope of the externalities. Withdemocratic institutions, publicdeliberation will lead to policysolutions for what citizens con-sider best for themselves.

The growing conservativecreed in Europe is that aEuropean democracy is not pos-sible because there is noEuropean demos. What theadvocates of this belief reallymean is that national collectiveidentities prime over the con-crete interests of individual citi-zens. Instead of being able ofpondering reasonable argumentswhether a particular policy is intheir interests and then makinga decision all together, citizensare assumed to fulfill the stereo-types of ‘their countries’ andthey must surrender to whatgovernments decide in theirname. At best it is democracyfor the people, but not by thepeople. The conservative policyconsensus that emphasises cul-tural identities of communitiesmay help governments to legit-imise their policies at home(‘we are defending you’), but itprevents consensus and legiti-macy at the European level. It isthe opposite of what Jean Monnetdescribed as the purpose ofEuropean integration: ‘We donot create coalitions of govern-ments, we unite human beings’.

The renewed awakening ofnationalism is a direct conse-quence of the dominance ofneoliberalism. It has become abarrier to democracy in Europe.By shrinking the public sector,neoliberal policies have broad-ened the scope for private andreduced the space for democrat-ic decision-making. But manyprivatising decisions andactions have direct or indirectconsequences for all. Theseunintended consequences arisein the form of negativespillovers and externalities,because, as we have seen, mar-kets frequently fail to coordinatebehaviour optimally. What is


Endnotes

1 European Parliament (2008),‘L’Europe doit porter l’idée d’unerefondation du capitalisme mondial.Ce qui s’est passé, c’est la trahi-son des valeurs du capitalisme, cen’est pas la remise en cause del’économie de marché’, 21October, http://www.euractiv.com/fr/services-financiers/sarkozy-pre-sente-refondation-capital-isme/article-176573.

2 Friedman, Milton (1997), ‘IsWelfare a Human Right?’, in,Leube, K.R., The Essence ofFriedman, Hoover PressPublication, Stanford.

3 On 31 December 1965, Timemagazine put John MaynardKeynes on the cover and quotedFriedman as saying, ‘We are allKeynesians now’. Later, Friedmansaid he was quoted out of context.‘In one sense, we are all Keynesiansnow; in another, no one is aKeynesian any longer. We all usethe Keynesian language and appa-ratus, none of us any longer acceptsthe initial Keynesian conclusions’.(See http://eh.net/pipermail/hes/2002-July/002319.html).

4 Stiglitz, Joseph, BruceGreenwald (2003), Towards a NewParadigm in Monetary Economics,Cambridge University Press,Cambridge.

5 The European ConstitutionalTreaty has recognised this realityby stipulating (Art. I-3): ‘The Unionshall offer its citizens an area offreedom, security and justice with-out internal frontiers, and an inter-nal market where competition isfree and undistorted’. PresidentSarkozy subsequently eliminated itfrom the Lisbon Treaty. ShouldEurope seek unfree and distortedcompetition? Should it favour onecountry or interest over another?This is surely not compatible witha modern left-wing policy agenda.

6 In his ‘Theses on Feuerbach’,Marx proclaimed: ‘The philoso-phers have only interpreted theworld in various ways; the point,however, is to change it.’ Thisseparation between a world ofthought and a real world echoesthe classical economic paradigm,whereby goods and services arethe ‘real economy’ and money is aveil.

7 For an excellent analysis of anti-enlightenment philosophy and itsdrift to fascism, see Sternhell, Z.(2006), Les Anti-Lumières. DuXVIIIe siècle à la guerre froide,Fayard, Paris.

8 Cowen, Tyler, Eric Crampton(2002), Market Failure or Success.The New Debate, Edward Elgar,Cheltenham.

9 I borrow the term from Stiglitz,Joseph (1990), Whither Socialism?,MIT Press, Cambridge MA.

10 For detailed analysis and pro-posals see Collignon, Stefan,Christian Paul (2008), Pour laRépublique européenne, OdileJacob, Paris.

11 Charles de Gaule famously oncesaid: ‘Les français sont desveaux.’ But quod licet bovi, nonlicet jovi : A conservative, authori-tarian politician may think that way,a political philosophy that claimsthe equality of men cannot be.

12 http://www.parteitag.spd.de/servlet/PB/show/1734195/Hamburger%20Programm%20engl.pdf

necessary that all democraticparties in Europe unite behindthis project.

A new era of human fulfill-ment, social justice and demo-cratic progress is within reach,if social democrats in Europedraw the conclusions from thefailures of the previous econom-ic and political paradigm. But itis also clear that this redefini-tion of aims and purposes isnecessarily a European venture.Europe remains the most excit-ing project of our times.

made an important step in theright direction when it adoptedthe Grundsatzprogramm inHamburg in 2007, which states:‘Our model is a political uniongranting all European citizensdemocratic rights of participa-tion. The democratic Europeneeds a government answerableto parliament on the foundationof a European constitution.’12

The SPD clearly understoodthat there will be no SocialEurope without a properEuropean democracy. It is now

means, European citizens willbe able to elect a European gov-ernment that will make lawsthat are applicable to all citi-zens because they are all affect-ed by them. This is the oppositeof the conservative approach topolicy-making, which wasrecently articulated by theFrench president suggesting thatFrance should assume the presi-dency of the European Unionfor a number of years. By con-trast, the German SocialDemocratic Party (SPD) has



The ESM

THE EUROPEAN SOCIALModel (ESM) in its mostbasic sense is best under-

stood as a Europe-wide sharedpolitical value and aspirationbased on the notion of ecologi-cal and social sustainability. Itacknowledges that the conserva-tion of human livelihood andthe protection from life risks –such as ill health, unemploy-ment and old age – are indis-pensable requirements for agood society. The implementa-tion and degree of realisation ofthe European Social Modelvaries across the Europeannations. Yet there are some keyESM elements:

• A developed and interven-tionist state representing theprimacy of democratic poli-tics over markets

• Free and compulsory educa-tion

What is theEuropean Social Model?

• A fair distribution of lifechances by equal access foreverybody to continuingeducation, training andskills development through-out life

• A robust welfare system thatprovides effective social pro-tection to a considerabledegree for all citizens, butespecially for those mostvulnerable

• The limitation and repres-sion of economic and otherforms of inequality

• A key role in the institution-al configuration of the ESMis played by the ‘social part-ners’, especially the unionsand other agencies promot-ing social and environmen-tal interests

• Active protection of theenvironment by setting anappropriate incentive struc-ture paying special attentionto the threats of climatechange

Each element of the ESM hasto go along with the overall aimof expanding prosperity andthe creation of decent jobs. TheEuropean Social Model thusrepresents a distinctive compo-sition of strong democraticstatehood, educational, envi-ronmental and social policies,and a responsive political econ-omy.

This definition partly draws onwork by Anthony Giddens

IN RECENT JUDGEMENTSundermining the right tostrike and compliance with

collective agreements, theEuropean Court of Justice (ECJ)has dealt a fresh blow to hopesfor a ‘Social Europe’. Politicalscientist Fritz Scharpf explainsthe reasoning behind rulingsfrom Europe’s highest court –and explores what can be doneto oppose them.

Herr Scharpf, why do youthink trade unions and socialdemocrats are so enthusiasticabout the European SocialModel, given that so manysocial rights are now beingrestricted?They are enthusiastic becausethey are deluding themselves.

So is there actually a EuropeanSocial Model at all?It may have been possible totalk about a European SocialModel when you were compar-ing the EU 15 with the USA, buteven that is not sustainable nowthe EU has 27 member states. Infact, however, Britain’s welfarestate and industrial relations areconstructed in an entirely dif-ferent way from Sweden’s andboth differ from Germany’s.Thus even if we just look at the‘old’ member states and leaveon one side the member stateswith weaker economies, which

cannot afford the same levels ofsocial protection, the differ-ences are still so great that itwould never have been possibleto agree on a single EuropeanSocial Model either throughharmonisation or minimumstandards. The debate inGermany has not yet fullyrecognised this.

But surely everyone can seethat the German system isunder competitive pressure?Both politicians and tradeunionists in Germany hope thatin this great big economic areain Europe it will be possible tocreate a social system that willbe pretty similar to the one weused to have in Germany. Theyalso see it as a block that couldstand up to the Americans and,possibly be a defence againstthe Chinese. That is whatGermany’s Social DemocraticParty hopes. But it is a falsehope because a political agree-ment on a single EuropeanSocial Model is implausible. Infact, it’s worse than that: hopingfor a Social Europe actually pre-vents politicians from taking theaction that is still possible atnational level.

The governing coalition inGermany, between christiandemocrats/christian socialistsand social democrats, wants to

‘The only solution is torefuse to comply with ECJ rulings’

Fritz ScharpfDirector emeritus of the Max PlanckInstitute for Social Research in Cologne.He has carried out pioneering researchin areas such as governance in Europe,the employment systems of Europeancountries, and federalism in Germany


Fritz Scharpf spoke toCornelia Girndt, editor ofMagazin Mitbestimmungin Cologne

How, then, does the ECJ arriveat the point where it isdemanding that the Germangovernment and German work-ers abandon compliance withcollective agreements?Where national differences areseen as representing impedi-ments to basic freedoms, it is nolonger enough to point out thatthey were considered appropri-ate, all things considered, by ademocratically accountable legis-lature. They now need addition-al justification in the light ofgeneral criteria defined by theECJ. The question then iswhether, for example, Germany’smodel of employee involvementcould in any way impede thefree movement of capital acrossthe EU and, if so, what generallyvalid argument could justify thatnational specialty.

Was it the intention when theintegrated single market wasbeing created that a type ofcapitalism which is politicallycoordinated and has a socialunderpinning should be seen asa burden?The six founding member states signed treaties in the1950s that established basicfreedoms and the right to freecompetition. The governmentsof the time could not, however,have intended those principlesto be interpreted in a way thatdoes away with national differ-ences. Nor could they ever haveimagined them making theoperation of German savingsbanks impossible or getting ridof the obligation to comply withcollective agreements inGermany. This radical liberali-sation is the result of judicialinterpretation, not the conse-quence of politically account-able legislation.

where the rules themselves areneither protectionist nor dis-criminatory. The ECJ can usethe most minor difficulty ofexercising a basic freedom as apretext to scrap an importantelement of national law. Thisradical approach to the integra-tion of the single market hasonly become clear very recently.

And what are the implications?Will the member states withwell-developed welfare andemployment relations systemsgradually be pushed in an eco-nomically liberal direction bythe actions of the ECJ and theCommission?European capitalism is enor-mously varied. The UK’s com-pletely liberalised model con-trasts with Sweden’s, while bothdiffer from the continentalEuropean model found inGermany. That model includessocial partnership and employeeinvolvement at company level.State participation in key busi-nesses, such as Volkswagen,was also part of that model. It isentirely natural in that contextthat legislation may requirecompliance with collectiveagreements: that in public pro-curement the state requires itssuppliers to observe collectivelyagreed terms and conditions ofemployment.

keep legislation that preservesthe influence of the state ofLower Saxony on Volkswagen,something the ECJ has ruledagainst and the EU’s CompetitionCommissioner has opposed.Political parties across the spec-trum in Germany have alwaysaccepted the principle that for-eign suppliers should not betreated less favourably thandomestic ones within theEuropean single market.However, the European Court ofJustice and the EuropeanCommission have gone farbeyond simply upholding thisprinciple. They argue that theinternal market should be a lib-eral market with no impedi-ments on the exercise of ‘basicfreedoms’ – that is, freedom ofestablishment and the freemovement of services, persons,goods and capital.

And what constitutes an imped-iment on these freedoms in theinternal market?In the view of the ECJ and theEuropean Commission, simplyhaving differences betweennational systems constitutes animpediment on the free move-ment of services, goods and cap-ital in cases where a providerfrom one member state wants tooperate in another. And theyintervene against these even


‘Where national differences are seenas representing impediments to basicfreedoms, it is no longer enough topoint out that they were consideredappropriate, all things considered,by a democratically accountable legislature’

that there will not be Europeanlegislation to protect Germanlegislation on compliance withcollective agreements.

You have spoken of the radical-ising effect of ECJ rulings. Howlong have you seen that going on?The ECJ’s earliest rulings, backin the early 1960s, were alreadybased on the principle thatEuropean law took precedenceeven over national constitution-al law. The Treaty of Romerequired member states to co-operate on economic matters,but the ECJ soon interpreted itas a supranational legal frame-work from which economicplayers could directly deriveindividual rights against theirrespective member states. Andthese rights were deemed tooverride national legislation andnational constitutions.

So did nobody object when theECJ argued that European lawtook precedence?The substantive issues of thefirst few cases were quite trivialand politicians were not reallyconcerned about them. The gov-ernments affected contestedthem but when they lost, thatwas the end of the matter.

Why have national courts gonealong with this?Lower-level courts thinkEuropean law is wonderful.Under German law, the onlycourt that can repeal legislationis the Federal ConstitutionalCourt. Under European law, bycontrast, a single judge in alower court can override nation-al legislation by citing an ECJinterpretation.

Is that why, in one article, youhave called the European Court

Commission’s job to take anymember state it believes isbreaching European law to theECJ. It does not have to ask any-body, neither the Council ofMinisters nor the Parliament.

Who defines European law?On the basis of the treaties,legal interpretation is shaped bylawyers. Neither the Council ofMinisters nor the EuropeanParliament has any say; whatmatters for the Commission arecommunications by judges,lawyers and legal academics.

And who are these individuals?The ECJ has one judge fromeach of the 27 member states.There is now a large communityof specialists in European law,in particular German lawyers,who interpret the treaties anddirectives, and this group byand large supports the linetaken by the ECJ. Its interpreta-tion of European law is not nec-essarily ‘neoliberal’ but itfavours progressively greaterintegration and a more unifiedlaw. And this trend in legal dis-course tends to level nationaldifferences.

The Laval ruling must havepleased the Latvians as muchas it displeased the Swedes,though.In representations to the ECJthere was a clear split. Theolder member states, with theexception of the UK, took theside of Sweden, while thenewer ones took the side ofLatvia (and Estonia in the caseof Viking). And that also meansthat member states with welldeveloped industrial relationsand welfare systems will notfind much support from the EU.The conflict of interests means

How can European law be soseparate from political deci-sion-making?It is important to make a distinc-tion here between two things.On the one hand, there are ECJ jurisprudence and theCommission’s treaty violationprocedures; they can create newlaw through interpretation with-out the involvement of politicalactors. And on the other handthere are the EU’s political insti-tutions, the Council and theEuropean Parliament, which willconsider and adopt EU legisla-tion. They are the focus of thecross-party enthusiasm forEurope that seeks to create aEuropean economic and socialarea through directives and regulations. This is a politicalprocess in which the Council ofMinisters – representing nation-al governments – has alwaysbeen involved and in which theEuropean Parliament now alsoplays a crucial role. In principle,progress in EU political legisla-tion can only be achieved wherethe 27 member state govern-ments more or less agree – andthat has not exactly become eas-ier since the latest enlargementsin central and eastern Europe.We can only hope that Europewill increase its capacity forpolitical legislation which hasbeen the purpose of constitu-tional reform.

EU constitutional reform is cur-rently on hold, but does it haveanything to do with ECJ judge-ments or the row about share-holding restrictions inVolkswagen?No. There is no link betweenconstitutional reform and theCourt’s jurisprudence or theCommission’s powers to prose-cute treaty violations. It is the


across national differences.Issues such as how the Lavaljudgement sits with Sweden’spolitical culture, for example, orhow other rulings sit withHungary’s institutional tradi-tions cannot have the same sig-nificance for the EuropeanCourt as the same issues wouldhave for constitutional courts inthe USA or Germany.

Can the Court be made tochange its line of judgements?There are two ways it could.First, one would need to getinvolved in judicial debates andbring legal arguments to bear onthe development of jurispru-dence. In fact, a minority ofEuropean lawyers is doing justthat, including Christian Joergesin Bremen, along with sometrade union lawyers. This groupis making a strong and consis-tent case that the ECJ’s judge-ments are based on dubiouslegal reasoning. We can onlyhope that they will have someinfluence.

And what should the politi-cians do? These issues are,after all, fundamental to oureconomic and social order.Governments would need todefend themselves. Yet theyfind it extraordinarily difficultto say that a particular ruling isan illegitimate encroachment

Court. Until a few years ago, theConstitutional Court had heldthat it would comply withEuropean jurisprudence only ifthat was compatible with thebasic freedoms guaranteed bythe German constitution. It nowno longer maintains that reser-vation.

So what should happen now?A similar controversy is current-ly developing over public serv-ice broadcasting to whichGermany’s Constitutional Courtascribes a political and constitu-tionally guaranteed role, where-as European law treats televi-sion as a commercial service.The key difference is thatnational judicial review oper-ates in a public arena, withinthe context of open politicaldebate and against the backdropof a country’s specific institu-tional traditions and politicalvalues. Moreover, theConstitutional Court takes itsplace as one authority amongmany others, each operatingwithin the same political systemand political culture.

But can the European Court notclaim the same?The European Court simplycannot be integrated politicallyin 27 member states; all it cando is to create uniform stan-dards for European law that cut

the ‘temple of European judge-made law’?The ‘temple’ is founded on thelegal principles – created byjudges – of the supremacy anddirect effect of European lawand on the transformation of thetreaty obligations of memberstates into individual rights forcompanies and citizens. A num-ber of judgements in the 1970ssubstantially broadened thisfoundation, and now the basicfreedoms are deemed not just toprevent protectionist discrimi-nation against foreign suppliersbut more broadly to provide abulwark against any govern-ment or trade union measuresthat might, in some way,impede the exercise of thosefreedoms. The most recentjudgements in the Laval andViking cases are just the logicalextension of this principle.

Does that mean that theEuropean Court of Justice isnow the highest legal authorityin the European Union?Yes, that is the case.

Why do national governmentssubmit to the ECJ?By announcing its disregard forthe interpretation of Europeanlaw, a national governmentwould renounce its generalcommitment to the rule of law.And that is a taboo that no gov-ernment is willing to break.

Yet in 2006, Germany’sConstitutional Court approvedregulations requiring compli-ance with collective agreements,arguing that collectively agreedpay helped to keep social secu-rity funds in balance.In legal terms, an ECJ rulingtakes precedence over one fromthe German Constitutional


‘The European Court simply can’t beintegrated politically in 27 memberstates; all it can do is to create uni-form standards for European lawthat cut across national differences’

Globalisation creates economicpressure, but European law hasseverely restricted or evenremoved the policy options thatcould be used to respond to thatpressure. We also have toremember that enlargement hasbrought low-wage economiesand the economic pressure thatimplies into the EU. Costs inRomania or Bulgaria are actual-ly not very much different fromthose in the Far East.

The reaction of the Confederationof German Trade Unions andthe European Trade UnionConfederation (ETUC) to theECJ judgements has been to callfor a ‘social progress clause’ inthe EU Treaty, which wouldprevent basic freedoms atmember state level – such asthe right to strike – taking sec-ond place to market freedoms.What is your view of theirdemands?The trade unions are right tooppose these judgements but Ido not believe that trying toamend the Treaty would bringus much further forward. Thatwould require the unanimoussupport of all 27 EU memberstates, which is very unlikely.Why should Latvia and Estoniabe party to a decision that wouldnot serve their economic needs?

And would it sway the ECJ?The ECJ would not necessarilybe swayed by the demand for aprogress clause. If its interpreta-tion of the Treaty is supportedby just a single member state,then a Treaty amendment cor-recting it could not be adopted.That is exactly why I thinknational non-compliance is theonly way forward. It is notgoing to be possible to create aEuropean Social Model, but it is

comply and none will, unless itactually wants the EU to fail.

What is your suggestion? Whatcan be done?The government could declarethat it considers a particularjudgement to represent a case ofjudicial legislation oversteppingthe politically consented limits ofEuropean powers. At the sametime, however, this governmentwould have to announce that itwould comply if the judgmentwere to be approved by a majori-ty vote in the Council ofMinisters. In other words, ratherthan merely expressing nationalopposition, there would be anappeal to European politicalauthority asking if the decision ofthe ECJ does in fact reflect a con-temporary political consensus.

In my view, that would be theonly strategy that would enableus to maintain our general sup-port for European integrationwhile still resisting the exces-sively restrictive judicial inter-pretation of treaty clausesadopted more than 50 years ago.

While companies have hugescope for operating in a singleEuropean market, the positionof workers has been systemati-cally deteriorating – do youshare that view?Yes. It is now possible, forexample, for German companiesto evade the legislation onemployee co-determination byexercising their freedom ofestablishment and relocatingtheir legal site to, say, the UK.That, at any rate, seems to bethe implication of the ECJjudgement in the Centros case.

Which has weakened employ-ees’ status more – globalisationor Europeanisation?

into areas that are the preserveof national sovereignty, that theECJ must respect that sovereign-ty, and that they will refuse tocomply with that ruling. Therewas a particularly dramatic casein Austria in which the Courtshowed a scandalous disregardfor fundamental national inter-ests.

You mean the Austrian attemptto limit a massive influx ofmedical students fromGermany. The ECJ ruled that it could not.Yes, and Austria’s reaction wasto threaten to veto the LisbonTreaty. At that point, theCommission agreed to suspendtreaty violation proceedingsduring a five-year moratorium.If a major country like Germanywere to refuse to comply withECJ rulings, maybe jointly withthe Scandinavian memberstates, that would be a provoca-tion that could throw Europeinto a constitutional crisis.

Why a constitutional crisis?What would happen?It would be a constitutional cri-sis because the entire edifice ofEuropean law rests on memberstates’ compliance. The EU istotally dependent on memberstates’ willingness to apply andimplement European law and toassume political responsibilityfor it. If voters are dissatisfied,their anger is directed notagainst MEPs or Commissionersor ECJ judges but against theirown national governments. So ifa major member state were torefuse to comply with ECJjudgements, the European edi-fice would wobble. There isquite a lot of clandestine non-compliance but no memberstate has yet publicly refused to


could not be required to complywith the German collectiveagreement for the constructionindustry in the federal state ofLower Saxony while building aprison near the German town ofGöttingen. The ECJ based its rul-ing on the Posted Workers’Directive, arguing that the Polishcompany would be bound bycollectively agreed provisions onpay only if all German workerswere paid on the same scale(that is, if the regional collectiveagreement had been declared‘generally binding’) or if theywere all paid a national minimumwage. Germany’s highest court,the Federal Constitutional Court,had in 2006 approved legislationon compliance with collectiveagreements, pointing to theirvalue in providing contributionsto the German social securityregime.

Key ECJ judgements

The Laval case: The Swedishconstruction workers’ unionblocked access to a building siteat Vaxholm in Sweden, whereLatvian construction companyLaval was involved in building aschool. The union took strikeaction in an attempt to forceLaval to comply with pay ratesset down in the Swedish con-struction agreement, (which alsohelp to finance the country’ssocial security system). Lavaltook the case to the EuropeanCourt of Justice, which ruled thatthe blockade and the Swedishunion’s demands on pay wereillegal. It interpreted the PostedWorkers’ Directive as restrictingthe right to strike.

The Viking case: Helsinki-basedshipping company Viking wantedto re-flag one of its ships andreplace the crew with Estonians.The Finnish seafarers’ unionthreatened strike action and theInternational Transport Workers’Federation (ITF) persuaded theEstonian seafarers’ union to boy-cott collective bargaining withViking. The company took thecase to court and the ECJ rulingwas that the unions’ defensiveand obstructive actions wereunlawful; in effect, it gave com-panies’ rights to freedom ofmovement and establishmentprecedence over everything else.

The Rüffert case: This rulingoverturned German legislationrequiring foreign contractors tocomply with collectively agreedemployment terms when accept-ing public procurement con-tracts. The ECJ ruled that aPolish construction company

possible to limit the applicationof European law against existingsocial models at national level.

Would that correct the EU’scurrent bias to economic liber-alism, that so many peoplecomplain about?National social models wouldstill continue to be subject toeconomic competition, becausethere is still no prospect of har-monising the taxation of compa-ny profits or capital gains. Theeconomic pressure of tax, wageand cost competition is notgoing to decrease in an EU of 27member states, but we can atleast prevent judge-made lawfrom imposing additional legalrestrictions on national systems:as Christian Joerges and otherlawyers have argued, the ECJ isno longer working on the basisof sound legal reasoning. It hasa mission, and that mission istaking it in a direction that willnot tolerate divergent nationalsystems. And I believe that itcan only be stopped politically.


IN A RECENT interview withMitbestimmung, Professor FritzScharpf, one of Europe’s most

prominent social scientists, spoke aboutthe radicalising effects of the recent ECJrulings in the Viking, Laval, Rüffert andCommission vs Luxembourg cases: ‘thebasic treaty freedoms are now deemednot just to prevent protectionist dis-crimination against foreign suppliersbut more broadly to provide a bulwarkagainst any government or trade unionmeasures that might, in some way,impede the exercise of those freedoms’.For Professor Scharpf, this is the resultof judicial interpretation, not the choiceof the politically accountable. As aresult, he dismisses trade union enthu-siasm about the European Social Modelas delusion and calls on the memberstates to refuse to comply with ECJ rul-ings. Such move would clearly weakenthe position of the European Court.

The trade union movement sharesProfessor Scharpf’s concerns about therulings but considers that it is the bal-ance internal market / Social Europewhich must be reassessed by the legis-lator. The European Trade UnionConfederation (ETUC) urges Europe toact urgently and strongly as workers

cannot afford giving up on the SocialModel. It is indeed at the Europeanlevel that a constructive response mustbe found so that the internal marketcan develop within a social framework.What the Court did must therefore beundone primarily by law.

1. The European Social Model: ANecessary DreamThe difficult relationship between theeconomic dimension of the internalmarket on the one hand and the socialobjectives of the Union on the otherwas brought under the spotlight by therecent ECJ rulings. But the question ofwhether the Union can actually pro-mote a Social Model has been a con-stant and essential preoccupation forthe trade union movement since thevery beginning of the internal market.

From an early stage in the single mar-ket construction, the ETUC has beencalling for a social dimension so as toprevent the Community from becomingan economic free trade zone.1 Theassumption that economic growthwould automatically lead to socialprogress is one that the ETUC couldnever accept. In particular, the ETUChas been fighting, not always success-fully, the idea that social policy shouldonly be seen as a means of dealing withthe social consequences of the internalmarket (eg: equal pay between men andwomen justified by the need to avoiddistortion of competition) rather thanas an end in itself. As companies weregoing to take advantage of the increasedopportunities offered by an ever enlarg-

European Court of Justice (ECJ) andSocial Europe: A Divorce based onIrreconcilable Differences?

‘The assumption that economicgrowth would automatically leadto social progress is one that theETUC could never accept’


John Monks General Secretary ofthe European TradeUnion Confederation

ing single market, fair rules of the gameshould be established at the Europeanlevel so as not only to protect acquiredworkers’ rights but also to developmore advantageous rights at nationaland European levels in the context ofsocial progress.

It is important to underline thatwhilst calling for further socialprogress, the ETUC does not advocatea uniform model, based on maximumharmonisation of labour standards. Ithas always been a strong demand ofour affiliates that the rich variety ofnational industrial relations systems isrespected by the EU legislator. Rather,the Union should establish a set ofminimum procedural and substantivelabour standards, in particular with aview to ensuring that national socialmodels will not undermine each other.

The European Social Model is facingimportant challenges both of a politicaland of a legal nature.

Politically, the Union is clearly suf-fering from a lack of impetus. TheCommunity was founded to create acommon market in services, goods,capital and labour. Freedom of move-ment of labour is still too often per-ceived as the main social dimension ofthe Union although it has quite differ-ent objectives from labour law. Thefree movement provisions of the treatyare an economic, not a social concept– although free movement of personsas such is perceived by many as animportant human right. The balancebetween the economic dimension andthe social sphere in the Union’s activi-ties is regrettably often put into ques-tion by neoliberal forces in Europe.The transition from free movement toa clear social policy dimension istherefore difficult to achieve. Forinstance, whilst already in 1986 theSingle European Act foresaw the pro-gressive establishment of an internalmarket, workers and citizens of Europehad to wait until 1999 for the entryinto force of a Social Policy Chapter inthe EC Treaty.

The major legal challenge, whichwas highlighted in the recent ECJ rul-ings, lies in the fact that contrary to thefundamental economic freedoms, thesocial dimension in the EU treaties is acomplex mechanism, reflecting boththe desire to develop a European socialsphere as well as the need to preservenational traditions. The ‘social activi-ties’ of the Union consist of a complexrepartition of tasks between the Unionand the member states. Whilst mini-mum standards are developed atCommunity level – for instance withregard to health and safety, informationand consultation of workers – certainkey fields remain firmly anchored innational legislation and practice.Article 137 EC explicitly excludes pay,the right of association, the right tostrike or the right to impose lock-outsfrom the competence of theCommunity. Other areas such as socialsecurity and social protection of work-ers, dismissal protection and co-deter-mination must be agreed on unani-mously in the Council.

The complexity of these juxtaposedlayers contrasts with the apparent sim-plicity of the provisions relating to thefundamental freedoms. The provisionsrelating to the four fundamental free-doms have been a cornerstone ofCommunity competence since the verybeginning of the single market. Thelogic of the fundamental freedoms is‘negative integration’: restrictions tofree movement arising from nationallaw or practice are prohibited. The ECJhas developed a long jurisprudenceallowing certain national impedimentsto remain in place only where they arejustified by reasons of general interest.The rationale, nonetheless, remainsradical in that such exceptions areadmitted on a case by case basis andare interpreted restrictively.

Because of the specific nature ofEuropean integration with regard tosocial policy, national practices differgreatly from one member state toanother; these differences are even


more acute since the 2004 enlarge-ment. The question that was raised inthe recent ECJ rulings is one that hasbeen simmering for a long time. Wherethe fundamental freedoms collide withnational labour systems, can there be areconciliation?

The ECJ response in these four rul-ings is extremely worrying. The differ-ence of national standards is in the eyeof the Court an obstacle to free move-ment. The very existence of nationallabour law must therefore be justified,even if it is not discriminatory or pro-tectionist in nature. Consequently,national social models are subordinat-ed to European economic freedoms. Itis clear that if one is to follow the ECJguidelines, substantive parts of thenational social models will be put atrisk. The required justification for acollective action as well as the propor-tionality test developed by the ECJ inthe Viking case jeopardise social part-ners’ autonomy. In addition, the hori-zontal direct effect of Article 49 ECwill be a powerful instrument in thehands of the employers and act as adeterrent for trade unions to exercisetheir fundamental right to collectiveaction. In the Laval, Rüffert andCommission vs Luxembourg rulings,the ECJ admits in no uncertain termsthat preventing unfair competition onwages by imposing the respect of mini-mum working conditions such aswages laid down through collectivebargaining can constitute an obstacleto the free provision of services. Insum, the ECJ denies ‘labour’ equality ofarms vis-à-vis globalising capital.

The ETUC can only share ProfessorScharpf’s analysis: Social Europe hastaken a blow and ways to repair the

damage must be explored. But therewill be no easy answer. A first and nat-ural reaction is one of defiance towardsthe Union in general and the ECJ inparticular. However, whilst it is indis-pensable that national labour legisla-tions are better protected against theinvading interpretations of the ECJ andthe Commission, the ETUC warnsagainst calling for a return to thenation state. The trade union move-ment cannot afford giving up on theEuropean Social Model. European eco-nomic integration has now reached apoint of no return. Leaving the internalmarket regressing into a free trade areawould have devastating consequenceson the lives of citizens and workers ofEurope. One must also acknowledgethe significant social improvementsthat have been achieved so far. Article136 EC sets as a Community objectivethe improved living and working con-ditions, so as to make possible theirharmonisation while the improvementis being maintained, and proper socialprotection. On this basis, a series ofEuropean labour law directives havebrought concrete changes to the livesof workers (eg: equal pay, fixed-termwork and part-time work frameworkagreements, numerous information andconsultation directives, the future tem-porary work agency directive etc). It isalso significant that the 2000 Charter ofFundamental Rights will become legal-ly binding at the next treaty revision. Itis in the interest of the trade unionmovement to push for further efforts toreframe the EU in a different logic thanthe market alone.

The ETUC is convinced that becausethe problem lies at the European level,the main response must also be foundat the European level. The responsemust be such that it would preventsimilar issues from arising again.Refusing to comply with specific ECJrulings may undo the damages in theshort-term but it will not serve (orsave) Social Europe in the long-term.Rather, it is necessary to look at the


‘A series of European labour lawdirectives have brought concretechanges to the lives of workers’

hierarchy of values lying at the veryheart of the European construction. Inother words, the European legislatormust design the tools (or the con-straints) that would allow Europeanjudges to develop the internal marketwithin a social framework.

2. Working with the Judges ratherthan against: A Social Progress ClauseProfessor Scharpf proposes that a‘political appeal’ to the ECJ rulingsshould be put in place. A member statewould not have to comply with a judg-ment where a majority of governmentsagrees that the limits of European pow-ers have been overstepped. From theETUC point of view, such a proposal,albeit seducing, is not an appropriateresponse for three main reasons:

First, division of powers between thelegislative and the judicial authoritiesis an essential feature of democracy. Itis clear that the EU has been facing aproblem of judge-made law for sometime. Nonetheless, granting supremejudicial power to a political institutionwhose decisions are often negotiatedbehind closed doors will be destructivefor European democracy. However, anassessment of the ECJ’s independence,for instance judges’ nominations andaccess to the Court by other partiesthan the member states, should not beruled out.

Secondly, where the internal marketis not at stake the ECJ has shown aprogressive approach to social issues(see for instance case law on informa-tion and consultation, working time,sex discrimination and more generallythe ECJ interpretation of EU labourlaw). Member states should not beallowed to ignore such rulings.

Finally, weakening the role of theECJ will not solve the challenges thatEurope as a whole is facing. Somebasic choices need to be done by thelegislator to guide the Court. This isnot to say that the ECJ rulings shouldnot be criticised. Several legal expertshave already pointed out the loopholes

and inconsistencies of these judg-ments. The EU legislator, however,should limit itself to changing the law.

The European construction is nowstuck between the market and thesocial. The Court lacks the clear obliga-tion to take a constitutional approach,which would allow for an adequate bal-ancing between economic freedoms andfundamental social rights. The ECJ rul-ings infringe a number of core labourstandards set out in international law(eg: ILO Freedom of Association andProtection of the Right to OrganiseConvention C87 and Right to Organiseand Collective Bargaining ConventionC98, both ratified by all the memberstates)2. It is urgent that the ECJ reposi-tions itself with regard to internationallaw, which is also reflected in nationalconstitutional arrangements. It will benecessary to raise the issue of compati-bility between EU law and internationalstandards in future case law both beforethe ECJ and international instances.

Furthermore, to help correcting thebalance between the freedoms of thesingle market and fundamental rights,the ETUC is proposing that a ‘socialprogress clause’ is added to theEuropean treaties. In the ETUC’s view,the restrictive interpretations by theECJ are not the only possible interpre-tation of the European treaties, whichhave a clear social dimension that willbe reinforced by the Lisbon Treaty. Asocial progress clause should unam-biguously clarify and establish the rela-tions between fundamental socialrights and economic market freedoms.Such a clause must be legally bindingat the highest level, to ensure that itinfluences the decisions of the ECJ.Only a protocol, attached to thetreaties, can give sufficient guaranteesin this regard.

The social progress clause shouldcontain the following key elements:

First, it should confirm that the sin-gle market is not an end in itself, but isestablished to achieve social progressfor the peoples of the EU.


Secondly, it should clarify that eco-nomic freedoms and competition rulescannot have priority over fundamentalsocial rights and social progress, andthat in case of conflict social rights assafeguarded in international law shalltake precedence.

Finally, it should clarify that eco-nomic freedoms cannot be interpretedas granting undertakings the right toexercise them to evade or circumventnational social and employment lawsand practices or for unfair competitionon wages and working conditions. Incase of conflict with fundamentalrights, the use of economic freedomsshould therefore be justified so that therespect of the Community objectivescan be assessed.

In sum, a social progress clause mustestablish a clear legislative choice thatthe internal market should developwithin a social framework and not theother way round.

This proposal has been dismissed asbeing very unlikely as it would requireunanimous support of the 27 memberstates. The ETUC believes that morethan an institutional problem, it is acommunication battle that is layingahead of us. The social progress clauseis in the interest of all. Non-discrimi-nation and respect for collective bar-gaining is an interest and concern thatall workers and their unions share inEurope, be it in the ‘old’ or the ‘new’member states. As for companies, theirsurvival also depends on fair competi-tion in the single market.

Finally, national labour law mustalso be better shielded against internalmarket invasion. A revision of second-ary EU law may have to be envisaged,in particular with regard to the PostedWorkers Directive. In sum, the ETUC isunder no illusion that the recent ECJrulings are a serious blow to the fightfor Social Europe. The issues raised bythese judgments reflect an identityproblem that the Union has been fac-ing for some time – a problem whichgoes deeper than the question of theacceptable limits to the powers of theEuropean Court. At the last ETUCCongress in Sevilla, which took placeunder the slogan ‘On the Offensive’,the trade union movement renewed itscommitment to a Europe which is‘more’ and ‘better’. Ways of reconcilingthe ECJ with Social Europe must there-fore be found at European level. It isessential that the European legislatorreflects on the nature and desiredshape for European integration. TheETUC considers that the outcome ofsuch reflection should lead to legalreforms, the only way to secure a dem-ocratic and sustainable response tothese judgments. In particular, a socialprotocol should serve as an unequivo-cal guidance for the ECJ to interpretinternal market provisions within asocial framework.

Endnotes

1 ETUC Resolution, ‘The social dimen-sion of the internal market’, 6-7 October1988.

2 See also ILO Collective BargainingConvention C154 ratified by 12 MemberStates, ILO Labour Clauses in PublicProcurement Convention C 94 ratified by11 Member States.


‘A social progress clause mustestablish a clear legislativechoice that the internal marketshould develop within a socialframework and not the otherway round’

WHEN A SCHOLAR ofFritz Scharpf’s reputa-tion and standing

speaks, pro-Europeans shouldlisten. His warning that theEuropean project represents ajudicial entrenchment of neolib-eralism needs to be treated withthe utmost seriousness. But pro-European supporters of a SocialEurope and the idea of aEuropean Social Model, in thetrade unions and elsewhere,should pause and think before,as a result of Scharpf’s reflec-tions, they veer across to a kneejerk Euro-scepticism, or worsestill, succumb to an ignorantand populist anti-Europeanism.

The trigger for ProfessorScharpf’s anxiety about thenature of the EU has been aseries of European Court ofJustice (ECJ) judgements thatgive precedence to the foundingeconomic freedoms of theEuropean treaties over nationallaws and nationally based col-lective institutions that arejudged to compromise them.The European Trade UnionConfederation (ETUC) is natu-rally exercised by the recentcourt judgements where tradeunion collective action has beenjudged illegal that attempted toforce contractors from the newmember states to abide by col-lectively agreed terms in the oldmember states – so preventing

them from gaining advantage byusing cheaper labour from theirown countries.

However the details in thesecases are complex; in legal cases,details matter; and I am not alabour lawyer. But there is clear-ly a balance to be struck case bycase on these questions. On theone hand, the new member stateshave legitimate expectations thatthey can use their cost advantageto develop their economies. Thisprinciple the founding sixaccepted, for all its difficulties,when the Treaty of Rome ush-ered in the common market. It isfundamental to the processesthat make globalisation highlybeneficial to poor people inemerging economies. On theother hand, there is at stake theright of trade unions undernational laws and practices totake collective industrial actionto enforce the ‘going rate’ in theirown jurisdiction. This rightappeals to ordinary people’s feel-ings of fairness and justice. Yetthere is clearly an illogicality inpermitting competition on thebasis of lower labour costs in theexport of manufactures, as is thebasis of the single market, butusing workforce muscle to snuffit out at source in the provisionof services by firms from the newmember states.

The purpose of the PostedWorkers’ Directive was to resolve

The European Social Model and the ECJ

Roger LiddleVice Chair of the think tank Policy Network and a former political adviser to José ManuelBarroso and Tony Blair


been to surrender sovereignty inorder to subject themselves tothis external discipline in thebelief that the greater good oftheir citizens, including tradeunionists, is better served bythis in the long run.

The existence of the singlemarket has not resulted in mem-ber states having to dismantletheir social models. True socialmodels that have not been wellattuned to job creation havebeen forced to reform, as in thecase of Germany with Agenda2010. But in the last decade theEU countries with consistentlythe highest rates of productivitygrowth have been the Nordiccountries which also have themost generous social provision.Social justice and competitive-ness march hand in hand wheremember states have welldesigned social models. In theEU as a whole, there has notbeen a ‘race to the bottom’,rather in countries like Spain,Portugal, Ireland and some newmember states a ‘race to the top’.

Also core EU legislation andenforcement action to create theSingle Market has of coursebeen accompanied by much‘progressive’ flanking legislationand court action in fields suchas the environment, consumerrights, health and safety rulesand anti-discrimination as wellas the achievements of theEuropean Social Agenda itself.This progressive legal orderwould crumble if member statesfollowed Professor Scharpf’sadvice to defy court rulings.

From a British perspectiveProfessor Scharpf’s objections tothe European Court of Justicemake him sound more like aright-wing national sovereigntistthan a progressive defender ofEuropean social values. In

decline of ‘good working classjobs’.

Scharpf goes on to argue thatthe ability of EU nation states totake countervailing actionagainst these trends has beenconstrained by what he sees asthe neoliberal legal order of theEuropean Union. One problem Ihave with this argument is thatit totally ignores what nationstates have gained as a result ofthe creation of an EU legalorder, gains which are of crucialimportance for working people.The economic benefits of thesingle market have significantlyadded to EU GDP and as aresult of the growth dividend,national welfare states are betterfunded as a result. On the basisof the competitive strength thatthe single market offers,Germany is, for now at least, thelargest exporting nation in theworld, with all that means posi-tively for jobs and living stan-dards. Unlike the United Statesthis dividend has been morebroadly shared in Europe.

The single market would notbe the economic powerhouse ithas become without action bythe European Commission andECJ to ensure its rules areenforced and constrain nationaldiscretion on questions likestate aid. This may at times beuncomfortable. But the politicalchoice of member states has

this tension. Clearly if the ECJ’slegal judgements are notthought to represent a fair bal-ance between opposing and ulti-mately irreconcilable positions,then the first question to con-sider is how that Directive’sprovisions could in principle bestrengthened under EU legisla-tive procedures, and how thenecessary qualified majority forsuch a step might be won. Thismight require a package ofwider political trade-offs withthe new member states withwhich all students of EU affairsare familiar.

Professor Scharpf’s concernshowever go wider than a specif-ic case or cases. His is a chal-lenge to the EU’s constitutionaland judicial order. TheEuropean Social Model wasbuilt in the post-war era on theability of national welfare statesto shape capitalism in their owndistinctive national way. In hisview globalisation is shifting thebalance of industrial powerform labour to capital. Howeverthere is room for debate bothabout the degree to which thisis a generalised shift, asopposed to a shift within andbetween sectors. There is alsouncertainty as to the extent towhich globalisation is thecause, as against technologicalchange and shifts in consumerdemand that have led to the


‘In the last decade the EU countrieswith consistently the highest rates of productivity growth have been theNordic countries which also have themost generous social provision’

the very institutions atEuropean level that we nowneed to strengthen?

perceptions of the EU’s legalorder, Professor Scharpf’s wor-ries about Court rulings mayderive from an ideological con-sensus that has governed the EUfor more than two decades, butcould now be on the verge ofbeing modified. Jacques Delorspromoted the idea of the SingleMarket because he recognisedthat in the early 1980s this wasthe only means to reconcile hisambition to redynamiseEuropean integration with theprevailing neoliberal consensus.With the global financial crisisof October 2008, this consensusis at the very least about to berecalibrated. Would it not bemore productive to concentrateon how in this dramatic newconjuncture, EU integrationmight take a different road for-ward, instead of advocatingactions that would undermine

Britain the ECJ is seen as a pro-gressive force where its rulingshave made a significant contri-bution to equal treatment forwomen and other disadvantagedgroups. Indeed so terrified wasthe British government of theECJ’s perceived progressive bentthat it insisted on all manner oflegal clarifications and so calledopt outs before it would agree tothe incorporation of the Charterof Fundamental Rights in theLisbon Treaty. Its fear was thereverse of Professor Scharpf’sthat in the long run the ECJwould find legal devices toundermine the essence of the1980s industrial relations settle-ment that New Labour hasbroadly accepted. It is impossi-ble for both Fritz Scharpf andour cautious, business friendlyLabour government to be right!

But more than these different


To order, free phone 0800 243 407www.polity.co.uk

Independent Thinking from Polity

EUROPEAN SOCIETYWILLIAM OUTHWAITE, University of Newcastle

200 pages June 2008978-0-7456-1331-4 HB £50.00 / 978-0-7456-1332-1 PB £15.99

WILLIAM OUTHWAITE

European Society

Does it make sense to speak of a European society, above and beyond its component states and regions? In this major new book William Outhwaite argues that it does. He goes beyond the study of individual states and specifi c regions of Europe to examine the changing contours of the continent as a whole, at a time when Europe is beginning to look and act more like a single entity.

In what we have come to call Europe there developed distinctive forms of political, economic, and more broadly social organization – many of course building on elements drawn from more advanced civilizations elsewhere in the world. During the centuries of European dominance these forms were often exported to other world regions, where the export versions often surpassed the original ones.

In the present century many features of European life remain distinctive: the European welfare or social model, a substantially secularized culture, and particular forms of democratic politics and of the relations between politics and the economy. This book provides a concise overview and analysis of these features which continue to make Europe a distinctive region of global modernity. The book will become a key text for students taking courses on contemporary Europe, whether these are in departments of politics, sociology, literature or European Studies. It will also be of great interest to anyone living in, or concerned with, Europe today.

IWILL LIMIT MYSELF to a shortcomment, for I want to focus uponone crucial point: what the work-

ers and their representatives can do tomake Social Europe more European. Itis a crucial point as no other optionexists to stop the slow but inexorabledecoupling which would otherwiseintervene between social protectionand the economic integration of ourenlarged Europe.

Let me summarise the essential argu-ments leading to this conclusion. Weenjoy speaking of a European SocialModel and we have some reasons to doso, because the average social protec-tion existing in our Union is higherthan elsewhere in the world and itsunderpinning principles tend to besimilar in most of our member states.However, we well know that historical-ly and legally our welfare institutionsare national constructions, moulded bythe social and political arenas existingin each of our countries. They stillremain the paramount responsibility ofthe member states, not of the Union.Building a single economic space andpreserving fragmented social institu-tions can work, but only up to a cer-tain limit. We are now experiencing the

inconvenient truth of this reality.For years the defence of our social

rules and institutions availed itself of asort of immunity from the main rulesof the common market and it was dueto such immunity that the ‘anti-com-petitive’ effects of collective contractswere beyond the range of competitionrules. But more recently the implica-tions of such rules and even more ofthe freedom of movement in theenlarged Europe have created conflictswith national social protection systemswhich have dangerously shaken theimmunity and its borders.

Here I could enter into technicaldetails and also make use of good argu-ments to challenge the decisions of theEuropean Court of Justice in the casesLaval and Viking, which have givenrise to the current debate. However, ifwe look at such cases in more generalterms, we are forced to understand thatthe basic conflict is not only betweenlabour and companies, but first of allbetween the national dimension andthe European one. What does thismean? It means that in the long runthe national dimension is doomed tobe the loser and therefore labour itselfwould be the loser should it remainconfined within national borders.

Let us be realistic. We cannot expectour member states to open a renewedseason of constitutional reform andsolemnly (and unanimously) agreeeither upon a widened and strengthenedimmunity of labour related institutionsor upon a European social network, eventhough not necessarily a complete one,

Making Social Europe European

‘The basic conflict is not onlybetween labour and companies,but first of all between the nationaldimension and the European one’30 Social Europe Journal Autumn 2008

Giuliano AmatoFormer Prime Ministerof Italy

overcoming their competencies. It is notgoing to happen and the experience ofthe Convention on the Future of Europeis very instructive. In that case, limitedextensions of the European competen-cies in the social field were blockedunder the pressure not of the UK, but ofthe German Länder.

In the long history of social rights theworkers and their organisations havebeen the promoters of their ownprogress and the more they have suc-ceeded the more they have gainedinstruments for not just being promot-ers, but also co-decision makers of thesteps forward. They are historicallyused to playing this role at the nationallevel. For the future they have to getaccustomed to play it more and more atthe European one. They can do sobecause the existing treaties give themthe necessary means. According toArticle 139 of the Treaty establishingthe European Community, ‘should man-agement and labour so desire, the dia-

logue between them at Communitylevel may lead to contractual relations,including agreements. Agreements con-cluded at Community level shall beimplemented either in accordance withthe procedures and practices specific tomanagement and labour and the mem-ber states or, in matters covered byArticle 137, at the joint request of thesignatory parties by a Council decisionon a proposal from the Commission.’

Laval, Viking and other cases under-line the urgent need for European solu-tions. But workers and their organisa-tions should not limit themselves todemanding political institutions to takecare of them. They should negotiatetheir solutions with their counterparts,stipulate transnational agreements andactivate the appropriate procedures togive such agreements legal force. Timesare ripe for this kind of transnationalaction. It is a need, but it is also anopportunity, the opportunity to build abetter Europe.


Current thinking oninternational politics

and business

Available from McGraw-Hill

9780071476577 HB

Chindia: How China

and India are

Revolutionizing Global

Business ENGARDIO

£13.99 20.30¤

9781576753958 HB

A Game As Old AsEmpire: The Secret

World of Economic Hit

Men and the Web of

Global Corruption HIATT

£15.99 23.20¤

9780814474242 HB

India Arriving: How This

Economic Powerhouse is

Redefining Global

Business DOSSANI

£13.99 21.05¤

9781576753880 HB

The Real Wealth ofNations: Creating Caring

Economics EISLER

£14.99 22.10¤

9780071497299 HB

India’s Century: The

Age of Entrepreneurship

in the World’s Biggest

Democracy NATH

£15.99 24.05¤

9780071489065 HB

Freedom From Oil: How

the Next President Can

End the United States’

Oil Addiction SANDALOW

£15.99 24.05¤

9780071545969 HB

The War for Wealth: The

True Story of Globalization,

or Why the Flat World Is

Broken STEINGART

£16.99 21.99¤

9781422103838 HB

Billions ofEntrepreneurs: How

China and India are

Reshaping Their Futures

- and Yours KHANNA

£16.99 21.99¤

To order, please visit www.mcgraw-hill.co.uk| For corporate and bulk sales, please email us at [email protected]

THIS AUTUMN OF 2008sees public services hithead on by the current

financial crisis at a time whenan assessment has to be made ofthe public service aspect of thework of the EuropeanCommission under José ManuelBarroso and a progressive pro-gramme prepared on this sub-ject for the European election ofJune 2009. In our view publicservices are a cornerstone of ourprogramme for a new SocialEurope, especially as we remainconvinced that market forcesalone cannot guarantee an ade-quate level and quality of publicservices.

What can we say about thefinancial crisis?

Public service funding hasbeen facing a triple underlyingthreat for years, which has nowgot worse: local authorities areoverloaded by responsibilitiesand are struggling to assumethem financially; users’ pur-chasing power is collapsing;nation states, which have had

their legitimacy eroded by theprevailing free market culture,have fewer and fewer means tointervene and the financialorganisations which usuallyprovide funding for municipal,county and regional councilsare keeping a low profile.

In our countries, one worry isgnawing away at local authori-ties. The banks, led by Dexia,the local authorities’ bank inFrance, have been luring localauthorities into taking on tempt-ing loans. Some of these haveturned out to be a trap.According to a study by theFitch Ratings Agency, a quarterof the 105bn Euros in loansgranted to French municipalitiesare at floating rates, based onsophisticated indexes, whichare currently soaring upwards.

Some mayors are announcingthat they will have to freezeprojects in their towns due tothe credit crunch which is driv-ing up rates. In a country likeFrance, though this also applieselsewhere, where 87% of publiccivil investment comes fromlocal authorities, a bank liquidi-ty shortage may be traumatic forthe local economy.

Our European local authori-ties therefore have every right tocall for more supervision, coop-eration and the adoption of bet-ter regulations in the Europeanfinancial sector.

2009: A Crucial Year for the European Dimension of Public Services

Christophe RouillonMayor of Coulaignes (France), Vice President of the French MayorsAssociation and member of the PESGroup in the Committee of theRegions. He writes on behalf of theEuropean Socialists (PES Group) in theCommittee of the Regions

‘We remain convinced that marketforces alone cannot guarantee anadequate level and quality of public services’


could be a genuine consistentand innovative legislative ‘pack-age’ on matters such as users’rights, the quality and evalua-tion of SGEI; the awarding ofpublic service contracts; SGEIfunding; the relationshipbetween authorities regulatingSGEI; and the status of socialservices of general interest.2

The importance of our callbecomes clear when one consid-ers the great difficulties encoun-tered in the implementation ofthe Services Directive by themember states, which has to becompleted by the end of 2009.

Implementation is facing seri-ous problems, not least becausethe European Commission isrefusing to say exactly whichsocial services are outside thescope of the Services Directive.It maintains a distinctionbetween public service mis-sions, which Brussels calls serv-ices of general interest andwhich come under the regulato-ry powers of the member states,and economic activities whichcome under competition andinclude ‘services of general eco-nomic interest’ (SGEI). But oncethe directive has been incorpo-rated into national law socialservices will probably bedescribed as a sub-category ofSGEI. A report by a FrenchNational Assembly fact-findingteam on the funding and gover-nance of associations publishedon 1st October emphasises thatwith such a description there isa risk that the rules on state aidapplying to SGEI will be madeto cover associations handlingsuch activities as tutoring, aidfor the elderly or managinglocal social centres.

According to the report, ‘therisk for these activities receivingfinancial support from the pub-

gaining in credibility, is certain-ly a favourable one. Let us makethe most of it!

As local and regional socialistand social democrat elected rep-resentatives, we too are morethan ever convinced that marketforces alone cannot guaranteean adequate level and quality ofpublic services, especially asthe public authorities are deeplyinvolved at all levels in provid-ing, regulating, organising or —to varying degrees — funding orsupporting such services.

Now, as the new Protocol onServices of General Interestappended to the Lisbon Treatyconfirms, it is not up to the EUto interfere in the provision ofthese services. However, to con-solidate the public authorities’perimeter for action at national,regional and local level andensure the legal consistency ofpowers and definitions withinthis perimeter when the liberali-sation of various public servicenetworks has been based on dif-ferent rules over the years, weare continuing to call for theadoption of a European legalframework for public services.

This call is now becomingmore feasible than beforethanks to the new political dealon public services offered bythe Lisbon Treaty. This in factprovides for a legal basis (thefuture Article 14 of the Treatyon the Functioning of theEuropean Union) to legislate onservices of general economicinterest (SGEI) using the co-decision procedure.

In concrete terms, we thinkthat the legal framework that weare calling for could take theform of a proposal for a regula-tion on SGEI which, withoutclaiming to regulate everything,aims to pave the way for what

In fact it has never been soclear how much the ‘economicgovernment’ which should haveaccompanied economic andmonetary integration is cruellylacking today. But we think thatthis reasoning, which applies tofinancial services, can applyjust as much to public services.

What has the EuropeanCommission under José ManuelBarroso achieved as regardspublic services since 2004?

Not very much. The textswhich have had the biggestimpact on public services overthe past five years date back tothe Prodi era: the ‘ServicesDirective’ – the White Paper onServices of General Interest –and the ‘Monti Package’ result-ing from the Altmark judgementon the notification rules forstate aid. The last Commissioncommunication on services ofgeneral interest in November2007 was even downgraded tothe status of an appendix toanother communication on theinternal market, with such alow added value that theEuropean Parliament did noteven consider it worthwhile toissue a report on it!1

That is why we hope that the‘ostrich policy’ as regards publicservices will end after theEuropean election of 2009.

For that to happen, the social-ist family must set out its ambi-tions in the Party of EuropeanSocialists (PES) Manifesto forthe European elections. We aredelighted that it already con-tains the call for framework leg-islation on public services butsome additional suggestions canprobably be made to give thecall more substance.

The current context, wherethe need for regulation of themarket economy is once again


experience shows that it isvery difficult to know inadvance which innovativeproducts and services willbecome successful in themarket.4

Lastly on state aid: wenote that the EuropeanCommission is not alwaysvery clear about what thegeneral interest involves. Itneeds more clarity andpolitical ‘guidance’. To givean example, we know thatvarious Commission DGsare currently tearing them-selves to bits to know iflocal authority funding ofharbour infrastructures has to be considered as state aid.

2. Greater attention has to bepaid to the social economy,which is a very significantsector of activity (accountingfor 10% of all European busi-nesses and 10% of all jobs)and is particularly appreciat-ed by socialists and socialdemocrats because it providesmany services of genuine gen-eral interest. We feel thatassociations, mutuals andfoundations need a recog-nised European legal frame-work in order to guaranteethem equal treatment along-side other business modelsthat already benefit from, orare moving towards, recogni-tion of their status (theEuropean cooperative society,the European company andthe proposed European pri-vate company).

3. Finally, we call for greaterrecognition of the cross-sec-tor nature of public servicesin Community policies, par-ticularly cohesion policy.

of which have been incorporat-ed into the Lisbon Treaty.

For the European agenda post 2009 the socialist andsocial democratic representa-tives on the Committee of theRegions have three other pointsto make:

1. In our introduction we men-tioned public investmentagainst the background ofthe financial crisis. Thisfinancial crisis comes at atime when the Commissionis starting its review of theaction plan on state aid for2004-2009.

This action plan is due toend soon and it is extremelyimportant to amend its con-tents and philosophy.

For example, we feel thatthe quantitative approach tostate aid, namely to cut thetotal volume of state aid inEurope to below 1% of GDP,must be revised. Instead, wefeel that a distinction shouldbe drawn between the vari-ous types of aid and theirrespective benefits in termsof the general interest.

We also have reservationsabout the focus given by theCommission to ‘market fail-ures’. If we just take theexample of innovation-relat-ed activities, these are spe-cific in that they are oftendistant from the market. But

lic authorities is to have theirsubsidies reclassified as stateaid by the EuropeanCommission’. The second risk,says the report, ‘is to see the tra-ditional type of relationshipbetween associations and thepublic authorities jeopardisedby moving from a subsidy to acalls-for-projects set-up’. Thisthreat is not theoretical: inFinland, a number of associa-tions which provided welfareand medical services in sectorsopen to competition have seentheir financial support from thestate withdrawn.

Another extremely sensitivesubject for local authority man-agement of public services isthe questioning of joint authori-ty management methods.

In a reasoned opinion of 27thJune 2007, the Commission toldFrance that transferring the pro-vision of services from one localauthority to a group of authori-ties was governed by competi-tion law. The Commissiontherefore asked that the articleon the ‘Local Authorities’General Code’3 authorising suchtransfers be amended. Thiswould mean that all the lawsgoverning local authority group-ings would have to be reviewed,and not just in France. However,this line appears to be extreme-ly flawed as regards its compati-bility with the Charter of LocalSelf-Government, the principles


‘Associations, mutuals and founda-tions need a recognised Europeanlegal framework in order to guaran-tee them equal treatment alongsideother business models’

Endnotes

1 Communication from theCommission accompanying theCommunication on ‘A single mar-ket for 21st century Europe’ –Services of general interest,including social services of gen-eral interest: a new Europeancommitment COM (2007) 725final

2 See CoR opinion presented byJean-Louis Destans (PES/FR) on6 December 2006 (CdR181/2006)

3 L.5211-4-1L.5211-4-1 II CGCT

4 See CoR opinion presented byGabor Bihary (PES/HU) on 16November 2005 (CdR225/2005)

operators, whether they be pub-lic or private.

The example of social housingis a case in point. Under thetreaties, of course, Europe has nopower to take action on socialhousing. However, it has to benoted that the European Uniondoes act in the field of socialhousing through, for example,the rules on state aid: hence thecall for European legislation onstate aid to take greater accountof its impact on public servicesand territorial cohesion.

Examining public services indepth can seem a dry subjectwhen one gets so much into thedetails.

However, we cannot cut cor-ners here on the pretext thatthere are no legal powers to actor fall back on the defence thatthis is a local matter under theprinciple of subsidiarity. Let usremember how worked up pub-lic opinion became in 2005 dur-ing the debates on the ServicesDirective. Public opinion ishighly sensitive about mattersaffecting services of generalinterest. Europeans are expect-ing action by the EU which isnot the bare minimum, butwhich reflects their concernabout preserving the quality ofpublic services, defines whatpublic services are in a positiveway and clearly sets out whatcan be done through regulation.In short, no European legisla-tion on public services will getanywhere if it leads to a cutbackin public services and, ultimate-ly, lower social standards.

For this reason the three pub-lic service goals of ‘protection,modernisation and consolida-tion’ must be among the priori-ties for the next European elec-tion in June 2009.

Let us take two examples: Apart from the Protocol on

Services of General Interest, thefuture Lisbon Treaty only refersto public services, or - to beprecise - services of generaleconomic interest, in Articles14 and 106. But Article 14refers to a new objective insert-ed in the Treaty: that of territo-rial cohesion.

To give concrete form to thisobjective of territorial cohesion,the European Commission lastweek brought out a Green Paper.So for us, the Socialist Group inthe Committee of the Regions, itis essential that in the consulta-tions on this Green Paper onTerritorial Cohesion a maximumnumber of contributions shouldtake a look at the indissolublelink between the new objectiveof territorial cohesion and therequirements of quality andaccess to services of generalinterest. On reflection one won-ders whether the Commissionproposal on the liberalisation ofthe postal sector could havebeen the same if theCommission had been obligedto study the territorial impact ofits proposal beforehand.

However, this greater recogni-tion of the cross-sector andtrans-European nature of publicservices must also occur when asphere of activity of a socialnature and of general interestdoes not fall within theEuropean sphere of competence,in the sense that there is nolegal basis in the treaties for leg-islation in that area.

Indeed, a service of generalinterest may well be at oddswith Community policies. Suchinteractions should be anticipat-ed by the law rather than byjurisprudence. This is a matterof security for both citizens and


THE 2008 AMERICANPresidential election has cap-tured the attention and enthusi-

asm of millions of Europeans. Perhapsmy little patch of north London is anunusual area, but one sees the occa-sional ‘Obama 08’ poster displayed inhouse windows. I am not sure we willsee any more posters, for anyone, inthe European Parliament elections inJune 2009. The British political classeswere following the Presidential raceavidly, and by all accounts there was asimilar picture in other EU states. Whyis this, given that we seem so unenthu-siastic about our own politics, let alonewhat is going on in our partner statesand at European level?

Two answers come immediately tomind. US Presidential campaigns areentertaining, and US Presidential poli-tics matters. But before that, I shallconsider another couple of aspects ofAmerican politics which are worthy of interest.

American politics is a testing envi-ronment for political techniques andtechnology. With a major set of elec-tions every two years, and vastamounts of money, there is a veryrapid cycle of development and strongtechniques should quickly evolve

while the weak die out (although theDemocratic Party has had a touchingfaith in failed techniques and unsuc-cessful campaign consultants). Theconservative movement from the 1970suntil recently has been innovative withits use of direct mail, sophisticateddemographic analysis, ability to organ-ise people to talk about politics withother members of their communities,and understanding of the subtle linksbetween lifestyle and politics (realisingin 2004 for instance that most menwho watch television channels aboutfishing vote Republican).

However, in the last five years, kick-started by Howard Dean’s campaign in2003-04 and channelled through blogs,particularly www.dailykos.com, pro-gressive Democrats have been fightingback. The Democratic ‘netroots’ is apowerful force – it probably gave theparty control over the Senate in 2006thanks to its support in close contestsin Virginia and Montana. It has mar-shalled an enormous number of smalldonors in 2008, not only for Obamabut for Congressional elections in keystates and districts. There is a sense offreshness, optimism, fun and seriouspurpose to be found in the netroots, acombination that is largely absent fromEuropean politics of any stripe. Thearmy of donors co-ordinated by theblogs lacks any real counterpart either.To work out how to replicate the net-roots in Europe would be a hugeachievement – in terms of giving apolitical movement new energy andalso redistributing power away from

Why are we all so interested in AmericanPresidential elections?

‘US Presidential campaigns areentertaining, and US Presidentialpolitics matters’


Lewis BastonDirector of Research,The Electoral ReformSociety

the party elites. One of the excitingthings about US politics is that some-times, within a political party, it justtakes some determined individuals(including for instance MarkosMoulitsas of Daily Kos, or long beforehim Richard Viguerie on the right) tak-ing the initiative into their own hands,finding a movement that just snowballsaround them, and compelling the polit-ical world to adapt.

The use of the net (and the trans-plantation of some of the irreverenceand humour of the blogs) into cam-paigning is just one American innova-tion that anyone who is interested incampaigning should study. TheDemocrats, under Howard Dean aschair of the Democratic NationalCommittee, have built up what theycall a 50 state strategy. This does notmean spraying resources around wild-ly, but making sure that there is anorganisation and a party presenceacross the country. Having this meantthat the party could take advantage offavourable circumstances, as with itswin in a Congressional special electioneven in Mississippi. The strategyreplaced the previous excessive con-centration on a small number of swingstates. Many European parties, particu-larly the Labour Party in the UK, coulddo with learning that being a nationalparty is about more than rhetoric oreven ideology, it is a matter of organi-sation and electoral strategy as well.

The 2008 election was particularlyentertaining. It could share a title witha fine British study of the 1968 contest:‘An American Melodrama’. As a storyarc, as a Hollywood version of an elec-tion, it was hard to beat. There wasJohn McCain, the veteran militaryhero, going for one last campaign whenthose with less steel and ambitionwould be retiring and critics had writ-ten him off, a classic narrative fromsports movies translated into politics.The Democratic side was a grippingcontest between two candidates, eitherof whom represented a massive sym-

bolic change in the form of the firstwoman or first black nominee of amajor party for the Presidency.Obama’s victory was another classicstory, the charismatic, clean outsidercoming to change the way Washingtonworks.

However, even without this year’sparticular flavour, the story of anAmerican Presidential politics presentsdifferent facets at different times. Theprimary season is when a thousandflowers bloom, most of which are rap-idly cut down – it introduces us tosome new characters and ideas, andgives the media and the public achance to build up and knock downcandidates. John McCain, like BillClinton in 1992, proved his stayingpower by surviving a gruelling primaryseason, while Rudy Giuliani’s one statestrategy focused on Florida doomed hiscampaign. Then the narrative con-verges to the contest of the two nomi-nees, joined at the conventions by theirVice Presidential choices, before head-ing to the debates and the hecticnationwide tours culminating in elec-tion day itself (and sometimes as in2000 the conflict continues even afterthat date).

From a British point of view,European political contests that exciteinterest are relatively infrequent.French Presidential elections arousesome comment, and I discussed therelative merits of Sarko and Ségo withfellow British. There is continual,head-shaking despair at Berlusconi, notjust because of his antics but becauseof Italy’s economic failure and thegrowing threat of racism. The Britishleft pays less attention to Spanish poli-tics than it should – a genuinely confi-dent, radical government in an asym-metrically devolved and traditionallyconservative polity and society shouldget more coverage than it does.

Perhaps a general principle can beascertained. Good government makesbad entertainment. Countries with con-sistently high standards of living, sta-


ble democratic arrangements, socialsolidarity, growing economies and sexequality rarely find their internal poli-tics attracting the interest of outsiders,with the partial exception of theEuropean left’s interest in Sweden. Theeveryday business of politics inSweden, Denmark, Estonia, Slovenia,the Netherlands and Norway is oftensensible, consensual, conductedthrough rational means – and simplynot very interesting. A re-balancing ofthe coalition parties and governmentprogramme in the Netherlands follow-ing an election is not box-office materi-al, while American presidential elec-tions present drama, conflict and ulti-mately resolution. The clear choicethey appear to offer may often be illu-sory. Presidents ultimately have towork with Congress, and are con-strained by circumstances the wayevery other politician is, and agendasconverge. But, particularly since 2000,nobody can plausibly argue thatPresidential elections do not have con-sequences.

Different sorts of political institutionseem to excite different sorts ofresponse from the public – not neces-sarily on turnout, although it can havean effect, but on the perception of theelection. Direct election of a chief exec-utive with strong powers, as in the USand France, focuses and personalisesthe election in a way in which legisla-tive elections cannot. Elections for bod-ies whose predominant role is scrutinyand oversight, vital functions in gov-

ernment, seem to mystify the public.Examples of this are the GreaterLondon Assembly and the EuropeanParliament. The work clearly needs tobe done, and people will grudginglyacknowledge this, but it seems boring.The European Union political system,in which executive power is nominatedor intergovernmental, seems almostdesigned to be boring and disconnect-ed. I have long thought that a directlyelected President would at least makethings a bit more interesting, and testfor instance whether European-wideideology or national identification hasa greater effect on the role, andwhether the need to get Europe-widesupport would affect party strategies.

Some of the entertainment value ofAmerican elections comes through ourfascination with the genre of AmericanBizarre. The election is a windowthrough which one can study all sortsof strange phenomena, and perhapsfeel vindicated in one’s, not alwayswell hidden, feelings of contempt aswell as fear and resentment forAmerica. One can pat oneself compla-cently on the back for our rationalism,our lack of naïve credulity, corrupt tel-evangelists, moose-shooting governorsor bigoted talk-show personalities, andeven perhaps the relative scarcity ofvirulent racism, rank ignorance anddesperate inequality. However, this isto risk caricaturing ourselves as well asthe Americans, ignoring Europe’srecord at producing vicious irrational-ist ideologies, and the strength thatknowledge and progress have alwaysdrawn from the United States and itscultural and intellectual vitality.

But there is also a serious point.Most Europeans consider themselveson the rational, liberal side of a conflictwhich divides America down the mid-dle. The immense power and influenceof the United States may, or may, not,end up on the side of those who regardscience and reason as superior to faithand ideology as a guide to how to useit. The American cultural civil war


‘The European Union politicalsystem, in which executivepower is nominated or inter-governmental, seems almostdesigned to be boring and disconnected’

matters to the rest of the planet as wellas to the American electorate.American Presidential politics matters.

Most of us do not treat Americanelections purely as entertainment. Mostof us pick a side that is congruent withour general political views, and makean emotional and political investmentin its success. The European left ismore or less unanimous for theDemocrats, and in the last election wasmore strongly than ever for Obama(although it was interesting during theprimary season to try to work out thedividing lines that made Europeanslean either to Clinton or Obama). Theright is a little more divided, reflectingthe commitment to social conservatism,religion and plutocracy of theRepublican Party which is too strong abrew for many European moderate con-servatives.

A key reason that the 2008 electionwas the object of such fascination is tobe found in the extraordinary historyof the Bush administration. It has gov-erned, confrontationally and unilateral-ly, from the far right at home andabroad. It has encouraged every formof anti-Americanism while dishearten-ing those, such as myself, who are pro-gressive admirers of America. From thepoint at which it seized office throughchicanery and the Supreme Court (inwhat we would call a coup in mostcountries), it has been a depressingexperience. First came the attacks onscience and the environment. ThenBush betrayed those of us who ralliedaround America after the appallingattacks of 11 September 2001 – inusing that tragedy as an excuse for vio-lating the noble principles of the USConstitution, wholesale lying, goinginto war on a frighteningly casual basisand even worse presiding over a dis-gusting regime of disappearances andtorture. As a final show-stopping per-formance, Wall Street has collapsedand the next administration’s moneymortgaged to pay for the damage.

The next administration inherits a

disastrous legacy, and a need to proveto the world that the last eight yearshave been an aberration rather thanbusiness as usual. In fairness toMcCain, he had in the past opposedBush on the environment and torture.But as the campaign went on he soldhis soul to his party, and to the attackmachine that had smeared him and hisfamily when he had challenged Bushin the 2000 primary season. But to seeObama elected has delighted pro-Americans throughout the world.While Bush embodies the arrogant,ignorant side of America, Obama is apowerful symbol of the hope andrenewal that America offers too, and(like Clinton in 1992, only more so)would start with an immense fund ofgoodwill. The fact that America, by theclearly expressed will of its people, hasproduced a black leader, will changethe relationship between America andthe rest of the world. Perhaps Obamacan build on that, and restoreAmerica’s status as that shining city ona hill, a place of opportunity andprogress with a benevolent influenceon the rest of us, projected by actionand example.

Ultimately, America is in the con-sciousness of all of us – to some as anightmare, but to most of us as anambivalent object of attraction. Somuch of the world, and its culture, arepermeated with America that in orderto understand the times we live in, andattain a minimum of cultural literacy,we need to understand a bit aboutAmerica. An election is a time forinsight not only into what its nextleader intends to do for the next fouryears and how that will affect us, butinto why America makes the decisionsit does about the choices on offer.Particularly in 2008, no politicallyminded European can afford not to beinterested in American elections.



Endnotes

All the views expressed in the articles of this issue are those of theauthors and do not necessarily represent the views of SocialEurope Forum.

All rights reservedSocial Europe Forum© 2008

Documents

Social Europe Journal Vol. 4 No. 1