Europe in the Global Age

Anthony Giddens

• Publisher: Polity
• Year: 2013
• ISBN:
  9780745655246
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Europe's social model – its system of welfare and social protection – is regarded by many as the jewel in the crown. It is what helps to give the European societies their distinctive qualities of social cohesion and care for the vulnerable. Over recent years, however, the social model has come under great strain in many states within the European Union – unemployment, for example, remains stubbornly high. The resulting tensions have fuelled dissatisfaction with the European project as a whole, culminating in the rejection of Europe's proposed new constitution.

Reform of the social model is therefore a matter of urgency. It has to go hand in hand with the quest to regenerate economic growth. The weaker performers in Europe over the past few years can learn a good deal from states that have coped more effectively. But more radical changes need to be contemplated in the face of the impact of globalization, rapidly increasing cultural diversity and changing demography. The author argues that the traditional welfare state needs to be rethought. We have to bring lifestyle change into the heart of what welfare means. Moreover, environmental issues must be directly connected to other citizenship obligations. These innovations have to be made at the same time as Europes competitive position is upgraded.

This original and path-breaking book will rank alongside Beyond Left and Right, The Third Way and other works by Anthony Giddens that have helped reshape social and political thinking over recent decades.

1

The Social Model

Europe’s welfare system is often regarded as the jewel in the crown – perhaps the main feature that gives the European societies their special quality. In May 2003 two of Europe’s most distinguished intellectuals, Jürgen Habermas and Jacques Derrida, wrote a public letter about the future of European identity in the wake of the Iraq war. The welfare state’s ‘guarantees of social security’ and ‘Europeans’ trust in the civilizing power of the state’ brooked large.¹ Most other observers sympathetic to the European Union project would agree. The European social model (ESM) is, or has become, a fundamental part of what Europe stands for.

Cue in ‘ESM’ in Google and 55,800,000 items come up! Such a profusion perhaps reflects the fact that the ESM, like so much else about the EU, is essentially a contested notion. In spite of the fact that it is so central, the idea is somewhat elusive when we try to pin it down. The ESM, it has been said, is not solely European, not wholly social and not a model.² If it means having effective welfare institutions, and limiting inequality, then other countries are just as advanced as states in Europe. For instance, Australia and Canada surpass Portugal and Greece, not to mention most of the new states in the enlarged EU25. The ESM is not purely social, since however it is defined, it depends fundamentally upon economic prosperity and redistribution. It is not a single model, since there are big divergences between European countries in terms of their welfare systems.

There are many different definitions of the ESM around, although they all home in on the welfare state. Daniel Vaughan-Whitehead, for example, lists no fewer than fifteen components of the ESM.³ We should probably conclude that the ESM is not a unitary concept, but a mixture of values, accomplishments and aspirations, varying in form and degree of realization among European states. My version of it would be:

• a developed and interventionist state, funded by relatively high levels of taxation;

• a robust welfare system, which provides effective social protection, to some considerable degree for all citizens, but especially for those most in need;

• the limitation, or containment, of economic and other forms of inequality.

A key role in sustaining these institutions is played by the ‘social partners’, the unions and other agencies promoting workers’ rights. Each trait has to go along with expanding overall economic prosperity and (ideally) full employment.

Underlying the ESM is a general set of values: sharing both risk and opportunity widely across society, cultivating social solidarity or cohesion, protecting the most vulnerable members of society through active social intervention, encouraging consultation rather than confrontation in industry, and providing a rich framework of social and economic citizenship rights for the population as a whole.

Stresses and Strains

It is agreed by more or less everyone, supporters and opponents alike, that the ESM is currently under great strain, or even failing. The welfare state is embattled. It no longer offers the stability and security it seemed to do thirty or so years ago. We should begin, however, by putting this situation into context. Some speak of the 1960s and 1970s as the ‘golden age’ of the welfare state, when there was good economic growth, low unemployment, social protection for all – and when citizens were able to feel much more secure than today. From this perspective, the ESM has been ‘attacked’ by external forces, particularly those associated with globalization, and progressively weakened or partly dismantled.

The reality is more complex. For member states such as Spain, Portugal, Greece and most later entrants to the European Union, there was no golden age at all, since welfare provisions were weak and inadequate. Even in those nations with advanced welfare systems, everything was far from golden in the golden age. That era was dominated by mass production and bureaucratic hierarchies, where management styles were often autocratic and many workers were in assembly-line jobs. Few women were able to have working careers; only a small proportion of young people entered further or higher education; the range of health services offered was far below that available now; older people were put out to pasture by a rigid retirement age. In line with the bureaucratic ethos of the time, the state generally treated its clients as passive subjects rather than as active citizens. Some of the changes in welfare systems over the past thirty years have been aimed at correcting these deficiencies and hence have been both progressive and necessary.

The world, of course, has shifted massively since the ‘golden age’. The ESM, and the EU itself, were in some large part products of a bipolar world – a recurrent theme of this book. The fall of the Berlin Wall – Europe’s 11:9, as Thomas Friedman calls it⁴ – more or less completely changed the nature of the EU, giving rise to identity problems that still remain unresolved – and indeed were reflected in the refusal of the proposed EU constitution by the people of France and the Netherlands.

The demise of Keynesianism in the West and the collapse of Soviet Communism were brought about by much the same trends – accelerating globalization, the rise of a worldwide information order, the shrinking of manufacture (and its transfer to less developed countries), coupled to the rise of new forms of individualism and consumer power. These are not changes that came and went; their impact continues to grow apace.

Two decades ago the countries in the developing world produced 10 per cent of the world’s manufactured goods. That proportion has risen to 25 per cent and, if present trends are maintained, will reach 50 per cent by 2020. China has recently overtaken Japan to become the second largest economy in the world as measured in terms of purchasing power. In less than five years it is likely to surpass Japan’s economy in terms of market exchange values as well.⁵ In 1980, the countries that now comprise EU25 produced 26 per cent of world manufacturing output. By 2003 that proportion had become reduced to 22 per cent and is likely to be no more than 17 per cent by 2015.

The larger companies no longer source their goods and services nationally, but worldwide, intensifying both trade and local specialization. In 2003–4 world trade grew twice as quickly as global output. Transnational trade in services is advancing rapidly, with India in the lead. India’s service exports in real money terms grew from a value of $5 billion in 1990 to $40 billion in 2004.

Competition from the developing economies is no longer concentrated only in low-cost goods. China and India have made large-scale investments in technology, especially information and communications technology (ICT), and are each producing four million graduates a year. No one knows how far the outsourcing of services will go, given the fact that it is driven partly by developments in computer technology and by the widening of access to such technology. However, the complexity of the services that can be outsourced is rising rapidly. Financial, legal, high-tech, journalistic and medical services are among those most likely to be directly affected. I shall discuss those issues in more detail in chapter 2.

The social model depends upon overall economic prosperity, to which ideally it should contribute. The EU’s economic performance over the past twenty years or so, however, has given rise to recurrent anxiety. The EU has fallen behind the US according to the standard measures of economic success. (Western) Europe was once in the vanguard of social and economic change; today, the EU risks getting left behind by history. The progress that has been made with consolidating the Single Market, and the introduction of the euro, have not created an economic regeneration.

We know from survey results that the issues which preoccupied voters in the referendums in France and the Netherlands were not in fact primarily constitutional. In France, 75 per cent of those who voted in the referendum and, extraordinarily, fully 66 per cent of ‘no’ voters, still believed a constitution for Europe was necessary. The position in the Netherlands was more complex, since some ‘no’ voters were worried about smaller countries becoming too dominated by larger ones. But in both nations, social and economic concerns were of prime importance – mainly worries about jobs and about the adequacy of welfare. Changes happening in the EU, especially to do with its expansion, were seen as likely to make an already difficult situation worse.

A few commentators tend to underplay the economic difficulties faced by Europe, especially when the EU is compared with the United States.⁶ Europeans, they say, have made a lifestyle choice. They have traded in a certain level of possible growth for more leisure than is enjoyed by most Americans. Nevertheless, productivity in some EU countries rivals that of the US. Precisely because of Europe’s stronger welfare systems, there are fewer working poor in the EU states than in the US.

But these ideas are not convincing, as others have demonstrated.⁷ Average growth in the EU15 has declined in relative terms year on year since the 1980s. GDP per head has not got beyond 70 per cent of the US level over that period. Not only has the US had higher growth, it has also had greater macroeconomic stability over that time. About a third of the difference in per capita GDP with the US derives from lower average productivity of labour, a third from shorter working hours and the remaining third from a lower employment rate. None of these comes purely from choice, and all affect the viability of the ESM. Unemployment is far higher in the EU than in America. There are 93 million economically inactive people below the age of 60, a much higher rate than in the US.

Very many in Europe, including many young people – and over 60s – want to work but can’t. This comment also applies to immigrants. The US has done a better job of integrating immigrants into its labour market than have the EU countries. The jobless rate of non-nationals in the EU15 in 2002 was more than twice the rate for nationals. In the US the two rates are almost the same. The incorporation of ten new member states has brought with it a series of issues that are very remote from a ‘preference for leisure’. It has increased the EU population by 20 per cent, but GDP by only 5 per cent. Problems of inequality and cohesion have increased, both across the EU as a whole and within the member states.

Globalization

These are all challenges to which Europe can and must react. They have some major implications for the social model. However, in looking at strains affecting welfare systems, it is a mistake to focus on globalization alone. Some of the core problems faced by Europe’s welfare states come from endogenous structural change. These changes are directly connected with globalization (since almost all changes are) but are not wholly driven by it. This point is an important one to register, as some commentators invoke the spectre of globalization to explain away home-grown problems and delay reform.

The changing age profile of Europe is a case in point. In the EU today there are some 70 million people aged 60 and over, making up 20 per cent of the population. Over 30 per cent are aged 50 or more. One factor producing the ageing population is that, on average, people are living longer than in the past. A prime additional reason, however, is the low birth rate. This fact is easily understood if we compare the EU with the US. Following its most recent expansion, the EU has a population of 455 million, compared to 295 million in the US. Yet if current trends were maintained, by mid-century the two populations will be virtually the same.⁸ In America, birth rates are at replacement level. In the EU25, by contrast, they average 1.5 per 1,000 women, and in some countries the rate is as low as 1.2. If nothing changes in Italy, for example, the numbers of those of working age (19–65) will decrease by 20 per cent by 2035.

The steep decline in the number of those working in manufacture in the EU countries has been influenced by the transfer of industry to the developing world, and thus by economic globalization. But the main reason is not this. It is the impact of technological change, which in many industries has either reduced the need for human labour power or has simply rendered more traditional production processes obsolete. For instance, car manufacture has been almost wholly automated; the coal industry in most countries has shrunk, largely because of a widespread transfer to natural gas. Of course, it is again the interaction between ‘inside’ and ‘outside’ influences that is important. Technological change has accelerated because of growing intensity of competition.

One further example: patterns of poverty and social exclusion, although certainly affected by globalization, are influenced by endogenous changes too, including, in particular, transformations in the structure of the family. In most EU countries, rates of divorce are higher, and rates of marriage lower, than they were in the past. Families are more mobile, and may lack the extended kin relations that were once a source of social support. There is also the rise of the ‘non-conventional family’ – women having children on their own, same-sex partners living together, and so forth. These trends are complex and often difficult to interpret, but they have strongly influenced the nature of poverty and other forms of deprivation. Women and children make up a high percentage of the ‘new poor’ in most EU countries.

What globalization is has to be properly understood. Globalization is often seen solely as an economic phenomenon, even by some of the most sophisticated commentators on the subject. Martin Wolf, for example, defines it as ‘the integration of economic activities, across borders, through markets’.⁹ The definition is not so much incorrect as too partial. Globalization is so obviously not only economic that it is hard to see how anyone could seriously think otherwise.

Consider, for example, the role of communications media. The world has become interconnected electronically in ways that no one could have even anticipated several decades ago. I would in fact date the beginnings of the global age to the late 1960s or early 1970s, the first time at which an ...

Table of contents

• Cover
• HalfTitle
• Series
• Title
• Copyright
• Contents
• Dedication
• Preface
• Glossary of Terms Introduced
• Chapter 1: The Social Model
• Chapter 2: Change and Innovation in Europe
• Chapter 3: Social Justice and Social Divisions
• Chapter 4: From Negative to Positive Welfare
• Chapter 5: Lifestyle Change
• Chapter 6: At the Level of the EU
• Chapter 7: Eight Theses on the Future of Europe
• Appendix: Open Letter on the Future of Europe
• Index