By Alejandro Reuss, a historian, economist, and co-editor of Triple Crisis blog and Dollars & Sense magazine. Originally published at Triple Crisis
This is the first part of a three-part series on the historical trajectory of European social democracy towards the so-called “Third Way”—a turn away from class-struggle politics and a compromise with neoliberal capitalism—and its role in the shaping of the Economic and Monetary Union of the EU. It is a continuation of his earlier series “The Eurozone Crisis: Monetary Union and Fiscal Disunion” (Part 1 and Part 2). His related article “An Historical Perspective on Brexit: Capitalist Internationalism, Reactionary Nationalism, and Socialist Internationalism” is available here.
The idea of a united Europe was not unique to neoliberal politicians or financial capitalists, even if their vision was the one that ended up winning out. Rather, this idea cut across the entire political spectrum, from forces clearly associated with giant capitalist corporations and high finance to those associated with the working-class movement. Just as there have been “anti-Europe” or “euroskeptic” forces on the political left and right, there were also diverse forces in favor of European unification, each with its own vision of what a united Europe could be.
Going back to the mid-20th century, leaders of the social democratic, reformist left envisioned a future “Social Europe.” The European Social Charter, adopted by the Council of Europe in 1961, promulgated a broad vision of “social and economic rights,” including objectives like full employment, reduction of work hours, protection of workers’ rights to organize and bargain collectively, rights to social security and medical assistance, protection of the rights of migrants, and so on.
Figures on the revolutionary left, like the Belgian Marxist economist and Trotskyist leader Ernest Mandel, advocated a “United Socialist States of Europe.” This was an expression not only of revolutionary internationalism, but also of Mandel’s view that the working class could no longer confront increasingly internationalized capital through political action confined to the national level.
In other words, the question was not just whether Europe would become united, but (if it did) what form such unification would take.
Triumph of the “Modernizers”
The vision of social democracy on a grand scale did not come to pass, nor even was there significant movement in that direction when social democratic parties led the governments of the largest and most powerful countries in the EU. During overlapping periods in the late 1990s, the Labour Party’s Tony Blair was prime minister in the U.K., the Socialist Lionel Jospin was prime minister in France (though in “cohabitation” with Conservative president Jacques Chriac), the L’Ulivo (Olive Tree) coalition’s Romano Prodi led the government in Italy, and the Social Democrat Gerhard Schroeder (leading the so-called “Red-Green” coalition, with the Green Party as junior partner) was the chancellor of Germany.
All of these governments were led by figures who had turned away from the traditional social-democratic politics of class struggle (in even the moderated form prevalent in the postwar period), while still promising to temper neoliberal capitalism. This approach became known as the “Third Way,” a term especially associated with the “New Labour” program of Blair in the U.K., but also used to describe similar shifts in other countries. As Swedish political scientist Peo Hansen puts it, Blair expressed “unconditional espousal of capitalist globalization and … further liberalization of labour markets.” Jospin, who campaigned as a critic of neoliberalism, quickly shifted to “multiple privatization schemes and policy reshufflings favourable to business.” Prodi was “firmly in the camp of the ‘modernisers’.”
The case of Germany is especially instructive: The finance minister in the Social Democratic-Green coalition government, Oskar Lafontaine, was notable for swimming against the neoliberal tide—criticizing the EU’s fiscal constraints and inflation-targeting monetary policy, and proposing the adoption of common tax and social welfare policies. That is, he was arguing for EU-wide social democratic reforms to end “race to the bottom” dynamics (on wages, taxes, etc.) emerging in the EU. “Wage dumping, tax dumping and welfare dumping,” Lafontaine declared, “are not our [social democrats’] response to the globalization of markets!” That was too much for Schroeder and other social democratic leaders in Europe, and Lafontaine resigned under pressure in 1999.
Lafontaine would later become a founder and leader of Die Linke (The Left), which is certainly to the left of the Social Democrats. He was not, however, a revolutionary who threatened to upset the reformist apple cart. Rather, argues Hansen, Lafontaine was a “political liability among his own for merely sticking with a set of very traditional social democratic policies and values.”