The underlying social contract between individuals and the state in Western European nations over the last hundred years has been that the state would grow to regulate and tax virtually every sphere of life—public or private—in exchange for a measure of order and comfort for its citizens. If the state begins to reduce those comforts as order starts disintegrating, but continues to grow and to tax even more, it could be interpreted as a breach of the terms of the agreement.
As I was finishing this article, France’s youngest citizens took to the streets to defend the welfare state under the banner of the “Block Everything” movement. Their demands include greater investment in public health and education, rent controls, retirement at 60, and stronger environmental policies. Protesters have erected barricades, blocked highways and public-transport stations, in an effort to bring the country to a standstill. More than 400 people were arrested. The demonstrations erupted after President Macron appointed Sébastien Lecornu as prime minister, a move widely seen as signaling the continuation of his predecessor’s austerity policies.
These protests underscore the central argument of this article: the welfare state is the social contract that binds Western European citizens to their governments. When those benefits are eroded, many view it as a breach of that contract—one that, in their eyes, justifies civil disobedience.
Friedrich Merz, often dubbed Germany’s “BlackRock” chancellor, has already indicated that there has to be a reduction in state benefits: “The welfare state as we know it today is no longer economically sustainable with what we are producing as a national economy.” That the welfare state suffers from a viability problem is not news. What is news is that the head of the largest economy in the eurozone, with a relatively low debt-to-GDP ratio (~65%), is publicly preparing citizens for a rollback of state benefits.
But Germany is not alone in this conundrum. France’s government, the second-largest economy in the eurozone, with a much higher debt-to-GDP ratio (~119%), has lost a confidence vote in parliament and been dissolved over a budget that slashes public spending. According to deposed Prime Minister François Bayrou, nearly €44 billion in cuts is necessary because, he argues, France has not balanced its budget for roughly 50 years. The economy is expected to grow by no more than 0.6% in 2025, with a public deficit of about 6%. Some have even floated the prospect of an IMF bailout.
Another European nation that might need an IMF bailout—perhaps even more urgently than France—is the UK. The UK’s debt is becoming significantly more expensive to service due to a sharp rise in borrowing costs, which now amount to over £100 billion annually—nearly 10% of the national budget. This comes despite decades of mass privatization of social services. According to many economists, both France and the UK are going downhill in slow motion toward a debt crisis.
The Wall Street Journal, of course, has no doubt why this is happening: “Britain and France aren’t illiquid. They’re insolvent. Their future spending commitments, primarily in the form of expected social-welfare and old-age benefit payouts, far exceed any realistic estimate of the economic growth that will be available to pay those bills.”
Other European nations, such as Spain—whose GDP is expected to grow around 2.5% in 2025—will face a very similar problem with their welfare systems. Spain’s debt-to-GDP ratio is around 100% (compared to Germany’s ~65%), but its share of the budget devoted to social services is almost identical.
Spain’s current growth is predicated on a general increase in the money supply and a relatively successful immigration strategy over the last two decades. The immigrant population has gone from 3.5 million in 2005 to 7 million in 2025. This has contributed to lower GDP per capita, which is why many Spaniards have barely felt the macroeconomic growth. Despite immigration, the birth rate in Spain is among the lowest in Europe (1.12, lower than Germany, France, and the UK), which makes the long-term sustainability of the welfare state questionable under the logic that it is the current workforce that pays for it.
The case for slashing public spending is usually the same: slower economic growth and a smaller workforce reduce the state’s revenues, while the aging population continues to grow and unemployment rises due to slower economic growth. This discourse presents budget cuts as almost inevitable and frames “slower economic growth” as a natural phenomenon, almost like a drought, occurring outside the control of politicians.
That it is outside the control of politicians—who have limited control over financial policy—might be correct for the most part. However, to present it as a natural phenomenon implies assuming that markets operate under objective natural forces, like gravity, unaffected by the actors involved. That is simply not the case. The “markets” respond to the actions of individuals and companies. A case in point is the 2008 crash, which was brought about by a set of specific practices, such as the sale of mortgage derivatives, which were known—at least by some—to be fraudulent and to potentially cause the collapse of the entire system.
The 2008 crisis is a good example because the financial crisis engineered by big financiers, with or without knowledge, was ultimately paid for by ordinary citizens, and virtually no one was held accountable. It will again be ordinary citizens who pay the price of the geopolitical crisis that now affects Europe with the war in Ukraine. The conflict has unleashed war momentum against the interests of most European citizens, both economically and existentially, which could have been avoided or at least settled early on. Its effects are now precipitating a collapse of European economies and societies.
It is not that Europe did not have structural problems before—such as severe demographic decline, chronic underinvestment in digital technologies, a fiscal sustainability problem, or the loss of national sovereignty to an unelected bureaucratic class—but with the war in Ukraine, all these issues have become more pronounced. These problems have been compounded by the loss of cheap energy supplies from Russia—which were a lifeline to both industry and individuals—and the Trump administration’s demand that Europe foot the bill for the war in Ukraine and pay back the U.S. for years of supposedly favorable trade terms.
While Merz warns Germans that they should be ready to see cuts in public spending, he continues to support Ukraine with €9 billion this year and has changed the country’s debt rules, which will skyrocket the debt-to-GDP ratio. According to a recent interview, he claimed that if he had not done so, the “NATO alliance would have disintegrated in June.” NATO member states, compelled at Trump’s behest to raise defense spending to 5% of GDP, will necessarily see cuts in public spending to offset this defense rise.
Germany, France, and the UK are leading European support for Ukraine, promising to give Ukraine €100 billion to buy arms from the U.S. To this spending on Ukraine must be added the “Rearm Europe” plan, which, as Conor Gallagher very aptly argues, will result in armies ill-equipped to face Russia’s forces but well suited to face Europe’s own citizens:
“Defense spending by EU member states is now projected to reach 381 billion euros this year, up over last year’s record of 343 billion. Despite all the money being burned at the altar of Project Ukraine, sober analysts conclude that European nations are woefully ill-equipped to successfully do much of any fighting there, and no amount of money is going to change that for the foreseeable future (…) But all the additional weaponry and surveillance goodies that aren’t immediately tossed into the corrupt pit of death that is Ukraine could be more likely to be used on an increasingly discontented population rather than against Russia. We’re already seeing it happen.”
No wonder many Europeans are discontent when they are told that the basic underlying logic of their relationship with the state—the social contract embodied in the welfare state—has changed, yet they are unable to exit the contract. They are told there is no money for education, healthcare, or pensions, yet there appears to be an unending flow of money for weapons and war—a war that does not seem to be in the interests of most European citizens.
The sovereignty of modern nation-states, which are paradigmatic European creations, rests on the assumption that the state embodies the “will of the people.” The somewhat abstract concept of “will to representation” is converted into “sovereign will” and vested in the “state.” This presupposes that the role of the state and the state bureaucracy is to safeguard the interests of its citizens.
In Europe, the rise of the welfare state dates back to the end of the First World War. But it was really after the Second World War, in a Europe destroyed and impoverished, that the Western European states, with the help of the Marshall Plan, began developing a new social model. The war had left Europe ideologically and morally dead, so rather than ideals or morals, the state offered comfort and security in exchange for obedience and taxes.
This model seemed to work and offered a compromise—a European way—between the capitalist model of the U.S. and the communist one of the Soviet Union. Although some of this is true, the success of the model was predicated on and expanded through the economic preeminence of Western Europe allied to the U.S.—some would say a vassal—especially after the fall of the Soviet Union.
Parallel to, and as a consequence of, the rise of the welfare system was the growth of the state and the ever-increasing tax burden on its citizens. Starting in the 1960s, to finance the state, the value-added tax was implemented—first in France and later throughout Europe. The justification for this new tax was that the state needed the funds to finance welfare benefits. Europeans accepted this and other substantial tax increases, as well as sweeping new laws and regulations, afraid of returning to a pre-war scenario and comfortable with state benefits. So much so that, in Europe, “the state” has become almost synonymous with “the welfare state.”
This logic—Europe’s underlying social contract—has held Western European society together. Though not without critique, it was widely accepted. When François Bayrou proposed the €44 billion cut to social services that ended his government, both the right and the left voted against it. In France, where society is currently extremely polarized, this is not a minor detail but a significant indicator. The protests that have erupted in defense of the welfare state—on which both left and right are trying to capitalize—are further proof.
The current push for costly military readiness and arms spending seems to go against the logic of the welfare state, which is to say, against the interests of ordinary Europeans, thus changing the state’s side of the social contract. Now the state offers security and protection, not order and welfare, and asks more—not less—of citizens. That logic, in turn, requires new threats and enemies—and the launching of new wars. This happens because the state is, economically and ideologically, bankrupt.
This is not an anomaly but a feature of this model of state sovereignty as now embodied in the European Union. If the state embodies the “will of the people,” then the goal of the state, conceived as an expression of sovereign will, has to be nothing more than its perpetual existence. “It is not an end among others; it is that end for which all others can be sacrificed,” writes Paul W. Kahn in Putting Liberalism in Its Place.
Well with people like Kaja Kallas, they will go from fighting Russia to the last Ukrainian to fighting Russia to the last European. Seems like a natural progression.
Those living in democratic Western nations have always had the opportunity to oppose military buildups in preparation for war with Russia. Yet, they chose not to. If they end up living in hunger and poverty, they will only have themselves to blame.
>>>If they end up living in hunger and poverty, they will only have themselves to blame.
Just like us Americans who despite keeping voting for change keep getting shafted by both the Democrats and the Republicans? I don’t know much about European politics, but I think that European politics, just like American politics, is rigged to favor the oligarchs and the politicians who serve them.
Sadly, in the UK we have lived under an increasingly party-based authoritarian liberal oligarchy dressed with a rapidly fading and shrinking tinsel of electoral democracy wrapped around it. The BBC, funded by every license holder, lies, both by commission and omission, as does the MSM and the channels the MSM supports on Youtube, &c (no, the Times and Telegraph channels may sound like derivatives of ‘Round the Horne’ but, alas, they are not). The UK is not very different from other European countries which seem to be responding in similar ways by supporting new parties which wish to cast aside many of the constraints imposed by tradition and more recent custom and practice.
We Brits have attempted to control HMG’s willingness to go down to defeat in wars the USA has embroiled us from Korea, by acts of civil disobedience and political demonstrations, through the Cruise missile crisis and the wonderful women of Greenham Common, the vicious war against civil rights activists in Ulster, the destruction of Serbia’s territorial integrity, the illegal invasions of Afghanistan and Iraq, the overthrow and murder of Gadaffi and other leaders in North and sub-Saharan Africa, and the murderous regime put in place by the US and British Ukrainian coup and the subsequent conflict over Russian civil rights in the Donbass leading to the SMO.
Sadly, none of our efforts worked. So the only option is to support completely new parties and to clean house even more thoroughly than Cromwell did. The real choice at the next election will be between Reform and Your Party. The same process is occurring or has occurred in countries on the European mainland and it looks as if many governments are more than prepared to go to war against their own people to maintain the privileges of the politcal and financial élite.
The British have been prepared to give their lives for liberty in the past and will do so again. And this is true of every European nation. Our future is one of economic decline unless we come to terms with the emerging new world order and this pressure will only intensify the movement towards the most unLampedusa-like changes in the body politic.
For some Europeans。Defending themselves seems to be a tremendous sacrifice.
Is there any possibility that a potential future target of the new European militarism might be to the south of the continent, across the sea? A second prize of resources, if first prize (Russia) doesn’t pan out?
European entities seem to devolve toward the principle of following the will of the right people. Elitism can take many forms, from directing the lower orders to getting exclusive access to perks. More transparency showing the hidden levers and accounts would be a start toward citizen understanding. Who pushes so hard for weaponry and war, and why?
And how do a few individuals get to cause so many problems? Looking at BoJo, for one.
Who wants country welfare programs to be overwhelmed by migrants, political, economic or otherwise?
It looks like a real race to the end is looming in Europe.
Who will be killed off first?
The destructor propagators of mass death – Leyen Kallas Rutte Merz Macron Starmer et al
Or millions of individuals among the people of Europe, some of whom are slowly coming to realise what trap is being set up for them. People in all of Europe – Germans, Spaniards, Serbs, Italians, Poles, Brits. Everyone.
The financial data suggest the OK Coral is a low single digits of years away. Scary.
The European welfare state, along with Social Security and other programs in the US, was created in part to keep those filthy commies at bay, not out of the goodness of the elite heart. Once there was no more USSR to worry about…. I don’t think it’s a coincidence the concrete material benefits for citizens have been on the decline while the wealth disparity has increased drastically for the last 40 years or so. Nazis, the West is fine with – many Western countries gladly invited them in after hostilities were over. It’s the sharing bit that just can’t be tolerated.
This is simply not true about the experience of Western Europe. Most Western European states had some form of welfare system in place by the inter-war years not least because of trades union pressure and the need to support the dependents of the lost male population during the Great War. Bismark created the German welfare state as part of his effort to ensure the unification of Germany and to provide a secure basis for German industrial workers and soldiers – and it worked, and the rest of us followed in Germany’s wake.
But something else happened during The Great War–something in Russia. Surely this had an effect on how European governments treated the working class. Then when that thing was finally defeated ideologically Thatcher could proclaim “there is no alternative.”
Which is not to argue that political ideas control history but rather to agree with Stephen Douglas that “power concedes nothing without a demand.” The Russian Revolution was that demand scared the Euro aristocracy mightily.
Some effect, maybe. The move towards the welfare state in Europe began before that, however (1880s in Germany, 1900s in Britain… I think most European countries started introducing key elements of modern welfare systems like old age pension schemes, somewhere in 1880-1910s; the only one I can find quickly that could conceivably be blamed on us is Italy, 1919 – there are many other examples outside of Europe, and there things may have been different). It was influenced in large part by domestic “demand”, or by the desire to stave off their own socialist and unionist movements, but there were other considerations as well: inter-European competition; wanting to keep the race in shape to keep down the colonial populations; even, though you may dismiss that, Christian paternalism, patriotism and/or social progressivism as elements of elite ideology and self-image.
The Great October Socialist Revolution/October coup did influence later development to some extent, but it merely reinforced preexisting trends. I am not sure if its influence was always a helpful one for this, for that matter – it also helped start a powerful right-wing backlash that did not compare to what existed before the war.
And I’d say it’s also an example of how ideas do control history – if people in and out of power had not conceived of such reforms, no one would have enacted them.
The development of the welfare states of Europe can be traced well back to the mid-19th Century at least – they were arguably the result of the weakening of religion and the strengthening of the secular state, but you can trace its origins well back to medieval times – many towns and cities has surprisingly sophisticated social systems designed to protect the poorest organised by various forms of town governance (councils/guilds,etc). The motives were the usual complex mix of compassion, religious belief, social pressure, ideology and fear. They long predate any fear of socialism, although not of course fear of peasant uprisings.
Later northern European welfare systems, developed as private companies became larger and more influential and developed their own health/welfare systems (often, of course, under trade union pressure), and these in time became generalised by the State in order to iron out social pressures between those protected by those corporate systems and those (not necessarily poor) on the outside.
The complexity of the history is one reason why these systems are so complex (a health economist friend was fond of joking that there are only about 3 people alive who understand how the Dutch health system works) and have roots that go well beyond the notional ‘start’ of any particular scheme. Its also a key reason as to why there are so many deep differences between their design and implementation across Europe. Even between quite ‘similar’ countries – such as Denmark and Sweden – there are often very fundamental differences in both the background politics and the nuts and bolts of implementation of these systems.
For the most part, they work surprisingly well, despite several decades of attacks by neoliberals (even Thatcher feared tackling the NHS). The key threat, as the article alludes – is that the pension/care systems are for the most part based on assumptions of rising population/economic growth which no longer hold. This is, in my opinion, a key reason why domestic politicians have been so reluctant to tackle immigration. The projections are horrible if you rely on domestic fertility – but this applies now all over the developed and intermediately developed world. Its a nettle that has yet to be firmly grasped by any country.
Oh, of course – I specifically meant the comparatively standardised and systematic modern welfare systems as pioneered by Bismarck or Lloyd George, but depending on one’s definitions, some forms of state (or, more often, municipal?) welfare existed for centuries or indeed for as long as human civilisation. Standardised welfare of the Bismarck type is, to my knowledge, a 19th century European novelty; so is the ideologically-driven rejection of state welfare, though indeed, even such fanatics as Thatcher had a healthy fear of going too far in attacking what people had come to rely on.
” Stephen” Douglas? Surely you mean Frederick Douglas.
Yes sorry for the senior moment. And to the other replies to my comment I’ll just point out that the Russian revolution was preceded by others in Europe and perhaps most importantly our own which rejected a king (coming soon as Ken Burns PBS doc). I think the statement made by Frederick Douglas is to the point and that point is that those at the pinnacle of power do not back down other than from the threat of violence since violence is how they maintain their position. Even in enlightened 19th century Britain (paging Dickens) you could still be drawn and quartered.
Of course democracy is supposed to provide another path which is why they are doing so much to undermine it.
There are a lot of problems here, and a lot of misguided prejudices (I am not refering to the article, but about common knowledge). Europe, except the USSR, the last European power, was done in 1945. It was pretty clear in the Suez crisis. Yes, they were important countries in a slow decline, but decline. EEC-EU-Europe, or Euroamerica, is a marginal side of the US hegemonic system. The EEC was a optimizing system for the main economies of Western Europe, it was never designed for advanced but small countries like Sweden, Switzerland or Austria, not at all for undeveloped like Greece, Spain, Portugal, let alone ex-COMECON and the lot, not even the fiasco of a United Germany. It became a chaos. It was a economic device, not even a political one, the Paris-Berlin axis was a mirage (because of German partition), it lasted until 1990s, UK was ever a disloyal member, and the like. The political device was, and is, NATO, all the powerful countries of the EU are nothing without it, and the traction of NATO was to make the EU as similar to the US as possible as fast as possible. The welfare state was a concession by fear of the Soviet Union, which exists no more. There is no reason not to carry the EU to the same social welfare standards of the US, which is what is happening. Corruption is massive, as ever was, so if we don’t see things from this point of view, we hardly understand anything.
Taxes are lower than ever, in the sense that they are not extracting money where it is, in fact they collect less and less in a suicidal temptative to keep alive the system. If things were that far away without resistance, it’s more than dubious they are going to change in the next few years. Firstly, people must be aware about reality, not the bubble where they forced to live, and only after that, something could happen. Or not.
All these comments are well and good, but of course, the interesting part is the
question of what Putin’s motivations are. Is the attack on Poland because of
internal failures in Russia, or are their other reasons? Putin obviously has his eyes
on Latvia and Estonia, where a goodly portion of the population is Russian.
One would have thought that they would be easier anti-Nato targets. There is obviously a ‘message’ here. Poland has historically been vulnerable because
it is flat, and a convenient invasion corridor. Back in the day, when the European
militaries worried about mass invasions by tanks, that made sense. Mutandis mutandi,
it’s a drone’s world now. And it’s not like Israel, which gets its military weapons
free, courtesy of ‘foreign aid’ from the US. Putin has to pay for all the Iranian drones
and missles as well as domestic arms production. Has something changed internally
that makes expansion of hostilities desirable?
I’m sure the there’s ‘less here than meets the eye’, but being merely a slightly astute
citizen myself, I can’t suss it out.
Was there even an attack on Poland? Even that badic premise remains unclear. One might as well ask what the Poles were thinking at Gleiwitz, 1939.
Ukraine did hack Russia drones, then send them through Belarus. Belarus even warned Poland about the drones.
Fun fact. The drones that entered Poland did not have the range to reach there if launched from Russian positions. It was too far as the Russians pointed out. So either they were taken there by magical tailwinds that no weather report shows or else these were captured drones that were launched by Zelensky to bring Poland and NATO into the fighting. I’m going with Door Number Two.
UK media has commented that they were launched from Belarus.
Reports from Belarus said that they had a few enter their airspace which were shot down so gave Poland a heads up that they might have a few come their way. As for UK media, they are on par with Oz media or German media which is not a high bar. Some Brits say that the BBC actually stands for the British Bull******* Corporation as an example.
Bad
Old debating
Technique-
answering a question with a question.
Maybe they were just playing questions-
https://www.youtube.com/watch?v=u3xIs0aajN4
“The underlying social contract between individuals and the state in Western European nations over the last hundred years has been that the state would grow to regulate and tax virtually every sphere of life—public or private—in exchange for a measure of order and comfort for its citizens…”
Even though the final para states “This is not an anomaly but a feature of this model of state sovereignty as now embodied in the European Union. ..” the author doesn’t appear to acknowledge that the underlying European social contract between individuals and the nation state was effectively broken with the adoption of the financially unfederated Brussels governed administered common currency structure of European Union 26 yrs ago.
The individual nation states in adopting the Euro surrendered their capacity to deliver on that social contract to unelected administrators in Brussels. Each Eurozone member state in abandoning their national currency, gave up their fiscal sovereignty to adopt the Euro – effectively a foreign issued currency.
Together with accepting an arbitrarily Brussels enforced annual 3% fiscal deficit limit it was inevitable that expanded state monetary needs for industry/population growth would eat into the available funds necessary to deliver on that social contract.
The US, itself a nation of 50 fully financially federated states, knew full well the implications of that structure – a stealthy ploy to slowly but surely destroy European socialism.
IMHO a structure designed to keep Europe down, socially divided with vassalised financial elites in firm, ever growing control.
An article worth re-reading (after 13 yrs) by Greg Palas is ‘Robert Mundell, evil genius of the euro.’
See also William Mitchell’s Eurozone Dystopia: Groupthink and Denial on a Grand Scale
https://www.goodreads.com/en/book/show/30343868-eurozone-dystopia
and Mitchell and Fazi’s Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World
https://www.goodreads.com/en/book/show/36426386-reclaiming-the-state
Any residual social contract in the UK was erased from 1980 when unemployment first hit 2m down to the Thatcherite dogma that unemployment was “a price worth paying”.
The loss of trust in the political class during deindustrialisation, and social insecurity, has led to the rise of right wing populist insurgents preying on disaffection.
Any of the European nations which has experienced youth unemployment over 20% and poor real wage increases over the last few decades is likely to have the same social insecurity.
I agree. The state demands you obey the laws, keep the peace, respect your fellow citizens. In other words, to put the common good before your individual good. In return the state must give you the opportunity to thrive within those constraints. If it doesn’t all bets are off.
“Another European nation that might need an IMF bailout—perhaps even more urgently than France—is the UK. The UK’s debt is becoming significantly more expensive to service due to a sharp rise in borrowing costs, which now amount to over £100 billion annually—nearly 10% of the national budget…”
The UK does not need an IMF bailout – The UK is the sole fully sovereign issuer of the UK£.
It can pay any debt it incurs denominated in the UK£.
When will journalists ever spend the time researching how National monetary systems actually function?
In a democracy with well informed citizens then the choice between having billionaires or having a social safety net would be easy. As is then I’d say that either the citizens aren’t well-informed and we have democracy or we don’t have democracy and what we do have is oligarchy.
A subtle choice of words can be used when engaging in propaganda. The difference in outcome between asking if people want a welfare state or if they want a social safety net is (at least in my strong belief) huge.
I believe that as long as the ‘opposition’ to the status quo are using phrases suggested by supporters of the status quo then the ‘opposition’ will not drive any change.
Not sure about this:
. It wasn’t explained and I am not sure what is being referred to.
Bacchunin observes further upthread, “Taxes are lower than ever, in the sense that they are not extracting money where it is.”
Setting aside for the moment the MMT realities of fiat money (since Eurozone constituent states aren’t individually monetarily sovereign, having foolishly given that implement of sovereignty away in Maastricht) it ought to be obvious to anyone who can read a balance sheet that somebody owns all of the debt which makes these countries “insolvent.” Yet the press never makes the connection between rising inequality, the ever growing number of billionaires and state “insolvency.” It’s almost like rich people own the media … 🤨