European social democracy: facing the void in an age of austerity.

Peter Mair, Ruling the Void: The Hollowing of Western Democracy. London, Verso, 2013; Armin Schäfer, Wolfgang Streeck, Politics in the Age of Austerity, Cambridge U.K., Polity Press, 2013.

That the EU is in crisis, no one can doubt. Their flagship policy for a single currency is a shipwreck. At Copenhagen, in December 2009, the leaders of  China, Brazil, Russia, India and the United States talked about environmental policy, banning the Commission which had planned the Climate Change conference as the coming out party for the EU as a regulatory power on the world scene. A new industry has been spawned by academics as eager to publish about disintegration as they were to talk about integration. Germany’s Social Democrat Foreign Minister Frank Walter Steinmeier, recently in London, said that the rise of “Eurosceptic” parties like Ukip, Germany’s AfD and the French Front National, posed a threat to the European peace. “History before the First World War, he reminded his audience,  was a history of not talking to each other, of nationalisms which could no longer be [tamed] by reason.”

Steinmeier’s SPD is the key member party of the the Progressive Alliance of Socialists and Democrats- the second largest group in the European Parliament. The S and Ds should be of considerable interest to readers, since they in effect represent the healing of the rifts in the second, third and fourth socialist internationals. With the end of the cold war, Stalin’s feud with Trotski became irrelevant, while former communist parties, social democrats or trotskiites, could regroup and rebrand. One of the main results of this rearrangement of party alignments is the Progressive S&D group.

The two books under review provide a fairly complete overview of S & D  views about democracy, the EU and capitalism.  The authors are from the centre left. Peter Mair, Francis Mulhern writes in his forward, was a “precocious socialist” at University College, Dublin, but also worked for the Irish Times.  Mair died suddenly in August 2011, before completing the book, which has been assembled by Mulhern out of manuscripts. Wolfgang Streeck is firmly social democrat and a stalwart of German political science. Their combined message may be synthesised as: democracy is weakening, capitalism reigns, and the EU is incomplete.

Mair’s thesis is stated in his opening sentence: “The age of party democracy has passed”. Political parties, he writes, have become so disconnected from the wide society that they no longer seem capable of sustaining democray in its current form. Political parties no longer engage voters, as evidenced in the trends to the fall in party membership, disengagement from politics, and more electoral volatility, all of which  allows more scope to the media to set the agenda. In the past, political parties were rooted in their own constituencies and clienteles; now, they are more identified with public office, and feed off rather than run the state. “Experts” reign, beyond the reach of the common citizen, with the result that people are not so much semi-sovereign(the title of the U.S. political scientist E.E. Schattsneider’s 1960 book, “The Semi Sovereign People”), as non sovereign.

Paradoxically, as Mair points out, the indifference of western electorates to democratic politics waxed just as democracy, in the phrase of Juan Linz and Alfred Stepan, became “the only game in town”. Why this should be, Mair implies, has multiple causes: the rise of anti-politics, exemplified by Tony Blair’s mendacious statement that “I was never really in politics”; the expansion of the regulatory state ; the  infatuation with the idea of independent central banks;; not least, the experience of populist politics prompted Fareed Zachariah, the American political commentator, to renew the distinction-in effect made by Edmund Burke in his Reflections on the French Revolution-between popular and constitutional government. Zacharia’s argument, based on his experience from India, is that law and representative institutions, predate popular democracy, and are an indispensible pre-requisite to its good functioning.

The main chapter in the book, though, is on the EU, and the growth of its apolitical polity. It is not just that the EU’s powers hollow out the representative function of its member states; the EU was a house built by politicians to take opposition out of politics. “Europe, Mair writes, appears to have been constructed as a protected sphere, safe from the demands of voters and their representatives”(p.109). Yet, as he points out, it is only in the nation states that the relevant authority lies. The result is that EU regulations “hit”  home, and home “hits” Europe in the form of scepticism about both national and EU affairs, combined with a rise of “populism”. In short, Mair states, without any mechanism for opposition, we lose voice and by losing voice, “we lose control of our own political systems”, both national and European.

The Schäfer/Streeck volume, Politics in the Age of Austerity, argue along very similar lines: democracy depends on choice, they point out, and citizens influence the policy of governments through elections. This no longer holds because neo liberalism reigns, and with it the markets. The financial markets, we learn, caused the global recession, and the gamble by the EU is to hope that austerity will help economies “adjust” in the longer term. The authors rightly question whether this will be so, and go on to fear that decades of work to seek a common European interest will be lost. Better to have diluted democracy, Colin Crouch writes, in the EU, than a stronger national democracy that is ineffective at tackling issues that are beyond its geographic reach.

What conclusions can be drawn about the state of European social democracy from these two books? The first is their conviction that the dragon to slay in European politics is “nationalism”.  European nationalisms are identified as the source of Europe’s two world wars, to which the antidote is internationalism. Europe in the form of the EU is the answer to both.  The nations of Europe are too small, the argument runs, to deal with global challenges, like climate change, and have to be superseded by a new polity, run by people who know that their project is in the long run interest of the peoples, whatever populist demogogues may say. The champions of Europe must soldier on, regardless of the flack that comes their way. If opponents win out, and Europe recedes into its narrow nationalisms, the continent will become a backwater, a subject of world politics, a museum to a great past.  At its extreme, the EU project, it is implied, requires heroic action to succeed.

The second is the conviction that markets are the problem. There is no sense of how politics has shaped global markets: that it was politics that created the Euro; that the dollar standard since 1971 is the US answer to determined Japanese, then Chinese mercantilism; that the size of the foreign exchange markets is directly linked to the increase in the number of states with their own currencies  since 1945 from 51 to 190 in application of President Wilson’s ideal of a world made up of self determined peoples; that the growth in  the size of the world bond markets is due to the half century of determined deficit spending by rich world country governments, notably social democratic ones. Now, we are assured, capitalism reigns, especially financial capitalism, and its handmaiden, “neo-liberalism”.  World affairs are conducted by a small political and economic élite, far removed from popular controls. These arguments have political traction, echoing much of what social democrats, and Lenin, wrote about prior to 1914.

The third factor is the merger of the traditional strands of the left around a European project that is, from the S and D perspective,  the only one capable of constraining capitalism, and overcoming Europe’s inherited kleinstaaterei. Unfortunately, this project, as Mair points out, comes into its own at a time that the age of party democracy has passed, and democracy is the only game in town. The EU may be, as Mair suggests , a political system, which extracts resources,(for instance, national budgetary contributions); regulates behavior(failing to dredge the Somerset Levels, for instance, in favour of promoting wetlands as bird sanctuaries); responds to demands(but has a tin ear to multiple signals than national polities do not want to be hollowed out); and seeks to symbolize values and to create a new European identity. But it fails, as Mair rightly identifies, because national states remain the only viable source of authority, however sceptical voters have become of all politics. The implication, not spelt out in Mair’s book, is that the EU, and its coterie of bien pensants, are busily sowing the dragons teeth of  “populist” opposition. Nigel Farage’s simple message is: “ I want my country back”. He is not alone.

But it is in the fourth conclusion I draw from these books where they help to explain, as much by omission as by commission, why social democrats have not prospered in the European crisis since 2008. Social Democrats helped to  create the Euro; they militated for bloated budgets; they legislated for rigid labour markets; they backed open borders and immigrants; they enthused about climate change, without regard to US or Chinese deep hostility to binding international commitments; EU social democrats in particular enthused about the German model for the EU. Yet it was a Social Democratic government in 2002, which implemented the labour market reforms in Germany that have since then helped to consolidate German primacy, if not hegemony, on the continent. The balance of power among major European states is once more visible: it does not feature in these two books.

It does not because social democrats are embarrassed about talk of the re-emergence of Europe’s traditional state system, and prefer to shroud themselves in internationalist ideals. But which internationalism? EU brothers and sisters are scarcely suffering together in the age of austerity: in fact, northern brothers and sisters have taken to telling their southern brothers and sisters to tighten their belts, lower their wages(by sometimes up to two thirds or more compared to 2008), and sit out unemployment. As always, national labour market institutions in effect compete for the business of multinational corporations. And there is no love lost among social democrats for global financial markets. EU social democrats form part of a  long tradition across the continent of hostility to capitalism, particularly financial capitalism, with its evident association with the symbols of New York and London and their inhabitants. This is the space which they share with the radical populists social democrats claim they oppose. They oppose radical populists in the name of “Europe”, hence their hostility to Europe’s financial centre in London.  But  because the EU is their answer to Europe’s ailments, they have become enthusiastic members of the distant élite, part of the problem, not the solution.

In the early twentieth century, when party politics was in its heyday, social democrats backed democracy. This is no longer the case. The heart of democracy as a form of government is debate, and opposition. Mr Steinmeier says he brooks no opposition from nationalists. In Europe’s present condition, that is where opposition to the EU project is most active. The May 2014 elections to the European parliament will show how active they have become.

About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) ( His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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1 Response to European social democracy: facing the void in an age of austerity.

  1. Pingback: A supranational Europe or a European alliance of constitutional states: a review of Robin Niblett’s, Britain, the EU and the Sovereignty Myth, Chatham House, The Royal Institute of International Affairs. | Writing about history, politics & econo

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