The Social Impact of the European Policies

These reflections have been made for my participation to one of the many initiatives taken to celebrate the opening year of the Treaty of Lisbon and the urgency to evaluate the social impact of European policies. On the Treaty, I limit myself to observe, that fortunately for us it has not become a Constitution as most observers expected. Otherwise, do to the sacredness that surrounds the Constitutions in the legal southern European tradition, it would be impossible today to introduce the necessary changes. Perhaps, to bring misfortune was the birth place of the Treaty, Lisbon, already known for the (in)famous Lisbon Agreement that in 2000 launched the idea of making Europe the most competitive region of the world.

The social impact of the European policies can be summarized in four points.

(I) The European welfare systems, of which is good to remember both the diversities and the common traits. In Europe, since the Second World War, existed four types of welfare systems corresponding to the four main European mesoregions: Baltic, Western, Central, and Mediterranean. The diversities are social and institutional due to the history and culture of these countries. They are reflected in: the relationship between the rights and the labour market; the universal character of the rights; the levels of institutionalization of the required function; the relationship between State and civil society (family, associations, churches, etc.); Finally, the role of the public sector concentrated on services (North Europe) or production (South Europe). The dualism between State and Market is a feature common to these systems. The State governs redistribution by the use of taxation and covers the externalizations made by production, while the Market regulates production as a source of product value and employment. EU has adopted dualism and enforced it, trying to overcome diversity with the help of integration policies. At the end of the route it fails on both fronts. Dualism has been transformed from welfare in workfare and finally in warfare. The integration of the welfare forms and rules (e.g. the flexicurity) leads to their weakening or crisis, and to the EU disintegration represented by the crisis of the national states.

 (2) the EU integration policies have been pursued along four main lines of orientation:
(a) education. The basic idea is simple. The intensification and enlargement of the educational systems would produce the reduction of social differences between social groups and regions. This approach was at the center of social strategies in the Scandinavian countries during the postwar period. At the end of the 1960s, a number of researches emphasized that the increased wealth did not produce welfare, as well as the increased levels of education and research reproduces the existing  inequalities instead of reducing them because of the social and productive context it was oriented to (B. Hansen, Velstand uden Velfaerd, Kòbenhanvn). Meanwhile the strengthening of the privileged groups produced the tax revolt of the middle classes to terminate the use of redistributive taxation. The end of Social Democratic governments has its roots in these processes.

(b) Sectoral policies. The policies pursued have been organized on a high level of institutionalization which replaced the participation of civil society and segmented the population and its needs (children, young people, women, elderly, unemployed, occupied, etc.). These are the outcome of the introduction  of a functionalist model that has broken down the basic cells of community and society life into an abstract, formalised and legal form. These are not addressed to the strengthening of society basic social structures, but to control functions with the aim of integration in the framework of capitalist modernity. This form of government has been overtaken since the 1970s by the globalization power groups that have introduced the governance, i.e a segmented power system of global governance bodies - the international agencies – that controls strategic segments of life and resources of communities and States. The latter, deprived of control on these strategic segments, are obviously not able anymore to exercise their functions of government for their societies. The system of governance has become also the best EU instrument in line with globalization policies. The implemented instruments have been those of the Fund for agriculture, social fund, the Regional fund, etc.

 (c) Territorial policies. The inequalities and conflicts produced by the European  policies became clear at the end of the 1990s with the widespread awareness of the main EU’s problems: democratic, economic and social deficit. A new strategy was implemented placing at the center “the EU’s social and territorial cohesion”  to challenge the problems of regional and national territorial disruption exploded in the majority of European states. The regional dimension of the nation states, often favored by them to avoid internal fragmentation at the local level, is contrasted today by rediscovering a megaregional dimension that points to new forms of cooperation between European territories, such as  Italian Mezzogiorno, Eastern Poland and  Eastern Germany (An agenda for a reformed cohesion policy. A place-based approach to meeting European Union challenges and expectations. Independent report, by Fabrizio Barca, April 2009). However, the differences between real trends and policy proposals remain essential. The former aiming at reunifying the forms of government of the communities that are the basis of these megaregional entities.  The latter tries to manage by governance specific key areas of community life. The objective of governance is not the regeneration of new forms of government and citizens participations, but their passive adaptation to the imposed pattern of modernization.

d) The social economy. All the policies mentioned above have pursued the strategy of catching-up. It is built on the idea that it is possible to regulate and lead the economic and political processes and control the power groups by laws, rules and corrective actions. This implies to accept the externalization of social costs, and mitigate their effects with postponed interventions such as antimonopoly laws or environmental protection. . The failures of this approach are well known: from the antitrust laws in the United States at the beginning of last century, to the forms of industrialization imposed by national monopolies after the Second World War, and to the recent financial and technological speculation, etc.. The reactions are not missing and received more strength in recent decades. The social economy and civil society organizations are replacing the catching up strategy with a number of initiatives that pursue the reunification at local level of the various social, economic, and cultural dimensions. The EU participates in these processes with various forms of support and regulation (European law on social enterprise, support programs for firms with functional and social inclusion for weak groups -WISE, etc.).

(3) From the Lisbon Agreement (2000) to the Treaty of Lisbon 2009. The Lisbon Strategy, adopted by the Extraordinary European Council of March 2000, marks the alignment of EU policies to globalization and the inclusion of European powers inside its triadic power system. Europe adopts the objective of competitiveness toward the emerging countries and adheres to the industrial -financial-military system of the West. The EU’s strategic objective combines global competitiveness, knowledge economy, information society with the objectives of employment and welfare without considering the problem of compatibility between them and globalization. Despite a number of warnings about these objectives, the consensus obtained also among the European “social partners” is based on the old instrument of the dividend,  that is in the promise of concessions of participation in the spoils system. Among them the promise of a 3% per annum growth, an employment rate to 70% and 60% for women by 2010. The failure of these objectives is verifiable, as well as the success of EU’s integration in the economic, military and financial structures of globalization. However, the failures do not lead to a self-critical examination of the made choices. Structural problems and strategic choices are ignored and reduced to adjustments in the  institutional engineering. Instead of revising the very foundations of the EU by updating them to match the reality of our time, the efforts concentrate on the roof of this unstable structure by proposing a European Constitution. An objective, of course, disproportionate in relation to the real conditions of the Union and it was consequently reduced in ambitions to the approval of the Treaty of Lisbon in 2009.

(4) What to do? The Treaty has been introduced as a remedy for the the EU’s failures. Institutional reforms, leading to a more visible and transparent institutional structure should reduce the increasingly widespread complains. Among the taken measures the introduction of a President of the EU, a Vice-President in charge of EU’s Foreign Affairs and the strengthening of the Parliament role. How these newly-introduced measures have affected the operation of the EU is easy to ascertain. Nobody knows the names of these high political representatives, and the greater damage is not that we do not know them but that even presidents Hu, Obama or Putin do not. With regard to the socioeconomic aspects, the worries about financial speculation and the created social and economic crisis concern employment and the control of the financial centers. The measures introduced by these new EU’s institutions put instead a number of rigid constraints on national governments and public budgets, thereby preventing initiatives aimed to limit the damage of financial speculation. All this should be added to the measures of the European Central Bank to favor the German economy and the speculation promoted by the financial centers of London and Frankfurt. Those issues reveal the new content and meaning of the repeated objective of “enhanced cooperation”. The central role assigned by globalization to large European industrial and financial groups, and therefore to Germany and the United Kingdom, has been noted by a number of observers. German commitment to the countries affected by the crisis is in reality a way to impose the costs of the financial speculations of the German banks to the citizens of Greece and Ireland.  Furthermore, the measures of budget constraints and cuts to the social sectors imposed on these countries do not affect their high level of military expenditure for supplies provided by German industries as in the case of Greece. (“Saving the Euro”, The Economist”, November 20.2010; J. K.Galbraith, The Future of American Economy, 2010),

To exit from this situation a number of changes to the Treaty of Lisbon are required:

(I) The first concerns the rules governing the objectives and the functioning of the European Central Bank and, therefore, the National Central Banks of the individual states (section 4bis of the Treaty). The ECB, as stated in the Treaty, has a single objective: “the maintenance of price stability”. This approach has its roots in the German psychological trauma of crisis and war, but it cannot be translated into an article of the European Treaty. European countries have economies and peoples with different levels of cultural and economic theory sophistication.

(I) The second refers to the same part of the Treaty which states the independence of the European Central Bank from the governments and the political authorities of the EU. This principle, enshrined in the Constitution of some European states including the Italian one, has introduced in 1945 a rigid division and autonomy of powers, illogical but also justified by the trauma of fascism and the war. But today we speak of community regeneration and of the “common good” as the new social contract of the societies. Therefore, the idea of  separated powers within the State, independent from the forms of expression of popular sovereignty, belongs to a concept which is irreconcilable with the democratic principle that claims to protect. For the European Central Bank, and the corresponding national, it must be introduced the method of regular political control by democratic institutions such as Parliament, etc.

 (III) The third revision concerns the Euro as European currency also stated in the Treaty. However, this is a decision inconsistent with European reality. As rightly stated by Martin Wolf,: “Any currency union between different economies is inevitably a dangerous adventure. But if it is based on wrong ideas on the way in which should work, may prove catastrophic (The sole 24 ore, 24 November 2010). The diversity of the four meso-European regions therefore requires currency systems differentiated as shown by the fact that the most important European financial market remains outside the euro (London), and that Denmark and Sweden do likewise. Therefore, it is as necessary that a new European initiative for the creation of a Euro Mediterranean monetary system is established in the southern European countries (France, Italy, Spain, Greece,Portugal).

Finally it is evident that, as previously said, the entire institutional structure of the EU must evolve from the current federal structure of 27 member states to a Confederate structure based on four federations of Member states corresponding to the four meso-European regions.

,* Centro Studi Federico Caffè