Essentially, the project of social democracy is to make sure that unrestricted citizenship for all is made compatible with the dynamics of a market economy. Within that economic order, each and every citizen is to be guaranteed the same economic, social, and political rights. Here it is crucial to recall that this project came to fruition at a time in which a paradigm shift in the evaluation of social inequality was already underway. The poverty of any given individual cannot be explained satisfactorily by attributing it solely to that person’s failings, an explanation dear to the hearts of conservatives. Poverty is also the outcome of problems caused by the system in which it arises. Hence, it is important to create conditions that make possible greater equality of outcome or at least greater equality of opportunity.
This paradigm shift in the way that poverty and inequality were understood laid the foundation for the creation of the social welfare state, a redistributive tax system, and growing regulation of the free market, just to mention the most important social democratic achievements.
Even today this founding principle of social democracy has lost nothing of its validity, although new kinds of challenges make it necessary to come up with different problem-solving approaches. One such challenge is to be found in globalization, a phenomenon that has been proceeding apace since the nineteenth century. Today, social democracy can be implemented effectively only if nation-states can reach agreement about a broad range of trans-border political instruments. Such multilateral collaboration is the only source from which standards might emerge that might be capable of regulating and preserving the global financial system, international trade and its cash flows, and the labor market with its migratory movements, as well as labor and environmental standards, and intellectual property regimes.
Social Democrats Must Fight For Their Own Agenda
When we consider the current political agenda of the United Nations (Millennium Development Goals, Sustainable Development Goals, climate change accords, WTO agreements) or that of the G20 (regulation of financial markets, strategies for growth and development), it quickly becomes apparent that the social democratic project has fallen far short of achieving its aims in the European Union. The conservative parties argue that national states have a limited sphere of responsibility: adapting to globalization and enacting the structural reforms needed to do so. If the conservative viewpoint were to prevail, national states would have to dismantle the social welfare state and rescind many market regulations. As a rule, such measures would lead to greater social inequality both within and among states. Social democrats cannot evade the discussion about necessary reforms. They must acknowledge that changes are necessary to meet the challenges of globalization. But they must fight for their own agenda, which would focus on improving the economy’s growth potential, enhancing sustainability, and reversing social inequalities. A reform plan of this kind will have to set aside the requisite investment funds for future-oriented development.
Social democracy always has been a crucial source of ideas and impetus for European integration, yet it also has helped to erect protective barriers against fluctuating global forces and constraints. Social democratic ideas have contributed much to the gradual creation of an open yet still regulated European market, a common trade policy within the EU, as well as a shared framework for European models of social policy and European institutions designed to broker common, trans-border interests. Of course, in this process the social democratic model always had to confront other political approaches, but in the main its impact on all participating countries has proven to be positive.
The Demise Of The Win-Win Situation
However, this win-win situation evaporated for all the member states of the European Union in the wake of the recent financial crisis, especially that of the eurozone. From that point on, the policy of trying to rescue the euro and European integration has led to an increase in social inequality both within and among the individual member states.
Conservative parties like to shift the blame for these trends onto those citizens and member states that allegedly have not tried hard enough to address their own problems. Here too, the social democratic perspective necessitates a second look at the usual conservative explanation. What if citizens or states make major efforts to extricate themselves from the tough spot they are in, but fail? This may happen for any number of reasons: They may not have access to the loans they need to make crucial investments, or they may lack the financial leeway to carry through the investments they have already begun, or perhaps they are no longer able to compete on global markets, lack access to health care services, or find that their most talented young people have left the country to pursue better career and life opportunities abroad. And what if all of these problems occur at the same time?
In fact, this very scenario has played out in several regions and countries of Europe, especially those in which the eurozone crisis has hit hardest. Under these circumstances, the social democratic project can no longer be achieved. Almost inevitably, then, political support for social democracy will evaporate in precisely those regions and countries.
So what can social democrats do in countries where they still participate in government, at least for the time being? To begin with, of course, they should fight for their own agenda, and that of their electoral base in their home countries. But that alone is no longer enough. Sooner or later, the decline of social democracy in other member states will ultimately lead to the dismantling of social, financial, and environmental standards across the entire European internal market. Eventually, these upheavals will undermine the social welfare state, regulation of market competition, and higher social standards even in countries in which social democratic parties still have some influence on government. For that reason social democrats in Europe must take joint action. Social democracy will not survive on this continent unless European integration is pushed to a higher stage. Thus, the social democratic agenda calls for the expansion and rebalancing of the economic and fiscal union combined with a deepened and more fully democratized political union. These considerations are especially important in Germany, the cradle of social democracy.
If social democracy is to survive, the need for fair treatment of all member nations within the European Union ought to suffice to convince social democrats across all national boundaries that a change of course in the eurozone is urgently necessary. The eurozone should see to it that policymaking responsibilities in the financial markets, the economy, and social and political matters are coordinated, not allowed to drift apart as they are now. That would entail not merely the full implementation of the banking union, but also intensified coordination of economic policies designed to boost demand, as well as the development of a broadened, tax-supported European financial policy. This new financial resource could facilitate the merging of structures by supporting reforms and investments while sheltering member states from economic shock waves. All this presupposes enhanced coordination and consolidation of taxation in Europe.
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Unquestionably, an evolution of this kind cannot be achieved unless democratic legitimacy is enhanced and citizens are more fully included. What arguments might social democrats marshal, especially in Germany, to gain broader support among the voters? I have sketched out a few of the central lines of argument in the following list:
- The euro’s exchange rate is an especially important issue for Germany.
- Germany’s economy benefits more than others from the European single market.
- The German economy would suffer if Germany were surrounded by countries in recession.
- The German welfare state system could come under pressure if (internal European) migration continues to increase.
- High unemployment figures and social tensions in other countries undermine the political acceptance of European integration generally.
- That, in turn, weakens Europe’s cohesion and thus its geostrategic influence.
- Europeans will have to close ranks to deal successfully with growing external challenges.
We need new lines of argument to ensure the future of social democracy in Europe. Europe needs a New Deal, which can only be negotiated by social democrats.
This article was first published in the international edition of Neue Gesellschaft/Frankfurter Hefte
Maria Joao Rodrigues is Professor of European Economic Policy at the Université Libre de Bruxelles (ULB) and Vice-president of the Progressive Alliance of Socialists & Democrats Group in the European Parliament.