The European Project: Dismantling Social Democracy, Globalising Neoliberalism

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There are also other areas where elements of the EU and Member State governments may promote the interests of the Union in its own right – as a global ‘player’ – even when there are no direct corporate interests at stake. An example is the evident determination of some figures to develop a European military capacity, at least partially distinct from that of the US (Storey, 2002). Two EU Commissioners have recently proposed that the EU invest €2 billion per annum in defence and security research (Castles, 2004). While European military capacities might ultimately be used to further the economic agenda of European business interests, and while European armaments companies would expect to be beneficiaries of increased European military spending, this is an element of the European project that cannot be explained simply in terms of corporate lobbying and political response – the agenda, for some, is longer-term and more strategic than that.

More broadly, while Hocking and McGuire may overstate their case somewhat by referring to relative state autonomy, there is no doubt that the European ‘state’ (used here to describe an interlocking set of Member State and EU institutions) remains an important actor in the emerging pattern of European regionalism. While the overall trend may be towards deregulation and liberalisation, these processes in themselves require extensive state action and oversight. Vital state roles include:

  • The initiation of actions under EU competition law;

  • The initiation of actions against illegal state aids;

  • The maintenance of an anti-inflationary monetary policy;

  • The policing of the terms of the Stability and Growth Pact;

  • The conduct of trade negotiations vis-a-vis the WTO, the GATS and the EPAs, amongst other fora.

In each of these areas, the European state (whether it is the Commission, the ECB, or some other agency) exerts important regulatory influence. It is therefore inaccurate to characterise European regionalism as a simple triumph of the market over the state. Rather, the role of the state has been reworked to become an essentially (and essential) disciplinary agent in the advancement of the neoliberal agenda, while some of its other functions (including the provision of social services and supports) have been eroded. Thus, the state remains an important site of political struggle (see below).

The question of democracy

“’Europe’ provides the framework for economic adjustment based on law and controlled by state bureaucracies and big capital. It focuses economic policy as a technocratic exercise that regulates market freedom through institutionally ‘embedded’ and constitutionally safeguarded ‘rules’ which stand apart from mass democratic influence” (Bonefeld, 2002: 129).

Many commentators would accept, as the preceding section concluded, that the state remains an important actor, but go on to argue that the capacity of European citizens to change state policy is itself diminished by aspects of the European project. This argument is, in essence, that the EU suffers from a so-called ‘democratic deficit’. Part of the problem is, for example, the power wielded by behind-the-scenes corporate lobbyists, as discussed above; of course, lobbying happens at the national level also, but large corporations are usually best placed to maintain a permanent lobbying presence in Brussels and Strasbourg (Balanyá et al, 2000; McGiffen, 2001: 139). The fact that this lobby power operates through decision-making structures that are often lacking in transparency aggravates the problem – EU trade policy formulation provides a particularly egregious example of non-transparency (Worldwide Fund for Nature, 2003).

The fact that the ECB – “an unelected board of central bankers, one of the narrowest ruling élites in recent history” (McGiffen, 2001: 141) – is independent of popular or electoral pressures is also sometimes cited as an example of the democratic deficit. On the other hand, the Irish Central Bank, when it determined interest rate and other elements of monetary policy, was not, in theory, subject to such pressures either, so the mere fact of the transfer of power from the national to the regional level is not, in itself, a defeat for democracy. However, what the transfer of power upwards in this case ensures is that no individual Member State can respond to popular pressure by making ‘concessions’ in the area of monetary policy (and the SGP partially helps ensure that the same is true for fiscal policy). Most starkly, the euro ensures that devaluation is off most national agendas. The significance of the transition – from the national to the regional – is explained by Bonefeld (2002: 132-3):

“The importance of EMU, then, is not that it makes democratically unaccountable what previously had been democratically accountable... Rather, the importance of EMU is that national states, on their own initiative, will no longer be able to accommodate class conflict through credit expansion or currency devaluation. EMU, then, inscribes the neo-liberal policy of market freedom... through the creation of supranational institutional devices that check expansionary responses to labour conflict”.
In other words, the structure of European regionalism in theory ensures that no one state can go ‘soft’ and make concessions to its own working class (though debates on the SGP rules show that this is not entirely how things work out in practice). Instead, adjustment costs must be borne through adjustments in wages and in the ‘social wage’ of the welfare state. McGiffen (2001: 91) quotes an approving neoliberal economist: “Either the euro subverts the welfare state, or Europe’s welfare state will subvert the euro... [S]mart money should bet on the euro”.
A further element of the ‘democratic deficit’ may be seen in the tendency of European-level institutions to exercise power in a technocratic manner. Thus, significant areas of, especially economic, policy are decided upon not by democratic discussion and debate, but by administrative fiat. Competition policy, state aid rules, the appropriate level of the interest rate and many other matters are all now largely determined by technical ‘experts’ operating in a supposedly neutral realm of objective facts and data. To that extent, there has been a shift to the democratically unaccountable from the previously democratically accountable, to use Bonefeld’s phrase (see above). This is, arguably, part of a wider phenomenon through which the “room for real political change has been displaced by a technology of expertise” (Edkins, 1999: xii), and its discursive dimension is discussed further below.5
Andrew Moravcsik takes up this theme, but in the context of a spirited defence of the EU. Moravcsik (2002) argues that most governments commonly delegate certain functions to bodies (civil services, courts, etc.) that are not democratically elected and whose roles are shielded from public debate, and sometimes even public scrutiny. He goes on to claim that the EU simply specialises in such functions – including central banking, economic negotiations with third parties, administration of commercial law, and others – so that its apparent lack of democratic accountability is simply a function of a division of labour within the EU’s system of governance. If carried out at the national level, the EU’s main functions would, it is argued, also be outside political contestation.
Moravcsik’s is an interesting but ultimately unpersuasive argument. To take one example, by institutionalising deficit spending limitations within the terms of the SGP, the European project aims to deny European people the right to democratically debate matters such as whether deficit spending, above a certain level, should be encouraged in the context of a recession. True, this power was handed to the EU by democratically elected governments, but the fact remains that it has resulted in closing off space for democratic debate of this important issue, amongst others. EMU, as McGiffen (2001: 64) puts it, “abolished the tiresome influence of popular, democratic institutions on macro-economic policy”.
The European project also ensures that EU citizens cannot choose to elect a government that wishes to limit the scope of EU competition policy; that wishes to see substantial increases in state aid to industry; that does not want to enter into reciprocal free trade agreements with third countries; or that wants to stimulate the eurozone economy through exchange rate devaluations or interest rate reductions. Or, more precisely, they cannot choose to elect a government that wishes to pursue such an agenda and remain a Member State of the EU, as currently constituted. Again, these restrictions are in place because Member State governments put them in place, but the end result is that no European electorate now has the option of changing those policies by electing an alternative government. Even if a government with a radical reform agenda vis-a-vis the EU (such as a commitment to bringing the ECB under democratic control) were to be elected it could not unilaterally alter the rules of the EU and thereby respect the wishes of its voters. At best, it could engage in a debate with other EU governments, but this means that electoral mandates become aspirational rather than directly deliverable. In this way, democratic choice is substantially narrowed by the European project.
An additional dimension of the problem, and one already adverted to, is the discursive construction of the appropriate realms of the ‘political’ and the ‘technical’. An increasing range of decisions is being progressively removed from the realm of the ‘political’ and transferred into the realm of the ‘technical’ (Edkins, 1999). This does not, in practice, make them non-political matters – the level of the exchange rate and the interest rate, for example, have important distributional consequences. But it does serve to limit the public’s very right to even discuss issues that are portrayed as inappropriate subjects for public debate (such decisions being best left to the ‘experts’). Thus, policies are not only politically and legally ‘locked in’, they are also discursively locked in.
In particular, neoliberal policies are increasingly regarded, within élite circles especially, as ‘common sense’ or self-evident nostrums – mere technical (rather than political) solutions to technical problems (Holman, 2001: 173). Discourse analyst Ruth Wodak dissects the formulation of an EU policy paper on employment: her linguistic study reveals a strong emphasis on the part of the paper’s drafters of the need to persuade people of the merits of a more or less agreed (amongst the ‘experts’) position regarding flexible labour market responses to globalisation. Within this discourse, “experts act rationally, whereas the ‘European citizens’, the non-experts, act irrationally” (Wodak, 2000: 191). The role of the citizens is simply to be persuaded of the arguments of the experts, and the only role of politicians is to better engage in that task of persuasion. This type of approach results in a restricted and debilitated version of democracy.

Tensions and resistances

“the mainly ideological construction of a European Social Model allows European states to point to the allegedly inferior pure market economy of the United States. Paradoxically, however, the very notion of any sort of social model raises the expectations of ordinary people concerning the level of employment, social security and labour standards. These raised expectations stand in stark contrast to the EU’s practice of promoting greater competition among working people as well as the unemployed in order to drive down their standards of living. The contradiction between expectations and everyday experience has produced a crisis of legitimacy for European integration” (Schmidt, 2003: 43).

The EU is, in large part, a mechanism for the transmission and institutionalisation of neoliberalism – within and beyond Europe. If the EU did not exist, doubtless there would be (and already are) other transmission and institutionalisation mechanisms. The argument of this paper is not that the EU is the sole agent responsible for the dismantling of social democracy in Europe and the globalisation of neoliberalism. But it is one such agent, and a significant one in many respects. On the other hand, it is by no means all-powerful.
The ECB has ignored calls from some leading European politicians, and even some sections of European business, to lower interest rates (, 4th March 2004; Carter, 2003), but neither the French nor the German governments have been able to keep their budget deficits within the terms set by the SGP. This reflects the failure to persuade the populations of those countries that they must accept the dictates of European ‘disciplinary neoliberalism’ (Gill, 2001). The goal of EMU – to put in place regional institutions to ensure that national states cannot make their own compromises to class conflict (Bonefeld, 2002: 132) – has not been fully realised.
Gill (2001: 65) notes the opposition of powerful public service workers in France and many German unions to the expenditure cut-backs mandated by the SGP criteria. Chancellor Schröder’s proposed economic reforms have had to be substantially watered down in the face of trade union (and other) opposition (Guardian, 17th December 2003). Italian workers in their millions have successfully protested against proposed new anti-labour legislation (Petras, 2003: 186). The point made by Schmidt in the quotation that opens this section is reinforced by Gill (2001: 65) – that because most Europeans (though this is by no means exclusive to Europeans) are still stubbornly attached to social solidarity, the EU’s erosion of the mechanisms of solidarity confronts it with a fundamental legitimacy crisis.
The disjunction between the idealised vision of Europe propounded by Habermas and Derrida, and discussed extensively at the outset of this paper, and the reality of neoliberal regionalism is stark and politically destabilising. This disjunction was evident at a January 2004 meeting of EU employment and social ministers in Galway, where anti-poverty campaigners pointed to the “absolute contradiction” between stated aspirations towards a European social model and the reality of cut-backs in social assistance in Ireland and a number of other Member States (Dooley, 2004).
Some Member State governments have sought a way around their problems by using the EU as an alibi for the imposition of austerity policies: “an anti-labour policy wanted by national governments (on behalf of their capitals) is disguised as if it were an economic policy imposed by some distant bureaucracy, for which the member states are not responsible” (Carchedi, 2001: 139-40). But, insofar as this tactic is successful, it further undermines the European project in the eyes of EU citizens, who further identify the EU with globalisation and neoliberalism.
Other contradictions and tensions abound. The EU and the US, as adverted to earlier, are engaged in a variety of trade disputes that could yet escalate and undermine the corporate alliances that currently span the Atlantic, thereby eroding the level of economic support for globalisation and leading business leaders on both sides to call for resistance or defensive regionalism in the form of retaliatory trade sanctions or other measures. For example, The US Senate majority leader has described the EU Commission’s fining of Microsoft for anti-competitive business practices as the first shot in a potential trade war (Wray, 2004). Such a scenario could conceivably arise from developments in domestic US politics i.e., from forces largely outside European influence.
Tensions and contradictions create spaces for resistance, which is already occurring, as the trade union examples cited above demonstrate. The European Social Forum – an eclectic mixture of socialists, environmentalists, feminists, anti-war activists, and others, with 50,000 delegates gathering in Paris in November, 2003 – calls for ‘Another Europe’, an alternative to the EU’s neoliberal regionalism (Brassett, undated). What ‘another Europe’ would look like is not precisely clear, nor even agreed amongst these disparate groups, but it would certainly involve a much higher level of democracy and accountability.
In Ireland, resistance is constrained by two, closely connected factors. The first is the extent to which the EU is seen by many as a positive and progressive force (or resource) for change in Ireland. Some feminists point to the way in which EU directives on equal pay and in other areas have helped advance Irish women’s rights (Kennedy, 2003: 95). Some environmentalists point to the way in which the EU is forcing the Irish government to adopt certain environmental safeguards, though often with a large amount of Irish foot dragging: “per capita Ireland has received the highest number of legal warnings involving the bad application of EU environmental legislation” (McKenna, cited in Humphreys, 2004a; McDonald, 2003). Some animal rights campaigners extol EU initiatives on, for example, animal transport (McConnell, 2003). Many trade unionists (especially trade union leaders) see the widening and deepening of European integration as a necessary counter to the ‘American model’ of completely unregulated markets (Cassells, 2000). Some political commentators see the emergence of a European military capability as a means of advancing peace and human rights around the world (McSweeney, 2002). And some cultural commentators see Ireland’s participation in the EU as a key element in the promotion of Irish cultural openness and self-confidence (Ryan, 2000).
These are important arguments. However, alternative perspectives exist on each of these issues. For example, this paper has argued that the EU does not promote a social model distinct from the US vision of free market capitalism; rather, the EU is undermining the social protections long fought for by national labour movements throughout Europe. The EU’s environmental credentials are tarnished by factors such as its promotion of Trans European Networks, transport projects with significant environmental costs (McGiffen, 2001: 119-20), and its support for nuclear power (Ahern, 2004). Critics of EU militarisation point, amongst other things, to the extent to which Europe buttresses, rather than challenges, US military aggression (Storey, 2003). The claimed cultural gains of EU membership must likewise be set against the problems of participation in a European project that carries with it a strong sense of Eurocentrism and European superiority, of which a typical example is Commission president Romano Prodi’s assertion that Europe’s history constitutes “the richest store of culture and heritage amassed by mankind” (cited in Hansen, 2004: 58).
Nonetheless, there is no reason why campaigners against the current nature of the European project need throw the baby out with the bathwater. Where progressive gains have been made – in, for example, the advancement of women’s rights – these can be retained and extended in any recasting of the European project. Such a nuanced position vis-a-vis European regionalism may, however, encounter problems inserting itself into Irish political discourse. This is because of the second constraint to the development in Ireland of support for a radical overhaul of the European project (the development of a genuinely resistance regionalism), namely the manner in which critics of the EU are all labelled right-wing reactionaries, as has recently, for example, been done by O’Connell (2003).
Some Irish critics of the EU are obviously conservative, but, as this paper has argued, there are valid left-wing reasons for critiquing and seeking to change the current pattern of European regionalism. Not to do so merely to avoid the risk of being labelled reactionary is to participate in a discursive narrowing of the room for democratic debate, an acceptance that certain positions cannot be openly stated whatever their intrinsic merits. This, in itself, is unacceptable and deeply anti-democratic.
In many important respects, and to a growing extent, the emperor that is the European social project has no clothes – it is time to point out this nakedness and to begin the task of rebuilding European regionalism. Such a reconstituted regional model could then also become, to echo McGrew (2003), a building block of a more humane and just global order.
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