JEREMY RIFKIN LOSES THE PLOT
In an article published recently in the Guardian, economist Jeremy Rifkin - the idiot who forecast the coming of a logical impossibility (the 'hydrogen economy') and who recently established his bona fides to pontificate about European issues with his well-received book The European Dream - wrote that 'the current economic debate in Europe threatens to polarize public opinion - pitting unrestrained market forces against the bureaucratic dictates of a welfare state.' Rejecting such a polarization, he argues that the 'task at hand is pursuing an intelligent and sophisticated course that maintains a balanced tension between the entrepreneurial spirit of capitalism and the social solidarity of socialism without either vision vanquishing the spirit of the other.' His conclusion is that 'A reformed European social economy that allows both aspects of human behavior to flourish is a model for the rest of the world to follow.' Rifkin may not realize it, but he is only making the same point as Tony Blair when he declared this week that 'The issue is not between a free-market Europe and a social Europe' but the creation of a modern social Europe.
The problem with such rhetoric, however, is that 'social Europe' as it exists today already represents the minimal tolerable version of a social democratic vision of Europe. That Rifkin and Blair can talk as if reform were possible without totally betraying the idea of social Europe shows how very little they know about its present, greatly reduced state. They seem to be alluding to an idealized version of social Europe which continues to haunt the business press like a never-forgotten nightmare but which can no longer be found anywhere in reality, with the possible exception of the Nordic countries.
The rhetoric of EU reform emanating from people like Blair and Rifkin has to be rejected because it is utterly ahistorical. Blair and Rifkin would have us believe that there is some objectively definable entity that can be labelled social Europe which suffers from a congenital inability to change and which must do so urgently now or else it will 'fail' or 'die.' Such rhetoric is altogether unfounded, not least because there have already been thirty years of public sector cutbacks and welfare state reform in Europe, all of which were supposed to have helped it on its way to economic nirvana.
One of the obvious areas in which extensive reforms have taken place is unemployment compensation, which neoliberal commentators are addicted to stigmatizing as overgenerous. However, net replacement rates have been falling in most European countries for 20-25 years. In the Netherlands, for example, the rate peaked at 89.5 percent in 1978, while Denmark’s replacement rate peaked at 84 percent in 1983, France’s at 76 percent in 1987, and Sweden’s at 86.5 percent in 1988. No European country has replacement rates like that today. (The highest rate is in Switzerland where the figure is around 76 percent.)
The scholarly literature on European welfare state retrenchment is vast, but it seems to have altogether bypassed Rifkin and Blair, who only demonstrate their lack of credibility as commentators on the state of Europe by continuing to think of Europe as it was a generation ago. Neoliberal reformism having been pursued relentlessly for thirty years - particularly intensely in the 1990s - there is today really very little socialistic left about Europe. In most European countries, the social democratic vision has been pared down to a modest welfare buffer which only looks impressive once it is contrasted with the pathetic excuse for a social safety net that exists in the English-speaking countries. Viewed in an objective and unsentimental fashion, the European economy features a few more concessions to social democracy than have been made in the English-speaking capitalist countries.
What's more, wages have collapsed throughout continental Europe over the last ten years. In 1995, hourly compensation costs per worker were higher in Italy, France, the Netherlands, Belgium and Germany than in the U.K. Today, costs are lower in Italy, exactly the same in France, while the gap between British and Dutch, Belgian and German costs have been greatly reduced. The following table shows the extent of the difference for workers employed in the manufacturing sector between 1990 (the blue bar) and 2000 (the brown bar):
This chart shows that the crucial year was 1999-2000, when hourly costs per manufacturing worker fell from seven dollars above the U.S. to seven dollars below:
Costs per worker were therefore already lower in Europe than in the U.S. in 2000 than they were in 1995, and have only fallen further in the last five years. Indeed, by 2003 hourly labour costs were virtually identical in France, Germany and the U.K.:
It would therefore be absurd to suggest that Europeans are any longer the beneficiaries of overgenerous welfare systems and high wages. To talk about Europe in such terms is to be talking about something that essentially vanished between 1995 and 2000.
Because the differences between the European and the Anglo-American economic models are now extremely modest, calls for the creation of a 'modern' or 'reformed' social Europe are clearly disingenuous. Further reform can involve nothing less than the wholesale imposition of the Anglo-American model. Blair is trying to fool his European audience when he suggests that this is not his aim. He is doing his transparent old trick of mouthing social democratic platitudes as a means of greasing soft-headed social democrats up for the frying pan.
It seems to me that Rifkin, whether he realizes it or not, has fallen into the trap by which Blair and the neoliberals plan to do away with Europe's modest welfare buffer altogether. Anyone who lends the least support to the idea that Europe needs to reform itself is effectively complicit in a massive brainwashing exercise according to which people are supposed to delete from their memory cells the fact that Europe has already seen extensive economic reform. The reasons such apologists for neoliberalism as Blair and Rifkin continue to talk about reform as if there hadn't been any are twofold. First, they don't want Europeans asking the obvious question, which is what the point of all that reform in the past was, if it hasn't helped Europe improve its international competitiveness. Second, they want to distract the European public from the fact that, for neoliberals, no amount of reform is ever enough. The reform du jour is always the one that will usher in the millennium. As for the reforms of the past - well, just forget all about them. Pretend they never happened.
So now, as Blair turns the heat up on the social model he claims to be unsustainable in the 21st century, it's time Europeans began asking hard questions about the reforms elite commentators insist they need. For example, how helpful have cutbacks in unemployment benefits been? As we saw above, they have been falling throughout Europe since the 1970s. Yet despite the decline in net replacement rates – the most drastic reduction on the European continent took place in Denmark, where between 1983 and 1999 they fell by 20.5 percent - unemployment rates have continued on a broadly upward, rather than downward trend. On this basis, there is not the least reason to assume that further reductions in benefits will lead to substantial reductions in unemployment. The question has to be asked whether further welfare retrenchment will have any beneficial effects at all.
At this point, it should be readily apparent what the neoliberal game plan is. Make a great fuss about this or that reform then promptly forget about it once it's been achieved. Never give anyone time to stop and think, lest they ask the question why the reform that was once so urgently needed has failed to generate the anticipated results. Just shift the conversation to the next reform and tell Europeans that they need it urgently or else they will go to hell in a hand basket. Once that reform has been implemented, tell them about some other reform they need urgently, lest they go to hell in a hand basket. And so on, ad infinitum.
In short, neoliberals live in a kooky Alice in Wonderland world where there is always jam tomorrow, but never jam today. Empty promises are, in fact, all they have to offer Europeans. What Europe needs today are not further concessions to 'entrepreneurialism' (which is actually in a better condition in Europe than in the Anglo-American world, whose economies are actually fuelled by housing bubbles, easy credit, imperialism, armaments exports and financial speculation) but obdurant and unyielding insistence upon preserving the pitifully few concessions to social democracy that Europeans have managed to wring out of capitalists in the last sixty years. There is nothing Europeans need to give up. Not a damned thing. They have already given up far too much.
NB: Superb commentary on Blair's attack on Europe by Chris Marsden here and Julie Hyland here. Finally, for those who don't already know, the real cause of the EU's economic ills, especially Germany's, is not overly generous social arrangements but an overvalued Euro.
The problem with such rhetoric, however, is that 'social Europe' as it exists today already represents the minimal tolerable version of a social democratic vision of Europe. That Rifkin and Blair can talk as if reform were possible without totally betraying the idea of social Europe shows how very little they know about its present, greatly reduced state. They seem to be alluding to an idealized version of social Europe which continues to haunt the business press like a never-forgotten nightmare but which can no longer be found anywhere in reality, with the possible exception of the Nordic countries.
The rhetoric of EU reform emanating from people like Blair and Rifkin has to be rejected because it is utterly ahistorical. Blair and Rifkin would have us believe that there is some objectively definable entity that can be labelled social Europe which suffers from a congenital inability to change and which must do so urgently now or else it will 'fail' or 'die.' Such rhetoric is altogether unfounded, not least because there have already been thirty years of public sector cutbacks and welfare state reform in Europe, all of which were supposed to have helped it on its way to economic nirvana.
One of the obvious areas in which extensive reforms have taken place is unemployment compensation, which neoliberal commentators are addicted to stigmatizing as overgenerous. However, net replacement rates have been falling in most European countries for 20-25 years. In the Netherlands, for example, the rate peaked at 89.5 percent in 1978, while Denmark’s replacement rate peaked at 84 percent in 1983, France’s at 76 percent in 1987, and Sweden’s at 86.5 percent in 1988. No European country has replacement rates like that today. (The highest rate is in Switzerland where the figure is around 76 percent.)
The scholarly literature on European welfare state retrenchment is vast, but it seems to have altogether bypassed Rifkin and Blair, who only demonstrate their lack of credibility as commentators on the state of Europe by continuing to think of Europe as it was a generation ago. Neoliberal reformism having been pursued relentlessly for thirty years - particularly intensely in the 1990s - there is today really very little socialistic left about Europe. In most European countries, the social democratic vision has been pared down to a modest welfare buffer which only looks impressive once it is contrasted with the pathetic excuse for a social safety net that exists in the English-speaking countries. Viewed in an objective and unsentimental fashion, the European economy features a few more concessions to social democracy than have been made in the English-speaking capitalist countries.
What's more, wages have collapsed throughout continental Europe over the last ten years. In 1995, hourly compensation costs per worker were higher in Italy, France, the Netherlands, Belgium and Germany than in the U.K. Today, costs are lower in Italy, exactly the same in France, while the gap between British and Dutch, Belgian and German costs have been greatly reduced. The following table shows the extent of the difference for workers employed in the manufacturing sector between 1990 (the blue bar) and 2000 (the brown bar):
This chart shows that the crucial year was 1999-2000, when hourly costs per manufacturing worker fell from seven dollars above the U.S. to seven dollars below:
Costs per worker were therefore already lower in Europe than in the U.S. in 2000 than they were in 1995, and have only fallen further in the last five years. Indeed, by 2003 hourly labour costs were virtually identical in France, Germany and the U.K.:
It would therefore be absurd to suggest that Europeans are any longer the beneficiaries of overgenerous welfare systems and high wages. To talk about Europe in such terms is to be talking about something that essentially vanished between 1995 and 2000.
Because the differences between the European and the Anglo-American economic models are now extremely modest, calls for the creation of a 'modern' or 'reformed' social Europe are clearly disingenuous. Further reform can involve nothing less than the wholesale imposition of the Anglo-American model. Blair is trying to fool his European audience when he suggests that this is not his aim. He is doing his transparent old trick of mouthing social democratic platitudes as a means of greasing soft-headed social democrats up for the frying pan.
It seems to me that Rifkin, whether he realizes it or not, has fallen into the trap by which Blair and the neoliberals plan to do away with Europe's modest welfare buffer altogether. Anyone who lends the least support to the idea that Europe needs to reform itself is effectively complicit in a massive brainwashing exercise according to which people are supposed to delete from their memory cells the fact that Europe has already seen extensive economic reform. The reasons such apologists for neoliberalism as Blair and Rifkin continue to talk about reform as if there hadn't been any are twofold. First, they don't want Europeans asking the obvious question, which is what the point of all that reform in the past was, if it hasn't helped Europe improve its international competitiveness. Second, they want to distract the European public from the fact that, for neoliberals, no amount of reform is ever enough. The reform du jour is always the one that will usher in the millennium. As for the reforms of the past - well, just forget all about them. Pretend they never happened.
So now, as Blair turns the heat up on the social model he claims to be unsustainable in the 21st century, it's time Europeans began asking hard questions about the reforms elite commentators insist they need. For example, how helpful have cutbacks in unemployment benefits been? As we saw above, they have been falling throughout Europe since the 1970s. Yet despite the decline in net replacement rates – the most drastic reduction on the European continent took place in Denmark, where between 1983 and 1999 they fell by 20.5 percent - unemployment rates have continued on a broadly upward, rather than downward trend. On this basis, there is not the least reason to assume that further reductions in benefits will lead to substantial reductions in unemployment. The question has to be asked whether further welfare retrenchment will have any beneficial effects at all.
At this point, it should be readily apparent what the neoliberal game plan is. Make a great fuss about this or that reform then promptly forget about it once it's been achieved. Never give anyone time to stop and think, lest they ask the question why the reform that was once so urgently needed has failed to generate the anticipated results. Just shift the conversation to the next reform and tell Europeans that they need it urgently or else they will go to hell in a hand basket. Once that reform has been implemented, tell them about some other reform they need urgently, lest they go to hell in a hand basket. And so on, ad infinitum.
In short, neoliberals live in a kooky Alice in Wonderland world where there is always jam tomorrow, but never jam today. Empty promises are, in fact, all they have to offer Europeans. What Europe needs today are not further concessions to 'entrepreneurialism' (which is actually in a better condition in Europe than in the Anglo-American world, whose economies are actually fuelled by housing bubbles, easy credit, imperialism, armaments exports and financial speculation) but obdurant and unyielding insistence upon preserving the pitifully few concessions to social democracy that Europeans have managed to wring out of capitalists in the last sixty years. There is nothing Europeans need to give up. Not a damned thing. They have already given up far too much.
NB: Superb commentary on Blair's attack on Europe by Chris Marsden here and Julie Hyland here. Finally, for those who don't already know, the real cause of the EU's economic ills, especially Germany's, is not overly generous social arrangements but an overvalued Euro.
