Europe and the Common Weal

Next year will see us going to the polls twice in Scotland. Firstly, to vote in the European Parliamentary election and then, three months later, in the Scottish Independence Referendum. The proximity of these two elections is surely too close to miss the opportunity of trying to sew a seamless cloth, a political strategy, embracing both events.

The need for policies with a broad appeal has been problematic for the EU since Harold Wilson’s ‘re-negotiation’ in 1975. When the European Parliament was democratically elected in 1979 it soon became apparent to the political groups that formed that Parliament that more emphasis would be required on the so-called flanking measures of social legislation to protect citizens from a race towards the bottom in the borderless competitive market that was being created. Hence the social charter was proposed.

Now that we are in austerity time which has revealed that deregulated markets don’t do it for the EU’s citizens (not only that but also the fact is that they don’t do it for the EU’s economy either) and yet the right in EU politics claim that the welfare society is an excessive burden whereas I would argue that it is an added value and not “something for nothing.”

A household in Sweden spends 41 per cent on social protection, and a household in the US spends almost 40 per cent. This tells us there is a choice in these matters, not between high and low costs, but between a more uneven, or a less uneven distribution of income and opportunities.

It is time for the fight back and what better vehicle to use than the European Elections next year. In the political debate in Europe, we hear the argument, from the right, that the welfare society is a heavy burden. From the left, the criticism is that the welfare society has left those in need in poverty and exclusion.

If these two opinions are correct, then we are spending huge resources on a project that does not bring satisfactory results, economically, or socially. If they are right, Europe’s welfare society does not have a future worth defending. Are they right? There are good reasons for saying that the welfare societies Europe has developed are worthwhile both in social and in economic terms. They have made it possible for us to double living standards in Europe, over the lifetime of the Union.

We are the largest economic entity in the world. We produce a fifth of the world’s output with six per cent of its population. This has been possible because our welfare systems have given us the ability to manage continuous structural change, without the extremes of social division many countries have had to face; that is, until the balance between capital and society was tilted even further in favour of the financial sector.

If the strong market forces of the last half century had been left to determine income distribution, 40 per cent of Europe’s households would be living below the poverty line (that is, earning less than half the average national household wage). Forty per cent of families mean 150 million Europeans. But the Member States and the EU have not left people to the mercy of the Markets.

Instead, Europe has given its people the strongest social safety nets in the world. Our tax and social protection systems have brought one in four of all families – 100 million people – out of poverty and equipped them with the chance to attain a decent standard of living.

Can we still afford it? US success in creating jobs is less a question of competitiveness in world markets, and is much more a matter of its success, internally, in creating markets and jobs in service industries. Inside Europe, with its diversity of social policy coverage, we can see a similar positive correlation of social and economic conditions.

Member States with the strongest safety nets have enjoyed surpluses (like the Netherlands, Germany, the Scandinavian countries) while Member States with weaker safety nets have deficits in their external affairs (like Greece and Portugal).

We should not conclude from this relationship between social policy and economic performance that Europe can afford to waste resources, or we do not need to renew our systems.

We do need to invest efficiently. Our systems do need to be renewed. Social conditions are no more static than economic conditions. But, we must ensure decisions are based on a full understanding of the costs and coverage of social spending. This can be illustrated by comparing social expenditures (health, education, pensions, day care and taxes) for a household in the US and in the Scandinavian model, because it gives a factual background to what is often portrayed as two opposite ends of the social policy spectrum.

By looking at public spending differences, we see Sweden spending over 33 per cent, more than double that of the US which sits at less than 15 per cent.

The comparison is stark, but misleading. Its message is that Europe is uncompetitive, that we must re-examine our social model due to global competition and high costs.

But, if we look at social expenditure on the basis of both public and private spending, we see a closer balance of commitment between the US, with 28.3 per cent – half of which is private expenditure – and Sweden, where the private cost is a small fraction of the 35.5 per cent total social protection expenditure.

However, when we take the next step, and look at social expenditures as a percentage of private household expenditure. This shows that the burden on the household is remarkably similar, when we look at the arithmetic, rather than the rhetoric. A household in Sweden spends 41 per cent on social protection, and a household in the US spends almost 40 per cent. This tells us there is a choice in these matters, not between high and low costs, but between a more uneven, or a less uneven distribution of income and opportunities.

One conclusion we can draw from all of this is there is no objective evidence that we can not combine a good safety net and a successful economy. The second conclusion is that this combination has created the cohesion which has enabled Europe’s political stability to flourish. This is why social policy is so central to the Union’s political and economic success. Because it is a productive factor, and a peacekeeping factor.

We began the process of rebuilding Europe, through economic interdependence, in the late 1940s, with a commitment that no people in one country – or one region within a country – of the Union are left behind in sharing economic progress. Article 2 of the Treaty establishing the Community calls for: “ ….. a high level of employment and social protection, raising of the standard of living and quality of life, and economic and social cohesion and solidarity among Member States.”

The link between the European model and the appearance of a cohesive cluster of policy initiatives gathered under the rubric “Common Weal” allows the left space and the material to weave that seamless cloth between European election and Scottish referendum. Perhaps we have reached the stage in the UK where we feel we have too many middle men and women making decisions in Europe on our behalf. Do we really need Westminster and Brussels where, under the present arrangement, the power to decide on Article two of the treaty lies with bureaucrats in the Commission and Old Etonians in Westminster and a parliamentary electoral system that is designed by the political parties to keep MEPs out of politics?

We could also learn much from other movements in Europe to include in a Common Weal manifesto. Let us examine the Basque Mondragon Co-operative Movement founded by José María Arizmendiarrieta who became known as the Marxist priest. In 1943, Arizmendi set up a Polytechnic School, now the Mondragón University, a democratically-administered educational centre open to all young people in the region. He set up the school, which quickly expanded, with money from local people collected on street corners. He taught many students himself. The school played a key role in the emergence and development of the co-operative movement, educating and empowering the townsfolk. Arizmendi, who died in 1976 in Arrasate, is revered in his adopted town and around the world by co-operative activists for seeing that co-ops can be effective businesses and transform local communities. More links to be found at