Europe versus America

Britain may have invented the post-war welfare state but other
European welfare models have longer roots, and are proving more
durable and equitable, writes Hilary Wainwright.

Our presumption that the British welfare state was the best has
meant a widespread ignorance of the highly developed nature of
European social provision.

Our ignorance left many people vulnerable to the Thatcherite
notion that the only alternative model was to be found in the USA.
There in all its tatty glory was the living model of market
individualism with a government determined to eliminate all traces
of society. But look to the continent, especially Scandinavia,
Germany and France and there were plenty of examples of alternative
models in societies as prosperous, or more so, than Britain. The
heroine of the private market called it socialism but in fact it
was a form of capitalism in which principles of universal
provision, social and political rights and a presumption that high
quality public provision was of benefit to all classes, were deeply

In the face of global deregulation, this social capitalist model
has proved remarkably resilient. And in the intervening years,
Britain has plummeted, with the United States, to the bottom of
most Organisation of Economic Co-operation and Development (OECD)
measures of the quality of social provision. Only with anti-crime
provision does the US have a high allocation of GDP to a social
service. The newly developing southern European countries like
Greece, Portugal and Spain are now overtaking Britain by OECD
measures of social provision. Clearly, growing prosperity did not
automatically attract these nations to the model of capitalism
favoured by neo-liberal parties on both sides of the Atlantic or
their “third way” successors.

Europe’s social model is stable but not static. The conflict
between market-led and social solutions still rages. A year ago a
European Union summit in Lisbon agreed a five-year programme of
modernisation. One source of anxiety especially in Germany and
other parts of northern Europe is the doubling of the numbers of
retired people, putting a huge further burden on taxation.

With the Anglo-American model, modernisation tends to mean
“marketisation”. For pensions this means the move towards private
provision. In Europe, there is real debate about imaginative
alternatives including a challenge to the notion of retirement and
a consideration instead of the option of pacing your life so that
you work for a longer time span but with time off along the

The stabilising factor that has kept the European model afloat
in the rough seas of the world market has been a framework,
especially strong in northern Europe, of social dialogue and
negotiation, mainly between government, business and the unions but
also involving voluntary organisations with roots in radical social
movements around the environment, the needs of women, ethnic
minorities, and the old.

This tradition of social dialogue is also a source of new ideas
and solutions to the problems of bureaucracy and anxieties over tax
levels. Problems that in Britain have been turned into imperatives
to privatise welfare rather than democratise and improve it.

In the Nordic countries, where the social democratic model is
strongest, this social negotiation goes back to the 1920s and
1930s. As the trade union movement grew, it developed in a
direction that always included representing the social as well as
the individual wage of their members. In these countries, trade
union power has always been a source of protection of the welfare
state. They made sure that the establishment understood that
dismantling the welfare state would cause too much social
disruption to be worth it. On the other hand, trade union
involvement in the country’s social settlement protected the unions
from being easily marginalised.

In Nordic countries more than 80 per cent of the working
population are trade union members. Business too in these countries
has grown within the welfare state. There has always been grumbling
but until the recent growing power of large international
corporations, business has accepted the high levels of taxation
necessary to pay for high quality services. They have seen the
benefits for the education and morale of their workforce and for
their economic infrastructure.

Ironically, the threat of the free market model implicit in
restlessness of the powerful transnational corporations – ever on
the look out for lower cost locations – may be leading the European
Union to consolidate and entrench the European social model. As if
to set out their bottom line EU ministers agreed a Charter of
Fundamental Rights which lays down general commitments to health,
education, housing and other social provisions.

The British government has signed it only on condition that it
has no juridical status, but is merely a statement of general
political values. From being seen as the model of transforming the
warfare state to the welfare state, we are now seen as the country
which continues the cold war as the Trojan horse for American
capitalism within the European Union. Though surely Bush’s welfare
policies will lead the new British government to turn away from the
Atlantic and look to Europe?

Hilary Wainright is editor of Red Pepper.

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