Introduction

Current national debates

Competitiveness and Employment: What sort of European social model(s) for the 21st century?

• 1. Unfit for the 21st Century: A negative consensus
  
• 2. Competitivess and Employment: Some national perspectives
  
• 3. Towards a positive consensus?
  

Inequality and Exclusion: The Role of the State

Democracy, Identity and Citizenship

• 1. The renewal of democracy
  
• 2. Rights and Responsibilities
  

Conclusion

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Introduction

This paper draws upon presentations and discussions made at a seminar entitled 'European Social Democracy in the 21st Century' in September 1999.

As its title suggests, the seminar was held with the purpose of addressing the future of European social democracy. Social democratic governments currently dominate Europe's political map. However, social democracy across the continent is grappling with major societal and economic changes. All European societies are affected by globalisation and all Europe’s social democratic parties must strive to formulate compelling arguments regarding a clutch of interrelated issues.

After first providing a survey of the current national debates, this paper goes on to assess some of the most vital of contemporary issues, under the headings ‘Competitiveness and Employment’, ‘Inequality and Exclusion’, and ‘Democracy, Identity and Citizenship’.

Now is an extremely apposite time for a pan-European debate between social democrats. Dialogue is urgently required in order to ascertain where, on the one hand, there is radical diversity between countries and points of view, and where, on the other hand, European social democrats can learn from each other and apply similar solutions to commensurable challenges. The seminar upon which this paper draws undertook to explore this terrain by bringing together delegates from around Europe. The following text surveys the content of the seminar, and in so doing seeks to address whether or not it is possible to detect the emerging outlines of a shared modern European view of social democracy.

Current national debates

Certain differences between the various national contexts immediately present themselves. For instance, some Italian observers argue that in their country there simply is no national-level debate on the future of social democracy. Such debate is reportedly taking place within small circles that do not touch society at large. Furthermore, some commentators note that much of the rank and file of the Italian left has the impression that any Italian debate upon 21^st century social democracy has more to do with the future of individual politicians than with that of social democracy itself.

By contrast, in Britain and Germany talk of the ‘Third Way’ or ‘Neue Mitte’ certainly has provoked a debate upon the future of European social democracy. However, it is far from certain that this debate will unfold along the same lines in the two countries. The co-signatories of the recent Europe: The Third Way/Die Neue Mitte (Blair and Schroeder) face markedly different domestic political situations. Indeed, domestic political concerns are currently threatening to blow the German Chancellor onto a course other than that plotted by the Blair-Schroeder manifesto. Schroeder's SPD are stricken by electoral losses and the

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vote-winning Chancellor of a year ago now faces fierce resistance to his project to re-fashion the German social state. The Blair-Schroeder paper provoked internal SPD discontent and Schroeder's planned austerity measures, including spending cuts of DM 31 billion next year, are proving popularly unpalatable. By contrast, Blair's Labour Party appears set fair for a second term and internal Labour Party dissent over the Blair-Schroeder paper was notable by its absence. Blair has been dealt a more favourable historical hand than his German counterpart, insofar as painful – some would say brutal – structural economic reforms had already been made by Thatcher in the 1980s. Further, Blair undertook tough party reforms, such as the rewriting of Clause 4, before Labour achieved office; the transition to 'New Labour' had largely been negotiated while in opposition. In contrast, one can not talk of a 'New SPD' in this manner; the bitter fight between modernisers and traditionalists is being waged now, while the party is in government.

Opinion is divided over whether the Neue Mitte is part of Schroeder's problem or his solution. In some quarters the Blair-Schroeder paper is held to represent the end of social justice and to have precipitated the SPD's current electoral woes. However, elsewhere one encounters the argument that Schroeder's critics on the left have misunderstood the document. This argument describes it not as a departure from the goal of social justice, but rather as an expression of the contemporary need to renew social democracy. Account must now be taken, so this argument runs, of the economics of globalisation and the psychology of individualism. The state can therefore no longer be the sole motor of progress; new technologies and the knowledge economy are held to dictate that the state must now play the more facilitative role of enabling individual enterprise. As the Blair-Schroeder manifesto puts it, the state must concentrate more on 'steering' than on ‘rowing'. Such thinking entails a new supply-side agenda for the left, 'prudent' public finances and a reconstructed welfare state. According to this stance, the Neue Mitte does not betray social justice, it recuperates and renovates the concept for the modern era. However, if Schroeder is to succeed in this project, the Neue Mitte must be defined with greater clarity. At present the German government is struggling to work out what its new mixture of demand and supply-side economics means in practice. To reverse Marx's dictum, theory must now be added to German praxis.

If the SPD is to win public acceptance in Germany, it must win the debate at a national level, yet European-level discussions are also crucial in order to determine which practices from abroad can be most fruitfully adapted to the German context. Rigorous debate about the future of European social democracy is thus a pressing requirement for the formulation of a coherent Neue Mitte that is a successful modern approach built on clear values and with policies and ideas appropriate to the new millennium. Such debate is also necessary for the future credibility of Blair's Third Way, since – despite Blair's dominance of Parliament and the opinion polls – New Labour is frequently criticised as lacking both clarity and radical content. Centre-left voices in the media argue that for all the British government's welcome initiatives, such as the Working Families' Tax Credit, its policies do not yet match Blair's grand rhetoric of a 'constant revolution'. Furthermore, New Labour is not entirely immune

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to internal rank and file dissatisfaction. Disquiet has been expressed by those who feel New Labour is disregarding the traditional redistributive left-wing agenda, and many of Labour's 'core' supporters have 'stayed at home' in recent elections. There are therefore key similarities as well as differences between the political landscapes confronting Blair and Schroeder. Like Schroeder, Blair must inject the rhetoric of Third Way with radical content and, like Schroeder, he must address the arguments of those who charge him with betraying the left. A pan-European debate upon the best ways to reconcile social justice and modernity is thus valuable for Britain and Germany alike.

The debate over European social democracy in the 21^st century clearly extends beyond considerations of the Third Way. Indeed, Jospin has explicitly distanced his French socialists from the Third Way, which is described as having moved too far in the direction of the US model. Talk is of building a 'new alliance' (between the middle classes and the exclus), but not of following the Third Way. Furthermore, French socialists were undeniably piqued by the Blair-Schroeder manifesto. It was published on 8^th June 1999, just four days before the European Parliament Elections. This timing was felt to be at best inopportune and at worst a betrayal, since its liberal calls for a smaller state and less rigid labour laws were held to contradict the joint declaration of the European Socialist Parties, signed in March. The joint declaration, and not the Blair-Schroeder paper, was designed to be the common platform upon which Europe’s socialists fought their election campaigns. Furthermore, following the election results, the French socialists have been able to argue that they are correct to oppose the Third Way, for Jospin’s PS was alone among Europe’s governing centre-left parties in securing a positive electoral return. Viewing the mire the SPD now finds itself in, some French socialists have concluded that it was an error of the Germans to present the highly liberal Blair-Schroeder manifesto just before an election.

Jospin’s supporters seek to differentiate themselves from the Third Way by presenting the French path as one along which traditional socialist values can more comfortably move. However, perhaps surprisingly, the views of Blair and Jospin do have much in common. Both the British and French governments place a premium upon encouraging people back to work, and both strongly voice their ‘pro-business’ credentials. The two governments share a conviction that a transition must be made from industrial society to a service society based on knowledge. Like Blair, the French PS declares that society must be re-configured to accommodate the information age and globalisation. Furthermore, the two governments concur that, in order to encourage this transformation, today's social democrats must nurture entrepreneurialism and champion social investment in training and education. One can therefore detect broad agreement over what the big issues, or key questions, facing today’s social democrats are. The cross-Channel differences arise because the two governments seem to be generating different answers to these questions. Of the two premiers, Jospin appears the less enamoured with market economics, and the more confident in direct state activity. The French socialists talk more openly of redistributive state benefits as a necessary component of 'social health', and they are more overtly

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concerned to stress that flexibility can bring undesirable job precariousness as well as economic dynamism.

It is therefore apparent that, although Jospinisme and Blairism are not synonyms, there are significant areas of overlap. To expand upon the latter, one should note that Jospin’s programme of privatisation has proceeded more speedily than those of his centre-right predecessors, and that the new French budget freezes public spending in real terms. In addition, Jospin has recently stated that the government can no longer ‘administer’ the economy, and one of the reasons French employment has recently been boosted is that France is generating more short-term and part-time work in service and high-tech industries. Workers in these jobs do not receive the same level of benefits and protection as those in full-time work; precarious flexibility would appear to be creeping into the French model after all. It can therefore be argued that although Jospin talks to the left, he acts to the centre in a manner in some ways comparable to Blair. The similarities between Blair, Schroeder and Jospin suggest that upon certain key issues a European social democratic consensus is indeed forming, and forming itself in opposition to traditional social democratic Keynesian macro-economics. The following sections will indicate whether such similarities warrant talk of a new European social democratic mainstream.

Competitiveness and Employment:
What sort of European social model(s) for the 21^st century?

Today's European social democrats face the conundrum of how to construct social models that both preserve social cohesion and also prevent jobs leeching away to more ‘competitive’ models. This section discusses whether or not European social democrats' responses to this riddle are converging.

1. Unfit for the 21st Century: A negative consensus

Current European social democratic governments appear in broad agreement that traditional European social models are inadequate for the 21^st century. In its classic incarnation, the European model includes full (male) employment, generous redistributive social security from cradle to grave, and Keynesian demand management. Such features are commonly deemed out of step with today's social and economic realities. For example, traditional conceptions of full employment are felt to be outmoded, for they do not include working women, and traditional social models are considered incompatible with an internationalised economy as well as unable to bear the strain of ageing populations. It can therefore be said that European social democrats face a similar set of constraints, and that they are converging upon the realisation that traditional European social models must be radically overhauled.

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This can be termed a rearview mirror consensus since it is largely defined by a rejection of the past. However, a certain amount of agreement also textures the debate on which current models to steer clear of in the future. European social democrats appear united in their desire to avoid the US model in its unadulterated neo-liberal form. However, it should be recognised that, whereas some European social democrats refer to a pan-European social democratic rejection of the US social model, other social democrats drop the use of the definite article and refer to US models in the plural, some of which are deemed acceptable. For example, some draw attention to the fact that the American Robert Reich argues for a social model that both prioritises education as the fulcrum of economic growth and individual opportunity, and also stresses the need for public spending plus a more direct redistribution from rich to poor. Such thinking provides a provocative counter-balance to those on the centre-left who seem to use a vocabulary of equal educational opportunity in place of, rather than adjacent to, one of fiscal redistribution. The particular US model envisaged by Reich is thus clearly of value to the European left. This has led some European social democrats to argue that certain models conceptualised by Americans have utility for European policy makers, and to disagree with those Europeans that talk in terms of a common refusal of the US model.

It therefore appears that not all European social democrats even agree on what their common enemies are. However, one must distinguish substantial differences from terminological ones since, although not all European social democrats seek to oppose a unitary ‘US social model’, one can indeed talk of a common rejection of pure Reaganomics. Debate between Europe’s social democrats must therefore occur at the basic but crucial level of definition. Terminological ambiguity such as that attached to the phrase 'US social model' is inevitable in any discourse, but it is all the more likely in one conducted between Europe's social democrats, hailing as they do from diverse cultural, linguistic and historical backgrounds. One of the vital functions of an ongoing pan-European debate between social democrats will therefore be its capacity to reveal where, on the one hand, disagreements boil down to the hard substance, and where, on the other, they turn upon definitional ambiguities. In this given instance, one can detect substantial agreement beneath the surface disagreement. European social democrats agree that the model built under Reagan bought economic dynamism at too high a human price – witness the US’s highly uneven distribution of income and wealth, the existence of a working poor, chronic homelessness, and inadequate health care provisions for the poor.

Today’s European social democrats can therefore be seen to share both a rejection of the more brutal aspects of the US model and a common recognition that there is no going back to the classical European model. However, although one can talk of these two positions as defining a mainstream contemporary European social democratic stance, it must be recognised that this is a consensus on what to reject. It is a negative consensus, rather than a positive agreement concerning which policies should be adopted. The following subsections outline various national efforts to address the twin issues of economic

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competitiveness and social cohesion, and they consider whether or not these efforts gesture towards a positive consensus over the desirable European social model for the 21^st century.

2. Competitivess and Employment: Some national perspectives

Both commonalities and divergences emerge when one analyses the means by which different European social democrats have undertaken to solve the puzzle of combining competitiveness with cohesion. Some key features of these attempts are mapped below.

Making Work Pay

Some French commentators argue that, in order to side step US-style social ruptures, a maxim for 21^st century social democrat employment policies could be 'no working poor'. Such a maxim could be given content by statutory guarantees of a ‘decent’ minimum wage, and by policies to 'make work pay', such as the Working Families' Tax Credit recently introduced in Britain. Some French observers envisage that minimum wage levels might in the future be determined at an EU level. Such an eventuality would herald a truly pan-European social democratic employment policy. However, for the present moment such a co-ordinated supranational policy appears untenable. Divergence between national economic performances ensures that the level at which a wage becomes meaningful, or decent, will vary across the EU’s member states. Nonetheless, ‘make work pay’ could still become a creed common to all European social democrats, even were the means to realising this aim left in the hands of national governments.

Flexibility and Competitiveness

It should be noted that measures such as statutory minimum wages risk building rigidities into the job market, thereby entailing a loss of competitiveness and risking higher unemployment. The precept of ‘no working poor’ must therefore be accompanied by policies that promote the flexibility required in order to boost competitiveness and maintain high levels of employment.

The Dutch ‘polder model’ has been notable for its success vis-à-vis competitiveness and job creation. The basic units of this model are drawn from the Dutch tradition of co-operative governance. The dominant mode of interest-group representation in Holland – consociationalism – is inherently consensual, and neo-corporatist institutions for socio-economic decision-making are deeply rooted. These underlying conditions of Dutch politics and society were prerequisites for the understanding between trade unions, employers and the state in 1982 regarding the limitation of wage increases (the Agreement of Wassenaar). Some Dutch observers posit that since 1982 the consistent adoption of wage moderation has injected dynamism into the economy and created jobs. Significantly, some commentators also argue that the co-operative manner in which these decisions to restrain wages were reached through keeping social partners in dialogue with each other – was able to

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safeguard social cohesion. Co-operation is also manifest at the level of Dutch party politics. For 80 years Holland's coalition governments have been working along broadly similar lines. Dutch politics has therefore been marked by pragmatism and a narrowing gap between parties on the left and right. However, it has been argued that these are specific national characteristics and that the Dutch model is not widely exportable. It is certainly unlikely that one could successfully transplant the Dutch model into countries that periodically experience major shifts in government, and where neo-corporatist institutional channels of communication between responsible social partners are not already embedded.

Another feature that has enabled the Dutch model to successfully generate employment has been the fact that it embraces the creation of part-time jobs. Until the late 1970's, the proportion of women in the Dutch labour market was very low. In the last 20 years, however, the number of women entering the labour market has risen rapidly. This development has brought about a sharp rise in the number of part-time jobs. Nonetheless, although the Dutch model has been a successful job machine, it has not been able to prevent inequality in income and wealth from rising. It might therefore be argued that Dutch collective bargaining is a supply-side corporatism that draws a veil of social cohesion across measures that in fact increase social divisions. It is not, therefore, a magic formula that dissolves all tension between competitiveness and cohesion.

In Britain, New Labour appears to be responding to the cohesion-competitiveness conundrum by leaving the deregulative Anglo-Saxon model it inherited from the Tories largely intact. Care has been taken to ensure that new employment policies do not interfere with competitiveness. For instance, Britain's minimum wage was deliberately set low (£3.60), and lower still (£3.00) for 18- to 21-year olds. A Blairite social model includes the following features: an emphasis on the triangle of individual responsibility, participation in the labour market and education; tight budgetary policies; supply-side economic policies, and opposition to a passive welfare state that hands out overblown and unwieldy benefits.

Some in the French PS label Blairites as 'Third Way partisans' who are overly dependent on the Anglo-Saxon model. Whereas in Britain the realisation that flexibility denied can mean jobs lost manifests itself as a reluctance to temper the Anglo-Saxon model's deregulated flexibility, in France greater effort is expended on distinguishing good forms of flexibility from the bad. A distinction is drawn between internal flexibility, which is deemed desirable, and external flexibility, which is not. French observers have suggested that internal flexibility comprises measures designed to boost citizens' lifestyle flexibility, such as the re-organisation and reduction of hours spent working and more flexible opening hours for shops and public services. This type of flexibility, it is argued, accommodates the rearing of children, lifelong learning, sabbatical periods, and so forth. In contradistinction, negative, external flexibility is held to encompass facets like fragile part-time jobs, short-term contracts and sub-minimum wage jobs for the young or unskilled. This is the kind of flexibility held to characterise the Anglo-Saxon model and to produce a working poor. In an effort to highlight the Anglo-Saxon model’s deficiencies, some on the French centre-left argue that the creation of jobs is a necessary but not sufficient criterion of a social

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democratic programme; social democrats must create not just jobs, but jobs that are worth doing.

As evidence that the PS has backed this rhetoric with action, one can point to Jospin’s announcement on 26^th September 1999 that companies with a large proportion of 'precarious' jobs on their payroll will be forced to pay a higher rate of unemployment insurance. However, such a step appears to cut against Jospin’s previous declaration that governments should no longer seek to administer the economy. This does indeed represent a tension within French employment policy, and it suggests that within the Jospin government itself different – and not necessarily mutually compatible – responses are being offered to the competitiveness-cohesion conundrum.

The reduction of working hours

It is far from clear that internal flexibility promotes economic competitiveness effectively, and there is widespread agreement that prohibiting external flexibility does cut against economic dynamism and is thus likely to cause unemployment. Rather than follow the Anglo-Saxon model, the French PS's response to this appears to be an attempt to outflank unemployment by means of reducing the number of hours that people work.

The French government's 35-hour week proposals are designed to create jobs, foster good bargaining conditions in firms in order to promote internal flexibility, and to help fashion a new social model that re-assesses the comparative values of working time and leisure. This policy has generated significant interest among Europe's social democrats. This is largely because it is Jospin's biggest departure from liberal economic orthodoxy, and the policy that most clearly distinguishes him from the Blairite Third Way. It should be noted that in practice the French proposals are relatively modest: they entail a reduction from 39 hours to 35. However, the concept of reducing working time does have profound social and philosophical ramifications. The intention is to translate economic progress into social and cultural gain through providing citizens increased leisure time. The presence of the latter objective suggests an intriguing divergence between the French and British governments' conceptions of the good life. New Labour has introduced a minimum wage and a Working Families' Tax Credit, together with Welfare-to-Work schemes that are designed to encourage people into employment. All of these policies turn upon the project of 'making work pay' and are informed by the notion that labour liberates the individual and benefits society. Similar thinking also marks Jospin's increases in the minimum wage and his scheme to create jobs for young people.

However, the presence of the 35-hour week signifies that Jospin's government also draws upon an alternative conception of the good life – one that does not measure value solely in terms of the individual's freedom to labour, but also in terms of his/her freedom from labour. Both quality of work and quality of life outside of work matter. If the 35-hour week proves capable both of creating jobs and also of freeing time (and thereby also expanding cultural and social space), it will be a truly radical response to the competitiveness-cohesion

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conundrum. Indeed, some on the French centre-left believe that working time reduction has the potential to be a core component of a European-wide social democratic fight to ensure competitiveness and cohesion. Such observers assert that this objective should be shared, although the means of actualising it will vary according to particular national traditions and political institutions. It is argued that, while in France the state must play a central role by enshrining working hours reduction in law, in other countries different implementation strategies might be employed. For instance, negotiation between social partners could be appropriate to those countries, like Holland, with traditions of corporatism and co-operative governance.

Other European social democratic governments, however, are not rushing to embrace the idea of working time reduction. In Britain, certainly, it is regarded more as an eccentric curiosity than as a measure grounded in sound economic reality. It is too early to judge which side of the debate is correct, since the policy is still in its infancy. It is clear, however, that the 35-hour week is an area that Europe’s social democrats should continue to monitor closely.

3. Towards a positive consensus?

From the discussion above, it can be seen that it is not possible to talk of a single standard-type European social democratic response to the competitiveness-cohesion dilemma. It might, however, be argued that European social democrats do broadly share the same goals and that, although a single European model for the 21^st century is an unlikely development, in the future one might see the emergence of a series of comparable models that share certain important traits. Although each particular model would be marked by specific national characteristics, when grouped together one would be able to detect a family resemblance shared by them all. According to some French observers, this resemblance should feature a refusal to accept the notion of a working poor, a refusal to submit to the doctrine that any job is a good job, and a pursuit of flexibility of the sort that benefits employees as well as employers. However, a snapshot image of Europe today would not reveal a family resemblance characterised by these features. In particular, some have observed that Britain’s social model shares more in common with ‘the US model’ than it does with European social democratic models. More generally, it is far from evident that Europe's centre-left governments will draw similar conclusions regarding which varieties of flexibility are acceptable and which sacrifice too much on the altar of competitiveness. For example, at present there is little evidence of a common stance regarding working hours reduction policies.

At the extreme edge of the view that a shared European model is unlikely are those observers who argue that Europe’s 21^st century social democrats may well not even share common goals. Such sceptics argue that the links between Europe’s social democrats have hitherto arisen because social democracies have common historical routes in industrial capitalism and in working class movements. However, these sceptics argue that the

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fragmentation of the industrial working class and the transition to post-industrial society – to services and the so-called knowledge economy – may transform different social democracies in different ways. Such profound change could buffet social democrats in manifold directions, to the extent that they might no longer even share common objectives.

However, this scepticism should not imply that social democrats are currently unable to learn from each other. The fact that common constraints are being faced implies that communication over potential policy responses remains of high importance. Although one must beware of a priori assumptions that so-called best practices can be successfully inserted into alien environments, this proviso should not imply the end of dialogue. On the contrary, pan-European dialogue will enable social democrats to discover precisely which policies can and cannot be cross-fertilised and transplanted and whether a core of shared practices can be established.

With regards to competitiveness and employment, one of the current lines of dialogue that must be pursued concerns the extent to which European social democrats should relate to the Third Way. Some observers have argued that the Third Way has become a standard or leading frame of reference that other social democratic parties inevitably must relate to. However, others question whether European social democrats beyond Britain should refer to the Third Way at all. Some such observers argue that the Third Way is a political marketing tool utilised by the British Labour Party for domestic reasons, and that as a social model it is not sufficiently coherent to be widely exported.

This argument posits two principle functions that the Third Way is designed to play in the domestic British arena. Firstly, New Labour is held to employ the Third Way in order to distinguish itself from both Thatcherism and ‘Old Labour’. Secondly, the Labour Party is deemed to be seeking to use Third Way rhetoric as a lever to tilt public opinion towards acceptance of the Euro. According to this argument, New Labour is trying to convince the British public that Britain is similar to its continental partners, since such a perception could psychologically prepare the ground for British entry into the EMU. It is argued that the Third Way plays a key role in this strategy, since it is sold as a creed that unifies all Europe's social democrats and as a model for the future of European-wide social democracy. It has been argued by some critics that the Third Way thus employed is predominantly a form of political packaging, and that its content should not be emulated by other European social democrats. For instance, although some commentators cite low unemployment as a current British success story, critics stress that the Third Way is unlikely to close the growing gap between Britain's richest and poorest. Such critics also argue that the Third Way's emphasis on supply-side flexibility is unlikely to reverse Britain's current high levels of child poverty, or alter the statistic that only the four cohesion nations have lower incomes per capita. Regardless of whether one ends up a Third Way zealot or a sceptic, the key point is that debate is necessary in order to ensure that if one country's social democrats are considering importing a set of policies they are absolutely clear about the nature of this import. In other words, European social democrats must be clear about the practical consequences of the theories they learn from each other.

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The discussion above implies that no positive consensus has yet been reached regarding which social model(s) best solve(s) the competitiveness-cohesion dilemma. In fact, the very notion of exporting entire models is extremely problematic, and some of Europe's social democrats have even likened it to an imperialistic urge or missionary zeal. It is indeed possible that attempts made to win universal acceptance for single models are hubristic and, as such, doomed to failure. On this evidence, it would appear that European social democrats should seek to trade certain aspects of models, rather than these models’ over-arching frameworks.

Inequality and Exclusion: The Role of the State

As noted above, the quest for high competitiveness can yield a double quarry: high employment but also increasingly divergent levels of income and wealth. This concertina effect, whereby the affluent stretch further away from those on low incomes, is an example not just of inequality among wage earners but of exclusion, since those at the bottom edge of the labour force may well be excluded from society’s ‘winners’ circle’. They may, for instance, be deprived of the opportunity of bringing up a family in a safe, healthy and financially secure manner.

This section considers a variety of perspectives upon the roles that modern states should play in the fight against such inequality and exclusion. Broadly speaking, one can distinguish a traditional social democratic position which conceives of inequality principally in terms of an uneven distribution of wealth, and which posits that the state should intervene directly in order to restore an equitable balance by means of progressive taxation and public spending. Against this can be placed the neo-liberal position that accepts drastic inequality as an ineluctable economic fact, a necessary feature of a vigorous capitalist system. According to the neo-liberals, the state should limit itself to an, at most, extremely minor role in the fight against inequality, for they argue that an overactive state is gravely detrimental to economic dynamism. The Third Way claims to occupy a position distinct from both traditional social democracy and neo-liberalism. Although the Third Way does not encourage outright economic laissez-faire and attacks the right for abandoning the excluded, it does concur with the argument that overactive states impede the enterprise culture and, hence, damage the economy. In particular, the Third Way argues that social democrats must accept that globalisation has profoundly influenced the state’s capacity to intervene in the fight against inequality. Greater economic openness and factor mobility is held to have created an equity-inefficiency trade-off, whereby if the state wishes to preserve economic dynamism it must limit the extent to which it uses the benefit and tax systems to fight exclusion. Against this backdrop, the Third Way argues that the ‘Old Left’s’ reliance on ‘tax and spend’ is economically flawed and that it promotes mediocrity and conformity rather than enterprise and individual excellence.

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New Labour, and some in the SPD, now talk less of the state's duty to redistribute economic wealth and more of its duty to redistribute chances and opportunities via strong education and training. Indeed, the Blair-Schroeder manifesto explicitly prioritises equality of opportunity at the expense of equality of outcome. This revised conception of equality corresponds with a reformulated notion of the state's role in the fight against inequality and exclusion. According to the Blair-Schroeder document, the state should facilitate (not guarantee) greater equality, through a policy mix that relies more heavily upon education and training than upon high welfare spending and steeply progressive taxation. However, some observers have questioned whether such a radically improved education system can be achieved without increased taxing and spending. Two provisional conclusions regarding the future trajectory of Europe’s social democratic debate on equality, exclusion and the role of the state are therefore as follows: first, social democrats must decide whether to pursue equality of opportunity, or whether equality of outcome remains a laudable and viable goal for the 21^st century; second, they must explore whether Third Way policies are truly capable of delivering equality of opportunity without significantly increasing the tax burden.

Some French observers argue that, compared to New Labour, their PS places a greater emphasis upon the state’s role in the battle against inequality and exclusion. Such commentators can point to Jospin’s declared intention to use the state to impose a sense of order upon an otherwise wild world economy. This rhetoric suggests that, compared to the followers of the Third Way, Jospin envisages the state playing a more active, direct role in the fight against inequality and exclusion.

However, the French and British governments are united in the emphasis they have placed on ‘co-ordination’ as a vital principal in both the formulation and implementation of policies designed to tackle inequality and exclusion. For example, some commentators have heralded the Jospin administration’s legislation against exclusion and extreme poverty, which was enacted in 1998, as evidence that a co-ordinated style of government optimises the state’s ability to deliver policies that counter social exclusion and inequality. Although originated by the Ministry for Employment and Social affairs, this policy combines the efforts of several ministries. The Exchequer distributes funds; the Transport Ministry is mobilised to provide cheaper transport for the unemployed; the Secretary of State for Housing is tasked with refurbishing unoccupied premises and with negotiating cheaper housing, plus hospitalisation and health care for the very poor; and the Secretary of State for Professional Education is involved with opening up new opportunities and trades for the unemployed. This co-ordination also extends to various professional bodies, trade unions, medical boards, employment bureaux, non-governmental associations, and so forth. The intention is that by fostering a sense of common purpose, all layers of government are injected with a greater degree of energy and motivation.

New Labour’s Social Exclusion Unit is a comparable attempt to ensure that the government formulates co-ordinated responses to inequality and exclusion. This is a single unit which draws from different ministries and also from outside experts. This kind of ‘joined-up government’ is unusual in British politics, since it goes against the grain of the traditional

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Whitehall system which has tended to be rigidly departmental. On this evidence, it would seem that the concept of co-ordinated, 'joined-up government' is a feature of both the French and British governments' efforts to tackle exclusion and inequality. This correctly implies that social democratic governments must consider not just which policies are transplantable best practices; they must also consider which styles of government can be learnt from.

Democracy, Identity and Citizenship

A key issue for all of today’s social democratic governments is the changing nature of citizenship and identity. Rapid advances in communications and information technology – in particular the rise of the Internet – will profoundly affect the ways citizens view themselves and their governments in the 21^st century. Globalisation does more than pose a set of challenges for social democrats’ traditional economic policies; social, political and cultural activities will increasingly be extended beyond the boundaries of nation states and technological advances will mean faster transfers of people, ideas, goods and information. Some observers believe that people will become more individual and more critical of governments, since instant access to vast reserves of information from across the globe is likely to encourage people to question accepted norms and received modes of behaviour. In the face of such major social, technological, cultural and economic change, social democratic governments have a pressing need to formulate compelling visions of democracy, identity and citizenship for the 21^st century.

1. The renewal of democracy

Some commentators argue that a key task of social democratic governments must be to modernise, or renew, democracy for the 21^st century. The dismally low turn out to several recent European elections indicates that many citizens are highly sceptical about the relevance and/or value of contemporary politics and politicians. It has accordingly been argued that political and governmental structures must be redesigned and reinvigorated, so as to encourage people to engage once more with the democratic process. Such a process of renewal must take place at both the national and, increasingly, the supranational level.

National governance

Europe’s social democratic governments preside over markedly different types of nation states. For instance, Britain and France are still very centralised, whereas Germany is a highly decentralised, federal country. However, some observers believe that decentralisation should be a vital feature of all modern European democracies. They argue that by providing layers of government that are both visible and democratically accountable at a local level, political decentralisation can reconnect people with the political process. Decentralisation is

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accordingly held by some observers to be a crucial way of renewing democracy. This subsection looks at certain devolutionary steps that have been taken in France and Britain, and it asks whether these measures are capable of reinvigorating democracy and of binding the citizen back to the state.

In Britain, New Labour presents itself as carrying out a project of sweeping modernisation, a crucial aspect of which is to renew democracy. However, not all commentators are convinced that the desire to modernise and democratise permeates every layer of the Blair project. Such observers have argued that New Labour embodies a contradiction between devolution and centralisation. On the one hand, New Labour has brought in a set of measures to decentralise political power and to overhaul the British constitutional order. On the other hand, New Labour is criticised for ‘control-freakery’, for seeking to stifle internal rank and file Labour Party debate, and for seeking to concentrate power in ‘Number 10 Downing Street’ and at the Labour Party’s Millbank headquarters. With regards to decentralisation, New Labour has established a Scottish parliament based on a popular referendum; it has set up an elected assembly in Wales and, more recently, in Northern Ireland as well, and it has legislated for a London mayor. This list represents profound change and seems to suggest that, just as Thatcherism replaced restrictive economic practices with an open economy, so New Labour intends to replace an over-centralised state with a decentralised, more democratic one.

Or does it? Some critics assert that New Labour has not brought about a deep modernisation of the British polity and that, on the contrary, in many areas attempts have been made to diminish the spirit of decentralisation and to regain central control. A current example cited by critics of New Labour is the turmoil over the nomination of Labour’s candidate for the London mayor. As with the election of Labour’s leader in the Welsh Assembly (Alun Michael), the accusation is that ‘Number 10's' preferred candidate is being foisted upon reluctant party members by means of a biased electoral college system. Critics of the government are therefore able to assert that even, or perhaps especially, New Labour’s decentralising measures are tarnished by its desire to concentrate power in the centre and to stamp out nuisances (i.e. those who might challenge the party line). The charge is that decentralisation New Labour style enables the voter to choose whomsoever s/he wants, so long as it is Tony Blair’s preferred candidate.

Some critics argue that this tendency to centralise political power is a feature of New Labour’s preferred mode of governance: corporate populism. This term is intended to reflect the notion that New Labour's model of agency is the modern corporation: integrated, efficient, high-tech, and rich. Its policies, or products, are marketed to appeal to everyone and they are portrayed as non-ideological, technocratic solutions to the problems of the ‘ordinary man’. The positive outcome of this approach is held to be a highly efficient, result-orientated government. On the negative side, some commentators assert that this approach stifles debate and leads to a form of over-centralised control politics. These observers allege that corporate populism is anti-political, even anti-democratic, insofar as it seeks to suggest that in a given area there is one, and only one, technocratic solution to everyone’s problems.

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Such observers argue that corporate populism’s anti-democratic tendencies make it a style of government wholly inappropriate to the task of renewing British democracy. Furthermore, it has been suggested that New Labour’s uncomfortable combination of devolution and centralisation could be its electoral undoing. It is argued that the government risks alienating its own grass roots activists as well as the wider electorate, which may come to view New Labour as a paranoid government that is unwilling to allow genuine debate and which desperately tries to rein back a devolution of its own making.

The French state is also highly centralised. Indeed, France has a very long history of centralised government stretching back to the Jacobins and, earlier still, to Colbertisme. However, the nature of the relationship between French citizens and the state has changed considerably in the 18 years since Mitterand’s first left-wing government implemented a set of decentralisation laws, known as the Lois Defferre. These transferred powers to local authorities, regional and departmental assemblies, municipal councils, and to mayors. It has been argued from the French centre-left that these devolved arrangements balance – in an albeit complicated manner – the vertical, pyramidal functioning of centralised state power with a horizontally expanding network of local power. People can now see and experience things being done on a day to day basis by men and women they know, and who embody the authority and decisions of the state. These arrangements are held to be a way of renewing democracy and citizenship through fostering an inclusive sense of common social identity.

Some French observers also claim that this kind of political decentralisation has proved a valuable weapon in the fight against inequality and exclusion. Such commentators support this assertion through reference to the current government’s 'emplois jeunes' programme. This scheme is designed to create jobs for the young on the basis of five-year contracts, and it seeks to co-ordinate the various levels at which the French state operates. Those ministries deemed to be in closest proximity to citizens’ everyday life – education, sport, culture and social security – are mobilised in the effort to create socially useful jobs. At the same time, town councils are asked to work in conjunction with local representatives of the state administration (prefects), MPs, and non-governmental organisations, with a common objective of creating new jobs that target local needs and problems. This nationwide, decentralised, brainstorming session has succeeded in thinking up new types of jobs – such as placing young people on buses to act as mediators between the drivers and unruly children.

However, some observers are sceptical about the true extent of French decentralisation. Such commentators point to the fact that in France the local arms of government are very far from autonomous. They also note the leading role played by the government in the introduction of the 35-hour week. This is deemed to show that in France the impulse of the strong central state persists. In support of this analysis, it should be noted that in the ‘emplois jeunes’ project the central government is omnipresent in the decentralisation itself, for it plays a pivotal co-ordinating role and, moreover, because local authorities' budgets are largely comprised of state transfers. It would seem that in France one does not witness a

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deep political decentralisation but that, rather, schemes like the ‘emplois jeunes’ and the 35-hour week display a new, creative use of central control.

This discussion implies that, with regard to the renewal of democracy, it may not be possible to prescribe a single ‘solution’ to be shared by all European countries. For instance, in Germany a highly decentralised federal structure may be deemed an appropriate barrier against authoritarian government and a means to preserve local identities. However, one might argue that in France ‘creative central control’ is the best way to reinvigorate democracy and build a sense of shared civic identity. Whether or not devolution will succeed in reinvigorating the British polity remains to be seen. Indeed, the jury is still out on whether or not New Labour will allow devolution the free rein it needs in order to stand a fair chance of succeeding. It would seem that different policies regarding democracy, citizenship and identity will succeed in different countries. One must beware attempting to impose unitary answers that fail to allow for the particularities of different nations’ historical and political contexts.

Global governance

An important feature of globalisation is that the nation state’s claim to be the principal unit of political and economic power is increasingly under threat. Issues related to democracy and citizenship are therefore of crucial relevance to current debates concerning the nature of global governance. If we are all now citizens of a global village, it would seem reasonable to desire supranational institutions that are democratically accountable. The recent mass protests against the World Trade Organisation in Seattle suggest a significant degree of popular alienation from certain of our existing international institutions. Indeed, whether or not in favour of Seattle-style direct action, many on the left are now concerned that in the modern world economic power is all too frequently able to elude democratic control. Whereas in the past capitalism was enmeshed with nation state systems, we now witness a stateless form of global capitalism.

Social democracy's traditional reflex would be to desire a system of governance with which to re-impose a sense of order. However, differences of opinion exist among today’s European social democratic leaders regarding just how governable globalisation is. For instance, some commentators argue that there is a divide between the Third Way’s response to globalisation and that which is offered by the French PS. Although voices from within New Labour have called for the reform of such bodies as the WTO and IMF, some observers believe that New Labour’s approach to globalisation is an essentially defensive one. Such observers argue that New Labour prioritises reactive policies, such as the need for countries to deregulate, rather than active ones, such as the need to build a form of global governance capable of imposing a true degree of equitable order upon the global free market. Some would argue that the French PS favours a more active approach, with emphasis upon the potential to regulate or humanise globalisation. Jospin has indeed declared that globalisation is not a fate to be passively accepted: ‘It has been created by humankind’, he says – the implication

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being that globalisation can be regulated by humankind as well. Accordingly, Jospin has argued that international financial movements, together with the Internet, should be regulated in order to mould globalisation into a shape beneficial to society. This is more interventionist language than that which is used by New Labour in Britain. Once again, it would appear that although Europe’s social democrats are agreed on the questions – in this case the need to reform international institutions and to develop compelling responses to globalisation – as yet they are divided over which are the best answers.

2. Rights and Responsibilities

This autumn, Tony Blair talked of the need for today’s social democrats to forge 'a modern, responsible notion of citizenship'. The Blair-Schroeder manifesto seeks to elucidate what such a modern, responsible citizenship would entail. It states that in the past ‘the balance between the individual and the collective was distorted’. Yesterday’s social democrats are described as having placed too great an emphasis on ‘universal safeguards’ at the expense of promoting ‘entrepreneurial spirit’ and individual excellence. Furthermore, ‘too often rights were elevated above responsibilities’. Behind these claims lies the Third Way notion that major social, technological and economic changes have led to much greater demands for individual autonomy and diversity. Accordingly, in Britain one witnesses the Third Way argument that far greater emphasis must be placed on individuals’ responsibilities. They are still to be entitled to certain state-guaranteed rights – the citizen is not to be entirely abandoned to the cut-throat individualism of a deregulated market – but in this modern world they will increasingly be expected to ‘stand on their own two feet’.

A similar vision of modern citizenship and responsibility would appear to characterise the thinking of some within the German SPD. Certain voices from within the German government have argued that as a result of rising education standards, growing individualism, and a critical mass media, members of civil society are now more responsible for themselves than they were in the past. It is argued that, just as these societal changes require governments to reconsider the roles to be played by the state, so they demand a corresponding re-appraisal of citizenship, with greater weight now to be placed upon the individual’s responsibilities.

The Third Way’s ‘modernised’ notion of citizenship and individual responsibility connects with a number of economic policies. These include those that increase supply-side flexibility, and Welfare-to-Work measures that are not designed as safety nets to catch passive individuals but are intended to be springboards which require a degree of dynamism from those people hoping to benefit from them. The common strand that binds all such measures together is the objective of producing (or enabling the emergence of) individuals who are more energetic, self-sufficient, entrepreneurial, and hence less burdensome on the state.

Some observers characterise this Blair-Schroeder manifesto notion of modern citizenship as an 'enlargement of individual responsibility'. The individual is called upon to take more

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control of his/her destiny and to rely less upon traditional social democratic props such as the welfare state. This enlargement of responsibility involves a shifting of perspective from the sphere of guaranteed rights to that of duties. However, an important question mark hangs over this enlargement of individual responsibility, for some observers ask whether it represents a withdrawal too far from traditional social democracy. These critics feel that the Third Way’s ‘modern citizenship’ is too much of a concession to the demands of a globalised economy, too abject a retreat under the onslaught of neo-liberalism and, hence, the abandonment of the individual. By contrast, Third Way adherents depict this enlargement of individual responsibility not as a withdrawal, but as a necessary aspect of social democracy's renewal. Debate among Europe’s social democrats must therefore assess whether or not the Third Way has correctly grasped the nature of the modern world and, by extension, whether the Third Way is capable of substantiating its claims to empower, rather than abandon, individual citizens.

Conclusion

This paper confirms that the left everywhere must react to deepseated social and economic transformations. The discussions above suggest some significant commonalities in Europe’s social democratic responses. Social democrats across the continent are united in the search for a series of ‘both/and solutions'. For instance, a common desire has emerged to promote both flexibility and cohesion; most social democrats now seek both economic dynamism and social justice, just as many policy makers appear to want to retain both traditional social democratic goals and employ market-driven methods to achieve them. However, significant differences persist over how to pursue these dual objectives. Each country's experience of the profoundly changed and rapidly changing modern world remains intensely different. It is not surprising, therefore, that the sections above reveal continued divergence between social democrats over how best to approach globalisation and the transition to post-industrial societies.

Furthermore, since September 1999 (when the conference upon which this paper is based was held) a further line of difference between today’s social democratic governments has emerged. In September it appeared to some that Blair and Schroeder shared a common enthusiasm for deregulation, low taxes and a minimalist state. However, Schroeder is now showing signs of moving away from Blair and closer to Jospin. Schroeder’s disastrous showing in a series of provincial elections seems to have persuaded the German Chancellor that the Third Way is by no means the only way and, moreover, that it might well be one leading him to political catastrophe. His decision to rescue Philipp Holzmann, the building group, with public money, and his opposition to Vodaphone’s hostile bid for Mannesmann imply that Schroeder is prepared to veer away from the Third Way and back to a more traditional form of social democracy. It therefore seems that talk of the Third Way/Neue Mitte as the new mainstream of European social democracy is extremely premature. Indeed,

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on this recent evidence, it might be argued that a future centre-left consensus is more likely to resemble Jospin’s brand of relatively interventionist social democracy.

However, the above discussions suggest that the notion of any single template – be it Third Way or Jospinite – for a 21^st century European social democracy remains very problematic. No one has generated a response that can lay claim to being the single, right answer. Indeed, this paper suggests that it is highly unlikely that such a single pan-European social democratic ‘answer’ can exist: national contexts and traditions diverge to too great an extent.

This in no way implies that Europe’s social democrats should stop talking to each other; although entire models may not be exportable, aspects of given models can be borrowed and adapted to fit different national contexts. Furthermore, even where national governments end by agreeing to disagree, their differing policies will gain greater rigour and strength through having been formed in the crucible of pan-European debate. Europe's social democrats must continue to develop dialogic networks that enable them to determine what can be learnt from each other, and – with regard to the EU – where policy co-operation might be fruitful in the 21^st century. The challenges of the modern world are now known. The questions have been posed; social democratic answers must now be formulated with greater clarity.

At the time of writing, Greg Chambers was based at the European Institute Policy Unit of the London School of Economics. The author is grateful to Dr Kirsty Hughes, former Head of the European Institute Policy Unit, for her advice in preparing this paper.

This paper is based on the seminar 'European Social Democracy in the 21^st Century', jointly organised by the Friedrich-Ebert-Stiftung London and the European Institute Policy Unit of the London School of Economics, and held in London on 9/10 September 1999.

The views and opinions expressed in publications of the Friedrich-Ebert-Stiftung London Office do not necessarily represent the views of the Foundation.