Euroland vs. Dollarland? | The Nation


Euroland vs. Dollarland?

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Daniel Singer
Daniel Singer, for many years The Nation's Paris-based Europe correspondent, was born on September 26, 1926, in...

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It is a battle royal, and it foreshadows many more like it in the struggle for the economic mastery of Europe.

Internationalism Thrust Upon Them


t may be objected that with the Olive Tree coalition in office in Italy, New Labor in Britain, the "plural left" in France and Gerhard Schroder on the German horizon, Europe is perfectly poised to challenge the US. model with a social democratic alternative. One anecdote will show the naivete of this conception. Last November, employers and unions were negotiating within the E.U. framework about the representation of employees in the boardrooms of their companies. British managers, hating the idea, appealed to Tony Blair for help. The Labor Prime Minister turned to conservative Chancellor Helmut Kohl, who asked German employers for assistance. They duly boycotted the talks and the project was shelved. It took some time for the German unions to discover the plot and to report it to their British colleagues. Last month the matter was revealed in London, stirring a small scandal, though not much surprise.

This small incident confirms that you cannot bank on the leaders of Europe's center-left, acting on their own, to provide policies that move beyond the consensus. The only possible exception is French Prime Minister Lionel Jospin-if you stick to what he says rather than what he does. He said he would not accept the so-called stability pact, which would preserve Europe's deflationary straitjacket forever, and then did just that when he came into office. Still, Jospin can claim that he is seeking expansionary policies and that he's refusing to slash unemployment by cutting wages. He can also plead that he cannot do it alone. French exceptionalism is primarily the byproduct of the mass movement that shook France at the end of 1995 and without which the plural left would not now be in office. Indeed, the only way in which Italy's Romano Prodi or Blair or Schroder can be budged from their consensual position is by powerful pressure from below. The hopeful note is that the French example could be spreading.

The inauguration of the monetary club does not mean the end of belt-tightening, even if European production grows, as forecast, by nearly 3 percent this year and next. The authorities are determined to proceed with the dismantling of the welfare state, while putting a new emphasis on the drastic reduction of labor costs. This strategy is openly proclaimed by central bankers, business editors and international technocrats. In its "Economic Outlook," published in April, the Organization for Economic Cooperation and Development warns governments against "benefit generosity." It urges them to "risk antagonizing insider groups" (read: labor unions) "by relaxing minimum wage requirements, allowing for a wider dispersion of wages and easing employment protection." In the new context, employers will be in a stronger position to do these things. Before, when a European country was in serious trouble, it could devalue. Now it has no control over monetary measures and limited control over fiscal policy because of the stability pact. The regions in difficulty will be in a worse position than their U.S. equivalents because the E.U., with a budget amounting to less than 1.3 percent of G.D.P., can hardly come to the rescue. This is the framework within which it is planning to reshape the labor market, stripping workers of their protection and forcing them to migrate to seek jobs across frontiers.

Capital has always been favored over labor in the building of Europe, but things have now reached a breaking point. If the labor unions want to survive, they must first mobilize on a national scale the fully employed, the part-time workers and the jobless for common action. Then, going further than the French did, they must move beyond national frontiers with concrete proposals. They must elaborate a common program involving minimum wages, reduced working hours, social benefits and safeguards. In outlining how these can be implemented, they will have to draw up a vision of society that differs radically from the American model.

Can the labor movement measure up to its task? All that can be said is that it has little time to spare. The spread of the xenophobic poison in France, and now in Germany after the recent elections in Saxony-Anhalt, is a reminder that dark forces are waiting to exploit popular discontent. With Asians beginning to discover the sinister significance of an economic crisis and Western stock exchanges hovering at dizzying heights in an obvious bubble, the euro is venturing into an uncertain future. We must pin our hopes on movements from below and prepare for the worst.

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