Lorenza Antonucci
In the last two years European countries have been living through a ‘Brexit moment’, namely an ‘eruption of new kinds of social forces, previously excluded, into the political arena in powerful, visceral and protean ways’ (Dodds et al. 2017: 3). Such a process is often explained by examining the cultural roots of the new social forces, such as the proximity of ‘globalization losers’ to authoritarian and populist ideas (see Inglehart and Norris 2016). Cultural differences need, however to be understood as expressions of more profound socio-economic dynamics affecting European societies. European electorates seem to be expressing a social malaise due to their declining economic position and the inadequacy of the current support systems in protecting against the new forms of socio-economic insecurity. While that social malaise is channelled through cultural opposition, the aim of this article is to uncover the socio-economic roots.
The chapter critically examines the divide between globalization’s winners and losers, questioning the very existence of the divide. The chapter argues that due to growing precarity and inequality, the game of globalization rather than dividing the population into two distinct groups (‘winners’ and ‘losers’) affects various groups across Western societies. The chapter goes on to discuss the failure of current social policies in addressing these processes by revising the assumptions of the social investment paradigm that dominates European social policy-making, encouraging individual investment in higher education and promoting outsiders in European labour markets. The final section of the chapter examines the possibility of reforming social policies to tackle the malaise of globalization by restoring universal principles, updating labour market protection systems and finding a new paradigm for European Union (EU) policy-making centred on addressing inequality. Overall, this contribution aims to encourage a critical revision of the happy marriage between social democracy and liberal principles post-neo-liberalism, offering a re-evaluation of how public policy-making should address existing inequalities.
Problematising the Globalization Winners-versus-Losers Debate
Several commentators refer to a ‘working class revolt’ that began with Brexit and spread across the European Continent and beyond. According to this proposition, Brexit is the manifestation of anti-establishment sentiment expressed by neglected working class communities through the referendum (Hobolt 2016; Goodwin and Heath 2016). This response is even more evident in the systems of proportional representations in Continental Europe where, as we have seen in the recent French, German and Dutch elections, voters have continued to abandon the two established political blocks that dominated European politics for decades (the Christian Democrats and the Social Democrats) to the benefit of other parties: populist left-wing and extreme right-wing parties, new formations, and anti-establishment movements. The motivations and underlying socio-economic rationale for their political choices are yet to be clarified, but the underlying dissatisfaction with ‘the state of things’ can hardly be denied.
The analyses of Brexit resuscitated Rodrik’s division between globalization ‘losers’ and globalization ‘winners’ (1998). The current political events occurring across Europe, be they in the shape of Brexit or the rise of the National Front in France, are often explained using Rodrik’s concept of ‘globalization losers’. This term indicates the segment of the population which is affected by the increasing competition in global markets and has moved away from traditional politics as a result of its dissatisfaction. According to this idea, those who support anti-establishment parties and those who continue to support traditional parties reflect two sharply divided social constituencies: those who continue to support the ‘established’ political blocks are the globalization winners, while globalization losers are drifting towards more radical political proposals which aim to change the status quo.
This is certainly a convincing narrative; yet it is also a truism that does not really help us to answer the most compelling issues: understanding who are globalization’s ‘losers’, and deciphering in which respect their differing ideological stances are motivated by their declining material position. Interestingly, liberal thinkers have placed much greater emphasis on the ‘cultural’ triggers of the social divide, namely the proposition that the move away from established politics is motivated by a distinct cultural identity. The most obvious example is Goodhart (2017), who finds cleavages in British society between ordinary British people who have rooted identities (the ‘Somewheres’), and university-educated groups without cultural roots (the ‘Anywheres’). Goodhart believes established parties have failed in the way they supported the agendas of Anywheres, instead of listening to the needs of Somewheres. The cultural cleavage stressed by Goodhart – the one between Somewheres and Anywheres – fails to identify the new lines of inequality emerging in society. Goodhart ignores the presence of increasingly precarious workers with high levels of cultural capital, but limited economic resources (Savage et al. 2014). Goodhart also overlooks the fact that the real globalization winners (the global super-rich) are ‘Somewheres’ and not ‘Anywheres’: they are bounded to specific localities that they super-gentrify with their presence (Hay and Muller 2010). The cultural hypothesis has some empirical grounding (see also Inglehart and Norris 2016), but as argued by Hopkin (2017) it is analytically misleading to present economics and identity as opposing forces. Voters might justify their political choice in terms of immigration and sovereignty, but ‘wage stagnation, reductions in social expenditure, greater economic insecurity and high levels of migration’ are, ‘part of the same process of economic adjustment’ (Hopkin 2017: 475). Gidron and Hall (2017), for example, found support for Brexit and right-wing populism among the white working class emerged as an effect of status anxiety rooted in broader processes of social marginalization, which is both material (due to declining living standards) and cultural (due to declining ‘status’).
When we move towards the material reasons behind the political drifts occurring in Europe, we realize that they do not concern a small group of globalization losers and the ‘left-behind’ (Hobolt 2016; Goodwin and Heath 2016), but are widespread and involve ordinary citizens. In our analysis of Brexit, for example, we pay attention to a category of British society that more closely represents the experiences of ‘ordinary British people’, namely the intermediate class (Antonucci et al. 2017). Rather than representing the voice of the ‘left-out’, we found that Brexit was the voice of the intermediate classes who had a declining financial position and felt left out rather than angry. This category of voters is a group of considerable sociological significance, labelled ‘the squeezed middle’: a cohort of ordinary workers with intermediate incomes whose position is rapidly declining. We found this to be true in respect to different areas: education, perceived change in personal finances, emotional feelings, income and class identification. The corollary of our findings is that ‘globalization losers’ are not only those at the bottom of the social scale. Our finding mirrors Williams’ description of the Trump vote (Williams 2017): many people have conflated ‘working class’ with ‘poor’, while the American working class represents, in fact, the elusive disappearing middle class (or ordinary citizens). The sources of socio-economic insecurity to explore are, therefore, those that concern the majority of the population and go beyond explanations centred on identity or culture. Importantly, such a general malaise, which is not limited to the white working class, takes the shape not only of right-wing populism, but of other forms of left-leaning political radicalism and resistance that are too often dismissed as populism in social-democratic circles, even though they express demands in line with classical redistribution.
Even though it is not always articulated in these terms, the existence of populism questions the inequality in the distribution of resources in Western societies after globalization. There are two main processes behind the rise of inequality: a macro historical process and a micro dynamic mediated by welfare state intervention. The historical long-term process is the result of the struggle between capital accumulation and labour in global capitalism described by Wallerstein (2000). The latest evidence is a confirmation that global capitalism is resulting in progressive capital accumulation from the richest parts of society (the progressive rise of wealth inequality described by Piketty [2014]), and is shifting labour gains away from Western countries (the changing global income distribution analysed by Milanovic [2016]). Milanovic’s description of the global changes in inequality finds that the progressive rise of the emerging world middle class and the global plutocracy is accompanied by the hollowing out of the Western middle class and the declining position of those at the bottom. In this new dynamic of the world economy, therefore, globalization losers in the Western world are not just the poorest parts of the population, but also the lower middle classes, affected by a change in economic dynamics and a shift in welfare state interventions. This second element (i.e. the change in welfare state interventions), although mentioned by both Piketty and Milanovic, rarely receives in-depth consideration, despite its profound effect in shaping the internal dynamics of redistribution within Western democracies. The rise of the middle classes in Asia should not be interpreted as the inevitable consequence of a shift of wealth from the West to new countries: attention should be focused on the politics of taxation and spending within Europe and their effects on the rise of inequality.
The sense of dissatisfaction with the system found in very different groups could well reflect their increasingly similar material conditions. One of the elements that Gidron and Hall (2017) propose is that behind the lower subjective social status of those who vote for right-wing populism are the declining conditions of work. This calls into question the wave of reforms since the 1990s that have been centred on job creation at the cost of wage negotiation, redistribution and improving working conditions, thus affecting ‘ordinary’ citizens who are increasingly subject to precarity (Standing 2013). While not all those belonging to the ‘squeezed middle’ are in irregular and casual contracts, an increasing number of workers are affected by precarity in the broad sense. For example, indicators of precarity that affect the squeezed middle are: the stability of employment income; the ability to find a similar job in the labour market; the benefits paid in case of illness; and the effects of precarity on health and mental well-being. The hidden face of precarity is, according to Gallie et al. (2017), more than the fear of losing a job (which affects the so-called left-out), and involves a perceived threat to valued features of job insecurity such as personal treatment by superiors, and the loss of job characteristics such as skills, task discretion, task interest and pay. Crucially, the authors find such growing job insecurity partially overcomes class differences, in the sense that they affect more than the usual working class groups.
From a political point of view, the general diffusion of precarity demands solutions that speak to the majority and create new coalitions between ordinary citizens and the left-out (be that globalization ‘losers’ or ‘outsiders’ in the labour market). New political actors are mobilising widespread frustration experienced by insiders and outsiders in the labour market focusing on the common experience of dissatisfaction, which often involves labour market conditions. Before discussing solutions, we need to review the principles of the current social investment paradigm and identify its limitations.
The Limitations of Social Investment
The social policy paradigm that has dominated European social policy-making is social investment, which achieved ascendency in the 1990s and became the latest justification for social policy in Europe in times of public cuts and austerity after the crisis. It is also a paradigm that has helped to shape the ‘progressive’ response to how social policy evolved in times of globalization (Morel et al. 2012). The diagnosis of the current crisis therefore has to include an understanding of the limitations of this paradigm in addressing the roots of the current social malaise described above.
One of the most fascinating aspects of social investment is its continued popularity in European policy circles after austerity. Social policy scholarship has interpreted social policy developments post-2008 as a new unprecedented reconfiguration of the welfare state defined by austerity (Farnsworth and Irving 2015). This period has indeed been characterized by visible welfare cuts in several social policy areas, including health and social security, in particular in the UK (Taylor-Gooby 2013). Empirical studies have also shown that even post-2008 (therefore during austerity times), social investment policies have remained popular in European welfare states (Kvist 2013). The diffusion of social investment during the crisis has been cited as testament to the fact alternatives to austerity are still in place (van Kersbergen et al. 2014). An unanswered question remains how and why the use of social investment has been insufficient in limiting the rise of inequality in Europe.
As rightly suggested by Hopkin, the new ‘anti-system’ politics in Western democracies ‘Shak[es] the existing consensus around economic integration, free markets and liberal values’ (2017: 476). Crucially, one of the central purposes of social investment has been precisely to overcome the purely Keynesian paradigm, by mixing redistributive concerns with liberal market principles. While mixing insurance, redistribution and markets has been a longstanding feature of European welfare states (in particular in the Beveridge system) social investment attempted to strike a balance between these elements. The influence of post-neo-liberal ideas can be traced to several places: the idea of investing in human capital, and in reference to equality of opportunity, the relevance to choice and the important role of the market in delivering social provision (Jenson 2012). Some have found problematic ambiguity and have argued that the choice of justifying social expenditure through economic investment would have undermined the very existence of social policy (Barbier 2012). The defenders of social investment stress, instead, that alongside a liberal version of social investment, there is a Scandinavian version that places more emphasis on public investment for education and training – as well as activation measures and investments in getting workers back into the labour market; and childcare (Bonoli 2009). While this distinction might be relevant when looking at the empirical applications of social investment, in this instance, I am interested in discussing the principles underlying social investment and their effects on European social policy-making.
Encouraging Private Investment in Higher Education
A core limitation of social investment policies is the nexus between higher education and labour market policies, which has affected young people in particular. Since the early 2000s European youth policies have been designed around the strategy of investing in higher education (HE) from a human capital approach (e.g. for the EU Youth Strategy 2008–12) (see Bessant and Watts 2014). Participation in HE reached its peak before the crisis and has remained stable since, but has not contributed to reducing inequalities (Antonucci 2016).
Social investment policies have wrongly assumed that a supply-side focus would automatically smooth youth transitions to the labour market, in particular for young graduates (Keep and Mayhew 2010). In reality, with the development of higher qualifications, the value of lower qualifications has declined. Despite having the most educated labour force in its history, the EU is increasingly affected by the issue of graduate unemployment and underemployment, with graduates taking up jobs that do not require a degree. Social investment has used the expansion of higher education as an economic panacea, but this expansion has resulted in a decline in the economic value of qualifications in the labour market (Keep 2012). This reality does not deprive higher education of its social value, but, rather, highlights that the policy assumptions made about the automatic smoothing effects of degrees in the labour market need to be revisited. Crucially, the social investment paradigm has placed an emphasis on higher education as a form of investment in human capital (see Nelson and Stephens 2012), not as a path with a social value per se, therefore undermining its social function.
Social investment policies also cannot begin to address another problem that is becoming increasingly visible in the public domain: making young people and their families take on (privately) the costs of this expensive investment, thereby increasing inequalities among young people through higher education. Social investment policies in HE have indeed focused on macro HE spending (Nelson and Stephens 2012), neglecting the stratification effects of shifting towards individual funding (Antonucci 2016). As shown by Piketty (2014), student funding is a crucial mechanism to reinforce existing wealth inequalities and reproduce them across generations. During their mass expansion, HE policies have progressively shifted the focus to private forms of welfare support for young people under the principle that the previous system of student support reserved for the elite would have been economically unsustainable in a higher education system for the masses (Trow 2006). So, paradoxically, with the move of HE from the elite to the masses, which has meant access for young people from lower socio-economic backgrounds, the systems of student support have become less generous in their public investment and increasingly based on private investment.
Several strategies have been developed in Europe to sustain the mass expansion and maintain a financially sustainable system, such as providing loans and asking students to pay fees (Salmi and Haptman 2006). This is in line with the idea in the new social investment state that it is not just the responsibility of the state to provide welfare, but the family and the market also need to contribute. The discussion of HE policies by the social investment literature reflects the focus on private investment by employing a human capital approach, which seeks to encourage the state to invest in institutions offering HE, but neglects the function of public spending on individuals in the form of student support (Nelson and Stephens 2012). As my cross-national research on inequality in higher education demonstrates, the privatization of student funding results in several issues affecting young people at university and their families (even in the Scandinavian version of social investment that is Sweden): use of private loans via the bank while in HE, mental well-being issues due to the difficulty of facing everyday costs, student housing issues, and a divide between those who can afford a comfortable student experience and those who struggle while in HE (Antonucci et al. 2016). In the United States, the burden of students on their parents affects the majority, ‘except in the case of children of the rich, who gain a huge head start’ (Hacker 2011: 34). Similarly, the increasing private contributions demanded of students in Europe affect young people from low and intermediate socio-economic backgrounds, leaving a minority of young people from upper socio-economic backgrounds benefiting from the system – which serves to contribute to increasing inequalities via higher education (Antonucci 2016).
Overcoming the Insider–Outsider Divide
The social investment literature has identified an inevitable division between insiders and outsiders in the labour market – a division which has shaped the subsequent reforms of labour market protection systems. According to this idea the tertiarization of the employment structure, the education revolution and the feminization of the workforce created a division between those who access standard jobs, and those who can access non-standard jobs (Emmenegger et al. 2012: 28–9). Emmenegger et al. (2012) identify a division between the low-skilled, who are in precarious jobs, and are therefore excluded from labour market participation, and high-skilled people who are labour market insiders and whose labour market needs are fully protected. This division fails to account for many current experiences of young graduates who remain outside labour market protection systems, despite having a high level of skills (see Murgia and Poggio 2014). It also neglects the existence of ‘mid-siders’, who are in precarious jobs and have features in common with the outsiders: they are in (very) low-paid jobs, have no job protection, and experience sporadic periods of unemployment (Jessoula et al. 2010).
More profoundly, social policy reforms have been developed in an attempt to limit the insider–outsider division by reducing the forms of social protection for insiders; however, these reforms have, in reality increased rather than tackled the existence of precarious jobs (ibid.). Clegg (2008) described a series of reforms that have reduced protection in the labour market with the idea of reducing insider protection: cost containment (consisting of cutting the level and duration of benefits and making eligibility criteria stricter); recalibration, with more focus on those with atypical work histories, accompanied by declining protection for those with a long work history; and activation, which has focused on increasing investment in training, as well as implementing stricter job-search procedures, including sanctions. As labour market conditions have sharply deteriorated in recent years, scholars have started to overcome the dichotomy between labour market insiders and outsiders. As correctly indicated by Keune, this division is analytically unhelpful: it does not capture the fact that ‘differences between groups of workers are more a matter of degree’ and is based on a, ‘mistaken belief that the interests of insiders and outsiders necessarily differ’ (2015: 51). The diffusion of precarity might create common experiences across different social groups. Marx and Starke (2017) have shown the new politics of inequality surpass the insider–outsider division, as demonstrated by the recent support of the German Social-democratic party to ‘outsider-friendly’ policies. As stated by Keune: ‘The fate of the two groups is interrelated and employers use precarious workers to put pressure on the wages and conditions of standard employees’ (2015b: 396). Recent evidence (see also Gallie et al. 2017) shows the widespread diffusion of precarity asks for shared policy solutions that also speak to previously considered outsiders in the labour market and overcome this division altogether.
Finally, another important effect of social investment on social protection has been to shift resources from cash transfers to provision of services, resulting in negative effects on poverty (Cantillon 2012; Nolan 2013). Due to the idea that outsiders had to become insiders with more training, social policy has devoted fewer resources to sustaining the living standards of the poorest parts of the population. Since the crisis, even in the EU’s most developed welfare states, minimum income protection systems for work-poor households with children have fallen short compared to the poverty threshold (defined as 60 per cent of the equalized median household income) (Cantillon et al. 2015). Social protection systems have focused on job growth since the 1990s, and have neglected the importance of direct cash redistribution (Marx 2013). As an effect of those changes in protection systems, precarity is now widely diffused among those in work, touching larger segments of the population than only the ‘left-behind’.
The Way Forward for Social Democracy
Social policies are crucial instruments for social democracy, both in their capacity for triggering political support and for the transformative effects they potentially have in European societies. In this section I will review three areas of reform that could overcome the limitations of the current progressive paradigm: the popularity of universal principles in social policy-making; the necessity of updating labour market protection systems; and the need to have a new paradigm for social policy interventions that overcomes both austerity and the limitations of social investment, able to tackle the new inequalities.
Restoring Universal Principles
Looking at the growing mismatch between European lives and European policies described above, it is not hard to understand why a basic income strategy, as a universal and unconditional form of support, is becoming so appealing. A basic income policy would offer direct cash and its unconditionality would break the costly (and often counterproductive) orientation in our social protection systems towards means-testing. A basic income policy would partially address the gaps of the current system of social protection by offering support for ‘the precariat’, namely providing a safety net for those who experience frequent spells of unemployment in current precarious labour markets (Standing 2011).
Basic income activists tend to portray the basic income as an inherently positive policy strategy (Standing 2017). This is not always the case. For example, the Silicon Valley version of a basic income, which has gained momentum in venture-capital circles, promotes an idea of welfare without the welfare state that risks reinforcing existing inequalities. The venture-capitalist initiative ‘Y Combinator’ is working to create a market-based basic income measure. This private version of a basic income without a welfare state, however, does not allow the exploitation of a key feature of a basic income strategy: its capacity to de-commodify people’s lives, namely to make people able to survive without having to rely on the market.
Furthermore, a basic income policy will not directly address one of the main drivers of social exclusion: in-work poverty generated by the declining level of wages. One of its major caveats is that it does not deal with labour market failures, such as the presence of low wages. A basic income policy which is not combined with a strategy to ‘make work pay’ would end up using public resources to absorb social externalities created by the market, such as falling wages. A basic income strategy cannot be considered an all-embracing strategy for issues of inequality and poverty as Standing (2017) assumes, and other ad hoc measures should be implemented to address the declining condition of people in the labour force.
Despite the many weaknesses of this instrument (see the persuasive Sage and Diamond 2017), the basic income has some merits. First of all, it is indicative that, as reported by recent European-wide (Neopolis 2017) and British (Ipsos Mori 2017) surveys, the majority of individuals have at least some familiarity with the concept of basic income, and the majority of them also state that they would vote in favour of its implementation. The motivation behind the support for a basic income challenges one of the most persistent mantras in social policy and political circles to have emerged in recent years: the idea that, after New Labour, Europeans have abandoned support for universal provision in favour of means-tested provisions, in particular in the area of unemployment benefits (see Deeming 2015; van Oorschot 2002). According to the respondents of the European study (Neopolis 2017), the top three effects of basic income would be the possibility of reducing anxiety about basic financing needs, the creation of more equality of opportunity, and the encouragement of independence and self-responsibility. Individuals remain in favour of some forms of conditionality: when asked about their strongest fears in relation to basic income, the majority of respondents agree with the possibility that it could encourage people to stop working, while two popular reasons to be against are the idea that foreigners might take advantage, and the belief that the system would be impossible to finance. The financing issue comes up in the research on basic income by Ipsos Mori (2017) showing widespread support that decreases substantially if it is to be financed by raising taxes. For these reasons, we could think about basic income as a proposal that could be implemented for categories of people that society recognizes should not have to work, such as students. Considering the issues of higher education costs I presented above, the idea of a basic student income (Antonucci 2016) could be considered appealing. Overall, the idea of basic income challenges dogmas that pervade European social policy, not least the popularity of means-testing, and the assumption that public support favours means-testing (Taylor-Gooby 2012).
Updating Labour Market Protection
Alongside basic income, another relevant policy discussion concerns the reforms of labour market protection systems, under the assumption that current systems are rigid and unable to cope with the flexible nature of contemporary labour markets.
An appealing proposal in European social policy has been creating Individual Activity Accounts (IAAs) for each new entrant into the labour market, where points are earned on the basis of the type of job and are fully portable across sectors and jobs (Pisany-Ferri 2015). According to this scheme, rights and benefits would be attached to individuals, not to companies or employment status. The points accumulated could be ‘spent’ across various areas of welfare provision, for example in receiving training or for pension benefits. The flexibility and freedom to choose are certainly appealing features of this proposal. Such individual-based systems would not exploit the benefits of a collective social protection system which offer ‘risk pooling’ across generations and groups of workers. The current limitations of labour market protection systems lie not only in their rigid organization, but in how the collectivist principle has not created new lines of solidarity relevant to our contemporary societies based on gender, age and other dimensions.
A reformed system could instead take the shape of a contemporary version of Bismarck’s kasse, namely a scheme aimed at pooling resources from employers and workers. These modern versions of kasse should be dedicated to precarious workers, and able to cover short-term spells of unemployment and transitions from education to work. These forms of labour market protection are intended for those in work and in temporary contracts who face spells of unemployment and irregular patterns of income. Employers and those with more regular working patterns should contribute to the funding of those systems in order to ensure ‘risk-pooling’. The mechanism of funding such systems is crucial in order to redefine the respective contributions of work and capital in contemporary global capitalism.
Many commentators see the current informatization and digitization of the economy and the passage to the fourth industrial revolution as roots of very profound changes in work (Mason 2015). The ineluctability of the fourth industrial revolution, and its implications for work, is taken for granted even among left-wing figures, who are now proposing measures to manage (rather than to oppose) such labour market evolutions.1 Initiatives regarding the ‘revenues’ of the new labour market protection systems are already starting to be proposed across Europe. For example, there is a discussion of a so-called ‘tax on robots’ involving taxes that are designed to obtain a societal revenue from companies which are IT-intensive and rely heavily on automation. These ideas have been put forward in a recent recommendation by the European Parliament (European Parliament 2016), and are spreading across Austria and France, though they are in an embryonic stage.2 The modern kasse systems could be funded by putting a tax on automation which socializes the benefits made by companies that use automated production systems.
A New Paradigm for EU Social Policy
The reforms discussed involve not only nation-states, but also the complex governance of EU social policy in its powerful instruments (i.e. the European Semester) and competing policy paradigms (austerity and social investment). This does not mean that these reforms should occur at the European level – and setting up European-wide policies in this realm is unattainable at the moment – but that national social policies carry an inevitable European dimension.
Regarding the instruments, it is important to stress that during the crisis, the EU developed powerful policy tools to reform national social policies, such as the European Semester. The European Semester can be defined as a cycle of economic, fiscal and policy co-ordination that has been reinforced following the economic crisis. The European Semester has strengthened the process of tightening and subsuming social policy to economic objectives focused on competitiveness by transferring areas previously under ‘social policy’ into ‘economic governance’ (Crespy and Meinz 2015: 200). This is evident when looking at the example of labour market policies, and specifically wage-setting, which, even if formally excluded, is covered in the European Semester because of its competence in economic governance. As Bekker and Klosse point out, although the EU has no direct competence in matters related to pay, nominal unit labour costs are used as indicators to measure country performance. Through specific recommendations on economic issues, the EU can greatly influence countries’ social policies, in particular regarding wage-setting systems (Bekker and Klosse 2013).
The current debate on the effects of the European Semester on European social policy is open-ended. Regarding competing policy paradigms, some authors argue that the social policy targets (reduction of poverty and social exclusion) and the social investment agenda are inevitably affected by the strict fiscal discipline and budget rules (De la Porte and Heins 2015), while others find that recently the European Semester has become more social (Zeitlein and Vanherke 2018). For some scholars the national reforms pushed through the European Semester are promoting austerity and neo-liberalism (Crespy and Vanheuverzwijn 2017), while others find that the Semester embodies and puts forward the social investment paradigm (Bekker 2017). The influence on the EU is never considered to go beyond the social investment paradigm (when diverging from the neo-liberal and austerity paradigms). If the EU approach is influenced by the social investment paradigm, it is deeply affected by the limitations of social investment discussed above, in particular the neglect of inequality. This is evident when analysing the most recent attempts at reforming the European Semester and socialising it through a new Pillar of Social Rights (European Commission 2016, 2017). The language used in this Pillar is not new and reproduces the social investment paradigm, referring to equal opportunities and access to the labour market, dynamic labour market and fair working conditions, and social protection and inclusion. In other words, social inequalities are excluded by the EU policy-making infrastructure, despite the effects of economic policies on social inequalities.
Conclusion
If globalization is a ‘losing game’, the losers are not just a small group of the ‘left-behind’. Even those who were supposed to win from globalization – the educated and intermediate classes – are affected by growing inequality and precarity. Separated by the so-called cultural divide, old and young, insiders and outsiders, and the high- and low-skilled in reality meet in their increasingly challenging material conditions; for this reason both groups are moving away from the established political blocks of European policies (Christian democracy and social democracy). In this sense the focus on the cultural divide behind the Brexit effect, which is the subject of most public debates on this issue, hinders the potential of creating cross-societal coalitions to address the declining material conditions of vast segments of European populations.
Public policies, which are crucial in shaping the material conditions of individuals, seem unable to respond in their current form despite the potential window of opportunity that 2008 opened up to recalibrate economic and social policy. Some core flagships of the social investment paradigm have consisted in enhanced social mobility, upskilling and increasing the participation of younger generations in education. The limitations (if not contradictions) of these policies are visible to all: graduate unemployment and underemployment, growing inequalities through higher education, and the most educated generation in Europe at risk of becoming the ‘lost generation’. The turn towards means-testing, the disappearing role of cash transfers, and the lack of policies addressing the realities at work of both outsiders and insiders have weakened social bonds in European societies.
The current realities of the so-called European lost generation and the angry working class pose an important dilemma for social democracy; if austerity cannot deliver any long-term solution, social investment does not seem well equipped to address entrenched inequalities either. The appeal of the basic income across Europe tells us there is a profound need to restore the universal principle of creating bonds among different social groups. In its imperfect (and in all probably unrealistic) nature, basic income helps to challenge the dogma of the spread of ‘means-testing’ in contemporary social policy. The most pivotal area of reform for social democracy is beyond the basic income; it concerns updating labour market protection systems which, paraphrasing Esping-Andersen (1999), are increasingly ineffective as they mirror a society that no longer exists. Finally, national policy reforms would be limited in scope if they were not accompanied by profound reform of EU social policies, in the procedures of social policy-making (European Semester), as well as redefinition of the dominant policy paradigms (austerity and social investment).
Several years ago, Taylor-Gooby (2012) identified a Left Trilemma affecting European social democracy: the difficulty of finding plausible responses to the economic crisis, developing generous and inclusive social policies, and addressing issues relevant to public opinion in order to be elected. If the current social malaise was channelled and articulated through support for reformed welfare state intervention, as appears increasingly possible, the ‘Left Trilemma’ (Taylor-Gooby 2012) would become the usual European social democracy dilemma: finding a way to address social inequalities while taking into account major budgetary constraints.
Notes
1. See, for example, the current work on these topics inside the British Labour Party (e.g. Labour List (2016) http://labourlist.org/2016/11/corbyn-tell-business-well-use-the-state-to-power-new-industrial-revolution/).
2. For example, the Machine Tax, or Maschinensteuer, is currently discussed in Austria and a tax on robot to fund Universal Basic Income was included in the agenda of Benoit Hamon, the candidate of the Socialist Party at the latest French presidential elections.
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