04/09/2020
The time for adjustments and tinkering is over. Well before the ongoing Covid-19 crisis, inequalities and social injustice had mounted in most Western countries to a point where they produced widespread resentment and triggered an ‘authoritarian dynamic’: a rejection of diversity, a call for sanctioning outlying behaviour and for building walls to defend closed communities. The lessons of the past and what we know of the present tell us that those inequalities are likely to rise even further. As in previous modern pandemics and disasters, the economic and social effects are asymmetric and tend to increase existing personal and territorial inequalities. Therefore, returning to the pre-Covid-19 so-called ‘normality’– if ever possible – must not be the aim: a U-turn in policy making is indispensable!
Such a U-turn is not just a matter of investing large amounts of resources. It is a matter of rebalancing powers, pursuing social and environmental justice and rejuvenating democracy.
The European Union has the opportunity to play an important role in this U-turn, showing that it can add value to the life of all European citizens, especially the most vulnerable. It should pursue the “harmonious development” that its Treaty promised to deliver.
In the first weeks of the pandemic, a strong EU-wide response came only, as in the past, from the European Central Bank, thanks to its federal nature. But, after much hesitation, an agreement was achieved on a Recovery and Resilience Facility, conceived as an EU-wide and EU-financed tool. It is a remarkable step. It must not be wasted.
The current regulation proposal for the facility states that “Member States wishing to receive support […] shall submit a plan” which, among other things, “shall set out an explanation” of how it is “expected to contribute to the green and the digital transitions”, and how it “strengthens the growth potential, job creation and economic and social resilience of the Member State concerned, mitigates the economic and social impact of the crisis” and contributes “to enhance economic, social and territorial cohesion and convergence”. These words must not be hollow!
Drawing from the analysis, vision and strategy put forward by the Italian “Forum Disuguaglianze Diversità” (ForumDD), an alliance of civil society organisations and researchers, I will argue here that the objective of social and environmental justice should guide the EU in the use of both the Multiannual Financial Framework (MFF) and the new Recovery and Resilience Facility, and I will present some concrete and actionable proposals. They are inspired and backed by an assessment of the nature and causes of current inequalities and of the impact of the Covid-19 crisis, which is our starting point here.
It is by now widely recognised that the reduction of economic inequalities within countries had come to a halt by the beginning of the 1980s and had been reversed in most countries. In Europe this is shown by any indicator of personal income and (even more so) wealth inequality, and by any measure of regional inequality, as well by the rise in poverty. The non-monetary dimensions of well-being took a hit too. The expectation that inequalities in education, health, housing, mobility and other fundamental services would be progressively reduced by the process of European unification were frustrated in most Member States. At the same time, ‘recognition inequalities’ were also rising: many social groups – invisible manufacturing or gig-economy workers, teachers, people living in remote rural areas – increasingly felt that their role and views were not recognised and that their aspirations were being ignored by the authorities.
As economist Antony Atkinson argued in his ground-breaking book Inequality: What Can Be Done?, there was nothing unavoidable in this early 1980s shift.
Three major changes challenged the post-war ‘Social Democracy’ model. Globalisation, while helping to reduce inequalities among countries across the world – a remarkable achievement – weakened the power of organised labour in the West through a major rise in (cheap) labour supply. The rising digital technology offered significant long-term opportunities to enhance social justice but had the immediate downside of a major concentration of knowledge. The fragmentation of society and of the labour process – reduced labour concentration, offshoring, revival of the putting out system, rise of pseudo-independent labour, the narrative and reality of more fluid social positions, etc. – made it more difficult for mass parties to represent people. All three challenges could have been met, in order to rejuvenate the existing social model. Their negative effects were instead deepened by a major cultural turn: neoliberalism.
Neoliberalism’s general features are clear-cut: markets and corporations are seen as capable of delivering by themselves collective well-being, except for ‘imperfections’. Capitalism is considered as the cultural and political institution shaping common sense (individual autonomy, values, denial of reciprocity, etc.) and determining power relations. Labour is not recognised as a collective subject. Class subalternity linked to the control of capital (either material or immaterial) is obscured and so are its relations with racial and gender subalternities. Inequalities are seen as a temporary price to pay in order to allow growth, which eventually ‘will sweep away those inequalities’. The state is conceived as the tool for enacting the strategies designed by ‘technocrats’ and inspired by private corporations. Citizens count by voting, consuming and exerting their freedom to exit – from services, jobs and territories – not by using their voice and participating in a heated and open debate. ‘Conflict’ is considered evil, rather than the salt of democracy.
Neoliberal culture has inhibited most left-wing parties. By evoking the alibi of a ‘liquid society’, they have given up creating alliances of social groups and have retreated to a role of ‘responsible’ policymakers. The power of labour unions has been actively curtailed. Complexity is tackled by entrusting decision-making to ‘experts’ and technocrats. Policy choices are presented as technical, as if they were the result of an objective maximisation of ‘efficiency’, univocally defined, hiding the clear-cut political choices that they embody. Rules and institutions are designed in a ‘one size fits all’ fashion, as ‘space-blind best practices’. They make no use of the knowledge and preferences embedded in the territories and, if anything, are shaped to the needs of people living in city centres: a major cause of the increase in territorial inequalities, affecting people living in most peripheries and rural areas. The bifurcations created by technological change are dealt with as if there were no alternative: this is how the sovereignty over digital platforms came to be entrusted to private corporations. The 1994 Agreement on Trade-Related Aspects of Intellectual Property Rights under the auspices of the World Trade Organization (TRIPS) provided the seal on the process of concentrating knowledge, by giving a much higher stance to the protection of intellectual property rights than to the principle of free access to knowledge. A very illiberal move.
This diagnosis of the origin of inequalities allows us five propositions.
- First, since inequalities are the result of policy choices, they can be reduced by policy choices. Social and environmental justice, defined (with the economist Amartya Sen) as “sustainable substantial freedom”, or “the capacity to expand the freedoms we have reason to value” and to ensure at least the same freedoms for the next generations, can indeed be pursued. This should be and can be the defining goal of left-wing parties.
- Second, this objective calls for a major political and policy U-turn, intervening in the very process of wealth creation (pre-distribution), rebalancing powers and promoting a change in common sense. Labour should be given the tools to negotiate and participate in the firms’ strategic decisions. Space for a heated, open and informed public debate should be promoted in order to allow citizens’ participation. A gender perspective should be taken in every policy field. A major investment should be made in the renewal and quality of civil servants, enabling them to promote and govern public debate and to take discretional decisions geared to contexts. The process of knowledge concentration should be reverted.
- Third, such a U-turn can be initiated and put into practice at territorial and national level, but it also calls for a major coordinated effort at EU level, in order to achieve the necessary critical mass and to stop a ‘race to the bottom’ among Member States.
- Fourth, this U-turn will meet strong resistance by all those people who benefit from the current state of affairs. There is no one single solution that is good for all. There will thus be the need to cope with different views of the world, which is why conflict, heated public debate and negotiation are the salt of democracy.
- Fifth, left-wing parties will therefore need to build social alliances, combining and responding to “a multiplicity of heterogeneous demands” (Chantal Mouffe), to lead and win conflicts. For that to occur, left-wing parties should develop clear-cut proposals through public debate with civic organisations and organised labour, when designing new forms of organisation suitable to our modern society.
The time has thus come to pool together the radical ideas and proposals that have resulted from the mobilisation of civil society organisations, labour and culture which over these years have filled the gap created by retreating traditional parties. Here I’ll refer to three concrete proposals put forward by ForumDD.
The first proposal addresses a paradox. A powerful network of about one thousand public research structures exists in Europe, with autonomous budgets financed by coalitions of European countries and with an international management motivated mostly by non-monetary incentives. This network produces technologically advanced open knowledge with agreed objectives, offers opportunities for training, generates and manages freely available big data. But only a few corporations, by making use of their own research, can truly access this open knowledge in order to produce marketable innovations. In the fields of health, digital transformation and green transition – to mention the three main examples – consumers therefore end up paying again for what they have already paid for through taxation, while also freely providing their own data to privately owned digital platforms. Furthermore, the creation of strong monopolies or oligopolies produces an unprecedented concentration of knowledge and power, cuts off the rise of new firms, discriminates against people who cannot afford the prices and, in the case of health, puts at risk the very existence of national health systems.
Regulation can be improved but it is not enough. As in other turning points of capitalism – the development of world trade in the 17th century, the development of railways and several utilities, the catch-up process of second-comers – there is a need for state-owned enterprises to come onto the market and compete with the existing private giants. These international technological hubs, open to the investment of private capital, in the fields of health, digital transformation and green transition, would be able to pursue long-term objectives in line with the mission strategies assigned by the EU. High-level management would prevent short-term political interference, while guaranteeing that these objectives are pursued. Monopoly positions would be eroded, innovative goods and services would be sold at prices covering marginal costs, innovations would be pursued that are not deemed convenient by private monopolies – as is the case for vaccines. Furthermore, the new public corporations would favour a knowledge transfer to clusters of small and medium-sized enterprises (SMEs). All major EU Member States still rely today on a strong core of state-owned national enterprises: an alliance among them could trigger the creation of these hubs.
The second proposal concerns the use of the MFF and the Recovery and Resilience Facility and addresses the nature of national plans for their implementation. There is a great risk of a ‘bastard-Keynesian’ solution: most of those funds being injected into the economy through unconditional subsidies to firms and persons or through unconnected, ready-made infrastructure or training ‘projects’. Both uses fail to respond to the need for a radical change and would even fail to reproduce pre-Covid-19 ‘normality’. Providing liquidity to good firms hit by the crisis, as well as to people who lack the means to reach the end of the month, is of course necessary – and even more so if further lockdowns become necessary. This is the task of the temporary Support to mitigate Unemployment Risks in an Emergency (SURE), designed by the EU. But this is only a precondition and it can be misused if no radical overarching strategy exists. As for ‘projects’, they are obviously what any plan finally boils down to, but first there must be a strategy. Investing in fast-spending ‘projects’ that each public administration has ready in their drawer leads nowhere: while providing construction workers and trainers with some short-term oxygen, it does not respond to people’s aspirations and to the need for change. It rather increases the profits of those with more power to push forward ‘their own’ projects.
The purpose of national plans should rather be to promote a rebound towards environmental and social justice. Efforts should be concentrated in the marginalised areas of Europe – such as inner and rural areas, city peripheries, deindustrialised areas – where the endogenous market and democracy reactions to the crisis cannot suffice. Offering people living in ‘places that don’t matter’ an alternative to the authoritarian dynamic, turning their anger into a push for social advancement, removing the obstacles to their creativity, are primary objectives today. And even more so as the Covid-19 crisis is producing adjustments in consumer preferences – for example, towards health and social care, better and life-long education, decent housing, locally produced food, short-distance tourism, and flexible mobility – that can trigger new entrepreneurship, and the redrawing of their life plan by workers and entrepreneurs. EU resources should be used to unleash these “animal spirits” (“a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities”, as John Maynard Keyenes described them in his book The General Theory of Employment, Interest and Money – and to improve the quality of public services geared to people’s aspirations. For this to happen, a ‘place-based approach’ is needed.
In a place-based approach, open-ended guidelines, with general objectives and conditionalities, are issued at national level, coherent with EU-agreed priorities, while implementation is left to ‘places’ through integrated strategies produced by means of a participatory process with all stakeholders and citizens. This approach has been tried with success all over Europe and it has proved to be more effective when the choice of place boundaries – alliances of small municipalities or sub-sections of metropolitan areas – is endogenous to the policy process. The existence of common objectives, of homogeneities and complementarities, of the willingness to work together, can be judged by the national authorities that run the plan and assess the territorial strategies.
The third proposal concerns the rebalancing of labour power. It draws from the experience of ‘works councils’ operating alongside the board of directors in the companies of some EU countries, and develops it by taking into account the need for both labour and environmental perspectives to have a greater weight in firms’ strategic decisions. The specific proposal prepared for Italy calls for the following steps: creating – first experimentally, then by law – labour and citizens councils in medium-sized and large firms or for SME districts; electing representatives of the entire vertically integrated production system, including precarious workers; electing citizens representing environmental and consumer interests;entrusting the Council with different powers (to be informed, to make alternative proposals, to veto) according to the issue at hand. In this way, the main stakeholders would not be ‘consulted’ here and there, but could debate among themselves. The technical quality and strength of their collective action would improve; stable and precarious labourers would be reunited and would have a chance to reconcile their views; and labour and environmental perspectives would not clash ex-post but would search for solutions ex-ante.
Every EU Member State has its own social and labour arrangements, that must be taken into account. The EU could thus elaborate recommendations promoting country-specific institutional arrangements that favour territorial cooperation among stable and precarious workers; promote a heated, informed and open debate at territorial level among labour and holders of environmental and consumer interests; raise the technical competence of these stakeholders; and introduce firms’ duties in reacting to or adopting stakeholders’ assessments and decisions.
These are just three concrete examples of the U-turn in policymaking that Europe needs today. Many other concrete proposals have been developed by ForumDD – such as on steering the green transformation in favour of the most vulnerable people, and on levelling the field for youth in wealth inheritance – as well as by many other ‘social alliances’ that have sprouted up across Europe. The time has come for these ideas to be brought together in a concerted effort.
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