The European Social Model as a concept is a relatively recent invention, and I am not sure that such an animal really exists. If it weren’t for globalisation and the competition it is perceived as entailing between the US, Europe and China/Asia, we would not be talking about a European Social1 Model. Thus the plural title of this event referring to the European Social Models is the correct one to use.
Indeed, it has been customary to distinguish between at least three different kinds of Welfare state models, the Anglo-Saxon/liberal, the Central European/corporative and the Nordic/Social-Democratic model. This was not only an intra-European distinction, as the more developed countries outside Europe could also be analysed using the same categories.
To juxtapose a European Social Model and the American one – which I would hesitate to call a social model at all – is motivated by reality as well as politics. The reality is determined more by the neoliberal orientation of American society and politics and its prononounced estrangement from European values than by convergence between the European models.
The politics are determined by the need to deepen integration in Europe where the European Social Model is a popular conceptional tool with which to rally support for the Lissabon strategy and all it entails in its (forlorn) striving to make Europe the most competitive region in the world by 2010. Thus the strategy documents stress not only economic competetiveness but also social and ecological competetiveness.
Nevertheless many Europeans see the reality as rather one-sidedly emphasizing the first one. Particularly after the adoption of the strategy six years ago it was customary to look only at the US as the example to follow in terms of productitivity, employment and economic growth.
Today the situation has become somewhat more balanced. More and more analysts and policymakers are beginning to doubt the wisdom of comparing ourselves with the US and have increasingly started to look at the best practices and results that can be found in Europe. Not surprisingly, it is the Nordic countries that have set the example, as all five of them are usually to be found among the top dozen countries in any of the international beauty contests where countries are rated for their performance in competitivity, their R & D spending and application of ICT, lack of corruption, the efficiency of their public administation, the level of environmental care, equality of income distribution, freedom of press and so forth. Also using the scoreboards for measuring the EU countries’ fulfillment of the Lissabon strategy goals the Denmark, Sweden and Finland come out on top.
For two decades or so our electorate has been subject to relentless bombardment from the powers-that-be and the media in their service telling us, that our Welfare state never was and certainly no longer is sustainable and that we have to forego our universal social services and job security, cut social security, public spending and taxes, privatize, outsource and open up for competion anything that moves; in short go for the full monty of the neoliberal agenda in order to survive.
Most people in our countries have never believed this and no political party has had much success campaigning on an open neoliberal programme and/or promises of large-scale tax cuts (as opposed to doing this after elections). Fortunately, encouraged by the assesment of those who, looking from the outside, tend to see the Nordic Model as an example, the recognition has been growing that the Nordic Model of a Welfare State, far from being a hindrance to our success, has on the contrary been an essential ingrediant of any relative success we have had in a globalizing world economy.
This is not to say that the Nordic countries are perfect, nor does it justify and complacency about the future of our societies. We are not clones in the Nordic family either. While Finland comes out on top on many criteria, we have the worse Nordic record on unemployment and our social services and social security coverage are less comprhensive than in other Nordic countries, which have lead some people in Finland to question if we really qualify as a Nordic Welfare State at all.
Broadly speaking, all European countries face the same challenges of global competition, lagging productivity and aging populations. The Nordic countries are no exception, but the important thing is that they seem to have a better basis for meeting them.
The Nordic countries, with their investment in R & D and their high quality of basic and higher education, are known for their techonolgical inventiveness and innovativeness. But are they socially innovative as well? I think the answer is yes, bearing in mind that there is no need to re-invent the wheel.
Where the neoliberal view of the social partners tends to be negative, we regard them as important elements for Finnish success. Again, they are not perfect, but current problems in industrial relation in the forestry industry are the exception, not the rule. The social partners have been able to guarantee wage stability, agree on flexible labour market practices and also to contribute to the necessary adjustments and changes to our pension schemes in a way, which means that there is no ”pension bomb” ticking away as is the case in most other European countries – provided of course, that we are able to bring down our unemployment and raise the effective age at which people go on pension.
Most of the things we need to do to ensure the sustainability of our welfare model are self-evident and uncontentious: invest in education and research; encourage innovations, entrepreneurship, risk-taking and creativity; be flexible and adaptive and so forth.
Equally important is to ensure that the universality of our social services and security are retained, that income and wealth differentials are not allowed to grow and that the central criterion by which we judge the success or failure of our policies is the welfare of the least well-off people in our society.
All this is of course easier said than done, How to understand and deal with, for example, any trade-offs between equality and security on the one hand and efficiency and growth on the other? Economists and social scientists can offer their services and they should be used. But at the end of the day the choice between different social models is not primarily determined by objective evaluations of their performance, but by the underlying values behind them.
A final word of caution. Notwithstanding the relatively high marks we have received for environmental policies, we are not yet set on the course of ecologically sustainable development. Our energy policies are particularly vulnerable on this. Finland is becoming a model country for the nuclear industry as well, which not all people regard as exemplary. Nuclear energy in its present forms cannot be part of the sustainable energy use we need to achieve sooner rather than later. If this is understood then nuclear power can be useful, acceptable and even necessary during the transition to a sustainable energy economy, but not if nuclear power is regarded as a panacea setting us free of the constraints of ecological liabilties, as is too often the case today.
When people talk about the need to reform the welfare state it is not always easy to know if they are in the business of saving or dismantling the welfare state. During our economic crisis of the 1990’s we were forced to do some heavy cuts in public expenditure. It was a time when, to paraphrase Melternich’s remarks on collabolators in the Europe occupied by Napoleon’s armies, patriots and traitors could only be distinguished from each other by their motives.