Erkki Tuomioja:
”Blairism – A Beacon for Europe?”
Keynote speech at the Round Table discussion on the future of
the European welfare states at the Finnish Institute, London 29.5. 1998
No-one can remain indifferent to the example of a party which sweeps
into power with a record majority – even if it won a smaller proportion
of the popular vote than the Sandinists did in Nicaragua when they lost
the country’s first free elections. After the elections labour has of
course managed to increase its approval rating to historical heights.
What relevance if any this success has for the European left in general
and Nordic social-democracy in particular is another thing.
As brilliant and successful as Labour’s election strategy and campaign
were I have reservations about the same strategy working elsewhere.
Having listened to some of the gurus employed by New Labour in its
election campaign I think that a good part of their advice was more or
less irrelevant for the left in most other countries, and in some cases
more likely to lead to electoral disaster rather than success if applied
in the Nordic countries.
Labour’s internal reforms have nothing revolutionary about them from a
European point of view. Essentially they have meant that Labour has now –
partly – liberated itself from trade-union guardianship and otherwise
adopted statutes and practices which have been more or less normal
practice in most European social-democratic parties.
As to New Labour’s post-election performance the verdict on Blairist
policies must be left open for the time being. Even if they do turn out
to be a success in the British context there is no a priori reason
to think that they could or should serve as a model for other European
countries.
The starting point is rather baffling: why should American and British
experiences and policies on welfare reform be of particular value or
significance when debating the future of the welfare state, when these
countries are not welfare states in any sense that is familiar to and
accepted by most people in the Nordic countries.
The USA has, of course, never been seriously claimed as a welfare state.
The UK, on the other hand, has had the reputation of a welfare model
with the Beveridge Plan and the reforms carried out by the Post-war
labour government. Even so it can be argued that these two countries
between them have more similarities in their liberal or residual social
policies than with other, corporatist, institional or social-democaratic
welfare regimes. They certainly have the most unequal distribution of
income as well as the highest instances of poverty to be found in the
OECD-countries.
Anthony Giddens seems to interpret this as showing that the welfare
state has not been particularly successful in combating poverty and
reducing income inequality. (Giddens 1994, p. 149) Looked at from the
Nordic countries – where the welfare state has been extraordinarily
succesful in eliminating poverty – an alternative interpretation would be,
that neither the US or the UK can be called welfare states.
This has not, however, prevented the US and the UK from being those countries
which foster the most radical, not to say hysterical critique and
condemnation of both welfare and the welfare state.
Thus any search for a ”Third Way” portraying neoliberalism of the
reaganism/thatcherism variety as one pole and social-democracy as the
other is of rather doubtful relevance in a European context.
The social policies of the Nordic countries and most European countries
are different from the US and UK in their universalist approach to social
insurance, benefits and public services. It is indeed true that the welfare
state of the Nordic variety benefits not only the least priviledged but
also those who are well-off. It is also true, that the more well-off are
have also more earnings-related benefits and that they are able to use
free libraries, education and even health services more than less-well
off people do. The better-off do, however, also contribute more to the
costs of the welfare state both through taxes and social security
contributions.
This is intended. The result is a considerable redistribution of
income on the one hand and enhanced social cohesion on the other,
with the vast majority of the population sharing common experiences in
maternity wards, day-care centers, schools, health centers and other
social amenities. Much effort has been directed towards preventing
the emergence of a marginalized underclass through both social and
physical investment. Social housing and city planning policies, for
example, have consciously tried to avoid creating socially segrated
neighbourhoods.
Thus, contrary to what Giddens says (NS 1.5. 1998), social-democracy of
at least the Nordic kind is not about class politics of the old left, but
about overcoming and eliminating old class distinctions and contradictions.
Needless to say this is not a product of authoritarian policies – they
would never have been succesful – but of democratic multiparty politics
in a pluralist and liberal society.
The Nordic welfare regimes are of course high tax regimes with a high
degree of state intervention. But to call this corporatism of the kind
where the state necessarily dominates over civil society as Giddens
portrays it is misleading. A central feature of the Nordic welfare
model is that it involves both civil society and especially local
government with a high degree of real autonomy in the actual running of
welfare services.
In fact most social-democrats would today rather use the concept welfare
society in lieu of welfare state. This particular example of newspeak
should not be interpreted as an indication of surrendering the state’s
responsibility for the overall provision of welfare services and social
security but as meaning that these do not necessarily have to be produced
by the state itself.
Nor is it easy to comprehend what is meant by ”a new mixed economy”
as opposed to an old one in the Nordic context, where battles over
public ownership as such have never had the central position they
have used to have in Britain.
A good example is the Finnish system of pensions which rather uniquely
combines elements of both a basic minimum income guarentee and
earnings-related general pensions as well as private sector
provision of universal and mandatory pensions through legislation.
The state pensions institute provides a tax-financed minimum pension
for everyone topped by earnings-related pensions which after thirty
years of work-history come up to 60 % of former wage levels. There
is no fixed ceiling to what a pension can reach, but neither is
their a market for private pension schemes.
Earnings-related pensions are funded and financed by contributions
from both employees and employers. Each employer can choose the private
insurance company which provides the pension-coverage, but the investment
policies of the companies are regulated and the pension-system as a whole
is liable to cover the pensions that a mismanaged company could endanger.
After recent adjustments to the contributions to and benefits from
the system it should be financially sound even taking into account
the future increase of the proportion of pensioners in the population.
The viability of the pension system – as of any social security in any
country – could, of course, be endangered by new recession and/or
less-than-expected growth rates. This growth-dependency, however,
is a challange common to all welfare regimes in all the OECD-countries
to which not even Blairism has been able to provide an answer in its
rhetoric, much less practice.
One could, I presume, call the finnish pension system an example of the
Third Way. Other examples of comparable welfare state management could
be taken from other European countries, such as the workfare schemes
in Sweden to which Giddens himself has referred to.
I am not claiming that everything is fine with the Nordic welfare states.
On the contrary there are grave problems of which the most pressing
are those connected with the high costs of the welfare regimes. The
problems were evident already well before the end of the full employment
most Nordic countries were able to enjoy for years. But the problems
became acute when unemployment in Finland, for example, shot up from
practically zero to 18 % as social costs skyrocketed with the social
safety nets functioning precisely as they were intended to do while
taxable incomes fell.
While the welfare state cannot be blamed for the economic
crisis it is evident the resulting public sector deficit cannot be
balanced with tax increases. On the contrary there is a need for cutting
income taxes at least for low-income groups and even for a slight
reduction of the tax rate as a whole.
Not all of this can be achieved through growth and better employement.
Thus cuts in social expenditure – which have primarily affected
income-transfers, not services – are also neces-sary. The Nordic
social-democrats have not – nor have most centrist parties
either – resorted to trimming down social expenditure through any
desire to dismantle the welfare state. Attacks against the welfare
state have no significant political or public support despite
prominent academic and media support for neoliberal measures.
Not even the prospect of massive tax reductions which the dismantlers
of the welfare state dangle before people has succeeded in mobilizing
opinion behind the neoliberal agenda, except for some of the very rich.
Thus what is now being done in the Nordic countries aims at making
the welfare state economically and socially sustainable. That it also
aims at making it capable of acting as a trampoline to help the unemployed
return to work may be an example of using new terminology but this is
not new either. The original idea behind Nordic welfare policies has
been specifically to activate those who would otherwise be marginalised
and incapable of pariticipating fully as both as producers and
consumers as well as citizens in our societies.
Although unemployment in Finland is now coming down at an encouraging
rate it remains much too high at 13 %. It begs the question whether
generous unemployement benefits, labour market-rigidity and/or a too
equal distribution of income are to blame for persistant unemployment
as neoliberalists claim. In fact adjustments have been and will continue
to be carried out to correct excesses in all of the mentioned respects
and they can be expected to contribute to ameliorating the employment
situation, but they do not aim at fundamentally changing the character
of the Nordic regimes.
This reflects an important characteristic of social-democracy, namely
its readiness to implement reforms on a pragmatic basis with the aim of
finding solutions that work, without being slave to either old dogmas
or new fashions. This may sound too good to be quite true, but as an
approach to social challenges it is at least as valuable and, in the
European context, surely more workable than the search for an ephemeral
Third Way.
The Third Way as expounded by New Labour spokesmen implies that the
left must reform its policies because they have failed. This is something
most European social-democrats would not agree with. Reforms and new
thinking are certainly needed, not because of social-democratic failure
but because the life-time full-employment conditions of fordist mass
production and consumption and of Keynesianism-in-One-Country on which
the Nordic model was originally built do not exist any more.
Blairism deserves the benefit of doubt. But until it has more solid
achievements to its credit it would do well to contain the high-power
marketing of its ambition to a beacon to Europe which risks overstepping
the fine line between the highminded and the ridiculous.
Nevertheless there is one example of Blairism which has been and will
continue to be a beacon for continental social-democrats: namely the
Blairism of Eric Blair, better known as George Orwell, whose appeal
for fundamental decency in human relations and rejection of all forms
of totalitarianism will always be valid guidelines for all us.
