Progressive ideas and policy practice in Britain need to find common expression with social democrats
in Europe and further afield. In a world characterised by new forces of insecurity and greater global interdependence, we should no longer pretend that detachment or isolationism is
a viable strategy for parties of the left.
Our challenge today, if we are to realise our traditional commitments to full employment, social justice and strong public services, is to establish a progressive international settlement – not just in foreign affairs but also in domestic policy. That requires constant dialogue with other social democrats around the world.
A welcome advance is the creation of the joint PLP-SPD young parliamentarians’ initiative, organised through the London office of the German centre-left institute, the Friedrich Ebert Stiftung. Set up to debate the common challenges facing the left in Britain and Germany, it has quickly emerged as a crucial forum for exchanging ideas among a new generation of progressive politicians.
Recent discussions have focused with particular intensity on how the British and German governments should reform the state and public sector. Ten years ago the left in Britain gazed wondrously at the German social market as the powerhouse of the European economy. Germany’s ability to combine sustained growth with high employment and a comprehensive welfare state providing ‘cradle to grave’ security looked immediately attractive to Labour politicians desperate for a revival in their electoral fortunes.
Now it appears the tables have turned dramatically. Following its historic election victories in 1997 and 2001, New Labour is politically ascendant among European social democratic parties. Labour’s emerging philosophy of the ‘third way’ for social democracy has established itself as an important reference point for debates on the centre-left from Europe to Canada, Chile and Brazil.
By contrast, despite their stunning comeback in last September’s elections, Schroeder and the SPD look badly weakened, and their ability to assemble the political coalition required for achieving necessary structural reforms is now openly questioned in Germany. Many commentators in Britain and elsewhere assume that social democracy in Europe is today defined by ‘British passion for reform versus German inability to reform’. But this is mistaken. The two countries undertake reform projects from different traditions of constitutional system and political economy. Subtle comparative analysis is required. Yet too often the comparisons are partial and superficial, and overly pessimistic about the SPD’s prospects.
Labour is indeed in a powerful domestic position. Backed by an unprecedented second-term majority, it is now building
on the strengths of its first-term economic record by tackling some of the most intractable weaknesses of postwar Britain.
In contrast, the Schroeder government has to face fundamental structural barriers to reform.
First, the German constitution of 1949, based on federalism and the separation of powers, is orientated towards a permanent ‘consensus’ in German civil society. Since the 1990s, the deficiencies of these arrangements have become self-evident. Unpopular decisions are often avoided as public spending deficits spiral dramatically; the Conservative-dominated regional Lander may also block new measures out of naked self-interest.
Second, Germany’s economic performance worsened markedly in the 1990s and there are major structural weaknesses that continue to inhibit growth. These are partly a consequence of the huge costs of unification in financing infrastructure and welfare payments to the unemployed in eastern Germany. Unemployment recently leapt to 4.6 million and Germany’s generous welfare system is heading for insolvency.
The SPD could hardly face a more formidable challenge ahead of its special party conference on 1 June. With a majority of only nine seats in the Bundestag, and a weaker position in the Lander, it will require enormous political courage and skill to see through structural reform of labour markets, welfare, health and pensions.
Yet, despite all the obstacles, Schroeder and the SPD have a historic opportunity. On their ability to achieve long-awaited restructuring of the economy and public sector in Germany rests the future course of social democracy in Europe.
First, Schroeder is an outstanding and talented politician. He has charisma and the powers of persuasion required for negotiating tough reforms with an insecure electorate. The Chancellor has rightly pledged to make 2003 ‘the year of reform’ and has a major window of opportunity before next year’s state elections.
Second, in Wolfgang Clement he is supported by a first-rate Minister of Finance who is both widely admired and trusted in Germany, understands the seriousness of the problems facing the country, and is prepared to see through unpopular measures.
Clement has already shepherded through two major labour market reform bills based on the Hartz Commission proposals, and is now working on a range of measures to modernise Germany’s job protection laws, and restrict benefits to those under 25 unwilling to take a job or training. This could provide the springboard not merely for more far-reaching changes in healthcare and pensions, but for the new German social contract set out in Schroeder’s long-awaited speech to the Bundestag on 14 March.
Finally, opinion surveys suggest that voters in Germany recognise change is a prerequisite for future growth and prosperity. A more sustainable long-term electoral coalition for reform is still possible.
So the capacity of the Schroeder government to achieve radical reforms is easily underestimated. But to succeed, it will need to heed lessons important for social democratic parties across Europe.
Labour and trade union interests have often been the most suspicious of ‘reform’: the term itself has become a proxy on the left for worsening terms and conditions, lower employment and weaker social standards. It is essential for centre-left parties to demonstrate these reforms flow from, and are consistent with, traditional commitments to solidarity and equality. The means may change, to paraphrase Tawney and Crosland, but the values never do. It was the former SPD premier Willy Brandt who once argued: ‘those who want to live securely tomorrow have to fight for reforms today.’
Throughout our history, from Clydeside to the Jarrow marchers, the labour movement has fought for the ‘right to work’. It is the most important social right of all: no one can fulfil the potential that lies uniquely within each of us if the right to work is denied. Today, the challenge is to tackle every barrier to employment that prevents men and women from reaching their potential.
It is self-evident that the institutions of opportunity and security on which our citizens depend need to be renewed for each generation. The only question is, can this be done in such a way that is consistent with the values of the left?
Equally, it is essential that reformers build and sustain alliances with those who work in the public services. Without their commitment, our hopes for reinvigorating ‘the spirit of public service’ in Britain won’t be fulfilled. But more importantly, reform means adapting working practices to give more flexibility to employees. This should be welcomed by workers and unions,
not feared.
Big postwar institutions in the public sector were a necessary feature of social reconstruction, but too often they encouraged top-down systems of authority that took power away from frontline staff. This is a priority for reform and is a prerequisite of more efficient service delivery.
Our measures to end the ‘two-tier workforce’ in Britain, ensuring that private companies compete on the basis of quality and innovation in the public sector, are essential to demonstrating that reform is not a threat to workers’ rights.
Over the next two years, British and German social democrats will demonstrate whether it is possible for parties of the left to undertake far-reaching reforms of the economy and public sector, while revitalising active government as the traditional instrument of social justice.
There are, of course, formidable obstacles facing the centre-left in Europe. But we have every reason to be confident. If we remain true to our values, while exchanging policy practice widely among progressive governments, we can build an enduring social democratic settlement for the 21st century.