Downloading PDF. Please wait... Issue 1997

Bubble bursts for European business elite

This article is over 15 years, 9 months old
The victory of students and workers in France against neo-liberal labour laws is the latest in a series of setbacks for the ruling classes across the continent, writes Alex Callinicos
Issue 1997
Protesting against the CPE youth employment laws in Paris last month (Pic: Jess Hurd/ http://www.
Protesting against the CPE youth employment laws in Paris last month (Pic: Jess Hurd/

It will soon be a year since the defeat of the European Union (EU) constitution in the French referendum. That marked the beginning of a series of defeats for the neo-liberal agenda in Europe that has sent a paroxysm of rage through the global business establishment.

“Europe Stalls on Road to Economic Change,” intoned the New York Times on Friday last week: “After this week’s extremely close election in Italy, there is a strong sense in Europe that, because of weak governments and divided publics, the continent’s big three countries are unable to make the economic changes that most political leaders agree are essential to restoring growth.

“At stake, in the view of many European experts, is the ability of countries like the big three – Germany, France and Italy – to adapt to a globalised world in which Europe’s high labour costs and low population growth could portend long term decline, not just of economic power but of political influence as well.”


The problem is real enough. Unlike Britain, the main continental economies still have big manufacturing sectors. This means they are especially vulnerable to competition from low cost producers, above all in China.

The political, business, and media establishment across Europe is therefore firmly committed to the so called Lisbon agenda adopted by the EU in 2000. This is a package of free market “reforms” that would slash welfare provision and the protections that workers won during the 20th century.

The trouble is that there is an enormous gulf between the establishment and the mass of the population. Before the Italian elections an economist at Bank of America told the Financial Times:

“Italy needs a massive dose of pro-growth reforms, deregulation, and liberalisation of products and labour markets, privatisation to reduce the still large presence of the state and a big shake-up in the public administration.

“The electorate prefers more social protection and social spending than lower taxes and deep supply-side reforms.”

Italian big business had despaired of getting “reforms” under Silvio Berlusconi’s erratic and corrupt premiership. It hoped that Romano Prodi, who as Italy’s prime minister in 1996-8 carried out the spending cuts required for the country to join the euro, would provide a steadier hand. But his wafer-thin majority will leave his new government dependent on the votes of the far left Rifondazione Comunista.

Massive popular commitment to the welfare state is the rock against which the neo-liberal agenda has broken elsewhere in Europe. Gerhard Schröder’s centre left government in Germany started to implement “reforms” that slashed unemployment benefits.

In last September’s federal elections millions of voters deserted the two main parties, many to vote for the Linkspartei, a new radical left formation.

The mainstream parties were forced into a “grand coalition” under the conservative Christian Democrat leader, Angela Merkel, that business fears is too weak to make further inroads into the welfare state.

But it is in France that resistance to neo-liberalism has been most intense. The rebellion against prime minister Dominique de Villepin’s CPE law that would have made it easier to sack young workers is the latest in a cycle of revolt that has lasted more than a decade.

It began with the public sector strikes of November and December 1995, which brought down president Jacques Chirac’s first premier. Then came the massive teachers’ strikes of May and June 2003, and the defeat of the EU constitution last year.

The defeat of the CPE left Financial Times columnist Martin Wolf almost frothing with rage: “In France, remarkably, the population seems to believe that everybody can – and should – be treated just like a civil servant.

“They seek a miraculous combination of almost absolute job security with rising prosperity. In a rapidly changing world, this is a form of collective cognitive disorder.”

Edwy Plenel, former managing editor of the French left-liberal daily Le Monde, raved that the victory of the no vote on the constitution marked the rise of “a national revolution” – a reference to France’s pro-Nazi Vichy regime.

This kind of abuse can’t mask the fact that, despite the fact that mainstream political parties and the mass media are solidly behind it, the establishment has completely failed to persuade the mass of people of the necessity or desirability of neo-liberal “reform”.

“The anti-liberal clerisy [intelligentsia] has basically won the intellectual argument in much of Europe,” whines Charles Grant of the Centre for European Reform, a Blairite think-tank. “They’ve fostered the view that liberal economics leads to a kind of Dickensian vision of child labour and old women crying in the streets.”


The element of truth in this is that, since the late 1990s, the movement against neo-liberal globalisation has emerged as a powerful political force in continental Europe.

A systematic critique of neo-liberalism has been widely circulated by the monthly Le Monde Diplomatique and by writers such as Pierre Bourdieu, Noam Chomsky and Susan George.

Attac, founded in 1998 to oppose international financial speculation, was an important force in the campaign against the EU constitution in France.

Its German branch has worked with the trade unions to oppose Schröder’s “reforms” and the EU Bolkestein directive that threatens the wages and conditions of service workers.

In Italy, the mass protests at the G8 summit in Genoa in July 2001 and the anti-war movement have made opponents of neo-liberal globalisation an important force around Rifondazione Comunista.

But the problem for Europe’s ruling classes goes much deeper. The mass of European workers remain committed to the project of traditional social democracy to use the power of the state to protect them from the worst excesses of capitalism.

The mainstream parties of the labour movement have now abandoned that project and embraced neo-liberalism.

This opens up a space to their left. As the German elections showed, many social democratic voters, deserted by their traditional parties, are looking for a political alternative.

The challenge facing the radical and revolutionary left in Europe is to prove that they can offer this alternative, as Respect is trying to do here in Britain.

If they succeed, then the crisis of the European ruling classes will prove to be even worse than they already think.

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