Today I will start teaching an MA course in Economic and Social Policy at the James Madison University (JMU) in Florence. I designed the course around the theme: ‘European Policymaking in Hard Times’. You can read the full module descriptor here.
The first class examines macro-economic trends in Europe since 2000 to examine the origins of the sovereign debt crisis, how this has impacted on national public policy, and changes in transnational European decision-making. It is based on a close reading of Fritz Scharpf’s ‘Monetary Union, Fiscal Crisis and the Preemption of Democracy‘, and Wolfgang Streeck’s ‘Democratic Capitalism in Crisis‘. The first paper, which I highly recommend, argues that the EMU caused systemic imbalances within the Eurozone that national governments cannot resolve with their remaining policy tools: fiscal, social and labour market policy. The distributional implications of the imposed internal devaluation not only undermines the democratic welfare state, but democracy in Europe itself.
The second paper, traces the origins of the crisis in Europe to the ongoing tension between democracy and the market. The political compromise created after the WWII, premised on full employment, Keynesian demand management, comprehensive social protection and free collective bargaining among unions and employers was the beginning of what we now call ‘democratic capitalism’. This political settlement between the competing interests of the market and citizens has undergone three crises. First, free collective bargaining and a commitment to full employment led to rampant inflation. Governments then settled distributive conflict through pulling forward resources from the future in the form of public debt. This created a fiscal crisis of the state. In response, governments privatized debt financed spending, leading to the latest crisis – an explosion in private debt in private markets.
The democratic welfare state relied upon inflation, public debt and the de-regulation of private credit. It is the democratic state in the Europe not the capitalist market that is in crisis. To what extent this is directly related to the process of European market integration (and the Eurozone in particular) is a guiding question through the course.
Next week we will discuss the historical origins of different institutional regimes of Welfare Capitalism in Europe using Esping-Andersen classical three-fold typology of ‘liberal’, ‘social democratic’, and ‘conservative’ welfare regimes. We will then discuss whether there is a necessary trade-off between equality and efficiency by comparing the labour market and social protection regimes of Europe and the USA, before returning to a series of seminars on the Europeanisation of social and economic policy.
The course concludes by asking whether the European Social Model is in crisis?
The full lecture can be found here