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Social Democracy and Globalization: The Cases of France and the UK*

Published online by Cambridge University Press:  28 March 2014

Ben Clift
Ben Clift*
Affiliation:
Brunel University
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Extract

This Article Explores The Nature Of Contemporary Social democracy, questioning, with like-minded scholars, John Gray's interpretation of the relationship between social democracy and globalization, which asserts that social democracy is a historically exhausted project. Garrett, for example, in rejecting such assertions, argues that social democracy remains a distinctive and viable ‘project’ within the global economy, specifically in cases where strong left-of-centre parties are linked to ‘encompassing labour movements’. He has subsequently argued that social democracy in ‘Euroland’ (with or without encompassing labour movements) can pursue a less constrained fiscal policy, and expect a more accommodating monetary policy than some predict. Garrett thus insists that social democratic governments within the Eurozone are able to ‘use macroeconomic policy to lessen market dislocations and to redistribute wealth and risk in the ever more globalized economy’.

Type
Original Articles
Information
Government and Opposition , Volume 37 , Issue 4 , October 2002 , pp. 466 - 500
Copyright
Copyright © Government and Opposition Ltd 2002

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Footnotes

*

The author would like to thank Jim Tomlinson, Andrew Gamble, Stefan Berger, Jonathon Perraton and Mark Wickham-Jones for helpful comments on earlier drafts of this article.

References

1 Gray is cited here not as an exemplar of Third-Way thinking, since his work is not part of the Third-Way mainstream. It is used to frame this article as representative of writings on the apocalyptic implications of globalization for social democracy. See Gray, J., After Social Democracy, London, Demos, 1996, and False Dawn, London, Granta, 1998.Google Scholar

2 Garrett, G., ‘Capital Mobility, Exchange Rates and Fiscal Policy in the Global Economy’, Review of International Political Economy, 7:1 (2000), p. 169 CrossRefGoogle Scholar, and Partisan Politics in a Global Economy, Cambridge, Cambridge University Press 1998.

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6 J. Gray, False Dawn, p. 88 (emphasis added). Notermans goes so far as to argue the ‘irrelevance of Keynesianism’ to ‘golden age’ social democracy, which was due to sustained growth and the ability to contain inflation, not deficit financing. ‘Even in Keynes’ native Britain, deficit spending was absent and fiscal policy mainly exerted a contractive influence on consumption.’ Notermans, T., Money, Markets and the State: Social Democratic Economic Policies Since 1918, Cambridge, Cambridge University Press, 2000, p. 163.CrossRefGoogle Scholar

7 See Pierson, C., Socialism After Communism, Cambridge, Polity, 1995, p. 34.Google Scholar

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11 The term is borrowed from Keman, H., ‘Theoretical Approaches to Social Democracy’, Journal of Theoretical Politics, 5:3 (1993), pp. 291–316 CrossRefGoogle Scholar. Many analyses of the relationship between globalization and social democracy emphasize ‘encompassing’ labour movements in facilitating social democratic response to adverse international economic conditions, see, for example, G. Garrett, Partisan Politics in a Global Economy. However, these analyses offer little insight into social democracy in national contexts where such institutions are inherently weak and on the wane (e.g. Britain) or never existed in the prescribed form (e.g. France). It is in no small part the need to plug this gap in the literature which has inspired the choice of the Labour Party and the Parti Socialiste for consideration here.

12 So dominant are the northern, and particularly Scandinavian social democracies within the literature that one study which claimed to be a comprehensive analysis of the entire social democratic dataset made no mention of France or any of the ‘southern’ social democratic movements. Pontusson, J., ‘Explaining the Decline of European Social Democracy: The Role of Structural Economic Change’, World Politics, 47 (07 1995)CrossRefGoogle Scholar.

13 See Hirst, P. and Thompson, G., Globalization in Question, 2nd edn, Cambridge, Polity 1999;Google Scholar Held, D., McGrew, A., Goldblatt, D. and Perraton, J., Global Transformations, Cambridge, Polity, 1999 Google Scholar and Vandenbroucke, F., Globalization, Inequality and Social Democracy, London, IPPR, 1998 Google Scholar, especially chs. 4–7; Gray, J., After Social Democracy and False Dawn, especially pp. 88–89.Google Scholar

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17 See White, S., ‘Interpreting the Third Way : Not One Road, But Many’, Renewal, 6:2 (1998), p. 17.Google Scholar

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19 Ibid., p. 10.

20 Ibid., p. 7.

21 Ibid., p. 4.

22 T. Blair, Speech at the annual Friends of Nieuwspoort dinner, the Ridderzaal, the Hague, 20 January 1998.

23 T. Blair, The Third Way, p. 1.

24 T. Blair, Speech at the annual Friends of Nieuwspoort dinner, op. cit.

25 Brown, G., ‘The Politics of Potential: A New Agenda For Labour’, in Miliband, D. (ed.), Reinventing The Left, Cambridge, Polity, 1994, p. 122.Google Scholar

26 A. Giddens, The Third Way, p. 100.

27 Ibid., pp. 38–42.

28 White, S., ‘Interpreting the Third Way’, and B. Clift, ‘New Labour’s Third Way and European Social Democracy’, in, Ludlam, S. and Smith, M. (eds), New Labour in Government, Basingstoke, Macmillan, 2001, pp. 55–72.CrossRefGoogle Scholar

29 T. Blair, The Third Way, p. 3.

30 Ibid.

31 Ibid. See S. White, ‘Interpreting the Third Way’.

32 A. Giddens, The Third Way, pp. 107–9.

33 T. Blair, The Third Way, p. 11.

34 As Hirst, P. and Thompson note, G., ‘despite all the official rhetoric about the UK being the best home for FDI in Europe because of its basic competitive advantages, in fact there has been a consistent hollowing out of the UK domestic investment as better opportunities for competitive success seem to have presented themselves abroad’. Peculiarly high levels of foreign holdings of domestic manufacturing stock ‘makes the UK peculiarly vulnerable to externally initiated shocks and to decisions by foreign business interests’, ‘Globalization in One Country? The Peculiarities of the British’, Economy and Society, 29:3 (2000), pp. 341–3.Google Scholar

35 D. Held et al., Global Transformations, pp. 180–2 and 224.

36 B. Clift, ‘New Labour’s Third Way and European Social Democracy’, pp. 69– 71.

37 Gordon Brown, Mais Lecture, 19 October 1999.

38 Final Text of the PS National Convention on Globalization, France, Europe, 30–31 March 1996, Vendredi, 276, 8 April 1996.

39 L. Jospin, Modern Socialism, London, Fabian Society, 1999, pp. 4, 8 and 7.

40 See Lordon, F., ‘The Logic and Limits of Désinf lation Competitive’, Oxford Review of Economic Policy, 14:1 (1998), pp. 96–113.CrossRefGoogle Scholar

41 Moscovici, P., L’Urgence: Plaidoyer pour une autre politique, Paris, Plon, 1997, p. 43–4.Google Scholar

42 Vendredi, 202, 1 October 1993.

43 Jospin, L., L’Invention du Possible, Paris, Flammarion, 1991, p. 11.Google Scholar

44 Jospin, L., 1995–2000: Propositions pour la France, Paris, PS Presse, 1995.Google Scholar

45 L. Jospin, Modern Socialism, p. 11.

46 See Guyomarch, A., Machin, H. and Ritchie, E., France In The European Union, Basingstoke, Macmillan, 1998 CrossRefGoogle Scholar, ch. 6, and also D. Held et al., Global Transformations, pp. 177 and 180.

47 Figure quoted in Morin, F., ‘A Transformation in the French Model of Shareholding and Management’, Economy and Society, 29:1 (2000), pp. 36–53 CrossRefGoogle Scholar. See also F. Lordon, ‘Logic and Limits’, and B. Clift, ‘The French Model of Capitalism: Still Exceptional?’, in J. Perraton and B. Clift (eds), Where Are National Capitalisms Now?, Basingstoke, Palgrave, forthcoming.

48 The notion of ‘Keynesianism’ as employed here refers not to precise mechanisms of fine or coarse tuning, or to deficit financing, but to the broader insights into the relationship between the state and the economy, and the role of the state in ensuring security of employment.

49 L. Jospin, Modern Socialism, p. 6.

50 Muet, P., Achieving Full Employment, London Policy Network, 2000, p. 9.Google Scholar

51 L. Jospin, Modern Socialism, p. 11.

52 T. Blair, speech to the PES Congress, Malmo, 6 June 1997.

53 T. Blair, Mais Lecture, 22 May 1995.

54 ‘In today’s deregulated, liberalized financial markets’, argued Brown in his speech at the Mansion House, 11 June 1998, ‘the Keynesian fine tuning of the past which worked in relatively sheltered, closed national economies and which tried to exploit a supposed long-term trade-off between inflation and unemployment, will simply not work’. As noted above, this positing of a closed national economy is to say the least dubious. (See, e.g., P. Hirst and G. Thompson, ‘Globalization in the Country’, op. cit.).

55 Corry, D., ‘Macroeconomic Policy and Stakeholder Capitalism’, in Kelly, G., Kelly, D. and Gamble, A. (eds), Stakeholder Capitalism, Basingstoke, Macmillan 1997, p. 188.Google Scholar

56 See Held, D., ‘Globalization: The Timid Tendency’, Marxism Today (11/12 1998) p. 24.Google Scholar

57 Marquand, D., ‘Social Democracy Comes in From the Cold’, Political Quarterly, 70 (1999), p. 13.CrossRefGoogle Scholar

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59 Final Text of the National Convention on Globalization, France, Europe, 30– 31 March 1996, Vendredi 276, 8 April 1996.

60 L. Jospin, Modern Socialism, p. 10.

61 P. Moscovici, Plaidoyer une autre politique, p. 55.

62 D. Held, ‘Globalization: The Timid Tendency’, p. 25.

63 Balls, E., ‘Open Macroeconomics in an Open Economy’, Scottish Journal of Political Economy, 45: 2 (1998), p. 117.Google Scholar

64 E. Balls, ‘Open Macroeconomics’, pp. 117 and 120.

65 Ibid., p. 122.

66 See G. Brown, Statement by the Chancellor of the Exchequer on the Comprehensive Spending Review, 14 July 1998. The ‘old style tax and spend’ rhetoric is yet another example of New Labour’s tendentious caricature of Old Labour, which in the post-war years adhered to the ‘Golden rule’, with the possible exception of 1967–76. See Notermans, Money, Markets and the State, p. 163.

67 Gordon Brown, Statement on the Pre-Budget Report, 3 November 1998.

68 E. Balls, ‘Open Macroeconomics’.

69 It is not clear for how long this situation would have to endure before the ‘open letter’ calling for ref lation were issued. Nevertheless, such a course of action is clearly much more than just a theoretical possibility.

70 E. Balls, ‘Open Macroeconomics’, p. 130.

71 It is a mistake to infer from the rhetoric that New Labour’s macroeconomic outlook ‘rules out’ Keynesian policies. In certain circumstances, such as a recession, when unemployment falls well below the NAIRU, ‘macro-policy can undoubtedly be very effective and should be used boldly’. See D. Corry, ‘Macroeconomic Policy’, p. 191.

72 Gordon Brown has gone so far as to confidently assert that he would, if necessary, borrow to cover these spending commitments, Financial Times, 23 October 1998.

73 For example, in March 1999, income tax fell from 23 per cent to 22 per cent, and a 10 per cent income tax band was introduced. However, in less reported areas, the government increased its fiscal revenues through the abolition of Pension Funds Tax credits for Advance Corporation Tax — intended to raise £5.4 billion — and married couples’ allowance and mortgage tax relief.

74 Dyson, K., ‘Benign or Malevolent Leviathan? Social Democratic Governments in a Neo-Liberal Euro Area’, Political Quarterly, 70: 2 (1999), p. 196.CrossRefGoogle Scholar

75 First, the euro must include as many countries as possible, with Spain and Italy cited explicitly, along with the UK ‘if they wish’. Secondly, ‘Europe must be social and political’, therefore, ‘we want the relations between participating Euro countries to be founded not on an austerity pact (this is an explicit reference to the German inspired ‘Stability Pact’ of Dublin), but on a solidarity and growth pact, permitting policies in favour of job creation and social cohesion’. Thirdly, next to the European Central Bank, there must be established ‘a European economic government, representing the people and charged with coordinating the economic policies of the various nations’. Finally, there is a (with hindsight all too unnecessary) insistence that the euro must not be over-valued vis-à-vis the dollar and yen. Changeons L’Avenir: Nos Propositions Pour la France, Paris, PS, 1997, pp. 12–13.

76 P. Muet, Achieving Full Employment, p. 10.

77 Thus, the PS argues, in the event of a conjunctural downturn, spending should not be changed even if it were to slightly overshoot the 3 per cent deficit target, allowing macro-policy to counter a crisis of insufficient demand as part of the job-creating strategy. PS, Changeons L’Avenir ; P. Moscovici, Plaiydoyer pour une autre politique, pp. 96–98.

78 K. Dyson, ‘Benign or Malevolent Leviathan?’, p. 202.

79 See Libération, 16 December 1998. Other measures advancing the declared aim of increased ‘fiscal justice’ include reductions on tax breaks on inheritance and life assurance, and reducing concessions for firms investing in other financial ventures, as well as plans to reform VA T and habitation tax along more progressive lines. Libération, 23 July 1998.

80 In March, a 10% income tax cut was introduced for 5m lower earners, and 650,000 particularly low earners were exempted from taxation altogether. Financial Times, 23 March 2000. In September 2000, income tax was further reduced. Libération, 31 August 2000.

81 See OFCE, L’Economie Française, Paris, La Découverte 1999, pp. 19 and 63.Google Scholar

82 Gordon Brown, Mais Lecture 19 October 1999.

83 Ibid.

84 As Cross notes, ‘the natural rate hypothesis provides a rationale for the contemporary fashion of confining macroeconomic policy to the task of achieving targets for the rate of inflation or of price stability. The counterpart is that the only effective way to reduce unemployment or raise output in a sustainable way is through micro or “structural” policies.’ ‘Natural and Unnatural Frameworks: Is the Natural Rate Redundant?’b, New Economy, 6:2 (1999), p. 66. See also Corry, D. and Holtham, G., Progressive Macro-economics, London, IPPR, 1995, pp. 11–16.Google Scholar

85 See White, S., ‘Interpreting the Third Way’, and also Haveman, R., ‘Equity with Employment’, Renewal, 5:3/4 (1997).Google Scholar

86 Gordon Brown, Statement on the Pre-Budget Report, 3 November 1998.

87 This relief involves, at its height of its sliding scale, state remuneration of 18.2% at minimum wage level. See Gutman, O. and Lefèbvre, E., ‘Le rééquilibrage de la fiscalité du travail et du capital’, Regards sur l’Actualité (02 1999), pp. 3–16.Google Scholar

88 Libération, 19 October 1998.

89 The ‘leave it to the supply side’ assumptions of a conception of the NAIRU heavily influenced by neoliberal political economy is seen by many as the reason for the ‘failure’ in employment creating terms of the policy of competitive disinflation in the 1980s and 1990s.

90 Muet, P., Achieving Full Employment, p. 11.Google Scholar

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93 T. Blair, Speech at the annual Friends of Nieuwspoort dinner, the Ridderzaal, the Hague, 20 January 1998.

94 Labour Ministry figures, see the website: www.nsej.travail.gouv.fr/actualite/ bilan. Such results, however, must be placed in the context of a wider economic upturn, making the precise impact of the Plan Aubry difficult to discern.

95 Excerpts from the Projet de Loi PS website http://www.parti-socialiste.fr/html/change/index.html. See also Gubian, A., ‘Les 35 heures et l’emploi: la loi Aubry de juin 1998’, Regards sur L’Actualité (11 1998), pp. 20–21.Google Scholar

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102 Jefferys, S., ‘A “Copernican Revolution” in French Industrial Relations: Are the Times a Changing?’, British Journal of Industrial Relations, 38:2 (2000), pp. 241–60.CrossRefGoogle Scholar

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104 See Cohen, D. et al., ‘French Unemployment: A Transatlantic Perspective’, Economic Policy, 12 (1997), p. 274 Google Scholar. The separation rate refers to the rate at which workers are laid off or fired.

105 Jospin, L., Modern Socialism, p. 11.Google Scholar

106 See for example Hirst, P., ‘Social Democracy and Globalization’, Political Quarterly, 70 (1999)CrossRefGoogle Scholar, and Eatwell, J., ‘The International Origins of Unemployment’, in Michie, J. and Grieve Smith, J. (eds), Managing The Global Economy, Oxford, Oxford University Press, 1995, pp. 71–286.Google Scholar

107 Gordon Brown, Friedrich Ebert foundation speech, 7 May 1996.

108 Jospin, L., Modern Socialism, p. 3.Google Scholar

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111 J. Gray, False Dawn.

112 Jospin, L., closing speech to the PS Université d’Eté, 29 08 1999.Google Scholar See Clift, B., ‘Social Democracy in the 21st Century: Still a Class Act? The Place of Class in Jospinism and Blairism’, Journal of European Area Studies, 8:2 (2001), pp. 191–216.CrossRefGoogle Scholar

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