After the Third Way: Progressive Alternatives to European Austerity

Is there a credible progressive alternative to austerity? If so, is it attractive enough to mobilize a winning electoral constituency?
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Over a decade ago, 13 of the then 15 member countries of the European Union were led by progressive governments. Today, austerity politics dominates, and Socialist, Social Democratic and Labour parties are in opposition in all but 3 of the Union's now 27 member states. As a consequence, a fervent debate is taking place about the future of European progressive politics. Traditionalists are calling for a return to core values and a more aggressive role for government, while revisionists assert that further modernization should provide the progressive alternative, drawing on the skills and resources of a broader range of actors. Whichever view prevails could determine not just the fortunes of progressive politics on the Continent, but also the direction of the European project itself.

At the center of the current debate is a battle over the legacy of the Third Way. Was this an unprincipled election strategy and unnecessary accommodation with neoliberalism? Or, as its architects assert, was it a genuine and authentic modernization of social democracy for the time, one that recognized a hostile right-wing media necessitated a new style of politics just as demographic, economic and social evolutions necessitated new policies? Advocates of the first view, such as former UK Labour Party leader Roy Hattersely, claim it was the betrayal of core constituencies and core values that caused the current exile from power. In response, they call for a refocusing on the central state as driver of social change and greater distribution of wealth.

As Former UK Foreign Secretary David Miliband notes, this argument is appealing because it reassures people that nothing has changed, and that progressives don't need a fundamental rethink of their politics. It helps us feel good without obliging us to try and do good. Unfortunately, it's wrong. In his recent contribution to the debate, former UK Treasury Secretary Liam Byrne has illustrated that centralized state power is rarely the best or most effective vehicle for delivering public goods. Moreover, in the medium term, the capacity of the state to finance many of these services must also be re-evaluated. For the foreseeable future, progressives will need to promote social entrepreneurialism and a new partnership between an empowered local government and active citizens, focusing spending where it matters most, such as early years' education.

Today, even among its architects, defense of the Third Way is nuanced. At a recent dinner in Washington, D.C., Peer Steinbrück, the former German Finance Minister and one of three possible Social Democratic candidates for Chancellor in 2013, reminded British and American guests of their naivety regarding the importance of manufacturing to domestic markets and the importance of financial regulation. Similarly, a politics that focused on occupying the center-ground, and message control and sound-bites did little to motivate party members and supporters, and seems rather outdated an era of dominated by new social media and movements. So, is there a credible progressive alternative to austerity? If so, is it attractive enough to mobilize a winning electoral constituency?

In Europe, two competing approaches are emerging: one that operates within the confines of the recent Eurozone stability pact; a second that seeks to provide an alternative to it. The first is epitomized by a new generation of modernizers such as the Danish Social Democrat Prime Minister, Helle Thorning-Schmidt, elected in September last year, and the leader of the Romanian Social Democrats, Victor Ponta, who goes to the polls in November. Both favor a cautious political strategy that combines a formal coalition with progressive partners to assure a broad base of electoral support with a targeted reform agenda to spur business growth and trigger government reform. The second is embodied in François Hollande's candidacy to become President of France. This strategy is based on mobilizing broad support for the socialists by securing their left flank with promises to increase investment in economic growth and reform Europe's stability pact into growth pact.

While the approach of the new moderates may appear less ambitious, it offers a real and credible alternative. It is also popular with electorates tired of grandiose promises. Hollande's strategy, despite its popular appeal, also entails a dual risk. The Eurozone appears to be in recovery -- as Farheed Zakari notes. If Hollande is seen to jeopardize this, either by the electorate or the markets, he could be punished at the polls. This, one suspects, is the gamble that Merkel and Sarkozy are making. And, even if Hollande wins, a treaty revision requires unanimity among the European Union member states.

A fourth progressive government in office is a step forward, but however admirable a goal it may be, reform of the stability pact will remain beyond the reach of Europe's progressive for the foreseeable future.

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