Europe is experiencing its gravest economic crisis since the Second World War. In response, governments have undertaken radical measures.
In France, Emmanuel Macron suspended many taxes, rent, and other bills for businesses and promised no company would be allowed to collapse. Germany is “tearing up its fiscal rule book,” as the Financial Times put it, finally abandoning its obsession with balanced budgets to fight the crisis. Many countries have essentially nationalized payrolls, promising to cover the wages of workers who would otherwise have been laid off. In the UK, Andrew Bailey, the Bank of England governor, declared that the central bank was willing to pump unlimited quantities of money into the economy to support businesses and households, essentially embarking on an experiment in Modern Monetary Theory.
The crisis and the policies already taken in response to it have led many to believe that we are living through the twilight of neoliberalism—a transformation in European economies and in the social contract linking citizens to each other and their governments. Crises are always potential historical turning points: times of destruction and disorientation and sometimes also of reconstruction. Scholars like Thomas Piketty and Walter Scheidel have argued that in the past, major economic transformations, particularly dramatic diminutions in inequality, have only occurred as the result of great crises. But not all opportunities are seized—as Europe’s experience since 2008 illustrates.
During the late twentieth and early twenty-first centuries, advocates of neoliberalism insisted that market deregulation, welfare state cutbacks, and balanced budgets were necessary for growth and prosperity. By 2008 the bankruptcy of such arguments was clear. Neoliberalism had produced slow growth and rising inequality and insecurity, as well as Europe’s biggest economic meltdown since the Great Depression. A backlash against neoliberalism and the economic “experts,” politicians, bankers, and others who advocated for it quickly set in. Even many conservatives were convinced, as France’s President Nicolas Sarkozy put it at the time, that the neoliberal era of “unregulated markets” and “financial capitalism” was over.
What happened next? Neoliberalism was patched up and stumbled forward, with many European countries implementing austerity in response to the crisis. This response was partially a consequence of membership in the European Union and the Eurozone, which robbed national governments of crucial powers and tools, most notably control over their currencies and budget deficits. In some countries, including Italy and Greece, the EU mandated austerity without democratic consent from the citizens who would suffer from it. The result was political backlash and economic downturns from which neither country had recovered by the time the pandemic hit.
For the current crisis to lead to a more progressive Europe, it will take more than merely recognizing and bemoaning problems with the status quo. Discontent and grievances only lead to change when they are organized and mobilized around and translated into concrete demands. Left parties will need things they have not had in a long time: distinctive plans that link responses to current problems to a long-term strategy for transformation at the national and European levels.
On the national level, short-term crisis measures must benefit average citizens rather than banks, big business, and the wealthy, and support to business must be conditional on more responsible corporate behavior going forward. Such measures are both economically beneficial and necessary to avoid a repeat of the post-2008 narrative of corrupt bailouts of privileged elites. These short-term crisis measures must be married to long-term plans for tackling socioeconomic and regional inequalities, stagnant wages, and increasing economic insecurity—something that even many center and center-right politicians now recognize as necessary.
The crisis has also reminded citizens that dealing with global health requires well-resourced, efficient government capacities and resilient welfare states. For this to remain at the forefront of political consciousness, the left will need to recommit to its opposition to neoliberalism’s insistence on the “the primacy of economics”—the view that globalization, or markets, or any other economic imperative inexorably dictates particular policies or social outcomes—and instead again champion the “primacy of politics”—the view that it is both possible and desirable for democratic governments to promote more equitable societies and economies.
A reorientation of the left’s policy profile and appeal at the national level is necessary but not sufficient to catalyze transformation. As the financial crisis made clear, without major change at the European level, progressive responses to the crisis or a more social democratic future for Europe overall will be impossible.
Committed Europeans often reference Jean Monnet’s famous quote: “Europe will be forged in crises and will be the sum of the solutions adopted for those crises.” But Europe’s last crisis “solution” forged political resentment, economic decay, and intra-European tensions. Today’s crisis is more serious than the one Europe faced in 2008; nothing less than a Marshall Plan−type effort is necessary. A proposed German−French “recovery fund” is a step in the right direction, but it is unclear how much pushback it will receive from northern EU members. Moreover, the fund should only be a first step toward a new understanding of European solidarity, not an end point. Thus far, however, the European left has not been able to unite around any transformative plans. Indeed, many left parties, including the “solidaristic” Scandinavian ones, have long resisted providing further aid to struggling European nations. Putting national interests first, they have not devoted much energy to rethinking how Europe could be restructured to assist the continent’s most needy as well as protect the power of governments to limit markets and ensure that all citizens receive the social support they need. But if the EU cannot help Italy, Spain, and other countries through this crisis, it will fan anti-European sentiments and thus likely the fortunes of anti-EU, nativist populists.
Many leftists have long fallen into the trap of believing economic crises are the catalyst for revolutionary change. But history does not, as Marx once put it, operate according to “tendencies working with iron necessity towards inevitable results.” Long-term progressive change requires sustained action by the left—organizing and mobilizing discontent, coming up with viable and attractive plans for a better future, and gaining the political power necessary to implement these plans. During recent decades, the left has not proven successful at any of these tasks. It remains to be seen whether this crisis will be different.
Sheri Berman is a professor of politics at Barnard College, Columbia University, and the author, most recently, of Democracy and Dictatorship in Europe: From the Ancien Régime to the Present Day.