Where Now for European Social Democracy? - Policy Network

ROGER LIDDLE 61measures to promote employment. It argues that social inclusion andeconomic prosperity march hand-in-hand, and proposes, for the firsttime, European targets for tackling poverty in each member state onthe basis that social exclusion weakens long term economic potential.Ideologically and programmatically, the attractions of the Lisbonagenda for social democrats ought to be considerable. It provides areference point for the modernisation of our party programmes.First, it resolves a basic tension about economic policy that hasdivided the Left. Many blamed high unemployment in Europe onfailings of macro-economic policy: in particular, the dogged pursuit ofthe Maastricht convergence criteria in the 1990s. But an increasingnumber of experts on the Left have accepted, at least in part, thatunemployment has remained stubbornly high in several countriesbecause of structural factors, particularly labour market rigidities.Lisbon reconciles these positions with the proposition that structuraland demand-side policies need to work in tandem. Macro-policy shouldprovide stable conditions for growth. Open markets and well-targetedpublic spending raise the long-term growth potential of the economy,while labour market and Welfare State reforms raise levels ofemployment for any given level of economic activity.Second, Lisbon makes a social democratic case for markets. Thisis different from the neo-liberal proposition that the purpose inopening markets is simply to give the market’s ‘invisible hand’ freerein and the ‘sink or swim’ political philosophy that goes with it.The social democratic argument for strengthening competition isthat uncompetitive markets tolerate unaccountable accumulations ofprivate power. That accumulation of private power represents a vestedinterest that gives low priority to the claims of both consumers andthe unemployed, and acts as a barrier to new enterprise. Look at thearcane arguments over the Prospectus and Investment ServicesDirectives. The Stock Exchanges of European countries have sought tothwart the liberalising intent of the European Commission’s FinancialServices Action Plan. They are protecting their own narrow interests insurvival as against the broader European interest in loweringtransaction costs and making it easier for new entrepreneurs to raisecapital for new sources of growth and innovation in the real economy.