European Social Contract Betrayed

The austerity regimes being imposed on the European working class and some elements of the middle classes by the the IMF and the central banks of several large European countries, especially Germany, has resulted in millions of working people rejecting the traditional mainstream capitalist parties and voting for parties labeled by the mainstream media as “fringe.” Some of these “fringe” parties are so large that they determine the outcome of national elections (the Five Star Movement in Italy, for example) and pose a serious threat to “business as usual” in the social democratic movement.

It should be noted that after World War II and the collapse of German and Italian fascism, there was panic in the West European and American business circles that Communist Parties would be swept into power either by uprisings or elections. To fight this threat concessions were made to the working people in the form of social welfare programs based on socialist principles but trimmed down so as not to threaten the power and control of the international banking system led by the United States.

The United States basically financed the reconstruction of Western Europe and European capitalism and both the traditional conservative and right wing elements as well as the social democratic and center-left elements teamed up to back social programs designed to lessen the appeal of the demands of the Communist and Workers’ movements. This system worked fairly well until the breakdown of the capitalist system starting with the 2007 housing bubble and subsequent banking crisis. What has happened to the working people in Europe since the outbreak of the crisis is described by David C. Unger in his recent New York Times article (“Europe’s Social Contract Lying in Pieces”-NYT online 6-9-13).

Unger in his article laments that this “social contract” has been abandoned by the European center left parties and as a result “democracy’s best advertisement to the Communist East” had been “undermined … in pursuit of a perverse economic dogma.” The point, of course, is that all the social gains granted by the capitalists to the West European working people were begrudgingly conceded out of fear of the appeal of the Soviet Union and the world communist movement.

With the undermining and collapse of the Soviet Union and East European socialism, big capital no longer saw the need to coddle the working class and has reverted true to form to reimpose a regime of extreme economic exploitation in order to maximize its profits. Austerity is simply the redirection of social wealth from programs, such as health care, housing, unemployment, pensions, etc.,) into the coffers of the bankers and financial speculators where it rightfully belongs under the capitalist system (“a perverse economic dogma” which I take, unlike Unger, to be capitalism itself.)

What have the social democrats done — especially the Democrats in Italy the Socialist Party in France, the Spanish socialists, Pasok (the Greek socialist party) and others? They have abandoned the very people they are supposed to represent — the working people — and have backed and voted for policies that will bring about “many more years of cuts in social spending” and they are “increasingly out of touch with the desperate situation of young people.” This is why millions of voters have deserted these parties for so-called “fringe” groups.

What are the consequences of this social democratic betrayal? This is how Unger describes the scene in Mediterranean Europe: ”

You see shuttered groceries and clothing shops, abandoned restaurants, idled factories and half-built housing developments overgrown with weeds. Newspapers carry heartbreaking stories of families evicted from modest apartments, people losing their jobs and then their health benefits, young and not-so-young women turning to prostitution to make ends meet, even suicides by self-immolation.

This is the modern day equivalent of the heartless inhumane capitalism described by Marx in Das Kapital.

Unger points out that the economic power of Germany is so great it probably could have dictated the present regime of austerity without the cooperation and even against the hostility of social democracy. Today’s Germany has attained what it failed to achieve in two world wars, economic (and hence political) dominance of Europe. The tragedy of social democracy is that it collaborated in the destruction of its own electorate instead of fighting, even if a losing battle, to protect it. That betrayal did not go unnoticed.

As the European workers begin to fight back, as the communist and workers’ parties begin to gain in strength other social forces are also rapidly growing. Forces from the Dark Side are also beginning to proliferate such as the neo-Nazi Golden Dawn in Greece (“Greece for the Greeks”), the United Kingdom Independence Party (right-wing Eurosceptic libertarians), the National Front (a “whites only” party in the UK). The Union pour un Mouvement Populaire (UMP) and the UK Conservative Party should also take notice as they too are losing members to the “fringe.” Unger says Germany too should not be too confident. Their present economic dominance may evaporate if the rest of Europe dissolves into political and social chaos due to the on going capitalist crisis. An ultra-right movement in Germany may become ascendent. We wouldn’t want that to happen again.

Thomas Riggins is currently the associate editor of Political Affairs online. Read other articles by Thomas.