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«A thesis submitted to the Department of Political Science and International Studies of the University of Birmingham for the degree of Doctor of ...»

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Before 1989 the EMoS was perceived as the third way of societal organisation, opposed simultaneously to both the US‟ neo-liberal model and the Soviet‟s social-regulated 98 European Commission, Commission President Calls for Continued Effort to Adjust European Economic Structures without Abandoning the „European Model‟, IP/86/281, 05.06.1986, p. 1 99 See for example, European Commission, Growth, Competitiveness, Employment – the Challenges and Ways Forward into the 21st Century – White Paper, COM (93) 700 final, 5.12.1993; European Commission, Green Paper – European Social Policy – Options for the Union, COM (93) 551 final, 17.11.1993, pp. 29-30;

European Commission, From the Single European Act to Maastricht and Beyond: the Means to Match Our Ambitions, DOC/92/2, 11.02.1992, p. 13; Anna Diamantopoulou, The Modernisation of the European Social Model and the Forthcoming Stockholm Summit, SPEECH/01/113, 09.03.2001, p. 2; Joaquin Almunia, A European Economic and Social Model for the 21st Century, SPEECH/07/253, 25.04.2007, p. 4 204 markets.100 This is illustrated by the claim of Commissioner Flynn that the EC/EU has steered unique course between excessive paternalism and excessive liberalism. 101 After 1989, however, there is only one opponent left. As Padraig Flynn declares: “The collapse of Communism has consolidated the world predominance of political democracy and the market economy, but it has also ushered in a new era of socio-economic competition and cooperation in which there will be winners and losers.” 102 In that respect, during the Cold War there were two main “Others” to the EMoS, while after its end, the US‟ neo-liberal model remained its sole most important competitor.

Therefore, although as mentioned above, Japan is a country with which the EC/EU is constantly comparing itself, it is hardly surprising that after the collapse of Communism, the US and its neo-liberal model is the most pronounced “Other” emerging from the Commission social policy discourse.103 According to Jepsen and Pascual, one of the assumptions of the EMoS discourse is the superiority of the European model over the American one. The US serves as a negative example for European policy-makers, which sets the boundaries within which differences are constructed.104 The “Other-ing” of the US in this discourse is articulated in an interrelated double move, which shows the negative sides of the socio-economic organisation of the Other and reaffirms the Self‟s superiority.

According to Commissioner Flynn: “There is much public discussion about the relative virtues of the North American, Japanese and European socio-economic models.

Europe certainly has a lot to learn from the United States and Japan … but the truth is that 100 For a claim that this is how the EMoS is perceived see Maria Jepsen, Amparo Serrano Pascual, „The European Social Model: an Exercise in Deconstruction‟, Journal of European Social Policy, 15: 3 (2005), pp.

231-245, p. 232 101 See for example Padraig Flynn, Social Policy and Economic Performance, SPEECH/97/15, 23.01.1997, p.

2; Padraig Flynn, Modernizing Europe‟s Labour Markets, SPEECH/98/60, 27.03.1998, p. 1 102 Padraig Flynn, Green Paper Seminar, SPEECH/ 94/59, 28.05.1994, p. 3 103 An evidence for the dominance of the US as the most important Other for the EU is the fact that there are a number of Commission documents, such as speeches of its officials, where the only country the EU is compared to is the US. See for example, Padraig Flynn, Society and Jobs in Europe and the US: the Choices we have to Make?, SPEECH/96/109, 03.05.1996; Padraig Flynn, Social Policy and Employment - Friends or Foes?, SPEECH/ 95/278, 11.12.1995; Anna Diamantopoulou, The Modernisation of the European Social Model and the Forthcoming Stockholm Summit, SPEECH/01/113, 09.03.2001; Anna Diamantopoulou, The Social Policy Agenda: Europe at Work for Trade Unions, SPEECH/01/114, 09.03.2001; Peter Mandelson, A Modern Social Agenda for Europe, SPEECH/05/381, 23.06.2005 104 Maria Jepsen, Amparo Serrano Pascual, „The European Social Model: an Exercise in Deconstruction‟, Journal of European Social Policy, 15: 3 (2005), pp. 231-245, p. 233 205 there is no model there to follow.”105 The overall verdict of the experts is that the socioeconomic models in the US and Japan have some important competitive advantages because they allow for lower production costs and social spending as well as greater flexibility for employers. These in turn are contributing to the better macroeconomic performances of the two countries in comparison to the EU. However, as the documents of the European Commission make clear, there are important disadvantages of the American socio-economic system.

Perhaps the most important disadvantage of the neo-liberal model articulated by the Commission documents, is that it has: “… severe social consequences, as demonstrated in the US.”106 According to a report by the US Council of Competitiveness: “… the real income of the average American family has remained flat for two decades … the US infant mortality rate is among the highest in the world, and … America‟s schoolchildren rank the last among the big industrial nations in their grasp of science and mathematics. And while America‟s postgraduate education remain among the world‟s finest, the cost has risen by at least a third in real terms since 1980, far outpacing the average family‟s capacity to pay for it.”107 Furthermore, although living standards in the US are higher than even in the richest EU member states, this is due not to greater American efficiency or productivity but to the longer working hours and most importantly to the higher proportion of working age population being in work in the US. 108 Also, although the US has created more jobs in the 1990s in comparison to the EU, this has not tackled the issue of the so-called “working poor”109 and the resulting social exclusion. 110 Therefore, these articulations point to a situation where although the US does have good macroeconomic indicators for productivity and employment these do not translate into increased living standards for the overwhelming part of the population. On the 105 Padraig Flynn, Green Paper Seminar, SPEECH/ 94/59, 28.05.1994, p. 3 (emphasis added) 106 Padraig Flynn, Social Policy and Employment - Friends or Foes?, SPEECH/ 95/278, 11.12.1995, p. 5 107 Quoted in Ibid.





108 Anna Diamantopoulou, The Modernisation of the European Social Model and the Forthcoming Stockholm Summit, SPEECH/01/113, 09.03.2001, p. 3 109 Working poor are individuals who are in a regular employment but are still living in relative poverty as a result of low wages and commitments to dependents.

110 Based on Anna Diamantopoulou, The Social Policy Agenda: Europe at Work for Trade Unions, SPEECH/01/114, 09.03.2001, p. 3 206 contrary, there are: “Extremely wide income disparities.” 111 This is crucial in light of the Commission social policy discourse. As we have seen in the Lisbon Council Conclusions, for the EMoS and the ESM creating a cohesive society, which does not have big income distribution gaps is a major focal point. Commissioner Flynn summarises this stance in the following way: “… if Europe is to become more competitive, European Society as a whole must become more productive. The health of European society and the prosperity of European economy demand the maximum productivity, the optimum contribution from all.

But society as a whole cannot achieve maximum productiveness if, in the process, it becomes increasingly divided, between the rich who get richer and the poor who get poorer, between those who forge ahead and those who are left behind. In the mix between economic and social policy, the basic premise of social justice which underpins all our societies must not be abandoned.” 112 This clearly juxtaposes the US to the EU.

Since the data on the US shows that big social disparity is exactly what is happening there, it should come as no surprise that various Commission documents warn against an all out emulation of the US neo-liberalism despite its economic successes. For example, Commissioner Flynn urges: “… let‟s not go back to the 19 th century, or imitate the Americans. It just isn‟t desirable either in terms of long run competitiveness or social justice.”113 And Commissioner Diamantopoulou states that: “Europe should not attempt to ape the US in all things. I too believe that we should hold on to our distinct social beliefs, to ensure that „market economy‟ does not mean „market society‟.” 114 The reason for these statements is that the Commission discourse on the social models in the EC/EU promotes the idea that they ensure: “… a healthy balance between economic growth and social cohesion. And we have seen all too clearly from other countries, including the United States, the results of not having adequate social policies.”115 111 Ibid.

112 Padraig Flynn, Speech at the CBI Conference, SPEECH/94/120, 07.11.1994, p. 3 113 Padraig Flynn, Social Policy and Employment – Friends or Foes?, SPEECH/95/278, 11.12.1995, p.5 114 Anna Diamantopoulou, European Social Policy: Revising the Challenge of Modernisation, SPEECH/01/170, 10.04.2001, p. 4 115 Anna Diamantopoulou, The European Social Model: Promoting Economic and Social Progress, SPEECH/01/212, 19.03.2001, p. 2 (emphasis in the original) 207 These statements clearly indicate that the discourse of the European Commission rebuffs: “… robustly those …, whose definition of competitiveness, finds it possible to situate economic health in a social wasteland” 116 and does not endorse “the narrow, selfish view of social policy”117 What is even more important in terms of the topic of this study, these articulations construct the US as the prime example of an actor that has adopted such socio-economic organisation and in this respect it is the “Other” for the EU. Furthermore, as Jepsen and Pascual, referred to above argue, the discourse of the Commission suggests that the situation in the Union is better than that in the US. In this respect, the Commission discourse on the social models creates a distinct identity of the EU and clearly sets it apart from the main players that are most like the Self, thus, constructing the external border of the Union.

The general way in which this is conveyed is along the lines that: “The European way of life is based on a different social philosophy from that of the USA. A less individualistic and more collectivist model of society.”118 And that: “… a weak, deregulated or low-cost social protection and safeguards system does not bring economic advantage.”119 For example, according to the critics of the ESM, EU member states spend too much on social policy in comparison to the US, which affects their competitiveness.

However, European Commission documents make clear that overall: “… the US devotes exactly the same proportion of its economic output to health, pensions, social protection, labour market measures, child care, and so … as does Denmark... And the other EU countries within 1 or 2 per cent of the US, either way.”120 The key difference, however, is the way in which this is done – while some countries tax social transfers, other countries, such as the US, impose mandatory private social spending obligations on their workers and employers. 121 Thus, “The difference between the European model and the American model is that, for us in Europe, social 116 Padraig Flynn, Social Policy and Economic Performance, SPEECH/97/15, 23.01.1997, p. 3 117 Ibid.

118 Romano Prodi, Europe in the 21st Century, SPEECH/99/218, 18.12.1999, p. 3 119 Padraig Flynn, Social Policy and Employment – Friends or Foes?, SPEECH/95/278, 11.12.1995, p. 5 120 Anna Diamantopoulou, The Modernisation of the European Social Model and the Forthcoming Stockholm Summit, SPEECH/01/113, 09.03.2001, pp. 4-5 121 Ibid., p. 4 208 policy is a permanent concern of the state.”122 The US‟ neo-liberal system, on the other hand, has effectively led to a situation, where higher wage employees receive far better social protection than the low-wage employees or the unemployed. It is this low social spending on a large proportion of the American population that has led to increased income disparities and the resulting different life opportunities for the various social groups. Or as Commissioner Flynn argues: “While all income groups in the US saw real incomes rising between 1960 and 1980, it was clear from 1980 onwards that the distribution of income growth was starting to tilt. The top earners began to gain at the expense of the lowest earners. Wages amongst low skilled workers are still dropping, while those of workers with good educational qualifications and relevant skills are going up. And the result is the rise of working poor and the long-term damage caused by undertrained workforce.”123 Thus, from a European perspective there is “another side” to America‟s success story and it is: “… that working people in America have not shared equally in the economic boom.”124 In the EU, however, according to the Commission discourse: “… we do not want the social exclusion and division we see in the US … We do not believe that cohesion can only be bought at the expense of economic competitiveness. On the contrary, we believe that cohesion, if achieved by the right means, positively enhances competitiveness The alternative to cohesion – increasing social exclusion – comes with a heavy economic price tag: higher public spending, not just on welfare bills, but on dealing with the damage.

Poverty-related illness, drug addiction and crime push up expenditure on health care, policing, prisons and rehabilitation.”125 When this is taken into account, despite differences between the EU Member States‟s social systems: “… the major contrast remains between Europe and the US. Not in levels of expenditure, but in terms of who gets what across society as a whole. There is a choice being made in these different approaches. But not a choice between high and low costs. It is a choice between access and equality or ability to pay. A choice between a more, or less, uneven distribution of income, opportunities and life 122 Anna Diamantopoulou, The European Social Model and Enlargement, SPEECH/00/235, 23.06.2000, p. 5 123 Padraig Flynn, Society and Jobs in Europe and the US: the Choices we have to Make?, SPEECH/96/109, 03.05.1996, p. 3 124 Both quotations are from Ibid.



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