Center for American Progress

Europe’s Lost Decade Demands a Progressive Response

Europe’s Lost Decade Demands a Progressive Response

Europe just experienced a lost decade. To avoid another, it needs a progressive revival.

Lodewijk Asscher from the political party PvDA, is seen giving a speech, November 2019. (Getty/Romy Arroyo Fernandez)
Lodewijk Asscher from the political party PvDA, is seen giving a speech, November 2019. (Getty/Romy Arroyo Fernandez)

In the decade following the 2008 financial crisis, Europe has stagnated economically, politically, technologically, and geopolitically. It has stumbled from crisis to crisis, again and again responding with muddled half measures. The fact the European Union has survived is a testament to its strength, but it has emerged from the past decade decidedly battered and bruised.

Not coincidentally, Europe has been mired in a conservative era. This outlook has dominated Europe’s approach to the economy, European integration, reforming the European Union, and Europe’s role in the world.

When it comes to the European Union, Europe lost its ambition in this conservative era. Since World War II, Europe has been engaged in a grand project to build a union, integrating economically, politically, and culturally. This effort to build a federal union has made immense progress. Yet, in the last decade, European federalists have lost their voice. Instead of pushing for greater integration, Europe’s quasi-federal, quasi-multilateral structure, as defined after the 2007 Lisbon Treaty, has been seen as set in stone. A more conservative approach to Europe has reigned—one where the nation-state is central. This has left Europe ill-equipped to deal with the economic shock caused by the Great Recession and the 2015 migration crisis, both of which revealed massive shortcomings in EU institutions.

Economically, Europe suffered through a decade of austerity. A deeply ideological and naïve approach to economics that sees the economy in simplistic terms as if it were a household—and views debt in moral terms—has predominated conservative parties throughout Europe, including Angela Merkel’s Christian Democratic Union (CDU). Germany, Europe’s strongest economy, was thrust into the driver’s seat following the 2008 economic crisis. They demanded continentwide austerity, with a focus on cutting debt. The lack of a common fiscal policy meant that some EU states were stuck in an economic doom loop, unable to pull themselves out of the recession. This led to utterly disastrous results for Southern Europe. Greece, arguably the hardest hit by the crisis, has struggled to recover, requiring bailouts through 2018 and watching its debt-to-GDP ratio soar since 2008. Southern Europe’s economies remain unstable, with high unemployment rates and government debt, making them even more vulnerable to a crisis today.

The wave of migration that came to Europe in 2015 also revealed shortcomings in the European Union. The creation of the European Union’s common market had removed internal borders and enabled freedom of movement. But the European Union had not created a strong EU migration policy. In response to these crises, instead of pushing for a comprehensive EU response with shared responsibility falling on all EU members, the approach was muddled and confused. Solidarity broke down, leaving nation-states most impacted having to manage the crisis themselves. The impact of these two crises have fueled a populist surge that is upended European politics and threatening the European Union itself.

Geopolitically, Europe continues to punch well-below its collective weight. Despite having the largest economy in the world and 500 million people, Europe’s global position has stagnated. Instead of taking strong action after Russia invaded Ukraine and the United States elected an anti-NATO president, Europe did little. There was a lot of talk of the need for a stronger EU presence in the world affairs, but not much was done. Ironically, Europe’s military reliance on the United States is greater now than it was in 2010.

Instead of strongly pushing back against this conservative approach, Europe’s progressive parties have often embraced conservative framing—about debt or the European Union—only promising a softer touch or to do things better. A new dichotomy formed where being pro-European Union meant adhering to the EU austerity agenda. This gave political leaders in these countries very little economic room to maneuver or stimulate growth.

The coronavirus crisis demands a reset and rethink of this conservative approach to Europe. For Europe to get unstuck, it will be up to European progressives to outline a bold new vision that pushes aside the cautious conservatism that defined the last decade. Europe needs its progressives to find their voice. In a new essay, Lodewijk Asscher, the leader of the Dutch Labour Party, may have just shown European progressives the way. He provides a clear and bold alternative approach centered on three planks.

First, European progressives need a clear critique of the neoliberal economic approach. Before progressives can convince the public to pursue a bold new direction, they need to convince them that the current status quo is broken. Asscher outlines this clearly by taking on the neoliberal dogma and conservative economics that has defined Europe’s policy outlook. He writes:

The dominant neo-liberal way of thinking of the past forty years will not offer a solution here. We are emerging from an era where the market was king, the individual the solution and the state the problem. The system of free market thinking that has held sway for forty years is technically as well as morally bankrupt … The idea that government is no good whereas the market can solve anything and everything, was a delusion.

Second, European progressives need to offer a bold new unifying vision for rebuilding social, economic, and political life after COVID-10. As Asscher writes, “Society after corona should be built on the understanding that we all rely on each other. We share a single planet. We share a single country.” He argues that governments need to make sure the market works for society as a whole and that corporations’ private interest does not supersede the interest of the public. This, Asscher explains, requires linking our economic and climate goals:

This is also the right moment to make our economy sustainable and inclusive. Bail-outs for airlines should lead to employee participation, to shareholders and bondholders contributing and to a drive towards sustainability. In the economy of the future, it should be more profitable to protect the planet than to destroy it.

Third, progressives need to seek to forge an ever-closer union again. To do so requires rejecting the revival of nationalism and zero-sum economic thinking that currently permeates much of northern Europe. As Asscher argues, “The rise in nationalism, of each country just looking after its own interests, undermining international and multinational collaborations, has to stop.”

The fears in Northern Europe that policies and approaches that aid one region will harm others or of creating a “transfer union” are misplaced. Asscher writes:

A European Union without solidarity is not a union at all. A serious debate about solidarity between North and South means we need to address the fundamental economic imbalance. The advantages for Northern Europe have been quietly accepted (low interest rates, relatively low value of Euro in comparison with the Mark or the Guilder, great export opportunities), while potential support for Southern Europe has been politicised and rejected.

Working to alleviate debt burdens in Europe’s south won’t harm Europe’s north. Instead, a growth revival in the south is critical to economic prosperity in the north, especially with the collapse of global trade. Europe needs to be focused on lifting all boats. In this vein, he argues for a “European Marshall plan aimed at providing social and economic security for all Europeans in order to support our future economy. A European bond makes us strong, divided we will be weaker.”

COVID-19 is the biggest test yet for the European Union. To pass, the European Union won’t be able to muddle through with the same cautious conservative approach of the past decade. It will need a bold progressive approach. Some in Europe are starting to discover that.

Max Bergmann is a senior fellow at the Center for American Progress.

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Max Bergmann

Former Senior Fellow