Year L, 2008, Number 1, Page 51
Altiero Spinelli and the European Social-Economic Model
ALBERTO MAJOCCHI
1. Introduction.
This paper looks at some of the main points of Altiero Spinelli’s economic thought, seeking to highlight their relevance to the present-day situation and to establish the extent to which these objectives might be realised in the current phase of globalisation, given the limits characterising the stage now reached in the evolution of the European Union.
The following analysis of Spinelli’s economic thought is partial, in that it does not cover his activity as a member of the European Commission, or his work within the European Parliament. However, it is worth recalling that Spinelli’s action as a member of the European Parliament was particularly significant, as his bid to strengthen the Parliament’s budgetary powers was the starting point of the political initiative that led to the founding of the Crocodile Club and, subsequently, to the start of a process that would culminate in the Parliament’s adoption, on February 14th, 1984, of the Draft Treaty establishing the European Union.
2. The Social-Economic Model.
The third chapter of the Ventotene Manifesto, as Pistone remarks in his introduction to the anastatic version of it, presents social reform as one of the fundamental tasks of the post-war period, and returns to “the fundamental ideas of Carlo Rosselli’s liberal socialism, oriented towards the quest for a synthesis of the liberal democratic system, whose maximum expression can be found in the United States, with the demands for freedom and social justice expressed by the different streams of socialism”. Basically, the authors of the Manifesto draw attention to the need to create a mixed economy that, by combining some public intervention with a free market system, might succeed in guaranteeing equal opportunities through a series of measures and reforms, which can be summarised as follows:
a) transition towards public ownership of monopolies, particularly so-called natural monopolies — basically, public utilities providing network services and firms operating in strategic sectors — in order to prevent private monopolies from exploiting consumers and large enterprises from influencing, in the total absence of control, the management of public policies;
b) redistribution of wealth through agricultural reform that would assign land to those who work it, and industrial reform that would increase workers’ ownership of fields not controlled by the public sector, through cooperative management and employee stock ownership plans;
c) reduction of inequalities of starting points, through the provision of public education for all, guaranteeing a balance between the demand and supply of work and a relative convergence of levels of pay in all professional categories;
d) a generalised system of social protection able to guarantee a decent standard of living even to those who find themselves in the most difficult circumstances, yet “without reducing their incentive to work and save”.
It can thus be seen that this social-economic programme, outlined schematically in the Manifesto and certainly displaying Ernesto Rossi’s influence, constituted a rather modern approach, and it is one that was progressively implemented in Europe, albeit with many limitations, in the period following the end of the Second World War. But today, this same programme is subject to very profound criticisms, which seems to suggest that the survival of social-economic model that characterised the European economy in the wake of the Second World War can no longer be guaranteed.
3. A Marshall Plan for the Third World.
A second important aspect of Spinelli’s economic thought is illustrated in a small book he published in 1978, entitled: PCI, che fare?[1] In one chapter, Spinelli, considering an alternative policy for promoting growth, picks up on a Keynesian idea, highlighting the fact that Europe’s scope for future growth — once “the great well of domestic demand has run dry” — will depend on the availability “of another, comparable well of potential demand that can, progressively, be turned into real and enduring demand”. And Spinelli concludes that it is “the developing countries — the world’s vast South, but also the small South that exists within the most advanced countries — that represent, for the economies of the developed world, this vast reserve of potential demand that can, progressively, be turned into real demand”.
A historical example of this enlightened policy was the Marshall Plan, by which the United States, in supplying Europe with the means to reactivate its “economic machine”, also served its own interests: indeed, American industry’s successful transition from wartime to peacetime production was supported largely by the massive demand, from Europe, for US goods.
Spinelli returns to this idea, suggesting that “the North should make the very noble gesture of offering to transfer to the South, on an annual basis and free of charge or under very favourable conditions, financial resources to be used not for the relief of hungry populations — such gestures remain within the realm of charity — but rather for the realisation of development plans, drawn up by these countries themselves, if necessary with the technical assistance of the advanced countries”. And such plans should be supported primarily by Europe, which has already established — starting with the Lomé Treaty — good relations with the associated countries.
This policy would help not only the countries receiving the aid, but also Europe, whose production system would benefit from a large and constant flow of demand from developing countries. Spinelli also draws attention to a corollary of this policy, which is basically a Keynesian policy but implemented at supranational level: the growth produced, while certainly not sufficient to absorb the whole of the available workforce, would have the effect of reducing unemployment. And, picking up on a topic dealt with extensively in the works of Ernesto Rossi, Spinelli concludes that “in our countries we need to organise a form of compulsory work service in which young people of both sexes would have to be enrolled for a certain period of time, selecting the types of work that best lend themselves to such a scheme. By so doing we would be introducing, into society, new ethics and new forms of social solidarity.”
This idea of compulsory civil service thus completes the picture of a society that has recovered the dynamism of growth — accompanied by a fairer distribution of wealth on an international scale —, and that is able to guarantee equality of opportunities (through a generalised system of permanent training and social protection) and work for all, also by exploiting the opportunities offered by a non-profit sector capable of supplying the services necessary to meet the social needs that the market is not equipped to cater for.
4. The European Social Model and the Challenges of Globalisation.
If this, summarised very briefly, is the social-economic model that emerges from the works of Spinelli, the question we must ask now is, first of all, whether it still meets the needs of European society and, therefore, whether it is compatible with the development of a globalised world. Indeed, there are many, in political circles and among economists, who maintain that Europe does not have what it takes to rise to the great challenge of globalisation. And they support their view by listing the factors contributing to Europe’s crisis, namely, the structural rigidity of the labour and product markets, the high costs to business of funding the welfare state and, above all, the excessively high level of taxation. These observations are usually translated into two general political considerations:
— to increase employment, Europe, following America’s example, needs to deregulate its labour and product markets, thereby favouring flexibility and greater competition;
— to make production more competitive, and thus able to take on the international competition, Europe needs to abandon its costly welfare systems and scale down public intervention. This will allow it to reduce the level of taxation, thereby boosting consumption, thanks to the increase in the disposable income of families, and consequently production, thanks to the cutting of costs as well.
Reform of the welfare state, lower pensions, and a smaller public sector tend, therefore, to be presented as inevitable consequences of the process of globalisation that has laid siege to the world economy. But what this attitude actually reflects is not so much a point of fact as an ideological prejudice, which uses globalisation as an excuse to reduce the level of social protection and to play down the role of public intervention, even when this is justified by a failure of the market. This is, therefore, a point that needs to be properly clarified, because policies aiming to reduce to the role of the welfare state are running the risk of turning public opinion against the process of European unification, thereby making it very difficult to launch an action geared at overcoming the limits of intergovernmental cooperation and at promoting a reform, in a federal sense, of the institutional provisions contained in the Maastricht Treaty.
5. The Process of Globalisation.
Globalisation, or the progressive unification of economic and social relations at world level, is the natural product of the development of the forces of production, the same factor that, in the nineteenth century, in Italy and in Germany, wiped out the anachronistic regional markets, making way for the creation of national markets, and, in the twentieth century, decreed thedefinitive demise of the national markets in favour of the advance of European integration. It must be remarked that the progressive unification of economic and social relations, that is, the birth of a global market, is destined to lead, sooner or later, to political unification of the world, if it is true that — as Robbins taught — no market can exist without a government to guarantee the upholding of the fundamental rules on which it must be based. And it must also be remarked that the present governance of the world market — that which is today manifested through the hegemony of the United States, a hegemony founded on military might and technological superiority sustained by public demand — cannot guarantee a growth of the global market that is in the general interest rather than in the interests of just a few privileged groups.
These are phenomena of enormous significance. It is a fact that the process of globalisation has been promoted above all by technological developments in the information technology and transport sectors, and sustained by a widespread diffusion of mature technologies, a diffusion that has allowed economic systems characterised by an abundant labour supply to become competitive in the sphere of industrial production, too.
Globalisation, in this way, has allowed many countries, at last, to launch a process of rapid economic growth. But the diffusion of technology would not have been enough, on its own, to sustain this process; there had to be adequate capital resources as well. From this point of view, the most decisive innovation was the liberalisation of the capital market, which prompted vast flows of financial resources to be channelled away from areas where there is more propensity to save than to invest, directing them instead towards areas ready to use this surplus to fund the growing level of investments needed in order to get their industrial production off the ground.
This increased industrial production in developing countries has managed to find adequate outlets thanks to the opening up of the markets made possible by progressive reductions of the barriers to international trade agreed in the ambit of successive GATT rounds of trade negotiations. This has led to a gradual redistribution of the location of production, with developing countries becoming specialised in more traditional types of production, that is, in the intermediate sectors based on mature technologies, leaving the advanced countries to go on controlling the markets in the more innovative sectors. In an international political scenario characterised by the end of the bipolar order and, following the collapse of the Soviet Union, by the United States’ emergence as the sole hegemonic power, this gradual integration of developing countries into the global market has also been sustained by the well-established role of the dollar as the reference currency in an international monetary system in which the choices of the American Federal Reserve are still decisive.
6. The Environmental Risks Associated with Globalisation.
Having acknowledged the positive effects that the progressive liberalisation of international trade has had on all countries, including developing ones, we must now turn our attention to the problems that an increasingly integrated world economy can produce on an environmental and social level, and also with regard to the stability of the economic systems involved in the globalisation process.
On the first of these levels, the basic problem concerns the relations between the growth of trade and the safeguarding of the environment. Many observers maintain that increasing flows of international trade are, by definition, beneficial to the environment as they increase the resources that can be used to protect it. It is certainly true that environmental protection is a “good” more typically present in rich countries. The increased income now enjoyed by developing countries should, then, inevitably produce positive effects in this regard. This argument, while valid, tells only part of the story, however, given that the growth of the economy is a necessary, but not a sufficient, condition for achieving more effective environmental protection. In truth, the growth of international trade produces positive effects on the environment in the areas that are gradually incorporated into the global economy, providing these areas have a good environmental policy in which the cost for the use of environmental resources is internalised into the prices of final goods. If this is not the case, the growth of production will inevitably be accompanied by a deterioration of the environment, due to the excessive use of natural resources, to air and water pollution, to increases in the quantity of waste, to environmental degradation, and so on.
The acceleration of trade liberalisation promoted by the WTO should, therefore, be accompanied by a strengthening of environmental policies. But this is not the responsibility of the WTO, which, even if it were, does not have the powers needed to enforce compliance with adequate environmental regulations. In fact, there exists no supranational organisation capable of guaranteeing observance of obligations in the field of environmental protection, as the difficulties applying the Kyoto Protocol have all too clearly shown.
Furthermore, many countries, to support their greater integration into the world economy and achieve the balance of payments equilibrium and the monetary stability necessary to obtain IMF funding, are forced to respect constraints imposed by the IMF. To this end, the countries in question, often still in an initial stage of growth, are compelled to sustain an increase in their exports, which are made up largely of natural (agricultural or forestry) products; the result is more intensive exploitation of the land, more extensive deforestation, causing a severe loss both of biodiversity and of carbon dioxide sinks (and thus a worsening of the greenhouse effect), and a degradation of the environmental conditions generally.
7. The Social Risks Associated with Globalisation.
This opening up of international trade and the increase in factor mobility have left the economies of the industrialised world more fragile than before. The first sign of this was the relocation of production activities to newly industrialised countries, which are able to offer not only the same technologies that are used in rich countries, but also a plentiful supply of low-cost labour. This phenomenon, in itself, must be deemed a positive development in that it brings about a redistribution of production to areas once excluded from the process of industrialisation. But it leaves the countries from which this production has emigrated with falling employment levels in the industrial sector, and these need to be offset either by an increase in demand for services (for both business and families), or by the introduction, onto the market, of new products — the fruit of processes of innovation (therefore, by definition, technologically advanced). Where this fails to happen — or where it happens to an inadequate extent — the result is growing social tension, linked to the increase in unemployment, which generally leads to a demand for greater protection of the domestic market. This, in fact, is not the solution, but it is an option that, in the end, it is difficult to resist.
Another problem stems from the fact that the employment crisis demands greater recourse to measures of social protection, whereas in the globalised world there is a strong drive to cut public spending, and thus to reduce taxation (because of the difficulty deriving income from an increasingly internationally mobile tax base, but also to increase the competitiveness of national industry through cost reductions). The risk, therefore, is that, for the sake of competitiveness, we will see the start of a race to the bottom, both as regards environmental policy and social protection measures, which will have the effect of reducing the quality of life in industrialised countries. Again, this is not the right solution, and it is a matter of seeing whether, in Europe, alternative solutions can be proposed that will allow the European social model to be preserved.
8. The Difficulty of Funding an Expansionary Policy
The possibility of guaranteeing the survival of the European social-economic model, but also of sustaining the development of the backward areas of the Third World, clearly depends on an acceleration of the growth rate, coming in the wake of a long period during which the development of the European economy has failed to reach the levels recorded by the American one, or even of those of the developing countries. In particular, since 1995, the growth of productivity in Europe, which was higher than that of the United States throughout the post-war period, has been lower in Europe than in America. This gap in productivity has affected both product growth and the external competitiveness of the European economy.
For Europe, it has thus become essential to promote an economic recovery policy. But expansionary policies should not be launched through support for domestic demand (the traditional, Keynesian approach) but, instead, through solid domestic supply policies and transfers of resources sufficient to favour the growth of the world’s most backward areas. However, the funding of these policies is rendered particularly difficult, on the one hand, by the requirements on public finance imposed first by the Maastricht Treaty and then by the Stability Pact; and on the other, by the inability to increase tax revenue by the necessary amount, an incapacity that is linked to two sets of factors:
a) globalisation has made the tax bases, in every country, more unpredictable. In particular, the volatility of capital flows makes it impossible to guarantee adequate taxation of capital income; this means that, in order to keep the level of taxation stable, the levy on relatively fixed factors of production, and in particular on labour, has to be increased, having negative effects on people’s disposable income, and thus on consumption and employment;
b) in an increasingly integrated global economy, the primary objective of economic politics is increased competitiveness, and with this end in mind, the prevailing view among politicians — prompted by the prevailing current of thought in academic circles — is that a reduction of the level of taxation is absolutely unavoidable. More generally, it is felt that public intervention (deemed to reduce competitiveness by increasing, through the tax levies needed to fund it, the production costs of European firms) must inevitably be reduced.
These various financial constraints make it very difficult to implement the Lisbon Agenda and, at the same time, an effective policy for sustaining the growth of demand in the developing world. In Europe, then, it is proving impossible both to boost the competitiveness of European production, and to stimulate the potential demand in economically backward countries that could provide new outlets for European production. A solution to this impasse must be found if the gap separating Europe’s productivity growth from that recorded in the US is to be closed, and a new cycle of sustainable development of the European economy started.
9. Productivity Growth as the Means to European Economic Recovery.
Indeed, the recovery of the European economy calls for a growth of productivity, and this, in turn, presupposes a series of measures that, to be effective, have to be decided and implemented at European level, in the framework of a global economic situation that is quite different from anything seen in the past. A new technological revolution has taken place and the United States has succeeded in exploiting it to the full, recording extremely high productivity and product growth rates; meanwhile, the newly industrialised developing countries are now competing with the established industrialised nations in a host of sectors, and not just in those based on mature technologies. Europe is thus caught in a double vice and is struggling to find the road that leads to stable and sustainable growth.
In truth, it has to be realised that a phase in the development of the European economy, that which characterised the second half of the last century, is now definitively over. The key factor in the growth of that period was a technological development that can be defined imitative: in short, simply by importing the best technologies from the most advanced countries, Europe was able to boost productivity and keep on improving the standard of living of its population. Today, however, Europe has reached the technological frontier, and this makes it impossible to envisage the start of a new phase of passive development, i.e., of development determined by the importing of technologies from outside Europe. To grow, Europe must now rely exclusively on its own resources, looking, in particular, to a new capacity to produce innovation.
The growth of productivity in the United States has been sustained by that country’s very rapid technological development, which can be attributed to a combination of factors: a) a standard of higher education that certainly surpasses that found in most European countries; b) a large public demand, linked to the defence sector mainly, which allowed highly innovative investments; c) a domestic market of continental proportions, long integrated and supported by a reserve currency that is, in fact, used as the global currency. All this explains the technological superiority of the United States that has left the European economy trailing increasingly far behind it.
This set of factors is not present in Europe, where a fuller liberalisation of the internal market is the solution most frequently advanced as the way to challenge America: it is felt that freeing the labour and product markets of the last remaining obstacles will boost competitiveness and make it possible to take production to increasingly high levels of efficiency. A first objective to be reached in order to stimulate growth, then, is completion of the liberalisation of the internal market, which the enlargement of the EU and the challenge mounted by industrially developing countries, with their much lower labour costs, is currently throwing into question.
10. Completing the Internal Market.
It is certainly true that since the early 1990s, the process of completing the internal market, accompanied by the progressive increase in the size of this market, mainly as a result of EU enlargement to the countries of central and eastern Europe following their exit from the orbit of the Soviet Union, has been the one factor that has continued to sustain European growth. This process was further strengthened by the creation of the single currency, which has favoured deeper integration within the eurozone. But these development factors have not been enough to guarantee the EU an adequate growth rate: the gap, in terms of per capita income and labour productivity, that separates Europe from the United States has become wider and wider, and many have talked of Europe’s irreversible decline. The time has thus come to proceed, with determination, in this direction, but at the same time realising that other measures, too, are now needed.
The process of completing the internal market must start with the opening up of the services market: this is its most urgent priority. It is unthinkable that the single market should exclude a sector generating 70 per cent the European GDP and in which the productivity gap versus the United States is most marked. Integration is particularly important from the point of view of business-related services, whose investments in R&D, and thus in innovation, are influenced by the size of the market. In other cases, such as the personal services sector, where services are naturally more locally based, and that of services that can be supplied at a distance, integration is not such an important issue. But, without a doubt, Europe cannot disregard this factor, which is crucial to the increase of its productivity and growth.
The second key objective is completion of the process of financial integration. For various reasons (industrial, regulatory and fiscal), this objective is still far from being reached, even within the eurozone. The most striking paradox in this regard is that the greatest obstacle, the existence of different currencies, has already been overcome, at great cost and considerable sacrifice, and yet the benefits of this huge effort are being largely cancelled out by financial nationalism, and by competition between national regulatory authorities.
As the experience of the past decade has shown, completion of the internal market and further liberalisation of the labour market are certainly positive factors from the point of view of the growth of the European economy, but on their own they are not enough. What is needed, in order to restart European development, is support through a large public demand, which would favour a qualitative increase in European production and make it able to compete, on an equal footing, with the other players in today’s globalised world. And this is where the European budget comes in.
11. A Plan to Revive the Lisbon Agenda.
In the present economic phase in which, following two years of good recovery, the European economy looks as though it might be about to start slowing down again, the priority seems to be to introduce, at European level, a coordinated plan of investments — public and private — in order to fill the gap, in terms of material and immaterial infrastructures, that has been created in many EU countries by the need to comply with the restrictive policies necessary to bring these countries’ public finances into line with the Maastricht criteria and the terms of the Stability Pact, and, at the same time, to guarantee an investment plan geared at strengthening competitiveness and favouring the launch of a model of sustainable development.
This roughly outlined plan, in accordance with the objectives established in Lisbon, could make provision for:
— investments aimed at completing the European networks in the transport, energy and telecommunications sectors, also taking into account the connection requirements emerging in the wake of EU enlargement;
— a plan of investment in R&D and the promotion of higher education, to strengthen the competitiveness of European production;
— public and private investments in avant-garde technologies aimed at promoting European champions in the most progressive industrial sectors;
— the funding of a series of projects aimed at improving the quality of life of EU citizens and at guaranteeing sustainable development objectives (sustainable mobility, waste water treatment, renewable energy sources, new sources of clean energy, etc.);
— investments to guarantee the conservation and increased exploitation of cultural assets.
In the context of this plan to revive the European economy, increasing expenditure on R&D and on higher education emerges as particularly important, to improve productivity and make European production more competitive. In the past decade, the EU member states have invested 1.9 per cent of their GDP in R&D, as opposed to the 2.6 per cent invested by the United States, while spending on higher education in Europe has absorbed 1.3 per cent of the GDP as opposed to the United States’ 3.3 per cent. According to Aghion estimates, the EU needs to increase its expenditure on higher education by at least one GDP percentage point over the next decade (at the same time implementing a profound reform of the system of university governance).
12. Union Bonds as a Means of Funding an Economic Policy to Boost Growth in Europe.
Faced with the threat of a recession of the American economy and a slowing down of the growth of the global economy, the Bush administration has responded by proposing an expansionary fiscal measure, worth 1 per cent of the USA’s GDP; added to this, the Federal Reserve has, on several occasions, lowered the federal funds interest rate. In Europe, on the other hand, it seems entirely unrealistic to envisage the introduction of an economic policy to support growth, given that maintenance of price stability is the primary objective of the ECB, under the terms of the Maastricht Treaty; moreover, no impetus in this direction can come from the national budgets, which are bound by the need to comply with the rules of the Stability Pact. And the European budget, under the present rules, is in no position to contribute to efforts to boost growth.
In the context of a strategy to relaunch European growth, on a continental level, the European budget would have to be given an active role. But such a strategy would also have to be substantially different from the one implemented in America. Whereas, in America, reduction of interest rates and a policy of tax relief for families is seen as the way to boost consumption, Europe’s priority should be a strong recovery of investments, in order to make the whole business system more competitive, through higher productivity, and in order to increase the wellbeing of families, through a sizeable increase in collective consumption. At the same time, and here, too, there emerge considerable differences with respect to the American approach, an expansionary policy in Europe should be introduced in a framework of financial stability, guaranteed on the one hand by the ECB, which would have to be careful not to force recovery through excessive reduction of the level of interest rates — given the long-term risks of this, clearly highlighted by America’s experience — and, on the other, by the constraints (designed to prevent the public finances of EMU member states from running out of control) deriving from the Maastricht Treaty and the Stability Pact. In short, it is a question of following the road indicated by the Delors Plan of 1993, whose fundamental lines were, subsequently, partially taken up in the Lisbon Agenda.
What is needed, then, is a European economic development plan of around the same dimensions as the American one, i.e. worth around one GDP percentage point (again, this is in line the Delors plan). Once this choice has been made, there are two possible avenues that can be followed to find the resources needed to sustain the recovery of the economy. The first is, with the support of the European Investment Bank, to finance the European plan through the issuing of “Union bonds” — that is, bonds issued by the EU and guaranteed by the Community budget. Given the EU’s reputation on the world market and the current strength of the euro, these bonds could be issued at low interest rates; in addition to strengthening the European financial market, they would help to attract a large slice of global saving that currently, in the absence of valid alternatives, ends up on the American market, even though the value of the dollar continues to fall. Moreover, financing the growth support policy through debt would also seem to be justified by the decision to favour investments, whose profitability is deferred, over increases in private consumption.
Should this kind of budgetary reform appear difficult to realise, an alternative road will inevitably be taken, namely that of applying a golden rule at national — not European — level. In this way, the expenditure provided for under the European development plan would be exempted from the constraints of the Stability Pact, and could thus be financed by the issuing of national Treasury bonds. The results obtained would be similar, but in this case they would be accompanied by the risks implicit in loosening the stringent rules that have allowed Europe to move towards conditions of financial stability. It is certainly true that peer pressure and monitoring at European level could reduce the risks of “imaginative finance” potentially inherent in the application of the golden rule at national level; but, in any case, the application ofa European golden rule seems to be more in line with an evolution towards the founding of a federal financial system in Europe, in which budget balances can be managed, at the level of the central government, in accordance with macroeconomic stabilisation policies, while the national governments remain bound, by the terms of the Maastricht Treaty and the rules of the Stability Pact, to a policy of budgetary equilibrium.
13. A Policy of Sustainable Development on a Global Scale.
Whereas, in Europe, relaunching growth presupposes a supply policy, geared at increasing productivity through a series of measures ranging from more spending, by business, on R&D to a large increase in the share of income invested in higher education; or from the creation of material and immaterial infrastructures to link the different areas of the EU, to the completion of the internal market (through a profound integration, in particular, of the sector of business-related services), on a global level, there can now be no avoiding the need to introduce, at last, a Keynesian-type policy in support of the development of the most economically backward countries, those of Africa first and foremost.
Indeed, not all the areas of the world have been affected, to same degree, by the process of development triggered by globalisation phenomenon. Many countries, the African states in particular, started out from conditions so severely backward that they have not been able to participate successfully and profitably in the expansion of international trade. Even though the rate of economic growth in Africa has certainly accelerated over the past ten years, as a result of the increased demand for primary goods from industrially developing countries, this has not been enough to allow these economies to get off the ground and start absorbing the masses of the unemployed, or, therefore, to develop a domestic demand on the back of a significant increase in disposable income. Furthermore, the weakness of the political systems that emerged after the end of colonisation, added to the lack of technicians and skilled labour, has so far made it difficult for these countries to attract the international capital — in particular investments by multinational corporations — needed to solve the problem of the shortage of domestic capital and trigger a process of industrialisation outside the sphere of raw materials.
As way out of these conditions of chronic backwardness, Spinelli suggested launching a Marshall Plan for the Third World, based on the interests of the contributing countries and not purely on a spirit of transnational solidarity. In fact, by transferring financial resources to African countries in particular, Europe could transform a vast potential demand into real demand, thereby favouring — thanks to increased exports — the transition towards a new model of development which globalisation has made necessary. But this “Marshall Plan”, suggested by Spinelli, must not be allowed to take the form of unconditional income transfers — these would serve only to perpetuate the corruption of the dominant classes —, but rather that of the funding of regional development plans, promoted by regional groupings of states, which, at last, are beginning to emerge in Africa too.
But this is not all. Africa’s environmental conditions are extremely fragile, and they risk further deterioration on account of two factors: first, spiralling oil prices are making it increasingly difficult for the continent to obtain an adequate energy supply, and this is leading to increased use of its forests to meet this need (already, 49 per cent of Africa’s primary energy supply does not come from fossil fuels), and thus to a loss of biodiversity and a depletion of carbon dioxide sinks; second, climate change is intensifying the desertification process, exacerbating the food supply problems of countries that, to a large extent, are already living at barely subsistence levels. The launch of a policy to favour sustainable growth of the African economy can be put off no longer.
14. Europe’s Responsibilities.
Such a policy is not needed only in order to favour the start of development in Africa; it is also essential to Europe’s transition towards a model of sustainable development. A process of redistribution of wealth, on a vast scale, is currently taking place at global level. The so-called BRICs (Brazil, Russia, India and China) have become the symbols of this process. But this economic growth is bringing with it a progressive degradation of the environment. The growing global demand for goods and services is leading to an excessively rapid increase in the demand for natural resources and creating an environmental emergency. To respond to this, it is necessary to adopt models of consumption more compatible with the need to protect the quality of the environment.
On this front, too, Europe bears a heavy weight of responsibility, given that there is greater awareness in Europe, among public opinion and politicians, that current growth rates of production and consumption are incompatible with maintenance of the world’s natural balances. It is thus necessary to start rendering production processes more environmentally sustainable and, at the same time, to start containing the growth of consumption of market-produced goods in order to make room for an expansion of the types of consumption needed to meet the primary needs of the population, and in particular those of its most vulnerable groups (we might cite, first of all, the care of the elderly, the sick and the disabled, but also the conservation of collective goods and of the territory, the protection of cultural assets, and so on), above all through extensive recourse to the non-profit sector. And in this area, too, Spinelli’s ideas regarding compulsory civil service emerge as more relevant and urgent than ever.
Europe thus has a twofold responsibility. First of all, it must start up, internally and quickly, a process of conversion of production and consumption, in order to ensure that product growth is accompanied by an increase in wellbeing, not by a reduction in the quality of life, which is what is happening now. At the same time, while implementing an austerity policy internally, it must strive to favour the sustainable development of Africa, being careful to finance only projects apt to reduce energy dependence on fossil fuels and favour the conservation of environmental and natural resources. However, there is currently no indication that such major transformations are on the horizon and, moreover, in spite of the repeated statements of principle in favour of sustainable development advanced both at national level and by the European Commission and Parliament, it is hard to envisage a substantial change, in favour of more environmentally friendly development, in the absence of a European government equipped with real power and thus the capacity to turn European politics in a different direction.
15. Financing the Budget from Own Resources.
Naturally, with a view to bringing about an in-depth reform of the EU budget, it is necessary to act not only on the knowledge that the investments envisaged by a European development plan can be financed by the issuing of Union bonds, but also by making provision for a return to a system of genuine own resources. The so-called fourth resource is actually nothing other than a national contribution, proportional to the single country’s GDP. To be turned into a true own resource, it would have to be replaced by a European surtax on national income taxes, paid to the EU budget by the citizens directly, so as to increase both the transparency of taxation and, at the same time, the accountability of the European level of government that is levying the resources.
A new source of funding for the EU budget could be found by going back to the Commission’s draft directive for a carbon/energy tax. In a situation in which the risks associated with climate change are becoming increasingly clear, and the need to replace fossil fuels with alternative sources of energy increasingly urgent — also in view of the huge increases in oil prices —, a tax based on the carbon content of energy sources would seem to be an ideal instrument for triggering self-perpetuating energy-saving and fuel-switching processes, reducing the negative environmental impact of energy consumption, and encouraging the introduction of less energy-intensive production processes.
The process of reforming the EU budget should also include a review of the rules that shape budgetary choices. First of all, the multiannual financial perspectives should be approved at the start of the Parliament’s activity and their duration should correspond to that of the legislature. They should be approved by highly qualified majorities and serve, for five years, as the framework of reference for annual budgetary choices. Lower levels of government should also be allowed to participate in decisions on the splitting of resources between the national and European levels of government. Once the multiannual perspectives have been approved, decisions on the activation of own resources to cover expenditure should be taken by a majority vote, and no longer by unanimity, through a codecision of the Parliament and Council, and without the need for ratification by the national parliaments.
16. Conclusions.
Increasingly urgently, the recovery of the European economy is calling for implementation (at last) of the Lisbon Agenda and reform of the EU budget, which, structurally, must reflect the new priorities set out in the Agenda. There is also a need for in-depth reform of the financing of common policies, with the introduction of a European surtax on national income taxes in place of the fourth resource, a carbon/energy tax to favour sustainable development, and the issuing of Union bonds to finance the creation of the necessary material and immaterial infrastructures, and to make European production more competitive.
But the fact is that, as the Kok Report clearly showed, the Lisbon Agenda is not moving forward, and the reforms proposed by the Commission are, in truth, doing very little to favour this. The real reasons for the failure of the Lisbon strategy lie elsewhere and they are highlighted with extreme clarity by Collignon,[2] who draws attention to the fact that the objectives defined in the Lisbon Agenda have the nature of public goods. It is thus in the interests of member states to act as “free riders”, enjoying the benefits of reforms and initiatives introduced by other countries, but without sustaining the relative costs. Even though a cooperative solution could increase the benefits enjoyed by all the countries party to the agreement, the prevailing strategy is one of non-cooperation, which makes it impossible to progress towards the realisation of the objectives set.
For this reason, if an effective recovery of the European economy is what is seriously wanted, we need to see a transition from a system of governance without government, to use Rhodes’s expression,[3] to one of governance of a government, that is, the creation of a European government of the economy capable of overcoming the inefficiencies of the open method ofcoordination envisaged in Lisbon, whose weakness was reinforced by the decision of the European Council taken on March 22-23, 2005. But there does not seem to be any awareness of this need among Europe’s politicians, who have not even managed to carry through the institutional reforms provided for under the Constitutional Treaty which, in this regard, had in any case taken some wholly inadequate steps to guarantee adequate government capacity to favour an effective recovery of the European economy. The first step has to be that of acknowledging that Europe cannot have a government without first building a federal state equipped with limited, but real, powers, and that the European economy cannot possibly be governed — particularly in the face of the enormous problems presented by today’s globalised world — though the coordination of national policies managed by states that retain ultimate decision-making power in this field. This lesson, left to us by Spinelli, is as wholly valid today as it ever was.
[1] A. Spinelli, Pci, che fare?, Torino, Einaudi, 1978.
[2] S. Collignon, The European Republic. Reflection on the Political Economy of a Future Constitution, London, Federal Trust, 2003.
[3] R.A.W. Rhodes, «The New Governance: Governing without Government», In Political Studies, n. 3, 1996, pp. 652-667.
