Blairism - Europe's Shining Beacon or Low-watt Glow? Artikkeli Keijo Rahkosen ja Tapani Laustin toimittamassa teoksessa:'Blairism' - A Beacon for Europe", s. 42-249, Renvall-instituutti, Helsinki 2001

Erkki Tuomioja:

"Blairism - A Beacon for Europe?"

Keynote speech at the Round Table discussion on the future of the European welfare states at the Finnish Institute, London 29.5. 1998 No-one can remain indifferent to the example of a party which sweeps into power with a record majority - even if it won a smaller proportion of the popular vote than the Sandinists did in Nicaragua when they lost the country's first free elections. After the elections labour has of course managed to increase its approval rating to historical heights. What relevance if any this success has for the European left in general and Nordic social-democracy in particular is another thing.

As brilliant and successful as Labour's election strategy and campaign were I have reservations about the same strategy working elsewhere. Having listened to some of the gurus employed by New Labour in its election campaign I think that a good part of their advice was more or less irrelevant for the left in most other countries, and in some cases more likely to lead to electoral disaster rather than success if applied in the Nordic countries.

Labour's internal reforms have nothing revolutionary about them from a European point of view. Essentially they have meant that Labour has now - partly - liberated itself from trade-union guardianship and otherwise adopted statutes and practices which have been more or less normal practice in most European social-democratic parties.

As to New Labour's post-election performance the verdict on Blairist policies must be left open for the time being. Even if they do turn out to be a success in the British context there is no a priori reason to think that they could or should serve as a model for other European countries.

The starting point is rather baffling: why should American and British experiences and policies on welfare reform be of particular value or significance when debating the future of the welfare state, when these countries are not welfare states in any sense that is familiar to and accepted by most people in the Nordic countries.

The USA has, of course, never been seriously claimed as a welfare state. The UK, on the other hand, has had the reputation of a welfare model with the Beveridge Plan and the reforms carried out by the Post-war labour government. Even so it can be argued that these two countries between them have more similarities in their liberal or residual social policies than with other, corporatist, institional or social-democaratic welfare regimes. They certainly have the most unequal distribution of income as well as the highest instances of poverty to be found in the OECD-countries.

Anthony Giddens seems to interpret this as showing that the welfare state has not been particularly successful in combating poverty and reducing income inequality. (Giddens 1994, p. 149) Looked at from the Nordic countries - where the welfare state has been extraordinarily succesful in eliminating poverty - an alternative interpretation would be, that neither the US or the UK can be called welfare states.

This has not, however, prevented the US and the UK from being those countries which foster the most radical, not to say hysterical critique and condemnation of both welfare and the welfare state.

Thus any search for a "Third Way" portraying neoliberalism of the reaganism/thatcherism variety as one pole and social-democracy as the other is of rather doubtful relevance in a European context.

The social policies of the Nordic countries and most European countries are different from the US and UK in their universalist approach to social insurance, benefits and public services. It is indeed true that the welfare state of the Nordic variety benefits not only the least priviledged but also those who are well-off. It is also true, that the more well-off are have also more earnings-related benefits and that they are able to use free libraries, education and even health services more than less-well off people do. The better-off do, however, also contribute more to the costs of the welfare state both through taxes and social security contributions.

This is intended. The result is a considerable redistribution of income on the one hand and enhanced social cohesion on the other, with the vast majority of the population sharing common experiences in maternity wards, day-care centers, schools, health centers and other social amenities. Much effort has been directed towards preventing the emergence of a marginalized underclass through both social and physical investment. Social housing and city planning policies, for example, have consciously tried to avoid creating socially segrated neighbourhoods.

Thus, contrary to what Giddens says (NS 1.5. 1998), social-democracy of at least the Nordic kind is not about class politics of the old left, but about overcoming and eliminating old class distinctions and contradictions. Needless to say this is not a product of authoritarian policies - they would never have been succesful - but of democratic multiparty politics in a pluralist and liberal society.

The Nordic welfare regimes are of course high tax regimes with a high degree of state intervention. But to call this corporatism of the kind where the state necessarily dominates over civil society as Giddens portrays it is misleading. A central feature of the Nordic welfare model is that it involves both civil society and especially local government with a high degree of real autonomy in the actual running of welfare services.

In fact most social-democrats would today rather use the concept welfare society in lieu of welfare state. This particular example of newspeak should not be interpreted as an indication of surrendering the state's responsibility for the overall provision of welfare services and social security but as meaning that these do not necessarily have to be produced by the state itself.

Nor is it easy to comprehend what is meant by "a new mixed economy" as opposed to an old one in the Nordic context, where battles over public ownership as such have never had the central position they have used to have in Britain.

A good example is the Finnish system of pensions which rather uniquely combines elements of both a basic minimum income guarentee and earnings-related general pensions as well as private sector provision of universal and mandatory pensions through legislation. The state pensions institute provides a tax-financed minimum pension for everyone topped by earnings-related pensions which after thirty years of work-history come up to 60 % of former wage levels. There is no fixed ceiling to what a pension can reach, but neither is their a market for private pension schemes.

Earnings-related pensions are funded and financed by contributions from both employees and employers. Each employer can choose the private insurance company which provides the pension-coverage, but the investment policies of the companies are regulated and the pension-system as a whole is liable to cover the pensions that a mismanaged company could endanger.

After recent adjustments to the contributions to and benefits from the system it should be financially sound even taking into account the future increase of the proportion of pensioners in the population. The viability of the pension system - as of any social security in any country - could, of course, be endangered by new recession and/or less-than-expected growth rates. This growth-dependency, however, is a challange common to all welfare regimes in all the OECD-countries to which not even Blairism has been able to provide an answer in its rhetoric, much less practice.

One could, I presume, call the finnish pension system an example of the Third Way. Other examples of comparable welfare state management could be taken from other European countries, such as the workfare schemes in Sweden to which Giddens himself has referred to.

I am not claiming that everything is fine with the Nordic welfare states. On the contrary there are grave problems of which the most pressing are those connected with the high costs of the welfare regimes. The problems were evident already well before the end of the full employment most Nordic countries were able to enjoy for years. But the problems became acute when unemployment in Finland, for example, shot up from practically zero to 18 % as social costs skyrocketed with the social safety nets functioning precisely as they were intended to do while taxable incomes fell. While the welfare state cannot be blamed for the economic crisis it is evident the resulting public sector deficit cannot be balanced with tax increases. On the contrary there is a need for cutting income taxes at least for low-income groups and even for a slight reduction of the tax rate as a whole.

Not all of this can be achieved through growth and better employement. Thus cuts in social expenditure - which have primarily affected income-transfers, not services - are also neces-sary. The Nordic social-democrats have not - nor have most centrist parties either - resorted to trimming down social expenditure through any desire to dismantle the welfare state. Attacks against the welfare state have no significant political or public support despite prominent academic and media support for neoliberal measures. Not even the prospect of massive tax reductions which the dismantlers of the welfare state dangle before people has succeeded in mobilizing opinion behind the neoliberal agenda, except for some of the very rich.

Thus what is now being done in the Nordic countries aims at making the welfare state economically and socially sustainable. That it also aims at making it capable of acting as a trampoline to help the unemployed return to work may be an example of using new terminology but this is not new either. The original idea behind Nordic welfare policies has been specifically to activate those who would otherwise be marginalised and incapable of pariticipating fully as both as producers and consumers as well as citizens in our societies.

Although unemployment in Finland is now coming down at an encouraging rate it remains much too high at 13 %. It begs the question whether generous unemployement benefits, labour market-rigidity and/or a too equal distribution of income are to blame for persistant unemployment as neoliberalists claim. In fact adjustments have been and will continue to be carried out to correct excesses in all of the mentioned respects and they can be expected to contribute to ameliorating the employment situation, but they do not aim at fundamentally changing the character of the Nordic regimes.

This reflects an important characteristic of social-democracy, namely its readiness to implement reforms on a pragmatic basis with the aim of finding solutions that work, without being slave to either old dogmas or new fashions. This may sound too good to be quite true, but as an approach to social challenges it is at least as valuable and, in the European context, surely more workable than the search for an ephemeral Third Way.

The Third Way as expounded by New Labour spokesmen implies that the left must reform its policies because they have failed. This is something most European social-democrats would not agree with. Reforms and new thinking are certainly needed, not because of social-democratic failure but because the life-time full-employment conditions of fordist mass production and consumption and of Keynesianism-in-One-Country on which the Nordic model was originally built do not exist any more.

Blairism deserves the benefit of doubt. But until it has more solid achievements to its credit it would do well to contain the high-power marketing of its ambition to a beacon to Europe which risks overstepping the fine line between the highminded and the ridiculous.

Nevertheless there is one example of Blairism which has been and will continue to be a beacon for continental social-democrats: namely the Blairism of Eric Blair, better known as George Orwell, whose appeal for fundamental decency in human relations and rejection of all forms of totalitarianism will always be valid guidelines for all us.