Social scientists must guide us out of the crisis

The Italian researcher Maurizio Ferrera is keen to break the negative spirals created by the crisis, and thinks social scientist are now the right people to point to the different alternatives for action in political decision-making processes, both nationally and on an EU level. The economists’ medicine has not worked.

‘Beyond the Crisis in Europe. New opportunities for reconciling sustainability, equality and economic robustness’. That was the title of an Oslo conference on the welfare state organised by The Network for European Social Policy Analysis (ESPAnet). The NOVA social research institute at the Oslo and Akershus University College curated the conference. 

Maurizio Ferrara was a keynote speaker at the conference, which gathered 270 participants from 27 countries. He was very worried about the consequences if Europe fails to address the inequalities brought on by austerity policies, and he challenged his colleagues.

“The national welfare state and the European Union are two precious legacies of the twentieth century. But this mutual relationship is fraught with unresolved tensions which have multiplied during the crisis. It has led to a conflict between the nation state and the EU. Is reconciliation possible, and how would that work?” asked Maurizio Ferrera.

Behind all this is austerity-driven economic policies which have resulted in slow growth and high unemployment. This has created an imbalance which leads to greater inequality and more tension, especially within the Euro-zone.

Participative processes

Maurizio Ferrera used the word reconciliation as a starting point. The original Latin meaning of the verb ‘conciliare’ can be to rejoin entities which are moving away from each other, while the noun ‘concilium’ can mean council/counselling. Europe’s challenge is to bring back together again — to reconcile — economic and social Europe through discursive and participative processes.

“In order to create a process like that it is important to ask basic questions like: what is the European Union, and what should the EU be?”

Today we have four clear conflict lines defining the union, he says: How much solidarity should EU’s policies show? How do you balance market regulation and social safety on an EU level? Where do you draw the line between national social sovereignty versus EU interventions? A third battle line runs internally in the EU between member states with high wage levels and high welfare, and member states with low wage levels and low welfare. There are also conflicts between north and south, between rich member states and poorer ones which receive financial assistance.

Organised irresponsibility 

Ferrera uses Max Weber, Jürgen Habermas and Stein Rokkan to illustrate his points, and he borrows Kant’s arguments and his hospitality principle to arrive at norms which can be applied on an individual level to solve conflicts over immigration. 

One important argument for Ferrera is Weber’s view that intellectuals should provide clarity to politics. They must offer to politicians a choice of instruments to reach their objectives and they should involve themselves in debates on values and attitudes — for instance which attitudes form the basis for different alternative actions which can help politicians reach their objectives, and what the consequences of those choices might be. 

“But in the end it is the politicians who must make the decisions,” he underlines.

Maurizio Ferrera is critical to the one-sided discourse in the EU.

“If we look at the EU’s intellectual sphere which focuses on knowledge, values and attitudes, we see that this sphere has been monopolised by dogmatic economists who have a very particular view of how the economy should be administered.”

He draws on his own experience to give an example. Commissioners presented a white paper on a new social investment scheme, and it travelled through the bureaucracy in accordance to the usual rules. When it returned after the technocrats had looked at it, the white paper was suddenly wrapped in a new economic terminology and the most important terms had become efficiency, targeting and selectivity. The overall tone of the discourse had changed through what he calls the EU technocracy’s organised irresponsibility.   

“It’s irresponsible because of how these views are being used automatically. They stick to the principles even when they are inefficient.”

The labour market is special

“Mainstream economists think of employment and jobs and unemployment in terms of having an efficient and sufficiently flexible labour market, apart from some safety net, and that this will allow the labour market itself to produce jobs.”

Maurizio Ferrera says there are two variations of this view. One is that the labour market invigorates itself, so the less state intervention the more efficient it will be. The other view is the German Ordoliberalism, which has been of great importance for the shaping of the EU and its institutions. This approach says the market is not a natural thing, but it must be created through strong state interference. 

“But regardless of which of the two models are applied, the economists don’t see that the labour market functions differently than the product market, where you can shop around. The labour market is embedded in a social structure and has to be managed properly. This means you need to have industrial policies, employment services and unemployment benefits together as a whole.

“These must operate together, if they don’t you will not achieve an equal and fair system, neither will you get an efficient system. That’s why I challenge this system.”

Economists forget about the social structure, he claims, and provides an example from a conversation he had with Norwegian students who had interviewed social workers and social services clients.

“The cooperation struck me as being highly developed. The social worker also acts as a facilitator, and some also take the client’s preferences into consideration. This does not exist at all in Italy, especially not in southern Italy.

“The employment service is there, but it is like a notice board. You get a stamp and then you collect your benefit. Here [in Norway] you have a system which links your social standing to the service you get. Nearly all unemployed people are offered this service, I was told, while in certain European countries fewer than ten percent are, while the others are left to deal with informal channels. 

“We need to find new ways of thinking which are based on fairness and responsibility,” says Maurizio Ferrera.

How do you do that?

“I challenge the prevailing paradigm because it has to a large extent proven to be inefficient. The idea that countries can get out of economic and financial stress simply by restructuring their public debt through keeping their public finances in order has proven to be false. So why don’t they learn? If they have done it wrong, they need to learn from it. Now we see some signs of learning. The European Central Bank is moving towards quantitative easing, nearly six years after the crisis hit. Why hasn’t this been done earlier? Furthermore, the paradigm is in itself incomplete,” he claims.

“As one of my colleagues put it: if Europe wants to stay competitive and create lots of jobs, Europe must gain new comparative advantage over other regions of the world where they produce the same goods and services as Europe, only cheaper. We don’t want to compete on price with these regions. We want a Europe which is capable of selling products and services which can be sold to the world, but only invented and produced and supported by the economic social structures here.

“So we need an environment with many universities and innovative environments where highly skilled people not only are highly educated but have interdisciplinary skills. The kind of education we give our children is absolutely crucial. To get there, you cannot keep cutting. We need economic and social investments, like in education and child care from an early age, and we need to invest in women.”

Only 49 percent of Italy’s women are in work, even though women in Italy are better educated than men and want to work.

“Imagine the potential when you allow women to participate in the labour market,” says Maurizio Ferrera, and argues for economic safety for households and liberation for women. 

“A liberal society should allow people to pursue their dreams and you cannot expect a woman with a university degree who has become a mother not to work because her husband does not want to help with the housework.”

EU must get back to politics

Development has been controlled by self-propelled dynamics because of a technocrat elite of neo-liberal economists, says Ferrera. 

“They have held top positions in national administrations, in national banks and in finance ministries, in supranational institutions like the European Central Bank, and the Commission’s Director-General is also an economist. They all come from the same economic background.”

Maurizio Ferrera believes we are now at a cross roads, as several national politicians have started to realise that the supranational technocrats have too much influence on political decisions. 

“This is at the core of the debate on flexibility. When we talk about flexibility it means to regain the room for maneuver in order to respond to voters who are furious because of austerity measures and cuts and the fact that there are no jobs. They want to respond to the voters, but they also simply want to govern their countries along other principles than efficiency alone. For instance by aiming for more equality and social justice.”

He uses the example of when the troika presented Greece with the conditions for receiving financial support from the EU.

“The word poverty wasn’t even mentioned. But the first paragraph in the Lisbon Treaty dealt with poverty, so they might as well have told the Greek government: you have to cut the highest pensions, you need to get people to pay tax, you need to liberalise some economic sectors which are monopolised by professions, but you must make sure that people don’t fall into serious poverty. They could have done this, because it is their duty according to the Lisbon Treaty. But they didn’t, and I’m surprised no-one in the Greek government said anything.”

Why didn’t they?

“Poor people aren’t core voters, nor are they core groups for trade unions. I believe ideas which support the most fragile groups in society don’t get anywhere in politics if there isn’t a strong civil society, a third sector, or strong intellectual movements which manage to put this on the agenda.

This is the reason for his project:

“Part of my project for the coming five years is to bring together philosophers, sociologist, political scientists and historians so that they can think about this. And when the project has finished they shouldn’t just write books and articles, but speak out; speak the truth to the powers that be.”

Perhaps that could lead to a fairer society, hopes the Professor from the University of Milan, Maurizio Ferrera.