Europe Needs a New Social Model for the 21st Century

By Mettler, Ann | European Affairs, Spring 2005 | Go to article overview

Europe Needs a New Social Model for the 21st Century


Mettler, Ann, European Affairs


Why is Europe so slow in reforming its moribund economy? Could it be that the arguments we use - and the intellectual models we follow - are based on 19th century concepts and conditions and cannot meet the challenges of the knowledge-based economy of the 21st century?

After a decade of discussion about the need for reform, Europe's economic decline has been thoroughly analyzed, and there is ample evidence that current approaches are not working. The reason for the decline is increasingly clear. It is caused by interest groups that claim that any reform - however small - entails the imminent destruction of the "European social model." That, for example, was one of the main arguments recently used to block the opening of the EU market for services, which would have been of immense benefit to most Europeans,

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More and more Europeans, however, now openly admit that their social model is rapidly decaying and no longer even deserves to be called "social" In the face of persistently high unemployment, particularly among the young, deteriorating public finances and collapsing social security systems, Europe finds itself unable to generate the economic growth and create the jobs its citizens urgently need.

The Lisbon Council is a Brussels-based group founded in 2003 to promote the objectives of the European Union's so-called Lisbon agenda, adopted by EU leaders in 2000 with the aim of making Europe "the most competitive and dynamic knowledge-based economy in the world" by 2010. As this objective recedes ever farther over the horizon, the Lisbon Council's members have grown tired of the stale old debate about issues of vital importance to our future.

Together with 15 non-governmental organizations from seven EU member states, we have drawn up A Social Contract for the 21st Century, laying out a more contemporary vision of the rights and responsibilities of the state toward the individual and vice versa. The Contract, on which this article is based, is intended to start a wide discussion on revitalizing Europe and its economy. It is already attracting a great deal of attention.

The Contract states that Europe must, as matter of priority, reform its methods of economic governance and re-direct subsidies away from agriculture and smokestack industries. We must invest all our energy in the human capital that will allow us to thrive in a 21st century knowledge-based economy, as well as re-commit ourselves to the spirit of discovery and innovation that originally made European society great. Above all, we must seek to define a healthy, positive vision of a strong and prosperous 21st century Europe.

A good social model is not static. As societies progress and evolve, so must the social contract between citizens and governments. Social models that resist healthy change and do not adapt to modernity are doomed to fail. Trapped in a forgotten logic from a distant era, the model will grow less and less relevant to the society it is intended to shape, and less and less just

The world has changed dramatically since the principles of our current social contract were first elaborated. In the 18th century, most people worked on farms and could expect to live to about age 50. Early in the 19th century, the industrial revolution began to change the way people lived and worked, triggering massive migration to the cities and the proliferation of urban squalor. Against that backdrop, policy makers took bold and visionary action: they started to erect the modern welfare state, guaranteeing protection for the casualties of such profound economic change.

The labor movement made an invaluable contribution by establishing the vital principle that industry could only exist and thrive if it took proper care of the people it employed. The welfare state reached its peak in Western Europe in the second half of the 20th century.

Now, however, as we move from the industrial age to a networked, knowledge-based economy, the European social model desperately needs to be modernized. …

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