European Progressive Magazine

Home , Claude Bartolone, Emma Reynolds, Mariana Mazzucato

QueriesAutumn 2013 / Issue 2 / €5.90 THE EUROPEAN PROGRESSIVE MAGAZINE

MY EUROPE by Michelle Bachelet

ONES TO WATCH Emma Reynolds Joseph Muscat

IN NUMBERS 2013 UNCTAD Trade & Development Report

EUROPEAN INDUSTRIAL STRATEGY responsible, equitable, sustainable?

ESSAY: Mariana Mazzucato on the Entrepreneurial State COMMENT: Anthony Giddens About Queries Isaac Newton’s famous book “Opticks” concludes with a set of “Queries.” These “Queries” are not questions in the ordinary sense, but rather rhetorical questions intended to stimulate thinking. This was Newton’s mode of explaining “by query.”

Made with the financial support of the European Parliament

No 2 / Autumn 2013 / ISSN 2032-9113 – Queries is the scientific magazine of the Foundation for European Progressive Studies. The Foundation for European Progressive Studies (FEPS) is the first progressive political foundation established at the European level. Created in 2007 and co-financed by the European Parliament, it aims at establishing an intellectual crossroad between social democracy and the European project Publisher: FEPS – Foundation for European Progressive Studies. First published in Belgium 2012/2013 Magazine Editor of Queries: Dr. Ernst Stetter (Secretary General – FEPS) Editor-in-Chief: Alain Bloëdt Associate Editor-in-Chief: Olivier Breton Editorial Consultant: Giovanni Cozzi – Journalists: Lorenzo Consoli, Yves de Saint Jacob, Jacques Docquiert, Karl Falcon, Nicolas Gros-Verheyde, Trevor Huggins, Kim Rahir. Cover Illustration: Antoine Corbineau – Design & Production: All Contents, France Photo Credits (Pages 6-7): T. Sorrentino, Michelle Bachelet – Headquarters, Horst Wagner, Derek George Photography, N. Pires, FEPS, Tod’s, University of Warwick, University of Campinas, European Union 2013, Finance Watch, Florian Schäfer, Mariana Mazzucato, Creamer Media, Department of Information – Malta, Sportissimo/Pillaud, Zaman/Kursat Bayhan, Lars Hagberg, Paul Hu/Assignment Asia/ CLSA Investors’ Forum, DR Copyright © FEPS – Foundation for European Progressive Studies.

2 QUERIES — Autumn 2013 EDITORIAL © FEPS©

TIME FOR EUROPEAN reindustrialisation

ntonio Tajani, the conservative Euro- innovation process. Instead, we need public investment pean Commissioner for Industry and in areas where the private sector cannot or is not willing Entrepreneurship, asserts that “auster- to be active (page 113). ity may actually shut down the ﬁrst out- A very good example is illustrated by Marianna Mazzucato, breaks of recovery” (page 55). This is a who reminds us (page 47) that the US has spent the last welcome step away from the austeri- few decades using active interventionist policies to drive ty-onlyA solutions advocated by mainstream policymakers, private sector innovation in the pursuit of broad public however many policy proposals still do not take into policy goals, e.g. the algorithm at the heart of the Google account the prominent role that the state should play in search engine! promoting technological and industrial development. Anthony Giddens (page 59) also highlights the need to It is only through a significant increase in public and actively support research and development (R&D) and private investment towards innovative and cutting-edge claims that “Europe clearly needs to turn a corner in eco- technologies that Europe will succeed in creating more nomic terms or R&D expenditure will continue to decline.” jobs and stimulating growth. Indeed, as highlighted by This clearly requires both state and private sector to invest several international political economists in the Beyond and support long-term industrial strategies. Europe section (page 84), the state, both in advanced To this end, Louis Lemkow stresses that “the state has to economies and emerging markets, has always been a key be more present, more aggressive and more visible – and economic actor in promoting economic development and that’s where the progressive parties have a major role to innovation. play”. Consequently, the pressure is on and the opportu- The theme of this year’s Call to Europe conference – the nity has arisen for a responsible, equitable and sustainable annual signature event of the Foundation for European industrial strategy. The question remains: do we have the Progressive Studies – was Beyond Austerity: Building Euro- necessary instruments and the political will to embark on pean Solidarity. Experts at this event emphasised that a new economic path? future growth will require Europe to become more innovative. Therefore, government has a central role to play Massimo D’Alema, that goes well beyond cutting red tape hindering the FEPS President, former Prime Minister of Italy

QUERIES — Autumn 2013 3 CONTENTS CONTENTS #02 Contents European Industrial Strategy Responsible, equitable, sustainable?

Page 32 Corbis © Corbineau Antoine Atelier © Corbis © INPUT FOCUS INSPIRATION

P. 10 MY VIEW P. 34 FOREWORD P. 94 MEET THE PRESS Claude Onesta Charlotte Billingham & Giovanni Cozzi Personal Data in a Digital Society

P. 12 ONES TO WATCH P. 36 IN NUMBERS P. 98 PORTFOLIO Emma Reynolds UNCTAD European Cities & Sustainable Development Joseph Muscat Stephanie Blankenburg Photographs by Yann Arthus-Bertrand

P. 20 ANALYSIS P. 42 ESSAY P. 108 INSIGHT Eneko Landaburu Mariana Mazzucato Hannes Swoboda

P. 23 COLUMN P. 50 INQUIRY P. 110 REPORT Susanna Camusso The Failure of the European Industrial Policy Call to Europe III

P. 24 VISION P. 60 INTERVIEW P. 116 DIARY Elaine McCrate Pascal Lagarde FEPS & Members

P. 28 MY EUROPE P. 62 ESSAY P. 120 ZOOM Michelle Bachelet Louis Lemkow Fondation Jean-Jaurès NEW P. 68 JOINT INTERVIEW P. 122 PUBLICATIONS Marita Ulvskog & John Grahl Dimitris Tsarouhas Christophe Sente More information at P. 72 ESSAY Andy Smith Michel Aglietta www.queries-feps.eu P. 78 INTERVIEW Andreas Görgen

P. 84 BEYOND EUROPE

P. 90 VOTEWATCH How to support innovation in European SMEs?

4 QUERIES — Autumn 2013 QUERIES — Autumn 2013 5 CONTRIBUTORS CONTRIBUTORS

CONTRIBUTORS Pascal Lagarde Benoît Lallemand Eneko Landaburu Louis Lemkow Mariana Executive Director Senior Policy Analyst Former European Professor of Mazzucato of the French Public at Finance Watch Union Ambassador Environmental Science Italian-American They have contributed to the Queries debates and thinking. Investment Bank to Morocco at the Universitat Economist Autònoma de Barcelona

Michel Aglietta Yann Arthus- Michelle Bachelet Charlotte Stephanie Elaine McCrate Seeraj Mohamed Joseph Muscat Claude Onesta Emma Reynolds French Economist & Bertrand Former President Billingham Blankenburg Associate Professor Director of CSID & Prime Minister Head Coach of British Shadow Emeritus Professor of French Photographer, of Chile FEPS Executive Professor of International of Economics at the Senior Lecturer of Malta the French National Minister for Housing Economics at the University Journalist & Reporter Advisor Political Economy at SOAS University of Vermont at the University of Handball Team of Paris Ouest - - University of London the Witwatersrand La DéfenseNanterre

Olivier Blond Anne Bouverot Susanna Dae-oup Chang Giovanni Cozzi Ana Rosa Ribeiro Jyoti Saraswati Fernando Sarti Christophe Sente Andy Smith Editorial Director Director General Camusso Professor of FEPS Economic de Mendonça Professor of Political Assistant Professor & Political Scientist Researcher & Professor at GoodPlanet of the GSM Association General Secretary Developmental Studies Advisor Researcher & Assistant Economy at Stern Dean of the Institute at the Université Libre of Public Policies at Foundation of the Italian General at SOAS - University Professor at School of Business of Economics - de Bruxelles Sciences Po Bordeaux Confederation of London the University - New York University University of of Labour of Campinas Campinas

Diego Della Valle Anthony Giddens Andreas Görgen John Grahl Ewa Karwowski Hannes Swoboda Antonio Tajani Dimitris Marita Ulvskog John Zysman President & CEO British Sociologist Siemens Energy British Academic Researcher at Austrian Member European Tsarouhas Swedish Member Professor of Political of Tod’s CEO for South West & Professor at SOAS – University of the European Commissioner Assistant Professor of of the European Science at the University Europe Middlesex University of London Parliament & President for Industry and International Parliament & Vice of California Berkeley London of the S&D Group Entrepreneurship Relations at Bilkent President of University the S&D Group

6 QUERIES — Autumn 2013 QUERIES — Autumn 2013 7 CURRENTLY IN NEWSSTANDS NEW FORMULA

THE MAGAZINE OF GERMAN AND FRENCH-SPEAKING EUROPE INPUT SPECIAL OFFER 29€ ANNUAL SUBSCRIPTION

MY VIEW ONES TO WATCH ONES TO WATCH Claude Onesta Emma Reynolds Joseph Muscat P. 10 P. 12 P. 16

ANALYSIS COLUMN VISION Eneko Landaburu Susanna Camusso Elaine McCrate P. 20 P. 23 P. 24

MY EUROPE JE SUIS EUROPÉEN, JE LIS PARISBERLIN Michelle Bachelet P. 28 LE MAGAZINE DE L’EUROPE GERMANOPHONE ET FRANCOPHONE DAS MAGAZIN DES DEUTSH- UND FRANZÖSISCHSPRACHIGEN EUROPAS

WWW.BOUTIQUE-PARISBERLIN.COM QUERIES — Autumn 2013 9

pub PB-2.indd 1 22/10/13 15:21 MY VIEW MY VIEW

hat’s it! I promise not to mention sport this time, looking out solely for their own interests and treating other coun- or at least not too much. You will not find any tries as potential adversaries. I take the same approach with my startling revelations from the world of handball team. I remember playing in international matches where we had – I am writing not as a coach but as a committed an overly patriotic mindset. Opponents were considered invaders. EUROPE European. “Why?” you might ask. Because the We would belittle them and it was severely frowned upon to frat- T European Union is a fundamental issue that af- ernise with them after the match. A team with 28 players fects millions of people. Let’s be honest, Europe is everywhere There is no time or place for this sort of attitude in today’s world. we look, both in the media and our daily lives. As the son of a The players who face each other at the World Championship, for family of communists who left Italy for Brazil in the 1930s and example, are well acquainted from their German, English and came back to the continent three years later, I witnessed first-hand French clubs. Their wives know each other and their children the formation of Europe as we know it. Back then it didn’t exist. attend the same schools. This familiarity with one another means Too often we forget that the goal of European construction was that you can no longer demonise opponents as was done in to bring peace to a continent of coun- the past. The era of belligerence tries with the nasty habit of tearing has come and gone. Sport is now each other to shreds every 50 years “OPPONENTS REPRESENT at the forefront of the people’s or so. When you grow up with parents Europe. and grandparents who lived through AN OPPORTUNITY FOR one or both world wars, the signifi- OUR TEAM TO CONTINUE PLAYING AS A TEAM cance and essential good of this Our ability to live together peace- peace are never lost on you. While TO HONE THEIR SKILLS. fully has opened up new paths the EEC, ECSC and EURATOM cer- and journeys that were unimagi- tainly laid the foundation for an eco- WHY DON’T EUROPEAN nable thirty or forty years ago. nomic community, my interest lies in COUNTRIES TAKE THE Today I tell my players that oppo- the people’s Europe. I’ve always nents represent an opportunity found human interaction more inspir- SAME APPROACH?” for our team to continue to hone ing than foreign trade. So the econom- their skills. Why don’t European ic and monetary union is not really my forte, but I find solace in the countries take the same approach to politics? True team success- people’s Europe and the peace it has forged. es are few and far between in the European Union. As things stand, each member state is running in its own lane, with its heart BUILDING THE PEOPLE’S EUROPE set on beating its neighbour. In my team, we don’t compete with I recently came across a report on the two Spanish enclaves, our own team members. We win by working together to improve Ceuta and Melilla. I saw Africans attempting to cross the border as a whole. My players don’t take holidays as a group, but they do illegally – one, ten, fifteen times – only to be tirelessly turned back have a strong collective sense of purpose when they are togeth- by border guards. What does Europe do for them? Does cordoning er. They are well aware of the stakes and know that they can only

© Mamédy© Doucara off our problems actually solve anything? I highly doubt it. Europe’s win by pooling their strengths. The European Union is a team with economic and technological cooperation paved the way for the 28 players. It can only win in the long term if all its members emergence of “Social Europe”. Slowly but surely, we are continuing communicate and regard each other not as opponents, but as The time has come to start thinking of Europe as a close-knit team this process and one day it could spread across the world, so long valuable partners in a close-knit, peaceful community. This vision determined to live together in harmony, rather than a fragmented as we continue to share and communicate with each other. The may sound idealistic, and it should – changing the world has always group of individual players. challenge is worthy of the hopes it inspires, but we have to want required a good dose of idealism. to rise to it. There naturally was an outpouring of emotion following the Lampedusa tragedy, yet the revolting row over the Roma con- Claude Onesta tinues. The people’s Europe will only make lasting progress and has been head coach of the French men’s national by Claude Onesta spread its message of unity and peace once member states stop handball team since 2001.

10 QUERIES — Autumn 2013 QUERIES — Autumn 2013 11 ONES TO WATCH ONES TO WATCH

For many, Britain is a particularly divided country, split between the haves and the have-nots. Labour MP Emma Reynolds is working to try and narrow that divide, and to also ensure that her country plays a full part in the European Union. A committed progressive, she believes that more should be done to get Europe’s struggling economies back on track.

by Trevor Huggins

s someone who has Politics, Philosophy and Economics – a course Key Points achieved success at the that has produced several British prime ministers highest level of British and scores of MPs since the 1930s. “I knew I education, the phrase could really succeed in languages – and they do She was drawn to ‘teacher knows best’ is give you a real sense of achievement. But the politics by a desire for one Emma Reynolds intellectual buzz from arguing about politics was fairness, in opposition A to Thatcherism. would doubtlessly agree with. more attractive than being proficient in French But only up to a point: as a teenager at school or Spanish.” That said, Reynolds neglected nei- For Britain, her in Wolverhampton, Reynolds’ disagreements with ther language, spending five months of her gap ambition is a more her economics teacher sowed the seeds of a year in France and six in Argentina. equal society, starting political commitment that has today made her a with educational opportunities and Labour Party MP in her home city and a member A POLITICAL AMBITION of the opposition ‘shadow’ cabinet. “The schools Those skills proved useful on graduating in 2000, standards. of thought championed by Margaret Thatcher when she started her working life with a brief In Europe, the EU needs to help tackle © DR© seemed discredited to me, but my economics spell at an information centre for EU enlargement teacher – who definitely wasn’t on the Left – in Brussels, followed by a position in public af- debt and unemployment bought into them a bit more,” Reynolds recalled. fairs, lobbying MEPs on behalf of small UK busi- in the short term “The idea that we’d let people perish in unem- nesses. Her move to full-time progressive politics and toughen rules ployment for years, just to have a certain inflation came in January 2004, when she joined the in the longer term. EMMA REYNOLDS, rate, seemed totally unjust to me. And it inspired Party of European Socialists as a policy adviser, me to argue with him.” working initially on the manifesto for that year’s It was a case of ‘creative conflict’ as Reynolds’ European elections. However, the real turning WORKING FOR A MORE excellent results in the subject at 18 prompted point in her political life came the following year, her to shelve plans to study languages in Scot- with the desire to become an MP. “Britain’s gen- land in order to follow in her mother’s footsteps eral election campaign sealed it for me,” she as an interpreter. Instead, she took a year out conceded. “I took a two-week leave, did a lot of EQUAL SOCIETY and won a place at Oxford University to study door-knocking to help Labour candidate Rob

12 QUERIES — Autumn 2013 QUERIES — Autumn 2013 13 ONES TO WATCH ONES TO WATCH

Marris in Wolverhampton and I really got the bug. Miliband’s vision of a living wage and not just a when she was appointed housing minister by Ed “WE NEED TO SAY THAT Being part of the team, the election night and minimum wage, and I’m very exercised about Miliband as part of a reshuffle that promoted her beating the Conservatives in a marginal seat zero-hour employment contracts (offering no into the shadow cabinet. Europe is clearly a sen- THE EUROPEAN UNION made it all very exciting. I just felt ‘I want to do guarantee of paid work) – which are one of the sitive subject in a country where the Conserva- this’.” She returned to the UK in 2006 as a spe- worst forms of exploitation.” Highlighting what tive-led coalition plans a referendum on Euro- CAN BE A SOLUTION cial adviser to Geoff Hoon, then Europe Minister, she called the “fantastic” schools in Denmark pean Union membership. “The reason I wanted TO PROBLEMS, THAT IT who valued the contacts Reynolds had acquired and Finland, Reynolds added: “Better education this job is to keep the UK in the EU and make after two years with the PES and her technical is the key. All kids, whatever their background, sure it plays an important role there,” Reynolds CAN TACKLE HIGH LEVELS knowledge of EU affairs. Having followed Hoon should have similar opportunities; and in this affirmed. “Given the euro zone crisis, I don’t when he became Chief Whip, she seized her country I don’t think they do.” blame people for being more skeptical than be- OF UNEMPLOYMENT AND opportunity in 2008 at a party selection contest fore. But we’ve got to start putting the argument HELP ECONOMIES GET for a safe seat in Wolverhampton. The only KEEPING THE UK IN EUROPE more powerfully that it would be disastrous if we woman among eight candidates, Reynolds was Such comparisons are inevitable given her com- left and highlight the good things we get from THROUGH THE CRISIS.” chosen – and duly followed up by taking the seat mitment to Europe. Reynolds held the post of our EU membership. It’s going to be a constant in the 2010 elections. shadow Europe minister until October this year, theme for the next few years and it’s one I feel Though some local employers are doing well, passionate about.” Wolverhampton is home to areas of post-indus- Clearly, the EU does need to address its prob- trial deprivation and educational underachieve- “THE IDEA THAT WE’D LET PEOPLE lems, and particularly the way it deals with its ment, and offers a pointedly sharp contrast with troubled economies. With next year’s European the prosperous southeast. It has also inspired PERISH IN UNEMPLOYMENT elections in mind, Reynolds argues that “the Reynolds’ political commitment. “I would like to centre-Left has got to show that it has a different live in a more equal society,” she declared. “I think FOR YEARS, JUST TO HAVE plan for the way forward, a credible alternative” we live in a deeply unequal society - not only in A CERTAIN INFLATION RATE, to Angela Merkel’s rhetoric of punitive austerity. terms of income, but also in health, education For Reynolds, the battered economies of south- and everything else. I’m very committed to Ed SEEMED TOTALLY UNJUST TO ME.” ern Europe need a combination of short-term help and medium to long-term rigour. “We need the project bonds that François Hollande has talked about, the European Investment Bank, a well-funded youth employment scheme and as much leverage as we can provide to get these countries back on track – before we get tough about rules. We need to say that the EU can be a solution to problems, that it can tackle high levels of unemployment and help economies get DR© through the crisis.” This belief in Europe’s poten- ABOUT tial as a force for good and for future economic progress is a genuine conviction for Reynolds, Born in November 1977, Emma Reynolds is from Wolverhampton, who has little time for the pessimists. “We central England. She graduated from Oxford University in Politics, shouldn’t buy into this notion – which I find re- Philosophy and Economics in 2000, and moved to Brussels. She joined ally irritating – that Europe is in an inevitable the Party of European Socialists as a policy adviser in 2004, before decline,” she declared. “The EU is an important moving to London in 2006 as a special advisor to Geoff Hoon, Labour’s part of the world, we need to harness these op- Europe minister. She became an MP in 2010, was later appointed portunities in emerging economies and not be shadow Europe minister, and joined the shadow cabinet as housing

14 QUERIES — Autumn 2013 QUERIES — Autumn 2013 15 ONES TO WATCH ONES TO WATCH

Malta’s 39-year-old Prime Minister, Dr. Joseph Muscat, led the Labour Party to a landslide victory in March, securing only its second spell in office in 26 years. Today, the challenges are numerous — from economic and social policy to EU-wide issues such as immigration. In all of these areas, he sees an opportunity for a progressive agenda to flourish.

by Trevor Huggins

desire to help others is LEARNING FROM EUROPE Key Points the guiding ambition of A university education at both undergraduate all progressives when and post-graduate level has inevitably helped to Dr. Muscat’s political they become full-time shape Dr. Muscat’s ideas. However, it hasn’t been values are based politicians. the only learning experience. Though he had on fairness and social Dr. Joseph Muscat didn’t wait previously opposed Malta joining the EU, the A justice. that long. “I became involved in civil society from a country’s future premier served a four-year term Social reform, young age, but politics didn’t have much appeal at as an MEP from 2004-08 – a period which made fighting corruption ﬁrst,” Malta’s premier told Queries. “It was volunteer him realise that politics doesn’t need to be an and reducing energy organisations and social work that got my attention. exercise in conﬂict management. “Having come bills have been key They were making an impact on society and were from a country where politics is highly manifesto policies for places where you could make change happen.” polarised, I was impressed by the way others his party. When it came, Dr. Muscat’s involvement in politics in Europe sought compromise,” he said. “Politi- Tackling illegal coincided with his interest in journalism during his cians elsewhere were not afraid to recognise the immigration is

© Department of Information, Malta Information, Department of © student years. He began working for the Labour achievements of their opponents. There didn’t a pressing domestic Party’s radio station and helped the party develop have to be conﬂict over every issue. This inﬂu- issue that demands a TV station, website and newspaper. “It was all ence led to me reaching out back home. I began action by the EU. very exciting,” he recalled. “But I realised that I to reshape the party after I became leader in would have to reach out beyond the media if I 2008, and over time we built the Movement of JOSEPH MUSCAT wanted to contribute more to public life.” He joined Progressives and Moderates… a place where the party’s national executive at the age of 21 and new ideas and new approaches could be went on to combine journalism, his studies and a explored.” A FRESH series of roles in the Labour administration from 1996-98, along with a professional capacity as HELP FOR FAMILIES an economist. “It was a challenge,” he admits. “But Labour’s victory during the elections in March I think determination and good time management followed a campaign that included commitments START FOR MALTA will get you some way in life.” to tackle corruption – something Dr. Muscat

16 QUERIES — Autumn 2013 QUERIES — Autumn 2013 17 ONES TO WATCH ONES TO WATCH

describes as “a scar on society for far too long” IMMIGRATION ISSUES other nations faced a financial crisis we all came - and to extend civil rights. Since the government It’s this kind of solidarity that Malta is itself hop- to their aid,” Muscat recalled. “Now Malta and “WE NEED TO BE CLEAR took office, a Whistleblowers’ Act has been ing to receive from the European Union over the other Mediterranean countries have an immigra- ABOUT OUR AMBITIONS: produced to offer protection to those who reveal question of immigration. Malta has called for EU tion crisis and we are asking for a similar re- wrongdoing, while the statute of limitations on action to tackle the often hazardous clandestine sponse.” So far, that response has not been SOCIAL JUSTICE, FAIR past misdemeanours has been lifted, enabling traffic from across the Mediterranean – an issue forthcoming. “If you asked me ‘does Malta feel police to investigate ‘cold cases’. Meanwhile, that is also raised in mainland Italy, Sicily and it is getting the support it needs?’ I would have PLAY AND AN ECONOMY civil unions for gay couples are to be introduced Greece. As an island with a population of only to answer in the negative,” he added. A burning THAT DELIVERS JOBS in the near future. Two other election commit- 450,000, making it the smallest member of the issue in Malta, it is clearly also a controversial ments that resonated with voters were a promise EU, Malta will inevitably struggle to cope with one. In July, the European Court of Human Rights AND PROSPERITY.” to cut electricity bills by 25%, as a result of uncontrolled immigration. “When Greece and forced Malta to cancel two flights destined to switching electricity production from oil to gas, return migrants to Libya, a country seen as a and introducing free childcare for all couples launchpad for migrants from across Africa. In- working full time. The former should particular- deed, Dr. Muscat readily acknowledges that ally help the poorest in society and the environ- though EU support will be decisive in tackling ment, while the latter should help businesses “PROGRESSIVE POLITICS IS ABOUT the issue of immigration, Libya has to be part of to hold on to talented female staff. “We talk about LOOKING OUT FOR THE LESS the solution too. social democracy and social justice,” Dr. Muscat affirmed. “There are intellectual debates about FORTUNATE IN SOCIETY, GIVING PROGRESSIVE AMBITIONS what these terms mean, but I think we all know The year ahead will be an important one for the what progressive politics is about. We believe in PEOPLE A BETTER LIVING AND progressive community in Europe, particularly looking out for the less fortunate in society, giv- ALLOWING EVERYONE THE SAME with the European Parliament elections. Malta ing people a better living and allowing everyone currently has six MEPs, four of whom are from the same chances in life.” CHANCES IN LIFE.” the Labour Party and two from the conservative Nationalist Party. Dr. Muscat is in the rare position of having been involved in the inner workings of the EU from very different positions – first as a deputy in the European Parliament and now as a member of the Council of Europe – and is well aware of its public perception. Often seen as slow-moving and removed from the lives of ordinary people, he sees a key challenge ahead in making it more relevant. To succeed in that, Dr. Muscat argues that progressives everywhere Malta Information, Department of © need to make a statement of intent at the polls ABOUT next May. “We need to be clear about our ambitions – social justice, fair play, an economy that Born in January 1974, Dr. Joseph Muscat graduated delivers jobs and prosperity – and always guard in Public Policy from the University of Malta, followed against those conservative values that cause by a Masters in European Studies. He earned a PhD in societies to stagnate,” he affirmed. “The future management research from Bristol University in 2007. is ours to seize.” A radio journalist and an economist, he was elected to the Labour Party’s national executive in 1995, becoming an MEP in 2004 and party leader in 2008. He took office

18 QUERIES — Autumn 2013 QUERIES — Autumn 2013 19 ANALYSIS ANALYSIS

“FACED WITH THE CONFLICT IN SYRIA, THE EUROPEAN UNION AS SUCH HAS BEEN SHARING OUR SOVEREIGNTY A COMPLETE NONENTITY.”

economic measures; François Hollande, reflecting is no doubt in my mind. Yet to do so, it must exist Europe has not (yet) achieved its stated goal of speaking with one a typically French outlook, has held firmly to his as an entity. Europe must find the impetus to build voice on the international stage. The case of Syria is ample proof sense of responsibility as a key player in world on its potential as a political power—a status it has of that. It is vital that we rethink our diplomacy as well as our way affairs. These differences and the lack of political yet to achieve. To this end, it must start by ac- of acting and thinking. We must share our sovereignty resolve are tantamount to a roadblock. cepting to share sovereignty, use available to strengthen our position. To restore its credibility and influence, Europe must resources effectively and agree on a clear focus on three key areas. The first is the urgent strategy. need to review EU strategy on security, based It is not enough for foreign ministers to simply meet on the European Security Strategy (ESS) drafted every four weeks to comment on events. Their by Eneko Landaburu by Javier Solana and released in December 2003; work should be organised under the aegis of the the ESS provides a definition of key threats faced High Representative for the duration of his or her by Europe—including terrorism, weapons of mass term in office (five years). Ministers should come destruction and organised crime—along with ways together in an attempt to find common ground of tackling such threats. The second is the need on key issues such as relations with China, Russia

© European© Union, 2013 to use available resources and give the High and the United States, and defence. There must et us be clear: faced with the a united front on strategic issues is compounded ABOUT Representative of the Union for Foreign Af- also be an attempt, as proposed by Hubert Védrine, conflict in Syria, the European by the lack of impetus among member states in fairs and Security Policy/Vice-President of to encourage the most antagonistic member Union as such has been a addressing the problem, which leads to deadlock. Eneko Landaburu was the European Commission the means to states to better align their respective positions. complete nonentity, failing to born in Paris in 1948 and exercise the full range of powers set out in Lastly, when the time comes, the European Coun- shape matters in any way. SPEAKING WITH ONE VOICE holds Spanish nationality. the Treaty of Lisbon. These powers are not in- cil must approve progress made in drawing up a L These shortcomings were blatant- This raises questions as to whether the European He was Director General significant. Along with the European External Ac- European doctrine on external policy, which would ly obvious in the manifest differences between Union is even able to speak with a single voice. We for Regional Policy and tion Service (EEAS), the incumbent should be ensure optimal visibility. heads of state and European governments at the may well expect a group of countries facing the Cohesion from 1986 to 1999, active in shaping strategy and coordinating policy Naturally, differences will remain over the most G20 in Moscow. The only positive point of note same geographical reality to achieve such a goal Director General for for the European Commission in areas such as controversial issues such as the Israeli-Palestini- came from the meeting of foreign ministers in in an ideal world. Such an outcome is clearly with- Enlargement from 2000 energy, transport and commerce, in conjunction an conflict and military interventionism. Yet there Vilnius on September 7th, also attended by US in reach. Yet the reality of today’s world is entirely to 2003, Director General with the member states. is sufficient agreement among the 28 EU Secretary of State John Kerry, which saw EU coun- different; not only because member states remain for External Relations Europe also faces a stark choice: either we con- countries on the need to uphold our principles tries on relatively clear common ground in calling at odds in defining fundamental interests and pri- from 2003 to 2009, tinue to remain rooted in the Westphalian and values to provide a basis for consensus, for a “strong” response to the chemical attacks. ority issues, but also because EU countries have and EU ambassador to system and see our influence slip away or we which would in turn provide the world with a Encouraging; but it had taken Europe 17 days to yet to come up with a joint policy on external affairs. Morocco from 2009 to 2013. take into account the upheaval in internation- clear idea of the European position. It will be a speak as one in condemning the massacre! France and Germany, for instance, have conflicting He is the Special Advisor to al affairs and begin the process of sharing gradual process. This complete dislocation from the conflict in Syr- ideas over the part Europe should play on the in- the President and a member our sovereignty to better protect our interests Jacques Delors said that it would take a long ia is indicative of two key problems. The first stems ternational stage. On Syria, the EU was split be- of the Board of Directors of while upholding our principles and values. political and intellectual maturation to produce a from the deep divisions between member states tween these same two camps: Angela Merkel has the Notre Europe – Jacques European foreign policy. We need to begin that over recourse to military intervention. The second been reluctant to see France become actively in- Delors Institute, as well as a EUROPE HAS A PART TO PLAY process and we will see that, faced with the chal- involves the EU’s lack of any well-defined political volved in Syria (as in Mali and Libya), believing that member of the FEPS Despite the shifting international landscape, Eu- lenges that Europe must overcome, there is much doctrine on such matters. Our inability to present European influence should be primarily based on Scientific Council. rope still has a part to play in world affairs. There to bring us together and little to keep us apart.

20 QUERIES — Autumn 2013 QUERIES — Autumn 2013 21 COLUMN

THE CHALLENGE OF THE MINIMUM WAGE by Susanna Camusso

A few months ago, Jean-Claude Juncker, reference point for arbitrating between political and cultural trends in Europe. In one of Europe’s most experienced and ex- work performance and wages. In less some situations the value of the national European Identity pert decision makers, surprised everyone praiseworthy cases (i.e. in countries where minimum wage is established exclusively Global Perspective when he announced in a speech that he there is more pressure on the cost of living through negotiations between trade unions was stepping down as head of the Euro- and economic conditions are less favoura- and employers. In others, an agreement is group. In his speech, there was more than ble), the minimum wage is often a barrier reached between managers, labour organ- an underlying hint of self-criticism for hav- to free collective bargaining and leads to a isations and the government, which the ing contributed to the adoption of the aus- “race to the bottom” for job contracts in latter then buttresses with some form of terity-laden economic and social policies certain professions and sectors. It therefore legislative provision. In yet other cases, that, on a European scale, have led to un- governments make the decision without employment and job insecurity among requiring any prior negotiations. And final- young people, growing disparities, econom- “WHAT LIES ly, there are member states where the min- WE EDUCATE ic crisis, wage compression and lower wag- imum wage can be set by labour courts or THE EUROPEAN MANAGERS OF TOMORROW es for new hires. BEHIND THE arbitration boards. Not surprisingly, ideas Among the measures that Juncker pro- EUROPEAN differ as to the function, role and involve- Master in Management Executive MBA posed to raise expectations and give new ment of trade unions at work in each of Ranked no.2 in the world and no.1 in each of its Designed for high potential executives aspiring to international hope for the future to young Europeans MINIMUM WAGE these situations. What lies behind the Eu- fi ve campus countries leadership roles. (the primary victims of these misguided ropean minimum wage in terms of wage Financial Times Master in Management Ranking 2013 2nd worldwide for international course experience policies), he suggested the prospect of “a IN TERMS OF VALUE and redistribution policy, the contractual Financial Times EMBA Ranking 2013 MEB (Master in European Business) common eurozone minimum wage”. Re- ATTRIBUTED and representational model, and the value gardless of their inherent worth, these re- attributed to work? 1 year, 2 countries: intensive general management 8 Executive Masters programme. Based on an MBA-style curriculum marks confirm the existence of an alarming These are the main issues to be resolved Specialised part-time degree programmes for managers wishing to TO WORK?” with a cross-cultural approach. wage problem in Europe, especially for within a framework that is still marked, as excel in their area of expertise. youth and women. But is a European min- acts as an instrument for dumping or unfair mentioned above, by orientations that are 18 Masters Executive Education imum wage really the best instrument for competition towards neighbouring or com- not currently shared by the European Com- Specialised degrees in the following areas: High-level short and mid-length courses designed to enhance solving this problem? Two factors leave peting economic areas. Which model mission. If, however, industrial job creation Audit, Control and Finance • Energy Management • Media, Culture and Leisure • Marketing and manager’s leadership skills and perfect their expertise. significant room for doubt. should therefore be chosen as the bench- were to gain momentum, if labour rights Communication • Strategy, Law, and Management. Custom programmes, co-developed with our clients who benefi t from The first involves considering the min- mark when it comes to the proposed Eu- were given their just due, and if the EU our unique international programme deployment on our 5 European imum wage model as it exists today. ropean minimum wage, bearing in mind the shifted its policy, then we would have a Ph.D. – Doctoral Programme campuses and beyond. In the experience of several EU member major policy orientations of the European framework in which to work toward shared states where this model is applied, the min- Commission and the continuing influence solutions on a national and European level. ESCP Europe, The World’s First Business School (est. 1819) imum wage fulfils various functions. In the of neoliberal economic ideas? clearly beneficial cases, as for example in A second reason for doubt concerns Established in 1819, ESCP Europe is the world’s oldest business school and has educated generations of leaders and entrepreneurs. With its fi ve urban campuses in Paris, London, Berlin, Madrid, and Torino, ESCP Europe’s true European Identity enables the provision of a unique style of Junker’s own Luxembourg and in the Ben- the role of management and labour Susanna Camusso is an Italian cross-cultural business education and a Global Perspective on international management issues. ESCP Europe’s network of around 100 partner elux countries in general, it represents a organisations (starting with trade un- trade unionist and General Secretary universities extends the School’s reach from European to worldwide. reasonable fixed minimum level of pay for ions) in setting a minimum wage. Once of the Italian General Confederation services rendered. This represents a useful again, there are varied and contrasting of Labour (CGIL)

Only 1% of all Business Schools EFMD worldwide are triple-accredited. QUERIES — AutumnSummer 20132013 23 ESCP Europe is one of them. VISION VISION

LABOUR MARKET FLEXIBILITY, a step too far?

While the term is being used extensively in the news, “labour flexibility” has many interpretations, and most of them are not Women are more likely to be working DIFFERENT TYPES OF FLEXIBILLITY The point about this company-oriented positive. Indeed, the trend towards part-time work with little or no in part-time jobs. However, the search for flexibility is not instability is that it blurs the difference be- stability of income or working hours has continued largely only coming from employers. Although tween work and free time. Workers never most workers prefer a routine schedule really know when they will have time for unchecked, and is putting pressure on full-time employees, and that differentiates between work and per- themselves, it’s impossible to make plans especially women. The progressive movement has a role to play in sonal time, they also want flexibility to deal and to coordinate time with other people. challenging this. with changes in their own lives. Put simply, you can’t have a life outside Many want the option to work part-time for work if you are constantly at the beck and four or five years when they have a child, call of your employer. Not only does it cause by Elaine McCrate or to be home in time for the end of the insecurity and stress, but for hourly-paid school day. It’s a very different type of flex- workers and especially for those in part- ibility to that encountered in retail and time employment it also means their in- service jobs, where employers give people comes become unstable. Yet this is only a completely different work schedule every part of the picture for part-time staff. An- week, and may still call them in at the last other effect is that since employers have minute. For these people, flexibility means eliminated the periods of working at a low- o some extent, firms in the labour force – i.e. getting people to ers to carry out regression analysis of sales something very different. A study carried er-intensity because of lower customer have always wanted work more – to cope with surges in de- in a particular week or other point in time. out in the Chicago area by Susan Lambert demand – by definition, part-timers only the flexibility to re- mand. Meanwhile, as JIT was taking hold Drawing on that analysis, employers can Key Points and Julia Henly of the University of Chica- work when the environment is extremely spond to fluctuations in the manufacturing sector, we witnessed more precisely extrapolate the number of go found that some people on the call-in intense and stressful. Not surprisingly, in demand. However, the start of sustained growth in an area of staff needed for the coming period. Demand for flexibility list for work at retail companies were not when these people are interviewed for ac- T since the 1980s on- the economy where no inventory is held: Each of these individual factors has made began in the 1980s, on the payroll or listed as regular employ- ademic research they are open about this ward, a number of factors have coin- the service sector, and notably in retail and a significant impact on the labour market. led by new industrial ees. This is the extreme manifestation of stress and insecurity, which inevitably af- cided to make that desire a far more healthcare. Combined with these global However, as they have come together, they methods and the rise labour flexibility – where some workers fects their families. In the US, a study pressing one. One of these was the shifts, there were also specific develop- have also created feedback loops, or of retail. receive a pay cheque but no wage slip, showed that children whose mothers had spread of Just In Time inventory control ments in Europe, where trade unions began knock-on effects. Even in an idealised Part-time work which is a breach of labour law. It’s remi- left welfare and gone into work with unsta- from Japan to the rest of the world. Previ- demanding shorter working days. The re- world of working 9 to 5, if people are to go can reinforce gender niscent of the informal sector of a devel- ble schedules had more behavioural prob- ously, if an auto part supplier suddenly sponse of employers’ confederations was shopping or take their child to a doctor, inequality. oping country, a type of unstable employ- lems at school. needed more engine blocks, they would to come to the negotiating table, but to some of them will obviously have to stop Labour needs to ment that North America and Europe had There is no doubt that gender differences simply be taken from the warehouse. With seek greater flexibility in return. A more working 9 to 5. And as soon as one per- be a more stable consigned to history by the start of World play into the nature of labour market flex- JIT, firms became reluctant to carry such recent factor in the expansion of flexibility son’s schedule becomes more unstable element of the business War II. But now, the evidence indicates that ibility. Women are more likely to be working inventory and looked instead for flexibility is the advent of software enabling employ- and unpredictable, it spills into other jobs. equation. it’s growing again. in part-time jobs, where there is little or no

24 QUERIES — Autumn 2013 QUERIES — Autumn 2013 25 VISION VISION

compensation for flexibility. Full-time staff may be asked to stay late for an hour or “GENDER DIFFERENCE IS A FACTOR “THERE IS SUCH A THING two, while the former may be told ‘Don’t IN LABOUR FLEXIBILITY. WOMEN IN PRINCIPLE AS A GOOD come into work today.’ There is also a much greater variation in start and finish times. ARE MORE LIKELY TO BE IN PART-TIME PART-TIME JOB… IT DOESN’T For men, the question is more about overtime and being paid premiums, which em- JOBS WHERE THERE IS LITTLE OR HAVE TO BE STRUCTURED SO ployers are increasingly trying to avoid. In NO COMPENSATION FOR FLEXIBILITY.” THAT IT’S UNSTABLE, OR THAT the UK, premiums have all but disappeared, while manufacturing firms in Germany are THE INCOME IS INSECURE.” switching to ‘working time accounts’ where overtime is paid at the standard rate. Mean-

while, the kind of men who do find them- Peter© Dazeley Getty/ Images selves in part-time work tend be the more marginalized in society, such as immigrants and, in the US, African Americans. really rigidifies women’s role in secondary ilar story in retail, which has a major prob- Speaking as an economist, one possible a little more stable. In his book “Beyond has to help deliver these improvements, employment and tends to reinforce ine- lem with absenteeism because people solution is to put a price on that coordina- Employment”, French academic Alain and to promote good part-time jobs. In the JOBS AND GENDER MODELS quality, especially if full-time jobs are ac- cannot live with the work schedules. So if tion. In the past, overtime premiums meant Supiot argues that we need a broader dis- US, retail workers groups have been work- This link between gender and the type of companied by benefits that are not applied a supervisor – usually male – is unable to employers had to weigh up whether it was cussion of employment, one that places ing on this issue for about five years but contract is particularly noticeable in the to part-time contracts. That said, it is im- find a replacement for an absentee, he has worth asking workers to stay late. I believe work in a social context and provides work- have made little headway. So really, the so-called ‘mini-jobs’ in Germany, where portant to recognise that certain types of to do the work instead. This has become that something similar to that needs to ers with a new set of rights – to training, work is only just beginning. people can earn up to €450 a month with- work schedule instability, such as the un- a constant rather than an occasional fea- happen today. We need to limit the extent appropriate working hours and a family life. out paying taxes and there are no payroll predictability and variability in starting and ture of their work. to which firms shift the risks due to insta- I believe that the progressive movement taxes for the employer. However, because stopping times, is seen as something that bility from themselves to their workers. For the tax kicks in above that threshold, there men have to deal with more than women. A FAIR PRICE FOR FLEXIBILITY part-time workers, the emergence in North is no real incentive to turn that into anything At least in the United States, it appears to Inevitably, these trends raise a fundamen- America of ‘show-up pay’ is a step in the other than a secondary job. Typically, men be more of a male phenomenon; and that tal question: how could the situation be right direction. If someone arrives for work, will not take them because they are looking men will have a much harder time coordi- improved? Especially when related to gen- but is sent home after an hour – or even for more than 10-15 hours a week, nating work with family activities, such as der, I would emphasize that there is such immediately – they get a minimum pay- whereas women will accept such work, getting home in time for dinner, or seeing a thing in principle as a good part-time job ment, of perhaps two or three hours. albeit reluctantly. The result is that many their children playing sports. Men have also – just as there can be bad ones. The trade The important thing in all this is for workers women in Germany are now concerned been socialised to see their role as the union reaction has often been to try and to have trade union protection, which is that mini-jobs are reinforcing the tradition- primary breadwinner and being available convert everything to full time; but that why such issues rarely arise in Scandinavia, al breadwinner/homemaker model of men for their employers. So overtime at the last doesn’t work for people with primary re- for example, where there is a very high DR© and women – a model they’d hoped was minute for a lot of men – particularly in sponsibility for young children. The point level of union membership. Contracts in ABOUT being left behind. In France, those in part- manufacturing - is a fact of life, and one is that part-time jobs do not have to be Norway’s manufacturing sector, for exam- time jobs are often not covered by collec- that means they will often be upsetting structured so that they are unstable, or so ple, limit the number of overtime hours tive agreements, and if they are, those family plans. Overall, men are generally that people’s incomes are insecure – which an employee can work, which means Elaine McCrate is an Associate Professor of Economic and agreements are difficult to enforce. And working very long hours and in most proof course is more likely to affect women that firms need to think carefully about Women’s and Gender Studies at the University of Vermont. since we are discussing part-time work, we fessional salaried jobs the situation is com- more than men. when they ask for it and cannot make those She is a labour economist specialising in the political economy are inevitably talking about women – so pletely out of control. Staying late at the From a business perspective, there clear- requests routinely. I believe that, in of low-wage labour markets, labour-management relations, there is a gender equality issue there too. office if there’s a sudden brush fire or ly has to be a degree of coordination be- economic terminology, we need to make gender and the economy, African Americans in the U.S. working over the weekend to meet a dead- tween customer demand on one side and labour a little more of a fixed input and less economy, and econometrics. What we find therefore is that ‘flexibility’ line has become commonplace. It’s a sim- employees’ working hours on the other. of a flexible one, and to make employment

26 QUERIES — Autumn 2013 QUERIES — Autumn 2013 27 MY EUROPE MY EUROPE

“WHEREVER MARKET LOGIC AND NEO-LIBERALISM TOOK ROOT, THEY BROUGHT WHAT DOES WITH THEM A SEVERE DETERIORATION IN BOTH EQUITY AND WELFARE.”

believe that Europe today is PEACE AND DEMOCRACY ty. In Europe, the period of history with EUROPE a mixture of past achieve- Peace, the single most important part of particular resonance today is the Cold War ments and future challeng- the European project, has also been se- and its aftermath. es. However, what remains cured over the past 50 years – albeit with to be seen is whether the the notable exception of the Yugoslavian THE CONSEQUENCES I progressive spirit that crisis. This is no small feat when you look OF NEO-LIBERALISM MEAN TO helped to deliver the former, will now be at the history of Europe, which had been For five decades, two worlds - two visions equal to meet the latter. The achievements constantly beset by wars and conflicts of society and politics - were established reflect the core values expressed in the since the fall of the Roman Empire. In on European soil. The fall of the Berlin Wall founding Treaty of Rome; namely to build peacetime, the European Union has in 1989 and the end of so-called ‘real’ so- Michelle Bachelet? a new Europe together and to live in peace. strengthened democratic practices and cialism created in their wake a need to There is no doubting the successful impact built a culture of peaceful coexistence that reconcile two essential but opposing con- of either of these inspirational values. has transcended individual tensions and cepts from either side of the Iron Curtain: With only 7% of the world’s population, differences. That makes the EU not only freedom and equality. The main challenge the European Union accounts for 25% an accomplishment for European citizens, facing the newly-created European Union of global GDP and remains the biggest but also one that is duly recognised for its was therefore to work toward greater social trading power. At the same time, a sense achievements by the rest of the world, in- cohesion and egalitarianism across the of solidarity means that it shoulders cluding Latin America. whole of Europe. Unfortunately, we now nearly 50% of the cost of development aid. know that reconciling these two concepts The growth process has meanwhile led to However, it’s equally true that none of this is no easy task and has proved, in some some significant milestones in terms of has been achieved easily and that Europe cases, to be beyond Europe’s politicians. integration, resulting in a conglomeration is facing its share of problems. In the last Wherever market logic and neo-liberalism of 28 nations with diverse cultures but few years, the structure has faltered in took root, they brought with them a severe one single purpose: to be European and many ways and tensions have run high deterioration in both equity and welfare. It to draw different nationalities together during institutional and political talks. At was as if Europe had swapped an Iron Cur- under a common banner. Although the one level, this is a question of contempo- tain for a wall of indifference. economic crisis has had a severe impact rary economics and sovereign debt. Yet at on the European project, the euro has so a more profound level, it’s also about the Today, it has left the European Union need- far weathered the storm. It remains a effects of past events. History is never ing to address a series of issues that threat- strong currency on international markets static in any region of the world: it exerts en to undermine the European project. For and no country using it has so far with- a powerful influence on modern political a start, its various organisations - especial- drawn from the eurozone, despite wide- thought and frames much of the debate ly the European Parliament, the Commis-

28 QUERIES — Autumn 2013 QUERIES — Autumn 2013 29 MY EUROPE Le média de référence sur les questions européennes

IF PROGRESSIVES WERE ABLE TO POSITION THEMSELVES, THE CRISIS COULD BE A NEW OPPORTUNITY FOR THEM. coordination and a common vision for de- regard to the new dangers posed by glo- Progressives must learn how to be on the cision-making. However, these are merely balisation and a global financial system side of solidarity while at the same time tools for dealing with the challenges that without clear rules and appropriate controls. calmly and responsibly pursuing a return to have arisen with the economic crisis. The financial stability. If progressives were able real issue is for Europe to develop genu- GROWTH: A BIGGER QUESTION to position themselves correctly and strike inely common policies. When you look at it Faced with so many serious challenges, the right policy balance - particularly ahead from the outside, you see how complicated what should be the response of Europe’s of next year’s European elections - the cri- it is to design and drive such policies— progressive parties? I believe that they sis could be a new opportunity for them. something that has become even more have to be clear and unequivocal: their task difficult with the successive expansions, is to openly confront the growth and de- A MUTUAL INTEREST which have broadened the range of inter- velopment models that sustain inequality. As a Chilean, a number of crossovers be- ests at play. And herein lie the weaknesses. It is not just a matter of determining wheth- tween my country and Europe are unavoid- There is now a sense of urgency sweeping er or not economic growth is occurring; it able. In terms of its cultural and ethnic across Europe: the population is ageing, is about governing how growth is gener- origins, Chile, in many respects, has strong migration is changing societies, and unem- ated, where it is headed and what effect it connections with Europe. We too have ployment is having a devastating effect on has on women, men and families, and on achieved important milestones, such as the younger generations. Yet this is a real- the environment. In short, it is about intro- the Association Agreement with the Euro- ity that governments and progressive par- ducing policies focused on protecting the pean Union, the most comprehensive, ties do not always know how to deal with. welfare of current and future generations. far-reaching and forward-looking bilateral The new millennium brought a wave of In Europe the debate is between those who agreement ever signed by Chile. Why? opportunity for Europe to make the most advocate austerity and financial stability Because it is based on reciprocity, mutual of its strengths. But we have to recognise on one side, and those who put solidarity interest and a strengthening of relations that it was guilty of short-sightedness with at the top of the agenda on the other. between Chile and the EU in all areas, with three key pillars: political, economic and cooperative. So when one talks about market access conditions and investment, one also has to stress that the main objective is to promote, disseminate and defend Toute l’Europe décrypte le fonctionnement de l’UE et l’actualité à travers plus de 10 000 articles, des fiches pratiques, une revue de presse européenne quotidienne, des cartes democratic values, especially respect for comparatives, des infographies pédagogiques, des interviews filmées, des synthèses, des dossiers spéciaux, des rubriques d’information sur les institutions, les politiques et les Etats human rights, freedom of the people and membres de l’UE, des débats vidéo, des chats en ligne, une newsletter hebdomadaire, un agenda de la société civile, un réseau de partenaires, le blog eToile, l’animation de réseaux sociaux, ... the principles of the rule of law. This is the foundation on which we now want to build a more democratic, equal society.

Michelle Bachelet is a former President of Chile and is currently running for a second presidential term. © Michelle Bachelet - Headquarters - Bachelet Michelle ©

30 QUERIES — Autumn 2013 FOREWORD

EUROPEAN FOCUS INDUSTRIAL STRATEGY

FOREWORD IN NUMBERS DECODING Responsible, equitable, sustainable? Giovanni Cozzi UNCTAD Stephanie Blankenburg Charlotte Billingham P. 36 P. 40 P. 34 Thirteen years and a crisis after the Lisbon Strategy, ESSAY INQUIRY INTERVIEW the Union is still trying to speak with a single voice. Mariana Mazzucato The Failure of the European Pascal Lagarde P. 42 Industrial Policy P. 60 Attractive were its promises, ambitious were Comment by Anthony Giddens its expectations, but worrying are its outcomes: P. 50 Europe is mourning the loss of its historic industries ESSAY JOINT INTERVIEW ESSAY while struggling to foster its most innovative ones. Louis Lemkow Marita Ulvskog Michel Aglietta The Euro crisis most definitely hurt it, but the issue P. 62 John Grahl P. 72 P. 68 of the European industry is a much more structural one. It is the legacy of decades of laissez-faire, INTERVIEW BEYOND EUROPE VOTEWATCH and it is now the utmost priority to let the state back Andreas Görgen P. 84 How to support innovation P. 78 in European SMEs? in the game. There is hope, and Queries chose P. 90 to investigate where to take action.

32 QUERIES — Autumn 2013 QUERIES — Autumn 2013 33 FOREWORD FOREWORD

“IN EAST ASIAN COUNTRIES, STATES WERE ABLE TO INDUSTRIAL STRATEGY SUPPORT LARGE HOLDING Is the state a bureaucratic monster? COMPANIES OR SMALL INDUSTRIES

by Charlotte Billingham & Giovanni Cozzi AND SUCCESSFULLY PROMOTED TECHNOLOGICAL

ndustrial policies are debt-to-GDP ratios. This has led to a signif- state nurtured, protected, controlled and During the second half of the 20th century, is like throwing out the baby with the bath- need to make sure that fiscal and monetary back on the agenda. The icant reduction in spending in areas such as selected, either directly or indirectly, com- also in Europe, in countries such as France, water. The real question is how to equip the policies embed objectives such as full em- European Commission’s education and research and has further panies operating in those sectors of the Finland and Norway among others, the state with the right policies and tools to ployment, sustainable and equitable Horizon 2020 strategy impaired governments’ possibility to support economy that were considered of key im- state directly supported innovation and select, nourish, and support winners. growth, and environmental protection, has recently proposed to innovation and re-industrialisation, and the portance for industrialising and innovating technological processes by providing sub- among others and that they are not con- I strengthen the EU posi- ability to stimulate growth and employment. a country. sidies, protecting certain industries and THE CURRENT SITUATION sidered as a ‘luxury’. Further we need to tion in science with a dedicated Europe has become a region where mone- directly engaged in economic activities by IS AN OPPORTUNITY make sure that goals and objectives of budget of €24.3 billion, to invest 17 tary objectives (for example low inflation) ASIAN SUCCESS STORIES investing and supporting state owned en- What are the implications for the Europe- macroeconomic and structural (innovation billion in industrial leadership, and have priority over goals such as full employ- Political economists often highlight the terprises (SOEs). an progressive policy makers? It is essen- and industrial) policies are more coherent 30 billion to address climate change, ment, and equitable and environmental- case of industrial development in countries In the United States, the state has also tial for progressives to recognise that it is with each other. develop transport mobility and make ly-friendly growth, where fiscal policies have such as South Korea, Taiwan and other been very successfully in nurturing its own not sufficient to propose some alternative Consequently, there is a fundamental need renewable energy more affordable. become a mere tool for balancing budgets, East Asian countries in the second part of industry through active and selective in- policies (e.g. increase investment in edu- to reframe the debate on the role of the state However, in Europe a real paradox exists: and where state intervention in the economy the 20th century. In these countries, states dustrial policies as well as direct financing. cation, training, R&D, infrastructure, and (national and supranational) in Europe. Eu- what is given with one hand is taken away is limited to identifiable circumstances of were able to support (also as a result of For instance, the development of technol- renewable energies among others) that ropean progressives must convince citizens with the other. The Fiscal Compact and its market failures and imperfections. the internal power balances and of the ogies that make many Apple products such should accompany the current fiscal and that an alternative economic model where requirement for national budgets to be in In the past thirty years of neoliberalism we geopolitical situation of the time) large as the iPhone would have not been possi- monetary framework. the state takes a significant and much balance have significantly undermined the have been told that the state should not holding companies (e.g. Samsung and LG ble without direct financing support of the Instead, it is essential to advocate for an stronger stance in economic and industrial ability of the state to become a strong eco- be a strong economic agent as it does not in South Korea) or small industries (e.g. in US government. alternative economic and institutional development is feasible and economically nomic actor and have deprived it from any have the technical competence and exper- Taiwan) and successfully promoted tech- Despite the existence of success stories, framework in Europe, which could bring us viable. European citizens should no longer meaningful possibility to use deficit financ- tise to actively support and engage in the nological development. we are still told that state intervention in onto a new developmental trajectory where see the state and the European Union as an ing to promote growth, innovation and industrialisation process. In addition, we State policies such as subsidies for selected the economy should be limited as the risk innovative, equitable and sustainable inefficient bureaucratic apparatus. re-industrialisation. have also been told that too much state companies, tariff-protections, and technol- of failure and picking losers is too high. It growth and employment are at the core. Additional pressure has also been imposed involvement in the economy leads to the ogy licensing, together with disincentives, is true that failure happens, but this is part The present situation presents a pivotal to those weaker European economies creation of monopoly rents, and increases such as the threat to cut off loans or subsi- of the risk associated with innovation. opportunity and we have an ethical, eco- whose debt-to-GDP ratio exceeds 60% of cronyism and corruption. dies to underperforming companies, pushed It is also true that the state could, and has nomic and environmental obligation to Charlotte Billingham and GDP (e.g. Italy, Spain, and Greece). These However, in many parts of the world the East Asian public and private entities into in the past picked losers (e.g. investment instigate a genuine transition. Giovanni Cozzi are respectively countries have had to implement “mar- state has been a leading and successful sectors where they would have never ven- for the Concorde airplane in France). But We need to abandon the excessive and executive and economic advisors at ket-friendly” structural reforms and reduce economic actor. In many countries the state tured on their own due to the high-level of arguing that the state cannot be a strong almost exclusive focus on monetary crite- the Foundation for European government spending in order to curb their has ‘picked winners’, in other words, the risk that innovation processes entail. economic actor because it could pick losers ria and balancing budgets. Instead, we Progressive Studies (FEPS).

34 QUERIES — Autumn 2013 QUERIES — Autumn 2013 35 IN NUMBERS IN NUMBERS

2 / CHANGES IN TOTAL EMPLOYMENT 3 / CHANGES IN EMPLOYMENT RATES

(Millions of persons) (Percent of the working age population)

140 126,7 0,5 3,2 0,1 THE NUMBERS ARE IN 0,1 0,0

25,5

3,2 Employment, growth, labour income, public, and private debt… -9,9 -2,2 Queries presents the latest figures from 2013 Report 0 -20 -3,0 of the United Nations Conference on Trade and Development (UNCTAD). 2008 2012 2008 2012

Developing countries, excl. China and India Developed countries

1 / WORLD OUTPUT GROWTH Note: China and India are excluded because small variations in their estimates would significantly alter global outcomes.

(Annual percentage change)

Region/Country 2005 2009 2013

World 3.5 -2.2 2.1

Developed countries 2.4 -3.8 1.0 4 / SHARE OF LABOUR IN WORLD GDP 5 / FINANCIAL POSITIONS OF PUBLIC

Japan 1.3 -5.5 1.9 (Millions of persons) & PRIVATE SECTORS (Weighted averages, percent) United States 3.1 -3.1 1.7 European Union (EU-27) 2.1 -4.3 -0.2 of which: Eurozone 1.7 -4.4 -0.7 France 1.8 -3.1 -0.2 Germany 0.7 -5.1 0.3 Italy 0.9 -5.5 -1.8 United Kingdom 2.8 -4.0 1.1 64 62,4 6 South-East Europe 4.7 -4.3 0.3 PRIVATE SECTOR Albania 5.8 3.3 1.4 4,0 Bosnia & Herzegovina 3.9 -2.8 0.6 2,0 Croatia 4.3 -6.9 -1.0 Montenegro 4.2 -5.7 1.8 0 Serbia 5.4 -3.5 1.2 -2,2 Macedonia 4.4 -0.9 1.5 54,1 -4,2 Developing countries 6.8 2.4 4.7

Africa 5.8 2.8 4.0 52 PUBLIC SECTOR Latin America & Carribean 4.5 -1.9 3.1 Asia 7.8 3.9 5.2 1980 2011 -6 1971 2011

China 11. 3 9.2 7.6 India 9.0 5.0 5.2 South-East Asia 5.8 1.2 4.7 Note: Figures above zero denote a surplus and below zero a deficit. Surpluses indicate additions to the net stock of financial wealth, and deficits indicate additions to the stock of debt. Except for small errors of measurement and aggregation of large Note: Calculations for country aggregates are based on GDP at constant 2005 dollars. Note: Mixed income, typically from self-employment, is included in the labour share. numbers, the surpluses and deficits mirror each other.

36 QUERIES — Autumn 2013 QUERIES — Autumn 2013 37 IN NUMBERS IN NUMBERS

6 / CONTRIBUTIONS TO GLOBAL IMBALANCES 1,1 0,8 0,3 8 / LENDING & BORROWING BY SECTOR

(Current account balance as a percentage of world gross product) 0,3 0,1 -0,4 (Current account balance as a percentage of world gross product)

-2,3 A. United States B. Eurozone Highest Volume 10 10 3

0,0 0,0 0

-3 1970 2006 2011 -15 -15 2008 2012 2008 2012 CA surplus developing economies, Oil-exporting economies CIS excl. China CA deficit developing economies China Households and non-profit institutions Financial business Non-financial business CA surplus developing economies CA deficit developed economies serving households Rest of the world Government

Note: Deficit and surplus classification was based on the average current account (CA) position between 2004 and 2007. CIS includes Georgia. Note: Net lending positions are indicated by positive values, net borrowing by negative values.

7 / PRIVATE & PUBLIC DEBT 9 / NET CAPITAL FLOWS

(Per cent of GDP) (Billions of current dollars)

A. United States B. Germany A. United States B. Eurozone

300 197,3 300 2,500 8,000 170,1 162,1 150,1

86,3 81,8 58,3 55,5 0 0 0 0 1995 2012 1995 2012

C. Spain D. Greece 300 300 -2,000 -8,000 272,9 2005 2012 2005 2012 156,9 140,6 130,0 97,0 Other investment: incurrence of liabilities Financial derivatives: acquisition of ﬁnancial Financial derivatives: incurrence of liabilities 63,3 84,0 49,5 Other investment: acquisition of ﬁnancial assets Net errors and omissions

0 0 assets Portfolio: incurrence of liabilities Change in reserve assets 1995 2012 1995 2012 Portfolio: acquisition of ﬁnancial assets FDI: incurrence of liabilities Current account balance FDI: acquisition of ﬁnancial assets Private sector debt Gross public debt

Note: Data for the United States on «gross public debt» refer to “debt of central government». Data on «gross public debt” for 2012 are projections. Note: Data were available for only 67 developing countries (excluding LDCs) and for 28 LDCs.

3838 QUERIES — Autumn 2013 QUERIES — Autumn 2013 39 DECODING DECODING

“THE AUSTERITY STRATEGY RECOVERY? WHAT RECOVERY? IN EUROPE HAS DEEPENED THE STRUCTURAL FLAWS THAT CHARACTERIZE Europe’s crisis is structural. It won’t go away without decisive steps THE WORLD ECONOMY.” towards a strong and co-ordinated industrial policy.

by Stephanie Blankenburg economies and Southern European periph- income inequalities and downward pressures policy.” If private investors could pull them- ery economies), on the one hand, and per- on domestic aggregate demand. As chart 2 selves up by the bootstraps, with just a little sistent surplus economies (Germany, Japan shows (p.37), job creation in the world econ- help from the state, they would have done so and China), on the other. omy has been down to developing countries, by now. If they haven’t, it is because they with advanced economies (led by the Euro- remain uncertain in the face of the deeply …AGGRAVATED BY AUSTERITY pean Union) responsible for a job deficit (i.e. structural nature of the current crisis. There- As the figures show, these trends had been fewer employed people than expected on fore, what they need, as do workers around hese previous figures Despite the recent upturn in German quar- al imbalances (chart 6 p.38). The strong at work for some time prior to the onset of the basis of pre-crisis trends) of no less than the world, is a state-led, cross-country indus- show that the world terly growth, the eurozone clearly remains distributional shift away from labour and the global financial crisis and the subsequent 17 million people. trial policy that takes account of – and turns economy is set to lin- the biggest drag on world economic towards profit incomes that was particularly euro crisis. The liberalisation policies that round – the long-term effects of misdirected ger in dire straits for growth. According to UNCTAD’s estimate, marked in many high-productivity economies favoured these trends are largely responsible Austerity also means a further minimization past policy agendas that have had a negative the foreseeable fu- growth in the eurozone is set to contract produced downward pressures on aggregate for these (eminently predictable and predict- of the role of the state in responding to a effect on (almost) everyone. T ture, and that this is by another 0.7 percent in 2013 overall, demand for goods and services. This under- ed) crises. But, in particular, the euro crisis crisis that has long-term structural roots, as mainly due to the failure of high- despite a 0.3 percent expansion in the lying deflationary trend in leading world econ- has been much worsened by a mistaken explained above. There still is no sign of pri- productivity economies to orches- second quarter, and a possible further mild omies was not compensated by larger pub- policy response: as charts 7 (p.38) and 8 vate investment turning the page and picking trate a sustained recovery from the expansion in the third quarter of this year lic sector investment to counteract the (p.39) show, this crisis is a crisis of public up again in Europe. To continue to rely on deep economic recessions they suf- (chart 1 p.36). Therefore, any talk of a re- downward trend in private investment. In- indebtedness only insofar as the sudden low-wage/low-cost competition to stimulate fered in the wake of the global finan- covery from the euro crisis, not to mention stead, in a policy environment that favoured slowdown of intra- regional credit movements private sector investment demand that has cial crisis of 2007/08. a sustained and sustainable one, is highly private sector deregulation, large-scale pri- (chart 9 p.39) in the wake of the global fi- been on a downward slope for the best part premature. vatizations and balanced public sector budg- nancial crisis led to the de-facto “European- of three decades is tempting fate. Output growth in the United States is posi- ets, rising profit mark-ups were based on ization” of private debt. It is not, overall, a Photography George Derek © tive, but slowing down again (chart 1 p.36). ADVERSE CONDITIONS… growing private sector indebtedness (chart crisis of public profligacy. Fiscal consolidation Instead, these figures make a very clear case ABOUT This largely reflects growing uncertainty The figures also provide a strong hint as to 7 p.38) in the wake, in particular, of financial is therefore not the answer to Europe’s prob- for a strong state-led industrial policy in about the effectiveness of expansionary why this is the case: The euro crisis did not liberalisation. In other words, deflationary lems. If anything, the by now four-year old Europe that might help to correct some of Stephanie Blankenburg is Senior mon etary policies that are being under- take place in isolation but against the back- pressures on the real economy due to rising austerity strategy in Europe, in addition to the longer-term structural trends that led to Lecturer in Economics at the School mined by fiscal restraint. While some pro- ground of a highly fragile international eco- income inequalities were overshadowed by from opening immense political rifts, has the global financial and the euro crisis in the of Oriental and African Studies in gress has been made in reigning in its nomic environment. This was characterized debt-fuelled consumption and asset price deepened the structural flaws that charac- first place. The 2010 proposal by the Euro- London. She is an editor of the banking sector and reviving domestic de- by a steep fall in the share of labour income inflation. In the absence of a functioning in- terized the world economy, and within it the pean Commission in this regard, while note- Cambridge Journal of Economics and mand and employment since 2009, polit- in world gross output (chart 4 p.37), the roll- ternational monetary system, this also en- euro zone, over the past three decades. worthy for its emphasis on the need to focus co-editor of a forthcoming Special ical paralysis in the US is set to destabilize ing-back of the economic role of public sec- tailed growing global imbalances (chart 6 on the longer-term growth perspectives, is Issue of the Cambridge Journal whatever timid recovery may have been tors and states throughout the 1990s (chart p.38) between deficit economies (the US, Negative real wage growth in 2012 (except insufficient, because it espouses a narrow of Economics on Prospects for the underway. 5 p.37), and eventually growing internation- most small developing economies, many CIS for France and Germany) further exacerbates definition of industrial policy as “enterprise Eurozone.

40 QUERIES — Autumn 2013 QUERIES — Autumn 2013 41 ESSAY ESSAY

extremely uncertain: most innovation attempts - the short-term perspective of private venture fail, hence you have to be willing to welcome capital does not sit well with long-term scientif- failure. If you are a public sector institution trying ic discoveries. The next myth to be analysed is to nurture innovation and you want success at the assumption that a high number of patents is MAKING STATE all cost, you will fail.” The willingness to fail, the sign of a highly innovative economy. Mazzu- Mazzucato insists, is the baseline for any project cato points out that the opposite might be true: intervention glamorous of financing an innovative drive. Yet recent de- the rise in the number of patents is due to various velopments in the financial sector point in the developments that have nothing to do with inno- opposite direction. Bankers “have become in- vation. For example, the types of inventions that The old adage that the state should “stick to basics” when it comes creasingly short-termist. So the kind of financial can be patented have been multiplied and now to industrial policy and innovation is wrong, says economist architecture that is actually willing and able to include publicly funded research, upstream re- Mariana Mazzucato. The public sector must play a leading engage with the very uncertain world of innova- search tools rather than only final products and tion is very hard to find.” processes, and even “discoveries” of existing and directing role in bringing about innovation, she explains objects (like genes) instead of actual inventions. in her new book “The Entrepreneurial State.” Europe should WHAT DRIVES INNOVATION The following myth to be debunked concerns look to the US to learn how mission-oriented public funding In order to determine what drives innovation and Europe and the question why it lags behind the created technological revolutions. how innovation can create growth, Mazzucato’s United States when it comes to innovation. “If book starts by exposing a number of myths sur- the United States are doing better at innovation, rounding the subject. The first one is the as- it isn’t because university-industry links are bet- sumption that innovation is directly linked to ter (they are not) or because American univer- by Mariana Mazzucato & Kim Rahir research and development (R&D) expenses. In sities produce more spinouts (they do not). It fact, innovation policies still target R&D spend- simply reflects more research being done in more ing at the firm, industry and national levels but institutions, which generates better technical Mazzucato points out that very few studies ac- skills in the workforce. And US funding is split s many European countries leave no doubt, Mazzucato explains, that the tually find a causal link between R&D expenses between research in universities and early stage struggle with debt, sluggish public sector has a crucial role to play in innova- and growth performance at firm level. Only under technology development in firms.” Mazzucato growth and feeble compet- tion-led growth. very special and rare conditions can a causal also points out that there is no compelling record itiveness, the idea that a connection be found between R&D and growth. of R&D tax credits actually prompting research progressive withdrawal of THE NATURE OF INNOVATION The second piece of common knowledge that that would not have been done anyway. A the state from the economy Innovation means producing better products at the book takes apart is the idea that small firms will facilitate private investments, innovation and lower costs. The changes can be radical but just Key Points are of paramount importance for growth, inno- PROVING THE STATE’S growth is still going strong. The state is seen as as well incremental: “There is lots of innovation vation and employment. In Germany, for example, ROLE IN INNOVATION inertial and bureaucratic while the private sector that is less exciting than the Internet,” Mazzuca- The state must it is pointed out time and time again that SMEs Having argued that while the level of technolog- is by nature dynamic, competitive and ready to to notes with a smile. But the risk of true inno- play a leading role in are the backbone of the economy. But Mazzu- ical innovation is integral to the rate of econom- take on risks. The public sector should create vation, beyond “little gimmicks” is far too high for innovation-led growth cato explains that this assumption is often based ic growth, there is no linear relationship between the basic conditions for doing business - infra- private capital to be interested, says the Ital- The state is more than on a confusion between size and growth. High R&D spending, the size of companies, the num- structure, education, legal system - and let the ian-born American economist. “Innovation is a fixer of market failures growth is actually often found in young firms - ber of patents, and the level of innovation in an lively forces of the private sector do the rest. This The funding of that are more than often not small - but not all economy, Mazzucato then makes the case for a view of the state’s role is based on a number of innovation must be small firms show high growth. “Productivity prime role of the state in financing and directing myths, says Mazzucato who holds the renowned mission-oriented should be the focus, and small firms are often innovation. R.M. Phillips Chair of Science and Technology “99% OF INNOVATION The returns of less productive than large firms.” “Finance for innovation must be long-term, com- at the University of Sussex. Debunking these ATTEMPTS FAIL - SO YOU HAVE public-sector-funded The book moves on to the idea that private ven- mitted and patient,” Mazzucato says. It can and myths and finding a deeper understanding of innovation must not ture capital is risk-loving: not true, says Mazzu- will thus only be done by government institutions, innovation and the particularities of its financing TO BE WELCOMING FAILURE.” go entirely private cato who explains that - among other reasons but they must be independent of the electoral

42 QUERIES — Autumn 2013 QUERIES — Autumn 2013 43 ESSAY ESSAY

process. “It definitely doesn’t work in those coun- sector stays away because it is difficult to ap- tries where the people in charge of industrial or propriate the returns. Vision is something com- Excerpts from was the visible hand of the State that countercyclical lending but also innovation policies come along with the new pletely different: it is the state identifying and “The Entrepreneurial State” made these innovations happen. [...] directing that lending to new president.” Countries that have turned out to be creating new spaces and setting up entire But how have economists talked about uncertain areas that private banks successful in public funding of innovation have eco-systems of innovation that will then attract “Never more than today is it necessary this? They have either ignored it or and venture capitalists (VCs) fear. done so with the help of largely independent the talent that is needed to move forward. “It’s to question the role of the State in the talked about it in terms of the State And here too, like in DARPA, public institutions: the US Department of Ener- like a buzz,” says Mazzucato, “it needs coherent economy – a burning issue since simply fixing ‘market failures’. expertise, talent and vision matter. gy, the Finnish Innovation Fund Sitra and the policy signals but also a place that feels like the Adam Smith’s “An Inquiry into the Standard economic theory justifies In Brazil, it is no coincidence that Office of the Chief Scientist in Israel’s Ministry cool new place where green investments are Nature and Causes of the Wealth of State intervention when the social BNDES, the State investment bank, is of Industry. The process works even better when happening, then there are spill-over effects, peo- Nations” (Smith, 1776). This is return on investment is higher than run by two individuals whose those institutions are decentralised and “don’t ple learn from each other. Government is not just because in most parts of the world we the private return – making it unlikely background is Schumpeterian get too much attention.” “When they are decen- putting a patch here and there but overseeing are witnessing a massive withdrawal that a private business will invest. [...] innovation economics – and it is their tralised and well funded they are more willing to the system trying to nurture things.” of the State, one that has been justified Yet this explains less than one-quarter team of experts that have allowed the fail - because it’s a bit less high-profile.” US These eco-systems, where they work well, have in terms of debt reduction and – of the R&D investments made in the bold risk taking in key new sectors like president Ronald Reagan, for example, “who was certain characteristics. Countries in Europe that Anthem© Press www.anthempress.com- perhaps more systematically – in USA. Big visionary projects – like biotech and cleantech to occur. The against big government, doubled the spending are succeeding in growing through innovation terms of rendering the economy more putting ‘a man on the moon’, or bank is today earning record-level of the government agencies that funded inno- like Finland, Denmark or Germany have patient ‘dynamic’, ‘competitive’ and creating the vision behind the Internet returns in productive, rather than vation - but they were decentralised which is capital, science-industry links and a great deal ‘innovative.’ Business is accepted as – required much more than the purely speculative, investments: in better than one big ministry that might get too of medium sized companies. “The successful the innovative force, while the State is calculation of social and private 2010 its return on equity was an much attention.” ones, what really distinguishes them, is that they cast as the inertial one – necessary for returns. Such challenges required a astounding 21.2 per cent (reinvested have a big mission. Germany not only spends a the ‘basics’, but too large and heavy to vision, a mission, and most of all by the Brazilian Treasury in areas like MISSION-ORIENTATION AND VISION lot on Research and Development in terms of be the dynamic engine. [...] confidence about what the State’s role health and education) while that of the But independence and decentralisation are not GDP, these investments are “green directed.” Attempts at innovation usually fail in the economy is. As eloquently World Bank’s equivalent organization, the only requirement for institutional innovation And green doesn’t only mean solar and wind, it – otherwise it would not be called argued by Keynes in “The End of the International Bank for funding. “John Maynard Keynes, the British means really transforming your industries, and ‘innovation’. This is why you have to be Laissez Faire” (1926), “The important Reconstruction and Development economist who formulated the most influential the Germans are really pushing that.” The same a bit ‘crazy’ to engage with thing for Government is not to do (IBRD), was not even positive (−2.3 per theory on government intervention in the econ- goes for China that is spending 1,7 trillion dollars innovation... it will often cost you more things which individuals are doing cent). Equally, it is the Chinese omy, said even digging ditches is fine as long as on seven new areas that have been identified by than it brings back, making traditional already, and to do them a little better or Development Bank that is today the government comes in and plays its counter- the government and that are “all kind of green- cost-benefit analysis stop it from the a little worse; but to do those things leading the country’s investments in cyclical role,” Mazzucato explains. “But in the ish,” Mazzucato says. start. [...] The State... ‘foolishly’ which at present are not done at all.” [...] the green economy. While the usual long run, that doesn’t work.” The fiscal stimulus developing innovations? Yes, most of While many of the examples in the suspects worry that these public banks that Keynes propagated cannot just go any- the radical, revolutionary innovations book come from the US – purposely to ‘crowd out’ private lending (Financial where, “it has to be directed to really have an that have fuelled the dynamics of show how the country that is often Times 2012), the truth is that these impact.” This was the case with the IT revolution capitalism – from railroads to the argued to most represent the benefits of banks are operating in sectors, and and should be done for the next one, the green Internet, to modern-day the ‘free-market system’ has one of the particular areas within these sectors, revolution. nanotechnology and pharmaceuticals most interventionist governments that the private banks fear. It is about – trace the most courageous, early and when it comes to innovation – the State acting as a force for But how do you give your innovative drive direc- “THE RISK OF TRUE INNOVATION, capital-intensive ‘entrepreneurial’ modern-day examples are coming innovation and change, not only tion? Mazzucato thinks one needs vision - which investments back to the State. [...] Such more from ‘emerging’ countries. ‘de-risking’ risk-averse private actors, is not so easy in economic terms because “econ- BEYOND ‘LITTLE GIMMICKS’, radical investments – which embedded Visionary investments are exemplified but also boldly leading the way, with a omists don’t even know what vision means, it’s extreme uncertainty – did not come today by confident State investment clear and courageous vision – exactly not in our models.” Until now, the most common IS FAR TOO HIGH FOR PRIVATE about due to the presence of venture banks in countries like Brazil and the opposite image of the State that is view is that of the state coming in to fill the gaps CAPITAL TO BE INTERESTED.” capitalists, nor of ‘garage tinkerers’. It China – not only providing usually sold.” in sectors like basic research where the private

44 QUERIES — Autumn 2013 QUERIES — Autumn 2013 45 ESSAY ESSAY

THE EXAMPLE OF THE UNITED STATES the research that lead to many of the technolo- example is Google. The algorithm at the heart of To drive home her case, Mazzucato points to an gies later incorporated in the design of the per- “IN THE US, THE STATE HAS BEEN the Google search engine was developed with a unexpected example of government-funded in- sonal computer and oversaw the early stages of ENGAGED ON A MASSIVE SCALE IN government-funded grant. The same goes for novation that started a global IT revolution. “De- the Internet. Other US initiatives include The the story of Apple and its iPhone and iPod touch. spite the perception of the US as the epitome of Small Business Innovation Research programme, ENTREPRENEURIAL RISK-TAKING All of the technology in these devices - GPS, private sector–led wealth creation, in reality it is that was launched in 1982 and required govern- touchscreen, voice activated control - have come the State that has been engaged on a massive ment agencies with large research budgets to TO SPUR INNOVATION.” out of government-funded research. But when scale in entrepreneurial risk-taking to spur inno- give a small fraction of their research funding to the company’s success story is recounted, the vation.” The number one example is DARPA, the small, independent, for-profit firms. A year later, state doesn’t get a mention. Defense Advanced Research Projects Agency. in 1983, the Orphan Drug Act established strong The narrative, according to Mazzucato, doesn’t It was founded by the Pentagon after the “Sput- incentives for small biotech firms to develop prod- private sector innovation in pursuit of broad have to be changed in order for the state to look nik shock” in 1957 in a bout of panic that the US ucts for treating rare conditions - the argument public policy goals.” cool, but for the profits that innovation eventual- might be losing the technological battle. The being that rare diseases present such a small The latest initiative of the American government ly generates to come back to the state to fund change the creation of DARPA brought about in potential market that without incentives, these is Nanotechnology, where the leading role of the new research. That might be easier said than military R&D was the freedom to allow “blue-sky drugs would remain “orphans.” From these public sector was striking: “It wasn’t business done. As Mazzucato keeps insisting, innovation thinking - ideas that went beyond the horizon in examples “a general point can be drawn,” Mazzu- that wanted to do nanotech - the dream, the vi- will only work with mission-oriented funding, i.e. that they may not produce results for ten or twen- cato writes. “The US has spent the last few dec- sion, the mission came from government, the there is no foreseeable return on investment. So ty years. DARPA diversified its activities, funded ades using active interventionist policies to drive National Science Foundation and later the Na- there can be no automatic payback. But in the tional Nanotech Initiative - the word Nanotech- rare cases when the return actually happens, the nology came from government. Then they tried state should be able to recoup some of the ben- to convince business.” efits. “We should make sure that when there is a massive amount of profits coming out of these LESSONS FROM THE investments, that we think of ways in which the US EXPERIENCE: CHANGE funding mechanism itself - in the case of Goog- THE NARRATIVE le, the National Science Foundation - can share While the effectiveness of the US public sector the profits.” funding seems rather straightforward, there is And the incomplete narrative has another draw- another point that Mazzucato keeps stressing: back. “By not admitting the role the state has “We have to change the narrative, the poor image played with Google, we keep allowing Google of the public sector, the ‘oh you’re a boring bu- and all these companies to pay less and less tax. reaucrat.’ That has to be changed.” The state is Now the reaction to all this tax evasion is: let’s constantly put in the back seat and portrayed as lower tax even more and take away all the loop- important but boring, she says, “when actually, holes. But there is no evidence that more tax in all sorts of sectors, not only military based IT breaks are making R&D happen that would not research but also in the health sector, a lot of have happened anyway - and at the same time radical, revolutionary research is mainly funded they’re killing the budget.” by the state. It is public sector taxpayer money By changing the discourse and admitting what that is paying for revolutionary investments and the government did for these companies, for it doesn’t get the credit for it.” Google, for Apple, this tax lowering dynamic could And for her, the problem for the state is twofold. be resisted - and the government would have a It is not only in the narrative that it doesn’t get less hard time finding money to fund new innova- the credit, it is in the distribution of the profits tive drives. Because the fact that the profits from

© Radius Images / GraphicObsession Images / Radius © that the state is being left out as well. “And the the Internet revolution all went private is hindering Silicon Valley, San Jose, California. two are related,” Mazzucato insists. The striking the development of the green economy today.

46 QUERIES — Autumn 2013 QUERIES — Autumn 2013 47 ESSAY ESSAY

LESSONS FOR EUROPE policy, then it’s destined to fail.” “THE FIRST THING EUROPE NEEDS TO DO Are there lessons to be drawn for Europe? Defi- “Second: get your innovation policy out of that nitely, says Mazzucato, but the Europeans first market failure framework where you’re either IS BECOME MUCH MORE COHERENT AND have to address a problem that she calls ‘schiz- just thinking that you have to solve the public ophrenia.’ On the one hand, Europe is pursuing good problem, or at best, create the conditions HAVE INNOVATION BECOME A CENTRAL an innovative drive. In November 2011, the Eu- for innovation in this really dynamic private sec- PART OF A MACRO GROWTH POLICY.” ropean Commission announced an eighty-bil- tor.” The private sector, Mazzucato reiterates, lion-euro research, innovation and competitive- requires government to be much bolder and ness program called ‘Horizon 2020.’ “We need directly invest in certain areas. “That means you a new vision for European research and innova- have to make a decision where to invest.” of competitiveness? “Greece should not do what tion in a dramatically changed economic envi- The “skewed distribution of competitiveness” in Germany says it does, but what it actually did: ronment,” the commission said at the time of the Europe actually tends to prove her point, says get a proper state investment bank, get the announcement. Horizon 2020 is supposed to Mazzucato. “The places that are least competi- Fraunhofer institutes, get the diversified financial provide direct stimulus to the economy and se- tive, Greece and parts of Italy, as well as parts structures, spend on R&D and direct it.” cure “our science and technology base and in- of Portugal and Spain, are those that had no And finally, Europeans should learn to cooperate, dustrial competitiveness for the future, promising strategic state funding.” And Germany’s success, to rely on each other and to allow a certain division a smarter, more sustainable and more inclusive according to her, is based on massive spending of labour. “Let Greece do solar panels - with all the society.” That’s great, says Mazzucato, but on the on strategic innovation funding, via the state sun they have they should definitely develop solar other hand the treasuries at the national level bank KfW, the Fraunhofer Institute, a great net- panels, but right now, it is all imported - let Ger- and the commission’s Directorate General for work of research institutions with dynamic links many do machine tools, Italy art, the UK the sci- Economic and Financial Affairs (ECFIN) at the to the private sector and the clearly “green di- ence - not exclusively but to some extent, with this cross-national level still stick to their macro-eco- rection” of research. “Everybody thinks that Ger- division of labour, Europe could become a com- nomic theories of where growth comes from. many became more competitive because it kept petitive hub. Think together how we can all work Their macro policies actually prevent the coun- wages down; obviously that was part of the with our capacities and use our tools - the Euro- tries from successfully fostering innovation. strategy, but that would never have been enough pean Investment Bank for example - to help us “If you think about the whole way we have talked to win procurement contracts in the UK - achieve these areas of serious competitiveness.” about Germany versus Greece, you could think Siemens is winning procurement contracts in But with all these ideas, one remains central in that Greece has been spending too much,” says the UK to build trains! Because they produce Mazzucato’s thinking, the necessity to get rid of Mazzucato. But she sees it differently: “no, it was greener, faster, more modern trains. Why? Be- the state’s image of being a place for “boring not spending too much, it was spending wrong! cause they have a proper industrial policy.” bureaucrats.” In the United States, she says, you Germany spent much more than Greece in all And the solution to Europe’s skewed distribution find Nobel Prize winners leading government these areas that I’m talking about.” Telling coun- departments. “Now that’s expertise!” she ex- tries like Greece to tighten the belt will not help claims. She also points to ARPA-E, the succes- Mazzucato Mariana © them achieve growth. “We know what drives GDP sor to DARPA that was created in 2009 in order ABOUT growth are investments: investments in human for the United States to remain a global leader capital, skills, technology. Spain, since 2009 has in science and technology. “If you walk into AR- cut its R&D spending by 40 percent, it’s mad,” “IT IS PUBLIC SECTOR TAX PA-E today, it feels like Google. It is a really ex- Mariana Mazzucato is an Italian-born US-economist. she exclaims. citing place to be. The place buzzes.” So working She received her BA from Tufts University in History and The first thing Europe needs to do is become PAYER MONEY THAT IS PAYING for the government can be cool. International Relations, and a PhD in Economics at the much more coherent and have innovation be- Graduate Faculty of the New School for Social Research come a central part of a macro growth policy, FOR REVOLUTIONARY in New York. She is a Professor in Economics at the University says the economist. “Otherwise innovation pol- INVESTMENTS AND IT DOESN’T of Sussex, where she holds the R.M. Phillips Chair in Science icy remains in the ghetto, and even when you and Technology Policy. spend on it, if it’s not coherent with your macro GET THE CREDIT FOR IT.”

48 QUERIES — Autumn 2013 QUERIES — Autumn 2013 49 INQUIRY INQUIRY

n an article published in “INTERVENTION THROUGH THE FAILURE OF THE EUROPEAN April 2010, Dani Rodrik, Professor of Social Sci- REGULATION IS HOW THE UNION INDUSTRIAL POLICY ence at Princeton, announced: “Industrial pol- HAS SUCCESSFULLY MADE ITS I icy is back.” “In fact – he INDUSTRY CLEANER, MORE ECO- argued -, industrial policy never went out of fashion. Economists enamoured FRIENDLY AND MORE SUSTAINABLE.” of the neo-liberal Washington Consen- by Lorenzo Consoli sus may have written it off, but successful economies have always relied on why post-Keynesian economists advocate for industrial policy interventions […] has government policies that promote state intervention. moved from a traditional approach based growth by accelerating structural trans- The Chinese example and the urgent need to largely on product market interventions (pro- formation.” stimulate growth and create jobs are fuelling duction subsidies, state ownership, tariff According to Rodrik, “China is a case in point. the debate about the need and desirability of protection), through market failure-correcting Its phenomenal manufacturing prowess rests a true pan-European industrial policy: a very taxes and subsidies operating mainly on in large part on public assistance to new in- controversial debate, given its strongly ideo- factor markets (R&D incentives, training dustries. State-owned enterprises have act- logical character. Industrial policy means, in subsidies, investment allowances, help with ed as incubators for technical skills and man- plain words, state intervention in the economy, access to finance) to a focus on interventions agerial talent. Local-content requirements aiming at supporting the process of industri- that help build systems, create networks, have spawned productive supplier industries alisation, or some industrial activities. These develop institutions and align strategic pri- in automotive and electronics products. Gen- interventions may have a ‘vertical’ character, orities.” (3) erous export incentives have helped firms providing direct support to some particular A third, quite different type of industrial pol- break into competitive global markets.” (1) industries or industrial sectors, or be ‘horizon- icy is public authority (national or European) In August of the same year, the Economist tal’, meaning that the public support aims intervention through regulation: fixing tech- published a long article under the title “Pick- rather at strengthening the conditions that nical standards and imposing limits and ing winners, saving losers - the global reviv- make possible industrial success: research targets, for instance for energy efficiency, al of industrial policy.” One of the main forc- and innovation programmes, infrastructures the development of renewable energy sources driving this revival, according to the article, and networks development, services for en- es, or cutting industrial emissions. This, in was the economic crisis: governments are terprises, credit access. fact, has been the way the EU has acted, “under pressure to reduce unemployment In the EU, vertical, French-style interventions quite successfully, in order to make its in- and stimulate growth” and, in these circum- were quite popular in the past; in more recent dustry cleaner, more eco-friendly and more stances “support for chosen industries is a years, however, after a number of resounding sustainable. way of saving jobs and helping local firms failures and given the strong opposition of Until very recently, in particular in the view of fight foreign competitors.” (2) the neoliberal dominant culture, European those policy-makers and economists that More than three years after, the euro crisis initiatives have became more horizontal. As believe in the invisible hand of the market, has made this reasoning even more relevant. a recent OECD paper states “the rationale the very concept of industrial policy was Unemployment, affecting in particular the young, has dramatically risen in Southern 1 Rodrik, Dani, “The Return of Industrial Policy,” Europe. Relaunching the economic activity [http://www.project-syndicate.org/commentary/the-return-of-industrial-policy], 12 April 2010. and stimulating growth is urgent today more 2 The Economist, “The Global Revival of Industrial Policy – Picking Winners, Saving Losers,” than ever, through public policy if necessary, [http://www.economist.com/node/16741043], 5 August 2010. 3 Warwick, Ken, “Beyond Industrial Policy: Emerging Issues and New Trends,” OECD Science, given the clear lack of market dynamism. It Technology and Industry Policy Papers, No. 2, OECD Publishing,

50 QUERIES — Autumn 2013 QUERIES — Autumn 2013 51 INQUIRY

HOW EUROPE GAINED AND LOST ITS LEADERSHIP immediately associated with French-style IN MOBILE TELECOMMUNICATIONS ‘colbertism’, mercantilism, protectionism, “THE ONLY WAY TO AVOID centralised economy and even Soviet-type THE CARBON LEAKAGE RISK central planning. This characterisation is By Anne Bouverot, the region in another ten years from now; we poses it as a condition to approve mergers rooted in the way industrial revolutions took WOULD BE TO IMPOSE A ‘CARBON Director General of the Global first need to establish the right environment or consolidations between mobile phone off in modern nations in Europe and else- Mobile Operators Association for deploying 4G in order to create a leader- operators in the single national markets, as where. During the first industrialisation TARIFF’ ON IMPORTS IN ORDER (GSMA) ship role for Europe on 5G. Although it is a happened in Austria. This is a policy that runs phase, the State generally intervened to help TO COMPENSATE LOWER PRICES good idea to look forward and galvanise against the need to develop European indus- its nascent national manufacturing sector to Two recent events, the announcements of thinking on 5G, this should not be to the det- trial ‘champions’ to compete on a global level. grow stronger, protecting it until it achieved DUE TO THE LACK OF EMISSION Microsoft’s takeover of the Nokia handset riment of what we can do right now. If there are too many fragmented players in maturity. This was seen as a matter of public business and Vodafone’s sale of its stakes in Europe, the European economy will not be strategic interest, supported with public mon- LIMITS OUTSIDE THE UNION.” the US, have been seen as examples of the There is then the problem of the regulatory strong. ey and accompanied by the development of decline of the European mobile communica- approach in Europe with its overemphasis on public infrastructures (transport and com- tions industry. Acquisitions are a good thing driving down short-term prices to consumers Now we have the Commission draft for a new munications, energy supply), which are cru- trol of industrial development. And the very in a dynamic market, but what we are seeing and increasing the number of competitors. single market package, but what does it pro- cial for the industry expansion. act of birth of our modern, integrated Europe, seems to be a one-way movement: Europe- Regulation of international roaming rates and pose for the mobile communications indus- Typically, in the past this approach also in- the Schuman declaration of 1950, was in an companies in the information and com- reserving spectrum for new entrants are two try? Regulating international voice calls. But cluded a protectionist stance with trade bar- fact an initiative of industrial policy: the de- munication technology sector (ICT) are just examples. Nobody is asking to raise prices this is the past: what we actually need is a riers, tariffs for imports and subsidies for cision to put in common the steel industries becoming targets. Europe’s most innovative for consumers, nor to return to monopolies, regulation promoting innovation. Cutting pric- export, and colonialism. Some governments of six countries and the coal they needed for Key Points industry is now lagging behind other regions. but there is a need to focus more on promotes for consumers is good, but this should not pursued the so-called import-substitution-in- their functioning, under a supranational au- ing innovation and investment in the ICT in- be the only objective if we want to regain dustrialisation (ISI), aiming at producing in- thority that had centralised extensive power Contrary to what Europe was long viewed as a pioneer of mo- dustry. international competitiveness. The EU should side the country the goods that were nor- on production, restructuring, trade, compe- neoliberal observers fear, bile, setting the GSM standard for digital enable, instead, innovative digital services mally imported. Sometimes, the state took tition, and state subsidies in the sector. national states and the mobile telephony and enabling European EU spectrum policy, for instance, creates and technologies, such as mobile diagnostic direct ownership of the protected sectors, European Union have manufacturers to become world leaders in uncertainty for companies that are investing monitoring (mHealth) and smart grids in the through nationalisation of industries and PICKING CHAMPIONS a proven track record the mobile communications sector. The de- in the long term. In the future they could lose electric utility market. banks, the establishment of state monopo- Less intrusive than nationalisation and direct of fostering industry velopment of the GSM standard, started in their licences, no matter how well they do, lies, and the control over financial resources state ownership of industries - but neverthe- winners. the 80s, was a cooperative process where purely because the spectrum has to be made Today more than 390,000 jobs in Europe are in order to make them available for the in- less harshly criticised by liberal economists Nonetheless, the the best experts, hailing from a range of Eu- available for new entrants. By contrast, in the directly supported by the mobile ecosystem. vestment needed by the industry. as a distortion of the supposed efficient al- current treaty on the ropean industries, worked together. The tech- US, one loses the right to use the spectrum We are lagging behind, but this is still an in- This pattern was common for the so-called location of resources by market forces - is Functioning of the nical specifications were then set in the only if one does not use it or if one’s business dustry that can make an important contribu- ‘second-comer’ nations during the first in- the selective approach: the attempt by the EU does not allow it to framework of the EU Telecommunications was not successful. tion to Europe’s economic growth and recov- dustrial revolution. It was also applied almost state to promote certain sectors above supersede national states Standards Institute (ETSI). By the year 2000, ery. However, this will require policies that everywhere in Europe in the Thirties - during others, by selecting and supporting those on industrial policy GSM had become the de facto global stand- Another problem is that there are too many encourage investment in mobile broadband the great economic transformation sparked industries that seem to have the potential to matters, contributing ard for mobile communications. players in the European mobile communica- connectivity, enable innovation and help build by the world crisis which followed the Wall become country winners, or national indus- to divergences between tions market: around one hundred companies, consumer confidence in mobile services. Street Crash of 1929 - and often in the trial champions, according to a popular would-be European So what went wrong? We became com- while there are only three main operators in And we should also encourage students of framework of rising nationalistic movements, French definition. This old-style vertical ap- partners. placent and innovation slowed. When the 3G China and a similar number in the US. And younger age to study ICT to be sure we have authoritarian regimes and re-armament in proach was still widely used in the 1990s in Innovation and mobile standard came out, operators paid then we have too many ‘mobile virtual network the best brains working together to develop pre-war economies. Europe, and gave also remarkable results in education must be better outrageous sums in spectrum auctions to operators’ (MVNOs), companies that don’t new solutions to support the move to a After the Second World War, during the eco- some cases like the French TGV high-speed funded but banks find build 3G networks. And these investments invest in the infrastructure: Europe is home Connected Life, where nearly everything nomic reconstruction of Western Europe railways and the Franco-German-Spanish speculative activities and did not pay back. The Commission wants to to two-thirds of the 812 MVNOs globally! and everyone are connected. This presents supported by the Marshall Plan, several coun- consortium Airbus. There were also, howev- financial products more invest in researching the next generation of The Commission sees the development an important opportunity for Europe to regain tries put in place policies of centralised con- er, some disastrous outcomes, like the profitable. networks, namely 5G. 5G will be a reality in of MVNOs as a competition remedy, and im- its leadership position. >>>

52 QUERIES — Autumn 2013 QUERIES — Autumn 2013 53 INQUIRY

A STRATEGY TO REINDUSTRIALISE EUROPE >>> French government attempt to support the ers). The Commission thought that a ‘critical munity, was probably the most emblematic AUSTERITY ALONE CAN KILL RECOVERY national consumer electronics industry by mass’ could be reached in consumer demand of these stories, as Anne Bouverot explains pumping money in companies like Bull and by boosting the sales of the new 16:9 HDTV in her interview on page 53. Thomson, which proved eventually unable to large screen (produced mainly by Thomson compete with the Japanese, or JESSI (Joint and Philips), which were more attractive to THE EU GREEN INDUSTRIAL POLICY By Antonio Tajani, European Commissioner for Industry and Entrepreneurship European Submicron Silicon Initiative), the consumers than the old 4:3 format. By 1993, Paradoxically, in the last decades the EU has project on semiconductors that was financed an action plan “ for the introduction of ad- managed to implement a quite successful through EUREKA, the intergovernmental vanced television services in Europe” was industrial policy, but this has often encoun- A year ago, the European Commission crisis behind. On one hand the manufac- clear. In Europe, efforts to combat debt European Research Coordination Agency, launched, followed in 1995 by directive tered the fiercest industry opposition. This presented a strategy to reindustrialise turing sector is in recovery for the second and the breakup of the euro may have but failed to maintain the European compa- 95/47/EC on the standards for the transmis- policy is the industry ‘greening’ through reg- Europe. This strategy has the ambitious month in a row, thanks to positive data on diverted attention from more fundamen- nies’ market share in front of the much sion of television signals. “The community ulations, which have set standards for the goal of raising manufacturing’s contribu- exports. However, on the other hand the tal structural problems related to com- stronger Far Eastern competitors. intends, with this decision, to profit from Eu- protection of human and animal health, the tion to the EU GDP to 20% by 2020. This industrial base continues to decrease petitiveness. Also at the European Community level, during rope’s technological edge in HDTV in order environment and climate, and driven indus- strategy is based on four pillars: invest- from 15.5% a year ago to its current po- the same period, there was a perfect example to secure its economic and cultural independ- trial innovation in this domains.(8) ment in innovation; creating better market sition at 15.2%. To reverse this trend, a Therefore, the root of the crisis has to be of industrial policy gone bad: in the early ence and improve its international competi- Let us take the example of REACH, the EU conditions; improving access to finance; much more robust recovery is needed. found in the increasing competitiveness 1990s, three major consumer electronics tiveness”, explained in its Opinion on the Di- law on Registration, Evaluation, Authorisation and investment in human capital and This involves going beyond the prescrip- gap between European economies, which companies, Thomson (French), Philips rective the European Economic and Social and Restriction of Chemicals (1907/2006 skills. At both a national level and in the tion of austerity, which on its own may threatens the strength of the euro and (Dutch) and Bosch (German) engaged in the Committee, a perfect statement of industrial EC). The new regulation, which gave the in- next EU multiannual budget, resources actually shut down the first outbreaks of the EU itself. Europe is currently charac- development of a common European stand- policy objective. (4) (5) (6) dustry a greater responsibility to manage the should be used to attract private invest- recovery. terised by deep structural imbalances. ard for analogue high-definition television But the plan did not work. Notwithstanding risks linked to chemical substances, was a ment in research and innovation, focusing The productivity gap remains wide, with (HDTV), with the ambition to impose it as a the subsidies, it turned out to be a major dis- battlefield for lobbies and NGOs for six years, on those areas which can boost the whole countries burdened with punitive taxation world standard. The major drive for this at- aster for the EU industrial policy. The EU was before its approval in 2006. The chemical industrial sector, namely key enabling or inefficient public administration of jus- tempt was the fact that NHK, the Japan “unable to impose the analogue standard industry produced a number of impact as- technologies, bio economy, smart grids, “AUSTERITY MAY tice. This is without mentioning energy Broadcasting Corporation, was already de- being developed by Thomson and Philips to sessments predicting disasters if the regula- advanced manufacturing, transport, and costs, limited capacity for innovation, or veloping a similar standard since the 1970s. reluctant broadcasting and multimedia indus- tion was to be approved: between 150,000 sustainable construction. ACTUALLY SHUT unsuitable infrastructure. If the Japanese arrived first in the race to tries; and in any case the development of and 2.3 million jobs to be lost in Germany DOWN THE FIRST impose the HDTV world standard, Europe digital technology in the US and Japan was according to a study commissioned by the This strategy has been implemented with It is not only the lack of reform at nation- would have to follow, buying Japanese pat- making European efforts out of date.”(7) German Industry Federation BDI (Arthur D. six task forces, working on priority areas OUTBREAKS OF al level that undermines EU industry com- ents and adapt its production consequently. There were, however, also success stories Little report, June 2002); between 360,000 such as action plans for the automotive petitiveness. The EU itself sometimes The European Commission embarked in the among the European attempts to develop and 670,000 in France according to the sector as well as construction and steel RECOVERY.” creates more obstacles than benefits for venture. The idea was to support a European European standards with the ambition to French industrial federations (Mercer report, industries, and the communication on businesses. The solution is to reactivate standard through EU regulation, a targeted become the global standards. The GSM April 2003); and again some 1.7 million jobs security and defence industry. Also part the process of convergence between the communication policy for consumers and standard for mobile telecommunication, pro- in Germany according to a second report by of the strategy is the modernisation of The data presented in these reports are different economies. This will strengthen economic incentives for the companies in- duced thanks to a cooperative effort by the BDI in August 2003 (supplement of the Ar- the tourism industry and the simplification in line with the competitiveness report economic governance, not only for mac- volved (consumer electronics and broadcast- industry, supported by the European Com- thur D. Little report). of the Visa code. At the end of September published at the beginning of September ro-measures of fiscal consolidation, but In February 2013, five years after its entry we presented two reports on the current by the World Economic Forum, which also for the micro-measures most direct-

4 European Economic and Social Committee, “Opinion on the Council Action Plan on HDTV,” [http://eur-lex. into force, the European Commission pre- situation concerning industrial competi- suggested that the situation had got ly linked to industrial competitiveness. europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:1992:332:0039:0043:EN:PDF], 16 December 1992. sented a ﬁrst report on the implementation tiveness in Europe. What emerges from worse for EU countries. In particular, The Fiscal Compact should therefore be 5 Action Plan 93/424/EEC, “Council decision for the introduction of advanced television services in Europe,” of REACH in which there was no mention of these reports is a picture with both pos- countries subject to austerity measures accompanied by an Industrial Compact [http://europa.eu/rapid/press-release_IP-93-495_en.htm], 16 June 1993. 6 Directive 95/47/EC, “Standards for the trasmission of television signal,” [http://eur-lex.europa.eu/ job losses at all. The report pointed out that itive and negative elements, and this is fell several positions. Italy, for example, to balance and complement the action LexUriServ/LexUriServ.do?uri=CELEX:31995L0047:en:NOT], 24 October 1995. “when REACH was proposed, the EU was not satisfactory. went from 42nd to 49th, while Spain, Por- for growth, which will attract investment 7 Sally, Razeen, “States and Firms: Multinational Enterprises in Institutional Competition,” Routledge the world’s largest chemicals market with tugal and Greece also fell, ﬁnding them- and encourage manufacturing. – Taylor & Francis Group, 1995. th st 8 Acemoglu, Daron; Aghion, Philippe; Bursztyn, Leonardo; Hemous, David; “The Environment and Directed approximately 30% of global chemicals sales. Despite showing some signs of recovery, selves respectively at the 35 , 51 and Technical Change”, American Economic Review, [http://economics.mit.edu/files/8076], February 2012. Today it amounts to only 21%, China being the EU has not yet managed to leave the 91st ranks. The message of the report is >>>

54 QUERIES — Autumn 2013 QUERIES — Autumn 2013 55 INQUIRY

THE MISSING LINK >>> the largest chemicals market henceforth. WHY INVESTORS DID NOT BELIEVE IN THE EUROPEAN INDUSTRY However, the EU remains the world’s largest exporter of chemicals and over recent years the industry turnover has increased in abso- lute terms.” (9) In the meantime, the report concluded, “chemicals in Europe have be- By Benoît Lallemand, Senior Policy Analyst at Finance Watch come safer.” The European chemicals safety standards have become a global reference for the industry, since not only European Why didn’t innovation and industry de- The very first step towards putting The Liikanen group, set up by the EU producers, but also importers from third velopment in Europe get the investments finance back at the service of society is Intenal Market Commissioner Michel countries must respect the REACH rules. that the EU expected when it launched to return to the separation of commercial Barnier, made a similar recommendation And those rules are driving innovation in Eu- the so-called Lisbon Strategy, back in and investment banking. The activities (positive, although insufficient) in its final rope. Particularly important is the substitution 2000? Where did the money go? Well, of commercial banks (deposits, alloca- report in 2012, but the Commission has principle, which prescribes “the replacement the real question is: why should the tion of credit, management of payment not yet enacted the proposal. Barnier,

or reduction of hazardous substances in European© Union, 2013 banks have put their money into the real systems) are vital for the real economy however, has announced it will take the products and processes by less hazardous The European Space Expo in London. economy, when they could have had a and for society. Arguably, investment Liikanen recommendation into consider- or non-hazardous substances”, even if it is much better return for their investments ation by the end of the year. not mandatory for all the chemicals in the promise agreement. […] The 2020 CO2 quotas has fallen too low, partly due to the in financial products and speculative ac- scope of REACH. targets offer a clear and stable legal envi- economic crisis, but also because of some tivities? “THE VERY FIRST Banking separation would be much more Another EU regulation which has been ronment for investment, and will further stim- flaws in the system. One of the major prob- important to solve the systemic crisis of harshly opposed by the relevant industry ulate innovation by vehicle producers and lems, however, remains the so-called ‘carbon The liberalisation of the financial system STEP TOWARDS the international financial system than lobbies is the legislation, adopted in 2009, component suppliers. In addition, fuel effi- leakage’, the risk that production capacities in the eighties, based on the idea that PUTTING FINANCE the new capital requirements (Basel III which sets mandatory emission reduction ciency can create high-skilled jobs in engi- would be moved into third countries which the market is much more efficient than and CRD 4) and the whole new banking (10) targets for new cars: 130 grams of CO2 per neering and advanced manufacturing.” do not have the EU strict rules on emissions. the state, led not only to massive priva- BACK AT THE regulations. However, this does not seem kilometre by 2015 and 95g/km by 2020. The adoption in 2008 of the climate/energy It is the strongest argument used by large tisation of public banks, but also to de- to be the direction the EU is taking. In The regulation is currently undergoing package including the targets for 2020, was sectors of the EU industry that are lobbying regulation of credit allocation criteria, SERVICE OF European member states, reforms in amendment in order to implement the 2020 one of the most important and far-reaching to lower the EU climate ambitions and targets which previously gave priority to the SOCIETY IS banking structure have recently been target. Under the influence of its car manu- decisions taken by the EU in recent years. beyond 2020. The only way to avoid the car- needs of municipalities, industry and decided (in France and Germany) and facturers’ lobby, the German government, The package included the instruments to bon leakage risk would be to impose a ‘car- SMEs. TO SEPARATE are being discussed (in Belgium), name- which had already managed to water down reach the targets: the directive on renewa- bon tariff’ on import from those countries, in ly to deal with this problem, but they do the original directive when it was approved, bles and the cap and trade system for green- order to compensate the lower prices of At the same time, any form of control over COMMERCIAL AND not require a real separation of banking is now trying to postpone the implementation house gas emissions (ETS, Emissions Trad- products due to the lack of emission limits. the international movement of capitals INVESTMENT activities. In fact, these half-hearted re- of the 95g/km standard from 2020 to 2024, ing System), the legislation on energy This would be consistent with the regulation - which was still quite strong until the forms could even pre-empt Barnier’s notwithstanding an agreement reached on efficiency (which has been further developed on chemicals, which imposes the REACH seventies - was dismantled. The banks, BANKING.” proposal, signalling that member states 24 June during a trialogue meeting between through the implementation of the eco-de- obligations also to importers. which are now totally privatised, became do not intend to go any further. the Commission, the European Parliament sign and eco-label regulations and the revi- totally free to decide where to invest in banks are useful, but not vital. It should and the EU Council. It is interesting to read sion of the Energy Performance of Buildings GOOD INTENTIONS, GREAT order to maximise their private profits, be possible for them to fail. Consequent- the reaction of CLEPA, the European Asso- directive). True, after a promising start, the AMBITIONS, POOR INSTRUMENTS and - not surprisingly - they started to ly, they would find it much more expen- ciation of Automotive Suppliers: “EU mem- EU carbon trade scheme is not delivering the In fact, the European Union does not have invest where labour was much cheaper. sive to take risks and to engage in spec- bers states still need to endorse the com- expected results: the market price of CO2 today the power to pursue a ‘real’ European Moreover, the banks knew that they could ulative business. This is a liberal principle: industrial policy. The Treaty on the Function- still count on state guarantees to cover investment banks would have to accept ing of the EU gives it a place in art.6 and the huge risks of their speculative invest- fair competition, without the unfair ad- 9 European Commission, “First report on the implementation of REACH,” [http://europa.eu/rapid/press-release_IP-13-85_en.htm], 5 February 2013. art.173, classifying industrial policy among ments, particularly when they were ‘too vantage of state guarantees. 10 CLEPA - The European Association of Automotive Suppliers, 2013. the areas (culture, tourism, protection of hu- big to fail’. >>>

56 QUERIES — Autumn 2013 QUERIES — Autumn 2013 57 INQUIRY INQUIRY

>>> man health, education, youth and sport) “WHEN IT COMES TO INDUSTRIAL POLICY, where the Union may only “carry out actions STRATEGY to support, coordinate or supplement the THE COMMISSION CAN ONLY MAKE actions of the member states, without there- OR WISH LIST? by superseding their competence”. In these PROPOSALS TO EU MEMBER STATES areas, moreover, legally binding acts of the THAT THEY ARE NOT REALLY OBLIGED Union “shall not entail harmonisation of member states’ laws or regulations.” TO IMPLEMENT.” Nothing to do with the ‘shared competences’ In a bid to create jobs and growth, the As for Lisbon’s successor, the Europe EU. Indeed, I favour a re-industrialisation which empower the Union to adopt legislation dent of the Commission who relaunched the by EU Industry commissioner, Antonio Tajani, Lisbon Strategy set an ambitious goal 2020 growth strategy, there is a worrying of Europe; one that could be a mixture of in areas such as the internal market, agricul- European project, was given an essential which set quite an ambitious target: to in- in 2000 of devoting 3% of European sense of this being simply another wish list, leading-edge innovation and the recapture ture and fisheries, the environment, consum- instrument: the Single European Act, a reform crease to 20% the share of industry in the Union’s total GDP to research and albeit with some sanctioning mechanisms. of low-tech industries - such as clothing er protection; not to mention the ‘exclusive of the EC Treaty which enabled the Commis- EU’s GDP, currently at 15%, by 2020. In an development within 10 years. The pro- The underlying problem is that several ar- and furniture - that have been off-shored. competences’ the EU has in competition, sion to propose hundreds of binding acts, as intervention on page 55, Tajani advocates ject didn’t deliver. But does it mean eas of strategic importance are largely R&D is a pressing issue, but one that can- monetary policy, common commercial policy. building blocks of the single market, giving measures which should go “beyond the pre- that R&D in Europe has failed? beyond the competence of the EU, energy not be viewed in isolation. Europe clear- In other words, when it comes to industrial the Council of ministers the power to adopt scription of austerity, which on its own may being a case in point. Germany’s unilater- ly needs to turn a corner in econom- policy, the Commission can only make pro- them by a qualified majority before the dead- actually shut down the first outbreaks of re- Within the strict terms of the Lisbon Strat- al decision to abandon nuclear power was ic terms or R&D expenditure will posals to EU member states that they are not line of 1993. However, the most accom- covery”, and “an Industrial Compact to bal- egy, Europe has indeed failed to live up to very consequential for the rest of the EU, continue to decline. In education, pro- really obliged to implement, even when they plished example of a European industrial ance and complement the action for growth, its ambitions for R&D expenditure. How- and was taken at a time when Europe re- grammes such as Erasmus and the Bolo- commit to do it. The Commission has no pow- policy plan was the Davignon plan, launched which will attract investment and encourage ever, the statistics come with a warning ally needed an integrated energy system. gna Process for educational standards er to sanction them, cannot use the instru- by the Commission in the period 1977-1982. manufacturing.” But, again, it is not clear with label: be wary of over-generalising. For in I call this ‘paper Europe’: it means that have been valuable but need to be pushed ment of the infringement procedure, nor the Etienne Davignon, then Industry Commis- which instruments and powers these good areas ranging from robotics to electric cars, far-reaching ambitions are set up, but they much further. I also think that English threat to refer them to the Court of Justice. sioner, managed to have an official declara- intentions can be implemented. and nanotechnology to digital manufactur- lack the mechanisms to achieve them and should be adopted as an official second It can only express its regret. It is the same tion of ‘manifest crisis’ in the European steel Barroso has committed to present, by the end ing, Europe is highly advanced. The same tend to only really exist on paper. However, language and taught in every EU school; it unsuccessful ‘coordination method’ that was sector voted upon by the Community govern- of his mandate next year, a proposal for some is true of its universities, where their lower this doesn’t prevent the EU from having would make a huge difference to commu- applied to the Lisbon Agenda, adopted in ments in October 1980. This empowered the new treaty modifications, which are needed world rankings belie the fact that countries very worthwhile strategies in some fields nication. Overall, the key to R&D is to deploy 2000, which was meant to boost funding for Commission to adopt extensive measures to strengthen the economic union, which such as Germany avoid the national elitist of R&D. Its €1 billion project to develop a specific programmes in specific areas and research and innovation. It aimed at making against overcapacity, such as price regulation, remained undeveloped after the establish- structure of the US or UK and focus re- computer simulation of the human brain, to bear in mind that although the future is the EU, by 2010, “the most competitive and mandatory production quotas, suppression ment of the monetary union. It could be a sources at a regional level. Furthermore, if for example, will open up key areas for the impossible to predict, when it comes to dynamic knowledge-based economy in the of capacity as a condition for Community great occasion to try to remove the industrial one considers the R&D exercise a failure, future. innovation, Europe is not so badly off. world capable of sustainable economic support to restructuring plans, regulations policy from its limbo and transform it, at least, it’s clearly linked with the broader failure At the same time, it’s also important to growth with more and better jobs and great- against state subsidies, quotas for import into one of the ‘shared competences’. But of the entire Lisbon agenda. The reasons support Europe’s industrial strengths. Air- er social cohesion”. A dream that did not come from third countries. Today, this would not be nothing is less certain. Member states will not for the latter are well-known and led by a bus, for example, is a very successful en- true. In part, this was due to the lack of inter- possible, because the legal basis to enforce be keen on giving even more power to the governance based on the Open Method of terprise and we need to ensure the eco- est by private investors, attracted by other the Davignon plan, the 1951 Treaty of Paris Commission, particularly in an area that is so Coordination, which wasn’t robust enough nomic conditions that facilitate the more profitable investments, as on the European Coal and Steal Community, important for national pride and economic to discipline those countries disinterested competitiveness of such industries are Benoit Lallemand of Finance Watch argues expired in 2002. interests. Moreover, the neoliberal ideology in following the agenda. However, the con- sustained, without indulging in protection- in his interview on page 57. The current Europe 2020 strategy, launched predominant in Brussels is strongly opposed sequences of the Lisbon failure go far ism. SMEs will have a key role in that, as

However, above all, the Lisbon Agenda com- by the Commission president José Manuel to interventionism by the state in the econo- beyond R&D. The idea of the euro was that they will be very much part of the fantastic University© of Warwick pletely lacked the instruments needed to Barroso, does not seem to be any better than my, and the very idea of promoting European monetary integration would run alongside transformations underway in IT and digital Anthony Giddens achieve its goals. The comparison with the the Lisbon Agenda regarding the means to ‘industrial champions’ would be seen as an economic convergence. However, that con- production, and will be a growing source British sociologist, author of European single market plan, which success- accomplish its stated aims. The same can be attempt to weaken the competition rules and vergence never happened and is now the of innovation for large corporations. Europe ‘Turbulent and Mighty Continent: fully and timely achieved its target, is enlight- said, unfortunately, of last year’s strategy for undermine the primacy of competition policy main reason for the divisions between has to be at the forefront of this revolution, What Future for Europe?’ (Polity, ening. By 1986, Jacques Delors, the presi- the re-industrialisation of Europe, launched in the EU. north and south. and there’s a supporting role in that for the October 2013)

58 QUERIES — Autumn 2013 QUERIES — Autumn 2013 59 INTERVIEW INTERVIEW

member states and the European Commis- for the upcoming budget period within the services. The firms that have an international sion. We are committed to promoting multi- EU cohesion policy and this is a god thing. focus will create the most jobs outside the lateral or multi-country investment funds, In this regard, more effort should be made EU, but those same firms will also create the especially funds in the venture capital sector to simplify further the regulation which can most jobs in France. Employment in France with some partners that are members of the sometimes be a little cumbersome. is driven by international growth. The real PASCAL LAGARDE European Venture Fund Investors Network issue is how to go about offering products (EVFIN) with the aim of providing a boost Y.S.J.: Politicians often talk about and services in emerging countries. I’m think- Public banks and growth to European capital risk funds, as part of a the need for “European industrial ing about Asia, obviously, but also sub-Saha- bottom-up approach. champions”. How do we make that ran Africa, which is currently one of the world’s a reality? biggest growth regions and one where Y.S.J.: What is your assessment of P.L.: That will only come about through France has some unique advantages. Yes, European public investment banks seek to support both those three levels of cooperation in constructive relations between member there is competition with emerging countries, private-sector growth and innovation, all while developing Europe? Are they adequate? states, industrial incubators, productive re- and there always will be, so we have to seek ties with European partners. The head of research, strategy P.L.: I think there are many things that work search and services, and tools for lending a ways in which we complement each other. and development at France’s Public Investment Bank, Pascal quite well. During the economic crisis, Euro- boost to emerging champions. At the same It’s a political issue – you have to strike a pean initiatives helped companies through time, there needs to be a discussion between balance. But as Europeans we ought to be Lagarde, offers his assessment of this ambitious challenge. this difficult period. I would emphasise one member states and EU institutions, which able to negotiate terms with emerging coun- other point as well: we must strengthen necessarily have a role to play as regulators. tries that include standards for social and horizontal cooperation between the public In that regard, we’ve seen two initiatives car- environmental responsibility closer to the by Yves de Saint Jacob institutions that provide capital and finance ried out in France, one by Anne Lauvergeon, European social model. And don’t forget the for businesses to foster synergies and pro- which identified promising innovation sectors major tool at our disposal and one we don’t mote the establishment of transnational for France, and another by Arnaud Monte- brandish often enough: the euro. investment vehicles that can address the bourg, Minister for Industrial Renewal, who Yves de Saint Jacob: The Public together public and private funds to create that by September had already borne fruit in fragmentation of the banking and venture has defined 34 “industrial plans”. Other coun- Investment Bank (Bpifrance) was more effective finance markets for enterpris- two very specific ways: we agreed on a €750 capital markets. This cooperation must then tries, including Britain, have been working on established by the French government es. We only provide funding for viable busi- million refinancing deal made available by the be coupled with a strengthened cooperation these same issues. We now need to weave as a means of revitalising the country’s nesses and in no case do we bail out strug- EIB, and we operate in France the risk shar- with European financing institutions. Eurostar this research together and make it a topic of economy. Some have seen it as a tool gling firms. However, we invest, alongside ing instrument on behalf of the EIF which and multi-country joint investment vehicles discussion at meetings of European ministers. for bailing out struggling French firms, private investors, in turnaround funds man- provides a €200 million guarantee to Bpi- projects developed by some EVFIN members I’m a believer in integrating horizontal (bot- while others view it as a resource for aged by independent teams. We are also able france innovative loans. represent two examples of such projects. tom-up) and vertical (top-down) approaches, backing innovative businesses. Could to finance businesses that are rebounding, Secondly, we are active in working with Euro- We have national public institutions; it’s im- but ultimately it’s a matter of choice. you remind us of the Bank’s aims and i.e. that are seeing a return to growth after a pean regional funds, the structural funds de- portant to make the most of them. They pro-

investment strategy? period of hardship. signed to balance the level of economic ac- vide a bottom-up approach that obviously Y.S.J.: Isn’t it futile to be fostering DR© Pascal Lagarde: Bpifrance is a public invest- tivity across Europe. We already manage some works best in tandem with the more top-down competitiveness and innovation given ABOUT ment and financing institution designed Y.S.J.: How do you see your role at of these funds allocated to business financing tools of the European Union. the competition from emerging to offer long-term support for investment European level, in relation to the EU on behalf of some of France’s managing au- We also need to align innovation priorities countries, which don’t always adhere Pascal Lagarde and growth in France. Bpifrance aims to financial institutions or public thorities (“prefecture de regions” today, and in each country and in Europe as a whole. to the same environmental and societal is a graduate of Ecole support finance for SMEs, as well as mid-cap institutions in other EU countries? “regional governments” for 2014-2020). The concept of “key enabling technologies” standards as Europe? Polytechnique and Ecole firms, especially those that are growing and P.L.: We’re active on three levels. Firstly, we And lastly we have a third European focus, (KET) is a step in that direction. The focus P.L.: In my view, there are two primary issues: Nationale Supérieure innovating. cooperate closely with the EIB Group (Euro- which involves multilateral projects with part- should be on smart specialisation: instead of innovation and exports. All of our research de Techniques Avancées. Our objective is to address market imperfec- pean Investment Bank) and its private equity ners in other European countries. They in- everyone doing the same thing all at once, into the business climate for small and medi- He is Director of Research, tions such as capital constraints on lenders and guarantee arm, the European Investment clude, for example, the so-called Eurostar we have to identify the fields and the regions um-sized firms makes one thing very clear: Strategy and Development or lack of long-term development capital Fund. In June of this year we signed a coop- projects to support research and develop- where Europe is strongest. This is what has the companies with the brightest outlook are for France’s Public and support economic growth by bringing eration framework agreement with the EIB ment, which are administered jointly by the been proposed by the European Commission those that innovate and export their goods or Investment Bank.

60 QUERIES — Autumn 2013 QUERIES — Autumn 2013 61 ESSAY ESSAY

The issue of industrial production is clearly a broad one, ranging from the environment and competitiveness, to health and safety in the workplace and the questions of jobs and growth. The tension between business competitiveness and policies for greening industry has been around for many years, yet these two elements are in fact compatible rather than contradictory. Green technologies and sustainable approaches in industrial production are actually about the rational use of resources. In fact, signiﬁcant savings can often be made by a system of production that uses resources rationally, with a key factor here being the notion of Corporate Social Re- sponsibility in industry. CSR not only incorp orates social and economic questions, but also the issue of sustainability. As a result, many leading com-

© European© Union, 2013 panies now monitor their productive capabilities A low-energy building in Copenhagen’s Vildrose project. and use indicators to see how well and how sus- t a time when the future tainably they are using resources, with the ulti- of the environment is mate objective being to reduce the environmen- open to question, there tal impact of production. That desire to improve is one inescapable fact: is reflected, for example, in the 700+ companies we will not have a sus- that are now signatories to the Carbon Disclosure THE GREENING OF A tainable world unless Project’s climate change programme. industry, and notably industrial produc- A key instrument here is Life Cycle Assessment, THE EUROPEAN INDUSTRY tion, becomes sustainable. a technique that is increasingly being deployed Rather than a simple observation, this is an ab- by more progressive-minded companies. LCA solute imperative. However, it brings with it a set involves the analysis of resources entering the of questions about the very nature of sustainable cycle of production, from extraction – which can Industry represents an integral part of the move towards a industry, the related issue of green energy and, potentially be very damaging – to the transpor- sustainable way of life. In Europe, while many larger companies are ultimately, the political challenges these ques- tation of extracted materials to factories, man- aware of their responsibilities to the environment, the state has a tions raise for the progressive movement. To ufacturing processes, what waste is produced, vital role to play in pushing private enterprise to become more address these three areas involves not only con- how much of that waste is recyclable and then, sidering where we stand today, but also the di- finally, the distribution of the finished product. sustainable. Inevitably, this raises a political challenge – and an rection of travel for the future. The consumption of energy, water resources and opportunity – for the progressive movement. materials is examined within this cycle to produce a clear, quantitative analysis that will enable a “CONSUMERS INCREASINGLY WANT company to intervene and to reduce some of by Louis Lemkow the excesses. Such information also forms the TO KNOW ABOUT THE ETHICS OF THE basis of the sustainability reports published COMPANY THEY ARE BUYING FROM by major corporations, which are expected to base their claims on objective indicators about AND THE QUALITY OF ITS PRODUCTS.” their resource and energy use.

62 QUERIES — Autumn 2013 QUERIES — Autumn 2013 63 ESSAY ESSAY

Clearly, such analyses can lead to savings in “GIVEN THE NATURE OF GLOBAL leaders in wind turbine and solar energy tech- of 92%, although this now looks unlikely to be production costs. However, they are not the only nologies, and are able to export these systems achieved due to the combined effects of the way in which European industry can become CAPITALISM, THE STATE HAS TO BE worldwide and drive job creation. The role of R&D country’s economic crisis and the recent restruc- more competitive by embracing sustainability. here is a particularly important one as it is not turing of the renewable sector. Deployment of a The consumer part of the equation is also be- MORE PRESENT, MORE AGGRESSIVE just about more efficient renewable technolo- renewable strategy will, of course, loop back into coming attuned to environmental impacts and AND MORE VISIBLE – AND THAT’S gies, it is also about price reduction – making the potential for job creation, while providing is now exerting demand-side pressure. Con- the technologies themselves more competitive a monitoring role within the system for digital sumers, albeit largely from the middle class, in- WHERE THE PROGRESSIVE PARTIES – and Europe has played a very significant role technology. creasingly want to know about the quality and in that. Unfortunately, R&D costs money and in ethics of the company they are buying from and HAVE A MAJOR ROLE TO PLAY.” the economic crisis there have been cutbacks A ROLE FOR GOVERNMENT its products. The trend for European consumers in both public funding at national level – with The very fact that we are talking here about na- to buy locally-sourced foods because they have Spain being a clear case in point – and to a tional policies highlights another important as- a lower carbon footprint – and also support local natural, non-renewable resources. One day, how- lesser extent in the private sector. pect about the greening of European industry employment – is just one example of where com- ever green we may become, some of those The bigger challenge, though, for green energy – namely, the role of government. Personally, petitive advantage, Corporate Social Responsi- resources will be completely depleted. We is certainly its deployment as the primary energy I believe in state intervention, and that the bility and sustainability find common ground. In must therefore take on board the idea that source for Europe. Despite the technical and state has a role to play in introducing incentives other industries, however, the question is more growth should perhaps be limited, given its im- political difficulties, I strongly believe we should and mechanisms on the one hand, and tighten- complex. For the construction sector, a new pact on resource use, and some even demand be trying to build an integrated electricity supply ing regulations on Environmental, Health and zero-carbon emission building that rationalises zero-growth or ‘de-growth’. system across the EU, one that places the em- Safety (EHS) impacts on the other. Incentives energy use may well require a larger initial in- The question of jobs is a complex one due to the phasis on renewable sources. Reducing carbon for green production and R&D in green technol- vestment than a conventional building – yet will fact that technology changes and innovation can emissions and our dependence on oil are prior- ogy can provide immediate benefits and are not go on to deliver long-term savings. Here at the have both positive and negative effects. Digital ities that would also help to address the thorny complex to introduce – notably in the form of tax Autonomous University of Barcelona (Universi- technology has certainly created a massive num- question of energy security. It was said many incentives. Inevitably, there will be those who tat Autònoma de Barcelona), a state-of-the-art ber of jobs, for example, but introducing it into years ago that no major country would be able argue against such incentives, particularly the green building is being completed that will pro- the production process brings with it the risk of to have an electricity supply entirely based on laissez-faire neo-conservatives. But these ob- vide really notable savings over the longer term displacing people from the workplace. Although renewables, but that’s now being shown not to jections can be overcome at a national and an – though it will have cost more than a classic developing and expanding markets may boost be the case. Whether 100% renewable energy EU level, where there is a track record of funding research facility. In miniature, it reflects a much employment, I believe there is also a danger of is feasible EU-wide remains to be seen, but we programmes to promote green technology broader issue for sustainability – the fundamen- hype surrounding the potential for job-creation can definitely achieve well beyond 50% over the research and to refine the techniques for tal tension between up-front cost and savings – simply because new, more sustainable prod- next two decades. Spain had a stated objective monitoring the productive process. over time. I believe that CSR is helping to make ucts are being manufactured. There is also the a positive impact on this, but the short-termism question of positive/negative impacts in terms that has dogged private and public institutions of work and the environment. Technology has remains very much alive. It is part of our political made home-working possible – thereby bringing culture and changing that is an extraordinary people into the world of work who might other- challenge – particularly in the context of today’s wise have been marginalized for reasons of mo- economic crisis in Europe. bility. Home-working also reduces demand for

transport and all the associated CO2 emissions. JOBS AND GROWTH? One area where the picture is clearer, though, is The frequently-raised question of jobs and in the ﬁeld of renewable energy technologies. growth created by greener industry is meanwhile Europe is a major player in many of these equally complex, if not uncertain. There is also technologies, courtesy of both private and an important contextual point to be made ﬁrst state-funded research and development.

– namely, that growth implies yet more use of Companies in Germany and Spain are now European© Union, 2013 The Spanish Gemasolar solar power plant in Fuentes de Andalucía

64 QUERIES — Autumn 2013 QUERIES — Autumn 2013 65 ESSAY ESSAY

As progressives, we must also be aware of the active state intervention. Since most of industri- dealt with by majority parties on the progressive the environment in the same way we would question of inequities. It has to be a priority for al production is in private hands, the state has a left. Personally, I agree with a lot that the Greens normally talk about inequality in each of these governments to minimize impacts – and not just duty to push enterprises to take on board sus- say, but it’s a fact of political life that they have areas. However, this is not the only manner in in terms of climate change and low-carbon econ- tainable practices. In many parts of the world, only a marginal impact on governments. They which the progressive lexicon is reﬂected in the omy, but also with regard to all forms of environ- especially in countries with a social democratic have been in coalition governments for a period green agenda. Although the term sustainability mental degradation that affect people’s lives. tradition, the two sides do see eye to eye here and there but only represent 5-10% of the is widely used, I believe we should also commu- Unfortunately, those most affected by the health on sustainability. However, given the nature of vote. The big social democratic parties need to nicate about the importance of ‘intergeneration- outcomes of that degradation tend to be the global capitalism, I believe that the state has to bring this on board if we are to get any real pro- al solidarity’ – because solidarity is part of the most socially vulnerable groups in class terms. be more present, more aggressive and more gress on sustainability, because nobody else is left’s tradition, and sustainability is about in- From a progressive perspective, this is about visible – and that’s where the progressive parties going to do it. It should be a more integral part ter-generational solidarity. We need to act on social and environmental justice, and applies have a major role to play. We don’t believe in the of our electoral narrative, so that when we’re climate change – and also reduce the inequities equally to health and safety in the workplace. myth of the self-regulation through market forc- talking about the economy, it’s not good enough of its impacts. We must be sensitive to the fact Regulatory measures can of course be taken to es. It doesn’t work. This is clearly the case with to say ‘we would need to introduce economic that they impinge on some groups more than stop the excesses, to minimize the considerable climate change and action is something that has policies that respect nature and the environment’. others. We need to look for mechanisms to en- impact of industrial production on the environ- to be agreed globally – as the efforts of any one Anybody can say that, whether you are on the courage CSR, including sustainable production. ment. Legislation is in place at a national and an country are not going to be very relevant. I believe left or the right; the days of being long on rhet- I believe these questions should be central to EU level, and a lot has been achieved by meas- that progressive parties have a vital role to play oric and short on coherent practice are over. progressive manifestos. Sustainability is not just ures such as the European Water Directive. internationally in broaching these issues – as Parties need to be able to do concrete things, about climate change and environmental deg- However, as with health and safety regulations, some regulatory aspects, for example, must be propose mechanisms and be explicit about that. radation: it’s about solidarity and social justice. there is a real issue with compliance. It varies dealt with at a global rather than a European From the progressive side, it needs a more inte- enormously around Europe; there are some very level. But we ought to be able to cooperate in a grated view of the economy, the environment compliant member states and others that are pan-European way as progressives – not just on and society. Sustainability should be a core el- non-compliant, despite having signed up to the climate change but on a whole range of issues ement and linked to the idea of overcoming some regulatory framework. In certain European na- related to the environment, health and safety. of the bigger inequities related to health and tions such as the UK and in Scandinavia there The latter, in particular, represents an area where other issues. And I genuinely believe there is a is a very strong tradition of health and safety there isn’t much of a tradition on the conservative sense of urgency about this. It’s true that some monitoring and inspection, for example. But in right, but there is on the left. social democratic parties are more sensitive to countries like Spain, the infrastructure for apply- the green agenda and a number have taken it ing those regulations is weak. This issue requires THE POLITICAL CHALLENGE on board, but it needs to be taken up Eu- a long-term vision, rather than shallow short-term So how can the left make the most of this Key Points rope-wide. approaches, and I would underline the link be- potentially fertile ground? At the moment, sus- With the 2014 European elections just around tween work and environmental quality. There is tainability issues are only really being addressed Corporate Social the corner, the time is ripe for progressive parties also the related issue of European companies by minority parties – whereas they need to be Responsibility is to take a radically different approach to the en-

basing their manufacturing outside the EU, making industry vironment in their manifestos: namely to make DR© where not only wages but also EHS standards greener and generating it a thread running through their entire policy ABOUT are lower, resulting in lower costs for the indus- “AT THE MOMENT, SUSTAINABILITY savings. spectrum rather than just being an add-on. try or company concerned. It may indeed make The state can help A manifesto that sets out policies on the econ- Louis Lemkow is a such European companies more competitive – ISSUES ARE ONLY REALLY BEING the environment omy, social policy, health, education, technology, Professor of Sociology and but it raises questions about ethics and working ADDRESSED BY MINORITY PARTIES through incentives transport and then a beautiful sentence about Environmental Sciences at conditions, as well as accidents. and regulation. nature and the environment is not much use. We the Institute of The common thread in these sustainability issues WHEREAS THEY NEED TO BE DEALT Progressives need to need to talk about the environmental aspects of Environmental Science and is therefore the response of governments. Put integrate sustainability each of these areas, so that sustainability be- Technology (ICTA) of the simply, we’re only going to be able to overcome WITH BY MAJORITY PARTIES throughout their comes part of the whole train of thought – and Universitat Autònoma de the major environmental problems when we have ON THE PROGRESSIVE LEFT.” manifestos. not just the last carriage. We should talk about Barcelona.

66 QUERIES — Autumn 2013 QUERIES — Autumn 2013 67 JOINT INTERVIEW JOINT INTERVIEW

Kim Rahir: What kind of globalisation and economic systems. The rapid develop- to promote systemic changes because do you envisage? ment of the Chinese economy is surely a very private companies are focussed on market Marita Ulvskog: Many citizens regard positive aspect. But, as with earlier phases competition and because governmental globalisation as a strain, something that in capitalist development, such as the indus- action beyond the frontiers of individual HOW TO CHANGE GLOBALISATION has made their lives more complicated, as trial revolution or urbanisation, the increase states is still very difficult. The problem of something that cannot be fought or in society’s productive powers is running climate change provides the clearest resisted. Very few believe that they can ahead of our ability to control, correct and example – collective action is needed to have an impact on globalisation them- stabilise economic and social life. prevent the damage caused by the pursuit Globalisation is seen by many as an unstoppable force that has selves. They live with the impression that of narrow corporate or national interests. made life more difficult. But the seemingly irresistible process can financial markets and large companies run K.R.: Then do you believe our view of But international finance, international and must be controlled, say Swedish MEP Marita Ulvskog and the show and take every decision. globalisation has to evolve or must investment, international migratory flows British economist John Grahl. we make globalisation evolve? and questions of security all present sim- John Grahl: I concur with Mrs. Ulvskog M.U.: Yes, we do have to change globali- ilar problems of collective action. on the fact that most people feel unable sation. It might even start changing from to affect the course of globalisation or to the inside because even from an economic K.R.: Where should this controlling Joint interview by Kim Rahir challenge it in any way. At the same time, point of view, an unchecked course of momentum come from? they tend to be very critical of the process. events could have negative effects: a bad M.U.: Politics must be a decisive force of The financial crisis revealed very serious impact on democracy, on investment, on the movement that will turn globalisation dysfunctions in the way the world economy people’s health, and on the environment into something more adjusted to people’s is controlled. In England, many people ben- could provoke a very negative reaction that needs. We cannot leave it to blind eco- efit from very cheap imported goods while could put the forces behind globalisation nomic forces even if I believe that within competition from these same imports has at risk. And those forces are extremely the economic forces behind globalisation put pressure on wages and employment. averse to risk. It simply means that a coun- lies the seed of a new way of thinking, Many younger people, on the other hand, terweight to the market driven processes something that calls for putting brakes on take for granted their access to global of globalisation is not only relevant: it has the latter. But we cannot wait for this seed communication networks and the possibil- become essential. to grow by itself. We as politicians must be ity of global travel. the driving force at both national and global As someone with a Marxist background, I am J.G.: I completely agree that deep changes level.

© DR© Lars© Hagberg inclined to see globalisation as a new phase are needed and that even the dominant in what Marxists refer to as the socialisation players – the global corporations and the J.G.: In my view, politics has to be the key John Grahl is a professor of European Marita Ulvskog is a Swedish social of production, based on the construction of big banks – will suffer if changes are not but it is very tricky to extend political life integration at Middlesex University and democrat and was elected to the European new connections and a widening of social brought about. However, it is complicated to tackle global problems since there are a member of the EuroMemo Group parliament in 2009. A trained journalist, very few strong associations beyond indi- (European Economists for an Alternative she served for ten consecutive years as vidual countries. The political problems of Economic Policy in Europe). He has minister in Swedish social democratic the EU are a case in point: national politi- published articles on economics in the left governments, and later as secretary “IF WE BELIEVE WE CAN COMPETE cal issues dominate European parliamen- wing ‘New Left Review’ and the French general of the Swedish Social WITH CHINA IN TERMS OF tary elections and voters are not given any monthly ‘Le Monde Diplomatique’. Democratic Party clear choices on European policies. How- LOW SALARIES, LOW SECURITY, ever, one can see a development of transnational associations and groupings, which LOW ENVIRONMENTAL DEMANDS, will hopefully provide more support in the WE ARE TOTALLY WRONG.” future for stronger political forces beyond individual countries. (MARITA ULVSKOG)

68 QUERIES — Autumn 2013 QUERIES — Autumn 2013 69 JOINT INTERVIEW JOINT INTERVIEW

K.R.: Are the flows of money, improvements in wages and working con- production and transport costs down. Work- work of Mr. Stoiber on rules simplification, of information, of people still ditions. I do not think that would be protec- ers must be treated as human, not often serves as an excuse to push through controllable? tionist – it would only demand that trade machines. If you have a say in your work- deregulation, especially for small and medi- M.U.: The idea that we have lost control of be mutually beneficial rather than a game place, you can improve production methods. um-sized companies (SME). If we believe those flows is a major problem, because it with winners and losers. To take a more You are the expert, after all. In Sweden, we that we can compete with China in terms means that people have given in. We could clear-cut example, clothing imported into are totally dependent on exports – steel, of low salaries, low security, low environ- point to the example of China to illustrate the Union by big companies such as GAP qualified raw materials, forest industry, and mental demands, disempowerment of how globalisation can work in two direc- is being produced in Bangladesh by work- digital industry. It is interesting to see that employees, then we are totally wrong. So tions. In Europe, China is often presented ers doing a hundred hours a week. To we have had lots of payback through the let’s simplify the rules, but not by undermin- as a threat, especially in the industrial sec- accept such imports is to become the fact that the the employees have been very ing the rights of employees, or consumers. tors where Chinese products are the same accomplice in a crime, but as policies involved in its work for decades. as European products, only cheaper. If you towards global problems are limited to the J.G.: It is important to add that partly look at what is happening in China, you can promotion of free markets, control cannot J.G.: Britain is not doing as well as Sweden because of German pressure, deregulation see that workers are beginning to fight for be established. either in economic or in social terms. We and cuts in social provisions are being more democracy and decent salaries, that could probably learn from Nordic countries forced through in the weaker EU econo- people are protesting against the appalling that the two factors are linked – that a mies. The dominant view is exactly the one air quality in big cities. And we can see that fairer society can support a more efficient that Marita Ulvskog has just condemned the political system is reacting. Absolutely “IT IS COMPLICATED TO PROMOTE economy. Our greatest vulnerability in the – to restructure these economies through not in the way it would react in Sweden, global economy probably comes from our lower salaries, lower security and generally United Kingdom or Germany, yet it is react- SYSTEMIC CHANGES BECAUSE poor educational performance and that is lower standards. I also have to add that the ing. Actually, it is another aspect of globali- GOVERNMENTAL ACTION BEYOND closely related to poverty in childhood and European Social Democrats have not been sation, that is to say the fact that they can to multiple social disadvantages in housing as consistent or determined as they should feel the world’s eyes on them. THE FRONTIERS OF INDIVIDUAL and employment. Our employment rela- have been in challenging the kind of poli- tions are primitive in comparison with those cies advocated by Edmund Stoiber. Some- J.G.: I agree, and add that endless prop- STATES IS STILL VERY DIFFICULT.” of Sweden. What is ironic is that, if you ask times they give the impression that policies aganda against regulation, government (JOHN GRAHL) why we cannot do better in education or that would be unacceptable in Finland or intervention and public provision has in employment relations, you are told that in the Netherlands are quite appropriate in helped to bring about such a situation – the global economy needs low taxes and Portugal or in Slovenia. where market forces are seen as an ade- K.R.: What kind of industrial policies deregulated labour markets and that we quate answer to all problems of economic do we need to change that? cannot afford to deal with these issues. 1 German conservative Edmund Stoiber heads organisation. There is no doubt, however, M.U.: We know that industrial products still a EU group in charge of reducing bureaucracy. that control is possible in many spheres. make up 75 % of our exports. A lot of people K.R.: Can this really be done through For example, in the question of tax avoid- are working in the industrial sector and one legislation or is this also a cultural ance and tax evasion, determined action job in the industrial sector corresponds to question? by the EU and US together could provide two jobs in the service sector – private and M.U.: Every country must choose its own “BRITAIN IS NOT DOING AS WELL a global solution. Although governments public. Europe started as a Coal and Steel model, but when it comes to involving and are today very short of revenue, they are Union and still industrial sectors like these empowering people in their workplace, I AS SWEDEN EITHER IN ECONOMIC not yet ready for such action because many define much of what we are today. But so far, think it should be done through legislation. OR IN SOCIAL TERMS. WE COULD of them still want to base their economic globalisation has not made our industries That is what we did in Sweden, and trade development on tax breaks for big corpo- competitive enough. We must be well skilled. unions and the workforce have proven to PROBABLY LEARN FROM NORDIC rations. On conditions in China, common We must be the smartest on climate issues be a valuable asset of the company. So in action in the West could make a big differ- because not being climate-smart is this context I would emphasise that dereg- COUNTRIES THAT THE TWO FACTORS ence too – China’s access to Western now unacceptable for citizens and consum- ulation, under the banner of “rules simplifi- ARE LINKED.” markets could be made conditional on ers, energy efficiency is crucial to keep cation” is definitely not the quick fix that will solve all of our problems. In Europe, the (JOHN GRAHL)

70 QUERIES — Autumn 2013 QUERIES — Autumn 2013 71 ESSAY ESSAY

interests came apart at the seams and the “IF FRANCE IS LOSING GROUND, THEN sudden surge of US and UK shareholders IT IS BECAUSE ITS FIRMS ARE FAILING in CAC40 companies caused upheaval in corporate governance. French capitalism FINANCE, COMPANIES TO INVEST ENOUGH IN INNOVATION.” embraced pro-shareholder governance with open arms, in contrast to the stake- AND COMPETITION holder view prevailing in Germany. The slowdown in productivity. Payroll costs may FINANCIALISATION combination of an overwhelming focus on well be growing in France more than else- AND GOVERNANCE pushing up share prices and pursuing a where, but that is because productivity is After the Second World War, France pur- hierarchical, pyramid-style approach to Divergences between countries in the industrial competitiveness stalling. sued modernisation under the impetus and business organisation (a long-standing – especially between France and Germany – are causing economic guidance of central government. State French tradition) strongly discouraged dislocation in the euro zone and undermining Europe’s ability This offers a new perspective on the issue patronage allowed French capitalism to managers from adopting any innovation in to compete on the international stage. These problems have been of competitiveness. If France is losing build competitiveness clusters in transport, productive investment. compounded by the increasing financialisation of corporate ground, then it is because its firms are fail- energy, construction materials and chem- governance and an ideology hostile to industrial policy. Remedying ing to invest enough in innovation, largely icals. With the introduction of the Common Management dependency on company share because its business leaders and owners Market, the industrial model shifted in prices through stock options and the threat this situation requires a combination of two priorities: refuse to do so or because they cannot do favour of increased competition, with cur- of hostile takeovers led by hedge funds and multi-stakeholder governance and the development so. In the first case, we need to consider rency devaluation occasionally used to investment banks left business strategies of innovation solutions. the type of corporate governance cultivat- offset a lack of competitiveness. European prey to the whims of stock markets. Private ed by the financialisation of the economy. constraints changed the rules of the game equity (PE) provides a capitalistic alternative In the second, we need to look beyond the as financial deregulation began to gather to flotation. However, PE is particularly harm- by Michel Aglietta capacity of companies to produce techno- steam. The 1983 watershed for competi- ful to long-term strategies given that more logical, human, information and financial tive disinflation caused a passive trend than 70% of a buyout can be financed by resources and assess the kind of innov- toward neoliberalism, which turned active debt instead of a real equity contribution. ation systems in which they use them. in 1995 when the fabric of capitalistic Private equity funds use the assets and future revenues of the companies they target as collateral to secure their loans. Lending banks et us start with the The media overlooks the lack of research Key Points in turn use asset-backed securities (ABS) to French example. Ever and development among companies in spread risks among investors. Boards of di- since the Gallois report, southern Europe, France included. Since Shareholder governance rectors are made up of managers from the there has been no deny- 2002, R&D in the private sector has never is subject to the whims target company (the ones not laid off) and ing the fact that French exceeded 1.4% in France, compared with of stock markets and representatives from the private equity fund. L industrial performance an average of 1.9% in Germany, 2.0% in focuses on clearing debts. The fund managers seek to squeeze as much deteriorated significantly in the ten the United States, 2.5% in Japan, and It encourages offshoring and profit out of the target company within three years preceding the crisis. Rising wages 2.8% in Sweden. Meanwhile, French com- therefore deindustrialisation. to five years to repay their debts and use and shrinking margins are common excuses panies continue to lose ground in automat- Protecting market share in leverage to secure returns of more than 20%. for shortcomings in management account- ing industrial production processes: they a highly competitive Such strategies might be compatible with the ability. Competitiveness is seen solely as a had bought 3.5 times fewer industrial ro- environment requires sudden growth of start-ups. In most cases, reflection of payroll costs, which naturally bots than their German counterparts in the pursuit of incremental however, they represent a form of governance points the finger at the labour market. Indus- 2001; seven times fewer in 2011. Research innovation based on based on stripping and regrouping available trial policy is content to focus on internal into total factor productivity (TFP) shows the valorisation assets, destroying rather than creating value devaluation, resorting to wage deflation, that the particularly dated assets of French of intangible assets. to divvy up profits among a financial elite to

pitching one country against another. companies are a key contributor to the Paul© Tearle Getty/ Images the detriment of the workforce.

72 QUERIES — Autumn 2013 QUERIES — Autumn 2013 73 ESSAY ESSAY

This approach is taken to the extreme MULTI-STAKEHOLDER GOVERNANCE holders simply own part of the firm’s assets. Stakeholders have a range of interests. management performance; agenda under “A COMPANY IS in the private-equity model, but it is also AND EMPLOYEE EMPOWERMENT: They are the rightful owners of the firm as The board of directors does not act on the responsibility of the board chairman. widespread in all firms governed by THE SOCIAL CONTRACT a legal entity, but in no way represent all behalf of a single party. It sets company AN UNDERTAKING shareholder value. Across 21 European The concept of governance in the interests of its stakeholders. policy, and comes to agreement through Because it draws on the creativity of countries, foreign shareholders – including of shareholders alone stems from an ide- deliberation. As a result, it has a strategic the company’s human resources, mul- INVOLVING pension funds, private equity firms and ological view that gained a following in the Those who defend shareholder sovereign- objective that is reflected in standards of ti-stakeholder governance is key to A GROUP OF hedge funds – held an average of 37% of United States in the 1970s and became ty claim that it is warranted because all of governance. It is the board’s role to oversee competitiveness. Indeed, comparative ad- company shares in 2008, compared with more widespread in the 1980s. This view the company’s other relations are implicit- the company management – or technos- vantages come from within. Productivity PEOPLE WORKING 29% in 2003. This transformation in Eu- is based on a mistaken conception of the ly part of the nexus of contracts and there- tructure – to ensure that it complies with stems largely from collective learning: ropean shareholding based on the model company that fails to distinguish between fore carry prices equivalent to market standards of governance. Since the cor- tacit knowledge obtained by pooling skills TO PRODUCE made popular in the US and UK has led to the actual business and the “private firm value. Such claims do not hold water. A porate body entrusts its representative(s) in a manner that builds on individual capa- SOMETHING the disappearance of core shareholders on paper.” A company is an undertaking company is essentially a team. What makes – the board of directors – with the task of bilities; informal interaction between em- and a loss of majority ownership over time. involving a group of people working to pro- that team effective is the cooperation and organising the company, then governance ployees through horizontal structures; THAT CONTRIBUTES The stock market has become the only key duce something that contributes to socie- synergy between its members and their – through which the board interacts with motivation through employee empower- shareholder, with market value the sole ty. A group of people is not something that skills. As a consequence, a company’s all aspects of the business structure – ment. Only multi-stakeholder governance TO SOCIETY. manifestation of shareholder interests. This can be owned. In contrast, the “private firm share price does not fully reflect its use to must ensure that stakeholder coordination in which employees are actively represent- A GROUP OF has had a disastrous impact on methods on paper” is a corporate body in the shape society. The conflict of interests between is not hijacked by the interests of manage- ed on the board can create the system of of governance. Firms are no longer seen of a legal entity that determines the pur- shareholders and the people who make up ment alone. Multi-stakeholder governance checks and balances needed to cultivate PEOPLE IS NOT as going concerns that require solid back- pose of the company. This purpose is cap- the company warrants another distribution implies the use of checks and balances: collective skills as a factor of production. ing over time to develop a long-term pro- italist: it follows the abstract reasoning that of power, in the shape of multi-stakehold- separation of powers between the chair- Corporate social responsibility is neither a SOMETHING ductive investment strategy. The Wall sees capital in terms of accumulation and er governance, and a conduit for that pow- man and the CEO; internal audit commit- “touch of soul”, nor a cost: it is an intangi- THAT CAN BE Street model considers a company to be therefore the automatic growth in mone- er, in the shape of the board of directors, tees reporting to the board of directors and ble asset that can increase overall produc- nothing more than a group of assets that tary value. In this sense, the private firm which is more than simply a mouthpiece distinct from management; objective tivity by increasing the efficiency of the OWNED.” can be sold off separately on the stock owns the company. However, the share- for shareholders. criteria and methods for measuring labour factor. market. Liquidity supplants long-term commitment as the primary focus, as investors COMPETITIVENESS seek to maximise earnings. The financial AND INNOVATION SYSTEMS crisis has exacerbated this distortion. Yet there is more to the matter. Competi- The drive to shed debt has become tiveness based on intangible assets con- the number-one management priority, siders company stakeholders beyond the with massive fluctuations in share prices legal boundaries of the corporate body. indicative of price-risk instability, which There are no clearly defined ownership fetters investment. “PAYROLL COSTS MAY WELL rights for intangible assets. Intangible as- BE GROWING IN FRANCE MORE sets are a source of positive externalities Private equity can spur innovation. How- between the company, other companies, ever, it is a completely different type of THAN ELSEWHERE, BUT THAT public entities and the local communities private equity that helps small and midsize in which companies are based. They create businesses to pursue new ideas: the type IS BECAUSE PRODUCTIVITY a close bond between industry and servic- which involves a long-term commitment, IS STALLING.” es, business strategy and economic policy, which clears debts, which combines ven- resulting in products and solutions that are ture capital with strategic expertise for in tune with social issues: examples include fragile yet growing companies. All this re- the circular economy, energy transition, quires a wholly different approach to gov- urban renovation, health and lifestyles. ernance. They are often non-rival and a source of © Corbis ©

74 QUERIES — Autumn 2013 QUERIES — Autumn 2013 75 ESSAY ESSAY

return that is not immediately appropriable. tion system in the United States is well vate stakeholders. It also requires policies They must be calculated on the basis of “BECAUSE known. This approach makes individualism “THE SELF-SUSTAINING DYNAMIC dedicated to innovation systems. Industrial notional value. They improve the efficiency IT DRAWS ON an influential aspect of the business mind- OF INDUSTRIAL GROWTH IMPLIES strategy must be an integral part of local of all production processes and the quality set. Entrepreneurs – often with a back- policy. In France, it falls to the regions to of products. From a company standpoint, THE CREATIVITY ground in government research – secure AN ORGANISED BALANCE OF POWER promote a new mindset. They must intangible assets offset the drop in the the backing of angel investors, who help select companies capable of developing marginal productivity of physical capital OF THE COMPANY’S them get started on the path to growth in BETWEEN PUBLIC AUTHORITIES regional competitive advantages, identify invested as it grows. This is because intan- HUMAN areas of innovation in which there is real AND PRIVATE ACTORS. IT ALSO REQUIRES promising sectors of industry and pursue gible assets incorporate knowledge and symbiosis between entrepreneurs. They pilot initiatives backed by public-private are not destroyed through use. On the RESOURCES, maintain momentum with the help of POLICIES DEDICATED TO INNOVATION funding. To encourage small and midsize contrary, their marginal productivity grows private equity firms, which allows them businesses to innovate and export, it might through use. When companies are organ- MULTI- to avoid the premature burden of debt. SYSTEMS.” help to introduce a specific status for in- ised into networks that internalise exter- STAKEHOLDER Success or failure is settled by the Nasdaq. novative SMEs with access to attractive nalities resulting from this interplay, they have invested heavily in Eastern Europe to supervisory boards free to pursue an in- financing solutions while ensuring more create innovation systems. Making the GOVERNANCE IS This approach to industrial organisation is hone the competitive edge of innovation dependent strategy in the long term, mean- effective support for SMEs abroad. Lastly, most of this coordination requires a form a far cry from traditional practices in Asia. systems based on their home turf. They ing they can maintain their razor-thin focus repatriating industry and fostering incre- of governance that recognises the diver- KEY TO In Japan, small and midsize enterprises are have made a point of integrating their for- in the quest for incremental innovation and mental innovation requires using sustain- sity, capacity for interaction and mobility COMPETITIVENESS.” an integral part of the value chain for ma- eign investments closely into their indus- market share. able development as part of a strategy on of human resources. In other words, it re- jor corporations. SMEs are not seen as trial systems back in the Länder. Mean- both a European and national scale. quires extended stakeholder governance. subcontractors to be used as a means of while, under the influence of their US and There are three lessons to be learned from outsourcing costs; instead, they are viewed UK shareholders, French companies have the German experience. First, innovation There is no single innovation system that as partners on industrial projects. China’s allowed themselves to go adrift, even off- is usually incremental once you have a is superior to the rest. Differences stem Guanxi capitalism is modelled on a network shoring their research facilities. solid industrial base. Second, niche domes- from the cultural traditions, theories on of connections deeply rooted in Confucian tic markets can lead to highly profitable education and ideologies that shape the tradition. Extended family relations, trust- The Mittelstand is a sort of self-perpetu- exports into global markets. Third, it is ways in which companies are viewed. The based ties forged through mutual assist- ating ecosystem that creates a virtuous possible to safeguard a wide array of busi- venture capital contribution to the innova- ance and shared ethical standards provide circle underpinning its ability to weather a ness activities against competition from building blocks able to stand the test of storm and stand the test of time. At its core emerging countries through a policy of time. is a continuous improvement in the quality innovation that builds on strengths.

of intangible assets. It enables ongoing DR© GERMAN MITTELSTAND innovation by increments, something Social innovation is the predominant factor ABOUT AND THE ABSENCE OF ANY CLEAR French commentators like to call la perfec- in improving competitiveness, involving INNOVATION SYSTEM IN FRANCE tion du banal (“improving on the ordinary” government initiatives to retrain workers, BIBLIOGRAPHY The Mittelstand is a benchmark for com- or “building on the banal”). As a result, it is with close ties between businesses and Michel Aglietta is a French • Agenor P-R. and Dinh H. (2013), From imitation to innovation: petitive excellence in Europe. It contrasts not a system that makes sudden forays schools to promote apprenticeships. Two economist, Scientific Advisor to public policy for industrial transformation, Economic Premise, sharply with the hazy nature of the French into areas of radical innovation. Instead, other points of note, lacking in Germany the Center of International no. 115, World Bank industrial organisation that has followed the industry-wide incremental approach but prevalent in Scandinavia, include equal Studies and Forecasting (CEPII), • Aglietta M. and Réberioux A. (2012), Financialization of the firm, state withdrawal. The surge in Germany’s provides a source of invaluable competitive career opportunities for men and women, Emeritus Professor at the in Handbook on the economic theory of the firm, M. Dietricht and strength as an exporter since the introduc- advantages that can ensure solid market and government aid to provide child care University of Paris Ouest J. Krafft eds, Edward Elgar tion of the euro contrasts with the slow share and secure healthy margins. Sound for preschoolers. Nanterre-La Défense, Consultant • Gallois L. (2012), Pacte pour la compétitivité deindustrialisation seen in France. The way trading accounts allow Mittelstand firms at Groupama-Asset Management, de l’industrie française, rapport au Premier Ministre in which leading companies have respond- to use cash as their primary source of in- The self-sustaining dynamic of industrial and member of France’s High • Kohler D. et Weisz J.D.(2012), Pour un nouveau regard ed to the tougher competition ushered in vestment, enabling businesses to remain growth implies an organised balance of Council of Public Finances. sur le Mittelstand, Documentation Française by globalisation is instructive. German firms for the most part family run. This leaves power between public authorities and pri-

76 QUERIES — Autumn 2013 QUERIES — Autumn 2013 77 INTERVIEW INTERVIEW

Jacques Docquiert: What are the “WE NEED TO REKINDLE THE SPIRIT major energy challenges Europe faces? OF THE ECSC AND EURATOM Andreas Görgen: Like all countries, Europe must first provide the energy it IN EUROPE, IN ORDER TO POOL R&D ANDREAS GÖRGEN needs at an affordable price. It must then AND FINANCIAL RESOURCES AND ensure security of supply. Finally, it must “Energy: Europe is the best equipped to act” control its CO2 emissions to limit their neg- DRIVE THE ENERGY ISSUE FORWARD.” ative impact on the environment. Europe is in a unique situation when it comes to energy: some member states generate aged and organised. But the market alone reform of the onshore wind power market Andreas Görgen, President South West Europe with Siemens more than they need and, due to the links is not the answer to everything because and we can provide advice either directly Energy, readily acknowledges that the process of defining between them and the elimination of bor- energy is not like other commodities. It is or through our associations, while leaving a common energy policy often divides the 28 member states. ders, energy strategy must be planned for essential to industry and therefore our them with the final say. He urges them to join with industry to better manage and the European market as a whole. societies and the survival of us all. It also comprises a research and development J.D.: Is energy strategy a political organise a market that transcends national boundaries and has J.D.: But there are major disagreements component that cannot be regulated by issue? Do you see differences to compete on a global level. between member states on nuclear the market. The price and supply of elec- between governments? energy and shale gas. Can Europe tricity represent a societal challenge and I A.G.: When you give flour to a baker, he speak with one voice on these issues? think the EU is the best equipped to sees it as raw material to make bread. If by Jacques Docquiert A.G.: I don’t think that Europe speaks with address all these issues within its borders. you give it to a child, he’s going to do someone voice when it comes to defining these thing else with it. When a politician tackles aspects of energy policy. On the other J.D.: What can companies like the energy issue at national level, he will hand, in the 1950s, the European Coal and Siemens Energy do to help meet this make it a national issue informed by his Steel Community, which was the founda- challenge? political choices. When a European body tion for the construction of Europe, had a A.G.: Companies like Siemens act on three takes hold of it, it will see the European policy of pooling 80% of its electricity levels. First, locally: in France, for example, issues. And it’s the same thing for industry. generation. We need to revive this common we employ 7,000 people. Then at European So I think we need to strengthen the dia- will and commitment, especially on divisive level, since we provide tens of thousands logue between all those working on energy issues. It won’t be easy, but it is the only of jobs in the EU. Finally, we must also be policy to find better solutions, which are way forward. Germany and France, for competitive on a global scale. We need to not only achieved at national level. For the example, have completely different strat- develop products tailored to European Coal and Steel Community, the pooling of egies for nuclear power. But Germany has demand but which compete on an inter- production resources was a way of ironing not yet resolved the matter of how it’s going national level. This gives our companies out the differences. After the ECSC, there to manage the transition to renewable valuable expertise to help define EU policy. was Euratom, which pooled R&D and energy and in the meantime it could buy The Commission consults us, as do the financial resources to develop a technology nuclear power from France to provide tem- rotating presidencies and other institutions. that was considered very expensive and porary support. But Europe does not only revolve around hazardous. Ultimately, we need to rekindle Brussels… nations such as France and this spirit in Europe and use it to drive the J.D.: So a European energy policy Germany also play an important role. It is energy issue forward. We have just com- could eventually see the light of day? not our job to make decisions, at whatever pleted a study with the University of Munich A.G.: Energy production and supply level, but our expertise can help guide the which shows that by supporting renewable remains a precarious business in Europe decision-making process. For example, energy where it is most productive – in and the market needs to be better man- governments are currently considering a other words, solar power in sunniest © Melinda Nagy/PantherMelinda © Media/GraphicObsession

78 QUERIES — Autumn 2013 QUERIES — Autumn 2013 79 INTERVIEW INTERVIEW

regions and wind power in the windiest – suitable; we need to change the rules and outstanding research scientists who sector, a number of mergers have been we can reduce costs by €30 billion come up with a new model that can be then move elsewhere in search of stopped, which weakens the competitive- between now and 2030. But that implies applied worldwide. better working conditions. ness of our companies. It was Jacques an agreement between member states on A.G.: I often see this with my younger col- Delors who said that competition stimu- how to pay for renewable energy that J.D.: Consumers are very interested leagues – it’s the “Erasmus generation”. lates and cooperation is essential. takes into account the specific situation of in the development of the electric They have always lived, studied and partied each nation. car. What progress has been made? in a Europe without borders. They start J.D.: Perhaps the single market, working for a company and then find that created during a period of growth, did J.D.: How does energy conservation employment laws, pension systems, and not adequately address certain social fit into the equation? “THE MARKET ALONE IS everything else is different from one mem- constraints? A.G.: It’s fundamental. The best energy ber state to another and that it’s often more A.G.: Who are we to criticise Jacques resource is that which is not consumed. In NOT THE ANSWER TO EVERYTHING difficult to build a career within the Euro- Delors? We could do with more men like building renovation, there is still a consid- BECAUSE ENERGY IS NOT pean Union, moving say 500 or 1,000 him. Moreover, he proposed creating a erable amount of work to be done at kilometres, than it is to go to Asia or the “Social Europe” that has never seen the national and European level. And there is LIKE OTHER COMMODITIES.” United States. When you’re young, you light of day. an even more pressing need to act because want to be in step with the world and not this sector offers huge potential for job feel boxed in. In Europe, there is still much J.D.: Returning to energy, which creation. A.G.: Siemens is working on electrical work to be done in this respect, particularly domains should remain national and components in partnership with Volvo, as with regard to immigration and improving which should be under EU authority? J.D.: Must Europe set standards for well as on batteries and storage. The fun- the education system, which should enable A.G.: Building a united Europe with 28 achieving sustainable development? damental question is whether the elec- all young people to find employment. A different nations is not easy. It wouldn’t How do we factor in the constraints tricity consumed by an electric car pro- socially-responsible Europe can only be make sense, for example, for Lithuania to experienced by companies in the face duces less CO2 or if a hybrid engine is a beneficial to European industry. In another impose its energy mix on France. But at of global competition? better solution. We’ll know in a few years area, the development of an EU patent is, the same time, it didn’t make sense for A.G.: Our responsibility as an industry is but the jury is still out. for example, a very positive step but it has Angela Merkel to phase out nuclear power to develop products that provide the best taken more than ten years to achieve... without even picking up the phone to warn possible solutions to the climate change J.D.: How can we foster synergies her partners. The answer will not be found challenges of the 21st century, in other between businesses and universities? J.D.: Is the constant innovation in Brussels; the EU must not try to overrule words, those which produce less green- What other partners could become observed in the energy sector the member states in this area. The solu- house gases and make the best use of involved? compatible with European tion lies between the two. As for the green energy such as wind power. We must A.G.: Siemens is conducting research and harmonisation? energy mix issue, though it would take also make competitive, flagship products development programmes with universities A.G.: The EU must understand that the longer, someday the national governments

that we can export, and encourage other around the world and of course we support world has changed. In the 80s and 90s, will need to talk about it and work together DR© countries to follow our lead. Moreover, we numerous research programmes in Europe. the push for consumer protection was jus- because it cannot remain a purely national ABOUT need to lay down restrictive regulations This gives us a better understanding of the tified and had a decisive influence on the policy area, at times pitting countries that set an example for our international various stakeholders in the European development of competition policy, which against their neighbours. The core duo of Born in 1967, Andreas partners – this is the role of the EU and Union. At local level, a company must have prohibited anti-competitive agreements France and Germany and their partners Görgen holds a PhD in Law national governments. To quote one example: partnerships in all countries where it oper- and established strict control of corporate will need to ramp up discussions. and is a graduate of the Ecole for ten years, it was believed that the buy- ates, because a company like Siemens mergers. But now that European industry Nationale d’Administration back scheme was the best model for devel- does more than just sell things, it makes has to face global competition, it’s time to (ENA). An ombudsman, he oping renewable energies. This was true and exports them, employs people and look at things differently. To maintain an has taught at ESSEC and when these forms of energy first came supports innovation. industrial base in Europe, we have to give ENSAM. He is now President along. Now they account for 15-16% of J.D.: It is often said that Europe’s European industry the means to better South West Europe with the market and this model is no longer academic institutions produce cooperate and organise itself. In the energy Siemens Energy.

80 QUERIES — Autumn 2013 QUERIES — Autumn 2013 81 CLOSEUP CLOSEUP

from the current crisis. The important thing “WHAT WOULD CLEARLY HELP THE for us to bear in mind as manufacturers is that we must never lose sight of the soul SECTOR WOULD BE FOR EUROPE’S of our products and always remember that ‘Made in Italy’ is something very important. INSTITUTIONS TO TAKE FIRM BUSINESS AS USUAL ACTION AGAINST THE TRAFFIC IN THE THREAT OF THE for Europe’s luxury goods sector COUNTERFEITERS COUNTERFEIT LUXURY GOODS.” As an industry, Europe’s luxury goods sector stands squarely on its own two feet, and has no need of direct support from While much of the European industry is in difficulty, its luxury governments or the EU. However, what and large, our problems start and finish goods sector is growing rapidly, fuelled by growth in the world’s would clearly help the sector - and safe- with the counterfeiters. Aside from them, emerging economies. However, governments and the EU need to guard the jobs it provides - would be for the prospects are looking positive. For take action against the counterfeiters to safeguard the jobs of those Europe’s institutions to take firm action companies with a good reputation and who against the traffic in counterfeit luxury are creating products of great quality, I see working in a key industry. goods. This is not just about defending an the future as being bright, and getting industry from unlawful competition; it is brighter. And that can only be good news also about protecting the children who are for Italy and France, who have the leader- by Diego Della Valle being used to produce these illegal copies ship positions in this market.

in many countries around the world. I be- ©Tod’s lieve there is a pressing need for a legis- A POLITICAL CHALLENGE ABOUT lature to protect the exclusivity of the great In business, progress is clearly our priority. brands from a world of business that sim- But I would have to add that economic Born in 1953, Diego Della ply does not abide by the rules and causes progress is also about politics. And as we Valle is the president and a great deal of damage and suffering. It is look to move forward in Europe, I think it CEO of Tod’s Group, a family t may sound counterin- China – means that the number of people a major business problem because the is important that we do not forget the shoemaking business tuitive, but at a time with the ability to buy quality products is world of fake goods is not just harming the weaker countries and that we make plans founded by his grandfather of economic crisis, constantly increasing. brands; it is also endangering the jobs of which are not egotistical in nature and Filippo in the early 1900s Europe’s luxury goods At the same time, a country like Italy is more than a million people who work in this concerned only with the state of one’s own and transformed since the sector has never been so well-placed to take advantage of these sector in Europe. Along with the measures house. Instead, I believe we need to show 1970s into a series of global I successful. One explana- growth markets. Creating luxurious objects that need to be taken at a EU level, nation- solidarity – albeit with a sense of vigilance brands: Tod’s, Hogan, Fay, tion is that the luxury sector is, by definition, is a tradition that is steeped in Italian cul- al governments also need to act on this. – with those countries with more problems and Roger Vivier. A keen directed at people with real purchasing ture, a world where the beautiful arts are There is a battle to be fought here, and I than others. Otherwise, there would not be football fan, he and his power and therefore people who are suf- important and where there is a history of believe it needs to be fought soon. a lot of point in having a European Union, brother Andrea own Italian fering less in the current crisis. However, workmanship going back centuries. There Clearly, the sector is not against the idea and perhaps a lot of countries would lack top-flight club, Fiorentina..” the underlying reason is the major phe- is also the fact that Italy has excellent of competition per se. That said, I do not the energy needed to keep it together. nomenon we have witnessed over the past craftsmen – the sort that other countries see any real competition for Europe in an People need to realise that countries that ten years of the rise of economies in Asia, have either lost or never had in the first industry such as ours. Global competition have perhaps made mistakes in the past, the Middle East and parts of South Amer- place. Put that demand and supply picture certainly exists in the world of generic con- and are now in difficulty, need a plan that ica. These countries are bringing in many together, and it is not surprising that the sumer products and industrial goods where will enable them to pull themselves out of new customers who are passionate about opportunities are growing. We are indeed production is being transferred to emerg- those difficulties. They cannot be just ig- luxury goods. In particular, the rise of the fortunate to be in one of the few sectors ing economies with lower labour costs. In nored and left in a corner. Otherwise, the BRIC economies – Brazil, Russia, India and in the Italy economy that is not suffering the luxury market this does not happen. By risk is that at some point, those countries will explode.

82 QUERIES — Autumn 2013 QUERIES — Autumn 2013 83 BEYOND EUROPE BEYOND EUROPE

NEW GROWTH PATTERNS and challenges for development THE DEVELOPMENTAL STATE IN THE 21ST CENTURY The international financial crisis, which started in 2008 and is still ongoing, has strengthened the role played by the emerging countries in the international economy. Queries asked five international development economists to answer the same question: “What institutional and economic structure can best support industrialisation, innovation n the last decades, the economic rebound, initially supported by the through the expansion of investment, and and growth?” nomic growth of emerging agricultural and mineral commodities exports BNDES should be an important instrument countries has been strongly boom and lately by the expansion of house- for this effort. BNDES estimates investments dependent on external mar- hold consumption, lost strength and exhaust- of $1.9 trillion for the years 2014-2017. These by Fernando Sarti, Ana Rosa Ribeiro de Mendonça, kets, mainly on exports to ed. As a result, in the last three decades, investments would lead the rate of gross Seeraj Mohamed, Dae-oup Chang & Jyoti Saraswati I advanced countries. The in- Brazilian industry has performed poorly in capital formation the current 19% to 22.2% creasing participation in the international developing productive capacity and innovative of GDP in 2018, accelerating the rate of eco- trade flows was supported by a massive influx strategies. nomic growth. of financial and investment flows, which pro- The reversal of this picture and the resump- Financing is one of the main challenges to moted a subordinated insertion of these tion of industrial development should rely on guarantee these investments. The public fi- countries in the global value and production the adoption of articulated strategies, to be nancing system should be reinforced. This is chains, but also a low capacity of innovation. coordinated and supported by the combin- not an easy task, as the system, especially In the 2000s, a major change occurred in the ation of policymakers’ actions and the Bra- BNDES, is constantly jeopardized by private pattern of these countries’ growth. External zilian institutionality, mainly the public financ- financial sector interests, which never played was replaced by domestic demand as the ing system. It is important to highlight that this a relevant role in long-term financing. economic growth driver. In just a few cases, public financing system has played a special It is essential to ensure that the demand such as China, demand growth was led by and broad role in the last decade, financing generated by these investments is mainly investment in infrastructure and urbanization, industrial and infrastructure investment, a directed toward industrial domestic produc- and in others, such as Brazil, by household large social housing project, enlarging bank tion and not imports, in order to make the consumption. This movement accelerated access to the poorest, being a fundamental supply chains denser, to increase cross-

SOUTH KOREA and sustained emerging countries’ econom- element in the anticyclical policies to face the industry demand and to to accelerate indus-

INDIA ic growth rates and allowed them to be in effects of international crises. It has been trial investment. This virtuous cycle of growth charge of the global output and income ex- contributing to the emergence of a new de- will promote and also beneﬁt from better pansion in the post-crisis world. velopmental state in Brazil. The Brazilian production and technological capabilities. In Brazil, this growth pattern shift was marked development bank (BNDES) is responsible by a rough patch. In the 1990s, the liberali- for nearly 70% of the long-term credit and

BRAZIL zation process and the resulting misguided 40% of the total external funding for indus- productive, commercial and ﬁnancial insertion trial and infrastructure investment. Fernando Sarti and Ana Rosa in international economy promoted a sharp The strategies to revert the picture of a poor- Ribeiro de Mendonça are SOUTH AFRICA slowdown in the economic growth, with neg- ly developed productive industry and the respectively Dean and Assistant ative impacts on industrial and technological resumption of industrial development should Professor at the Institute of development. In the 2000s, the brief eco- rely on the stimulation of domestic demand Economics – University of Campinas.

84 QUERIES — Autumn 2013 QUERIES — Autumn 2013 85 BEYOND EUROPE BEYOND EUROPE

GOVERNMENT THE STATE THAT PURSUES and the developmental state DEMOCRATIC DEVELOPMENT Too good to be true?

There are contradictory demands about the developmental state in the pursuit of industrial When state-led development suffered from both a severe recession and attacks development, innovation and growth. The state that promotes economic development is one by neoliberals in the 1970s, development studies academics looked to the East… that pursues structural change. Not only does it have to work with what it has already achieved to do so, but it must also be able to work against these achievements.

n our discussion about the ties and speculation to increase profitabil- erful and well-organised constituencies he academics realised that the contradictory world-historical context of critically evaluated. The question should be state, we must be careful ity to meet the expectations of the within its society. It would be difficult but Japan and newly industri- the actually existing developmental states. In geared toward institutional and economic when thinking of it as a ho- shareholder value movement for ever high- we can draw lessons from a number of dif- alising countries like South fact, all successful developmental states in structures that enhance the general wealth mogeneous entity. In fact, it er returns. During this period the financial ferent states at different times in history. Korea and Taiwan had ef- the 20th century were semi-sovereign states. of people without undermining democratic is probably better to think of assets of NFCs in South Africa grew to 250 We can study the development of the now fective states promoting Contrary to the image of the developmental participation of the general population rather I it as multiple organisms. Un- percent of fixed assets. This growth in- developed countries, the reconstruction T rapid industrialisation, re- state being a defender of dubious national than effectiveness and capacity of the state fortunately, this association of an undefined creased debt and deindustrialisation. projects of the developed countries after paying debts, alleviating poverty, and educat- interests as a closed unit of national devel- itself. Perhaps a real alternative would be a number of organisms does not by its nature The National Treasury (NT) was exultant the Great Depression and World War II, and ing their population. The Japanese economy opment, they surrendered half of their sover- democratic state that guarantees the maximal have a clearly defined identity. They do not about the growth rates. They claimed that the late developers. achieved an annual average growth of 10% eignty to the United States and became an participation of its citizens in choosing devel- automatically share the same goals, values the growth was due to the success of their Alice Amsden drew attention to the need in the 1960s. South Korea and Taiwan both integral part of the US-led Cold War developmental goals, and cultivates social infra- or ideology. The same can be said about macroeconomic policies and they praised for “reciprocal control mechanisms” where showed a remarkable average annual GDP opment, in order to secure aid, resources and structure through which people can come the ruling party, the government, govern- the growth of financial businesses in the the state set performance requirements growth rate of 9.2% and 9.5% respectively market access. Worse still, these states kept up with innovative ideas for the wellbeing of ment departments, and even the cabinet economy. They want to support further fi- and supported only businesses that between 1961 and 1980. These economies the other half of their sovereignty for the au- the general population. of ministers charged with providing leader- nancial sector growth. The government achieved them. The developmental state successfully transformed from agrarian to thoritarian state apparatus and used the force ship to the government and the state. Departments of Trade and Industry and also has to regulate finance and limit the industrial society by the 1980s through ex- to squeeze their working population, while The financialisation of the South African Economic Development raised concerns disruptive influences of cross-border cap- port-oriented industrialisation, which seemed their products were consumed by the fordist economy and its negative impact on indus- about financialisation, uncontrolled capital ital flows. It has to assert influence over the to be led and coordinated not by private actors workers in the United States and Europe. This trial development provides an example of flows and volatile exchange rates. They allocation of capital to support its industri- but by highly effective states – these are the model therefore does not have a roadmap to the conflicting views and interests within argue that these factors are negative for alisation policies, reward innovative busi- so-called East Asian developmental states. enhance people’s democratic control over government. The economic growth rate industrial investment and employment. nesses that attain development goals and These states seemed to have roles far beyond economy, in addition to only emphasising climbed to over 5 percent per annum during It seems that it would be a really hard task to constrain speculation on asset markets. that of perfecting the market. The develop- effective industrialisation and fast economic the 4 years preceding the 2008 global to align the government around the tasks mental state has been presented as an alter- growth at all costs. The ordinary working economic meltdown. My view is that much of industrialisation, innovation and growth. native development model by many econo- population is not given any active role in this of the growth was linked to financialisation. This task would necessitate that the gov- mists since then and it is becoming more so development model. It simply needs to work Surges in short-term financial flows into ernment provide the adequate leadership, Seeraj Mohamed since the emergence of the current recession. hard until the gains of the economic devel- Dae-oup Chang financial markets sharply increased institutions and policies to build a develop- is Director of the Corporate Strategy However, this idealised model of development opment trickle back down to it. In order to is Senior Lecturer in Development debt-driven consumption and speculation mental state. Furthermore, that government and Industrial Development Research severely misrepresents East Asian develop- consider East Asian development as a mod- Studies at the School of Oriental in real estate and financial markets. Non-fi- would have to manage multiple interest Programme at the University of the ment by ignoring many of its own contradic- el alternative to neoliberalism, the experience and African Studies, University nancial corporations used financial activi- groups and the demands of different pow- Witwatersrand, South Africa. tions. Externally, the model underestimates of people under these states needs to be of London.

86 QUERIES — Autumn 2013 QUERIES — Autumn 2013 87 BEYOND EUROPE COMMENT

THE INDIAN DEVELOPMENTAL STATE What went right? BEYOND THE COMMODITY TRAP The IT transformation of production

For the advanced industrial democracies to expand the real income of the citizens and sustain growth in employment and productivity, their economies will have to escape from the Commodity Trap.

The developmental state is closely associated with regimes and societies unique to East Asia. For most developing countries, India’s experience of industrial policy The Commodity Trap is the price-based tors such as finance, insurance, and enter- CAD and manufacturing processes to big is far more illuminating. competition throughout markets for tainment. There are highly automated infor- data analytics – more accessible than ever. standard goods and services, which mation rich service offerings such as Escaping the commodity trap will puts pressure on wages and profit mar- Google search, Skype, or Netflix. Hybrid require a productivity agenda, a strat- gins alike. It was cre ated by the widespread offerings – systems integrating people and egy to push toward high value high availability of conventional technologies and machines – embed IT enabled services in wage production. The IT enabled transfor- s India a developmental others. More typically for both states, inter- still exists for states to implement a pro-ac- the decomposition of production. The result agricultural equipment and cranes changing mation of services and the revolution in man- state? To the pioneers of the ventions within the same sectors would tive industrial policy. Fourth, and most was an array of points of competition and the way we farm and run ports, for example. ufacturing means that productive innovative concept, it most certainly oscillate between success and failure. importantly, in raising the living standards diverse competitive entrants throughout the Even fundamentally human service offerings solutions can be found throughout the value isn’t. Indeed, the alleged Thus, despite widespread inefficiencies of the majority of the population, effective supply networks. from restaurants to building maintenance are networks, at all the phases of production – failures of the Indian state’s across state-supported sectors by the time industrial policy is no substitute for wider Clearly, the way out of this trap is to create potentially altered. From app-based restau- from product conception and design through I interventions vis-à-vis its of the 1991 liberalisation, the Indian state political and social reform. distinctive high value added products – both rant reservation systems to the IT-intensive actual manufacture. Indeed new business East Asian counterparts provided the cen- had also helped to establish a wide-rang- goods and services. The emerging transfor- management systems that create a global models will be as important as the technolo- tral tenet of the developmental state – the ing industrial base in the country with “THE WIDELY mation of the production of goods and ser- building maintenance business for ISS in gy development itself. A policy agenda must need for an autonomous state to devise strengths in several key industries, includ- vices is dramatically altering what is produced, Denmark and Johnson Controls in the US. emphasize technology diffusion to assure and implement effective industrial policy. ing pharmaceuticals, software and auto- HELD BELIEF where, how, and who captures the value. The IT has equally revolutionized manufacturing, those tools are available and that firms and But to those more familiar with the Indian mobiles. Moreover, despite the reforms the THAT INDIAN crucial policy question is how to nudge that with computer-aided design (CAD), virtual entrepreneurs understand their potential. The economy, the case can be made that not state has continued to intervene in the transformation in the advanced countries prototyping, novel materials, new production institutional starting points for such diffusion only was (and is) the Indian state develop- economy, albeit often in new and innovative INDUSTRIAL toward higher value added, higher skilled, processes including 3D printing. It has even mechanisms will be varied, and there are pol- mental, but that its experience is more ways. In the automobile industry it has higher wage solutions. allowed innovation in large-scale data ana- icy analogies in agriculture – the American pertinent to other developing countries helped to enhance the position of local POLICY WAS Let us begin with the production of services. lytics or sophisticated scheduling and supply Agricultural Extension service – and in ma- than that of East Asia. Of course, the Indian firms within transnational production net- A FAILURE Transforming services through rule-based chain management. These innovations taken chine tools, the Japanese machine tool state did not engender the degree of works. And in the software industry, it has information technology has become a source together reopen the question of how manu- centers. Not everywhere needs to look like industrial development that the Korean worked closely with the leading firms to AND KOREA’S of economic dynamism. Services are no facturers will address their markets and or- Silicon Valley, and developing new IT tools is state did. But the reasons for this lie more ensure India retains its position as the longer an economic sinkhole, immune to sig- ganize production. just the beginning. Effectively deploying the in the wider politics of the country, in par- world’s preeminent international outsour- A SUCCESS IS nificant technological or organizationally IT enabled transformation of services new tools throughout the economy is the ticular the ability of vested interests to cing hub. What does all this mean for our BOTH SIMPLISTIC driven productivity increases. Like manufac- and manufacturing will be accelerated crucial task. successfully resist land reform and the understanding of the developmental state turing, IT enabled services rest on capital-in- by the emergence of cloud computing economic and social benefits that spring in the 21st century? First, that a democracy AND MISLEADING.” tensive infrastructure. Google server farms as the next information technology from it. The widely held belief that Indian is not incompatible with successful indus- establish the capacity to respond almost in- platform. We must distinguish between John Zysman is Professor industrial policy was a failure and Korea’s trial policy. Second, interventions can be stantly to a demand, but those farms require Cloud Operations, a new version of distance of Political Science at UC Berkeley a success is both simplistic and misleading. as effective in emerging knowledge- Jyoti Saraswati is P rofessor of investments of billions of dollars. computing, and Cloud Architecture, a basic and Co-director of the Berkeley Each state succeeded spectacularly in intensive industries as in mature, labour- political economy at the Stern School The service transformation is economy wide, way of organizing IT activities. Cloud will make Roundtable on the International certain sectors and failed disastrously in exploitative ones. Third, that policy space of Business – New York University. not limited to traditional information rich sec- computation intensive applications – from Economy.

88 QUERIES — Autumn 2013 QUERIES — Autumn 2013 89 VOTEWATCH VOTEWATCH

by an overwhelming majority, with only the NEW TAXATION SYSTEM on the capacity of the SMEs to become com- European Conservatives and Reformist group Previously, in July 2011, the EP had voted a petitive. For this reason, both sides support opposing. report called “Financial, economic and the so-called ‘SMEs test’, an assessment of social crisis: measures and initiatives the potential impact of new legislation on HOW TO SUPPORT INNOVATION SMEs: competitiveness and business to be taken.” Amongst other things, the small and medium businesses. opportunities – Motion for a resolution: report encouraged the Commission, in para- Moreover, relative consensus seems to have in European SMEs? Paragraph 51/4 graph 73, to carry on measures to tackle been achieved on the necessity and urgency harmful tax competition, but also to aim at a of active measures such as reducing red tape, 60 3 “specific and simplified taxation system for improving access to financing and stimulating 569 Small and Medium-Sized Enterprises (SMEs) are the backbone SMEs.” The paragraph received wide support, of innovation in production processes. The of the European economy and the main vector for its recovery. For Against Abstentions with only the ECR and GUE/NGL groups reservations come only from the groups that Or so say most Members most of the Members of the European opposing it. In the case of the ECR, it looks believe that the EU should not get involved in EASIER ACCESS TO CREDIT like their opposition to the introduction of a promoting and coordinating such measures. Parliament. Although measures for stimulating the development A second own-initiative report, this time from common consolidated corporate tax base On the other hand, between the centre-left of enterprises – be it the reduction of red tape or a better access the Committee on International Trade titled (and the involvement of the European Com- and centre-right there are still some diver- to financing – are a prerogative of the member states, the EU “Financing EU SMEs’ trade and invest- mission in taxation matters in general) out- gences over the differentiations between the institutions have lately made their moves towards contributing ment: facilitated access to credit in weighs their likely support for simplified tax- regimes of micro-enterprises and SMEs, with to the coordination of such measures across the Union. support of internationalisation” ation systems for SMEs. the centre-left being relatively more in favour reached the plenary stage in November 2012. Probably the same reason lies behind the of such differentiation as a way to better pro- This report represents the EP’s reaction to separate opinion (from the rest of S&D group) tect very small businesses. the 2011 communication by the Commission of the British Labour delegation (who op- by VoteWatch Europe called “Small Business, Big World - a part- posed), and the Danish and Swedish Social- nership to help SMEs seize global opportu- ist delegations (who abstained). hile the provi- should be to address the entrepreneurial po- legislation that targets SMEs (Paragraph nities” and puts forward a wish list for making sions regarding tential of European citizens as a real alterna- 51/3). Indeed, the S&D, GUE/NGL and ECR EU SMEs more competitive on the global Financial, economic and social crisis: the activity of the tive to employment, in particular among young groups voted for the exemption of the micro- market,In primarily cooperation by enhancing access to in- measures and initiatives to be taken In cooperation SMEs have been people, women and migrants. […] The nat ural enterprises, thus in favour of allowing more formation regardingwith opportunities, and in- – Motion for a resolution: Paragraph 73 with rather cross-cut- consequence will be the creation of new jobs, freedom for special legislation and measures creasing access to capital for import/export 111 ting the EU legis- more innovation, and higher economic growth to support this type of very small businesses. operations. The report was received with wide 26 530 W lation, the MEPs of all enterprises, whether industry, services support among MEPs, the reservations com- have – in the current European Parliament or socially oriented.” SMEs: competitiveness and business ing only from some of the groups the left, For Against Abstentions term (which coincided with the outbreak of This report called for a reduction in bureau- opportunities – Motion for a resolution: GUE/NGL (who opposed) and the Greens/ the economic crisis) – aimed to mainstream cracy and more incentives for entrepreneur- Paragraph 51/3 EFA (who abstained). Their reservations were All in all, in the 7th EP term there has been the approach to SMEs through own-initiative ial initiatives. A central point of the report is mainlyVoteWatch related toEurope their general is an independent concerns that consensus among the MEPs that SMEs need VoteWatch Europe is an independ- 247 reports. the ‘mapping’ and integration of all existing 10 furtherorganisation opening set of internationalup to promote trade better may to be stimulated by special measures and that ent organisation set up to promote 393 funding instruments for SMEs from the damagedebates the and workers’ greater interests, transparency primarily in in the EU should ensure the coordination and better debates and greater transpar- SMES VS. MICRO-ENTERPRISES European, national and local levels. It reached For Against Abstentions theEU developing decision-making, countries. by providing easy harmonization of these measures across the ency in EU decision-making, by pro- For example, the report titled “SMEs: com- the plenary stage in September 2012, where access to, and analysis of, the votes member s tates. The analysis of the (relative- viding easy access to, and analysis of, petitiveness and business opportuni- the complete text was approved by a com- PROTECTING MICRO-ENTERPRISES Financingand other SME activities trade of and the investmentEuropean ly scarce) voting data on this topic seems to the votes and other activities of the ties” is the EP’s reaction to two Commission fortable majority (though not by a roll call The fourth part of the same paragraph (Par- – MotionParliament for a resolution:(EP) and the single EU vote Council show that the slowdown of the economic European Parliament (EP) and the EU communications, one on the internationalisa- vote). However, divergence among the posi- agraph 51/4), on the other hand, aimed at of Ministers (Council). growth has lead to an almost consensual Council of Ministers (Council). 38 tion of SMEs and the other on European tions of the political groups surfaced when it maintaining the high standards with regard 55 approach among the political families at the 577 competitiveness. The report states “the EU came to whether micro-enterprises should to health, safety at work, EU workers’ rights [ ] INFO: www.eurotopics.net centre-left and centre-right of the spectrum [ ] INFO: www.votewatch.eu should invest in programmes whose aim be excluded by default from any proposed and environmental legislation, was supported For Against Abstentions that economic recovery is highly dependent

90 QUERIES — Autumn 2013 QUERIES — AutumnSummer 20132013 91 INSPI- RA- TION

MEET THE PRESS PORTFOLIO INSIGHT Personal Data in European Cities & Sustainable Hannes Swoboda a Digital Society Development P. 108 P. 94 P. 98

REPORT DIARY ZOOM Call to Europe III FEPS & Members Fondation Jean-Jaurès P. 110 P. 116 P. 120

PUBLICATIONS Dimitris Tsarouhas Christophe Sente Andy Smith P. 122 92 QUERIES — Autumn 2013 QUERIES — Autumn 2013 93 MEET THE PRESS MEET THE PRESS

DAGBLADET DE VOLKSKRANT EL PERIÓDICO INFORMATION Netherlands DE CATALUNYA Denmark PERSONAL DATA Spain in a digital society

The espionage programmes of the US and the UK have met with harsh criticism in Europe. 10.06.2013 10.06.2013 11.06.2013 The US is chasing whistleblower Edward Snowden, who uncovered operations for spying FEAR OF THE US on European citizens and institutions. How much surveillance can a constitutional state take? Washington FIGHT AGAINST undermines BIG BROTHER US STASI NOT With their Prism programme the US’s the rule of law National Security Agency has far over- LOST YET stepped the boundaries of the permissible, The surveillance scandal in the US will penetrating the private sphere of citizens The US runs the risk of become a surveil- come back to haunt President Barack Oba- all over the world, the left-liberal daily El lance state along the lines of the former East In cooperation ma because it has no legal basis, the Periódico de Catalunya complains: “Not Germany, writes Daniel Ellsberg, the whis- with 09.06.2013 left-liberal daily De Volkskrant predicts: “In only does the Big Brother announced by tleblower who made public the pentagon principle nothing can be said against sur- George Orwell actually exist, in this age of Papers a good 40 years ago, in the left-lib- veillance of the Internet - as long as it’s information he has a series of increasingly eral daily Information. But the exposure of Surveillance THE GUARDIAN done in accordance with transparent rules sophisticated instruments at his disposi- the Internet surveillance programme Prism United Kingdom so that everyone knows what’s allowed and tion. And he enjoys the political support of is cause for hope, Ellsberg writes: “The NSA, in West as bad what isn’t. As long as abuse can be pun- a democratic system. ... The companies to FBI and CIA have, with the new digital tech- Diversity and uniformity are just as ished, and as long as its scope is limited whose servers the espionage agency has nology, surveillance powers over our own evident in Europe’s headlines as they as in China and it takes place in the context of target- access are called Google, Facebook, citizens that the Stasi - the secret police in are in Europe itself. The euro|topics ed investigations. And precisely that is the Yahoo, Apple and Microsoft. All of them the former “democratic republic” of East Ger- press review shows you which topics According to The Washington Post and The are apparently no more hindered in the UK biggest problem with Prism: its lack of are American and present in every corner many - could scarcely have dreamed of. are moving Europeans and reflects Guardian, Internet companies have been and US, in this regard, than they are in China. clarity. The US didn’t ask anyone to approve of the Earth. The mass surveillance pro- Snowden reveals that the so-called intelli- the great variety of opinions, ideas and giving the US National Security Agency ... It is striking how the west and China are its operations. And in addition, it seems grammes are an inadmissible violation of gence community has become the United emotions on those issues. Whether access to user data since 2007. The left-lib- moving incrementally towards each other, that that it acquired access to the private the private sphere, even if the US Congress Stasi of America. ... But with Edward Snowden the topic is politics, the economy, so- eral Sunday paper The Observer finds this especially in the practice of mass surveil- data of millions of citizens who weren’t even has given them its approval and they are having put his life on the line to get this in- ciety or culture, euro|topics takes a worrying and sees parallels with China, lance. But unlike the Chinese, for the suspected of terrorism. For this reason monitored by a special court [the United formation out, quite possibly inspiring others daily look at the European press and whose President Xi Jinping visited the US moment at least, we have the option to Obama will rightly face problems. He has States Foreign Intelligence Surveillance with similar knowledge, conscience and pat- cites the most important voices. Be- on the weekend: “So this series of revela- oppose what’s happening.” a lot to explain. Because states that use Court].” riotism to show comparable civil courage. ... cause the question that interests us tions should be welcomed for the light it investigation methods secretly and indis- I see the unexpected possibility of a way up is: What does Europe think? casts on the ways the west has changed [ ] INFO: www.theguardian.com criminately contribute to the very thing they and out of the abyss. ... Snowden did what and on the nature of the secret powers that are trying to fight: the undermining of the [ ] INFO: www.elperiodico.com he did because he recognised the NSA’s [ ] INFO: www.eurotopics.net were exercised by democratic governments. rule of law.” surveillance programs for what they are: If there are stories to tell about the value of dangerous, unconstitutional activity.” the intelligence, the lives saved, let’s hear [ ] INFO: www.volkskrant.nl them, but the fact is that executive powers [ ] INFO: www.information.dk

94 QUERIES — Autumn 2013 QUERIES — Autumn 2013 95 MEET THE PRESS MEET THE PRESS

24.06.2013 DELO SPIEGEL ONLINE DER STANDARD Slovenia Germany Austria LA REPUBBLICA PUTIN’S YEARNING Italy FOR THE TIMES OF THE KGB

Vladimir Putin obviously dreams of a return is a success. ... The unyielding, stony-faced to the golden age of espionage, the left-lib- Putin who presented himself at the G8 08.07.2013 16.07.2013 21.08.2013 eral daily La Repubblica writes mockingly summit certainly bore a greater resem- EU won’t put free Merkel turning Germans about Moscow’s help for ex-intelligence blance to the man who came in from the trade zone at risk into US subjects Spiegel CAMERON’S agent Snowden: “The rough yet romantic cold of Dresden than the cold of Moscow, Representatives of the EU and US will In the debate about the US spy programme times of the spies who came in from the which has left the ice age behind it.” resume talks about a joint free trade zone on the weekend SPD chancellor candidate GOVERNMENT cold seemed gone forever. But now they today. Accusations about the US intelli- Peer Steinbrück accused Chancellor have returned in a shiny new Internet ver- [ ] INFO: www.repubblica.it gence service’s data espionage won’t Merkel of having violated her oath of ofﬁce. CAN’T BE sion. Because Vladimir Putin, the ever less stand in the way of the negotiations after The columnist of the news portal Spiegel democratic Russian tsar, wants to turn all, the left-liberal daily Delo writes: “Europe online, Jakob Augstein, believes he’s right: TRUSTED back the clock. ... Although it’s not easy to has been rocked by the NSA scandal and “Systematically and on a mass scale the return to the glorious Soviet times, Putin the spying on Europeans’ personal data US is violating the fundamental rights of The actions taken against The Guardian is doing all he can to make sure the mission and EU institutions. Watched by their home people who have no opportunity to vote are a massive abuse of state power and audiences, European heads of government about the practice in elections. Because demonstrate the unpredictability of the are vehemently calling for the matter to be the NSA and the CIA are not working with- British government, the left-liberal daily cleared up during the talks. Even though in our laws. ... The issue here is not what Der Standard points out indignantly: “The one can barely imagine negotiations when our position on America is. Or on interna- clumsy and legally questionable acts of one party knows that the other party has tional terrorism. Or on the role of the intel- aggression against the newspaper only 01.07.2013 spied on it to an inconceivable extent, the ligence services. Everyone has an opinion conﬁrm the suspicion that Cameron’s gov- Defenceless in the digital world EU doesn’t want to take any chances. The on these things. The issue is that our rights ernment can be trusted even less than the LIBÉRATION free trade agreement is too big a project are being violated and we are unable to US to master the balancing act of providing France The revelations about US spying activities Europe seems to forbid itself from even to be jeopardised by complaints about a raise an objection. This means we are no both security and privacy. Those who can’t in Europe expose above all the EU’s weak- thinking in terms of ‘digital sovereignty’, digital attack on Europeans’ personal data. longer citizens but subjects. And that is a tolerate the truth coming to light sooner or nesses in the digital world, the liberal daily although such sovereignty now makes up After all, it’s seen as an excellent opportu- fundamental experience of German histo- later won’t be able to resist the temptation Libération comments: “The spying on the an essential part of state power and has nity to give the EU’s ailing economy a much ry that we never wanted to repeat. Who do to abuse the data gathered to protect embassies of European allies and EU insti- established itself as one of the most impor- needed boost.” we turn to now? Who is there to help us? against terrorism. And if the British only tutions is a graphic illustration of the weak- tant moral, political, economic and interna- ... We obviously can’t count on the German act this way under pressure from the US, ness of the Old Continent. Already unable tional topics of our era.” [ ] INFO: www.delo.si government. Angela Merkel’s response to we have to ask how much sovereignty one toimpose taxes on the US Internet giants the biggest spy scandal in history was to of the leading nations in Europe actually that operate on its territory and open their keep her mouth shut for weeks on end - has on a central issue.” servers to their country’s intelligence ser- [ ] INFO: www.liberation.fr and then say nothing.” vices, how could it possibly create, apply [ ] INFO: http://derstandard.at and defend a digital habeas corpus? Or [ ] INFO: www.spiegel.de introduce its own laws on the protection of personal data and the relocation of servers? To borrow Pierre Bellanger’s phrase,

96 QUERIES — Autumn 2013 QUERIES — Autumn 2013 97 PORTFOLIO PORTFOLIO

what surrounds us in its broadest sense. Improving and preserving this urban living “INCREASING URBAN DENSITY environment is the aim of a new kind of WHILST ENSURING DECENT ecology that is crucial for contemporary urban policy-making. First and foremost LIVING CONDITIONS FOR ALL there is a major challenge to overcome in terms of public health: 1.3 million people IS THE ISSUE THAT DETERMINES die every year as a result of outdoor air ALMOST ALL OTHER CHOICES.” pollution – largely because of pollution from cars in developed countries – whilst 2 million people die as a result of indoor air pollution (often due to poor-quality heating systems) in the developing world. fabric and creates jobs. Local initiatives tiﬁc, political, spiritual and artistic creativ- There is much work to be done: a number vary, from AMAPs to urban farms. They ity into ﬁnding new solutions. And as the of remarkable initiatives, good practices offer an important resource for educating traditional hubs for immense amounts of

© European© Union, 2013 and aspirations have yet to fully take root, people about the relationship between the talent and creativity, cities have a distinct as cities have become an ecological test- city and nature. role to play. The “8 House” sustainable building in Copenhagen. ing ground. They are perhaps even more Increasing urban density whilst ensuring It is a matter of social cohesion, since eco- crucial than the countryside. The building decent living conditions for all has also logical problems always present more of a sector, for example, offers more potential become a prominent issue. Cities are in- threat to the most vulnerable among us. for reducing greenhouse gas emissions creasing in size every year but contrary to We have to create new forms of solidarity than any other. All this can be achieved to popular opinion, the density of major cities to tackle the changes on the horizon, the direct financial benefit of city-dwellers, in developed countries is decreasing. Sky- from energy bills to forced migration and ECOLOGY IS A NEW FORM which is often the condition on which their scrapers, for example, are generally occu- quality of life. We have to rediscover how support depends (particularly in the form pied by offices and city centres clear out to live together. Conviviality is a popular OF HUMANISM of lower energy bills). in the evening whilst the suburbs continue word among ecologists. In the cold, imper- by Olivier Blond Expanding the use of renewable energy is to grow, following the American model. sonal cities in which we live, it could be vital, including on a small scale with micro Urban sprawl of this kind results in land interpreted as a call to action. Transforming wind turbines and solar heating systems. being ‘artificialized’: in France, the equiva- society will only be possible if we work We also need to encourage green roofs lent of one department is ‘artificialized’ together as a community: urban ecology ities have been the have no direct contact with it. With this degrees of toxic chemicals and consume and environmentally friendly transport, every ten years, generally at the expense is a new form of humanism. centre of power in geographical divide comes the need for an array of resources. They are all sources reduce the volume of waste produced, and of agricultural land. At the same time, society for centu- education; ecology must become an inte- of pollution, sometimes far off in giant improve waste reprocessing and recycling. the expansion of the suburbs generates a ries. They are now gral part of city life. Above all, this means Chinese workshops, sometimes in our own significant volume of car traffic and pollu- much more than raising awareness of the relationships that backyard. But how can we convince young RELOCATION AND URBAN DENSITY tion, wasting both time and resources for Olivier Blond is the C that: cities almost exist between urban choices and their di- people from disadvantaged neighbour- The fact that cities depend on an increas- society. Editorial Director of the are society. And that in turn is having rect or indirect consequences, which are hoods who have never seen the ocean nor ingly vast and distant “hinterland” places a GoodPlanet Foundation, a profound impact on ecology, which often hidden from view. experienced forests or mountains, except significant burden on the environment. A INVENTING A NEW MODEL founded by Yann Arthus- is now urban in focus. Everything from constructing a building or on a screen? How can we ask them to single piece of fruit transported by plane In the end, the main ecological challenge Bertrand. He created the In 2007, the proportion of the world pop- a road, to commuting to work, going shop- protect the planet? halfway across the world, for example, cities face is facilitating the emergence of television programme ulation living in cities officially reached ping, heading off on holiday or choosing a One idea is to stop picturing the environ- causes CO2 emissions of several times its new political and social models. The aim is “Vu du Ciel” on France 2 in 50%. The figure is already over 70% in particular diet has an impact on the envi- ment as some distant natural landscape own weight. Relocating production, at least not to invent some kind of new green uto- 2006 and the Ecology section Europe and North America. Protecting the ronment. All these activities produce and to return to the primary meaning of the in part, is therefore necessary to reduce pia or idealised cooperative, but a tangible, of Courrier International natural world now depends on people who greenhouse gas emissions, use varying term, to think of the ‘environment’ as global warming. It also maintains the social dynamic world. Society must put its scien- magazine in 2003.

98 QUERIES — Autumn 2013 QUERIES — Autumn 2013 99 PORTFOLIO PORTFOLIO

THE SUSTAINABILITY of European cities

Size, wealth and availability of energy resources are a few of the factors that help explain why some major European cities are not on equal footing when it comes to sustainable environmental policy. Thankfully, the European Green City Index produced by Siemens and its partners provides an objective framework for comparing the cities, pointing the way to balanced urban development in Europe.

Photographs by Yann Arthus-Bertrand Captions by Yves de Saint Jacob © Yann Arthus Yann © Bertrand Altitude/ #1 COPENHAGEN, DENMARK © Yann Arthus-Bertrand / Altitude

Copenhagen is Europe’s “greenest” city with high scores #2 STOCKHOLM, SWEDEN across the board. Natural gas © Yann Arthus-Bertrand / Altitude and renewable energy have reduced dependency on oil. The The Swedish capital reigns supreme in terms of transportation: despite the cold climate, 68% of residents cycle or city’s buildings are well insulated walk to work, 25% use public transportation and only 7% commute by car. Stockholm also leads the way in energy- and nearly all are connected to efﬁcient buildings, and enjoys a remarkable level of cross-party political support. Along with Vilnius, it has the the district heating network. cleanest air in Europe. Virtually all Copenhageners live within 350 metres of a public transportation station and every administrative authority has its

100 QUERIES — Autumn 2013 QUERIES — Autumn 2013 101 PORTFOLIO PORTFOLIO

#3 OSLO, NORWAY #5 AMSTERDAM, NETHERLANDS © Yann Arthus-Bertrand / © Yann Arthus-Bertrand / Altitude Altitude Water has pride of place in Amsterdam’s history and culture, so it is no surprise that the city ranks top in terms of water management. If the European Union performed Extremely low water network losses (3.5% compared with average of 23% in other cities) and extensive use of individual water meters

as well as Oslo in terms of CO2 have helped keep prices low. The city has also achieved excellent results in incinerating waste, regarded as a resource in its own right, emissions, it would already have but performs less well in terms of air quality. exceeded its targets for 2020. The Norwegian capital is aiming even higher and wants to improve its performance by a third by 2030, through increased use of district heating networks and electric cars. Almost 2,000 of these cars are already in use and are entitled to drive in bus lanes. Air quality, however, remains a weak spot. © Yann Arthus Yann © Bertrand Altitude/

The Austrian capital is hot on the heels of its northern counterparts. 13% of all energy consumed comes from renewable sources, compared with an average of 7% across Europe. The city has also made its mark with a number of innovative initiatives, including a network of 50 repair shops for everyday household items to reduce waste and support for timber-framed buildings, which are more energy efﬁcient. © Yann Arthus Yann © Bertrand Altitude/

102 QUERIES — Autumn 2013 QUERIES — Autumn 2013 103 PORTFOLIO PORTFOLIO

#6 ZURICH, SWITZERLAND #8 BERLIN, GERMANY © Yann Arthus-Bertrand / Altitude © Yann Arthus-Bertrand / Altitude Switzerland’s largest city stands out for its excellent waste management. Residents have to pay for special bin bags, which has reduced the average amount of waste produced to 400 kg per Berlin has pulled out all the stops to renovate person (compared with over 500 kg elsewhere in Europe). Effective recycling schemes and modern and improve the energy efﬁciency of the

incineration plants round out the picture. Zurich also scores well in CO2 emissions, thanks to its ramshackle buildings in the former communist efficient public transportation and district heating. part of the city. Over the last 20 years, the German capital has become a renowned expert in the field, in particular the use of solar energy and highly efficient financial arrangements. Waste recycling is a strength thanks to well-disciplined citizens but transportation remains an issue. © Yann Arthus Yann © Bertrand Altitude/

The Finnish capital was the ﬁrst European city to launch #9 BRUSSELS, BELGIUM a comprehensive sustainable © Yann Arthus-Bertrand / development plan, in 2002. Altitude Helsinkians have had a hand in managing green spaces The Belgian capital has long and urban forests since been a leading light in initiatives 1995. The result: eco- to inform the public and help suburbs that have created individuals reduce their carbon jobs and energy-efﬁcient footprint. The Sustainable homes, effective waste and Neighbourhood project

water management, and Arthus Yann © Bertrand Altitude/ encourages residents to form air quality that makes groups to identify a sustainability it one of Europe’s most project, which is then eligible to breathable cities. receive public funding. A scheme is also in place to encourage hitchhiking in the suburbs. Air quality, however, remains

104 QUERIES — Autumn 2013 QUERIES — Autumn 2013 105 PORTFOLIO PORTFOLIO

IT’S NOT ALWAYS CAPITALS THAT LEAD THE WAY…

The Catalonian metropolis has wisely taken advantage of major events such as the 1992 Olympic Games and incorporated them into its sustainable development strategy. A test-bed for urban development, Barcelona has transformed a heavy industry hub in the city centre into a modern district dedicated to the knowledge-based economy and new technologies. © Yann Arthus Yann © Bertrand Altitude/ © Yann Arthus Yann © Bertrand Altitude/

FREIBURG IM BREISGAU, GERMANY © Yann Arthus-Bertrand / Altitude #10 PARIS, FRANCE © Yann Arthus-Bertrand / Altitude Germany’s sunniest city prides itself on being the country’s ecological capital and the Green party’s Paris and its suburbs – home to some 12 million inhabitants – must be viewed as a whole in order to properly “solar city”. The ecological and energy-efﬁcient assess the capital’s environmental performance. At this level, the densely populated, industrialised city performs construction techniques used in its Vauban district better than London or Berlin in terms of CO2 emissions. While Paris has its work cut out in terms of transportation, have been studied all over the world. The city’s the Grand Paris urbanisation project has opened up exciting prospects for environmental governance. environmental movement has been driven by decades of impressive demonstrations against nuclear energy and in favour of solar power. The What kind of city do you want to live in? only risk is that it might become an “oasis” isolated from the outside world. © Yann Arthus Yann © Bertrand Altitude/ The PES Group in the Committee of the Regions (CoR), in cooperation with FEPS, held a series of seminars on Sustainable Europe, focusing on Progres- sive Urban Development. Debates emphasised the need to promote mixed and integrated cities and neighbourhoods, and to include all groups of society in urban spaces. New technologies and social media applications should be further explored in encouraging citizens’ participation. The key contribution of EU funds in the development of sustainable urban concepts was a recurrent theme in the debates. Commenting on progressive urban development, PES Group President Karl-Heinz Lambertz underlined that local authorities must be empowered to use EU funds effectively and should no longer pay the price of continuous austerity measures.

106 QUERIES — Autumn 2013 QUERIES — Autumn 2013 107 INSIGHT INSIGHT

“WE MUST NOT COPY THE GERMAN ELECTIONS AND LET 28 NATIONAL CAMPAIGNS ABUSE GERMAN LESSONS THE EUROPEAN UNION AS A SCAPEGOAT for the European elections FOR THE GREATER OR LESSER EVIL.”

by Hannes Swoboda

mainly because of the neo-liberal Commis- the Progressive Alliance of Socialists and sion leadership and a Council which spends Democrats in the European Parliament has most time blocking proposals instead of fought against the neo-liberal mainstream The recent federal elections in Germany – Europe’s biggest producing solutions – but we have to wel- and proposed progressive agendas. come the doubts of the people. Through our strong engagement in the country and economy – preoccupied people and politics in Dubium sapientiae initium, doubt is the legislative work in the European Parliament origin of wisdom, was coined by René Des- we could construct a new framework for Germany as much as across Europe. In Brussels, several cartes. As Socialists and Democrats in the financial sector. This will reduce the issues were delayed, most notably progress on the banking Europe we must embrace those doubts instability that resulted from a deregulated that people have about the European Un- financial market, for the economy and the union. But which lessons for the European elections in May ion and answer them, instead of deflecting people in Europe. from real problems. But more has to be done in the coming 2014 can we learn from Germany? We have all the advantages on our side years to bring stability, growth and employ- because the European Parliament elec- ment back into our European economy. A tions truly matter. Over 70% of legislation new industrial recovery is needed to reduce in Europe comes from the European Par- unemployment radically. And we need a liament, the EU’s only directly elected body. clear strategy for preserving democracy And for the first time, the European Par- and civil liberties as vital elements of our urope was not the main It may be strange but it is a fact that “the pean policy of the German government. liament elections will also contribute to European identity. topic in the German cam- German elections this time were also our Europe needs a German government that deciding who will be at the helm of the These are huge tasks for the new Europe- paign. ‘Europe’ usually elections”, as somebody in Spain put it. at the very least combines its fiscal respon- European Commission, to lead the EU for an Commission. To fulfil these tasks we Bayhan Zaman/Kursat © served as a scapegoat in Germany today is economically strong and sibility with more investment into growth the next five years. need a new Commission president, who ABOUT debates about German willing to block developments it does not and jobs. And Europe and Germany would So we must not copy the German elections like Jacques Delors has a strong European E contributions to Greece’s see as favourable. And many countries need an employment policy that creates and let 28 national campaigns abuse the commitment and a clear vision of a social bailouts or Germany’s willingness to trans- which do not like this German role are too jobs from which people can live decently. EU as a scapegoat for the greater or less- and democratic Europe. And we need a Hannes Swoboda was elected fer powers to EU level – or lack thereof. weak to resist Germany having one foot We have to remember, that Germany - with er evil. We have to use the opportunity to Commission that is ready to fight for a Eu- President of the S&D Group in At the same time, people across the Euro- on the brake and simultaneously preaching its low rate of unemployment - has the really engage with people, online, through rope which addresses these challenges and January 2012. A member of the pean Union followed the German campaign extreme fiscal austerity. As long as we have highest rate of precarious jobs in Europe. traditional media and face to face, to tell simultaneously strengthens Europe’s glob- Austrian Social Democratic attentively. Opinion polls were made in this kind of German government and pol- It is time that Europe sees a Germany that them why Europe matters and why their al role. For once, the Council should not aim Party since his youth, he became several European countries, including icy, Europe will be far away from econom- presents all its good sides - from social vote is essential in these elections. for a weak Commission but one that mul- one of Austria’s first MEPs when Greece, on how these neighbouring coun- ic stability, growth, high employment and partnership to the high percentage of in- Ahead of the European elections, it will be tiplies the strength of member states. the country joined the EU in 1995. tries would vote if they could choose the equality. dustry with impressive export rates. our main task to communicate our past Before becoming an MEP, he next German parliament. The candidates, The elections in Germany – despite the More people may have doubts about achievements to the voters, and to make served in the Vienna City campaigns and slogans were analysed in massive support for Ms Merkel – are a the European Union now than before the clear what challenges lie ahead and how Assembly and Municipal Council. detail across Europe’s member states. chance to correct and balance the Euro- last European elections five years ago - they can best be tackled. In the last years

108 QUERIES — Autumn 2013 QUERIES — Autumn 2013 109 REPORT REPORT

CALL TO EUROPE III

Beyond austerity: building European solidarity ecent media reports the implosion of financial markets and the structural and long-term causes of the lin- Brussels – 16 & 17 September 2013 have been eager to freeze-up of credit in the most advanced gering crisis in Europe. Instead it trans- portray the econo- and financially sophisticated economies, formed the economic malaise into a full- mies of Europe as the crisis is still lingering in the eurozone. blown economic, social and political crisis recovering. A return Since 2008, Policy responses, have been of the European Union. R to growth for the abundant but ineffective. The financial sec- These troubled times call for bold and eurozone has been heralded in tor bailout after the collapse in 2008 was effective alternative policies, which would August when the area recorded a fast, internationally coordinated and decisive. allow Europe to embark on a new develop- quarterly output growth of 0.3%. After The subsequent attempt to launch stimulus mental trajectory where growth, job creation two and a half years of consecutive GDP packages was less assertive, short-lived and equity are achieved across all regions contraction, this meagre growth rate and finally reversed. The symptoms of the of Europe. To provide these visionary and appears as a long-awaited salvation. In the financial crisis were bandaged, but a inclusive alternatives to austerity, the Foun- UK, more upbeat expectations by consum- deep-seated economic and social malaise dation for European Progressive Studies ers and businesses resulted in an improving emerged in the EU. Once again the credit (FEPS) called upon academic experts, growth outlook. As a consequence, the IMF markets froze up but this time for govern- democratic representatives and civil socie- raised its dismal GDP forecast for the aus- ment borrowing by economically weaker EU ty. Together they discussed an alternative terity-stricken country to 1.4% this year. These bright spells are however fleeting. Only one day after the IMF upgrade, the UK unexpectedly had to announce the largest “EUROPEAN RECOVERY: MOSTLY CLOUDY decline in its industrial production in nearly

© FEPS© a year. Similarly, it can be doubted that the WITH SOME BRIGHT SPELLS AND A HIGH eurozone has returned to sustainable CHANCE OF RAIN.” growth as signs of economic expansion The austerity policy has not been able to ease the symptoms, remain elusive outside of Germany. It is clear let alone heal the underlying structural and long-term causes that the welfare of most European has not of the lingering crisis in Europe. Instead it transformed been improving given high and persistent member states. This time the mere treat- social and economic approach for Europe unemployment. Currently, more than 26 ment of symptoms was insufficient. The and the importance of building European the economic malaise into a full-blown economic, social million unemployed are desperately looking diagnosis blamed fiscal profligacy in cri- solidarity among citizens and countries. and political crisis of the European Union. With the aim for jobs in the 28 countries that belong to sis-hit countries for their loss of competi- to provide visionary and inclusive alternatives to austerity, FEPS the Europeans Union. tiveness. This living-above-your-means HOW TO BRING ABOUT These persistent clouds in the EU growth lifestyle had to be stopped – according to THE RECOVERY? THE QUEST called upon academic experts, democratic representatives and civil outlook are hardly surprising given the the conservative diagnosis – through the FOR WAGE-LED GROWTH society. austerity policies implemented in Europe implementation of austerity, that is severe But if the current EU-wide austerity policy shortly after the global financial crisis. As a cutbacks in government spending, the is the problem, then what could be the solu- consequence nowhere nowhere have the welfare state and public-owned assets. tion? Experts and progressive policymakers by Ewa Karwowski & Christophe Sente repercussions of the crisis been as severe Austerity policy has not been able to ease call for wage-led growth. Wage-led growth and persistent as in Europe. Five years after the symptoms, let alone heal the underlying stresses the importance of wages as a key

110 QUERIES — Autumn 2013 QUERIES — Autumn 2013 111

REPORT REPORT

economic factor underlying domestic demand. supranational labour authorities. Trade unions and A more equitable income distribution can be “AN IMPORTANT ROOT OF THE other employee institutions have been persistent- a powerful engine of growth since more money FINANCIAL CRISIS AND EUROPEAN ly undermined over the past decades by labour in the pockets of the less well-off boosts market deregulation. In order to strengthen the economic activity through higher domestic TROUBLES IS HIGH AND RISING crisis resilience of the European economy, pre- consumption. However, new empirical research carious labour conditions have to be prevented presented at the 3rd Call to Europe conference INCOME INEQUALITIES.” and flexibility should be based on employment shows that wages have been confined to a shrink- security, as demonstrated, for instance, by ing share of national income across European German manufacturing. This would strengthen economies (and globally) over the past three imbalances accumulated between weaker and domestic demand, while encouraging further decades. Indeed, since the early 1980s, a signif- stronger member economies. In the past, export productivity growth. icant increase in the profitability of capital has competitiveness has been gained at the cost of © FEPS© been accompanied by a sharp decline in labour stagnating domestic wages. So-called export-led DESIGNING A EUROPEAN FUTURE: Zita Gurmai, MEP & Josef Weidenholzer, MEP. bargaining power and wages seem caught in a growth resulted in the international indebtedness INNOVATION AND GROWTH relentless global race to the bottom. of the importing countries. Unlike at the global While economic crisis and stagnation are current An important root of the financial crisis and level, there is a strong bond within the EU between challenges, the well-being of European citizens European troubles is high and rising income these surplus and deficit economies as most ex- in the future remains the key target for EU policies. inequalities. Therefore, differentiated policies ports are part of intra-European trade. Conse- Future growth will require Europe to become more encouraging increases in wage shares across quently, member countries with export surpluses, innovative. But innovation is an ephemeral crea- Europe could generate the equitable growth so such as Germany, have a responsibility to boost ture, hard to define and even harder to fabricate. urgently needed in the EU to put people back into domestic wages in order to stimulate domestic From an academic perspective, it can be de- employment and pay off heavy public debt bur- demand and imports. Practically, this more equi- scribed as an uncertain, collective and cumulative dens. Such a strategy could strengthen solidarity table growth strategy requires the strengthening process. As highlighted at Call to Europe III, these among EU economies since it would allow for of organised labour, the introduction of an characteristics impede access to finance for in- a symmetric policy response towards trade EU living wage (differentiated by country), and novators. Private sector lenders are often not willing to take the risk, commit to a project and be patient. There- fore, there is a major role for governments in the © FEPS© process of innovation, going well beyond just lift- Nat O’Connor, Director of TASC & Ania Skrzypek, FEPS Senior Research ing red tape. We need public investment in areas Fellow. where the private sector cannot or is not willing to be active, and we need public support for innovative private investment. Until recently, this public support was mainly organised in public- private partnerships (PPPs), where public bodies had to bear the brunt of the investment risk while private partners pocketed the majority of profit. Such parasitic constellations should be discarded in favour of more balanced investment arrangements where the private sector takes on a fair and efficient share of the risk, and governments can share in the profit. Politically, there is now more space for such policies. After years of stale

© FEPS© and unproductive debate reiterating the supposed FEPS© Massimo D’Alema’s opening speech – 17 September 2013 – Concert Noble, Brussels Gustav Horn, Research Director of the Macroeconomic Policy Institute of the Hans-Böckler-Stiftung.

112 QUERIES — Autumn 2013 QUERIES — Autumn 2013 113

REPORT

contrast of state versus market, the taboo of innovation and industrial policy has been broken. “THE LEFT CANNOT SIMPLY RELY Few now contest that state and market activity ON SLOGANS TRUMPETING A VAGUE can be complimentary in promoting growth. Public investment banks, which support private PROMISE OF SOLIDARITY.” investment in innovative – and often privately underfunded – areas, have become an increasingly popular tool to foster investment. The success EIB lending, offer suitable policy tools to address stories of the German KfW and the Brazilian regional divergence while promoting EU-wide BNDES attract followers. The latest announce- innovation. ment to launch a new public investment bank was made by the French President in August. BUILDING EUROPEAN SOLIDARITY: There is scope for innovation in all sectors of VALUE-BASED POLICIES public provisions. Education must become What is the message that the European left has more progressive, especially since it is so vital to deliver to European citizens to ensure a bright to passing on and creating the knowledge that economic and political future for the EU? It is be- forms the base of innovation. Administrative and coming increasingly clear that the left must health services can be improved to support convince people that political and economic innovation by enterprises. Tax avoidance and choices in Europe are not between “nation states” tax evasion should be addressed to help finance and the EU but between a solidarity-based Social public services. Closing tax havens and legisla- Europe and a conservative regional governance tive loopholes could contribute to levelling the of globalization defined by austerity. If the progres- playing field between large corporations and sive parties fail to deliver a convincing European SMEs somewhat, since the latter have very political project in 2014, the first consequence will limited possibilities to circumvent taxation. be the consolidation of macroeconomic manage- Importantly, the workforce should be more ment focused on the balancing of budgets and involved and better included in innovation since not on solidarity, as defined in terms of job creation, it represents one of the most important resourc- equity and growth. To this end, and in the run-up es of companies – its human capital. Workers to the 2014 European elections, the left cannot and employees will be most productive and simply rely on slogans trumpeting a vague new innovative when they enjoy social and employ- European political promise of solidarity. Many © FEPS© ment protection. This should be part of a human people in Europe are suffering and are looking for workplace where workers enjoy job security and practical solutions to real economic problems. decent working conditions. Solutions to the poisonous populism the right Finally, innovation might be a competitive process appears to offer. Solidarity must be defined in clear but solidarity among EU countries should not terms and encompass the creation of high-quality be left behind. Currently, there is a strong jobs (for all age groups and for both men and divergence among European economies women), equitable and sustainable growth and concerning their innovation performance, which empowerment. But more importantly, these broad has become more pronounced since the onset concepts should be translated into real progressive of the financial crisis. The financial resources of policy proposals. The citizens of Europe must see the EU should be used to support innovation a fair and practical alternative to both austerity in structurally lagging areas. The Horizon 2020 and to the neoliberal agenda that has dominated project and EU Structural Fund combined with Europe in the past four decades.

114 QUERIES — Autumn 2013 DIARY DIARY

NOVEMBER 1-3 NOVEMBER 11 Vienna – FEPS Young Academics Network seminar Helsinki – 8th Research and Policy Days – The Future of European Democracy

This group of thirty young researchers will groups work on the following topics: mod- As part of the European Year of the include stakeholders from different back- gather for two and a half days, during which ernising party politics, employment, pop- Citizens, this year Research and grounds, including researchers, politicians, they will devote their time to finalising their ulism, enlargement, economic governance, Policy Days will focus on the state of civil servants, trade unionists, and journalists. papers and deliberating on dissemination elections 2014. This year they have already democracy in contemporary European The Research and Policy Days have so far strategy. published four papers: societies. It will ponder the state of touched upon several diverse topics linked - The European Youth Guarantee: a real- democracy at the local, national, European, to current European issues, including ‘Politics The third seminar of this year’s BACKGROUND ity check and global levels. and Religion’ to ‘Euroelitism and Populism’. cycle will be an opportunity to The Young Academics Network (YAN) was - How Eurobonds Relate to European In- Among the speakers of this new edition: summarise the respective working established in March 2009 by FEPS with the tegration BACKGROUND Tarja Halonen, President of Finland, Bruno groups’ research, highlight the most support of the Renner Institute to bring to- - Fixing the Broken Promise of Higher Organized with the support of the Kalevi Liebhaberg, FEPS Scientific Council Chair, inspiring findings and discuss how gether progressive PhD candidates and Education in Europe Sorsa Foundation, the aim of this prominent Tuija Brax, former Minister of Justice, they can best contribute to the young PhD researchers interested in applying - Reinventing a social democratic Europe: event is to promote progressive policy Eero Vainio, Vice Chairman Social Democrat- progressive agenda for the electoral their academic experience to the debate What can we learn from the weakness of debate across disciplines and to bridge the ic Party. © European© Union, 2013 year 2014. about the Next Europe. In the third cycle, the ‘Social Europe’? political-academic divide. The participants

NOVEMBER 8-9 EARLY DECEMBER Budapest – “For a Progressive, European energy system” seminar Brussels – Book launch and discussion on populism

Increased cooperation in terms of one in Budapest, with the support of the Tánc- that research will be published next year, aimed at studying the growth of America, providing a snapshot of groups energy facilities would help ensure sics Foundation, with experts from the region. exploring in detail the infrastructure and in- populist movements in Europe and from the perspective of a variety of the success of policies designed to Complementing this, FEPS has established terconnection needed ias part of targets for North America during the past three authors and research methodologies. make energy supplies in Europe more an energy focus group with experts from var- 2030 in the EU energy and climate package. decades. The book launch, which will take place at affordable and secure. Enhancing our ious sectors who meet regularly in Brussels. the FEPS office, will be followed by talks energy system is a central topic of A collection of articles will be published in Populism is both a reaction to and a prod- with journalists, politicians, academics, discussion at the moment. FEPS be- December to exhibit some of those delibera- uct of the growing distance between citi- and the general public. Discussants gan addressing these issues this year. tions. In addition, let us also note the recently The Changing Faces of Populism: zens and their institutions of governance, will be invited to analyse and critique A series of round tables in different EU coun- published initial report from the energy re- Systemic Challengers in Europe both at state or European level. This book the book. tries is being held on the issue. The first two search project that FEPS has undertaken with and the US is a a joint publication offers a selection of case studies that re- events took place in Latvia and Finland. There the support of the British Institute for Public of FEPS, Italianieuropei, and the flect the diversity of populist movements

will be two more this autumn, – including Policy Research (IPPR). The ﬁnal report of FEPS© Centro per la Riforma dello Stato that presently exist in Europe and North

116 QUERIES — Autumn 2013 QUERIES — Autumn 2013 117 DIARY DIARY

MEMBERS DATEBOOK Wake of the Global Financial Crisis” symposium is an opportunity to listen FRIEDRICH-EBERT-STIFTUNG | GAUCHE RÉFORMISTE to progressive, evidence-based ideas GERMANY EUROPÉENNE (GRE) | BELGIUM on how sustainable economic recov- November 27, Brussels December 12, Brussels ery can be achieved in the European After the latest tragedies in southern “Is there still a role for the state in the Ebert-Stiftung grant, it brings togeth- the President of the French National economies. The seminar will be divid- Europe, it is high time for more European economies of the 21st cen- FONDAZIONE SOCIALISMO | er 35 participants from all over Croa- Assembly urges the left to resume the ed into four panels: Economic growth solidarity, dignity and common stand- tury?” is the title of the debate be- ITALY tia, as well as prominent progressive offensive after the German elections and innovation, Industrial policies and ards at European borders. What tween Jean-Pascal Labille, Belgian November 1-3, Gallipoli (Lecce) academics, politicians and activists. in order to avoid a political earthquake. the role of state, European and nation- are the next steps towards a fair Minister in charge of Public Corpora- Successfully launched in 2010, the His ideas? Make use of ‘radical real policies for post-crisis recovery, and Common European Asylum System tions and Development Aid; Pascal School of European Democracy with formism’ to get Europe out of the cri- Industrial ﬁnancing. and what role can and should Germa- Lamy, former Director General of the FEPS’s contribution continues this CENTRO PER LA RIFORMA DELLO sis, set a model of sustainable and ny play? These questions will be dis- World Trade Organisation and former year for its fourth season, under the STATO (CRS) | ITALY inclusive growth and meet the chal- cussed during a conference at the European Commissioner in charge of name of Luciano Cafagna, distin- November 11, Rome lenges of a globalized world. OLOF PALME INTERNATIONAL EU Office of the Friedrich-Ebert- Trade; and Bruno Liebhaberg, Presi- guished historian and socialist. The Presentation of the book Dove vanno le CENTER | SWEDEN Stiftung with Birgit Sippel, Member of dent of Gauche Réformiste Européenne topic is ‘Mediterraneo del Nord e Med- primavere arabe? (‘What future for the November 23, Malmö the European Parliament and of the and Chair of the Scientiﬁc Council of iterraneao del Sud’. Arab Spring?’), edited by Antonio Can- POLICY NETWORK | UK Organized in collaboration with the Committee for Civil Rights, Justice FEPS. The debate will take place at taro, member of CRS and professor of November 18, London Social Democrats and the S-students, and Home Affairs; Dr. Ralf Stegner, the Brussels School of Economics and constitutional law in Urbino. The volume ‘The Insider-Outsider Dilemma: A this year’s Palme Day’s theme is Chairman of the parliamentary group Management (ULB). FOUNDATION MAX VAN DER puts together a number of general, ge- Stranglehold on Social Democracy?’ ‘Fight the Gaps’. The day will comprise and the Schleswig-Holstein-SPD; STOEL | NETHERLANDS opolitical appraisals and country articles – A debate led by Professor David many exciting lectures and talks. and Serpil Midyatli, Member of November 2, Amsterdam with updates for summer 2013. The Rueda of Oxford University on how Among the speakers: Lee Cheuk-yan, Landtag of Schleswig-Holstein. TASC | IRELAND In Netherlands, the Afrikadag is the panel will comprise Massimo D’Alema, the electoral coalitions of European secretary general of China’s only Mid-December place to be for political debate about president of FEPS and Italianieuropei; centre/left parties are threatened by free trade union, who will talk about TASC will be publishing a book on international cooperation. This year’s Lucia Annunziata, TV journalist and an insider/outsider dilemma. Indeed, the struggle for trade unions in POLICY NETWORK | UK themes in industrial policy, including theme is labour and over 30 participat- commentator; and Stefano Silvestri, social democrats have become unable China; and Joakim Palme, professor December 9, London examining the state’s role in ‘making ing organizations – including Oxfam director of the think tank Istituto Affari to reconcile the demands of two of Political Science at Uppsala ‘Understanding the Populist Signal’ winners’ through the production of Novib, Cordaid, Heineken, and Amnes- Internazionali. After the volume edited groups of voters that have traditional- University, who will talk about poverty – A debate on how and why populism new industry capabilities, the creation ty International – will discuss its various by Stefano Rizzo, this is the second book ly supported them: on the one hand reduction and social protection can be seen as both a threat and of networking spaces and the pro- aspects, from job creation by foreign published under the auspices of CRS labour market “outsiders,” who have systems. a corrective to liberal democracy motion of ‘conceptions of control’ that investments and the role of gender, to on the subject of the Arab revolutions. insecure jobs or no jobs at all; on the and the health of political parties and are favourable to industrial develop- child labour and slavery. other hand labour market “insiders” public institutions. The corrective ment. The book will also examine the with stable employment. FONDATION JEAN-JAURÈS | comes in seeing the rise of populism controversial role of Ireland’s 12.5 FONDATION JEAN-JAURÈS | FRANCE as a warning signal to parties and percent corporation tax rate, public NOVO DRUSTVO | CROATIA FRANCE November 27, Paris governments to re-politicise those expenditure in support of enterprise, November 9-10 & November 23-24, Mid-November, Paris FUNDACIÓ RAFAEL CAMPALANS | Meeting at Laurent Bouvet’s Founda- problems that intentionally or uninten- the crucial difference between inno- Zagreb 26 May 2014, the day after the Euro- SPAIN tion of the Observatory of political life, tionally are not being addressed vation and R&D, and a re-evaluation ‘Politics to Women’ is a comprehensive pean elections. Europe wakes up in November 22-23, Barcelona on the “Handbook of Social.democ- by the establishment. How to beat of Ireland’s competitiveness. educational programme on feminism, shock: massive abstention, a populist Co-organized with FEPS and the racy” written by Fabien Escalona and populists in a populist climate? social policy, women in the labour mar- wave... Is that the worst-case scenar- Inter national Institute of Social Stud- Mathieu Vieira. How can populists be beat signal ket, political activism, and women in io? In a new book entitled The Euro- ies, the “Beyond Financial Regulation: serve as a corrective? the media. Supported by a Friedrich- pean emergency, Claude Bartolone, European Industrial Policies in the

118 QUERIES — Autumn 2013 QUERIES — Autumn 2013 119 ZOOM Hermès Directeur de publication Dominique Wolton

LA REVUE HERMÈS Depuis 1988 Plus de 1 200 auteurs 65 titres 25 € le numéro In every issue, Queries will introduce the work of one of the FEPS member foundations. La première revue francophone internationale consacrée à la communication The first of France’s political think tanks, the Jean-Jaurès left. True to its mission of public service, the foundation is com- Foundation was created in 1992 by socialist former prime mitted to making its intellectual and political output available for dans ses rapports avec minister Pierre Mauroy-who drew inspiration from the the benefit of all, both in publications freely accessible on the la politique, la culture et German model-and remains aligned with its founder’s internet and at public events. la mondialisation. party. Recognised as a public service since its inception, the foundation has been working for the past twenty FOSTERING UNDERSTANDING OF SOCIAL years in France and further afield to build a more AND LABOUR HISTORY democratic world, develop ideas for the future and foster The Jean-Jaurès Foundation does important work to educate understanding of social and labour history. others about socialist history, with an archive unique in France, publications and events that offer a historical perspective on cur- BUILDING A MORE DEMOCRATIC WORLD rent events, as well as an online portal providing access to tens Backed by a network of foundations and left-wing political parties of thousands of documents. In 2014, the centenary of the assas- in more than a hundred countries, the Jean-Jaurès Foundation sination of Jean Jaurès, the foundation will be organising numer- LES ESSENTIELS D’HERMÈS takes action worldwide to promote the democratic process – ous initiatives – including publications, talks and debates, a major previously in Ukraine, now in Egypt, soon in Mali – train political exhibition at the National Archives and a documentary broadcast Collection dirigée par staff and support the most promising initiatives. This work includes on Arte – to commemorate this important historical figure and Éric Letonturier election planning (Tunisia), supporting democratic and European highlight some lesser known aspects of his life. initiatives (Serbia & the Balkans, Georgia) and establishing con- Depuis 2008 tact and organising debates (Israel and Palestine). 32 titres 8 € le numéro DEVELOPING IDEAS FOR THE FUTURE As a forum for dialogue and reasoning among high-level politicians, union and trade body representatives, academics and experts, Une collection de poche qui the Jean-Jaurès Foundation contributes to the advancement and rend le savoir accessible à tous, spread of progressive ideas. As part of its efforts to provide clear, une passerelle entre la recherche sharp analysis of our society, the foundation has set up nine Pierre Mauroy, et le public. Observatories for long-term reflection in which influential figures founder of from all disciplines engage in open dialogue and produce analyses the Fondation and proposals on issues of concern to the French and European Jean-Jaurès

THE SPECTRE THE PROGRESSIVE AT THE FEAST ARGUMENT Capitalist Crisis and the Politics of Recession for individualism

Review by Dimitris Tsarouhas Review by Christophe Sente

he financial and economic crisis has ANDREW GAMBLE mess lie with the construction of (to quote Colin ince completing a doctoral thesis on strategy that is unlikely to work, because the right, un- led to a sharp downgrade of global THE Crouch) “privatized Keynesianism” that Reagan in the left-wing critiques of the European hindered by the taboos that bind the left, exploits these economic growth for 2013. Particu- SPECTRE US and Thatcher in the UK were busy implementing. Constitutional Treaty, Sophie Heine concepts with much greater success.” larly in the Eurozone’s southern pe- AT THE What emerged during that crucial time, apart from has published several books, including Heine uses part of her book to sketch out an anthro- riphery, the problem is explosive with FEAST Washington Consensus policies, was a momentous such promising titles as Oser penser pological basis for individualism. According to her, in- CAPITALIST CRISIS AND THE record-high unemployment and a POLITICS OF expansion in credit and an attempt to make the fi- à gauche (“Daring to think left”) and dividualism is part of human nature and expresses a T RECESSION S sharp reduction in output leading to angry social pro- nancial sector “the most important driver of growth now Pour un individualisme de gauche (“The progres- desire for self-determination, rather than the rational tests and political instability. These are dangerous and competition in the economy”. To a large extent sive argument for individualism”). pursuit of self-interest, as posited by economic liberal- times, and analysts have been writing and analyzing the project succeeded, and it is for this reason that Always insightful and educational, her work is capable ism. Inherent in this theory are two conclusions: the left the situation for a while. In this context, it is interest- it is proving so difficult to get rid of financialization of winning over a lay audience and gives the lie to the will inevitably absorb the idea that the individual is the © JC© Lattès ing to step back to the time when the crisis actually Macmillan Palgrave © now that its failures have become apparent to all. idea that the representation of a specific social group “ultimate purpose of collective action”, and this, in turn, occurred and the analysis that stemmed from a much narrower After all, peoples’ expectations on consumption and lifestyle are is integral to any progressive political agenda. will require public institutions to be adapted, but not destroyed. set of empirical data. This is a useful exercise to evaluate a writ- bound up with this system. At the same time, while careful not to confuse the multiple objectives One shortcoming of Sophie Heine’s argument is its failure to men- er’s ability to comprehend the crisis, sketch out its likely trajecto- The book’s value lies in two further factors: first, the author ex- of modern socialists and the holistic ambitions of traditional com- tion the importance of social democracy’s vibrant social-liberal ry and outline different scenarios as to its future evolution. plains that neoliberalism has never been a monolithic entity, and munist movements, Heine criticises the modern left for its seeming tradition. Since emerging in the work of the young Marx and Proud- This is precisely what Andrew Gamble set out to do in his book overcoming it goes through understanding its true nature. It entails inability to integrate the needs and interests of individuals into hon, it continues to influence thinkers such as Anthony Giddens The Spectre at the Feast. The book set out to explain why the a) a “laissez faire” strand that resembles market fundamentalism, its programmes. According to Heine, the left has certainly evolved and Ulrich Beck. Likewise, by distancing herself, in the name of world became engulfed in what was then known as the “credit b) an “anarcho-capitalist” strand geared towards the privatization in response to the rapid rise of neoliberalism and the quickening individual freedom, from the idea of promoting political participation, crunch”, which then soon mutated into a banking, then financial, of state asset and a c) “social market” strand reminiscent of Ger- pace of globalisation, but has made the mistake of “continuing she makes it difficult to achieve the very thing she is arguing for. and ultimately economic crisis. Andrew Gamble’s credentials in man ordoliberalism. Secondly, Gamble sets out possible scenar- to address its message to ‘sacred’ groups”. And it pays the price These criticisms should not, however, distract us from her defence embarking upon such an exercise are well-established. His ear- ios for the future of the world political and economic system. at the ballot box. of the relevance of current demands for a reduction in working time. lier work on political economy, and especially his widely acclaimed Rejecting protectionism and market fundamentalism, he asserts For Heine, attempts by “communitarian” and “republican” intellec- The argument is certainly a lot closer to a libertarian approach than The Free Economy and the Strong State on Thatcherism, means that the post-crisis world has to operate on the basis of multilat- tuals to reshape the identity of the left are doomed to failure as to the traditional socialist perspective as reimagined by André Gorz that this is a book written by one of the few academics expected eral cooperation, with the US in relative decline, a rising China long as, despite all their differences, they espouse the theoretical and Michel Rocard. Nevertheless, it should serve as a reminder to to deliver a sharp, analytical yet easily accessible account of the and structural imbalances of the world economy. Analytically rich superiority of the collective in its various forms, in a society of in- the left that one of its historic demands remains socially relevant forces that led to the mess we are currently experiencing. and descriptively compelling, The Spectre at the Feast is a pro- dividuals. Conscious of the rise of populism, Heine recognises the and sets it apart. In that task, Gamble does not disappoint. The book is compact at foundly important book. political effectiveness of an appeal to the nation and the technical a total of 180 pages, yet packed with the kind of analytical insights The Spectre at the Feast: Capitalist Crisis and the Politics of inability of the left to do so. Commenting on the far-right National that its author is renowned for. He correctly asserts that the crisis Recession // Andrew Gamble (Palgrave, 2009). Reproduced Front party’s popularity among the working class in France, she will lead to a “prolonged period of political, economic and ideo- with permission of Palgrave Macmillan. The full published writes: “Trying to convince them to return to the progressive fold Pour un individualisme de gauche // Sophie Heine (Editions JC logical impasse” (p.10), as indeed it has. The origins of today’s version of this publication is available from www.palgrave.com by appealing to […] higher values or an ‘open’ national identity is a Lattès, 2013).

Dimitris Tsarouhas is an Assistant Professor of International Relations at Bilkent University Christophe Sente is a member of the Gauche Réformiste Européenne think tank and the FEPS Scientific Council.

122 QUERIES — Autumn 2013 QUERIES — Autumn 2013 123 PUBLICATIONS

THE FRENCH DENIAL Philippe Herzog The last spoiled brats in Europe

Review by Andy Smith EUROPE, RÉVEILLE-TOI !

journalist at The Economist and unstated premise is that today there are unavoida- Ce livre est un cri d’alarme mais il est aussi plein d’espoir. resident in France for the last ble ‘economic rules’ that sooner or later will simply decade, Sophie Pedder provides oblige the French to ‘get real’ about their socio-eco- « Philippe Herzog est convaincant. Lisez, il vous entraînera. » Michel Rocard here a book-length version of an nomic choices and fall in line with practice in the argument she ﬁrst made in an rest of the world. The unproven assumption here is « Est-il trop tard pour choisir la voie exigeante que nous propose Philippe Herzog ? A article that caused considerable that everywhere else the anonymous forces of glo- Michel Barnier controversy during the 2012 French presidential elec- balization have determined political choices and so Je ne le crois pas. » tions. Using a term from popular psychology, her basic this will happen to France too. However, as the het- argument is that the French are ‘in denial’ about both erogeneity of national interpretations of globaliza- the state of their economy and the capacity of their tion shows, there is no such one best way, nor do

© JC© Lattès L’indifférence et les replis face à l’avenir de l’Europe sont state to maintain current standards of living. From this ‘economic rules’ simply impact upon societies. To postulate the book develops a standard diagnosis of this state of the extent that such rules even exist, they do so only having been insupportables et dangereux. Philippe Herzog fait appel à toutes les affairs and proposes a slightly more original set of antidotes. translated into policies by those in power. As so often, the problem with the French is traced to excessive The second problematical dimension of this book is that it per- forces de la société. Ne laissez pas l’Union s’abîmer dans les rivalités public spending, wasteful social protection measures (particularly petuates the myth that strong welfare states are necessarily a partisanes et les conflits nationaux, prenez la parole, engagez-vous dans pensions and unemployment benefits), crippling levels of social handicap for economic growth. As Hay and Wincott’s The Politi- insurance costs and bureaucracy placed on private companies cal Economy of European Welfare Capitalism (Palgrave, 2012) les mouvements européens ! C’est une urgence. and a wrongheaded willingness to tax the rich rather than address convincingly shows, such a correlation frequently does not exist more deep-seated issues. In short, all this interference in the in practice. On the contrary, welfare states can be a motor for economy is seen as ‘infantilizing’ the people and discouraging economic development provided they are attached to a sustain- À la veille d’élections européennes à hauts risques, Philippe Herzog change in the policies and behaviour of France’s political elites. able growth model. There is certainly much wrong with that of soumet au débat public un programme d’action puissant et cohérent Not surprisingly, Pedder’s solution is essentially that the budgets France, but its relatively low dependence on rising house prices of virtually all the above public policies should be progressively merits reflection that is entirely lacking in Pedder’s book. pour reconstruire l’Union et sortir de la crise. Il est le fruit de vingt but drastically reduced. However, she does suggest some (pension This point about the current crisis being one of growth, not debt, rates, unemployment benefits, administrative jobs) be cut more raises in turn a final problem with advocating public expenditure ans de travail personnel et collectif acharné au sein de l’association than others (e.g. family allowances), and this in the name of build- cuts. As Mark Blyth, underlines in Austerity: The history of a Confrontations Europe et de son expérience politique des institutions ing a new ‘social pact’. Although little is said about how such an dangerous idea (OUP, 2013), across the board cuts increase agreement could be politically achieved, the Swedish experience wealth inequalities, reduce demand, shrink the economy, and européennes. of the 1990s is proposed as the model to follow. thereby hamper growth. They have not worked in the past and Notwithstanding this partial attempt to go beyond the recipes of won’t now. mere austerity, the reasoning behind the book as a whole is prob- Le déni français. Les derniers enfants gâtés de l’Europe. // Sophie lematical for at least three reasons. Firstly, its underlying and Pedder (Editions JC Lattès, 2012). Prix du livre : 17 € Prix du livre numérique : 7,90 € EAN papier : 9782304042269 EAN numérique : 9782304042276 210 pages – 140 x 225 mm – ID : 15051 EAN Epub : 9782304242270 Date de parution : 17 octobre 2013 Andy Smith is a Professor in Political Science at the University of Bordeaux’s Emile Durkheim Centre. CONTACT Confrontations Europe Éditions Le Manuscrit www.confrontations.org [email protected] 227, boulevard Saint-Germain 124 QUERIES — Autumn 2013 www.manuscrit.com 75007 Paris, France  : +33 (0) 890 71 10 18  : +33 (0) 1 43 17 32 83 Editions Le Manuscrit, 20 rue des Petits-Champs, 75002 Paris, France THINK EUROPEAN Read European

Subscribe at www.queries-feps.eu

SUBSCRIBE ONLINE TO QUERIES The first & only European progressive opinion magazine

NEXT ISSUE Populism in Europe Queries #3 - Winter 2014

Complete the following coupon and post it with your Card Number: payment to: Expiration Date (MMYY): Abomarque - Queries Security Code: CS 63656 First Name & Surname: ...... 31036 Toulouse Address: ...... FRANCE Postal Code: ...... City: ...... Yes, I subscribe to Queries for one year for €20 Country: ...... Phone: ...... (incl. 2.10% VAT – Shipping extra*). Email (mandatory): ...... I only wish to receive Queries #2 for €5.90 (incl. 2.10% VAT – Shipping extra*). Date: ...... Signature: I pay: By cheque to the account of Abomarque (and will receive a receipted invoice) Or order by phone (credit card only): +33 (0)5 34 56 35 60 Subscriber’s hotline: [email protected] By credit card:

* Shipping fees for 4 issues: FR: €6.68 / BE-LU-NL: €7.12 / DE-AT-FI-GB-IE-IS-CH-DK-NO-SE: €9 / IT-PT-ES-GR: €9.4 / Other European countries: €11.4 / Africa: €11.8 / US-CA: €7.68 / Middle East: €10.6 / Asia: €9.68 / South & Central America: €11.6 / Oceania: €10.8 FRANCE

This is the age of Truth.

When the crisis roam, when the world is in search of direction, when people produce their own information system and question any official word, Truth is the answer. It’s management, is our expertise.

Tomorrow will be Truth Well Told. QUERIES, THE EUROPEAN PROGRESSIVE MAGAZINE Michel Aglietta, Yann Arthus-Bertrand, Michelle Bachelet, Charlotte Billingham, Stephanie Blankenburg, Olivier Blond, Anne Bouverot, Susanna Camusso, Dae-oup Chang, Giovanni Cozzi, Massimo D’Alema, Diego Della Valle, Anthony Giddens, Andreas Görgen, John Grahl, Ewa Karwowski, Pascal Lagarde, Benoît Lallemand, Eneko Landaburu, Louis Lemkow, Mariana Mazzucato, Elaine McCrate, Seeraj Mohamed, Joseph Muscat, Claude Onesta, Emma Reynolds, Ana Rosa Ribeiro de Mendonça, Jyoti Saraswati, Fernando Sarti, Christophe Sente, Andy Smith, Hannes Swoboda, Antonio Tajani, Dimitris Tsarouhas, Marita Ulvskog, John Zysman. www.queries-feps.eu

FEPS - FOUNDATION FOR EUROPEAN PROGRESSIVE STUDIES Rue Montoyer 40 • 1000 - Bruxelles - Belgique • T +32 (0)2 234 69 00 • F +32 (0)2 280 03 83