It’s been a little over a month since the call was published Inform Draghi, a rigorous and disturbing diagnosis of the decline of the EU economy with respect to the US and China. The need for a greater commitment to European integration or the approximately 750,000 million euros of annual investment required to be competitive in the coming years are some of the most discussed issues. Without wanting to go into the specific aspects of the text, let’s look at it from a historical perspective.
It is not the first time that a simple report has had such significance. When the former president of the European Central Bank (and former vice president of Goldman Sachs) exposes the investment levels essential to maintain the EU’s competitiveness, he echoes that other decisive historical period: “A minimum annual additional investment of 750,000 to 800,000 is needed million euros corresponding to 4.4%-4.7% of EU GDP in 2023. For comparison, investment during the Marshall Plan between 1948 and 1951 was equivalent to only 1%-2% of EU GDP. EU. This increase would require the EU investment rate to rise from around 22% of GDP today to around 27%, reversing a multi-decade decline in most large EU economies.” Beyond the essential economic questions, a diagnosis of the era is proposed: Europe once again finds itself facing an existential challenge.
The circumstances were very different. At that time, Europe had just been destroyed by a war that claimed millions of human victims and countless material damages. In the midst of the war, Winston Churchill commissioned a report from William Henry Beveridge, director of the London School of Economics. They formed the Informe Beveridge two texts. The first focused on overcoming the limited health and social security systems—originally designed in Bismarck’s Germany—and developing what later became known as the welfare state, which dealt with full employment. Its fruits were only seen when European societies began reconstruction after the war. The first Government that shaped the spirit of 45 was that of Clement Attlee, the British Labor Party who later inspired the model of European welfare states. It took a revolution to save Europe: an unprecedented state intervention in the economy; universal public health and pension systems, and a progressive fiscal policy, which served to finance them. The maximum marginal income tax rate reached 90%, a reality that spread to other countries, including the United States. After the end of a devastating and bloody war, Europe was able to recover in the following decades and become in one of the most prosperous and productive regions on the planet.
The situation today is far from being so dramatic and the challenges are different. But the hangover from the crisis of globalization in 2008 and its management austericida by the EU, the economic convulsions caused by the covid-19 pandemic, the advance of the climate crisis and Russia’s war in Ukraine and geopolitical instability – the most inhuman face of which is broadcast daily from Gaza and, now , with special intensity in southern Lebanon—paint a dark picture for the continent. The lack of European competitiveness is not an abstract issue or an exclusive discussion among macroeconomists; Quite the contrary, it is felt in the pockets of citizens and conditions the responses of the main European economies, which today are between recession – like Germany – and stagnation – like France. In circumstances like this, when everything seems to be based on quicksand, to save order you have to be unfaithful to your own commands.
Perhaps for that reason, Mario Draghi, a man of the establishment European, who righted the course in the debt crisis with his famous “whatever it takes”, is the one chosen by Von der Leyen, the president of the most right-wing Commission in history, to try to take a leap forward in the integration of the Union and confront the “nationalist impulses.” Despite the loud opposition of the German Government and other central countries to the path of pooled debt and increased public investment, one thing seems evident: either the Union manages to overcome its centrifugal tendencies and achieve a common course or its future is shaky. The EU, in addition to the vital competitiveness gaps by sectors, stakes its destiny on the ability to achieve a clear and unified political direction that articulates the sovereignty of its different national realities.
In any case, to be able to emulate Beveridge’s gesture and be in a position to “save Europe” requires something more than a realistic and “unorthodox” diagnosis or billions of annual public investment to improve European competitiveness. Something is needed that perhaps Draghi and his team will end up collecting in a second report. It is not enough, in the first place, to point out that the European social State must be maintained. It is evident, as the authors of the report point out, that the existence of a large single market with relatively broad purchasing power and stable institutions are competitive advantages over its geopolitical competitors. But it is no less true that the European social pillars show cracks and are going through a certain crisis. To get an idea of its dimensions, according to Eurostat, in 2023 there were 94.6 million people at risk of poverty or social exclusion in the EU.
This blind spot of Informed Draghi It is what distances it from the focus of interest of the majority of citizens. Meanwhile, Beveridge managed, by addressing issues that affected the daily life of the people, for his report to transcend expert discussion and become popular through thousands and thousands of copies that were printed, distributed and read.
Secondly, although the climate crisis is assessed and analyzed in certain aspects that are decisive for the economy, climate policies appear more as a brake or limit on competitiveness than as a central element of a growth strategy for Europe. The ecological emergency is the main challenge of the time, and not a mere economic condition.
This historical analogy also raises issues that go beyond the ideological debate of well-intentioned reformist elites. Human and political factors were decisive for the construction of the welfare state: the existence of the Soviet Union—usually pointed out by the historian Josep Fontana as an alternative model that contained Western Europe—and the strength and relative cohesion of a working-class fabric with institutions, parties and unions in charge of putting pressure on the ruling classes to achieve a fair social pact and lasting peace.
Who or what can fill the role of the USSR today? Is the existence of competing geopolitical blocks such as the United States or China sufficient in an economic, technological and industrial war? Does Putin’s Russia – paradoxically – once again occupy that role of existential threat to the West? What political and social forces are capable of mobilizing today to make irreversible economic and social transformations of the magnitude we need, even under stricter public control? Have we learned that lesson and are we going to save Europe so we don’t have to rebuild it again?
Lilith Verstrynge She is a historian, political scientist and former Secretary of State for the 2030 Agenda.
