A ‘new normality’ is only possible with a modern welfare state

A ‘new normality' is only possible with a modern welfare state

This health, economic and social pandemic has shown the need for strengthened welfare states, and the political risks associated with weakening them, as well the need to build welfare states where they do not exist in order to avoid permanent conflicts and the crisis of dislocated emigration.

(AFP/Dominika Zarzycka/NurPhoto)

There are those who argue that after the Covid-19 pandemic nothing will be the same as it was before. I’m not so convinced. If we don’t take steps to avoid it, we run a real risk of returning to the way things were, to what some call the ‘new normality’. Everything depends on the balance of power at the global, European and national levels, in that order. In its different variants – Chinese, British, Brazilian, Indian – the coronavirus continues to wreak havoc. Inequality has increased, as it always does in times of economic crisis, creating opportunities for the wealthy and bankruptcy for the most vulnerable.

The virus has brought calamity upon much of the world and eroded social democracy in the countries where it exists, including in the European Union. Even after being chipped away by the ultra-liberal policies that led to the 2008 crisis, these welfare states of these countries have allowed them to better withstand the onslaught of Covid-19 than other countries. Two pieces of information paint a picture worth thousand words for understanding how the world is faring following the ‘neoliberal sweep’ that began in the late 1970s.

The first is that the world’s ten wealthiest individuals own wealth equivalent to 3.5 billion people. The second is an International Labour Organization (ILO) report which revealed the disgraceful working conditions faced by a majority of the world’s population. Informal work, in which workers enjoy no rights whatsoever, accounts for 85 per cent of the working population in Africa, 65 per cent in Asia, 45 per cent in Latin America and 25 per cent in Europe.

Unsurprisingly, countries without a strong welfare state have seen historic levels of devastation. Brazil, India, the United States during the Trump era, and Africa provide direct evidence. In Jair Bolsonaro’s Brazil, which has 2.5 times the population of Germany, five times more people have died and the epidemic is out of control. The United States, which has 3.9 times the population of Germany, has seen seven times as many deaths. In India we are witnessing a catastrophe of biblical proportions, while in Africa the number of those who have received the vaccine barely exceeds 1 per cent.

The ultra-liberal policies responsible for this are the legacy of Margaret Thatcher, who claimed that there was no society, only individuals, and who determined to break the back of the trade union movement in the United Kingdom.

Thatcher was aided in her campaign of social demolition by that mediocre Hollywood actor of simplistic ideas, Ronald Reagan, who said it was time to “get the state off the backs of the people.” The Washington consensus followed, ushering in a wave of liberalisation, privatisation and deregulation. The result has been a neoliberal bleeding dry of states the world over.

An end to neoliberal capitalism: strengthening and building welfare states

For this reason, I argue that it is urgent to put an end to this neoliberal version of capitalism, with its failed ‘austericide’ and no less disastrous response to the waves of the Covid-19 pandemic. Otherwise we risk a return, on the one hand, to austerity policies in the face of soaring public debts and, on the other, to the advance of populism, Euroscepticism and other evils that feed ‘illiberal’ or authoritarian tendencies.

This health, economic and social pandemic has shown the need for strengthened welfare states, and the political risks associated with weakening them, as well the need to build welfare states where they do not exist in order to avoid permanent conflicts and the crisis of dislocated emigration. A social state is only viable with improved distribution of wealth, property, and sound taxation systems that guarantee quality public services in health care, education, etc.

But building a modern state, let alone a welfare state, is impossible in countries such as those in Latin America, Asia and Africa, where tax revenues often equate to less than 20 to 25 per cent of GDP. For this reason, I argue that we must consider not only a better distribution of revenue – through wages and taxes – but also of property in certain circumstances such as monopolies, companies that are too big to fail, or for essential services.

In these cases, collective interest must take precedence over private interest, and collective forms of ownership and/or management that are not necessarily state-owned, including public/private partnerships, should be adopted. Such systems have been used in the past and are currently being employed with great success in various countries. Public intervention in these cases will depend on the strength of democratic political will.

It’s hard to understand why the huge amounts that states have lent to large corporations in difficult situations have not been transformed into equity stakes, as any prudent private investor would have done with their money. Or why political leaders have not finally put an end to the blatant theft that tax havens represent, veritable hellholes for the common good and the main obstacle to inclusive globalisation. States, for example, have invested copious amounts of money in the pharmaceutical industries in order to accelerate the emergence of the holy vaccines.

Do you think a private investor would have done the same without acquiring shares in these corporations and thus participating in their management? The policies of socialising losses and privatising profits must finally come to an end.

It is difficult to know how to proceed when faced with such a situation and road maps are often lacking. I prefer to follow the advice of the poet Antonio Machado when he says in a verse: “Wayfarer there is no way. Make your way by going farther.” And this is exactly what we have to do, to truly walk in the right direction. In this respect, the approval of European funds is an important step forward, but perhaps not enough if we take into account the scale of the damage. The Union cannot go on any longer without an effective common social policy beyond declarations, such as those made at the recent Porto summit, because welfare states are becoming unsustainable within national frameworks.

Doing so would require the introduction of European taxes that would pave the way for a EU budget that is less ridiculous than the current one. The new policies of the United States under Joe Biden could serve as encouragement. If Biden moves towards a more European social model, the Union should move towards the American Democrats’ model of massive public spending and tax initiatives that tax super-corporations.

We all agree that issues such as anti-democratic inequality, environmental sustainability and citizen control of digitalisation require the joint action of global political and social powers. Just as past democratic gains were made possible by alliances and mobilisations at the national level, today we need grand coalitions and/or agreements at a European and global level.

European political and social forces, such as trade unions, should take the initiative in this regard and establish common objectives with the United States and other global actors. It is difficult, if not impossible, to intervene in the global economy without shared intelligence between key political actors. A concrete example of this that points to a way forward is the US initiative to suspend restrictions on the manufacture of Covid-19 vaccines.

In this regard, the European and global trade union movement should play a more effective role than they have previously. The positions of the new US administration could be used to advance a fair social, environmental and digital agenda that would shape a new global normality. This objective should take into account, realistically and without naivety, unavoidable global realities such as China and India, which represent more than one third of the world’s population.