Editor's Note: This article is republished with thanks to the Policy Network, an organization specializing in connecting and informing those involved in progressive policies and ideas. This article and many others exploring modern challenges in progressive politics can be seen at www.policy-network.org.

Dialogue between proponents of European social democracy has created a considerable amount of consensus in both core philosophy and at the policy level. This should come as no surprise given that all the respective countries face the same new challenges of globalisation and rapid internal change. Significant differences do remain however: national differences in social and economic conditions; differences in the weight of ideologies and traditions within parties; differences in the political cultures of each country, in their political systems and in the composition of the respective political arenas in which social democratic parties compete. These differences notwithstanding, the new issues under discussion are the same everywhere, as are the basic responses.

The new approach focuses on several related dimensions: new economy, new welfare and new politics. The constraints within which these new approaches operate are the same in all countries:

• The devaluation of Keynesian macro-economic coordination
• Increasing stress on welfare
• The growing diversification of the different parts of the old and new working classes
• The emergence of new rivals on the left in the electoral arena (green parties)

New Economy

European social democracy stands by its traditional conviction in regarding the primacy of political responsibility over markets. However, transnationalisation is increasingly undermining Keynesian macro-economic coordination. At the same time, the knowledge economy is transforming capitalism: goods, services, knowledge and professional skills are rapidly outdated; small and medium size enterprises are increasingly significant; higher levels of skills and permanent re-qualification are required. This leads to new social risks, whilst traditional risks worsen.

In thier economic policies, modern social democrats are pursuing a package of interrelated policies and pragmatic strategy-mixes. Different countries may stress different elements of the mix but there is broad consensus as to the overall composition:

• Economic progress, growth and full employment remain matters of political responsibility but the socialisation of the means of production and state planning are ruled out.
• Anti-inflation policies are a priority, leading to the autonomy of federal reserve banks and to strict budgetary discipline.
• Welfare objectives are attained through cooperation between government and business.
• A new mix of supply and demand side economic policies involves lower taxes; the prioritisation of research and development in order to foster technological innovation; public investment in human capital (job qualification and re-qualification); ecologically sustainable growth; a limited increase in labour market flexibility; state-sponsored job programmes for target groups (young people, the long term unemployed); and in some countries (like France), the reduction of working hours and tripartite systems of cooperation for job creation and growth (Germany and the Netherlands).

Welfare state innovation

All social democratic parties acknowledge that the comprehensive European welfare state has its merits but is increasingly suffering from four interrelated weaknesses:

• Unbearably high costs;
• Increasing inefficiency in tackling old and new social risks;
• A culture of passivity, dependence and benefit fraud;

• Financial and institutional structures which are partly out of tune with recent societal change, e.g. the accelerated ageing of society.

The causes of these differ from area to area. In the pension system the main cause is the reversal of the demographic pyramid. In health insurance, the rapid rise in overall costs due to higher standards are making treatment increasingly costly. The financial dilemma in unemployment insurance and welfare (income support) lies in the double constraint of smaller budgets on the one hand and the growing cost of benefits on the other, both of which are due to prolonged high unemployment.

Whilst social security levels and the role of civil society agents vary, there is no dispute over the most basic issues: first, that there is a need for structural change; and secondly, that social security must be protected. All reforms are aiming at a new type of welfare state which promotes activity, is stricter with regard to fraud, requires cooperation between the state and society in delivering security and is based on greater subsidiarity. This involves the following measures:

• Individuals and families have primary responsibility for themselves;
• The state clamps down more effectively on benefit fraud;
• The welfare state is above all a social investment state which provides the needy with new opportunities to help themselves ( job training, new qualifications, support for self-help groups);
• In return for subsidies, the individual is strictly obliged to look for and accept available job offers (welfare to work), or face having benefits and subsidies cut.
• An education system offering life long opportunities for re-qualification is considered to be the most appropriate social policy in the knowledge economy (policy of second chances).
• Civil and social responsibility are strengthened by promoting a welfare society based on social self-help initiatives;
• Benefits from public social insurance systems are slightly reduced and supplemented by employer and private insurance schemes. A decent standard of living is guaranteed but the desired individual living standard must be protected through additional private initiatives.

New politics

With the near complete disappearance of the traditional working class (just 16% of the population in Germany) and the impact of the new economy on social stratification, interests, values, aspirations and modes of communication, building a majority for electoral success requires new alliances and new communication strategies.

• There is a need to form new social and political alliances not along old class lines but rather with regard to new social groups and values. Success in the electoral arena, depends on building alliances around: the rest of the old working class; the new working classes ('wired workers', social and cultural workers); the new bourgeoisie (small and medium size entrepreneurs in the knowledge economy); and liberal professionals.
• In all European societies traditional class structures have been replaced by 10 to 12 socio-cultural milieus with different values, life styles, and socio-cultural orientations. None of theses naturally supports social democratic aspirations. Instead of relying on more or less automatic support from related milieus, social democratic parties must form temporary alliances on the basis of overlapping interests through permanent communication with changing focuses.

Beyond this common ground, there do remain some disputed issues of substance but these disputes are not absolute. They mainly relate to differences of emphasis within a basic shared consensus. Take justice for example. The precise meaning of justice and the appropriate level of social security remain disputed. Is social inclusion the modern successor of social justice; is the supply of equal educational opportunities plus an existence-level guarantee of social security the present- day substitute for social justice? Or should social democracy still be faithful to a concept of justice comprising full equality of life chances and the guarantee of a decent standard of living for all citizens? The nature of economic globalisation and the scope for political action which it entails also remain a point of contention. Whilst Blair maintains that the only appropriate strategy for coping with globalisation is to adapt national economies and societies and to strengthen national positions within global competition, Schrvder, Jospin and other European leaders are calling for new patterns of transnational political co-operation to regain the capacity for political regulation at the global level.

Conclusion

Three conclusions can be drawn which together define the state of Modern European Social Democracy. Firstly, Modern Social Democracy in Europe is neither a system, nor a patent remedy for all the new social and economic diseases. It is not a ready made model which can be exported to any and every country in the world. It is a pragmatic approach which is shaped by the specific political and welfare cultures and different problem constellations prevailing in each individual country. The unifying factor is a common value system based on a political philosophy which seeks to balance freedom, justice, social security, tolerance, and economic prosperity. Secondly, whilst there have been some notable successes in welfare protection, social justice, the expansion of democracy, job creation and economic growth, significant deficiencies remain. Social exclusion is still a real problem; the reduction of unemployment has been limited; and slight welfare cuts have had to be accepted across Europe. Thirdly, what is most sorely lacking is a comprehensive strategy for effective, transnational co-operation which, by setting social, financial and ecological standards at the global level, can ensure the responsible regulation of economic globalisation. The first step in this direction is an action-oriented dialogue between all those who share the basic values and the overall objectives of Modern Social Democracy.

The full text of this article appears in Multiple Third Ways, Wiardi Beckman Stichtung/ Freidrich Ebert Stiftung/ Renner Institut, 2000.