The disappearance of work and widespread dislocation in Europe and the United States pose once again the nineteenth-century "Social Question": how to secure economic progress in light of the political and moral threat posed by the condition of the working class? The solution then was state action, which, contrary to today's neoliberal orthodoxy, fostered economic growth. The state cannot be abandoned now; Europeans won't go for it. It is the only protection from global market forces and the only forum for politics. But the left must stop protecting the status quo and give up unaffordable policies if it is to bring in the excluded and avert extremism.
Tony Judt is Director of the Remarque Institute at New York University and author of A Grand Illusion: An Essay on Europe.
Ill fares the land, to hastening ills a prey, Where wealth accumulates, and men decay.
by Oliver Goldsmith
The little town of Longwy has a ghostly air. For many years it was an important center of iron and steel manufacturing in the industrial basin of the northern Lorraine and a proud stronghold of socialist and communist unions. Since 1975, however, the local industry, like steelworking everywhere in Western Europe, has been in trouble. Today the steelworks are gone, and so, at first sight, are their workers. At noon on a working day the town is quiet, with empty shops, a few sad-looking bars, and a deserted railway station occupied by a gaggle of drunks. The erstwhile steelworkers, grown old, wait out their lives in bars and cafes, or else stay at home with the television. Their wives and daughters have part-time, nonunion work either in new factories and offices distributed in the fields outside the town or else at commercial centers deposited optimistically at crossroads some 20 miles away. Their sons have no work at all and mill around at these same commercial centers looking at once menacing and pitiful.
There are towns like Longwy all over Europe, from Lancashire to Silesia, from the Asturian mountains to the central Slovakian plain. What makes the shattered industrial heartland of northeastern France distinctive is the political revolution that has occurred there. In the legislative elections of 1978, when the left was defeated nationwide, the voters of Longwy returned a communist deputy to Paris, as usual. Twenty years later, in the legislative elections of May 1997, the right-wing National Front -- which did not exist in 1978 -- came within 3,000 votes of overtaking the local communist candidate. A little farther east, in the similarly depressed industrial towns and villages around Sarrebourg that abut the German frontier, the National Front did even better: moving ahead of both communists and socialists, its candidates secured more than 22 percent of the vote in half the local constituencies.
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With the EU's addition of ten new members and a likely slowdown in U.S. productivity growth, Europe has a chance to overtake the U.S. economy. To actually do so, however, it must boost its competitiveness with some much-needed reforms.
Only a few years ago pundits were sure that the United States was losing to Asia and Europe and had to emulate their more state- directed economies to remain competitive. Now the conventional wisdom is that America is number one and that the rest of the world should adopt its more laissez-faire approach. In fact, neither caricature is right. Asia was booming and now it is slumping, but it will be back. Europe's underlying ossification will persist. But most important, while the U.S. economy is in a period of robust growth, nothing fundamental has changed. Its long-run growth rate has not accelerated, productivity has not risen, and the structural unemployment rate has fallen by one percentage point at most. Come the next recession, all this triumphalism will seem silly.
America's economy is in its eighth year of sustained growth, transcending the German and Japanese "miracles." This is no fluke. America's unique brand of entrepreneurial capitalism is based on a series of advantages that explain the stunning success of the 1990s and provide the basis for extending this winning streak. These strengths include deft managers, technological innovation, and a culture that values rugged individualism -- all fueled by finance capital that can nimbly meet the needs of a globalized, rapidly changing economy. Furthermore, the era of the deficit is over. Pessimists who warn of inflation should be ignored; American business leaders understand that today's low level of inflation is self-perpetuating. America's prosperity is structural, not transient, and its lead over Europe and Asia will only widen with time. America had the twentieth century. It will also have the twenty-first.
