Gabor Scheiring

The first phase of the battle against the coronavirus is getting close to its end. However, as John Maynard Keynes warned, it is not enough to win the war but we need to win the peace too. Already before the current one, Europe was facing a multiplicity of crises, each potentially deadlier than the corona crisis. Only bold, progressive cooperation can save the future of Europe.

The way the economy assigns value to goods, services and work – the process of economic valuation – shows profound imbalances. Several countries at Europe’s Eastern and Southern rim saw a steep increase in inequality, following the 2008 financial crisis. The gap between the rich and the poor grew the most in Hungary, Italy, and Bulgaria in addition to Luxembourg, but Spain and Lithuania also became more unequal. Several European nations also saw an increase in precarious, atypical, temporary, and part-time employment and a concomitant rise of in-work poverty. Labour market protection was slashed to spur growth and tease investors. Inequality and labour market precarity lead to health problems throughout Europe, and increased countries’ vulnerability to health shocks, such as the coronavirus. Some even demanded human sacrifice at the altar of economic production in the face of the corona crisis.

“Many countries at Europe’s Southern and Eastern rim have been trapped in a perpetual austerity regime.”

Italy, Greece, Spain, Portugal, Hungary, Latvia saw deep cuts to their health care budgets after 2008. Even worse, in Italy, the number of acute care hospital beds was halved during the past 20 years as the country has struggled to please lenders. However, maintaining a primary budget surplus since the beginning of the 1990s did not help Italy to bring down debt. Austerity and recurring economic crises have killed Italy’s growth prospects, which even ended up increasing the country’s debt. Health and social care spending cuts since 2010 were linked to nearly 120,000 excess deaths in England alone.

In addition to institutional pressure in the form of debt conditionality, the global race to the bottom on taxation is another major factor behind the austerity trap. Taxes on capital have declined in several European countries as governments compete with each other to attract footloose capital. European tax havens– Luxembourg and The Netherlands being the worst offenders – cost billions of lost revenues each year in countries such as Italy, hindering the fight against the coronavirus.

Economic malfunctioning is also linked to ill health structurally. Diseases of despair and the obesity epidemic, which are among the most critical contributors to premature mortality, struck many developed countries even before the coronavirus. The power of big food companies, deindustrialisation, the increased anxiety generated by precarity and reduced predictability, and growing inequalities are major contributors to these chronic health problems. 

The health of people and the health of democracy are intertwined. People left behind in regions struck by diseases of despair, workers facing precarity and the prospect of downward mobility have a higher tendency to support anti-establishment parties. Trump’s popularity in health-deprived regions of the US, the high share of Brexit votes in the unhealthiest towns in the UK hit by years of austerity, or the rising popularity of Lega Nord among workers in deindustrialised towns in Italy are cases in point. Strongman politics is on the rise throughout the world – the quality of democracy is declining globally. 

“Orbán uses the crises to pursue his Social Darwinist politics”

But political strongmen promising a better life to their voters and ‘taking back control’ only exploit these same people behind the scenes. That’s what Hungary’s Prime Minister Viktor Orbán did with his most recent power grab, allowing him to rule by decree without time limit on the pretext of fighting the coronavirus. While most European countries increase public spending to protect vulnerable populations, Orbán uses the crises to pursue his Social Darwinist politics further, suspending the labour code to force workers and employers into ‘flexible’ solutions, without offering any meaningful assistance to the unemployed.

The government recently ordered hospitals to free up 50% of their beds, sending home thousands of severely ill people. Doctors and hospital directors criticising this measure are muted or fired. Many believe that the government uses the corona crisis to downsize public health to make markets for loyal national capitalists in the private health sector in the long run. Orbán’s recent authoritarian move serves to mute the social opposition against these Social Darwinist policies. This is not new: authoritarianism has been a central pillar of Orbán’s capitalism since 2010.

However, political bullies like Orbán, Salvini or Trump are not the root cause of today’s multiple crises. They are reckless political entrepreneurs who exploit every structural opportunity offered by the crises generated by faulty economic structures. The crisis of economic valuation, the health crisis, and the crisis of democracy have a shared root: the power of big businesses, footloose capital, and the false myth that our societies need more market competition.

Does Europe have a chance? Democratic capability-enhancing developmental states have to be the protagonists in this drama if we want to avoid unnecessary suffering. The most valuable things – public goods such as health, sustainability or inclusive development – cannot be entrusted to the markets. Instead of maximising growth and competition, the goal of economic policy should be to maximise life chances for current and future generations. Instead of the fantasy of trickle-down economics, we need to ensure inclusive growth through progressive income taxation, wealth taxes and new forms of economic democracy.

Europe’s conservative elites need to realise that they have to safeguard democratic quality with at least the same vehemence with which they were willing to enforce austerity after 2008

Nation states cannot achieve these transformations without progressive European cooperation. Although European elites took some baby steps in the right direction, the EU’s response to the corona crisis has been dangerously weak so far. Instead of solutions that individualise responsibility at the level of nation states, Europe needs shared debts to fund economic recovery and prevent any further increase in the gap between Europe’s Northern core and the Southern and Eastern rims. The EU also needs to curtail the power of footloose transnational capital and parasitic national bourgeoisies by closing European tax havens and curbing the downward race to the bottom on taxation by introducing European taxes. Institutional pressure for austerity has to end, and labour market precarity has to be reduced. Europe also needs to secure at least as much funding for a brave European Green New Deal as for saving the banks after 2008.

And finally, Europe’s conservative elites need to realise that they have to safeguard democratic quality with at least the same vehemence with which they were willing to enforce austerity after 2008. Otherwise, nationalist authoritarians will completely derail the dream of a sustainable, free and just shared European home. There is no solution to today’s intertwined crises without more European solidarity and more progressive politics.

Copyright Photo: European Union