Monday, 23 November 2009

Europeans Sour on American-Style Capitalism

TIME: French President Nicolas Sarkozy has spent the past year hammering away at the excesses of American-style capitalism. In September, European Commission President Jose Manuel Barroso declared that workers' rights and "social cohesion" were top priorities on the Old Continent. And Italy's veteran Economy Minister, Giulio Tremonti, went out of his way last month to praise the posto fisso (guaranteed job for life) as a supreme public value.

In certain European political and intellectual circles, such talk would hardly turn heads. But those three men wagging their fingers at the free market were thought to have their capitalist bona fides as part of a generation of European business and government leaders who had pushed for reforming the welfare system and opening up the job market. Often in open ideological war against the entrenched interests of labor unions and leftist politicians, the likes of Sarkozy and Tremonti had long insisted that free-market reforms were the only way to create a more dynamic Europe in an increasingly competitive globalized economy.

So how do we explain the fact that longtime Ronald Reagan admirers are suddenly starting to sound like a union activist's picket sign? Has the Great Recession of 2008-09 effectively sapped all the energy from Europe's post-1989 wave of economic neoliberalism? "Quite clearly, the state is back," notes Iain Begg, a professor of European political economy at the London School of Economics. "In front of the failures of the Anglo-American model, we are seeing a revival of Keynesian approaches to react to the crisis."

Of course, the ideas of John Maynard Keynes are also behind the auto-industry bailouts, new financial regulations and public investments pushed by the Obama Administration. The difference is both in the details and the big picture: not only do specific national economic policies in Europe tend to still trail those of the U.S. on the free-market curve, but there is also a lingering ingrained suspicion about capitalism itself. >>> Jeff Israely | Tuesday, November 17, 2009