Europe in the 1970s &1980s

1. Europe in the 1970s &1980s Moving right or moving left? Toward a deeper Europe?

2. New Political Science Curriculum Information Meeting 1:00-1:50pm Wednesday, April 1 Room SN-2105 For returning Political Science Honours, Majors and Minors Topics Course renumbering New courses New requirements New prerequisite policy "Grandfathered" status Sample course patterns Questions and answers

3. The 1970s • The 1973 Energy Crisis & its impact: OPEC oil boycott results in • rising prices • fuel shortages & car-less Sundays • shift of wealth from the west to oil producers in the Gulf & elsewhere

4. Changing economic outlook • Sustained economic growth replaced by stagflation: • Increased unemployment • Increased inflation as oil price increases ripple through western economies • Declining rates of economic growth • Increased bankruptcies, especially in basic industries: • Heavy metal • Steel • Shipbuilding

5. Solutions: • Short-run: • Index wages to rate of inflation • Restructure declining industries • Attempts to save jobs, cushion impact on workers and employees • However quick fixes don’t work: • Problem runs deeper • Increased openness, exposure to world economy: competition from • Green field plants • Newly industrialized countries: Brazil, Asian tigers, even Poland • Search for longer-term solutions • Britain: a turn to the right • Netherlands: return to social partnership • France: swing to the left, then to Europe

6. United Kingdom Mounting economic problems from the 1960s • Slower rates of economic growth • Aging industrial plant reflecting • Earlier industrialization • Relative lack of wartime destruction • Problematic industrial relations - frequent strikes reflecting • Shop-floor power • Jurisdictional disputes among craft-based unions

7. Attempted Solutions • Attempt to imitate French economic planning in the early 1960s: • Establish National Economic Development Council (NEDC), attempt to elicit cooperation from unions and employers • Attempts by both Labour and Conservatives to regulate trade unions: • “Battle of Downing Street” (1969): Labour fails to regulate unions – backbench rebels – law is not passed • Conservative government passes Industrial Relations Act in 1971 • Trade unions refuse to comply with provisions for registration, regulation • Attempt to join European Community (vetoed by De Gaulle)

8. The 1970s: fading consensus • Mounting economic problems • Major industries – steel, shipbuilding, aeronautics – need state subsidies to continue operating • Hyper-inflation because of energy crisis • Parties’ response: • Labour, increasingly divided, moves to the left • re-embraces state ownership, socialism (but party divided at all levels) • Conservatives, under Margaret Thatcher from 1975, move to the right • reject state ownership, extensive involvement in the economy

9. Prelude to Thatcherism • Heath government (1970-74) • Attempts to regulate unions – fails • Attempts to avoid subsidies to declining industries • 1974 Miners strike – results in new election • Labour governments (1974-79) • Harold Wilson (1974-76) & James Callahan (1976-79) attempt Social Contract with trade unions: • Unions agree to restrict wage demands, provide labour peace in exchange for longer term benefits • Social contract succeeds in damping down wage demands from 1976-78 • Wave of strikes – winter of discontent – breaks out in 1979

10. Thatcher and Thatcherism • Margaret Thatcher ousts Heath as leader of Conservatives in 1975 • Thatcher’s vision – an end to the “nanny-state” – a neo-liberal view • State to withdraw from the economy • Fosters enterprise culture • Promotes market relationships • Preference for monetarism (regulation of money supply rather than Keynsianism)

11. Thatcher’s policies • Privatization of nationalized industries • Elimination of subsidies to declining industries • Curb trade union power • Regulation of trade unions • 1984 miners strike • Trims welfare state (but doesn’t eliminate) • Attacks bastions of Labour Party power: • Sale of council (public) housing • Restrictions on local council taxation and spending • Reserved attitude toward the European Union: favour larger market but oppose any form of federal Europe

12. Transformation of the party system • Conservative Party abandons postwar stance (one-nation conservatism) and embraces neo-liberalism • Favours a weak state – except in the administration of justice • Labour initially moves further to the left • Re-embraces socialism in early 1980s • Following election defeats in 1979, 1983, 1987 begins move back toward centre • Liberals Democrats (formed by merger of Liberals and Social Democrats) gain votes in the centre • Win up to 20% of the popular vote, but • Win few seats under single-member plurality electoral system

13. Transformation of British society • Decline of industrial north • Increased wealth of south, especially around London • Growth of the City – London’s financial centre • Eventual recovery of British economy • Prosperity of financial and business centre in the south • UK as cheap labour zone: able to attract new plants on basis of lower labour costs • Sharp disparities in distribution of wealth

14. Netherlands • Like Britain, mounting economic problems • Increased inflation results in wage indexation • Restructuring in ship-building, heavy metal • By early 1980s, mounting unemployment (~20%) reflecting decline of manufacturing • Problems: • Shift from a low wage economy, in which incomes had been managed, to a high wage economy in the 1960s • industries built on the assumption of low wages are no longer viable

15. Solutions: • Return in 1982 to revamped system of social partnership: • Trade unions agree to wage reductions in exchange for reductions in work hours and creation of part-time jobs • Trade unions and employers associations work together to tackle selected problems: • Retraining workers • Finding work for long-term unemployed • Renewed partnership but different from the past: • Reliance on voluntary rather than compulsory or imposed settlements • Over time, increased reliance on market mechanisms

16. France: moving left? • Right (Gaullists and allies) control both the Presidency & National Assembly thru 1981 • 1981 as turning point: Left comes to power • Francois Mitterand, leader of the Parti Socialiste (PS), wins the Presidency • Dissolves National Assembly, secures Socialist majority

17. Left in power • Reform labour laws: enshrine right to strike • Begin to decentralize the French state • Attempt to reflate the French economy, to improve workers’ position • Rude awakening: • Reflation results in balance of payments problems, flight of capital • Forced to implement austerity measures, cut expenditures in 1982 & 1984

18. Mitterand’s solution • Renewed interest in European integration • France with Germany presses for greater economic and political integration: • Currencies linked together in European monetary system • Single European Act (1987) opens the way for completion of single market: • Qualified majority voting (QMV ,voting on the basis of a weighted majority) replaces national veto to speed passage of necessary legislation

19. Impact: • Neither a move to the left nor right, per se, but to another level of governance • Recognition that national solutions no longer viable • In response, return to the European project, in some sense stalled since the 1960s: • Attempt, with others, to shift power to a new level of governance in which greater control possible • Renewed transnationalism • Results in Maastricht Treaty (Treaty on European Union, 1991), • formation of the European Union, • but not necessarily the deeper Europe which had been envisaged

20. European integration • France stalls European project in 1960s • Empty chair crisis (France walks out) • Luxembourg Compromise – retain nat’l veto on matters of national importance • Renewed momentum in 1970s • UK, Ireland & Denmark join in 1973 • Special powers of ECSC used to deal with over-capacity in steel • First attempts at monetary union – • Key currencies linked in “snake” – rising and falling together – from 1972-1974 • European Monetary System (EMS), established in 1978 • Direct elections to European Parliament from 1979 • Nevertheless: • UK a reluctant European • Uncertain if sufficient political will to go forward

21. 1980s • Further enlargements • Greece (1981) • Spain & Portugal (1986) admitted • EC shoring up new democracies • Single European Act (SEA) 1985, 1987 • Single market for goods and services to be completed by 1992 • Qualified majority voting (QMV) introduced to speed legislative process • More than 300 pieces of legislation required to ensure single market, common product standards, free movement • Paves way for Maastricht Treaty (Treaty on European Union) 1991

22. The Maastricht Treaty (1991) • Establishes the European Union (EU) • Encompasses separate communities • Aim: ‘Ever Closer Union’ • Increases Qualified Majority Voting (QMV) • Increases powers of European Parliament • Established basis for Common Foreign & Security Policy (CFSP) • High Representative to serve as spokesperson • Provision for single currency by 1999 • Measures to harmonize currency • Euro introduced in 2001 in 11 of the (then) 15 member-states

23. Pillar structure: Different patterns of decision-making • Pillar I, Community pillar • Decisions by qualified majority • Pillar II, Foreign & Security Policy: • Member states retain veto • Pillar III, Justice and Home Affairs: • New policy area • Member-states retain veto

24. Impetus • Growing realization that many problems require European solutions • Franco-German axis • France & Germany, with smaller states, drive process forward • Pressure from large corporations • Growing need for a single market & uniform product standards

25. A wider v. deeper Europe: • European project embraced by elites, particularly in older member-states • However, not everyone favours a deeper, federal Europe • Denmark: in, but only so far • UK: a reluctant European • Euroskeptism in British Labour Party • Mrs. Thatcher: • Favours wider market • Abhors federal Europe • Wanted UK’s “money back” • Growing euroskeptic wing in Conservative Party

26. Balance sheet • Fears in 1970s that double digit inflation might de-stabilize democracies • Prove unfounded • Instead, 3rd wave of democratization begins with collapse of dictatorships in Greece, Spain and Portugal • Stabilizing mechanisms crafted in postwar period don’t work as smoothly as before – cf. problems of stagflation – but no slide into crisis or depression • Welfare states provide cushion • Europe project: • more integrated & united than before • Debate over a wider v. deeper Europe an important step • Different than Europe in 1914, 1920 or even 1950