Postwar: A History of Europe Since 1945

by Tony Judt

The bigger it grew, the harder the European Community was to manage.

So long as there was sufficient cash to go around, economic cooperation could be presented as a net benefit to all parties; whereas any political move in the direction of European integration or coordination implicitly threatened national autonomy and restricted domestic political initiative. Only when powerful leaders of dominant states agreed for reasons of their own to work together toward some common purpose could change be brought about.

a further reminder that, as in the past, Franco-German cooperation was the necessary condition for the unification of Western Europe. The impulse behind Franco-German moves in the Seventies was economic anxiety. The European economy was growing slowly if at all, inflation was endemic and the uncertainty resulting from the collapse of the Bretton Woods system meant that exchange rates were volatile and unpredictable. The Snake, the EMS and the écu were a sort of second-best—because regional rather than international—response to the problem, serially substituting

the Deutschmark for the dollar as the stable currency of reference for European bankers and markets. A few years later the replacement of national currencies by the euro, for all its disruptive symbolic implications, was the logical next step. The ultimate emergence of a single European currency was thus the outcome of pragmatic responses to economic problems, not a calculated strategic move on the road to a pre-determined European goal. Nevertheless, by convincing many observers—notably hitherto skeptical Social Democrats—that economic recovery and prosperity could no longer be achieved at a national level alone, the successful monetary collaboration of Western European states served as an unexpected stepping stone to other forms of collective action.

A retreat from the system of national vetoes in the European Council was unavoidable if any decisions were to be taken by an increasingly cumbersome community of states that had doubled its size in just thirteen years and was already anticipating applications for membership from Sweden, Austria and elsewhere.

From the point of view of Brussels-based officials, the ERDF and other so-called ‘structural funds’ had two purposes. The first was to address the problem of economic backwardness and unevenness within a Community that was still very much guided by a post-war culture of ‘growth’, as the Single European Act made quite explicit. With each new group of members came new inequalities that required attention and compensation if economic integration was to succeed.

The second motive behind Europe’s enormously costly regional funding projects—between them the various ‘Structural’ and ‘Cohesion’ Funds would consume 35 percent of all EU expenditure by the end of the century—was to enable the European Commission in Brussels to bypass uncooperative central governments and collaborate directly with regional interests within the member-states.

The new regionalist politics fell into many over-lapping sub-categories—historical, linguistic, religious; seeking autonomy, self-government or even full national independence—but generally divided into wealthy provinces, resentful at being obliged to subsidize penurious regions of their own country; and historically disadvantaged or newly de-industrialized zones, angry at being neglected by unresponsive national politicians.

A certain sort of united Europe was indeed beginning to come into focus. Regionalism, once the affair of a handful of linguistic recidivists or nostalgic folklorists, was now offered as an alternate, ‘sub-national’ identity: displacing the nation itself and all the more legitimate in that it came with the imprimatur of official approval from Brussels and even—albeit with distinctly less enthusiasm—from national capitals as well.

The residents of this increasingly parcelized Community, whose citizens now professed multiple elective allegiances of variable cultural resonance and daily significance, were perhaps less unambiguously ‘Italian’ or ‘British’ or ‘Spanish’ than in decades past; but they did not necessarily therefore feel more ‘European’, despite the steady proliferation of ‘European’ labels and elections and institutions. The lush undergrowth of agencies, media, institutions, representatives and funds brought many benefits but won scant affection.

Between a reputation for policy-making by distant unelected civil servants, and well-stocked rumors of political back-scratching and profiteering, ‘Europe’ in these years was not well served by its own achievements. The familiar shortcomings of local politics—clientelism, corruption, manipulation—that the better-run nation states were thought to have overcome now resurfaced on a continental scale. Public responsibility for occasional ‘Euro-scandals’ was prudently shifted by national politicians onto the shoulders of an invisible class of unelected ‘Eurocrats’, whose bad name carried no political cost.

The decades-long drive to overcome continental disunity by purely technical measures was looking decidedly political, while lacking the redeeming legitimacy of a traditional political project pursued by an elected class of familiar politicians. Insofar as ‘Europe’ had a distinctive goal, its economic strategy was still grounded in the calculations and ambitions of the Fifties. As for its politics: the confident, interventionist tone of pronouncements from the European Commission—and the authority and open chequebooks with which European experts descended on distant regions—bespoke a style of government rooted firmly in the social-democratic heyday of the early Sixties.

Every politically significant revolution is anticipated by a transformation of the intellectual landscape. The European upheavals of the 1980s were no exception. The economic crisis of the early Seventies undermined the optimism of Western Europe’s post-war decades, fracturing conventional political parties and propelling unfamiliar issues to

the center of public debate. Political argument on both sides of the Cold War divide was breaking decisively with decades of encrusted mental habits—and, with unexpected speed, forming new ones. For better and for worse, a new realism was being born. The first victim of the change in mood was the consensus that had hitherto embraced the post-war state, together with the neo-Keynesian economics that furnished its intellectual battlements.

The post-war welfare states rested upon two implicit assumptions: that economic growth and job creation (and thus government income) would continue at the high levels of the fifties and sixties; and that birth-rates would remain well above replacement level, ensuring a ready supply of new tax-payers to pay for their parents’—and grandparents’—retirement.

Public policy since the 1930s rested on a broadly unquestioned ‘Keynesian’ consensus. This took for granted that economic planning, deficit financing and full employment were inherently desirable and mutually sustaining. Its critics offered two lines of argument. The first, quite simply, was that the array of social services and provisions to which Western Europeans had become accustomed were not sustainable. The second argument, offered with particular urgency in Britain—where the national economy had staggered from crisis to crisis for most of the post-war decades—was that, sustainable or not, the interventionist state was an impediment to economic growth. The state, these critics insisted, should be removed as far as possible from the market for goods and services. It should not own the means of production, it should not allocate resources, it should not exercise or encourage monopolies, and it should not set prices or incomes. In the view of these ‘neo-liberals’, most of the services currently furnished by the state—insurance, housing, pensions, health and education—could be provided more efficiently in the

private sector, with citizens paying for them out of income no longer (mis-)directed to public resources. In the view of one leading exponent of free-market liberalism, the Austrian economist Friedrich Hayek, even the best-run states are unable to process data effectively and translate it into good policy: in the very act of eliciting economic information they distort it.

Since 1973, however, free-market theorists had re-emerged, vociferous and confident, to blame endemic economic recession and attendant woes upon ‘big government’ and the dead hand of taxation and planning that it placed upon national energies and initiative.

only in Britain were the political disciples of Hayek and Friedman able to seize control of public policy and wreak a radical transformation in the country’s political culture.

If the British political consensus collapsed in the ensuing decade it was not because of ideological confrontation but as a consequence of the continuing failure of governments of all colours to identify and impose a successful economic strategy.

‘Thatcherism’ stood for various things: reduced taxes, the free market, free enterprise, privatization of industries and services, ‘Victorian values’, patriotism, ‘the individual’.

But what Thatcherism stood for more than anything else was the ‘smack of firm government’. By the end of the Seventies there was much anxious debate about Britain’s purported ‘ungovernability’, the widely-shared perception that the political class had lost control, not just of economic policy but of the workplace and even the streets.

The Thatcherite revolution strengthened the state, cultivated the market—and set about dismantling the bonds that had once bound them together. She destroyed forever the public influence exercised by Britain’s trade unions, passing laws that limited union leaders’ ability to organize strikes, and then getting them enforced in the courts.

Thanks to Mrs. Thatcher there emerged in Britain a much-expanded market for goods, services and, eventually, labour. There was more choice and (though this took longer and remained imperfect) more price competition.

As an economy, then, Thatcherized Britain was a more efficient place. But as a society it suffered meltdown, with catastrophic long-term consequences. By disdaining and dismantling all collectively-held resources, by vociferously insisting upon an individualist ethic that discounted any unquantifiable assets, Margaret Thatcher did serious harm to the fabric of British public life. Citizens were transmuted into shareholders, or ‘stakeholders’, their relationship to one another and to the collectivity measured in assets and claims rather than in services or obligations. With everything from bus companies to electric supply in the hands of competing private companies, the public space became a market place.

Public spaces fell into neglect. Petty crime and delinquency rose in line with the growing share of the population caught in permanent poverty. Private affluence was accompanied, as so often, by public squalor.

Thus when Mrs. Thatcher and her successor John Major so much as hinted that they might begin privatizing the National Health Service or charging fees for state education, public support evaporated—among precisely those newly-prosperous but highly vulnerable sectors of the population that had been attracted to Thatcherism in the first place.

Among Margaret Thatcher’s chief victims was her very own Conservative Party. By the time the Iron Lady had finished with it, the Tory Party—Britain’s ‘natural’ party of government for nearly a century—had no program, no leaders and, as it appeared to many, no soul.

Most of Mrs Thatcher’s Tory contemporaries, not to mention the party’s cohort of elder statesmen whom she thrust aside as soon as she dared, were genuine conservatives, old enough in many cases to remember the bitter political divisions of the inter-war years and wary of arousing the demon of class warfare. Thatcher was a radical, bent upon destruction and innovation; she scorned compromise. For her, class warfare, suitably updated, was the very stuff of politics. Her policies, often dreamed up at very short notice, were secondary to her goals; and these in turn were in large measure a function of her style. Thatcherism was about how you govern, rather than what you do. Her unfortunate Conservative successors, cast out upon the blasted landscape of post-Thatcherism, had no policies, no goals—and no style.

It took the Labour Party fourteen years and three different leaders to recover from the catastrophe of 1983. Politically, the party had to isolate and destroy the influence of Trotskyites and other ‘hard’ Left activists in some of its regional strongholds (notably Liverpool). Sociologically, it needed to come to terms with its failure to keep abreast with the concerns and aspirations of a new middle class, without whose support it could never again be elected to office, and which outnumbered the evaporating core of industrial proletarians and public sector employees on whom Labour (like all Social Democratic parties) had traditionally relied. Intellectually, Labour’s leaders needed to identify a new set of policy objectives—and a new language in which to present them.

Instead New Labour’s campaign, aimed almost exclusively at marginal, ‘soft’ Conservative voters, inveighed against high taxes, corruption and inefficiency—the very objects of Mrs. Thatcher’s own attacks a generation before. If Tony Blair and his colleagues drew a discreet veil over the Thatcherite era, this was not by chance. Blair’s successes rested squarely upon a threefold inheritance from Mrs. (now Lady) Thatcher. First, she ‘normalized’ the radical dismantling of the public sector in industry and services and its replacement with the ‘privatized’, entrepreneurial Britain whose praises Blair sang with such gusto. Second, and in the process, she had destroyed the old Labour Party and facilitated the task of those who fought to reform it: Blair had merely to reap the rewards of their work. And third, as we have seen, her asperity and her intolerance of dissent and disagreement had fractured her own party and rendered it unelectable.

For the first time in two generations the role of the state had been put up for discussion and fewer and fewer voices were heard in its defense, at least within the political mainstream. To be sure, there were those who continued to believe that the Thatcherite revolution wrought havoc, and that a return to direct state management of services (if not public ownership of production) was still to be desired. But in the wake of Mrs. Thatcher theirs was a case that had to be made—and except with respect to core social goods like education and medicine, it was no longer guaranteed a sympathetic hearing.

One legacy of the Sixties—the renewed interest in local and regional languages and culture—seemed to threaten the very territorial integrity and unity of France itself. To fearful contemporaries their country appeared to be modernizing and splitting apart all at once. But the state remained above the fray.

But in France it was the state itself that seemed to hold the key to the country’s economic resurgence. Its managers were the country’s intellectual élite; its planners saw themselves as a class of disinterested civil servants unaffected by the nation’s ephemeral ideological passions and social eruptions. Politics in France divided the nation bitterly over the question of who would gain power and to what social ends; but concerning the question of how they would wield that power there was a remarkable practical consensus.

Mitterrand had forged a superb electoral machine, turning the Socialist Party into a catch-all movement appealing across the whole spectrum of French society, including Catholics, women, farmers and small shopkeepers, all hitherto hostile to the Socialists.

The supreme pragmatist, Mitterrand grasped readily enough that it was unthinkable for France even to contemplate choosing between remaining in the Western economic (and political) orbit and casting itself out into a doubtfully sustainable middle route between

capitalism and Communism. Making a lasting virtue out of passing necessity, he duly re-fashioned himself as a leading ‘Europeanist’. France would build a better society through European unification rather than against it. Rather than struggle against capitalism France would invent a superior version. By 1984 Mitterrand had removed the four Communist ministers in his government; publicly proclaimed the virtues of a ‘mixed’ economy; appointed a young and technocratic prime minister, Laurent Fabius; handed the management of economic affairs, finance, and the budget to Jacques Delors, with instructions to stabilize the French economy10; and even, in a prominent speech in April of that year, called for a French modernization ‘à l’américaine’.

Mitterrand devoted the rest of his long reign (he retired in 1995 after two seven-year presidential terms, dying at the age of eighty the following year) to expensive public works of questionable aesthetics and utility; the re-establishment of French international initiative11; . . . and to overseeing the restoration into private hands of the many services and industries he had only recently taken

into public control.

In contrast to Mrs. Thatcher and her heirs, however, the French were cautious about selling off public utilities, or ‘strategic’ firms like the Renault car company (only recently saved from bankruptcy by a huge capital grant from the state in 1985). In markets as in gardens, the French were suspicious of unplanned growth. They preferred to retain a certain capacity to intervene, typically by keeping a portion of even privatized firms in state hands. Privatization itself, in France, was thus a distinctly regulated affair—controlling shares were carefully directed towards enterprises and businesses on whom the state could rely, and international investors remained for many years understandably suspicious.

In the first place, accelerating developments in technology—notably in telecommunications and the financial markets—were undermining the old ‘natural’ monopolies. If governments could no longer harness the airwaves, or the movement of money, for their own exclusive use, it made little sense for them to ‘own’ them. There remained a powerful political or social case for the state retaining part of a given sector—a public television channel, say, or the post office; but competition was now unavoidable. In the second place, governments were being driven to sell public assets out of short-term economic necessity. Pressed by inflation, the oil crisis of 1979–80, large annual

deficits and growing government indebtedness, finance ministers looked upon the sale of publicly-owned assets as doubly beneficial. The state would off-load loss-making industries or services; and the monies thus raised would help balance the budget, albeit on a one-time basis.

Given such national disparities, the forms of privatization in Europe naturally diverged significantly. In every case, however, they entailed some element of deregulation; the liberalization of markets; and the introduction of new financial instruments to facilitate the sale and re-sale of shares in partly- or wholly-privatized companies.

But Brussels’ chief means of leverage were the rules being drawn up for the operation of a single European market. The latter obliged all businesses—public and

private alike—to conform to norms of open competition within and eventually between countries. There was to be no favoring of national ‘champions’, or hidden subsidies or other advantage for publicly-owned or controlled enterprises competing for contracts or custom.

Critics had warned that the result would not be more competition but simply a transfer of concentrated economic power from the public to the private sphere and this is what happened. Thanks to complicated cross-shareholding arrangements, many large private firms in France, for example, mimicked the behaviour of the old public companies. They monopolized whole sectors and were no more responsive to their small ‘stakeholders’ than they had been to taxpayers or consumers when administered under public management.

Economic liberalization did not signal the fall of the welfare state, nor even its terminal decline, notwithstanding the hopes of its theorists. It did, though, illustrate a seismic shift in the allocation of resources and initiative from public to private sectors. This change went far beyond the technical question of who owned which factories, or how much regulation there was to be in any given industry. For nearly half a century Europeans had watched the state, and public authorities, play a steadily more prominent part in their affairs. This process had become so commonplace that the premise behind it—that the activist state was a necessary condition of economic growth and social amelioration—was

was largely taken for granted. Without the cumulative unraveling of this assumption in the course of the waning decades of the century, neither Thatcherism nor the Mitterrand volte-face would have been possible.

This widely-shared understanding of Europe’s recent past blended the memory of Depression, the struggle between Democracy and Fascism, the moral legitimacy of the welfare state, and—for many on both sides of the Iron Curtain—the expectation of social progress. It was the Master Narrative of the twentieth century; and when its core assumptions began to erode and crumble, they took with them not just a handful of public-sector companies but a whole political culture and much else besides.

But timing was all. Intellectual critics of Communism had never been lacking; however their impact had for many decades been blunted by a widespread desire in Western Europe (and, as we have seen, in Eastern Europe through the 1960s) to find some silver lining, however dim, in the storm cloud of state socialism that had rolled across much of the continent since it first broke upon Russia in 1917. ‘Anti-Communism’, whatever its real or imputed motives, suffered the grievous handicap of appearing to challenge the shape of History and Progress, to miss the ‘bigger picture’, to deny the essential contiguity binding the democratic welfare state (however inadequate) to Communism’s collectivist project (however tainted).