Europe’s Social Contract Under Stress

Abstract

We are currently living in an era of welfare pessimism. While extensive welfare programmes and high levels of social transfers remain central to the political economy of western — and, to a lesser extent, eastern — European countries, the traditional ‘social contract’ between states and their citizens is simultaneously failing to fulfil its original objectives while also being eroded by stealth or, in some cases, directly attacked. Older notions of solidarity are breaking down as structural changes in western societies render political and economic identities more individualistic and group oriented and the changing balance between the generations (the ageing of western societies) threatens the contract that was originally struck between them. Globalization, although of contested significance, has reduced the autonomy of governments to pursue ‘market-correcting’ policies and preserve their own idiosyncratic forms of ‘social contract’. Although their existence is not in jeopardy, the western welfare states are clearly at an impasse. There appear to be few viable alternatives available to a shift towards ‘more market’ and the acceptance of greater inequalities, as revealed by the convergence of major party political programmes on an agenda of reregulation and ‘neo-liberal’ reform.