Transcript Europe in the 1970s &1980s

Europe in the 1970s
&1980s
Moving right or moving left?
Toward a deeper Europe?
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
The 1970s
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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
Changing economic outlook

Sustained economic growth replaced by
stagflation:
• Increased unemployment
• Increased inflation as oil price increases ripple
through western economies
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Declining rates of economic growth
Increased bankruptcies, especially in basic
industries:
• Heavy metal
• Steel
• Shipbuilding
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:
Poland

Brazil, Asian tigers, even
Search for longer-term solutions
• Britain: a turn to the right
• Netherlands: return to social partnership
• France: swing to the left, then to Europe
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
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
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Trade unions refuse to comply with provisions for
registration, regulation
Attempt to join European Community (vetoed by
De Gaulle)
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
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
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Labour governments (1974-79)
• Harold Wilson (1974-76) & James Callahan
(1976-79) attempt Social Contract with trade
unions:
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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
Thatcher and Thatcherism

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Margaret Thatcher ousts
Heath as leader of
Conservatives in 1975
Thatcher’s vision – an end to
the “nanny-state” – a neoliberal view
• State to withdraw from the
economy
• Fosters enterprise culture
• Promotes market relationships
• Preference for monetarism
(regulation of money supply
rather than Keynsianism)
Thatcher’s policies
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Privatization of nationalized industries
Elimination of subsidies to declining industries
Curb trade union power
• Regulation of trade unions
• 1984 miners strike
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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
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
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
Netherlands
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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
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:
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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
France: moving left?

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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
Left in power
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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
Mitterand’s solution
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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
Impact:
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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),
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formation of the European Union,
but not necessarily the deeper Europe which had been
envisaged
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
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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 –
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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
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Nevertheless:
• UK a reluctant European
• Uncertain if sufficient political will to go forward
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
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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
The Maastricht Treaty (1991)

Establishes the European Union (EU)
• Encompasses separate communities
• Aim: ‘Ever Closer Union’
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Increases Qualified Majority Voting (QMV)
Increases powers of European Parliament
Established basis for Common Foreign &
Security Policy (CFSP)
• High Representative to serve as spokesperson
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Provision for single currency by 1999
• Measures to harmonize currency
• Euro introduced in 2001 in 11 of the (then) 15 memberstates
Pillar structure:
Different patterns of decision-making
• Pillar I, Community pillar
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Decisions by qualified majority
• Pillar II, Foreign & Security Policy:
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Member states retain veto
• Pillar III, Justice and Home Affairs:
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New policy area
Member-states retain veto
Impetus
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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
A wider v. deeper Europe:
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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

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Euroskeptism in British Labour Party
Mrs. Thatcher:
• Favours wider market
• Abhors federal Europe
• Wanted UK’s “money back”

Growing euroskeptic wing in Conservative Party
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