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Crisis - what crisis?

Why is widespread social anxiety fuelling xenophobia rather than criticism of neoliberal capitalism? What role has the state played? Have we arrived at the paradoxical situation where the best we can do is to call on the state to do its job?

The social misery the economic meltdown has inflicted has not triggered a crisis in the legitimacy of Europe’s system as such. This is puzzling. If elections are any indicator of prevailing preferences in democratic societies, the most recent round of national elections in Europe confirm that free-market capitalism has considerable popular support. In the midst of the rampant economic crisis, the vote has gone to the right, and not simply to the conservative or the xenophobic extreme right, but to parties of the economically liberal right advocating the very economic model that caused the crisis. Support to left parties is at a historic low. Social frustration, instead, is being channelled into xenophobia.

Absent is a broad cross-ideological coalition of forces that can protect society, similar to the counter-movement against free markets that Carl Polanyi observed to be taking shape in the early twentieth century. At the time, European Conservatism and Socialism came to a consensus on the need to constrain markets, a consensus on which the post-war welfare states were built. Instead, we now have governments, irrespective of their ideological allegiance, running to the rescue of finance capital and big business, and implementing austerity programmes to reassure capital markets, while society bears this with equanimity, despite the price it is paying in terms of cuts to social insurance, to basic services for the most disadvantaged, a marked rise in unemployment, and a rapid drop in consumers’ purchasing power.

Why is widespread social anxiety fuelling xenophobia, rather than a constructive counter-wave against neoliberal capitalism?

Three factors conspire.

The state: more powerful, less responsible

Over the past three decades, public authority - at both state and EU level - has accelerated action to enhance market efficiency, entailing a dramatic increase in social risk. Yet at the same time, public authority has ceased to assume responsibility for the generated risk. Rather than a retrenchment of the state, we have the new phenomenon of increase in the power of governing bodies (and their capacity to inflict social harm), while their responsibility for the social consequences of policy action decreases. This discrepancy between power and responsibility damages democracy, as the exercise of power becomes ever more autocratic, even if all rituals of democratic politics are meticulously performed.

But if the discrepancy between power and responsibility is eroding the authority of states (as Richard Sennett has claimed in his The Culture of the New Capitalism) it might be expected to trigger a legitimation crisis of the system and mass revolts. Yet no such crisis ensues. For meanwhile, the legitimacy relationship (or the social contract) between citizens and states has altered in such a way as to absolve the state from social responsibility. Let me trace the logic of this development.

The reform of the welfare state in the late twentieth century consisted in transferring responsibilities for wellbeing from public authority to citizens. Regulatory policy enforced individual self-reliance on matters ranging from finding jobs and securing pensions to remaining employable, maintaining a healthy lifestyle, and protecting the environment. Justifying neo-liberal economic policy by describing globalization as ‘inevitable’, public authority has thereby effectively managed to redefine its relationship with citizens: market-regulative functions linked to the provision of social rights (wealth redistribution, guaranteed employment) have exited this relationship. A whole generation of citizens has by now been socialised into the practices and ideology of individual responsibility.

Surveys indicate that individuals, especially the young (the potential victims of 20% youth unemployment in the EU) do not expect public authority to provide economic and social safety. There is no legitimacy crisis, no mass-scale revolts, because the very social contract has been altered to exclude issues of social safety from the range of responsibility of public authority. The state has been absolved from such responsibility by the very publics suffering the increased risk of social fall-out.

While some have celebrated individual responsibilisation as a form of emancipation, as “turning collective requirements into individual opportunities for choice” (Ulrich Beck), in the context of the economic uncertainty that is typical of globalisation, it is bound to breed anxiety and engender social pathologies rather than foster emancipation. Autonomy that imposes an overwhelming burden of responsibility on individuals for their well-being quickly decays into what Erich Fromm has called the “fear of freedom”. It is exactly because public authority is perceived as incapable of managing the nebulous threats coming from a globally integrated world, that this fear of freedom is being channelled into hatred of strangers, rather than into demands for more social protection.

The ‘rich Uncle’ state

The role of the state has been further altered in recent years to allow it to actively manage the distribution of opportunities and risks via a new type of intervention: intervention aiming to lend support to specific economic actors. We have all witnessed the massive bailout of failing banks, but also the special support states have provided to specific companies (e.g. in the automotive industry) during the economic crisis. This aligns with a practice, preceding the crisis, of setting up ‘national champions’ – private companies receiving large financial benefits from their states in defiance of EU competition rules on the grounds of their being strategically important for the competitiveness of national economies. This redistribution of funds from taxpayers to particular businesses or sectors of the economy amounts to saving capitalists, rather than saving capitalism.

However, it is not only corporate capital that has profited from this privileged treatment by the states; so have groups of workers. Take the recent decision of the French Government, alarmed by the stagnating and falling incomes (together with a decline in purchasing power) triggered by its austerity measures, to introduce in April a one-off payment of 1000 euro per salaried worker. The beneficiaries of this seemingly generous provision are highly selective: workers in the largest publicly listed enterprises on the French stock-exchange (CAC 40). Left out are those working in the SMEs, public sector employers, and those on minimum wage (so called ‘smicards’).

These new distributive functions of public authority, developed well before the economic crisis, have constructed a new matrix of state-society relations. The overly-protective ‘nanny state’ of post-war welfare capitalism, and the ‘step-mother state’ of the neoliberal late twentieth century (a state which takes its distance from society), has been replaced by the “rich Uncle” state – one that readily intervenes to help select actors but only for the sake of competitiveness in the global economy.

New winners and losers

The new configuration of winners and losers takes shape, across the traditional divide between capital and labour that once formed the contours of Left and Right political families in Europe. Now a new alliance of social forces is mobilising around a ‘risk’ pole, where self-perceived losers from globalisation and neoliberal capitalism rally behind policies of economic patriotism – a combination of closed (protected) economy, as well as cultural sovereignty (anti-immigrant sentiment). On the opposite ‘opportunity’ flank converge the supporters of the centre-left and centre-right parties that embrace free and open markets, as well as culturally liberal and cosmopolitan values.

All these factors combine to create a novel type of xenophobia, now fuelling mass support to populist parties in Europe. In contrast to the old version in which hostility to foreigners was cast in terms of the protection of cultural and political sovereignty (national chauvinism), the foundation of xenophobia is now more explicitly economic. It is related to perceived threats to socio-economic wellbeing (especially job loss) brought about by open border policies in the context of globalisation. Note, for instance, that ‘classical’ post-WWII parties of the far right, such as the French Front National who have not had hitherto an explicit economic programme (though tacitly embracing free market capitalism) are now abandoning their economic liberalist stance and actively calling for social protectionism, as are newly-emerging populist parties such as the Dutch Party for Freedom, the Swedish Democrats and the True Finns, who are appealing for the return of the welfare state. That the far right has an explicit economic programme and, moreover, that it takes a hostile stance to free markets, are new features of the far right – features that have emerged only since the late 1990s. Ominously, this combination of xenophobia and appeals to social protection is reminiscent of the ‘third way’ Nazi and fascist parties of the interwar period.

Recent surveys corroborate this new, economic rather than cultural, foundation for xenophobia – as a significant percentage of Europeans declare that the current level of immigration is spoiling the quality of life, by combining the (perceived) threat of jobs loss with pressures on the social security system, and the state education and health systems (according to a Harris poll published in Financial Times, September 6, 2010). As fear of job outsourcing in the context of globalisation is becoming shared across the working and the middle classes, economic xenophobia has come to taint the discourse equally of centre-left and the centre-right.

Significantly, in its formative stage, the basis of this economic xenophobia is not impoverishment, and neither is it the growing gap between rich and poor, as is commonly claimed. The basis is a perception of economic insecurity and a threat to livelihood. These are different things. Note, for instance, that anti-immigration populist parties started to mobilise successfully in the affluent nineties, in conditions of good economic growth and low unemployment, but feeding on the sense of uncertainty that intensified globalisation was creating. Despite the extraordinary prosperity Europeans enjoyed in the late nineties, the sense of anxiety and insecurity on an everyday level was steadily growing, fuelling anxiety based on perceptions of physical insecurity, political disorder, cultural estrangement, and employment insecurity. What triggers these fears are perceptions of threat, rather than actual exposure to threat. For instance, the data on popular perceptions about the negative economic impact of immigration is in contrast with data indicating that the actual flow of migration is diminishing. Although 40% of Germans say immigration is making the country a worse place to live in (according to the study cited earlier), Turkish emigration to Germany has declined dramatically since 2000.

Today, anti-immigrant parties are thriving in relatively rich and egalitarian countries such as Switzerland, Sweden and Finland. In Finland, too, analysts note that a populist upsurge has been brewing for years as decline in traditional Finnish industries such as forestry and paper have brought economic insecurity. In response to this insecurity about maintaining a standard of living, including a sense of physical insecurity, a new public-order-and–safety agenda has taken shape in recent years, which is mobilising extreme-right populism around a ‘risk’ pole and ushering in a novel political era in European politics.

This era is shaped by social anxiety, whose source is the perceived fragility of the model of wellbeing, and the incapacity of individuals, without the proper help of public authority, to assume the responsibilities forced upon them. As economic liberalism and globalisation have come to be accepted in most advanced industrial democracies as having no alternative, citizens have begun to address public authority with demands for compensation for the insecurity caused by globalisation. Such demands for compensation range from curbing immigration, protection from ‘pandemics’, increased safety in public spaces, blocking EU enlargement, or most brutally – hostility to strangers.

Responsibility must go back to the State

It is not the invisible hand of the market that is generating the anxieties haunting our societies. Behind the alleged inevitability of increased market freedoms and decreased social protection stands a particular formula of policy-making that has been adopted by public authorities at both the level of EU central institutions and member-states, irrespective of governments’ nominal ideological affiliation.

First, this is the economic policy of productivity-focused jobless growth. This formula of supply-side economics, which prioritises the fast increase in productivity for the sake of competitiveness in the global economy, first emerged in the 1980s and has been preserved throughout the recent jobless economic recovery. This formula of economic policy generates insecurity even while it effectively generates growth. The second culprit is the politics of individual responsibilisation that is turning citizens’ declared right to the pursuit of happiness, dressed up as social entrepreneurship (we are all supposed to be authors of our lives) into the fear of freedom.

Therefore, one of the struggles to be launched against the plethora of pathologies haunting our societies would be to demand the economic responsibilisation of public authority vis-à-vis its citizens. Strategies of passive or active resistance, subversion, or even radical obstruction (in the spirit of the recent rise in anarchist activity in Europe) are missing the point. Paradoxically, we can be authors of our lives only if we have less responsibility for our material wellbeing – in order to direct our aspirations beyond economic and social survival. Let’s force the state do its job.

About the author

Albena Azmanova is Associate Professor of politics at the University of Kent; she is the author of The Scandal of Reason: A Critical Theory of Political Judgment (Columbia University Press, March 2012), among a long list of publications. She is currently writing a book with the working title The Crisis of ‘the Crisis of Capitalism’

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