The Magazine

Continental Drift

A quarantine for the Sick Men of Europe.

Jan 13, 2014, Vol. 19, No. 17 • By DAVID AIKMAN
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The year 1946 was vintage for Churchillian rhetoric, with two speeches that significantly affected the history of the West—and, indeed, the world.  

European Union bureaucrats protesting pay/staff cuts, Brussels (2012)

European Union bureaucrats protesting pay/staff cuts, Brussels (2012)

stringer / belgium / reuters / newscom

The more famous of the two was the Iron Curtain speech delivered in Fulton, Missouri, in March, in which Churchill laid out the stark reality of Communist domination of the eastern half of Europe by Stalin’s armies. But the second of the 1946 speeches, given in Zurich six months later, had profound consequences. In it, Churchill foresaw “a kind of United States of Europe,” the kernel of a European economic and political union that would, Churchill hoped, banish forever the shadow of war that had ravaged continental Europe’s strongest nations, France and Germany.  

Soon after Churchill’s speech, the Council of Europe came into existence, as did, later on, the European Coal and Steel Community and the other economic structures that were to form the core of the European Economic Community (the Treaty of Rome, 1957) and, eventually, the European Union (Maastricht, 1992).

The idea of a European federal superstate as an economic and political entity was never far from the minds of Europe’s key founders. Democratic capitalism was to be the main economic engine of that entity. But as Samuel Gregg points out in this cogently argued study—which frequently refers to Alexis de Tocqueville—whereas the American federal experiment emphasized economic and political freedom as the prerequisites for social prosperity and “human flourishing,” Europe’s postwar program was heavily influenced by social democracy. The goal became economic security for everyone, an idea that required labor-union political power and large bureaucracies to administer the welfare state.

Gregg correctly reminds us that behind social democracy’s stress on fair economic outcomes for Europe’s population lay the fundamental Marxist principle of redistributionism. He certainly does not attribute the European Union’s recent woes to the influence of Marxism, but he assembles a variety of ingredients that add up to what he calls “social Europe,” a social-welfare coterie of EU countries in which general prosperity has declined as economic freedoms have been whittled down.  

There is, he argues, a bewildering variety of ailments that have beset the eurozone and the larger economy of the European Union. One of them is dirigisme, a term few Americans could comfortably define. Basically, it is the principle that the state is allowed to limit economic freedom if (according to the Italian constitution’s definition of dirigisme) economic freedom gives rise to activity that could damage “safety, liberty, and human dignity.” Put succinctly: Free enterprise is good just as long as some people don’t become too rich and others too poor. Less impenetrable to Americans is the philosophy of “corporatism,” the idea that employee and employer groups should coordinate with government to agree on what is beneficial to the “solidarity” of society. 

Much of this is classic Keynesianism, the theory that a market economy can actually be “managed” in a socially beneficial way. In fact, other European economic shibboleths have dominated the EU economy for years. One of the first to come into existence was the Common Agricultural Policy, a device intended to prop up living standards of (mainly) France’s farmers as they were being whittled down by the rise of urban living standards. Today, as Gregg points out, the CAP eats up fully half of the European Union’s budget, even though agriculture produces only 2 percent of the EU’s gross domestic product.   

Europe’s challenges, however, go well beyond agriculture’s cosseted status and the protected living standards that evoke rhapsodic praise from certain Americans. We do, indeed, work harder than Europeans—a full month more each year in many cases—and have to put up with one month’s less vacation time. But, as becomes clear in Gregg’s description of the challenges facing Europe, the EU’s difficulties are partly cultural as well: The disciplined, hard-working northern tier of Europe pays the bills of a spendthrift, sometimes lazy southern tier—and a holdout group of entrepreneurial business executives find it harder and harder to take the risks necessary for innovation. The concept of “social Europe,” Gregg suggests, has enabled the development of a social and economic culture of dependency and the emergence of a bureaucratic elite.