Four ways out for the post-COVID-19 period - A European Perspective

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Philippe Pochet, General Director of the European Trade Union Insitute (ETUI) outlined four different scenarios for Europe that may emerge post-Covid at our Social Policy Conference 2020.  Below is an extract from his paper.

Four ways out for the post-COVID-19 period

At the European level, what the pandemic has cast doubt on is the very fundamentals of European integration. The main features of the European Union (the EU), what could be described as its “pillars”, are these: the single market and freedom of movement, the euro and the Stability and Growth Pact, and competition and state-aid law. At the present time, these three pillars are being powerfully shaken, not to say called into question. They are sure to be at the centre of discussions in 2021 about the practicalities of emerging from the crisis and the future of the European integration process.

We can already look ahead and see that the post-crisis EU could be standing on very different foundations if the questioning of the three basic pillars continues over time or, conversely, it could just as easily go back to its old ways.  What will the world environment in which this happens be, though? Here there are four possible scenarios emerging. Sketched out briefly, the point of these scenarios is to look ahead to possible changes and, at the same time, gauge certain risks.

Scenario one is that we might return to the orthodoxy of neoliberalism and austerity – a bit like what happened in the previous crisis (2008-2013): a more or less green recovery in 2009 was succeeded, more radically, by a reversion to the fundamentals of neoliberalism. This is what eminent researcher Colin Crouch has called the strange non-death of neoliberalism. This seems to me much less likely (but not to be ruled out) in this crisis. We seem to have learned the lessons of the previous crisis and the poor management of it, and it is difficult to see the political conditions emerging for imposing an austerity diet on the public sector in one or two years’ time.

Scenario two is what I term the Chinese path. In the end, that is the country that has done best in health terms, if we compare it to the EU and especially the United States. We would be moving towards a more authoritarian state, monitoring the population by tracing people’s contacts using new means based on artificial intelligence, with restrictions placed on (sometimes quite fundamental) freedoms in exchange for a feeling of protection of the national territory and a degree of efficiency in the authoritarian management of the pandemic. This goes hand-in-hand with the fragmentation of the world and a more or less radical scaling down of trade (“deglobalisation”).

The third scenario is a return to growth at any price. The way out of the crisis would be unfettered catch-up consumption without much consideration for the environment, a sort of rerun of the Belle Époque or indeed an end-of-the-world party. That would obviously have a positive impact on conventional economic indicators (GDP) and reduce bankruptcies and unemployment in the short and medium term, but it would have major negative long-term consequences. The calls by certain governments (such as in the Czech Republic) or sectoral players to forget the Green Deal underline the strength of this scenario. We can see it clearly in the case of European agricultural policy or that of green chemistry, where vested interests oppose change in the name of jobs. This, of course, runs counter to the calls for, and commitments to, emission neutrality by 2050 in the case of the EU and now 2060 for China.

The final scenario involves accelerating the ecological transition and rapidly rethinking our growth (or shrinkage) model with a return to public services, common goods and solidarity at the heart of the economy and social affairs. We are also seeing the seeds of this in the present situation, not just with several governments and civil-society players supporting the Green Deal but also with the part certain cities, such as Paris and Brussels, could play in bringing about this faster transition. But this transition would be taking place against a background of high unemployment and a severe economic and financial crisis that would make it very complicated to carry through successfully.

Obviously, these four scenarios are not mutually exclusive and can be combined and developed in parallel in different regions of the world, depending on the relevant balance of power. It sometimes takes only a little to switch from one scenario to another, and the strategy of collective actors will play a key role.

The full paper is available to download here.