anti-inflationary priorities of the German economy and the Bundesbank. Participant countries would commit themselves to domestic economic rigour in order to sustain their place in the EMS. This was the first German initiative of its kind and it amounted in fact if not in name to the recommendation that, for Europe at least, the Deutschmark replace the dollar as the currency of reference.
Some countries stayed out—notably the UK, where Labour Prime Minister James Callaghan correctly understood that the EMS would prevent Britain adopting reflationary policies to address the country’s unemployment problem. Others joined precisely for that reason. As a ‘
This was a momentous shift, of greater consequence than was sometimes appreciated at the time. In the past, if a government opted for a ‘hard money’ strategy by adhering to the gold standard or declining to lower interest rates, it had to answer to its local electorate. But in the circumstances of the later 1970s, a government in London—or Stockholm, or Rome—facing intractable unemployment, or failing industries, or inflationary wage demands, could point helplessly at the terms of an IMF loan, or the rigours of pre-negotiated intra-European exchange rates, and disclaim liability. The tactical benefits of such a move were obvious: but they would come at a price.
If the European state could no longer square the circle of full employment, high real wages and economic growth, then it was bound to face the wrath of those constituents who felt betrayed. As we have noted, the instinctive reaction of politicians everywhere was to assuage the anxieties of the blue-collar male proletariat: partly because they were the worst affected, but mostly because precedent suggested that this was the social constituency most likely to mount effective protests. But as it transpired, the real opposition lay elsewhere. It was the heavily-taxed middle classes—white-collar public and private employees, small tradesmen and the self- employed—whose troubles translated most effectively into political opposition.
The greatest beneficiaries of the modern welfare state, after all, were the middle classes. When the post- war system started to unravel in the 1970s it was those same middle classes who felt not so much threatened as cheated: by inflation, by tax-financed subsidies to failing industries and by the reduction or elimination of public services to meet budgetary and monetary constraints. As in the past, the redistributive impact of inflation, made worse by the endemic high taxation of the modern service state, was felt most severely by citizens of the middling sort.
It was the middle classes, too, who were most disturbed by the issue of ‘ungovernability’. The fear, widely expressed in the course of the 1970s, that Europe’s democracies had lost control of their fate derived from a number of sources. In the first place there was a backlog of nervousness provoked by the iconoclastic rebellions of the 1960s; what had seemed curious and even exciting in the confident atmosphere of those days now looked more and more like a harbinger of uncertainty and anarchy. Then there was the more immediate anxiety born of job losses and inflation, about which governments seemed helpless to act.
Indeed, the very fact that European leaders appeared to have lost control was itself a source of public angst—all the more so in that politicians, as we have seen, found some advantage in insisting upon their own inadequacy. Denis Healey, Chancellor of the Exchequer in the hapless Labour government of the mid-Seventies, bemoaned the billions of Eurodollars washing around the continent, the work of ‘the faceless men who managed the growing atomic clouds of footloose funds, which had accumulated in the Euro-markets to evade control by national governments’.[201] Ironically, Healey’s own party had been elected in 1974 because of the Conservatives’ apparent inability to allay public discontent—only to find itself accused of comparable impotence, and worse, in the coming years.
In Britain there was even passing talk of the inadequacy of democratic institutionsin the face of modern crises, and some speculation in the press about the benefits of government by disinterested outsiders, or ‘corporatist’ coalitions of ‘nonpolitical’ experts. Like De Gaulle (in May 1968), some senior British political figures in these years thought it prudent to meet with police and military leaders to reassure themselves of their support in the event of public disorder. Even in Scandinavia and the Low Countries, where the core legitimacy of representative institutions was never seriously called into question, the disarray of the world financial system, the apparent unraveling of the post-war economy and the disaffection of traditional electorates called into question the easy confidence of the post-war generation.
Behind these nebulous stirrings of doubt and disillusion there was a very real and, as it seemed at the time, present threat. Since the end of the Second World War, Western Europe had been largely preserved from civil conflict, much less open violence. Armed force had been deployed to bloody effect all across Eastern Europe, in the European colonies, and throughout Asia, Africa and South America. The Cold War notwithstanding, heated and murderous struggles were a feature of the post-war decades, with millions of soldiers and civilians killed from Korea to the Congo. The United States itself had been the site of three political assassinations and more than one bloody riot. But Western Europe had been an island of civil peace.
When European policemen did beat or shoot civilians, the latter were usually foreigners, often dark- skinned.[202] Aside from occasional violent encounters with Communist demonstrators, the forces of order in Western Europe were rarely called upon by their governments to handle violent opposition and, when they were, the violence was often of their own perpetrating. By the standards of the interwar decades, Europe’s city streets were quite remarkably safe—a point that was frequently underscored by commentators contrasting Europe’s well-regulated society with the rampant and uncaring individualism of urban America. As for the student ‘riots’ of the Sixties, they served, if anything, to confirm this diagnosis: Europe’s youth might play at revolution but it was mostly show. The ‘street-fighting men’ ran little risk of actually getting hurt.
In the 1970s, the prospect suddenly darkened. Just as eastern Europe, in the wake of the invasion of Prague, was stifled in the fraternal embrace of the Party patriarchs, western Europe appeared to be losing its grip on public order. The challenge did not come from the conventional Left. To be sure, Moscow was well pleased with the balance of international advantage in these years: Watergate and the fall of Saigon had decidedly reduced America’s standing while the USSR, as the world’s largest petroleum producer, did very well out of the Middle East crises. But the publication in English of Aleksandr Solzhenitsyn’s
Nor, except in a very few marginal instances, was there a credible revival of the far Right. Italy’s neo- Fascist
In the course of the 1970s, Western European society faced two violent challenges. The first of these was pathological, in the sense that it was born of a longstanding malaise, albeit cast in a very modern form. In the Basque region of northern Spain, in the Catholic minority of Northern Ireland, in Corsica and elsewhere, old grievances flared into violent revolt. This was hardly a new experience for Europeans: Flemish nationalists in Belgian Flanders and German-speaking ‘Austrians’ in Italy’s Alto Adige (the former South Tyrol) had long resented their ‘subjection’, resorting variously to graffiti, demonstrations, assault, bombs and even the ballot box.
But by 1970 the problem of the South Tyrol had been resolved by the creation of an autonomous bi-lingual region which appeased all but the most extreme critics; and although the Flemish nationalists of the
