stagnation. Its continental admirers, heedless of the aborted ‘third ways’ in their own national pasts—notably the popular Fascist ‘third way’ of the 1930s—were keen to sign on. Under Jacques Delors (1985-1995) the European Commission had appeared a trifle preoccupied with devising and imposing norms and rules—substituting ‘Europe’ for the lost inheritance of Fabian-style bureaucratic socialism. Brussels, too, seemed in need of a Third Way: an uplifting story of its own that could situate the Union between institutional invisibility and regulatory excess.[412]
Blair’s new-look politics would not long survive the disastrous decision to embroil his country and his reputation in the 2003 invasion of Iraq—a move which merely reminded foreign observers that New Labour’s Third Way was inseparably intertwined with the UK’s reluctance to choose between Europe and the United States. And the evidence that Britain, like the US, was seeing a dramatic rise in the numbers of the poor—in contrast to the rest of the EU where poverty was increasing modestly, if at all—severely diminished the appeal of the British model. But the Third Way was always going to have a short shelf life. Its very name implied the presence of two extremes—ultra free-market capitalism and state socialism—both of which no longer existed (and in the case of the former had always been a figment of doctrinal imaginations). The need for a dramatic theoretical (or rhetorical) breakthrough had passed.
Thus privatization in the early 1980s had been controversial, provoking widespread discussion of the reach and legitimacy of the public sector and calling into question the attainability of social-democratic objectives and the moral legitimacy of the profit motive in the delivery of public goods. By 2004, however, privatization was a strictly pragmatic business. In eastern Europe, it was a necessary condition for membership of the EU, in conformity with Brussels’ strictures against market-distorting public subsidies. In France or Italy, the sale of publicly owned assets was now undertaken as a short-term book-keeping device to reduce the annual deficit and stay within euro-zone rules.
Even Tony Blair’s own Third Way projects—for the semi-privatization of London’s Underground, for example, or the introduction of ‘competition’ into hospital services—were embarked upon as cost-efficiency calculations with side-benefits to the national budget. To the extent that they were tied to an argument of social principle, this was tacked on as an unconvincing afterthought. And Blair’s appeal was diminishing with time (as the sharply reduced scale of his third electoral victory, in May 2005, was to show). Despite cutting government expenditure, opting out of the European social charter, reducing company taxation and welcoming inward investment with all manner of sweeteners, the UK remained stubbornly unproductive. When measured by output- per-hour it consistently underperformed its ‘sclerotic’, regulation-bound EU partners.
Moreover, a New Labour plan to avoid the coming crisis of Europe’s under-funded public pension schemes—by passing the liability on to the private sector—was already doomed to failure within less than a decade of its proud inauguration. In the UK, like the US, companies that invested their pension funds in a skittish stock market had little hope of meeting long-term commitments to their employees, especially as those employees—no less than pensioners dependent upon public funding—would now be living much longer than before. Most of them, it was becoming clear, would never see a full company pension… unless the state was forced back into the pensions business to make up the shortfall. The Third Way was beginning to look an awful lot like a game of Three-Card Monte.
At the beginning of the twenty-first century, the dilemma facing Europeans was not Socialism or Capitalism, Left versus Right, or the Third Way. It was not even ‘Europe’ versus ‘America’, since that choice had now been effectively resolved in most people’s minds in favour of Europe. It was, rather, a question—
There could be no going back to the world of the autonomous, free-standing nation-state, sharing nothing with its neighbour but a common border. Poles, Italians, Slovenes, Danes—even the British—were now Europeans. So, too, were millions of Sikhs, Bengalis, Turks, Arabs, Indians, Senegalese and others besides. In their economic lives, everyone whose country was in the European Union—or wanted to be—was now irrevocably European. The EU was the world’s largest internal single market, the world’s biggest trader in services, and its member-states’ unique source of authority in all matters of economic regulation and legal codes.
In a world where comparative advantage in fixed-factor endowments—energy, minerals, farmland, even location—counted for less than policies facilitating education, research and investment, it mattered hugely that the Union exercised increasing initiative in these areas. Just as states had always been vital in the constituting of markets—making rules governing exchange, employment and movement—so it was now the EU that made those rules; thanks to its own currency it also exercised a near monopoly on the markets in money itself. The only vital economic activity left to national rather than European initiative was taxation rates—and only because the UK insisted upon it.
But men live not in markets but in communities. For the past few hundred years those communities have been grouped, voluntarily or (more often) coercively, in states. After the experiences of 1914-45, Europeans everywhere felt an urgent need for the state: the politics and social agendas of the 1940s reflect this anxiety above anything else. With economic prosperity, social peace and international stability, however, that need slowly evaporated. In its place came suspicion of intrusive public authority and a desire for individual autonomy and the removal of constraints on private initiative. Moreover, in the era of the superpowers, the fate of Europe seemed largely to have been taken out of its hands. The European nation-states thus appeared increasingly supererogatory. However: since 1990—and
The early modern state had two, intimately related functions: raising taxes and making war. Europe—the European Union—is not a state. It does not raise taxes and it has no capacity for making war. As we have seen, it took a very long time indeed for it to acquire even the rudiments of a military capacity, much less a foreign policy. For most of the first half century following the end of World War Two this was not a handicap: the prospect of undertaking another European war was abhorrent to almost all Europeans, and their defense against the only likely enemy had been sub-contracted across the Atlantic.
But in the aftermath of September 11th 2001 the limitations of a post-national prescription for a better European future became clear. The traditional European state, after all, not only made war abroad but enforced the peace at home. This, as Hobbes long ago realized, is what gives the state its distinctive and irreplaceable legitimacy. In countries where violent political warfare against unarmed civilians had been endemic in recent years (Spain, the UK, Italy and Germany) the importance of the state—its policemen, its army, its intelligence services and its judicial apparatus—was never forgotten. In an age of ‘terrorism’, the state’s monopoly of armed power is an attractive reassurance to most of its citizens.
Keeping citizens safe is what states do. And there was no sign that Brussels (the European Union) would or could take on this responsibility in the foreseeable future. In this vital respect the state remained the core legitimate representative of its citizens, in a way that the transnational union of Europeans, for all its passports and parliaments, could not hope to match. Europeans might enjoy the freedom to appeal over the heads of their own governments to European judges, and it remained a source of wonder to many that national courts in Germany or Britain complied so readily with judgments emanating from Strasbourg or Luxembourg. But when it came to keeping the gunman and the bomber away, responsibility and thus power remained firmly in Berlin or London. What, after all, should a citizen of Europe do if her house were fire-bombed? Call a bureaucrat?
Legitimacy is a function of capacity: it is in part because the disarticulated, ultra-federal state of Belgium, e.g. has sometimes appeared unable to keep its citizens safe that its legitimacy has been called into question. And although the capacity of the state begins with arms it does not end there, even today. So long as it is the state— rather than a trans-state entity—which pays pensions, insures the unemployed and educates children, then that state’s monopoly of a certain sort of political legitimacy will continue unchallenged. Over the course of the twentieth century the European nation-state took on considerable responsibilities for its citizens’ welfare, security and well-being. In recent years it has shed its intrusive oversight of private morality and some—but not all—of its economic initiative. The rest remains intact.
Legitimacy is also a function of territory. The European Union, as many observers have noted, is an utterly original animal: it is territorially defined without being a consistent territorial entity. Its laws and its regulations are territory-wide, but its citizens cannot vote in each other’s national elections (while being free to cast their vote in
