How to spot a new-centre socialist

By Peter Cook, The Globe and Mail, Monday 26 October 1998

Brussels—Europe has travelled many roads since Karl Marx warned of the bourgeois who is a bourgeois for the benefit of the working class. But wolves in sheep's clothing are still with us. And, for good or ill, some may be found in the preponderance of new-centre socialist leaders, flanked by Green, Communist, even Conservative allies, who now rule the continent.

When Tony Blair of Britain's New Labour defeated a 17-year-old Tory Government in 1996, he did it with the support of Tory tabloid newspapers and the reassurance that he would not change the basic tenets of Thatcherism or its holy grail of low taxes. Massively supported, hugely popular, he then went further than any Thatcherite had dared, creating an independent Bank of England. And he stuck resolutely to the rest of his new manifesto, repeating as recently as at last month's party conference in Blackpool that New Labour policies were based on prudent economics, free-market solutions and low marginal rates of taxation.

Mr. Blair has stated that socialists lost the battle of ideas in the Reagan-Thatcherite 1980s. But now, through a concern for social justice, he claims they are winning the battle of values.

Mr. Blair's victory of the left was followed a few months later by the surprising triumph of Lionel Jospin's Socialist Party, and their Communist and Green allies, in France.

How would their ideas and values be influenced by Blairite pragmatism? In terms of rhetoric, not much. Mr. Jospin plowed ahead with his ideological commitment to job creation via a state-imposed shorter work week and tried to pursue a softer line on monetary and fiscal policy. Pointedly, he made no claim to be a new, centre socialist. Still, he has brought change. He has gone further than his right-wing predecessors in privatizing state companies and reorganizing a mostly publicly owned defence sector. He also has eschewed what is normal in French politics by visiting the United States and praising it.

To Mr. Blair and Mr. Jospin have now been added Gerhard Schroeder in Germany and the ex-Communist Massimo D'Alema in Italy.

Mr. D'Alema arrives in power by appointment, having previously been the power behind Romano Prodi's Olive Tree coalition. The surprise, if any, is that he has made his formerly communist Democratic Party of the Left respectable enough to go into coalition with Christian Democrats. But of course, in Italy, land of permanent coalitions, that is not so remarkable. Nor, for all his intellectual lineage, is Mr. D'Alema likely to be radical. His task is to show that a bourgeois can be a bourgeois for the benefit of the working class and he has enough technocrats in his cabinet to ensure that pragmatism prevails and he stays respectable.

Mr. Schroeder's ascent is more interesting. First, he arrives in power after an election. Second, he won that election by pretending to be of the neue mitte (the new centre) while saying and doing nothing particularly new or centrist. Since the election, Mr. Schroeder has been so much the captive of his finance chief Oskar Lafontaine that he lost his only visibly new-centre recruit, computer millionaire Jost Stollmann, as economics minister. Mr. Stollmann rightly decided that the new Social Democrats looked, in the persona of Mr. Lafontaine, just the same as the old.

In some respects, the Schroeder-Lafontaine government, allied with the Greens, is new and different. For example, they have been praised by both the right-wing Financial Times of London and left-wing Le Monde of Paris; in one case, for the moderation of their proposal to cut taxes, in the other, for their awareness of the consumer interest as opposed to the business interest.

Where will such virtues lead? Possibly to a different set of policies in Europe. And if that turns out to be true, then the unchanging Mr. Schroeder and the backward-looking Mr. Lafontaine could presage more of a revolution than the trendy, new socialism of Mr. Blair.

The course that Europe is now on has been dictated by the Maastricht Treaty and the arrival of the euro. It prescribes tight fiscal targets, a monetary policy modelled on the Bundesbank and, after the euro comes, a Growth and Stability Pact, which allows no relaxation of deficits except in extraordinary circumstances. These rules were put there at the insistence of the Bundesbank and former German finance minister Theo Waigel, over the objections of the French, who wanted more flexibility.

Mr. Waigel, however, has given way to Mr. Lafontaine who is, he says, an admirer of U.S. monetary policy under Alan Greenspan. As he sees it, Mr. Greenspan's success has been to maintain consistently low interest rates and achieve low unemployment. The other side of the Greenspan reputation -- that of being a hard-nosed central banker who has not hesitated to raise rates to pre-empt inflation and so has great credibility in financial markets—he ignores.

The combination, then, of a lax Mr. Lafontaine and a French Government that is already calling for lower interest rates to combat global recession represents an attitudinal change that could be decisive. Socialism's gift to the bourgeois and working class may, as a result, be a fiscal and monetary policy that is looser than at any time in the past 25 years (a period during which power in Bonn and Frankfurt has been held by anti-inflation hawks). What is a new-centre socialist who is not Blairite? One who is likely to take many more risks with inflation and recession.