Europeanization, Territorial Subsidiarity and Welfare Reform
LUIS MORENO
Spanish National Research Council (CSIC), Madrid, Spain
ABSTRACT Europeanization can be regarded as a process that finds expression in the gradual
redefinition of state sovereignty and the development of supranational common institutions
(e.g. Agreement of Schengen, Court of Justice, Euro currency). In parallel, territorial
subsidiarity seeks to provide for a greater sub-state say in areas of social policy making, often
linked to cultural or identity considerations. This article deals with welfare development in the
European social model in contemporary times. While a paradigm shift in macro-economic
policies has allowed for monetary centralization and a growing matching of EU internal ‘open’
markets, the quest for the decentralization of welfare programmes has also aimed at meeting
demands for policy innovation and a more effective management. Allegedly, welfare provision
by sub-state diversity may affect collective solidarity and redistribution. The emergence of new
social risks and the role played by the mesogovernments in welfare reform in Europe are also
subject to analysis and discussion in this article.
KEY WORDS: Decentralization, Europe’s Social Model, regions, welfare
Introduction
The unfolding of structures of governance in the European Union (EU) is taking place by means
of formalizing interactions—directly and indirectly—among the EU’s twenty-seven member
states. These interactions mainly affect policy networks which have been traditionally confined
to nation-state policy arenas. An emerging new layer of supranational government and an
internal all-round political concurrence are processes well under way. As a multi-level political
and institutional framework, the EU can be seen as a compound of policy processes.
Europeanization therefore implies that national, regional and local policies are shaped by
factors that lie beyond the member states. Europeanization is a concept with economic,
political and social aspects, and involves countries sharing a similar historical background and
embracing values of democracy and egalitarian human rights. The concept is, however, far
from precise and clear-cut and is subject to several interpretations. The peoples of the EU
have, to some extent, internalized European institutions, albeit rather loosely and gradually.
The European Court of Justice and the Schengen Agreement, as well as common policies such
as the establishment of the Euro, the economic criteria set by the Maastricht Treaty or policy
programmes developed under the OMC (Open Method of Co-ordination) can be regarded as
steps towards supra-state Europeanization. However, the constitution of a United States of
Europe ought not to be regarded as the necessary outcome of this process of Europeanization.
The neo-functionalist school of thought has generally adopted the view that universal progress
requires integration, which is made equal to cultural assimilation and single identity formation,
along the lines of the American ‘melting-pot’. In parallel with the process of Europeanization,
the principle of subsidiarity provides for decisions to be taken at EU level only if local, regional
or national democratic institutions cannot perform better. In other words, the preferred locus
for decision making is that which is closer to the citizen, and as local as possible. This
interpretation is not shared by some political elites of the EU member states who have often
interpreted the subsidiarity principle as a safeguard for the preservation of traditional national
sovereignty (the UK is the most notorious example but there are others as well). Both bottom-
up supra-nationalization and top-down decentralization have allowed a considerable extension
of what may be called a European cosmopolitan localism (Moreno, 2005). This is seen when
societal interests aim both at developing a sense of local community and also of participating
on the international scene. In this way both the particular and the general come together. In a
European and global perspective, the harmonization of economic development has gone hand
in hand with the decentralization of political institutions and the regionalization of welfare
development. The role of sub-state1 territories in these processes, however, has been largely
neglected. Already in 2001, the White Paper on European Governance (CEC, 2001) stated that
the national governments of the member states were not involving the local and regional
‘actors’ in an appropriate manner in the preparation of their positions on EU policies and,
consequently, were not facilitating democratic accountability at those levels of government.
Illustrative of this lack of political impulse is the case of the regions with legislative powers. In
2002 about half of the EU-15 regions were ‘partner regions’, or regions with legislative powers
(in almost half of the member states), and were regarded as not being genuinely accountable
to their own citizens (Committee of the Regions, 2002). In June 2007, the members of the
Committee of the Regions from 74 regions with legislative powers in eight EU member states
made a declaration claiming for more proximity, more involvement of regions and local
authorities and for the respect of the principles of subsidiarity and proportionality (Regleg,
2007). Welfare has remained largely a national government function, funded by compulsory
contributions or tax-financed schemes of social protection. However, the political salience of
sub-state regions and regional policy making in the welfare realm has recently begun to draw
attention to the interrelationship of both fields of research: territory and welfare (McEwen and
Moreno, 2005). Not so long ago, ideas, interests and institutions related to welfare and to
spatial developments were frequently regarded as contradictory or even incompatible with
each other. Generally speaking, territorial politics literature has tended to neglect the social
dimension, while research on welfare has taken the unitary nation-state for granted. Regional
actors, meso-governments and local authorities are now seen as important not just for culture
and identity politics but are increasingly regarded as optimal welfare policy providers. This is a
result of the interaction of the processes of bottom-up globalization and top-down devolution
of powers. Welfare decentralization, however, has also been criticized on the grounds that it
can exacerbate inequalities and jeopardize collective solidarity. All these developments might
have modified, to some extent, the tenets and configurations characteristic of European
welfare states. Is today’s European social model based upon the same cognitive and normative
principles that were dominant several decades ago? Have the views of actors been modified
substantially on the role of the European welfare states? Is there a growing convergence or
divergence among national welfare approaches to reform? Can we expect the development of
supranational European institutions in the field of social policy and/or a further
Europeanization of national welfare policies? These are questions, regarding both the
functional and territorial aspects of social life, that need to be scrutinized in order to lend
evidence to claims of paradigm shifts and mutations within the broad model of social Europe.
The two subsequent sections of this article examine the link between economic paradigm
shifts and welfare reform in Europe. The emergence of ‘new social risks’ and the recipes to
meet these new risks seem to indicate a convergence of responses in the various European
welfare regimes. In general, most EU countries are influenced by the ‘liberal’ re-commodifying
approach to social protection. This, however, should not be regarded simply as the
‘Americanization’ of welfare. In fact, there is a widespread belief in most EU countries that the
European social model provides collective unity and identity, in contrast to other systems, such
as that in the USA, where possessive individualism is a distinctive tenet of welfare provision, or
South-east Asia’s ‘social dumping’ model of economic development. After discussing the
territoriality of welfare solidarity, an examination of the increasing role played by the sub-state
levels of European governance will be made in the latter part of this article.
Economic Paradigm Shift and Welfare Reform in Europe
In general terms, paradigms suggest new approaches to empirical evidence, new problems for
solution and sometimes, but not necessarily, new explanations for phenomena which cannot
be understood through other paradigms. In policy terms, a paradigm is concerned with the
manner political and social actors approach key issues and seek to resolve them. Paradigms,
value systems and referentiels provide normative and cognitive elements, which shape
principles and actions adopted by actors within the same frame (Kuhn, 1970; Jobert and
Muller, 1987; Hall, 1993; Surel, 2000). It has been argued that a significant paradigm
transformation has occurred concerning the European welfare state, which correlates changes
in economic policies (most notably, from Keynesianism to Monetarism) (Moreno and Palier,
2005). Has welfare development in Europe, as a consequence, evolved into a mere surrogate
of economic ideas, interests and institutions? Certainly there are a number of new features
which may have given way to what can be regarded as a distinct post-welfare state model
(Loughlin, 2004). Let us remind ourselves that during the Trentes Glorieuses, or ‘Golden Age’
of welfare capitalism (1945–75), West European systems of social protection were based upon
the assumption of full employment and on the complementary roles of mother and father
within the nuclear family and, in particular, of women’s unpaid work within households
(Esping-Andersen, 1990; Lewis, 1997). A combination of social policies, Keynesianism,
Taylorism and female segregation facilitated a sustained economic growth and the
generalization of a kind of ‘affluent worker’. The outcome of these factors translated into two
main types of welfare state: the Keynesian–Beveridgean and the Keynesian–Bismarckian
welfare states. In both types of welfare state, national governments managed economies with
a relatively high degree of autonomy. They were able to provide social provision for needs
which market and family did not meet. The tax consequences of such provision were
legitimated upon political coalitions of working- and middle-class groups (Flora, 1986/87). The
effects of the oil crises in 1973 –74 and 1978– 79 revealed the increasing openness and
interdependence of European economies, and altered a scenario of prosperity and abundant
stable male employment. Nevertheless, the Golden Age evolved into a Silver Age of the
welfare state showing limitations but also a high degree of resilience in resisting pressures of a
diverse nature (Taylor-Gooby, 2002). During the 1980s and 1990s, a neo-liberal ideological
offensive challenged the tenets and legitimacy upon which welfare states had previously
developed. Its discourse elaborated on the effect that processes of international competition
and industrial transformations had had on the national labour markets. In parallel, deep
structural modifications had taken place as a consequence of the ageing of the population, the
increasing participation of women in the formal labour market and the rearrangements that
had occurred within households as producers and distributors of welfare. In sum, fiscal crises
and the erosion of the ideological consensus which gave way to the ‘Mid-century Consensus’
had conditioned the recasting of welfare states in Europe (Crouch, 1999; Ferrera and Rhodes,
2000; Esping-Andersen et al., 2002). Economic reforms have also led to monetary
centralization and a growing harmonization of single-market policies in the European Union,
and EU member states have faced and implemented policies of a similar nature. Those
countries which attempted to exercise their nominal state sovereignty against the tide of the
new economic policies were penalized heavily. Failure of the programmes for indicative
planning implemented by the first Mitterrand government in the early 1980s illustrated the
‘persuasiveness’ of the new economic neo-classical and supply-side paradigm embraced by
neighbouring and competing countries. This episode illustrated that national economic
‘sovereignty’ was very limited in manoeuvres to promote the previous Keynesian demand-side
approach (Camilleri and Falk, 1992; Schmidt, 1995; Strange, 1995). In the light of the economic
changes that have occurred in Europe over the last 30 years, can we conclude that European
welfare has substantially changed even if their outer forms remain as they were before? In
trying to respond to such a question it should be pointed out that all three political, economic
and social dimensions are simultaneously present in a paradigm, even if we agree that one of
them is usually dominant or hegemonic. Alternatively, different dimensions, (economic,
political and social) could be considered on their own merits. A paradigm shift would result
from the interaction of all three of them. If we were to take into account the latter view, the
statement that social welfare in Europe has been over-determined by economics ought to be
qualified (Jessop, 2002). Such interpretation is based upon the stable high levels of public
social expenditure and popular support for welfare in Europe (Svallfors and Taylor-Gooby,
1999; Bonoli, 2000; Kuhnle, 2000; Pierson, 2001; van Oorschot, 2002). An important
conceptual distinction may be drawn between (a) objective economic and social elements that
influence the context in which the politics of welfare reform operates; and (b) the subjective
level of the understanding of those issues by those actors involved in interpreting popular
perceptions and influencing reforms. The latter dimension influences not only processes of
policy learning and transfer. It also affects opportunities for coalition-building and the extent
to which policy reform is to be understood as pursuing a new direction—based on new values
and objectives—or as modification of existing policy directions. Such an ‘objective – subjective’
distinction is useful in analysing the emergence of new social risks—alongside traditional social
needs—across European welfare states (Taylor-Gooby, 2005). With the extension of the
criteria for ‘open’ market competition stimulated by economic globalization, subsequent de-
regulation and market flexibility have allowed for the extension of a general sense of
uncertainty and the emergence of new social risks. These are associated with the transition to
a post-industrial (post-Fordist) society (Esping-Andersen, 1999) and relate to four main
elements: (1) higher participation of women in the formal labour market; (2) an increase in the
numbers of frail and dependent elderly people; (3) the rise of social exclusion for workers with
poor education; and (4) the expansion of private services and the de-regulation of their public
counterparts. As a consequence, vulnerable groups are likely to experience new needs in four
broad areas: (1) balancing paid work and family responsibilities (especially childcare); (2) being
called on for care of a frail elderly relative, or becoming frail and lacking family support; lacking
the skills necessary to gain access to an adequately paid and secure job; (3) having skills and
training that become obsolete and being unable to upgrade them through life-long learning;
and (4) using private provision that supplies an insecure or inadequate pension or
unsatisfactory services (Bonoli, 2005). The answer to the question of whether new social risks
would induce new welfare rearrangements and how they could be reconciled with old ‘core’
commitments for social provision is still to be articulated by European actors in the various
contexts of European governance. Until now, new social risks do not seem to add up to a new
paradigm of welfare, but ought rather to be regarded as a modification that will generate new
political discourses testing economic reforms which favour the introduction of a more flexible
and de-regulated European social model. Despite the diversity of its institutional forms and
manifestations in the EU’s mature welfare states, the European social model can be still
identified as one based upon collective solidarity and as the result of institutional patterns of
social conflict and cooperation in the Old Continent. The article now turns to a brief
examination of its nature and to a discussion of some of the territorial challenges for its
adaptation to changing economic, political and social scenarios.
Europe’s Social Model, Decentralization and Solidarity
During the twentieth century the rise of the welfare state—a European ‘invention’— allowed
provision for the basic needs of ‘the people’, by means of income security, health care, housing
and education. There is a widespread belief that the ‘European social model’ provides
collective unity and identity to most EU countries, in contrast to other systems, (individualism
of welfare provision in the USA, or ‘social dumping’ in South-east Asia, for example). The
articulation of ‘floors’ or ‘safety nets’ of legal rights and material resources for citizens to
participate actively in society can be seen as a common primary concern of the European
countries. Accordingly, the fight against poverty and social exclusion plays a central role in the
European social model. The EU countries share a common perspective on social risks coverage
and the promotion of egalitarian social citizenship. In functional terms, EU member states have
embraced new economic policies of a similar nature. As stated earlier, those countries, which
attempted to exercise their nominal state sovereignty against the tide of the new economic
policies, were penalized heavily. Less attention has been generally paid to the territorial
dimension of welfare and, in particular, to the growing input made by sub-state institutions
and actors for welfare development and the alleged threats of exacerbating territorial
inequalities within a model based upon collective solidarity. One result of intra-state historical
variations, often reflected in different party systems, channels of elite representation or
interest articulation, is that decentralization has become a major embedding factor in
contemporary political life in Europe. Decentralization in some countries (for example,
Belgium, Italy or Spain) affects the very ‘core’ of traditional social policies. In these countries,
health care, for instance, has been decentralized, allowing the establishment of regional
systems of health provision (McEwen and Moreno, 2005). EU institutions, particularly the
Commission and the Parliament, have encouraged multilateral co-operation on the
assumption that national states would be less ‘sovereign’ than they have been up until now.
Increasingly, sub-state governments and local authorities do not require the rationalizing
intervention of central bureaucracies and elites, and can activate policies of industrial
relocation or attraction of foreign capitals without the role of intermediaries from the central
state. By means of local incentives, urban re-development plans, or favouring corporatist
agreements with trade unions and industrialists, regional governments and metropolitan
authorities can have direct negotiations with the transnational corporations involved (Rhodes,
1996; Moreno, 2003). Sub-state governments do not exist in isolation from the new
international order. They are subject to the same socio-demographic pressures and the
necessity of a greater interrelationship with institutions and actors beyond their boundaries
(Jones, 1995; Keating, 1998). This may constrain their capacity to generate social solidarity and
reinforce territorial loyalties through the distribution of social transfers and services. Critics of
the de-structuring of the old order have suggested that globalization, decentralization and the
increasing role of sub-state governments may bring about two major drawbacks to welfare
development. (1) Sub-state governments may be more sensitive to pressures from the
business community for increased flexibility, lower taxation and lower public spending.
Individually, sub-state societies appear more vulnerable to the threat of dis-investment in an
era when capital is increasingly mobile, and when even a single corporate relocation can
devastate an entire community (Piven, 1995). (2) Sub-state governments may be tempted in
an increasingly competitive international arena to offer ‘too’ generous conditions for capital
investment or industrial relocation. By engaging themselves in a ‘race to the bottom’, social