Fortunately, the European Central Bank has been more careful, but does it operate from different intellectual foundations? Today, we need a new paradigm for economic policies that links markets to security, that renews the promise of modernity and progress; a paradigm that marries economic freedom to social justice, equality to solidarity. After having extinguished the fire of the present crisis, we need to build a house that is fireproof.

Economic paradigms shape political norms and values. The French revolution has defined modernity by the twin values of liberté and égalité; later, the Commune de Paris added fraternité. With the Declaration of Human and Civil Rights it enshrined individual rights as a protection against authoritarian rule and the tyranny of majority. Emancipated citizens became the sovereign in the modern state. Free and equal individuals would conclude the ‘social contract’ of the republic by which they determined the laws that were applicable to themselves.

The political division into a ‘liberal right’ and an ‘egalitarian left’ follows different interpretations of the modern world: Liberalism gives priority to individual freedom, socialism to equality. Both are children of modernity. But let us understand that how we interpret the world is how we change it.⁶

The modern vision of society serving individuals stands in clear contrast to the conservative, anti-enlightenment view,⁷ whereby society is a hierarchically structured whole in which each individual has a pre-assigned role and status and to which they have to surrender. The conflict between these three political paradigms has dominated European history for over 200 years. At times, liberalism entered into an alliance with conservatism and became ‘neoliberal’ and nationalistic; modernity was preserved in ‘political liberalism’, which recognised the equality of citizens as democratic right holders. On the other side, socialists fell for communitarian conservatism when equality did no longer mean recognition of the other as an equal in all her or his diversity, but rather the surrender to conformism and hierarchy. But true social democracy is a modern and progressive force: it embraces individualism by fighting for human and civic rights; it breaks up the barriers of traditions and customs; it seeks the emancipation from community by developing the freedom of individuals; and it recognises that individual freedom is only possible when the formal equality of legal rights has a material substance in wealth. This is why individuals need the state not only as a set of rules and regulations, but as a system of rights. Access to food, clothing, shelter, and medical care have become human rights that can only be realised through the democratic use of power in a state of law (Rechtsstaat).

Regulating financial markets today may be necessary to overcome the economic crisis, but it is not sufficient as a new paradigm for a Social Europe.The emergence of modern social democracy cannot be separated from the existence of market economies and therefore from the institutions of money and finance. Modern social democracy has gone beyond Marxism, without forgetting that capitalism endogenously produces injustice. For the political norms of modernity will only be recognised as valid and legitimate in a society where contracts are concluded by market participants who interact as free and equal partners.

These political norms give priority to freedom and equality over fraternity, to contractual relations of solidarity over the patriarchal hierarchy of community and they emphasise democracy as the only system which allows individuals to control the collective as free and equal citizens. Thus, the modern state is democratic and not authoritarian, because it returns power and sovereignty to citizens who are the collective owners of public goods, of the res publica. No doubt, reality often looks different. Power relations overrule norms of freedom and equality. But norms may be valid even when they are not facts. Indeed, the never-ending struggle for freedom and equality, which has defined social democracy for 150 years, draws its legitimacy from the discrepancy between modern norms and values and their non-realisation in the real world. It was this insight that led Eduard Bernstein 100 years ago to call for the pursuit of a more practical, piecemeal movement towards a socialist state within the context of a parliamentarian democracy. And Jean Jaurès acknowledged it by saying: ‘The Republic is the humus of socialism’. Today a European democracy must become the humus of Social Europe.

6. In his ‘Theses on Feuerbach’, Marx proclaimed: ‘The philosophers have only interpreted the world in various ways; the point, however, is to change it.’ This separation between a world of thought and a real world echoes the classical economic paradigm, whereby goods and services are the ‘real economy’ and money is a veil. [↩]
7. For an excellent analysis of anti-enlightenment philosophy and its drift to fascism, see Sternhell, Z. (2006), Les Anti-Lumières. Du XVIIIe siècle à la guerre froide, Fayard, Paris. [↩]

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