Only social democratic solutions are capable of addressing the crises we face.

I was listening to a French trade unionist recently who started his speech by saying ‘there is not one crisis, there are three crises’ – and then added, rather cheerfully, ‘at least’. He was referring to the economic crisis, the environmental crisis and the demographic crisis, which together make a complex mixture of short and longer term challenges for Europe, individual member states and the world. What distinctive positions has social democracy to offer on these matters?

I will concentrate here on the economic crisis, which looms above everything. We have lost 7 per cent of European GDP in 18 months, and EU unemployment is rising – perhaps it will reach 12 per cent by the winter’s end – and young people are its disproportionate and blameless victims. David Cameron, incredibly, has blamed big government – big Labour government – for the crisis and the misery created by it, never once mentioning the irresponsible role played by those in financial markets. And what is more, though with honourable exceptions, the press seem to be allowing him to get away with it. Why are we incapable of attributing the full blame to the banks and the others where it rightly lays? We now know that light-touch regulation with that lot was never going to be enough. But if the idea sticks that the crisis is all the fault of the government, then the obvious solution is going to be to cut public spending and prune government severely. Labour is doing the right things but needs vigour and force to explain why.

There is already wide pressure, and not just in the UK, to pronounce the end of the crisis and start cutting public spending. That EU governments may act prematurely and choke off the recovery is the ETUC’s biggest worry at the present time. (In 1937 a premature move by the US Congress to balance the books killed the recovery that was starting to take place, and the recession did not end until World War Two.) The British Conservatives – and Liberal Democrats – favour cutting spending now, but this would be a huge and dangerous step. It would cause a depression on the 1930s scale if they carried out the intentions they stated at their recent party conferences. There is a genuine divide between the parties on this issue. And the fight to resist cuts must stir the energy and commitment of all on the left.

Yet the relative popularity of parties of the right is not just a UK phenomenon. Though there are some exceptions, in general Europe’s left is failing to attract support, at a time when it should be in the ascendant. We know that raw and unregulated free-market capitalism has precipitated the greatest economic crisis in the post-war period, but voters generally are looking either rightwards or (a minority) further left.

Some centre-right politicians (for example Chancellor Merkel and President Sarkozy) have moved to implement socially sensitive policies, impose tougher financial regulation to curb ‘Anglo-Saxon’-style capitalism, and adopt an environmentalist agenda. They will undoubtedly at some point move to cut spending and deficits, but so far they have responded to the crisis by adopting a social democratic agenda. They are sitting in the socialist chair – apart from Mr Cameron, who is spectacularly out of step with his centre-right colleagues on this – as he is on the Lisbon Treaty. On that point Mr Cameron is taking the ‘Little Britain’ not the ‘Great Britain’ line. His vision of the EU combines hostility with prejudice, and ignorance with pettiness. Never before has a major British party seemed so out of step, so provincial, so imbued with ‘island-mentality’. There should be a real opportunity here for Labour if we take it.

Admitting that some previous policies were not so brilliant would help. Was it such a good idea to duck UK entry into the euro? The much-prized British flexibility on its currency has resulted in a devaluation of 25 per cent in the value of sterling against the euro; the UK economy has become smaller than that of Italy; Britain looks set to have a longer recession than any other major European economy; and our exporters so far seem not to be benefiting from our cheap currency. Could we now perhaps acknowledge that euro entry could help reshape the UK’s economic strategy, so that its focus becomes more long-termist, export-orientated and geared towards serious production, rather than towards the maintenance of a short-term speculators’ paradise based on real estate bubbles.

An Irish trade unionist recently told me how he had hoped for most of his life to see capitalism collapse, but he now wanted it to survive. He is, of course, dead right, and social democracy has a vested interest in this, as does all of society. But what kind of capitalism? The social democratic answer must be a long-termist, social market one, based on open markets for sure, but also with strong welfare states and public services, and adequate worker rights and trade union freedom. And it must be unapologetically European and internationalist.

The case for social democracy will never be as black and white, as dramatic, as capitalism versus communism. But most polls tell us that most people are social democratic, and even when they vote for right parties they expect social democratic policies. We have been seen that in France and Germany. So social democracy has a future in Europe. Social democratic parties must take advantage.