The overarching challenge in the world today is: how do we advance the institutions and practices capable of enacting a desirable quality of life for a burgeoning global population of 6.5 billion people? And how do we accomplish that in a way that does not burn up the planet in a Venus atmosphere of our own creation? That is a tall order to fill, yet it is the defining task of the 21st century.
More than anywhere else, Europe has fostered the types of innovations that point the way forward for the world to meet these challenges. Europe's brand of “social capitalism” is better suited for the 21st century than America's “Wall Street capitalism” because it has developed itself on several major fronts.
* Real family values: healthcare and supports for families and workers. European nations score at the top on social and health indicators, with Europeans today enjoying universal health care for all, generous retirement pensions, an average of five weeks paid vacation (compared to two in the U.S.), paid sick leave, paid parental leave, kiddy stipends (about $200 per month for children's needs), affordable childcare (Americans pay at least six times more for child care), low-cost higher education (in some countries it's free), and a shorter work week with comparable wages for their workers. Social spending in Europe runs 35 percent per capita above that in the United States; even in Greece, which has been beset by debt troubles recently, people still have more of these supports than most Americans.
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European nations are rated by the World Health Organization as having the best health care systems in the world, yet they don't all use a British or Canadian style single-payer system. Some have single-payer, but others like France and Germany employ private nonprofit insurance companies as the backbone of their health care systems. As a result they spend only about half the amount (per capita) as the United States, which has a for-profit system, to provide universal coverage, even as 47 million Americans, many of them children, don't have any health care except a hospital emergency room. Despite spending far more money, U.S. health care is ranked 37th in the world — just ahead of Cuba and Kuwait. Even European nations like Croatia, with far less wealth than America, provide health care for all, truly a damning indictment of the American for-profit system.
- Environmental sustainability, readying for global warming. Europe is leading in preparing for global warming, with widespread deployment of conservation practices and “green design” in everything from skyscrapers, homes and automobiles to low wattage light bulbs, motion sensor lights and low flush toilets. Europe has moved forward aggressively with renewable energy technologies like solar, wind and sea power, as well as efficient mass transit, high speed trains and more. In the process, Europe has created hundreds of thousands of new green jobs. As a result of this transformation toward sustainability, the average European uses half the electricity of the average American, and it takes 40 percent more fuel to drive a mile in an American car compared to a European vehicle. Europe has reduced its “ecological footprint” (the per capita amount of the earth's capacity that a population consumes) to half that of the United States for the same standard of living.
- Economic power. The typical knock against Europe by American critics has been that these levels of support for workers, families, communities and the environment make the European economies weak and sclerotic, likened to a sick old man. However, this turns out to be a myth promoted by U.S. ideologues and their media accomplices. Even after the economic collapse of 2008, Europe has the largest economy in the world, producing nearly a third of the world's gross domestic product, almost as large as the United States and China combined. It has more Fortune 500 companies than the U.S. and China combined, and some of the most competitive national economies in the world, according to the World Economic Forum. The E.U. is now the largest trading partner with both the U.S. and China.
The US prides itself on its vibrant small-business sector, but Europe's economy actually has more small businesses than the U.S. that provide two-thirds of Europe's jobs, compared to less than half the jobs in the United States. So much for red tape supposedly strangling the European economy. Despite sovereign debt difficulties in a handful of countries, Europe's economy is hardly weak or sclerotic. And Europe is hardly socialist, indeed it is firmly capitalist, but it is a different kind of capitalism — social capitalism rather than Wall Street capitalism.
- Economic democracy. Practices like codetermination, works councils, co-operatives, public-private partnerships and a vibrant small-business sector are fostering a greater degree of economic democracy in Europe. Codetermination, first pioneered by Germany, allows workers at major corporations to elect their own representatives that sit side by side with stockholder representatives on corporate boards of directors. It also includes worker-elected works councils in most workplaces, which give workers a great deal of input and consultation at the shop floor level. Imagine if Wal-Mart were required by law that allow its workers to elect 50 percent of its board of directors – that's what Germany does. It's hard for Americans to even conceive of such a notion, yet many European nations employ some version of this as standard operating procedure.
Europe in effect has reinvented the corporation, yet across the Atlantic we know hardly anything about it. Critics like Naomi Klein and Noam Chomsky criticize corporations and capitalism as if they operate the same everywhere, when in fact they don't. The impact of codetermination has been immensely significant, and yet it has not hurt Europe's economy; indeed various studies have shown that these practices have helped the economy.
- Robust political democracy. After centuries of kings and dictators, Europe has forged pluralistic political institutions and electoral methods like proportional representation, public financing of campaigns, free media time for campaigns and universal voter registration that have produced the most representative democracies in the world at the national level (at the European Union level, which is relatively new and still in formation, it's a different story). These modern practices have fostered inclusiveness, participation, multiparty representation and policy based on broad public support and consensus-building. Europe's robust political democracies ensure that politics rule over economics, instead of the other way around, ensuring that the benefits of its prosperous social capitalism are broadly shared.
One American myth says that “Europeans pay more taxes than Americans” for this social capitalism. But for their taxes, Europeans receive a seemingly endless list of supports and services for which Americans must pay extra, via out-of-pocket fees, premiums, deductibles, higher tuition and other charges, in addition to their taxes. For example, many Americans are paying escalating health care premiums and deductibles, while Europeans receive health care in return for a modest amount deducted from their paycheck. Other Americans are saving tens of thousands of dollars per child for their college education, yet European children attend for free or nearly so. Millions of Americans are scraping to save the amount they will need for retirement beyond Social Security, but the European public retirement systems are much more generous, paying out twice as much per individual as U.S. Social Security. Many Americans pay extra for child care (at least six times what Europeans pay), or self-finance their own parental leave after a birth, but Europeans receive all of these and more — in return for paying their taxes. When you sum up the total balance sheet – taxes paid as well as out-of-pocket — it turns out that many Americans pay out as much as or more than Europeans, but we get a lot less for our money.
Properly understood, Europe's economy, political democracies, social support system and environmental vision are all components of its well-designed social capitalism — an ingenious framework in which a capitalist economy has been harnessed to finance environmental as well as economic sustainability. In addition, the economic engine finances a social system that better supports families and employees in an age of globalized capitalism that threatens to turn most people into internationally disposable workers. Even the continent's conservative political leaders agree that this is the best way; indeed European conservatives are for the most part to the left of the Democratic Party in the U.S.
The transatlantic differences between the American and European ways is not a mere coincidence, but rather a direct result of basic differences in key economic, political and media/communication institutions and infrastructure that have been quietly incubating and developing in the post-World War II period. Taken together these differences in “fulcrum institutions” — the crucial institutions on which everything else pivots — are the keys to understanding the striking divergence between the European way and the American way.
Ironically, the land of “We, the People” still does not trust the people all that much, and its aging fulcrum institutions elect governments that fail to produce policy supported by a majority of Americans. Judging by the timid positions of President Barack Obama and Congressional Democrats, this seems unlikely to change much, even if Democrats miraculously took back the House and held on to the Senate and presidency in 2012.
Consequently, the advances of the 21st century in political, economic, media and social organization will continue to take place in Europe, not America. Despite the short-term debt crises in some of the E.U. member states, if we are to survive the 21st century then Europe must step up its global leadership. Part of that process must involve spotlighting its fulcrum institutions – economic, environmental and political — as the basis for a new development model that offers hope to the world. In short, if the European Way didn't exist, we would have to invent it. In this make-or-break century beset by a worldwide economic crisis, global warming and new geopolitical tensions, the European model has the greatest potential to carry the world forward.