Between Europe and America

Will Hutton's The State We're In set the political tone for the UK's New Labour government after its landslide victory in 1997. The respected commentator has now turned his attention to the global stage in The World We're In calling for European liberalism to act as a counterweight to American conservatism. Adam Lent, Fabian Global Forum's Editor, quizzed him about the book's arguments.

You are very clear in your book that you are against American conservatism and not America itself. However, if America remains in thrall to conservatism for the foreseeable future is there not a risk that your approach could create just the division between the US and Europe that many fear your views might encourage?

Firstly, my own money is actually on a reaction against American Conservatism. American politics is made-up of cycles between periods of conservatism and periods of progressivism. They've alternated in fifteen to twenty year cycles since the middle of the 19th century and I think the conservatives have now peaked and we're beginning to see the foundations laid of a reaction to it. You can already see, for example, an enormous trust deficit in American capitalism talked about by Hank Pauls, the Chief Executive of Goldman Sachs - hardly a member of the liberal left.

The second thing to say is that because I'm being very clear-eyed about American conservatism, it doesn't mean that I give up on the place. We have to engage with the US no matter which regime is in power. We have to try and protect what's good in the current order, you have to see how it could be improved and we have to argue with the American Right and, who knows, they may actually temper some of their positions. So to be critical of the American right is not to argue for disengagement in transatlantic relationships, in some respects it's to argue for its reinforcement. But I argue for its reinforcement from a position of strengthening Europe not weakness. Each European country would immeasurably strengthen its dialogue with Washington if it sang from the same hymn sheet as every other European country.

You are also very clear in the book that if we take a "hard liberal" stance on terrorism and tyranny we must match that with equal efforts to create a juster international order. But in a situation where America is clearly the main power with the military capability to confront terrorism and tyranny but is equally not interested in a juster world order, doesn't that put hard Liberals in a very difficult position?

It does, of course it does. But that doesn't mean it isn't the right position and I think there's some evidence that the Americans themselves are having a bit of a rethink. If you are to wage an effective reaction to terrorism, you've got to have intelligence and you only get intelligence from people who choose to collaborate with you because they think that you have got the juster cause. If you want civic powers in the Middle East to supply information about terrorist networks, then you've got to address the issue of a just settlement in Israel and a just settlement for the Middle East. That means listening to their demands on aid and trade and education and health and the whole damn shooting match.

I think in some ways the Americans have got this message. Even the Bush administration, at the Monterrey Conference in March increased enormously it's commitment to aid - it's only a tiny fraction of the military budget but it was an increase. I think the war is now on between the great federal agencies and Departments of State about what the right approach is. Broadly speaking, the State Department sees the advantage of American deploying a softer approach while the Pentagon essentially favours a unilateralist blast-them-all-to-hell approach.

So there are forces in the US who take a hard liberal position. Our job is to keep on engaging with the United States to strengthen their hand. But it's not a particularly easy argument.

In the book you call for a series of reforms to the global order. You call for a world financial authority, a world competition authority and also a recast IMF. One thing you don't suggest was any permanent structure to oversee redistribution of world resources or a redistributive mechanism such as the Tobin Tax.

Well, I am in favour of some kind of Tobin Tax like intervention but I'm not completely convinced about the Tobin Tax itself - taxing actual market transactions to support more grants as aid to distressed countries is a rum way of carrying-out redistribution. It's rather as if you're going to redistribute in Britain by increasing stamp duty but not think about the possibility of progressive taxation.

I think one of the ways of doing it is to follow the World Health Organisation's call for just $20 billion a year for preventative health care in some of the very poorest countries. There's enormous paybacks from that.

It's true, I haven't asked for novel institutional mechanisms to carry-out redistribution. I suppose I thought that was a step too far but within the institutional mechanisms that I want strengthened, there's a pretty clear favouring of redistribution.

The book concentrates very heavily on the relationship between the US and Europe as a defining relationship for globalisation. Could you not be accused of missing what may be a much more significant conflict and relationship which is that between West and East. Most obviously in the form of China and India now entering the global market in a major way.

I think the Washington Consensus and the Brussels model are actually the two models of capitalism on offer in the world today. In reality that's what we're talking about. India and China in twenty years may have GDP's equivalent to the size of Britain or France but they haven't at the moment and the capacity to organise multilateral world rules relies primarily on the EU and the US. That is just the political reality of today.

Now I'm not saying that because that's the political reality that Brazilians, Indians, Africans are irrelevant but they do have to operate within a system of rules framed by America and Europe. If China wants to join the World Trade Organisation it has to do a bilateral deal with America and a bilateral deal with the EU as a precondition for joining it

It is imperative that globalisation is governed by multilateral institutions and if less powerful countries don't have the EU acting as a counterweight on the US, the truth is that the US will run the globe on their behalf. Everyone's got to look at reality and not actually do a classic Liberal Left thing of saying well it should be different therefore it is different. Even the Chinese, with close to a billion people, have a very, very marginal impact on global trade and financial flows.

But where does that leave the European model? Is it really realistic that the European model could have any resonance in the East?

Well I think it can. I think the way they will do the social contract is different of course and the way they will underpin their State is different and their relationship to capitalism will be different. But I think an Asian version of the Brussels model is more likely to fly than an Asian version of the Washington Consensus. Now of course the US wants them to follow the latter - that's one of the great battles in Asia, so they need an intellectual alternative to the Washington Consensus which they haven't got at the moment but we in Europe can provide it.

Some of the radical changes that occurred in European Capitalism you write about in the book obviously developed on the back of many, many years of campaigning largely on the part of the Labour movement and progressives throughout Europe. For the type of radical changes you are demanding would there not need to be the same sort of grass roots movement as that which existed in Europe for many years prior to '45.

I am very clear-eyed about the prospects of what I have described coming to pass. Actually I'm very pessimistic about it, I'm actually more pessimistic since writing the book. When I published 'The State We're In', everyone was very optimistic about what a Labour government could do. Nobody is optimistic about what Europe can do.

There's an enormous scepticism in Liberal Left circles about the EU to which my answer comes back, if not Europe, then what? I do argue in the book that actually it could be a fifty year or even longer period during which Europeans recognise that they have more in common. French, German, British and Italians have more in common and more common goals than they realise. That should be accented rather than what distinguishes them.

If you take any issue - North Sea fish quotas, genetically modified food, global warming, tax evasion, effective vaccination programmes, establishing worker rights - I just don't understand, I don't understand how anybody sentient thinks this can be done in a world of nation states. I don't understand how anyone on the liberal left, especially given our commitment to internationalism, how they can believe this. Sometimes, they'll say we can do it all through treaties and international collaboration but this is always going to be more cumbersome and based on the lowest common denominator. It's a profoundly unprogressive response and the bloody institution that we Europeans have got that can do it is the European Union. The progressive Left should get out there and support it and campaign for it and engage with it and insist it's more accountable and transparent instead of sitting on their hands. All that does is legitimise US scepticism and legitimise reactionary views on Europe.

The number of enthusiastic pro-Europeans who are under 40 in Britain who have any influence in public debate is close to negligible. So I am enormously pessimistic about this. I think it's been lost, I think no-one's standing up for it. It's precisely like the inter-war period that led to the collapse of the League of Nations. Non-American participation, no-one in Europe prepared to stand for an internationalist perspective or multilateral gains and a collapse into competing nationalisms. Whereas the Left had an honourable record at that time, at this moment they have a dishonourable record, they are not actually standing-up for those working multilateral institutions that actually might do some good.

You're posing this very much as though it's a British problem but of course recent events in European elections ...

Don't I know it? Don't; I know it? Although I would say to you that the result in the first round of the presidential elections in France were 5.9 million votes for Le Pen against 5.6 million in 1995. When he was up against Chirac, his vote went down. In the local elections they got smashed. And the mainstream French Right are, in some respects, more liberal than new Labour. At the Seville Summit, it was the alliance including the French Right wing President that blocked those moves to have punitive measures against countries that didn't collaborate with the measures to stop people trafficking. Chirac said, he wasn't going to make the poor poorer, echoing precisely what Clare Short said.

There's two ways of looking at what went on in France. One way is to say what the American Right say, which is that it's European anti-semitism raising its head again. Another way is to say the defeat of Le Pen was a glorious reassertion by France of absolute core Western values but I haven't read one piece like that in the British press because that's not the story that the sceptical liberal and the establishment here want to tell.

Placed on Fabian Global Forum, July 2002