Jacques Delors Was the Gravedigger of “Social Europe”

At his funeral last week, former European Union chief Jacques Delors was hailed as a left-wing architect of the EU. But far from realizing the Left’s hopes for a “social Europe,” in the 1990s Delors built a new European order in thrall to free-market dogmas.

Former EU president Jacques Delors was instrumental to Europe's neoliberal turn. (Jacques Langevin / Sygma via Getty Images)

This past Friday, Emmanuel Macron presided over a much-publicized ceremony of national tribute to Jacques Delors, the 1981–84 French finance minister who headed the European Commission from 1985 to 1995. Heads of state from all EU countries were invited to join Macron and leaders of the European institutions in paying their respects to Delors, who died age ninety-eight the previous week. Upon his passing, the former Commission chief was widely acclaimed as a “visionary,” an “architect,” or even the “father” of the European Union.

On both Right and Left, French and European political elites’ reactions have been unanimous in praising Delors’s “European engagement.” He is also considered one of the most important figures on the Left during France’s Fifth Republic. Yet if we look beyond such pieties, we see that his role was really something else. Delors was, in fact, one of the main actors in the abandonment of the French socialist program after the left-wing government came to power in 1981, and then in the dashing of the European left’s hope for a “social Europe” later that decade.

Delors and French Socialism’s Liberal Turn

Indeed, Delors was a key player in the French left’s liberal turn. This is not entirely surprising, given his political trajectory: in brief, that of a social democrat reformist who surfed on the radical wave of the 1970s before somewhat naively rallying to economic liberalism.

After graduating in law in 1945 at age twenty, Delors started his career at the Bank of France and joined the French Confederation of Christian Workers (CFTC) union. In its ranks, he was a member of the left-wing (anti-Marxist) current “Reconstruction,” which championed a socialist and democratic trade unionism. Although he supported the secularization of the CFTC and its transformation into today’s French Democratic Confederation of Labor (CFDT), he always remained a convinced social Christian inspired by the ideas of personalism — an intellectual movement that developed mainly in France in the 1930s and sought a “third way” between liberal capitalism and socialist collectivism.

Working for the General Planning Commission in the 1960s, in 1969 he became a special adviser to Georges Pompidou’s new Gaullist prime minister Jacques Chaban-Delmas, who launched a “new society” program with Delors’s help. Although this government’s priority was increasing growth and economic competitiveness, and despite a repressive loi anticasseurs in the wake of May ’68, this new society policy showed some new progressive concerns for social dialogue, vocational training, education, women’s rights, and a minimum-wage rise.

His early career as an adviser in a right-wing government did not preclude Delors from joining the Socialist Party (PS) in 1974 — a force that had recently reorganized the forces of French socialism under François Mitterrand’s lead. This was a rather natural choice for a lifelong member of the CFDT. Several important figures of the CFDT and of the Unified Socialist Party (PSU), like Jacques Chérèque and Michel Rocard, joined the PS in 1974, after Mitterrand narrowly lost that year’s presidential election with 49.2 percent of votes cast.

During those years, the CFDT and the PSU embodied the so-called Second Left. This current had emerged in France from the late 1950s in opposition to the Soviet repression of the Budapest uprising of 1956, France’s own war in Algeria, and Charles de Gaulle’s coup d’état in 1958. By the late 1960s, this Second Left — which brought together social Christians, social democrats, humanists, but also Trotskyists and Maoists — advocated a decentralizing socialism based on autogestion, or self-management. In the 1970s, under the influence of the 1968 revolt, French socialists and most of the Left embraced this objective.

This was also the time when the Socialists adopted a common program of government with the Communist Party (PCF) and advocated a rupture with capitalism. At the PS’s first congress in Épinay, in June 1971, Mitterrand sought to bolster his radical credentials by warning, “He who does not accept the rupture . . . with capitalist society, that person, I say, cannot be a member of the Socialist Party.”

Against this backdrop, Delors, who became the party’s national delegate for international economic relations (1976–1981), did not immediately advocate austerity and economic liberalism. In 1976, he told TV program l’Apostrophe that his understanding of being a social democrat meant “a break with capitalism, nationalizations, self-management and the eradication of meritocratic society.” That same year, he took part in a conference on the crisis in capitalist planning organized at the University of Sussex by Stuart Holland, himself one of the main promoters of Labour’s then radical-left Alternative Economic Strategy. This conference resulted in the publication of a now forgotten book, Beyond Capitalist Planning, in which Delors and his colleagues promoted a strategy to move beyond the kind of “managed capitalism” that had characterized the postwar era, through greater state control of big enterprises and an extension of public ownership based on “socialist planning,” with greater industrial and economic democracy.

The Left’s electoral victory in France in May 1981 saw Mitterrand elected president and a PS cabinet taking over — joined in June by four Communist ministers. Ending some twenty-three years of right-wing rule, Delors was appointed finance minister. Immediately after its election, the new executive led by Pierre Mauroy swiftly passed several major social and economic reforms. These included the extensive nationalization of industry and banks, mass hiring in the public sector, a rise in the minimum wage as well as pensions, increased family allowances and access to health insurance benefits, increased benefits for unemployed and part-time workers, increases in housing subsidies and allowances to people with disabilities, and the reduction of working time (from forty to thirty-nine weekly hours, with the objective of soon reaching thirty-five hours). There would also be the introduction of a fifth annual week of paid holiday, strengthening of health and safety protections in the workplace, the decriminalization of homosexuality, and the abolition of the death penalty.

At the same time, the government launched a broad Keynesian reflation plan to kickstart growth and employment. The costs of these measures were largely met through the introduction of more progressive taxation, a wealth tax, and a clampdown on tax evasion. The 1982 “Auroux laws” also introduced greater industrial democracy (although “self-management” remained a far-off dream), while power was increasingly decentralized to the regions, départements, and municipalities. This certainly went against the new neoliberal tide sweeping across the West under the leadership of Ronald Reagan and Margaret Thatcher.

The new French government was well aware of the constraints that the interdependence of European (and world) economies and the European Community (EC, the forerunner of the European Union) placed on its domestic plans. This was especially critical when the country’s main commercial partners, starting with Helmut Schmidt’s West Germany, were adopting deflationary austerity policies in sharp contrast with their ambitions. Besides, the European Monetary System (EMS) established in March 1979 anchored European currencies to the strongest currency, the deutsche mark, and introduced a monetary constraint that geared European countries to economic “stability” and anti-inflationary policies — public spending restrictions, wage containment, and high interest rates — not to full employment or redistribution.

As early as June 11, 1981, during a joint meeting of European finance and social affairs ministers, Jacques Delors called for an EC-wide concerted reflation plan, while Jean Auroux, minister of labor, asked for radical measures against unemployment, in particular for an EC-wide reduction of working time. The proposals formulated and reiterated in the following months by the French government failed to convince its European partners, however. Schmidt had turned increasingly to domestic austerity since the 1979 second oil shock — a choice confirmed by his successor, Helmut Kohl, after 1982. In Britain, the “Iron Lady” was pushing through budget austerity, deregulation, flexible labor markets, the privatization of state-owned companies, and a reduction of the power and influence of trade unions.

Forced to pursue reflation by itself, France got bogged down in rising macroeconomic difficulties: rising inflation and increasing trade and budget deficits. Above all, the country faced capital flight, currency speculation, and sharp hostility from business and finance. In the United States, deflationary policies promoted since 1979 by the Federal Bank helped bring about a global recession in the early 1980s, which only worsened the situation for France’s PS-led government. All this, especially the high interest rates on the international markets, made it increasingly difficult for the state to fund itself. The franc was thus devalued in October 1981 and June 1982. With each devaluation, France’s foreign debt increased. Faced with the stubborn refusal of the main European governments for a coordinated European stimulus and confronted with continued downward pressure on its currency, France would not be able to remain in the EMS for long without changing course. In this context, Delors started calling for greater budget austerity and for a “pause” in social reforms by the end of 1981.

In March 1983, after a third devaluation, the French government had to choose between sticking to the program on which it had been elected, which implied leaving the EMS, or the other way around. It opted to abandon its efforts to “change life” (the slogan of Mitterrand’s campaign in 1981) and carried out a radical change of economic policy: turning to deflation, budget restrictions, a reversal of nationalizations, giving up on wage indexing, and progressive financial deregulation. In 1984, the Communists left the government. This so-called tournant de la rigueur (austerity turn), which was to become a trauma in the collective memory of the French left, was undertaken in the name of Europe, and under Delors’s strong influence and lead.

The “Delors Moment”

Abandoning “socialism in one country,” the French government chose to reassert its European commitment. Delors’s appointment as the new European Commission president from 1985 onward epitomized this new strategy. As a leading architect of France’s turn to austerity and perseverance in the EMS, Delors had gained widespread support among European political elites. In Thatcher’s words, he was “extremely intelligent and energetic and had . . . been credited with reining back the initial left-wing socialist policies of President Mitterrand’s Government and with putting French finances on a sounder footing.” As well as winning the confidence of neoliberal conservatives, Delors was also a social Catholic acceptable to Christian democrats, had gained the trust of West German chancellor Helmut Kohl, and was well-versed in European bureaucratic jargon (he had been a member of the European Parliament and taken part in the work of the EC Confederation of Socialist Parties).

Delors’s three terms at the head of the Commission are often remembered today as the “Delors moment”: a time of unique political dynamism for Europe, with the establishment of the single market, the signing of the Schengen agreements on cross-border movement, the creation of the Erasmus student-exchange program, the launching of the Economic and Monetary Union (EMU), leading to the creation of the euro, and so on. Delors is also usually depicted as the uncontested “father of social Europe,” having prepared the ground for the institutionalization of “European social dialogue,” the strengthening of European social and cohesion funds, and gradually increasing European competences and regulation in the social field.

In reality, after he took office in January 1985, the new Commission president immediately placed economic liberalization and the single-market project at the top of his agenda. This was a consensual choice, as Delors himself explained some years later: “I had to fall back on a pragmatic objective that also corresponded to the spirit of the times, since back then it was all about deregulation, the removal of all obstacles to competition and market forces.” The completion of the EC’s internal market, with the removal of remaining barriers to the “four freedoms” — i.e., the free movement of goods, capital, services, and people within the EC — was, naturally, strongly supported by Kohl and Thatcher. The new UK commissioner for internal market and services, Arthur Cockfield, who had held economic portfolios in Thatcher’s governments, played a key role in laying the project’s foundations.

Pressures from the various business lobbies were crucial in determining the reshaping of European integration from the mid-1980s onward. In 1983, at the initiative of Volvo chief executive Pehr Gyllenhammar, the leaders of seventeen top European transnational corporations — including Volvo, Philips, Fiat, Nestlé, Shell, Siemens, Thyssens, Lafarge, Saint Gobin, and Renault — met in Paris to found the European Round Table of Industrialists (ERT). Its goal was to promote further opening of markets together with European support for industry. The Commission’s 1985 White Paper on Completing the Internal Market, which proposed around three hundred measures to complete the single market by 1992 through the abolition of nontariff barriers, closely resembled the ERT’s recommendations.

The rationale underlying the internal market program, institutionalized by the 1986 Single European Act, was therefore intricately free-market oriented. Far from the kind of “socialist planning” promoted by Delors and his PS colleagues only a few years earlier, it sought to build a bigger market through liberalization and harmonized market norms. Delors, like other Socialists in close contact with European business circles, had come to believe that the ongoing trends of trade liberalization, banking, and financial deregulation were inevitable and indispensable to enabling economic growth and job creation, and indeed to reestablishing western Europe as a leading economic actor in an increasingly competitive and globalized world. In the following years, critical directives would be adopted regarding the liberalization of capital movement and the deregulation of the banking and insurance sectors.

Did Delors and his colleagues not see that unleashing trade, liberalizing services, and letting capital move freely within the European Community without prior fiscal and social harmonization would inevitably pit workers and national welfare regimes against each other — causing a race to the bottom over social rights, salaries, and redistribution? This remains perhaps the most unsettling question, as already throughout the long 1970s European socialists had been talking about upward social and fiscal harmonization, and about greater control over capital movement and multinational companies — not about deregulation.

Delors’s administration adopted what some of its prominent figures called a “Russian doll strategy”: a kind of spillover approach in which each step of the way forward was designed to contain the seeds of another to follow. The Commission hoped to cash in on the success of the single-market program with new initiatives: the Paquet Delors, meant to double the EC budget and the “structural funds” for more “economic and social cohesion”; EMU and the creation of a single currency; and the “social dimension” with the adoption of the Social Charter of Fundamental Rights, a new Social Action Program, and the relaunching of “European social dialogue.” In short, Delors saw the single market as a step toward closer union; market-led integration would then in turn demand social and fiscal corrections.

Unfortunately, not all aspects of the process had the same success; if the consolidation of the “European social model” was supposed to somehow necessarily follow from the strengthening of the market, in reality it kept lagging behind. The “Delors Package” was adopted after fierce negotiations, doubling the “structural funds” while restraining the budget of the Common Agricultural Policy, but the overall budget of the EC — and therefore its potential for social and regional redistribution — remained extremely limited, even now barely ever exceeding 1 percent of European GDP. The social dialogue relaunched in 1985 with the Val Duchesse discussions among employers, trade unions, and the public sector associations, giving very few results. The Charter of the Fundamental Social Rights of Workers in 1989 did proclaim several social and economic rights — equal treatment for men and women, freedom of association and collective bargaining, and the right to decent pay and protections. Yet this remained nonbinding. The Social Action Program, adopted in 1989 to implement the charter, consisted of forty-seven instruments (compared to the nearly three hundred for the single-market program), most of which were nonbinding recommendations and opinions.

In contrast, the monetary union turned out to be Delors’s greatest political success. In 1988, the European Council appointed him to chair a committee, largely composed of European central bankers, to make new proposals for the realization of the EMU. Initial unwillingness of the German government to abandon the all-powerful deutsche mark had been softened by the French government’s commitment to favor freedom of capital movement and by the assurance that the future supranational European Central Bank would be modeled after the Bundesbank — that is, independent from political powers and devoted primarily to “price stability.” The Delors Report, released and adopted by European governments in the spring of 1989, set the course for monetary union, later enshrined in the Maastricht Treaty in 1992.

The core of this new treaty was the commitment of the member states, except the UK and Denmark, to adopt a single currency under the authority of a single independent central bank by 2000. This was no small decision. Even more than under EMS, this meant that European governments would abandon key aspects of national economic and monetary sovereignty, starting with their right to issue money and alter exchange rates. The treaty also formally introduced for the first time the “convergence criteria” that set mandatory rules regarding the member states’ economic policies: limiting the government budget deficit to 3 percent of GDP and public debt to 60 percent of GDP, keeping inflation rates no higher than 1.5 points above that of the “best-performing” countries, maintaining exchange rate stability, and respecting interest rate convergence. Much to Delors’s regret, the negotiators at Maastricht refused to include convergence criteria on employment standards.

Meanwhile, the “social dimension” promised to trade unions continued to trail behind. With the Agreement on Social Policy annexed to the Maastricht Treaty (from which the UK opted out until the New Labour government joined in 1997) only scarcely increased European competences in the social field and could not counterbalance the constitutionalizing of neoliberalism at the core of the new European Union. A social protocol included in the treaty institutionalized a new “European social dialogue” for employers, trade unions, and the Commission to agree on social policy directives, but given the employers’ reluctance, and in the absence of pressure from EU institutions, member states, and below, this was unlikely to bring significant results. Indeed, between 1995 and 2013, only three directives were passed under the Protocol procedure — on parental leave, part-time work, and fixed-term work.

By the time Delors’s Commission came to an end in 1995, Europe — embodied more and more assertively by an expanding EU — was headed ever further from that “social Europe” that socialists and trade unions had striven for in the long 1970s. Far from a market-controlling, redistributive, economic-planning-oriented, and democratized Europe serving workers, what came about was an increasingly neoliberal Europe. Its supposed social dimension was not only compatible with but an incentive to free markets and the extension of private property.

In other words, Delors was not only the gravedigger of France’s socialist experiment, changing the course of the French left. He also helped bury the European left’s hopes for a “social Europe” and helped shape Europe as we know it today: a technocratic, authoritarian, and neoliberal machine.