Ed Miliband delivers a speech on international development at The Almeida Theatre in London. Photograph: Getty Images.
Show Hide image

Jacob Hacker: Miliband’s not talking about “predistribution” but he has embraced my big idea

The US academic behind the concept on how Labour's manifesto reflects a new economic philosophy.

I’m an American academic who’s mostly written about US public policy. Yet back in 2012, my work was mentioned by not one but two major British political figures. The first was Ed Miliband, who spoke approvingly of an idea I had discussed called “predistribution.” Miliband praised the idea as an alternative to New Labour’s hands-off approach to markets, which used tax revenues from an expanding financial sector to help those left behind.  To Miliband, the goal in the wake of the financial crisis was not just to redistribute after the fact, but to encourage better market outcomes from the start – “to transform our economy so it is a much higher skill, much higher wage economy.”

The other British political figure to mention my work was a little less friendly. During PMQs, David Cameron joked that the Labour leader had a “new guru,” a “Mr J Hacker.” That was funny (although I had to Google “Yes, Prime Minister” to fully appreciate the joke). But then the Prime Minister said, “Mr. J Hacker’s recommendation is that we spend an extra £200bn and borrow an extra £200bn in this Parliament.” Humor provides license to stretch the truth, but this was a lie. I had never written about the British budget, much less given recommendations to anyone about taxing and spending. But it was a revealing lie, for it underscored the central deception at the heart of the current government’s approach to the economy.

Britain faces two great challenges. The first is the long-term slowdown of productivity growth that has gone hand-in-hand with the economy’s excessive financialisation over recent decades. The second is the growing gap between those at the top and the rest of British workers, whose jobs have become less secure while their pay has stagnated.

The coalition now in power has mostly ignored both problem, choosing instead to focus on the phantom menace of a national credit default. (No rich country with its own currency has ever defaulted on its debt.) That in turn has resulted in a strange paradox: austerity has slowed growth so much that austerity has failed to produce big budget savings. Economically, Britain has suffered through a modern form of blood-letting: painful treatment that has mostly weakened the patient.  It’s a good thing the coalition has stopped drawing so much blood, but tragic so much had to be spilled.

The British media have mostly played along with this shell game, reporting on the political struggle as if the central issue was the budget deficit rather than growth and inequality. More important, journalists have reported hardly at all on the huge gap between the coalition government’s initial promises and the present reality. The deficit was supposed to be gone by now. Today, it continues well into the foreseeable future, constraining what any new government can do.  The economy is now recovering, but Britain’s economic record since the downturn has been much worse than the United States’ – worse even than the British recovery from the Great Depression. By any measure, this is not an inspiring result.

As a political scientist, I know bad deeds often go unpunished in electoral politics. Voters pay the most attention to economic trends just before the vote, and they’re generally not so great at the counterfactual thinking needed to compare those trends with alternatives that might have played out under different leadership. To make that comparison harder, continental Europe has gone even farther down the austerity road, so relatively speaking Britain looks pretty good. And, of course, this election promises to be one of the most unsettled in British history. The rise of the SNP has pulled Scottish anti-austerity voters from Labour (and will immensely complicate the formation of a government after the election). For all these reason, the poor record of the governing party – or Labour’s competing economic vision – probably won’t be decisive on 7 May.

But the fact remains that one of the two major British political figures who commented on “predistribution” back in 2012 will be the next prime minister. As the election looms, it is high time we looked beyond the personalities and gaffes and asked: Does the Labour Party have a new economic philosophy? More important, in the event Labour forms the next government, will that philosophy work?

 

***

 

The first time I spoke of predistribution was at a conference in Oslo in 2011. Miliband, less than a year into his tenure as Labour leader, was in attendance. Later, we met at an academic seminar in Oxford; the exchange continued over subsequent conversations in London. To him and others, I emphasised that it was the idea, not the label, that mattered. The idea, which draws on my joint work with fellow political scientist Paul Pierson, is that government has an enormous, inevitable influence on how well markets work and who they help and hurt – even before it sends out a single check. The message of post-1970s economic debates is that government mostly just redistributes the autonomously generated rewards of growth. The main lesson of history, however, is that government is vital to the advance of innovation and productivity and to the translation of these economic gains into social gains. Through the rules for the markets it enforces and the public investments in skills, technologies, and infrastructure that it makes, government helps us grow richer, healthier, and better educated. It doesn’t just slice the pie up; it makes the pie bigger.

Consider the two biggest transformations of the twentieth century: the roughly doubling of life expectancy and the more than fourfold increase in GDP per capita in rich nations.  These were not zero-sum changes that redistributed a fixed pot. They were positive-sum changes that, over time, made almost everyone better off. And they were directly tied up with government policy. Most of the public health and medical breakthroughs that revolutionised our lives (and which even cautious estimates suggest are worth much more than the increases in income we have enjoyed) can be credited to the regulatory and investment power of the state. To cite just a few examples, public health efforts in the early twentieth century, the development of antibiotics and vaccines, the successful campaign to reduce tobacco consumption, the spread of publicly guaranteed insurance, the major breakthroughs in cancer care, the reduction in air and water pollution, and most of the major medical technologies of our day, including breakthrough prescription drugs – all began with public research and funding. Indeed, in the case of the initial quartet of examples, government directly engineered huge efforts to catalyse changes in the organisation of societies and health care systems that allowed us to live longer and with less disability than ever before.

Similarly, most of the major innovations that drove the skyrocketing of economic productivity over this same period emerged out of public research and funding. Markets are brilliant at allocating goods and drawing on existing knowledge to meet consumer demand. But they notoriously under-invest in the basic infrastructure of prosperity, both physical and intellectual. Public education remains the greatest government investment ever made. Public roads, communications and transportation networks, and energy infrastructure are close behind. Even the twentieth century’s technological revolution, which propelled quantum leaps in productivity, relied heavily on government impetus. The computer and internet, for example, trace their origins to massive public investments in R&D (much of it defense-related) made by the United States and Europe during and after World War II. As University of Sussex economist Marian Mazzucato has persuasively argued, even the ubiquitous iPhone owes most of its major elements (including that friendly voice that asks you to repeat what you said) to government research and funding. 

The need for government to play this catalysing role has not faded in the twenty-first century. Far from it: Complex knowledge economies are more interdependent and more reliant on investments in skills and technologies – and more prone to short-sighted private action – than ever.  If the public foundations of twentieth-century prosperity included electrification, modern transportation and communication networks, and the municipal infrastructure that enabled cities to become healthy hubs for innovation and advancement, the twenty-first century list must expand to include the infrastructure for advanced digital communication, newer and more efficient forms of mass transit, and platforms for a green-energy economy, such as smart electric grids. These sorts of vital investments will not happen without government taking the lead, and they are extraordinarily attractive today, given low interest rates and a backlog of needs.

Does Labour have such an investment strategy?  The party’s 2015 manifesto is encouraging. It calls for greater investment in a “world-class infrastructure” and both college and vocational education. It calls for greater investments in early education through expanded child care for pre-school children and wraparound care at schools for those in primary education. It vows to set up a National Infrastructure Commission to determine goals and encourage their achievement in an efficient, non-partisan fashion.  An underlying growth strategy emerges, one built on higher wages, better infrastructure, greener energy, and digital technology. For example, one promise is to ensure all of the country has high-speed broadband by the end of the next parliament.

But the proof of the pudding is in the eating. Is the rhetoric backed by the commitment of government dollar? Here the differences between the two parties could not be more stark, but so too is the lingering effect of austerity. Having failed to meet prior deficit-reduction targets, the Tories have loosened up in the short term and doubled down in the long term. Their goal is to create a substantial budget surplus within five years, which would imply reducing public spending to a share of GDP not seen since before World War II. This goal will require sharply reducing public investments, as well as virtually every other sort of public spending. Indeed, the Institute for Fiscal Studies (IFS) estimates that it implies total, inflation-adjusted cuts of 40 percent to so-called unprotected departments (that is, everything besides health, schools, and overseas aid).

By contrast, Labour leaders have left themselves more room to shift spending toward productive investment. For starters, they have focused on the structural deficit, excluding public investment (whose long-term returns, decades of research shows, greatly exceed initial commitments). The goal is balance the current account, which would require relatively modest cuts. Moreover, the cabining off of investment spending means that, in principle, true capital investments should not be in budgetary conflict with other priorities. Nonetheless, these investment commitments could be more robust if the budget situation had not so deteriorated relative to expectations since 2010.

Still, Labour has embraced a central pillar of predistribution: public investment in physical and human capital that make society richer. Given Britain’s slow productivity growth, paltry R&D spending, and subpar infrastructure, this is a major positive step toward a more innovative, digitally connected, and green British economy.

 

***

 

If contemporary political leaders have been too quick to discount the value of public investment, they have also been too slow to recognize the dangers of private speculation. Certainly, New Labour in Britain and New Democrats in the United States were complicit in the deregulation of the financial sector that contributed to the recent financial crisis, and certainly Labour has paid a heavy price for the resulting economic crisis that both major parties failed to foresee or forestall.

Since the crisis, however, there has been a much clearer contrast between right and left in both nations. Conservatives are mostly quiet about the need for continuing reform, implying that the problem mainly concerns the “culture” of finance, rather than distorted policies and rigged markets. And they have been much more sympathetic to the self-interested claims of big financial actors. By contrast, progressive leaders – and Miliband is no exception – have called for greater attention to the distorted incentives that allow financial actors to impose huge risks on all of society while reaping huge rewards themselves. If there is anything that defines the breach between today’s Labour Party and that of the Blair/Brown era, it is the recognition that something went seriously awry at the top of the income pyramid during the speculative boom of the 1990s and 2000s.

The United States and Britain, the most financialised economies in the world, suffer from a common problem of “profits without prosperity” – there has been economic growth, but little of it is going into long-term investment or workers’ paychecks.  In fact, the growing share of the economy consumed by finance in both nations has been mostly a double negative. It has pulled money and talent from more productive sectors while imposing enormous costs and risks on everyone but favored insiders. What economists call “rent-seeking” – the generation of excess returns for privileged players through the exercise of market power, political influence, or both – does not just occur when special interests wheedle special deals from the government. Far more common, it reflects the passivity of government in the face of major distortions of the market that benefit a favored few at the expense of most everyone else. Nowhere has this been more true than in the financial sector.

Moreover, the negative effects on corporate behavior are not just limited to the financial sector itself. Managers outside the financial sector have focused more and more on immediate shareholder returns rather than long-term growth, as well as on fostering favorable policies that allow them to profit at society’s expense.  This has been the greatest cost of the run-up of incomes at the very top so characteristic of the United States and Britain. Experts who worry about this trend do not think that great fortunes are inherently bad. Our concern is that they are tied up with market developments that are bad for everyone else, and that they lead to imbalances in political power that make it hard to address those market distortions. Again, nowhere has this been more true than the financial sector.

For that reason, perhaps the most promising aspect of Labour’s new philosophy is its invocation of “an economy based on mutual obligations.” What that means remains vague, but two concrete initiatives suggest an ambition to shift how the financial and corporate world works in fundamental ways. The first is a set of measures designed to reduce the focus on short-term movement in stock prices, including proposals to encourage institutional investors to focus on long-term performance of companies they invest in and changes in takeover rules to increase the sway of long-term investors and strengthen the now-largely-toothless “public interest” test (a change recently advocated by takeover experts Aeron Davis, David Offenbach, Richard Stevens, and Nick Grant). 

The second set of measures – in many ways more far-reaching – would make it harder for executives to receive large pay packages absent strong performance or without worker say. These reforms include mandatory disclosure of votes on executive pay by investment and pension fund managers and, most sweeping of all, mandatory employee representation on pay-setting committees. These are ambitious ideas that could address the very real problems of short-termism and self-dealing that have hurt the economy, fed inequality, and increased financial risk.

 

***

 

Investment takes time to pay off. The natural question, therefore, is whether Labour can create jobs and expand productivity in the near term – and, no less important, ensure that those taking these jobs receive a decent share of the productivity gains their work helps enable. Viewed as a problem of predistribution, the question is whether Labour can foster fulfilling, well paid, and socially valuable jobs for as many citizens as possible. Supplements to wages can be valuable, but workers want a job and opportunities for upward mobility more than a public check. Moreover, redistribution can breed resentment, especially in an age of greater cynicism about government effectiveness. Taxation and redistribution are cornerstones of progressive governance, but they cannot do the work on their own.

Instead, the core policy tool must be macroeconomic policies that ensure tight labor markets. That means substantial public investment in job-creating projects necessary for long-term growth and overall spending policies that are mindful of the demonstrated negative effects of austerity on jobs and incomes. As just discussed, it also means rules and levies that reduce the risks of financial instability. Ensuring high levels of workforce participation also requires active policies to help people enter the workforce and change jobs,  to develop new skills, to take their benefits from job to job, and to balance work and the care of children and elders.

Thankfully, the Labour manifesto is comparatively strong in all these areas. The roughly £50bn difference in implied spending cuts documented by the IFS represents the largest fiscal gap between the parties in modern history – and a fateful difference. Hippocrates’ Oath says, “First, do no harm.” Everything that has happened in Europe over the last half-decade has suggested the substantial harm of steep spending cuts. Moving carefully to balance the books is, by itself, a pro-jobs program.

Less noticed, Labour has called for a range of efforts squarely targeted at increased workforce participation. Most notably, it has pledged to increased by two-thirds (from 15 to 25 hours per week) the number of hours of free child care for working families – a proven strategy for increasing workforce participation of parents, especially mothers – and it has singled out vocational education as a major area of investment.

Most of the commentators who have paid attention to Labour’s programme have asked, rightly, whether it will bring up wages enough to deal with the strains facing ordinary workers. But there is another side to the “wage squeeze” – high prices. Almost completely missed, the Labour proposals contain a number that are mostly about lowering the “rents” that privileged market actors receive so that the paychecks of workers go farther.

Literally so, in the case of housing – the biggest cost for most consumers, and a cost that has skyrocketed in Britain as affordable housing has virtually disappeared. Against this backdrop, Labour’s emphasis on building new homes that workers can afford and encouraging longer-term tenancy arrangements for renters are welcome, if still somewhat undeveloped. More specific and unusual, the Labour manifesto makes the case that energy, water, and transport costs all can be brought down.  These are all classic mixed markets combining public and private investment, in which government has a vital role to play as a countervailing power on behalf of consumers. And alongside the reforms of finance and corporate governance, they signal at least a partial embrace of the central idea of predistribution – that government authority can be used to reduce economic strains by improving how markets work, rather than just redistributing income or providing benefits.

Behind all these priorities lurks a difficult question: whether predistribution of the sort I have discussed is even possible given the decline of labor unions. Empowering ordinary workers within the workplace and democratic politics is central to making markets work for most workers. Yet we live in a post-labor world, in which wage increases are not going to naturally track productivity gains because of workers’ bargaining power. If wages are to rise steadily again, a broader range of strategies will be required, including minimum wages, high labor standards, and the promotion of creative alternatives to unions. So far, Labour’s statements have emphasized a higher minimum wage and the elimination of the most exploitative labor practices, such as zero-hour contracts. Yet there has been a notable lack of serious discussion of the alternative to unions that could provide some degree of representation for workers. In the United States, a vibrant debate is taking place about work councils, social movement unionism, and other new organisational forms loosely group under the label “alt.labor.” With trade union membership down sharply over the last generation,  Labour leaders would be well served to expand the conversation, too.

 

***

 

Elections are contests of personalities, but also contests of ideas. They are big multi-player games that are fun to watch, but also tests of competing governing philosophies that have enormous consequences for how societies evolve over time. It would be too much to expect commentators and voters to put aside entirely their favored prejudices and petty fascinations. But it is not too much to ask that the most reflective among them step back and assess the bigger terrain.

Five years ago, I experienced my proverbial 15 minutes of fame on an unexpected side of Atlantic. “Predistribution” has mostly disappeared from the lexicon of British politicians – and thankfully so. But the idea hasn’t, mostly because the challenge of how to restore well-functioning markets in rich democracies amid growing inequality and persistent insecurity remains so pressing.  Labour has embraced that challenge, and if a crazy election, well-timed burst of pre-election growth, and less-than-charismatic leader mean its program lies fallow, that will be a loss for Britain’s economy as well as for our idealised vision of elections. If Labour could successfully pursue the ideas its leaders have laid out on paper, Britain would move much farther in addressing low productivity and high inequality than it would otherwise. The Prime Minister had a good laugh at “Mr. J. Hacker,” but the British economy would be better off if he had paid attention to what I was actually saying.

 

Photo: JOHN MACDOUGALL/THE NEW YORK TIMES/EYEVINE
Show Hide image

Europe after the storm: how Emmanuel Macron plans to transform the EU

The French president has a vision to lead the deadlocked EU out of crisis and towards greater integration. But can he carry the rest of the bloc with him, especially the troubled Germans?

Sometimes it takes a Frenchman. The 19th century writer and politician Alexis de Tocqueville is remembered today for explaining the merits of American democracy to the world. In the mid-20th century, two other Frenchmen (well, one French, and one a Lorrainer with ties to Luxembourg), political economist and diplomat Jean Monnet and foreign minister Robert Schuman, were pivotal in establishing a limited European Community of Coal and Steel; today they are remembered for creating the intellectual basis for its transformation into the European Union. Now, the French president, Emmanuel Macron, is showing the deadlocked EU a way out of the crisis. What he is proposing on Europe is so major and so much more important than any other pressing current issue, including Brexit, that it is a wonder it is not being more widely and constantly discussed across the continent.

In a series of books, articles and speeches over the past 18 months Macron has brutally exposed the weaknesses of the European Union. The problem, he shows, is that the member states are too weak on their own to enjoy effective sovereignty in the fields of finance, economy, the environment, immigration, foreign policy and defence. Worse, the EU, in its current form, is unable to remedy these deficiencies. The euro is not based on a common parliament and economic policy, and is thus condemned to perpetual instability. The taxation regimes of the member states are not co-ordinated, leading to a downward competition between EU countries that puts the foundations of Europe’s welfare regimes at stake.

While the EU sets ambitious targets to tackle climate change, its member states fail to live up to their independent promises. The continent lacks a single jointly funded army commanded by a shared government and so its defence provision is inadequate; it is actually defended by a military alliance in Nato where most of the war-fighting capacity is provided from across the Atlantic Ocean and the English Channel. Most of Europe has a common travel area – Schengen – but no common border defence or established migration policy, with predictable results in the Balkans and Mediterranean.

The Europeans are in effect, though Macron does not quite put it this way, leaseholders on their own continent.

President Macron proposes to return “sovereignty” to the populations of the member states – by which he means genuine democratic participation – through the creation of a larger “European sovereignty”. His concrete suggestions for EU reform are anchored in elements such as the establishment of a European military intervention force that would have a single European doctrine and budget; and of a European border police and a European asylum office that would uphold simultaneously the integrity of its outer border and a common asylum regime. The list could go on, but even more fundamental than the policy and instrument changes suggested are the proposals on how these would be governed, funded and legitimised.

The extent of the policies suggested and their European nature leads Macron to conclude that they require a common budget overseen by a European finance minister and tightly controlled by a European parliament. Given the policy areas that the proposals cover and the mechanisms suggested to enable them, they amount to reshaping the EU in such a way as to form a European state in all but name, rather than the European confederation we have today.

But this is not all there is to it. The president’s vision effectively abandons the framework within which changes to the EU’s structure have been made up until today, namely as the sovereign decisions of the governments of its member states. Instead he suggests that Europeans reclaim – our words not his – the freehold they forfeited, with good reason, in the mid-20th century.

For in President Macron’s vision a common road map for how to develop the new Europe would be put to discussion among the populations of countries willing to engage in the process, and ready to take those discussions into consideration when voting for the next European parliament in 2019. Ultimately, this vision suggests that where some member states aren’t willing to partake in the process they would not have to join in the new union, but remain part of a slower-speed rump made up of the remains of the EU of today.

Here are Macron’s own words in his book Revolution: “We have confused sovereignty and nationalism. I say that those who truly believe in sovereignty are pro-Europeans: Europe is our chance to recover full sovereignty... Sovereignty means a population freely exercising its collective choices, on its territory. And having sovereignty means being able to act effectively. Faced with the current serious challenges, it would simply be an illusion, and a mistake, to propose to rebuild everything at the national level. Faced with an influx of migrants, the international terrorist threat, climate change, the digital transition, as well as the economic supremacy of the Americans and the Chinese, Europe is the most appropriate level at which to take action.”

The underlying conception of “sovereignty” here appears complex, but is in fact clear and revolutionary; it is no accident that his manifesto book was titled Revolution. Macron is not simply “pooling” the sovereignty of the member states; he is vesting it at a higher level. Nor is the president taking sovereignty away from these states, because in today’s world they don’t have any to begin with. The peoples of mainland Europe will have a European sovereignty or they will have no sovereignty.

***

To understand where that leaves the nation state, one needs to grasp the distinction that French political thinking makes between the nation and the state. While most European nation states take their raison d’être from a shared territory or bloodlines, France’s identity is supplemented by another, that of the Republic. The Republic’s foundational myth is that of a defender of republican and universal values such as essential human and citizens’ rights. So far, these are recognised as distinct yet overlapping, as can be witnessed by important formal addresses of French presidents always ending in the call: “Vive la République, et vive la France.”

With Macron aiming to preserve the first, the French nation, he suggests transferring the other, the French Republic with its commitment to the defence of human rights and universal values, to the European level. The French nation will remain, just as the other nations will remain, but it will no longer be sovereign. The French Fifth Republic will come to a formal end – it is in practice already redundant – and will be replaced by the Sixth Republic, which will simultaneously be the first European Republic.

The Macron plan is thus, unsurprisingly, very “French”, as one might expect from a man who received his education from two of France’s elite universities, Sciences Po Paris and the École Nationale d’Administration, and who admires Napoleon. This is also reflected in some of his policy concerns, such as his recent call for the EU to develop a new Mediterranean strategy, which is reminiscent of Sarkozy’s failed Union for the Mediterranean, or the suggestion to establish European corporations that would be champions in one field of economic activity. That said, he and his plans are also very Anglo-Saxon (though he may not thank us for saying so). Macron makes frequent and willing use of his fluent English and has worked as a banker at Rothschild. He has praised the economic models that other countries have adopted and believes firmly in a digital start-up revolution.

Similarly, his foundational ideas for the reform of Europe are – directly or indirectly – inspired by successful developments from elsewhere. Just as the independent colonies that formed the United States realised that they were too weak to face the challenges of the age on their own, Macron emphasises that true sovereignty for Europe’s peoples can only exist through the creation of a single de facto state responsible for policies to deal with Europe’s greatest challenges. Yet, just as England, Scotland, Wales and part of Ireland remain as nations within a larger sovereign political union within the United Kingdom, so Macron sees France and the other nations retaining their distinct identity under the new “European sovereignty”. And he wants it not to be attained gradually and by stealth, but quickly through consultation and consent. He outlines a process of constitutional conventions followed by democratic procedures such as referenda, with a clear path to a European sovereignty by 2024 – the date of European parliament elections – agreed within a couple of years. Those unwilling to participate would not be able to block the progress envisioned by the others.

***

There are formidable obstacles to Macron’s vision, domestic, European and global. His plan is a fundamental challenge to French nationalism of both the right and the left. So far, outside the political extremes, the response has been muted, with the exception of a few symbolic battles such as over whether the European flag should be displayed in the French parliament. Serious opposition has tended to focus on his economic plans at home. Once people wake up to the core of these ideas, there will be furious controversy. The Fifth Republic will not go gentle into the European dawn.

The Macron plan is also fundamentally at odds with the current reality and temper of the EU and its member states. As one former eurozone prime minister told us when asked about Macron’s vision, the EU “is a confederation of states with a federal overlay. It is not a state and will not become one. It is a legal order and a habit of mind, a habit of consultation”.

The idea of a multi-speed Europe is also alarming in parts of eastern Europe, where given the current deficiencies in the state of liberal democracy it would be logical to assume that they would be left in the slow lane for integration. Moreover, the Macron plan has the capacity to throw a spanner in the works of establishing a mutual settlement between the EU and the UK over crucial Brexit issues such as the Irish border and the single market.

Above all, the president’s solution puts Germany in a quandary. Though it reflexively supports anything that smacks of a restarting of the “Franco-German motor” of European integration, or the “Franco-German couple” as the French would have it, Berlin understands “more Europe” in an incremental, not a final sense.

Germany has also been much less keen to shunt the eastern Europeans into a siding. For geopolitical reasons it has preferred to slow down the train in order to allow the slower states to keep up and to enable everybody to reach the same destination together, if they ever arrive.

Besides, there is a lot of sympathy among German conservatives, especially the Christian Social Union, for the very Hungarian and Polish conservatives that Macron would like to exclude or neutralise. At the beginning of January Hungary’s prime minister Viktor Orbán was a guest of honour at the party’s annual New Year’s retreat. Most importantly of all, the German public and most politicians alike oppose the merging of sovereign debts which Macron knows is required to stabilise the euro.

Macron’s concept of European sovereignty faces an uncertain fate in the world at large. The support of the essential freeholders of Europe’s security, the United States and, to a certain extent, the United Kingdom, cannot be taken for granted. For the first time since the end of the Second World War, an American administration cannot be automatically relied upon to defend Europe.

***

Yet, at the same time Macron seems to be the only major European politician who has at least begun to build a working relationship with President Trump. So far it looks as if Macron has also understood that Britain shouldn’t be left to its own devices. Despite some growling over Brexit, he is not a plausible Britain-hater, and he has shown a keen interest in continuing defence co-operation. Also, if he has any sense, the president will realise that Brexit and the unification of mainland Europe need to be negotiated in tandem, because the two processes – just think of the border between Northern Ireland and the Irish Republic – are intertwined.

Then there are the spoilers in Europe’s neighbourhood and beyond. Russia, Turkey, and China keep Europe’s governments busy and all have the capacity to cause serious trouble. European countries are divided as to how to respond to issues such as Russia’s disregard for international boundaries or the integrity of democratic processes elsewhere.

Does President Macron have the capacity to see his ambitious plan through to completion? So far, everything in his personal and political life suggests that Macron is a man of extraordinary quality, who is unbound by convention and completely free of any path-dependency. He has never done things, at least none of the really big things, the easy way. 

Macron has a clear strategy for the creation of his European republic. Last year he began with the reform of the French economy, partly for its own sake, but mainly to impress Berlin. Failure to do so would have left him open to the standard German “ordo-liberal” charge that other countries are not to be trusted with a European budget or common debt. This is why his book and the Sorbonne speech of September 2017 gestured towards the former German finance minister Wolfgang Schäuble by speaking of “upholding common rules”, rather than just holding out a begging bowl.

So far, Macron has been extraordinarily successful, far more so than many of his detractors expected, and his supporters dared to hope.  After his remarkable, but essentially flukey election victory he created a political party, La République en Marche, from scratch and romped to victory in the subsequent parliamentary elections. He has so far overseen the domestic reform process without being derailed by France’s once almighty unions, nor has he been affected by a major political scandal involving members of his hastily created and initially heterogeneous political movement.

And Macron is no longer a mere one-man band. His outlook has inspired other seasoned politicians from different parts of France’s former political system to join him. To name but a few among the more senior political ranks, the French economy minister Bruno Le Maire speaks fluent German, is often on German TV and appears credible on both sides of the Rhine. Meanwhile, foreign and European affairs are similarly handled by experienced politicians and diplomats.

While one should not overestimate the importance of French MPs, the new class of politicians elected to parliament by Macron’s victory is very different from its predecessors. They are particularly diverse and excited about doing politics differently.

Many MPs are now considerably younger than their average constituents, while others are remarkable in their own right. To name but a few, the French parliament now includes Cédric Villani, a winner of the equivalent of the Nobel Prize in mathematics, the Fields Medal, and a staunch European federalist; while the new head of its European affairs committee, Sabine Thillaye, held a German passport for the greater part of her life before also gaining French nationality. Even if the diversity of his MPs leads to political fractures, Macron’s majority in the lower house is sufficiently large to render this inconsequential.  However, in Europe, the president had an unexpectedly slow start because of the inconclusive outcome of the German federal elections in September. Macron had hoped to start 2018 discussing the future of Europe with Chancellor Merkel; but his scheme to draft a whole new Franco-German treaty for the 55th anniversary of the historic Élysée Treaty in 1963 has had to be put on hold.

Nonetheless, there are signs that the German debate is slowly going Macron’s way. First, the German election result, which damaged Angela Merkel, and the initial deadlock over coalition talks in the country have, for the first time in more than a decade, shifted Europe’s balance of power back towards Paris. Second, the coalition agreement struck between Merkel’s Christian Democrats, its Bavarian allies and the Social Democratic Party (SPD), strikes a distinctively pro-European chord as this was a core demand by the latter party. Third, and perhaps most importantly, by securing the key finance and foreign ministries, the SPD will have considerable leverage over European affairs in the new government.

One way or the other, between them, Macron and pro-European voices in the SPD have destroyed two tenacious recent narratives: that all is well with the EU, despite a few rocky patches, and that there can be no question of further far-reaching and fast-paced European political integration any time soon.

In the future, it will thus simply no longer be good enough for Merkel’s chief of staff, Peter Altmaier, to trot out as he did in December the old Berlin mantra that “the discussion about whether Europe should be a federal state, confederation or a United States is one for academics and journalists, not for German foreign policy”. There is also a new Franco-German spirit in place and for once it is linked to the beginnings of a visionary and yet realistic plan. It found expression in a joint Franco-German parliamentary resolution last month in support of European reform, a pis aller for the stalled treaty. Perhaps other eurozone parliaments will follow suit with similar temporary yet symbolic measures.

***

In his New Year address, Macron spoke directly to the European people. “I will need you in this year,” he said, “to rediscover our European ambition, a more sovereign and united Europe, and one that is more democratic and good for our people [sic].” He directly appealed to the much vaunted European public sphere, in effect over the heads of member state governments. It was undoubtedly the right decision, but nobody can be sure that it will work. The messages from the great European public are mixed.

To be sure, there has been a substantial recent outpouring of support for the European ideal, epitomised by the “Pulse of Europe” movement. But when one gets down to details, and especially any concerted plan to save the union, that consensus evaporates. Just before Christmas, a poll by the respected Körber Foundation showed Germans to be strongly supportive of the European Union but, by a small majority, opposed to Macron’s plan to save it.

For all the rhetoric, when it really matters, the European sense of shared destiny is still weak and common ideas are often lost in translation. Of course, public opinion can change, if credible leaders make the case to the public at large. To do this Macron will need a “Europe en Marche”, or to extend the La République en Marche across the continent: a project for the democratic unification of Europe.

Together with active citizens and other leaders he will have to craft a new common narrative that rings true in Paris, Athens and Tallinn alike. He will have to lead the nation une et indivisible out of its hexagonal comfort zone to act as a new Grande Nation in Europe. The French cannot be armed missionaries – that never worked – but they must be the animating spirit of the union. To succeed, President Macron will have to frighten and inspire Europeans in equal measure. The movement will need to give us a “project fear” and a “project hope”. 

Brendan Simms is professor in the history of international relations in the department of politics and international studies at the University of Cambridge, and chairman of pro-European think tank the Project for Democratic Union. He is a New Statesman contributing writer

Daniel Schade is a researcher and lecturer in European studies at the University of Magdeburg in Germany. He serves as deputy chairman of the PDU