Industrial plant

Divided Societies. The Magnitude of the Risks Is Measured by the Number of Losers

Societal division has shaped modernity since industrialisation. In the 1990s and 2000s, however, its effects were suppressed. A socio-historical review to an understanding of the situation since the financial and economic crisis.

A conviction had been consolidated by the middle of the 20th century. It emerged from the dramatic experiences of the Great Depression of the 1930s as well as the Second World War and the Shoah: modern societies require stabilisation measures. Workers should be protected from the consequences of recurrent economic crises and share in the wealth of society. This is not only an imperative of social justice but also in the interest of liberal democracy. Totalitarian ideologies have less chance of success if all citizens enjoy secure living conditions. At any rate, this is the assumption of the sociological theory of democratic citizenship that T. H. Marshall founded with his study Citizenship and Social Class in 1950. Furthermore, this was the principle on which the welfare state was developed in Europe after the Second World War. With Roosevelt's New Deal, the USA had led the way in this already in the 1930s.

In the 'glorious thirty years' ('Trente Glorieuses') from 1945 to 1975, welfare-state stabilisation measures set in motion a process of positive societal change. The increased purchasing power of broad sections of the population stimulated domestic demand. The middle class developed gradually and the expansion of education enabled the transition to the technological revolution of the 1980s. Despite stormy distribution conflicts, it was possible to keep a division of society such as had occurred in the interwar period, at bay. In addition, the welfare state regulation of labour markets and the measures to combat illegal employment have had an inclusive effect that has not always been intended but was gradually progressing. Equal working conditions defused competition between autochthonous and migrant workers. The acquisition of initial language and cultural skills also made labour a key integration mechanism.

Middle Class Losers

However, the changes in welfare policy in Europe since the 1980s put an end to this development. Initially, the flexibilisation of labour market legislation was intended as a temporary compensation for the intensified competition on global markets. However, it became more entrenched. This led to the emergence of the dual labour market. Side by side with the workers safeguarded by the welfare state, there now exists a whole host of precarious workers. Mostly women. Temporary contracts, part-time jobs, temporary work, up to the extremes of 'zero-hour contracts' are part of everyday life not only on construction sites, in workshops, industrial halls and pubs, but also in administrations, universities and government departments. In addition, migrant workers are found in illegal employment.

For demographic reasons, regulated migration to Europe is more necessary than ever, as the number of contributors will soon be too scarce to finance pension systems in an ageing society. But under the prevailing conditions of the dual labour market, it is perceived only as potential competition. Angry, insecure and feeling left behind, autochthonous Blue and White Collars encounter discriminated, illegal migrant workers.

Side by side with the workers safeguarded by the welfare state, there now exists a whole host of precarious workers.

The chances in this situation of establishing a common representation of interests look bleak, with the result that the societal divide is advancing. This is compounded by the increasing fragmentation of the middle class. Thus, the emerging highly qualified representatives of the knowledge economy are increasingly separating themselves off from the traditional middle classes, which are among the biggest losers of the financial and economic crisis. Their savings were often destroyed and their life insurance policies lost considerable value. In the USA, many also lost their real estate. Their social position and prestige were gambled away. A feeling of impending loss of social status spread like wildfire.

No Alternative?

The question now arises whether this undesirable development could have been avoided or whether it has the quality of a natural disaster. In view of the intensified international competition in the economy, it was clear since the 1970s that the welfare state had to be reformed.

However, the force with which the established rights of weaker social classes were undermined was only possible through the impact of neo-liberalism, which emerged as the dominant ideology. Every political decision was to be subordinated to the interests of the economy 'because there is no alternative', as Margaret Thatcher famously put it.

Another consequence of this policy was the deregulation of the financial markets. Speculation resumed its course and invented the most opaque products conceivable for passing on its risks to retail investors. Thus the chain reaction of the financial crisis, which began with the bankruptcy of US investment bank Lehman Brothers on 15 September 2008, turned fatal. After the self-regulatory power of the markets had been preached for thirty years, taxpayers now had to bail out the banks. This was followed by economic crisis, recession and austerity – the costs of the crisis were largely socialised.

The Restoration of Social Equilibrium

Right-wing populist political entrepreneurs have taken advantage of the social divide generated by the dismantling of the welfare state in combination with the deregulation of the financial markets. Nationalism, authoritarianism, rejection of migration, ethnic closure of welfare systems are their watchwords.

They address conflicting socio-political expectations that have gone unheard for too long. Conservative and social democratic mainstream parties have a hard time dispelling this propaganda because they have often played a central part in neoliberal policies. The restoration of social equilibrium would therefore require the emergence of a new political culture capable of guaranteeing all members of society access to secure living conditions without ethnic discrimination.

Right-wing populist political entrepreneurs have taken advantage of the social divide generated by the dismantling of the welfare state in combination with the deregulation of the financial markets.

Social policy measures would include: the dismantling of the dual labour market, combating illegal employment, regulating financial markets and curbing speculation in essential goods such as housing. In terms of cultural policy, it would mean abandoning the short-sighted zero-sum, winner-and-loser mentality of the neoliberal age and establishing a social practice of recognising precarious life situations. Its guiding principle: The number of losers in a society reflects the magnitude of the uncontrolled risks it takes.


Translated from German by Edith C. Watts


About the Author
Gregor Fitzi

Gregor Fitzi is Co-Director of the Centre for Citizenship, Social Pluralism and Religious Diversity at the University of Potsdam. He does research on sociological theory, the history of sociology and political sociology. He just published with Bryan Turner and Jürgen Mackert Populism and the Crisis of Democracy.