The rocky road to monetary union

The idea of creating a monetary union in Europe can be traced back a long way. Indeed, in the first century AD, a merchant could pay with the same money, the denarius, throughout his long journey from Rome via Colonia Claudia Ara Agrippinensium and Lutetia Parisiorum to Londinium – that is, via Cologne and Paris to London. Sixteen centuries later, however, the same journey involved an unending sequence of money changing and conversion. Trade was heavily hampered by high tariffs between countries and even broke down in the frequent times of war. In Germany alone, if one may call it that, a hundred different territories exercised the right to mint their own coinage. The number of customs borders in this region in 1790 has been estimated at some 1,800. It was only with the establishment of the customs union in 1834 that most trade barriers disappeared in Germany. And it was only following political unification within the German Reich in 1871 that the multiplicity of coinages was fully abolished and the Mark introduced as the common currency.

What lessons might we draw from comparing these epochs of European history?

There were two conditions that characterised the common currency period:

• The stability of the currency was ensured by the natural scarcity of the metal.

• A common currency went hand in hand with political union under the Pax Romana.

Introduction

We conclude our analyses in this chapter by considering the links between parties and voters. After having presented separate analyses of the demand side and of the supply side of electoral competition, in this chapter we seek to relate both levels. Our main argument in this volume has been that globalization leads to the formation of a potential for a new line of conflict, and that the corresponding issues and interests are articulated by political parties. We have presented much evidence for the emergence of such a new division and for the polarizing capacity of the issues associated with globalization. At the level of parties, we have observed substantial changes in the configuration of the main actors. Cultural issues have become more important for explaining the structure of party positions. Furthermore, among these issues, those linked with the process of globalization, such as the questions of immigration and European integration, have become more salient. This is a consequence of the transformation of the character of the cultural line of conflict. Following these developments, electoral competition cannot be summarized by a single line of conflict. Both economic and cultural differences are now equally relevant. In addition, important transformations could be observed among voters. The structure of political attitudes has changed following a similar pattern.

It undoubtedly required political courage to fix the beginning of monetary union definitively for 1 January 1999. To date, the euro's success has proved the confraternity of ‘economic doubters’ wrong. The single currency has brought the member states monetary stability: internally, with a low rate of inflation; and externally, with the protection the common currency affords against the foreign exchange market repercussions of exogenous shocks that were repeatedly experienced in the past.

The political decision did not, however, remove all justification for the reservations entertained by many economists about a premature start to EMU. The economies of the member states still have some way to go to satisfy the conditions necessary for monetary union to function properly. The political courage at the beginning needs to be complemented by the resolve to pursue the necessary reforms.

Fiscal policy has yet to demonstrate convincingly its full compliance with the self-imposed rules of the Stability and Growth Pact. Confidence in stability is certainly not fostered if, over and over again, governments solemnly promise to follow a sound budgetary policy in the future, as they did for instance in Berlin in the spring of 2007, only to see one or the other distancing themselves from such promises a few months later. And how credible are commitments if, many years after accession to EMU, countries still have debt levels of over 100 per cent of GDP – and that despite the ‘gift’ of markedly lower interest rates associated with entry into EMU?

Introduction

The Swiss political system is often viewed as an example of stability. The consensual style of politics, the unusual longevity of the grand coalition which forms the federal government, the high level of cooperation between social partners and the state, are all factors that explain or have contributed to this image. Further, such a perception is not only the point of view of outside observers. Kerr (1975), for example, emphasized in the 1970s that Switzerland had not faced any major political change since the late nineteenth century. This image is even reinforced by data from opinion surveys in this period, showing that Swiss citizens, in comparison with citizens of other European countries, are among the most satisfied with the state of their economy and political system (Sidjanski 1975).

Yet, over the last decades, Swiss politics have been marked by important developments. The transformations may seem to be less impressive, less dramatic than in neighbouring countries. But, at least by Swiss standards, they are significant and indicate deep changes in the social and economic basis of political cleavages. The single most important development is certainly the rise of the Swiss People's Party (SVP). A traditionally rural and Protestant party, it gradually changed its political orientation in the 1980s and early 1990s and has now become one of the most potent examples of the success of the populist right (Kriesi et al. 2005).

According to our assumptions outlined in the previous chapter, the political potentials created by the new cleavage are rather similar from one Western European democracy to the other. All these countries are characterized by increasingly comparable social, economic and cultural context conditions. Defined in most general terms, the relevant societal context characteristics which determine the political potential of the new cleavage in a given country include the relative strength of the country's traditional cleavages, the overall level of its economic and human development, its traditional openness to the world markets and its integration into the global community, its current economic difficulties, and its definition of the national community and the perceived threat to this community by processes of denationalization. While insisting on the broadly similar societal contexts of our six countries, we shall also point out some variability with regard to these general context characteristics, variability which mainly depends on the size of the countries. Three of our six countries belong to the small European democracies – Switzerland, Austria and the Netherlands in that order – while our three other countries – France, the United Kingdom and Germany – are the three largest European democracies. In this chapter, we shall first consider one by one the societal context characteristics before moving on to a presentation of the more political context conditions.

Introduction

In their introduction to Dutch politics, Andeweg and Irwin (2005: 19) put the accent on the Netherlands as ‘a country of minorities’, without any doubt, as they maintain, ‘the single most important characteristic of Dutch politics’. During the nineteenth and early twentieth century, although a numerical minority, the Liberals had dominated Dutch politics thanks to franchise restrictions. As the franchise was enlarged, however, they were gradually crowded out of political power and became a minority among others. Those other minorities have been structured by religion and class. Andeweg and Irwin argue that a socio-economic left–right dimension and a religious–secular dimension have always been and still are of crucial importance for the structuration of Dutch politics.

As far as religion is concerned, the Catholics, who corresponded to about one-third of the population in the late nineteenth century, did not constitute the only minority, since the Protestants were divided into a more orthodox and a more mainstream current. The religious groups all created their own parties: in addition to the Catholic party (KVP), the religious differences gave rise to two major Protestant parties – the more orthodox Anti-Revolutionary Party (ARP) and the more mainstream Christian Historical Union (CHU) – next to a host of additional small parties. The class based minority – the working class – entered the political arena relatively late due to the late industrialization of the country.

Introduction

This appendix presents supplementary information on the data collection process, on the operationalization of the variables and on the statistical methods used in this volume. This information is divided into five sections. In the first section, we explain how the data on the positions of parties during electoral campaigns were collected, and we present the criteria used to sample newspaper articles. The second section gives the detailed references of the individual-level datasets. The next two sections present the procedures used to operationalize individual-level variables, first in the case of social-structural variables (class, education, religion), then with respect to citizens' issue-positions. Part of the information on these operationalizations cannot be presented here for reasons of space. This concerns the tables indicating the recoding procedures for social-structural variables, as well as the detailed discussion of the measures of voters' attitudes. This information is, however, available from the website of the project (www.ipz.uzh.ch/npw/). In the fifth section of this appendix, finally, we turn to the statistical methods used in this volume and give more detailed information on multidimensional scaling and on the various indices and summary measures used in the comparative chapters.

Analysis of the supply side of electoral competition: data collection

All analyses of the supply side of electoral competition are based on an original dataset collected for this project on the content of mass media during electoral campaigns. We selected in each country a quality newspaper and a tabloid (or equivalent if there were no ‘true’ tabloids).

Introduction

All countries explored in this book face similar challenges due to globalization processes. Different reactions to these developments are the result of several contextual factors as well as of the strategies of political parties. But Germany has to deal with one additional major challenge that sets this country somewhat apart from the others: the ongoing struggle to complete reunification. Despite or maybe because of the astonishing and unexpectedly rapid development that ended with political reunification on 3 October 1990, the social and economic differences between the western and the eastern part of the country have remained a major problem. The East Germans have had to adapt themselves not only to liberal democracy and the market but also to an economy that became increasingly globalized in the 1990s.

For the traditional parties, reunification and the integration of a 15 million strong post-communist electorate was a ‘unique challenge’ (Jeffery 1999: 112). But the election of 1990, the first in the reunited Germany, resulted in a triumph for West Germany's core parties, proving their organizational strength (Betz 1999: 32). As a consequence of the ‘electoral colonization’ (Jeffery 1999: 97) of the Eastern Länder (states), the party system of the reunified Germany is in general the party system of the old Federal Republic (Pappi 1994: 221). Therefore, after some early forecasts of a return to Weimar conditions, with extreme ideological polarization and a high degree of fragmentation, at least since the mid-1990s the development of German party politics has been interpreted as undramatic (Niedermayer 1998; Mielke 2001; Stöss 2000).

Introduction

France clearly is one of the countries whose political landscape has been profoundly altered in the past two decades. Although organizational stability has never been a defining feature of the French party system, the new institutions of the Fifth Republic established in 1958 did progressively bring about a more stable pattern of ‘bipolar multipartism’ (Parodi 1989; Knapp 2002). Since the early 1980s, however, cultural conflicts related to the different conceptions of norms that should be binding in society, of the way community is conceived, and of the balance of power between the nation-state and the European Union have emerged. The appearance of these issues on the political agenda, and the rising prominence of an integration–demarcation line of conflict lie at the heart of the transformation of the French party system that took place in the 1980s and 1990s.

As a driving force of this transformation, and as one of the most successful right-wing populist parties, the French Front National represents something like the ‘prototype’ or the ‘avant-garde’ of a new party family. Earlier than in other countries, the extreme populist right achieved its electoral breakthrough in a number of second-order elections in the early 1980s. According to our theoretical framework, the early success of the Front National in comparative terms must be analyzed in the context of the country-specific political potentials and context structures.

This study deals with changing conflict structures in West European societies and their mobilization by political parties. In general, there are two basic approaches to handling such a question: the first one concentrates on the changing relationships between political actors and often resorts to concepts of network analysis (Laumann and Knoke 1987; Laumann and Pappi 1976; Knoke et al. 1996; Scott 2000; Wassermann and Faust 1999). In this book, we follow the second approach and analyze issue-positions of parties as well as of voters, since we are especially interested in the thematic basis of political conflicts. This is not only the standard approach in political science (e.g. Kitschelt 1994, 1995) but has recently become even more important because of the growing significance of issue-based voting behaviour (Downs 1957; Key 1966; Budge and Farlie 1983a; Franklin 1985; Aardal and van Wijnen 2005). We expect the parties, the main political actors in West European democracies, to select the issues they articulate in party competition as well as their positions strategically. But we also look at the other side of this competition where we are interested in the changing issue-positions of the voters. However, contrary to pure rational choice or individualistic approaches, we combine the issue-based approach with a structural perspective which is focused on the political attitudes of groups. According to our point of view, membership in social groups still constitutes an important basis for the development of issue-preferences.

Tables B.1 to B.12 present the data used for the MDS analyses, that is, the positions of parties on the twelve issue categories, as well as the salience with which they addressed these issues. The average issue positions are measured on a scale ranging from –1 to +1, with positive values indicating support for the corresponding aim, as expressed by the name of the issue category (for economic liberalism, for the welfare state, etc.). The salience of an issue for a given party is the percentage of issue statements of this party regarding this issue. Thus, the saliencies presented in this table sum to 100% for each party in each election. We present saliencies in this way as they make it easier to compare the profile of different parties. For the MDS analyses, however, these saliencies were further multiplied by the percentage of issue statements of the corresponding party in a given election (which are indicated on the right hand side of the tables). In this way, the saliencies sum to 1 for each election and indicate the relative importance of a party × issue combination in the overall campaign.

Introduction

As we have observed in Chapter 1, the political mobilization of the latent structural potentials constituted by the challenge of globalization gives rise to two interdependent dynamics – the transformation of both the basic structure of the national political space and the parties' positioning within the transforming space. On the one hand, parties react to the political conflicts and the associated preferences developing in the electorate and articulate them in the political arena. In this way, they restructure the political space. On the other hand, the individual parties position themselves strategically within the emerging spatial configuration of their competitors in the transformed space. According to our basic hypothesis, the parties who appeal to the preferences of the ‘losers’ of globalization constitute the driving force of the current transformation of the Western European party systems. We propose that the initial electoral success of these parties set in motion the transformation of the dimensional structure and the repositioning of the established parties within the transforming structure, which, in turn, contributes to the ongoing transformation of the dimensions of the political space.

As outlined in Chapter 2, there are a number of processes which contribute to the functional dealignment in Western European party systems, i.e. to a greater detachment of the voters from the parties in general. Thus, we agree with Kitschelt (2000: 164) and other authors that parties are, much more than they used to be, confronted with political preferences which result from exogenously determined, spontaneous developments in the electorate or from activities of independent media and political entrepreneurs who operate outside of the parliamentary arena.