Western Europe: Neocapitalism

WESTERN EUROPE

The widening prosperity of Western Europe has altered not only the Continent’s face but its mentality as well. This is nowhere truer than in the field of economics, where Europe is witnessing a transformation that ranks in importance with the birth of the Common Market and the march of American firms into Europe. The phenomenon needed a name-and the Italians have given it one. “What we have created,” says Emilio Pucci, the Florentine fashion marquis who also sits in the Italian Parliament, “is neocapitalism.”

Neocapitalism is a blend of expansive private enterprise, extensive social-welfare programs and selective government intervention-a syncretism of capitalism’s proven methods with some of socialism’s less extreme aims. It has already made doctrinaire Marxism outdated, changed many socialists into business-minded pragmatists and made social workers out of many capitalists. Though Britain’s victorious Labor Party leaned farther to the left than was expected in setting up a government last week (see THE WORLD), its reassurances to private enterprise are typical of the change. Said Laborite Douglas Jay, new president of the Board of Trade: “This government starts with no prejudice or bias whatever against private business.”

Though the marriage of philosophies often has its rough moments-as it is sure to have in Britain-neocapitalism is not the result of a shotgun wedding. Right after World War II, many Western Europeans tended to associate socialism with reform and considered capitalism a dirty word. Then postwar free enterprise and the market economy demonstrated that they could raise the standard of living to an undreamed-of level of prosperity. The forces of the left, which had staked their political future on voter disillusionment with capitalism, were stymied.

No More Preaching. Faced with capitalism’s success, the left adopted many of its basic tenets. Italy’s Socialists are plugging their responsibilities to businessmen in the campaign for next month’s elections, and even the Communists have given up preaching collectivization to workers who drive their own Fiats to the plants. “Neocapitalism,” says Marchese Pucci, “is a system in which workers and management find common interests.” Says Pierre Auguste Cool, president of Belgium’s Christian Trade-Unions: “If I were to tell my members that capitalism is a threat, they would advise me to see a doctor.”

While prosperity has dissipated the left’s enmity for capitalism, private enterprise in Europe has undergone some changes itself. It has rejected its narrow prewar devotion to low wages, high prices, restricted markets and forbidding tariffs, and is openly trying to emulate U.S. business. Instead of producing a limited number of high-cost goods for a market composed of the rich, Europe’s new capitalists have created a mass consumer market based on economy-sized cars, readymade clothing, expanding paychecks and easy installment plans. In doing so, they have not only doubled production while reducing the work week since 1950, but have created across the Continent a new breed of property owners who tend to be more conservative simply because they have more to conserve.

Buried Antagonisms. Both business and labor have sought to bury their ancient antagonisms, and the presence of U.S. firms and methods in Europe has helped. In Britain, for example, Esso has introduced productivity bonuses for its workers. In Sweden, which has not suffered a major strike since 1953, managers and labor leaders meet yearly to decide upon wage guidelines for all industry. With its top members on most major corporate boards and a $250 million treasury to invest, the West German Trade Union Federation has become absolutely capitalistic: it owns dozens of businesses, from the country’s biggest housebuilder to a supermarket chain. Last week, Building Workers Chief Georg Leber presented Chancellor Ludwig Erhard with an ambitious plan under which management would channel 1.5% of labor’s wages into a huge investment fund that would later pay benefits to the workers.

Europe’s businessmen, on the other hand, have softened their opposition to government involvement in private enterprise. Sir Leon Bagrit, the computer king of Britain’s Elliott-Automation, has campaigned to get the government to take a greater interest in modernizing industry. Even the British Conservatives have called for more centralized planning. In order to get loans from state banks, many French industrialists embrace “Le Plan”-the government’s program for expanding certain industries and restraining others. Governments own outright most of Italian oil and steel, French automaking and banking, British coal and gas, as well as the larger part of Europe’s shipping, railroads and broadcasting. Continental businessmen, many of them connected with Catholic-oriented political parties -as in Italy, Belgium and Germany-have also been influenced by the softening of the Catholic Church’s position on socialism, as evidenced by Pope John’s encyclical Mater et Magistra.

Dead Issue. More important in the long run is the increasing reluctance to turn to nationalization, almost all of which took place before 1945. Nobody expects much more of it in the future. Britain’s Laborites will try to renationalize steel, but will probably leave private industry in general untouched; most politicians on the Continent are extremely careful about how they use the word nationalization. Says Lars Erik Thunholm, president of Stockholm’s Skandinaviska Bank: “The nationalization of industry is a dead issue as long as private enterprise shows the ability to continue expanding the economy.” There is no sign that Europe’s neocapitalists, who have gathered new strength from the fusion of ideas and methods, are about to lose that ability.