A perfect storm is brewing in Europe, largely of its own making. The recent street protests in France—against the high cost of living and the poor school conditions—are the clearest expression yet of a country, and a continent, in crisis. What some Europeans still believe are external shocks or isolated policy failures are, in fact, deep but expected issues inherent in the statist interventionist model that has progressively weakened economic growth, reduced individual freedom, increased state power, and skewed the relationship between rulers and ruled.
Since 1914, and in particular in the post-WWII era, steadily rising taxation has financed ever-expanding social spending and state bureaucracies. But the political, social, and economic limits of this model are increasingly apparent: taxes cannot simply be raised indefinitely. With an aging population and inflows of under-educated immigrants, high labor force participation rates cannot be sustained. The old tax-and-spend approach, continually expanding “social rights” through higher taxation and debt is now reaching its limits.
France Leading. . .the European Decline
Historically, France has stood at the epicenter of wider political upheaval in Europe, from the revolutions of 1789, 1830, and 1848 to the Paris Commune of 1871 and, more recently, May 1968. The recent events in France once again signal the beginning of a critical phase of a pan-European economic and political malaise.
The root cause of the crisis in France is similar to the one in many other European countries, but more serious. Long-term economic stagnation has left the French facing a rising cost of living. For young people, particularly those from immigrant backgrounds and with few qualifications, the problems are more acute. They are facing poor educational conditions as students, and high youth unemployment upon graduation. Their already-limited prospects will soon be further disrupted by the rapid adoption of AI.
The social fracture between this bleak reality and the older, affluent urban “bobos” (“bourgeois-bohèmes”) is increasingly palpable. The latter form President Macron’s dwindling base of support, yet inhabit a world far removed from both the immigrant-heavy Parisian suburbs such as Seine-Saint-Denis and the modest, sometimes struggling, “France périphérique,” where surging fuel and electricity costs directly erode disposable income.
All this forms a fertile breeding ground for social unrest and popular uprising, in a country with a long tradition of this kind. The dire reality slowly becoming apparent across French society is that the bloated French state’s “modèle républicain” is failing. Its promise of “Liberté, Égalité, Fraternité” contains tensions that become increasingly difficult to reconcile as the state expands: coercive attempts to impose ever greater material equality inevitably come at the expense of individual liberty. The inevitable and predicted social decay from such an inefficient system is becoming increasingly visible, as the French joke sardonically that the one part of the public administration that never seems to fail is the tax collector.
The Social Contract Myth
Europeans should reconsider the idea of the “social contract” that they have been taught to take for granted. Unlike an actual contract, the relationship between individual and state does not rest on explicit consent: the state can impose new obligations, taxes, and regulations without the individual’s agreement. In that literal contractual sense, the “social contract” is not a contract at all, but a political metaphor that has helped legitimize expanding state power. As Murray Rothbard wrote in Ethics of Liberty (1982):
. . .“free society” did not “confer” any monopoly of coercion on the State; there has never been any form of voluntary “social contract.” In all historical cases, the State has seized, by the use of aggressive violence and conquest, such a monopoly of violence in society.
If the “social contract” thesis is implicitly accepted, as well as the idea that political redistribution should “correct” the natural distribution of income and wealth emerging from voluntary exchange, then public spending exceeding half of GDP becomes a perverse normality. Instead, such outrageous public spending levels should be seen as the consequences of the state’s severe violations of society’s property rights.
The State’s Failures: Reversing Causality
Despite such a level of public spending, the state’s fundamental Weberian mission—securing public safety and protecting private property—is failing, with all the costs that this entails for the people. This is one effect of the democratic “tragedy of the commons” that few Europeans realize applies to their own declining society.
Yet, most Europeans, regardless of political persuasion, continue to look to the state to solve problems that state intervention helped create in the first place. The causality is obviously reversed: the institution responsible for creating the problems in the first place is expected to provide the solutions. This reversal of cause and effect is at play when European leaders increasingly attribute Europe’s difficulties to external forces, thereby deflecting attention from their own responsibilities for their failed foreign policy. Such scapegoating is politically effective precisely because geopolitical claims are difficult for ordinary citizens to independently evaluate.
Oligarchy vs. the People
European political leaders bear substantial political and moral responsibility for policies that have over several decades created a complex energy and cost-of-living crisis. These consequences cannot simply be attributed to external actors, but to the Western ruling oligarchy. However, the European majorities also share responsibility because they still fail to understand the limits of democracy.
The deeper political explanation for the current crisis is that the interests of Europe’s ruling minority have increasingly diverged from those of the ruled majorities. This divergence has become particularly pronounced over the past decade: the forced “Green” transition and its impact on European industry; the top-down disruption of economic life during covid; and an increasingly-monomaniacal foreign policy aimed at preserving Western hegemony in a rapidly-emerging multipolar world.
The current unrest in France and elsewhere in Europe is thus probably the first overt signs of a much deeper economic, social, and political reckoning. A “perfect storm” is gathering over Europe; not merely a political crisis, but a crisis of the whole statist economic model, the relationship between rulers and ruled, and ultimately, of Western values themselves. The months and years ahead will likely be dramatic, and it will probably get darker for Europe before it gets brighter.
