Jean Monnet Center at NYU School of Law


3. The Asymmetric Political Economy of European Integration

The White Paper rightly celebrates the success of European economic integration - which far exceeds the degree of integration achieved in the international economy that is provoking the present commotion about "globalisation". It seems not to realize, however, that with the completion of the Internal Market and with the creation of the Monetary Union, the nature of the problems on the European agenda has changed radically. Economic integration and market liberalization have greatly reduced the capacity of national governments to influence the course of their national economies. At the same time, the legal constraints of "negative integration" and European competition law and the ensuing economic pressures of regulatory and tax competition have drastically reduced the range of economically feasible and legally permissible policy instruments with which Member States can pursue non-economic political purposes or deal with politically salient social or environmental problems. At national level, therefore, the perceived impotence of governments in the face of urgent demands and manifest crises weakens their political support and must eventually undermine the political legitimacy of the Member States. Under these circumstances, it was inevitable that national actors have increasingly come to demand European solutions to the "spillover" problems created by European economic integration. As it turns out, however, these demands are largely frustrated by a basic asymmetry between the market-creating and the market-correcting policies at European level.

Market integration, though never completely conflict-free, was a shared goal which, by and large, could be realized through Europe-wide and uniform rules of negative integration, liberalization and harmonization. Many of these policies could be unilaterally imposed by the Commission and the Court in their roles as the "guardians of the Treaty" and the enforcers of the maxims of "undistorted competition" or, where they depend on Council directives, they could count on the support of the producers and consumers of all the Member States, who expected to benefit from access to the larger European market. In contrast, market-correcting European regulations are as likely to be opposed by business interests as they are at national level. Moreover, the social-protection and environmental interests that would often prevail nationally over business interests are less well-represented in European bargaining processes. What matters more, however, is that, even where these interests could politically prevail over business opposition, they are likely to be divided at European level.

One reason is differences between the rich and poor Member States: firms, workers and consumers in Portugal or Greece, not to mention Poland or Hungary, simply could not afford environmental or social standards at the levels that Danish or Dutch voters consider essential. Even more important, however, is the divergence of existing welfare-state and industrial-relations institutions and the high political salience of divergent national policy legacies. Voters in Britain simply could not accept the high levels of taxation that sustain the generous Swedish welfare state; Swedish families could not live with the low level of social and educational services provided in Germany; and German doctors and patients would unite in protest against any moves toward a British-style National Health System.

In short, successful European policies of economic integration and market liberalization have resulted in a fundamental asymmetry in the European political economy: Though the pressures of regulatory and tax competition give rise to increasingly urgent demands for more effective market-correcting policies at European level, agreement on effective European solutions is most difficult precisely for these problems about which the citizens of the Member States care most. The White Paper, unfortunately, gives no indication that its authors are aware of this fundamental change in the dominant problématique - and if they were, they certainly did not appreciate its implications for the institutions and procedures of European governance. In fact, if the central recommendations of the White Paper were adopted and applied to the issues discussed here, the outcome would not be effective problem-solving but a veritable legitimacy crisis.




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