The sinews of peace: Democratising the political economy of the European Union

WP 7 - The Political Economy of the European Union

León, 19-20 September 2008


Workshop outline

This workshop aims at reformulating the key questions of the research agenda on the political economy of the European Union. In line with the overall design of the RECON project, the workshop elucidates the democratic implications of the institutional design and decision-making processes of the policies defining the basic economic structure of the European society; the sinews of long peace that Europe has enjoyed since the launching of the European integration process; and the establishment of the welfare state. In concrete, it will seek to answer some central questions: 

  • Is decision-making in macro-economic policy, the design of the common market or tax policy democratic enough?
  • Has the process of European integration decreased or increased the democratic legitimacy of such decisions?
  • Are the democratic shortcomings connected to the particular and asymmetric way in which the strings of the purse are divided between the Union and its Member States?

The workshop will stress not only the close connection between democracy and legitimate decision-making in such key questions (very well-documented historically, but rather underplayed in recent debates), but also between the different case areas in consideration, which will be treated here as mere parts of a coherent socio-economic order. This is why the papers are not limited to the study of fiscal and tax policy as such, but particular emphasis is placed on the related policies which condition the scope of actual political choice in fiscal and tax matters, and on which public institutions must necessarily rely in order to make their decisions effective. More specifically, attention is paid to the concrete norms defining two economic freedoms (free movement of persons and free movement of capital) and to the norms governing the non-contractual liability of Member States.

By such means, the aim of the workshop is not only to discuss specific problems arising in each area, but also to define concrete policy programs to re-democratise decision-making in these areas. In doing so, special attention will be paid to the effects that the present decision-making setup has on the fostering of both a community of economic risks (a common market) and a community of public insurance (a welfare community).

  • To what extent is it possible to democratise the European Union without regenerating the solidaristic foundation underlying welfare states? Are the solidaristic predispositions which support a welfare state undermined or fostered by the process of European integration?
  • Is it necessary to Europeanise the community of public insurance?
  • And how could that be done without undermining national democratic structures?

The workshop will contribute to the testing of the three democratising strategies at the core of the RECON project, by means of developing concrete versions of each in the overall area of the political economy of the Union. By doing so, the workshop will also contribute to drawing the general substantive and procedural policy maps of the project.

Papers will combine the reconstruction of institutional structures, decision-making processes and substantive outcomes in each area with the explora-tion of policy options which would allow to re-democratise the steering of the public finances of the Union, allowing the citizens of Europe, either as national citizens, as European citizens, or as engaged cosmopolitans who happen to be resident in Europe, to have a decisive influence in the shape of socio-economic arrangements.1 In doing so, the papers will reflect on the three underlying topics around which RECON’s work package 7 is struc-tured, namely:

  1. The extent to which the democratic shortcomings of the European Union are related not only to problems pertaining to the institutional and decision-making setup of the Union or the Member States, but also to the specific combination of such features, and in particular, to the breadth and scope of the “structural democratic deficit”. The latter results from the combined effects of, on the one hand, the present division of competences between the EU and its Member States (characterised by many inconsistencies, such as the federalisation of monetary policy and the de facto reinforcement of national power in the formal design of tax powers) and, on the other hand, the division of labour between decision-making processes at each level (and very critically, at the European level, between the standard Community process requiring unanimity in the Council and the co-decision process, which is biased against redistributive and market-correcting measures).
  2. The peculiar interplay between the advanced Europeanisation of the community of economic risks, defined by the breadth and scope of market institutions and regulations, the very limited Europeanisation of the community of public insurance, which is institutionalised in national welfare states, and the “ghost” state of the political community of citizens, reflected in the low levels of participation in European elections, the weakness of European political party structures and the disconnection of national public spheres.
  3. The transformation of the paradigm of relationships between Member States, which oscillates between political cooperation and a model of competition “imported” from the free market literature.


By means of elucidating the complex interrelationships between these key economic policies, and by means of framing the question as part of the larger one of democratising the EU’s socio-economic order, this workshop will reconnect the debate on the public finances of the Union with the one on democratic governance. The relationship between the two has been obscured by the causes underlying the “structural” democratic deficit of the economic governance of the Union, and has resulted in the construction of academic walls of separation between the present topics, which are both artificial and normatively unjustified. The fragmentation of the research and policy agendas does indeed rule out, without proper justification, a huge amount of potential political choices, and contributes to the progressive erosion of the social legitimacy of the Union’s existing policies (the ultimate test of which was the negative outcome of the referenda in France and the Netherlands in 2005) and may eventually undermine the legitimacy of the European Union itself. By means of spelling out the actual factors causing the substantive structural bias of European decision-making in favour of negative integration, and showing that these are no other than the present institutional and decision-making set up of the Communities, the workshop aims at clarifying the normative basis of the critiques and translating them into specific constitutional and policy options.

The topics dealt with in the workshop have been chosen in view of their critical importance. It may be quite obvious that fiscal and tax policies are at the core of the public finance of any political community, but it is less well noticed, and in particular in the debate and literature on the European Union, that the concrete conception of economic freedoms, which is at the core of a polity’s constitutional arrangements, has important consequences for the extent to which public finance options are open to democratic majorities. The workshop will illustrate the “cost” of economic liberties with reference to the free movement of persons and the free movement of capital. The consistency in the regulation of the movement of capital has a major influence on the cognitive resources which public institutions can rely on to monitor actual compliance with tax obligations, in particular with regard to persons whose main source of income derives from capital invest-ments. The concrete definition of the free movement of persons, and the rights that citizens carry with them when settling in another Member State, has major implications for the expenditure of both source and destination Member State. Similarly, the standards of non-contractual liability of public institutions tend to be framed as belonging to the domain of highly techni-cal jurisprudence. However, such standards not only have major economic consequences, but also play a key role in drawing the boundaries of the political community, and consequently, the scope of solidaristic obligations.


1 This clearly assumes that the proper realisation of the public autonomy of European citizens depends on the ability of political processes to shape economic policy. This is not only a neces-sary assumption of the research project, but as will be explored in the introductory section of the workshop, is also a normative assumption enshrined in the positive constitutional law of the Member States of the European Union, and consequently, is also a key part of the “deep” consti-tution of the European Union, i.e. the constitutional traditions common to the Member States. 




For more information, please contact:

Agustín J. Menéndez (University of León)