The European Rescue of the European Union: The Socio-Economic Malaise of Integration
WP 7 - The Political Economy of the European Union
León, 9-10 September 2011
First Session: Theoretical Framework
RECON has articulated three different conceptions of the purpose and point of European integration in polity terms. At the same time, RECON's work package 7 - The Political Economy of the European Union has contributed a second dimension by means of tackling the conceptions of distributive justice that different visions of European integration gravitate towards.
This workshop aims at exploring the analytical, axiological and policy implications of this bi-dimensional understanding of the socio-economic constitution of the European Union by means of contrasting two of the main planks of the European socio-economic constitution: the four economic freedoms and the fiscal and monetary constitutional principles under which asymmetric European monetary union has proceeded. This leads to rendering explicitt he highly political character of the European socio-economic constitution and articulating a research and policy agenda that pays proper attention to questions of democratic legitimacy and political stability.
Second Session: Economic Freedoms: Vanguard of European Integration or Il Topolino Morto Partorito dalla Montagna?
There is not such a thing as theEuropean internal market, but a plurality of understandings of whatsuch an internal market means (a common market, a single market, atransnational market). The specific characterization of the internalmarket depends on the specific understanding and shape of the keyprinciples on which the market is grounded, namely the four economicfreedoms (plus the principle of undistorted competition). Historicalreconstruction shows that such an understanding has varied and stillvaries among member states; and has changed and been transformed (and isstill in flux) at the supranational European level too. In particular,there is a sea of a a difference between the common market approach(followed from the beginnings to the late 1970s) and the single marketapproach (followed from the early 1980s). There is thus no one single right conception of what is the single market or what the four economic freedoms entail, but actually many.
This section will thus consider the internal market projectas essentially contested terrain, which is open to be shaped anddefined by different conceptions of European integration, and may thusbe duly influenced not only by different polity views, but also bydifferent conceptions of distributive justice. What are the mainmilestones in the evolution of the understanding of the internal market?What polity implications this has had? What effects this has had onnational democratic decision-making processes? And on nationalconfigurations and set-ups of the socio-economic constitution, and inparticular, of the welfare state?
Third Session: Asymmetric Monetary Union: Towards Fiscal Union or The House that the Euro Unmade?
Since the fall of the Bretton Woods system in August 1971, the European Union has faced a triple economic challenge: (1) How to ensure monetary stability without the convertible dollar anchor?; (2) How to render compatible a stabilising monetary policy with the use of fiscal policy to achieve the basic constitutional goals of the
Sozialer Rechtsstaat?; (3) What is the proper means of social integration with which to undertake the government of economic policy? What is the proper mix of (political or epistocratic) discretion and (political or epistocratic) rules?
The monetary Union announced in the Maastricht Treaty and further specified in the Amsterdam Treaty and the secondary legislation making up the Growth and Stability Pact was the product of a complex compromise. It resulted in a rather atypical asymmetric form of monetary Union, characterized by a mix of federal and apolitical monetary policy and formally political and national fiscal and wage policies. “Governance” arrangements (such as open coordination among Member States through broad economic policy guidelines) were supposed to square the circle, and ensure that monetary policy was “technically” taken care of, while Member States retained wide discretion to set up their fiscal policies but used it in ways that took into account the “common” interest of Euroland.
The fiscal crisis of the PIGS has revealed the extent to which “governance” arrangements have not delivered (although exactly what they have not delivered is far from obvious). We seem to be now in a situation in which some degree of further integration in economic policy must happen and will happen, but can’t happen, or will only happen to an insufficient extent and rather too late. Actual room for choice in economic policy is structurally determined by the way in which decisions are framed (i.e. whether economic policy is approached as a whole larger than the parts, as used to be the case in the three first postwar decades, or as an aggregation of separate policies, an inheritance of the peculiar model of asymmetric monetary union) and by the institutional structure and decision-making setup. Democratic legitimacy is not a luxurious plus, but a very fundamental condition for the efficiency of economic policy.
Can the single market and monetary union be sustainable when the institutional setup and the decision-making processes on the two of them isolate them from political contest and political preferences? Can indeed political union be decided in an apolitical form? Can legitimacy be produced intergovernmentally? Or coordinated through multilevel governance arrangements, such as the Eurogroup? Have not these options already been proven insufficient, illegitimate and inefficient?
Fourth Session: What to do, Spinelli?
The Maastricht cum Amsterdam socio-economic constitution may have become fully exhausted. While the Lisbon Treaty was the reform treaty to end treaty reforms, we have de facto already mutated the Treaties. In formal terms, a small Treaty amendment has been decided (and is pending on national ratification) at the same time that a radical and synchronized change in the material constitution of all Eurozone Member States has been agreed (the Pact for the Euro plus).
Do these changes make sense from the standpoints of efficiency and legitimacy? Will they result in a stable constitutional settlement? Are there other possible blueprints for the future of the European Union? Which are those? And how do we get there?