Europe Forged in Crisis: The Emergence and Development of the EU

Federico De Cicco, 2014.
Fed­eri­co De Cic­co, 2014.

“Europe will be forged in crises, and will be the sum of the solu­tions adopt­ed for those crises.” - Jean Mon­net

The­se are tur­bu­lent but con­fus­ing times in Europe. The Great Reces­sion has tak­en a seri­ous toll. In Por­tu­gal, Italy, Ire­land, Greece, and Spain (the PIIGS), inter­ven­tion by the EU in domes­tic pol­i­cy seems unprece­dent­ed. Por­tu­gal, Ire­land, and Greece were forced by finan­cial mar­kets into bailout agree­ments with the “Troika.”1 In Italy, under the watch­ful eyes of Europe, the unelect­ed tech­no­crat­ic gov­ern­ment of Mar­io Mon­ti replaced the elect­ed gov­ern­ment of Sil­vio Berlus­coni – and not a sin­gle mem­ber of this new tech­no­crat­ic gov­ern­ment was elect­ed. Spain nego­ti­at­ed with the Troika, but was saved by changes in the finan­cial mar­kets.

The EU’s inter­ven­tion has not been restrict­ed to the so-called Euro­pean periph­ery. In the Nether­lands, the gov­ern­ment fell in 2012 under pres­sure from the Euro­pean Com­mis­sion to imple­ment major spend­ing cuts. The sub­se­quent gov­ern­ment did as it was told. In France, in the sum­mer of 2014, the Prime Min­is­ter pre­sent­ed the res­ig­na­tion of the entire gov­ern­ment to the pres­i­dent, in protest over the imple­men­ta­tion of the aus­ter­i­ty pro­gram­me demand­ed by the EU.

The polit­i­cal reac­tion has been fierce, with demon­stra­tions, riots, and occu­pa­tions a fre­quent occur­rence across Europe. There has also been an elec­toral back­lash. In the UK, France, and Den­mark, the far right topped the polls in the 2014 Euro­pean Par­lia­ment elec­tions, while in Italy, the Five Star Move­ment led by the clown­ish Beppe Gril­lo came sec­ond. Across Europe few gov­ern­ments now last more than one term. Jean Claude Junker, then Luxembourg’s Prime Min­is­ter and now the incom­ing Pres­i­dent of the Euro­pean Com­mis­sion, lament­ed: “We all know what to do, but we don’t know how to get re-elect­ed once we have done it.” But the sto­ry can be told equal­ly well in reverse: we all oppose what you’re doing, but even when we elect some­one dif­fer­ent it keeps being done.

This phe­nom­e­non where­by poli­cies are decid­ed by Europe, imple­ment­ed nation­al­ly, and con­test­ed help­less­ly is not as new as it may seem. We need only think of the Jup­pe plan in France in 1994, which led to France’s largest strike wave since 1968. This was just an ear­ly exam­ple of a gov­ern­ment imple­ment­ing hat­ed poli­cies in order to meet an EU tar­get. What is new is that with the cur­rent cri­sis, this is not hap­pen­ing in one or two coun­tries but across the EU simul­ta­ne­ous­ly.

Although the EU is not new, and its role in deter­min­ing the eco­nom­ic and polit­i­cal devel­op­ment of Europe is both sub­stan­tial and well estab­lished, crit­i­cal analy­sis of the EU is sore­ly lack­ing. Most of what is writ­ten on the EU is uncrit­i­cal­ly lib­er­al and focus­es on diplo­mat­ic and leg­isla­tive detail.2 What lit­tle crit­i­cal lit­er­a­ture exists often sim­ply inter­prets the EU in terms of the func­tion it plays for neolib­er­al glob­al­iza­tion. At one extreme, it is por­trayed as a transna­tion­al cap­i­tal­ist con­spir­a­cy, while at the oth­er extreme the cri­tique is lim­it­ed to iden­ti­fy­ing the wrong poli­cies: too much lib­er­al­iza­tion, pri­va­ti­za­tion, etc.3 When analy­ses of the EU go from what it does to the larg­er ques­tions of what it is and why it exists, analy­sis often becomes com­plete­ly un-root­ed. We see non­sense claims about the idea of a unit­ed Europe across time, some­times extend­ing to hagio­graph­ic accounts about the found­ing fathers of Europe.4 At times it is tru­ly absurd: Europe is a bas­tion of social demo­c­ra­t­ic anti-impe­ri­al­ist cap­i­tal­ism in dis­tinc­tion to the USA.5 Oth­er times more intrigu­ing claims are made, such as the argu­ment that the EU is a neo-medieval state like the Holy Roman Empire!6

Curi­ous­ly the ques­tion of whether the EU is a state or not and, if so, what kind of state is it, rarely con­nects the devel­op­ment of the EU poli­ty with what has been at its core: eco­nom­ic inte­gra­tion. The state is treat­ed as though its exis­tence and form can and should be under­stood sep­a­rate­ly to the ques­tion of the eco­nom­ic repro­duc­tion of soci­ety.

Instead, I will try to address the emer­gence and devel­op­ment of the EU as a new polit­i­cal form by focus­ing on the under­ly­ing process of eco­nom­ic inte­gra­tion: why was eco­nom­ic inte­gra­tion need­ed and why did its estab­lish­ment involve the cre­ation of the EU? Pur­su­ing this ques­tion will allow us bet­ter under­stand what the EU is in rela­tion to the state, how it devel­oped, and what it does.

Euro­pean inte­gra­tion should not be under­stood as a steady and con­tin­u­ous pro­gress towards “ever closer union.” Rather, we need to under­stand the devel­op­ment of the EU as an iter­at­ed process of deal­ing with crises of cap­i­tal­ist repro­duc­tion that arise from work­ing class pow­er and the threat of work­ing class auton­o­my. This iter­at­ed process can be seen then as hav­ing two waves, the first one emerg­ing in the late ’40s and ’50s, the sec­ond emerg­ing in the late ’80s and ear­ly ’90s, and con­tin­u­ing to devel­op ever since.7

I: Economic Regulation and State Form

In order to root my analy­sis of the rela­tion between the form of polit­i­cal insti­tu­tions (the EU and the nation­al state) and the econ­o­my, I want to begin this arti­cle with a brief the­o­ret­i­cal con­sid­er­a­tion of this issue. I would like to step back from Europe and dis­cuss the nature of the state and its rela­tion to eco­nom­ic reg­u­la­tion over a much longer time frame. I draw sub­stan­tial­ly here on both, what Ben­no Teschke has called the “the­o­ry of social prop­er­ty rela­tions”8 and on the state deriva­tion debate in the 1960s and 70s.9

The ques­tion always fac­ing mate­ri­al­ist social analy­sis is: “how does a soci­ety repro­duce itself?” The answer to this ques­tion dif­fers across his­to­ry, but in every soci­ety cen­tral to the ques­tion of how a soci­ety repro­duces itself is the ques­tion of the extrac­tion of sur­plus labor.10

In pre-cap­i­tal­ist forms of soci­ety the extrac­tion of social sur­plus occurs pri­mar­i­ly under threat of direct vio­lence.11 For exam­ple, a peas­ant worked a corvée for their lord because that lord could direct­ly threat­en vio­lence on the peas­ant. Impor­tant­ly, here both eco­nom­ic pow­er (the pow­er to buy, sell and exploit) and polit­i­cal pow­er (the con­trol of vio­lence) are unit­ed in the one per­son, the lord, where­as under con­tem­po­rary lib­er­al cap­i­tal­ist soci­ety the­se pow­ers are sep­a­rat­ed. With the sep­a­ra­tion of eco­nom­ic and polit­i­cal pow­er, the exploit­ing sub­ject that extracts sur­plus labor no longer direct­ly or per­son­al­ly holds the threat of vio­lence. Under cap­i­tal­ism, this exploit­ing sub­ject, i.e. the cap­i­tal­ist, is the sub­ject of a log­ic of accu­mu­la­tion through exploita­tion inde­pen­dent of the use of vio­lence, but which requires a form of vio­lence equal­ly inde­pen­dent from the process of exploita­tion. This mutu­al require­ment of inde­pen­dence is sym­bi­otic. Nei­ther the eco­nom­ic nor the polit­i­cal can exist or be under­stood inde­pen­dent­ly of the oth­er, despite their nec­es­sary mutu­al inde­pen­dence.

This inde­pen­dent process of exploita­tion occurs through a seem­ing­ly non-vio­lent form of legal con­tract­ing. This free con­tract­ing involves the cap­i­tal­ist pay­ing the work­er the val­ue of their labor-pow­er, which is less than the val­ue of the goods they pro­duce. How­ev­er, despite the appar­ent polit­i­cal neu­tral­i­ty of this con­tract, work­ers engage in it is because they lack inde­pen­dent access to the means of pro­duc­tion. There­fore, they are inca­pable of sat­is­fy­ing their own needs and desires except by sell­ing their labor-pow­er to an employ­er. This of course rais­es the ques­tion: “why do work­ers not have access to the means of pro­duc­tion?” The well-rehearsed answer is that the means of pro­duc­tion are the pri­vate prop­er­ty of the cap­i­tal­ist, and this pri­vate prop­er­ty is pub­licly enforced through the pub­lic pow­er of state vio­lence. This returns us to the bifur­ca­tion of social pow­er into pri­vate, eco­nom­ic pow­er to con­tract and pub­lic, polit­i­cal pow­er to enforce con­tracts. The eco­nom­ic pow­er to buy, sell and, most impor­tant­ly, to exploit, and the polit­i­cal pow­er to enforce, are sep­a­rat­ed under cap­i­tal­ism. Through the sep­a­ra­tion of the polit­i­cal pow­er of enforce­ment, eco­nom­ic pow­er takes on a nat­u­ral sem­blance devoid of force. The vio­lence that is involved in ensur­ing the oper­a­tion of cap­i­tal­ist process­es of exploita­tion is sep­a­rat­ed into the sphere of the state.

The fun­da­men­tal char­ac­ter­is­tic of this sep­a­rate polit­i­cal sphere of the state is its con­trol of vio­lence. But what this vio­lence is there for is to ensure the oper­a­tion of cap­i­tal­ism. It is to ensure that seem­ing­ly neu­tral prop­er­ty rights exist. The­se prop­er­ty rights are ensured through the cre­ation of laws and reg­u­la­tions regard­ing the oper­a­tion of the­se prop­er­ty rights and through the use of vio­lence to main­tain the oper­a­tion of the­se laws and reg­u­la­tions. How­ev­er, as this polit­i­cal sphere is where laws and reg­u­la­tions are decid­ed, they are also where the­se prop­er­ty rela­tions can be con­test­ed and fea­si­bly changed.12 The state is there­fore simul­ta­ne­ous­ly the insti­tu­tion through which the legal frame­work of cap­i­tal­ist repro­duc­tion is put in place, the vio­lent orga­ni­za­tion that enforces that frame­work, and the insti­tu­tion through which antag­o­nism to cap­i­tal­ist repro­duc­tion can be medi­at­ed. The state medi­ates class antag­o­nism by being the insti­tu­tion that imple­ments the legal frame­work through which class rela­tions are main­tained. To reit­er­ate, we can point to three aspects of the state, first­ly, a legal frame­work for exploita­tion to occur, sec­ond­ly, a medi­um for the medi­a­tion of class antag­o­nism, and final­ly, a means through which the­se prop­er­ty rela­tions are vio­lent­ly imposed and main­tained.

This frame­work will help us under­stand the chang­ing nature of the state in the twen­ti­eth cen­tu­ry, with the increas­ing incor­po­ra­tion and medi­a­tion of class con­flict with­in the state. And it will help frame the fun­da­men­tal argu­ment of this arti­cle: that the devel­op­ment of the EU needs to be under­stood as a bifur­ca­tion of the state, where the reg­u­la­tion of cap­i­tal­ist repro­duc­tion takes place at a Euro­pean lev­el, while the medi­a­tion of class antag­o­nism and the enforce­ment of the­se reg­u­la­tions remains at a nation­al lev­el.

II: The creation of the EEC (1914-1957)

The Crisis of the Interwar Period

By 1945 Europe had expe­ri­enced over 30 years of chaos. Begin­ning in 1914, the con­ti­nent had seen over 10 years of war, and 70 mil­lion deaths. The 21 inter­war years were marked by per­ma­nent volatil­i­ty, with extreme eco­nom­ic and polit­i­cal crises. It was from this chaos, and more specif­i­cal­ly the cri­sis of the post­war years, that Euro­pean inte­gra­tion was born.

World War I marked the end of the long peri­od of peace, lib­er­al­ism, free trade, and unprece­dent­ed eco­nom­ic growth that defined 19th cen­tu­ry Europe. There were there­fore repeat­ed attempts after the war to return to the 19th cen­tu­ry order. But they all failed, and the econ­o­my slumped. Growth of GDP per cap­i­ta in West­ern Europe between 1913-1950 was 0.8% per annum, low­er than any peri­od between 1820 and 2000.

Table 1: Growth of real GDP per cap­i­ta, 1820-2000 (Aver­age annu­al com­pound growth rate)

1820-1870 1870-1913 1913-1950 1950-1973 1973-2000
Aus­tria 0,7 1,5 0,2 4,9 2,2
Bel­gium 1,4 1,0 0,7 3,5 2,0
Den­mark 0,9 1,6 1,6 3,1 1,9
Fin­land 0,8 1,4 1,9 4,3 2,2
France 0,8 1,5 1,1 4,0 1,7
Ger­many 1,1 1,6 0,3 5,0 1,6
Italy 0,6 1,3 0,8 5,0 2,1
Nether­lands 1,1 0,9 1,1 3,4 1,9
Nor­way 0,5 1,3 2,1 3,2 2,9
Swe­den 0,7 1,5 2,1 3,1 1,5
Switzer­land NA 1,5 2,1 3,1 0,7
UK 1,2 1,0 0,8 2,5 1,9
Region­al Aver­age 1,0 1,3 0,8 4,0 1,8

Source: Bar­ry Eichen­green, The Euro­pean econ­o­my since 1945, 17.

In addi­tion to eco­nom­ic fail­ure, the peri­od was one of extreme polit­i­cal volatil­i­ty. Imme­di­ate­ly after the war there was the rev­o­lu­tion­ary wave, which in many ways con­tin­ues to define the ideation­al iden­ti­ty of the rad­i­cal left. This wave coin­cid­ed with the expan­sion of suf­frage, the rise of mass par­ties and mass unions, increased democ­ra­ti­za­tion of the state, and the politi­ciza­tion of the econ­o­my. In Rus­sia this rev­o­lu­tion­ary move­ment took state pow­er, while in Italy, Spain, Ger­many, Aus­tria, Greece, and Por­tu­gal the fas­cist coun­ter­rev­o­lu­tion took state pow­er. In oth­er coun­tries the high lev­els of class con­flict lead to the cre­ation of some form of demo­c­ra­t­ic cor­po­ratism: the Basic Agree­ment in Nor­way (1935), the Peace Agree­ment in Switzer­land (1937), and the Basic Agree­ment in Swe­den (1938).

As World War II approached it was wide­ly expect­ed that the cri­sis of the inter­war years would con­tin­ue unless there was some final res­o­lu­tion. For the Axis pow­ers this solu­tion was the vic­to­ry of the Third Reich. But oth­ers had dif­fer­ent hopes. On the Left, many believed that World War II would end with a rev­o­lu­tion­ary wave greater than that at the end of World War I. Leon Trot­sky found­ed the Fourth Inter­na­tion­al with the explic­it aim of act­ing act as the “head of the rev­o­lu­tion­ary tide” which would inevitably fol­low the war.13 For lead­ers of the allied nations, it was equal­ly clear that post­war recon­struc­tion could not fol­low the same path as after World War I.

In August 1941, Win­ston Churchill sailed to New­found­land to meet with Pres­i­dent Roo­sevelt to agree on the “Atlantic Char­ter,” an eight-point plan for post­war recon­struc­tion. At the cen­ter of this plan was a clear com­mit­ment to low­er trade bar­ri­ers and to the rather social demo­c­ra­t­ic goal of bring­ing “about the fullest col­lab­o­ra­tion between all nations in the eco­nom­ic field with the object of secur­ing, for all, improved labor stan­dards, eco­nom­ic advance­ment and social secu­ri­ty… and which will afford assur­ance that all the men in all the lands may live out their lives in free­dom from fear and want.”14 While the sin­cer­i­ty of this com­mit­ment can eas­i­ly be ques­tioned, it is clear that a lesson had been learnt from the inter­war cri­sis and the post­war peri­od would be dif­fer­ent.

Postwar Settlement

After World War II, Trotsky’s antic­i­pat­ed rev­o­lu­tion nev­er hap­pened. As can be seen from Table 2, the years from 1946 to 50 expe­ri­enced far less labor unrest than those imme­di­ate­ly fol­low­ing WWI. This does not mean there were no rev­o­lu­tion­ary pres­sures. Across Europe com­mu­nist par­ties were grow­ing rapid­ly, and in some coun­tries were win­ning elec­tions. But instead of lead­ing to social­ism, Europe saw the cre­ation of what has been called the post­war set­tle­ment.

Table 2. Strike Activ­i­ty (Annu­al days lost per 100 work­ers)

France Ger­many Italy UK
1919-24 120 191 149 233
1946-50 87 4 145 10
1953-61 41 7 64 28
1962-66 32 3 134 23
1967-71 350 8 161 60
1972-76 34 3 200 97
1977-81 23 8 151 112
1982-87 13 9 93 88

Source: 1919-1924 & 1946-1950: Andrea Boltho “Recon­struc­tion after Two World Wars: Why the Dif­fer­ences?” Jour­nal of Euro­pean Eco­nom­ic His­to­ry 30 no. 2 (2001), 429–456. 1953-1987: Philip Arm­strong, Andrew Glyn, John Har­rison, Cap­i­tal­ism since 1945, (Oxford: Basil Black­well, 1991). Note that the fig­ures do not mea­sure exact­ly the same thing. Boltho’s fig­ure mea­sure “man-days lost” per 100 non-agri­cul­tur­al wage earn­ers. Arm­strong et al mea­sure work­ers in indus­try and trans­port.

This post­war set­tle­ment result­ed in the rise of the wel­fare state, full employ­ment, and the incor­po­ra­tion of work­ers’ orga­ni­za­tions into the man­age­ment of cap­i­tal­ist devel­op­ment. It also saw an unprece­dent­ed eco­nom­ic boom and a mas­sive increase in inter­na­tion­al trade.

The growth boom is remem­bered well across the West­ern world. In almost every coun­try the thir­ty year peri­od after 1945 has a unique name empha­sis­ing its nov­el­ty: Les Trente Glo­rieuses (France), Wirtschaftswun­der (Ger­many), Reko­rdåren (Swe­den), the “Eco­nom­ic Mir­a­cle” (Italy, Japan and Greece) or sim­ply the “Gold­en Age” (Unit­ed States and UK). As Table 1 shows, growth in West­ern Europe in this peri­od was around 4% per annum, the high­est growth ever record­ed for West­ern Europe and star­tling­ly high­er than the 0.8% growth in the inter­war peri­od.

The boom in inter­na­tion­al trade, while not as well remem­bered, is even more dra­mat­ic. As can be seen in Table 3, while dur­ing the inter­war years exports declined, the post­war years saw a mas­sive increase in inter­na­tion­al trade.

Table 3. Growth in Vol­ume of Mer­chan­dise Exports (Annu­al aver­age com­pound growth rates)

1870–1913 1913–1950 1950–1973 1973–1998
West­ern Europe 3,24 –0.14 8,38 4,79

Source: Angus Mad­dis­on, The world econ­o­my, (Paris, France: OECD, 2006), 127.

The post­war growth boom was dri­ven both by this increase in inter­na­tion­al trade and by a sig­nif­i­cant increase in invest­ment.

Cen­tral to this growth in invest­ment were the insti­tu­tions cre­at­ed as part of the post­war set­tle­ment. The­se “insti­tu­tions solved com­mit­ment and coor­di­na­tion prob­lems in whose pres­ence nei­ther wage mod­er­a­tion nor the expan­sion of inter­na­tion­al trade could have tak­en place.”15 Under the­se insti­tu­tions work­ers mod­er­at­ed their wage claims, mak­ing prof­its avail­able to cap­i­tal­ists to rein­vest. Cap­i­tal­ists restrained div­i­dend pay­outs in order to rein­vest. Invest­ing in mod­ern­iza­tion and expan­sion of pro­duc­tive capac­i­ty stim­u­lat­ed growth and increased the future income of both work­ers and cap­i­tal own­ers.

The ben­e­fit for employ­ers was that the threat of an insur­gent work­ing class was avoid­ed; for the orga­nized work­ing class, it was a seat at the table, which facil­i­tat­ed the oth­er aspects of the post­war set­tle­ment – it enabled the cre­ation of the wel­fare state and the over­sight of ris­ing liv­ing stan­dards and full employ­ment.

How­ev­er, the post­war set­tle­ment went fur­ther than the con­flict between labor and cap­i­tal. The insta­bil­i­ty of the inter­war years was not only cre­at­ed by work­ing class mil­i­tan­cy. In Ger­many, Italy, Spain, Aus­tria and else­where the far right had come to pow­er on the basis of a pop­u­lar move­ment depen­dent on the sup­port of dis­grun­tled nation­al­ist farm­ers.16 Dur­ing the great depres­sion, agri­cul­ture was hit bad­ly, result­ing in grow­ing demands for autarky and the pro­tec­tion of agri­cul­tur­al pro­duc­ers from the world mar­ket. The solu­tion to the­se issues in the post­war peri­od was the cre­ation of the Com­mon Agri­cul­tur­al Pol­i­cy (CAP). Before get­ting to CAP, we need to look at the emer­gence of the Euro­pean Eco­nom­ic Com­mu­ni­ty (EEC).

The Birth of Europe?

The stan­dard polit­i­cal nar­ra­tive regard­ing the EU is to pose the alter­na­tive as being either for Europe or for nation­al sov­er­eign­ty. The appeal of nation­al sov­er­eign­ty here is obvi­ous both to the Left and Right. For the Right nation­al sov­er­eign­ty means the col­lec­tive nation walk­ing its own path, and for the Left it means peo­ple demo­c­ra­t­i­cal­ly deter­min­ing their own social devel­op­ment. The post­war peri­od was an era where­by nation­al peo­ples were able to deter­mine their own domes­tic poli­cies in a high­ly demo­c­ra­t­ic and free man­ner that was unprece­dent­ed. Today both the Left and Right recall this peri­od wist­ful­ly.

A seem­ing para­dox here is that this emer­gence of pop­u­lar sov­er­eign­ty went hand in hand with the devel­op­ment of a lev­el of supra­na­tion­al gov­er­nance that had nev­er been seen before. Inter­na­tion­al­ly, this was rep­re­sent­ed by the cre­ation of the IMF, GATT, and World Bank. But this devel­op­ment was even more extreme in Europe, where a vast array of new insti­tu­tions emerged: the Organ­i­sa­tion for Euro­pean Eco­nom­ic Co-oper­a­tion (OEEC), which exists today as the Organ­i­sa­tion for Eco­nom­ic Co-oper­a­tion and Devel­op­ment (OECD), the Euro­pean Atom­ic Ener­gy Com­mu­ni­ty (Euratom), the West­ern Euro­pean Union (WEU), the Euro­pean Pay­ments Union (EPU), and of course the Euro­pean Coal and Steel Com­mu­ni­ty (ECSC) and the Euro­pean Eco­nom­ic Com­mu­ni­ty (EEC). Between them, the­se orga­ni­za­tions marked a new phase in the polit­i­cal orga­ni­za­tion of the Euro­pean econ­o­my.

In order to dis­en­tan­gle the para­dox of a simul­ta­ne­ous increase in nation­al demo­c­ra­t­ic sov­er­eign­ty with the increase in Euro­pean supra­na­tion­al gov­er­nance, it is nec­es­sary to depart with some of the mythol­o­gy sur­round­ing the birth of the Euro­pean Union.

A fre­quent sto­ry often told is that the ear­ly devel­op­ment of the EU was dri­ven by a noble few or a sin­is­ter cabal, depend­ing on the polit­i­cal per­spec­tive. But regard­less of the per­spec­tive, the names are gen­er­al­ly the same. At the front is the French civil ser­vant Jean Mon­net and Robert Schu­man, the Lux­em­bourg-born French Prime Min­is­ter (1947-1948). The sup­port­ing cast is pro­vid­ed by Altiero Spinel­li, the Ital­ian author of the Ven­totene Man­i­festo; Paul-Hen­ri Spaak, Prime Min­is­ter of Bel­gium (1947-49); Kon­rad Ade­nauer, Chan­cel­lor of Ger­many (1949-1963); and Wal­ter Hall­stein, a Ger­man civil ser­vant who became the first pres­i­dent of the Com­mis­sion of the Euro­pean Eco­nom­ic Com­mu­ni­ty (1958-1967).17

The leg­end is that a few peo­ple deter­mined to estab­lish peace across the con­ti­nent, and con­vinced of the need for a Euro­pean Fed­er­a­tion, set about estab­lish­ing a Euro­pean state bit by bit. The first step in reach­ing this high and noble ide­al was an agree­ment on coal and steel, and the rest nat­u­ral­ly fol­lowed.

Indeed the Treaty of Paris and the cre­ation of the Euro­pean Coal and Steel Com­mu­ni­ty (ECSC) is a rather odd moment of inter­na­tion­al diplo­ma­cy. It emerged as a pro­pos­al from the rather grandiose “Schu­man Dec­la­ra­tion,” made by the then French For­eign Min­is­ter on May 9, 1950, which gave “world peace” as its aim, and “a unit­ed Europe” as its inter­im objec­tive, but set­tled for “the pool­ing of coal and steel pro­duc­tion… as a first step.”18

In addi­tion to the­se over­flow­ing state­ments, the treaty over­flowed with insti­tu­tions. To admin­is­ter a com­mon mar­ket in coal and steel, it cre­at­ed in embryo the insti­tu­tions of the mod­ern EU: a High Author­i­ty (the pre­cur­sor of the Euro­pean Com­mis­sion), a Com­mon Assem­bly (the pre­cur­sor of the Euro­pean Par­lia­ment), a Coun­cil of Min­is­ters (the pre­cur­sor of the Coun­cil of Min­is­ters), and a Court of Jus­tice (the pre­cur­sor of the Court of Jus­tice of the EU).

In order to under­stand why the Euro­pean fed­er­al­ists came to found the ECSC, the impor­tant issue is less their fed­er­al­ist ambi­tions, but rather the actu­al issue of Euro­pean coal and steel pro­duc­tion.

The coal and steel heart­lands of con­ti­nen­tal Europe encom­passed the bor­der­lands of Ger­many, Lux­em­bourg, France, and south­east Bel­gium. It had been at the cen­tre of all recent west­ern Euro­pean mil­i­tary con­flicts, as well as being both eco­nom­i­cal­ly impor­tant and poten­tial­ly high­ly eco­nom­i­cal­ly inte­grat­ed. It was a region both where the break­down of inter­na­tion­al trade mat­tered great­ly and where the indus­tri­al work­ing class was at its strongest.

The ques­tion, there­fore, was how to man­age the tran­si­tion to a lib­er­al mar­ket econ­o­my while avoid­ing social con­flicts that might arise from that tran­si­tion. The con­tent of the Treaty of Paris is there­fore focused heav­i­ly on the social dif­fi­cul­ties in man­ag­ing the tran­si­tion to an inte­grat­ed coal and steel mar­ket. It is strik­ing from any brief perusal of Title III of the Treaty, the sec­tion which deals with the coal and steel indus­tries, how much of it is focussed on mat­ters such as “the pos­si­bil­i­ties of reem­ploy­ment… of work­ers set at lib­er­ty by the evo­lu­tion of the mar­ket or by tech­ni­cal trans­for­ma­tions” or “the appraisal of the pos­si­bil­i­ties of improv­ing the liv­ing and work­ing con­di­tions of the labor force… and of the risks which men­ace such liv­ing con­di­tions.”19

Alan Mil­ward sup­ports this under­stand­ing when, in his detailed dis­cus­sion of the social dynam­ics behind Bel­gian par­tic­i­pa­tion in the ECSC, he writes “The Treaty of Paris can be under­stood not just as the diplo­mat­ic sub­sti­tute for a peace treaty, but also as the moment when Bel­gium for­mal­ly entered the mixed econ­o­my… It rat­i­fied the shift to pub­lic respon­si­bil­i­ty in man­age­ment, to the incor­po­ra­tion of the labor force into that respon­si­bil­i­ty, and to the com­mit­ment of the state to wel­fare and employ­ment.”20

How­ev­er, the impor­tance of the ECSC should not be over­stat­ed – although it often is. The ECSC was impor­tant in pri­mar­i­ly two ways, first­ly, it was an ear­ly step in the direc­tion of the cre­ation of the com­mon mar­ket; sec­ond­ly, it cre­at­ed the insti­tu­tions of the EEC. How­ev­er, the ambi­tion of an inte­grat­ed Euro­pean econ­o­my was not real­ized with the ECSC. In fact, the ECSC was real­ly only a very small step in that direc­tion.21

The first major step in the cre­ation of the EU was not the Treaty of Paris or the ECSC; it was the cre­ation of the EEC with the Treaty of Rome. Today the Treaty that start­ed as the Treaty of Rome con­sti­tutes rough­ly three quar­ters of the “con­sti­tu­tion” of the EU.22

International Trade and Social Protection: The Creation of the EEC

As we have already empha­sized, cen­tral to the post­war boom was the growth in post­war trade (see Table 3). In Europe this was enabled by the cre­ation of the Com­mon Mar­ket with the Treaty of Rome.23 The Com­mon Mar­ket entailed a cus­toms union — no inter­nal tar­iffs or trade bar­ri­ers. It was to be admin­is­tered through the Euro­pean Eco­nom­ic Com­mu­ni­ty (EEC), which inherit­ed the ECSC insti­tu­tions.

From the Treaty of Rome onwards the EEC was to present a sin­gle eco­nom­ic tar­iff and cus­toms bloc to the rest of the world, while inter­nal­ly trade would be free.

But why was the cre­ation of the EEC nec­es­sary? In the late 19th cen­tu­ry, tar­iff bar­ri­ers were rad­i­cal­ly reduced across the West­ern world and a Com­mis­sion, an Assem­bly, a Coun­cil of Min­is­ters, and a Court of Jus­tice weren’t nec­es­sary. Through the won­ders of the “most favoured nation” clause, eco­nom­ic inte­gra­tion appeared to devel­op nat­u­ral­ly.

How­ev­er, after World War I, things were dif­fer­ent. With the rise of democ­ra­cy and the orga­nized work­ing class in the first half of the twen­ti­eth cen­tu­ry, the sep­a­ra­tion between lib­er­al pol­i­tics and the lib­er­al econ­o­my were threat­ened. The econ­o­my was politi­cized. In the inter­war peri­od there was no suc­cess­ful res­o­lu­tion of this prob­lem.

After World War II, the prob­lem was resolved through the incor­po­ra­tion of the orga­nized work­ing class into cap­i­tal­ist gov­er­nance. This entailed both an expan­sion of the state into new spheres of socioe­co­nom­ic life as well as its increased demo­c­ra­t­ic admin­is­tra­tion.

There­fore the inte­gra­tion of Euro­pean trade after the war required not only the reduc­tion of bar­ri­ers, but also the means through which the reduc­tion of the­se bar­ri­ers could take place with­out threat­en­ing the liv­ing stan­dards of Euro­pean cit­i­zens.24

We can see this clear­ly in the nego­ti­a­tions lead­ing up to the cre­ation of the EEC. Cen­tral to the­se nego­ti­a­tions were con­cerns regard­ing issues such as wage rates, dif­fer­ences in hol­i­days, and the fact that work­ing hours in the French auto­mo­bile indus­try were 40 hours per week, while they were 48 in Ger­many. Even the ques­tion of equal pay for wom­en was on the agen­da.

Here, we can final­ly return to the issue raised ear­lier regard­ing farm­ers. The Treaty of Rome includ­ed a com­mit­ment to the cre­ation of a Com­mon Agri­cul­tur­al Pol­i­cy (CAP). Whilst the sig­na­to­ries of the Treaty did sure­ly not antic­i­pate the cur­rent size of the CAP in 1957, it serves as anoth­er exam­ple of cre­at­ing a means through which cit­i­zens could be pro­tect­ed by the state from the dis­rup­tion and threat of free and open mar­kets. This kind of defen­sive mech­a­nism defines what is nov­el about the approach to the reduc­tion of trade bar­ri­ers brought about by the Treaty of Rome.25

The cre­ation of the EEC brought about the reduc­tion of trade bar­ri­ers, the expan­sion of trade with­in Europe and there­by con­tribut­ed to growth and cap­i­tal­ist devel­op­ment. The cre­ation of this supra­na­tion­al orga­ni­za­tion cre­at­ed a new means through which the rules of eco­nom­ic life could be set. It there­by increased the pow­er of nation­al states to set the­se rules and facil­i­tat­ed the increased demo­c­ra­t­ic admin­is­tra­tion of eco­nom­ic life.

It can now be seen how oppos­ing nation­al sov­er­eign­ty to Euro­pean gov­er­nance makes lit­tle sense. Rather than threat­en­ing the pow­er of the state, the EEC was cre­at­ed as a means through which the pow­er of the state could be pre­served and enhanced.

III: From Consensus to Crisis (1957-1984)

The estab­lish­ment of the EEC ush­ered in the first wave of Euro­pean Inte­gra­tion, after which lit­tle changed for near­ly 30 years. Indeed, it was not until the mid-1980s that the process of Euro­pean Inte­gra­tion was renewed.

But this is not at all to say that noth­ing was hap­pen­ing. Indeed, one can ret­ro­spec­tive­ly dis­cern three very impor­tant devel­op­ments. First, expan­sion; sec­ond, the flur­ry of failed pro­pos­als; and final­ly, the ear­ly moves towards mon­e­tary union.

Per­haps the most major change in the EEC between 1957 and 1986 was its expan­sion. First the UK, Ire­land, and Den­mark joined (1973). They were fol­lowed lat­er by the recent­ly democ­ra­tized Greece (1981), Spain and Por­tu­gal (1986).26

The sec­ond devel­op­ment was the flur­ry of failed reforms. Amongst the­se, there were pro­pos­als for a com­mon cur­ren­cy (see the Wern­er report27), pro­pos­als for a mas­sive expan­sion in Europe’s fis­cal capa­bil­i­ties (see the Mac­Dougall report28), and pro­pos­als for devel­op­ing a Euro­pean social democ­ra­cy (see the Social Action Pro­gram­me aris­ing from the Paris sum­mit29). How­ev­er despite the­se debates, process­es, reports and agree­ments, very lit­tle of the­se pro­pos­als actu­al­ly mate­ri­al­ized, and they are there­fore of lim­it­ed inter­est and impor­tance.

The one major devel­op­ment that did take place was the respon­se of EEC states to the break­down of the Bret­ton Woods sys­tem. First, there was the “snake in the tun­nel,” then sim­ply “the snake”. This was fol­lowed by the Euro­pean Mon­e­tary Sys­tem, which last­ed the ear­ly 1990s. I will cov­er the­se in some more depth below. But first, it is worth con­sid­er­ing why the­se devel­op­ments hap­pened at all.

The Postwar Settlement becomes Unsettled

As described above the post­war set­tle­ment was a fun­da­men­tal­ly unsta­ble arrange­ment, under which the work­ing class agreed to mod­er­ate wage demands and the cap­i­tal­ist class agreed to invest the sur­plus prof­its gen­er­at­ed by this wage restraint. The result was an unusu­al­ly high lev­el of invest­ment in the post­war peri­od (See Chart 2). This arrange­ment was man­aged through the expan­sion and inte­gra­tion of work­ing class orga­ni­za­tions into cap­i­tal­ist gov­er­nance. The insta­bil­i­ty arose from the fact that at any point there were gains to be made from aban­don­ing this agree­ment. There was an addi­tion­al prob­lem; the inte­gra­tion of the work­ing class into cap­i­tal­ist gov­er­nance was brought about par­tial­ly as a means of avoid­ing rev­o­lu­tion­ary con­flict. In oth­er words, in order to avoid the threat of work­ing-class orga­ni­za­tions seiz­ing pow­er and expro­pri­at­ing the cap­i­tal­ist class, the­se orga­ni­za­tions were inte­grat­ed into the man­age­ment of cap­i­tal­ist devel­op­ment. How­ev­er, this inte­gra­tion brought about a dra­mat­ic increase in the size and pow­er of work­ers orga­ni­za­tions, both as inte­grat­ed bod­ies and, poten­tial­ly, as inde­pen­dent actors. For those who believed in the poten­tial of rev­o­lu­tion­ary action, the oppor­tu­ni­ties for the rev­o­lu­tion­ary activ­i­ty of the work­ing class were not dwin­dling, but rather grow­ing.

Increas­ing­ly, the prob­lem for the rev­o­lu­tion­ary ele­ments in the work­ers’ move­ment was not orga­ni­za­tion; it was the bureau­crat­ic lead­er­ship of the work­ers’ move­ment, which had become inte­grat­ed into cap­i­tal­ist man­age­ment. This prob­lem was expressed dif­fer­ent­ly by dif­fer­ent sec­tors of the new­ly emerg­ing New Left, per­haps most clear­ly in Trot­sky­ism: “The his­tor­i­cal cri­sis of mankind is reduced to the cri­sis of the rev­o­lu­tion­ary lead­er­ship.”30 But sim­i­lar sen­ti­ments can be seen in Mao­ism, anar­chism, and the gen­er­al rise of anti-author­i­tar­i­an move­ments, in which notions of self-man­age­ment and self-man­aged autonomous strug­gles became para­mount.

Extri­cat­ing the exact causal rela­tion­ship is dif­fi­cult, but by the late 1960s, strikes were increas­ing, prof­it rates were decreas­ing, and the invest­ment rate began its decline.

In France, days lost to strikes more than dou­bled. In 1962-1966, annu­al days lost were 32 per 100 work­ers; between 1967-1971 it was 350 days lost to strikes per annum. This fig­ure was of course large­ly dri­ven by the rev­o­lu­tion­ary cri­sis of May 1968. In the UK, the fig­ure also more than dou­bled. It climbed from 23 in 1962-1966, to 60 in 1967-71. How­ev­er, in the UK the num­ber of strikes con­tin­ued to rise through­out the 1970s, and only began to fall after the elec­tion of Thatch­er. In Italy, the work­ers’ move­ment was in the 1970s per­haps the most mil­i­tant of any­where in Europe, and the days lost to strikes near­ly quadru­pled, from 64 annu­al days per 100 work­ers in 1953-61 up to 200 days in 1972-1976 (see Table 2).

oisin chart 1
Source: Phillip Arm­strong, Andrew Glyn, John Har­rison, Cap­i­tal­ism since 1945, 352.

Prof­it rates went in the oppo­site direc­tion, as can be seen in Chart 1. Here we see the weight­ed aver­age net man­u­fac­tur­ing and busi­ness prof­it rates for France, Ger­many, Italy, and the UK. As can be seen the net man­u­fac­tur­ing prof­it rate decreased from 24.3% in 1955 to a low of 8.8% in 1975.31

By the late 1960s, the invest­ment rate had also start­ed to decline. As can be seen in Chart 2, in Ger­many it fell from 37% of GDP in 1965 to less than 27% in 1975. In the UK and France, the post­war rise in the invest­ment rate came to an end.32

oisin chart 2
Source: Penn World Tables 8.0

Not only was there a cri­sis in the pri­vate sec­tor, but the post­war state con­tin­ued to expand in order to meet ris­ing demands for the uni­ver­sal pro­vi­sion of social ser­vices. As can be seen from Table 4, the size of the gov­ern­ment sec­tor in West­ern Euro­pean economies had been increas­ing through­out the twen­ti­eth cen­tu­ry, and by the mid-1970s there was lit­tle sign this trend would be com­ing to an end.

Table 4. Total Gov­ern­ment Expen­di­ture as Per Cent of GDP at Cur­rent Prices, 1913–1999

1913 1938 1950 1973 1999
France 8,9 23,2 27,6 38,8 52,4
Ger­many 17,7 42,4 30,4 42 47,6
Nether­lands 8.2a 21,7 26,8 45,5 43,8
Unit­ed King­dom 13,3 28,8 34,2 41,5 39,7
Arith­metic Aver­age 12 29 29,8 42 45,9

Source: Angus Mad­dis­on, The world econ­o­my, 135.

a. 1910

How­ev­er, despite the sig­nif­i­cant rise in social spend­ing dur­ing this peri­od, social con­flict did not abate, and the legit­i­ma­cy of the exist­ing polit­i­cal order was being increas­ing­ly under­mined.

A telling exam­ple was in Britain, where, in 1973, indus­tri­al action by the Nation­al Union of Minework­ers (NUM) had reduced the sup­ply of elec­tric­i­ty to the point where the Con­ser­v­a­tive gov­ern­ment was forced to declare a three-day-week. But pub­lic sup­port was large­ly behind the min­ers. The Prime Min­is­ter sought a man­date to take on min­ers and called a snap elec­tion under the slo­gan “Who gov­erns Britain?” – the gov­ern­ment or the labor move­ment. The Con­ser­v­a­tives got their answer when they were kicked out of office, and the Labor Par­ty was vot­ed in.

The reac­tion to the cri­sis of the late ’60s and ’70s was large­ly to con­cede to the demands of the move­ment. Wages went up, prof­it shares went down, gov­ern­ment expen­di­ture increased, and the doors were open to the social move­ment to come inside and share pow­er. In brief, the post­war solu­tion was extend­ed. Rather than aim­ing to sup­press the move­ment, it was thought that a demo­bi­liz­ing demo­c­ra­t­ic res­o­lu­tion was pos­si­ble.

This enables us to under­stand the flur­ry of well-mean­ing and often ambi­tious pro­pos­als that devel­oped at a Euro­pean lev­el in this peri­od, such as the afore­men­tioned Mac­Dougall report, which pro­posed to mas­sive­ly increase Europe’s spend­ing pow­er and move some fis­cal deci­sion-mak­ing to a Euro­pean lev­el. It also helps us under­stand the Social Action Pro­gram­me, which emerged from the 1972 Paris sum­mit, and began that ephemer­al dream of the Euro­pean lib­er­al Left: “Social Europe.” The polit­i­cal space from which the­se pro­pos­als arose was a cri­sis where­by the tra­jec­to­ry of post­war devel­op­ment was break­ing down and gen­er­at­ing a desire for new solu­tions. But none of the­se projects ever had any real legs. The rea­son for this is equal­ly obvi­ous – they could not solve the prob­lems that exist­ed with­in the nation states of Europe.

The only pro­pos­al that did get some real trac­tion was the one that was at first mere­ly intend­ed to solve a prob­lem aris­ing from Amer­i­ca.

The Breakdown of Bretton Woods

It is wide­ly believed that a major con­tribut­ing fac­tor to the eco­nom­ic chaos of the inter­war peri­od was the gold stan­dard. This oper­at­ed through the declared com­mit­ment to main­tain con­vert­ibil­i­ty of cur­ren­cy into a spec­i­fied amount of gold. There­by all cur­ren­cies were fixed in val­ue again­st a homoge­nous inter­na­tion­al­ly trad­able com­mod­i­ty. In order to main­tain gold con­vert­ibil­i­ty, coun­tries need­ed to pur­sue a set of eco­nom­ic poli­cies to avoid bal­ance of pay­ments prob­lems and main­tain their gold reserves. This could involve cut­ting wages and gov­ern­ment spend­ing, regard­less of the effect this might have on the country’s wider eco­nom­ic health, the liv­ing stan­dards of its cit­i­zens, or its polit­i­cal sta­bil­i­ty. Accord­ing­ly, this led to many prob­lems in the inter­war peri­od.

There­fore, in 1944 an agree­ment was reached that the post­war mon­e­tary sys­tem would be much more flex­i­ble. It was agreed that the US dol­lar would be con­vert­ible into gold, and every oth­er cur­ren­cy would be con­vert­ible into dol­lars. This allowed for adjust­ments to a country’s exchange rate. For exam­ple, if work­ers in a coun­try brought about wage increas­es and there­by made that country’s exports uncom­pet­i­tive, it would be pos­si­ble to adjust the exchange rate so that the val­ue of the nation­al cur­ren­cy would be worth less in dol­lar terms, revers­ing some of the neg­a­tive effect that this wage increase might have.

By 1971, almost all of America’s main com­peti­tors had deval­ued again­st the dol­lar on a num­ber of occa­sions, and as wage demands, the cost of social ser­vices, and the cost of the war in Viet­nam rose, Amer­i­ca found itself in a sit­u­a­tion where it had a grow­ing bal­ance of pay­ments prob­lem and an over­val­ued cur­ren­cy. The solu­tion was obvi­ous, and the US end­ed dol­lar-gold con­vert­ibil­i­ty. The stat­ed inten­tion was to deval­ue the dol­lar but main­tain the sys­tem more or less unchanged. And indeed, a few short months lat­er, the “Smith­so­ni­an Agree­ment” was signed, which large­ly returned the sys­tem to how it oper­at­ed before. One sig­nif­i­cant change, how­ev­er, was that cur­ren­cies were now allowed to fluc­tu­ate again­st the dol­lar more than pre­vi­ous­ly. Under the new Smith­so­ni­an Agree­ment, coun­tries could fluc­tu­ate ±2.25% again­st the dol­lar. How­ev­er, this meant that in the EEC, cur­ren­cies would now be able to fluc­tu­ate much more again­st one anoth­er.33

The respon­se to this drew on the Wern­er Report (1970), which laid out a plan for cre­at­ing a sin­gle Euro­pean cur­ren­cy. The EEC coun­tries agreed to allow their cur­ren­cies fluc­tu­ate by only ±2.25% again­st one anoth­er. This frame­work, where­by Euro­pean cur­ren­cies fluc­tu­at­ed with­in a small­er band than the band for fluc­tu­a­tion faced by oth­er coun­tries, was called “the snake in the tun­nel.” How­ev­er, very short­ly after the sign­ing of the Smith­so­ni­an Agree­ment, its “tun­nel” fell apart and the inter­na­tion­al mon­e­tary sys­tem moved to free float­ing exchange rates. In Europe, how­ev­er, the snake per­sist­ed with­out the tun­nel. But even this was only of lim­it­ed suc­cess, and through the 1970s coun­tries entered and exit­ed the snake depend­ing on their domes­tic eco­nom­ic sit­u­a­tion. In 1979, there­fore, the Euro­pean Mon­e­tary Sys­tem was cre­at­ed, which oper­at­ed on more or less the same prin­ci­ple, only in a more struc­tured man­ner.

Despite this impor­tant change, look­ing at the long peri­od between the Treaty of Rome (1957) and the Maas­tricht Treaty (1992), we can see rel­a­tive­ly few devel­op­ments. It is there­fore use­ful to con­sid­er Euro­pean Inte­gra­tion as occur­ring in two waves. The first was estab­lished by the Treaty of Rome, was cen­tered on the com­mon mar­ket, and last­ed until the mid-80s. The sec­ond was estab­lished by the Maas­tricht Treaty and lasts to this day. This sec­ond wave was cen­tered on the sin­gle mar­ket and the com­mon cur­ren­cy, whose ear­ly moments I have just described. How­ev­er, before we con­sid­er the devel­op­ment of this sec­ond wave from 1992 onwards, it is worth con­sid­er­ing the sit­u­a­tion in Europe in the 1980s that it devel­oped in respon­se to.

The Delayed Resolution of the Crisis

By the late 1970s the cri­sis that had emerged in the mid-60s was still not resolved. Prof­it rates were con­tin­u­ing their decline and had not recov­ered (See Chart 2). Invest­ment rates had fal­l­en sub­stan­tial­ly (See Chart 1). Growth rates were sub­stan­tial­ly low­er than what they had been dur­ing the 1945-1975 peri­od. In addi­tion, the re-emer­gence of unem­ploy­ment became a major social prob­lem. This was in fact a very sig­nif­i­cant change, since full employ­ment had been the norm across West­ern Europe for the entire 1945-1973 peri­od (see Table 5).

Table 5: Lev­el of Unem­ploy­ment (% of labour force)

1950–73 1974–83 1984–93 1994–98 2000 2004 2008 2012 2014
Bel­gium 3 8,2 8,8 9,7 7,5 8,7 7,2 7,2 8,5
Fin­land 1,7 4,7 6,9 14,2 10,0 9,0 6,4 7,5 8,4
France 2 5,7 10 12,1 10,4 9,0 7,3 9,4 10,2
Ger­many 2,5 4,1 6,2 9 8,2 9,9 8,1 5,6 5,2
Italy 5,5 7,2 9,3 11,9 10,6 8,2 6,4 9,5 12,6
Nether­lands 2,2 7,3 7,3 5,9 3,3 4,8 3,2 5,0 7,1
Nor­way 1,9 2,1 4,1 4,6 3,4 4,2 2,4 3,2 3,5
Swe­den 1,8 2,3 3,4 9,2 6,2 7,0 6,0 7,9 8,2
Unit­ed King­dom 2,8 7 9,7 8 5,7 4,7 5,1 8,2 6,8
Ire­land n.a. 8,8 15,6 11,2 4,8 4,9 5,0 15,0 12,1
Spain 2,9 9,1 19,4 21,8 12,7 11,3 9,0 23,2 25,5
Aver­age 2,4 6,0 9,2 10,7 7,5 7,4 6,0 9,2 9,8

Source: 1950-1998: Angus Mad­dis­on, The world econ­o­my, 134. 2000-2014: Jan­u­ary data from Eurostat.

And soci­ety was still polit­i­cal­ly high­ly unsta­ble. In Italy, the very high lev­el of indus­tri­al activ­i­ty con­tin­ued, albeit with greater des­per­a­tion. This hope­less­ness saw the begin­ning of the “Years of Lead,” which per­haps reached its peak with the kid­nap­ping and exe­cu­tion of for­mer Ital­ian Prime Min­is­ter Aldo Moro by the Brigate Rosse in 1978. Such vio­lence was not lim­it­ed to Italy. Ger­many wit­nessed left-wing guer­ril­la activ­i­ty dur­ing this peri­od as well, with such groups as the Rote Armee Frak­tion, Rote Zel­len, Rote Zora and the June 2 Move­ment. The UK expe­ri­enced left-wing armed activ­i­ty in the north of Ire­land and, in Britain, there was a per­sis­tent increase in strike activ­i­ty.

Indeed, the British win­ter of 1978-1979 was rocked by a strike wave that is remem­bered as the “Win­ter of Dis­con­tent.” This strike wave was both felt and vis­i­ble across the UK. The fact that the win­ter was one of the cold­est on record did not improve things. City cen­ters filled with uncol­lect­ed trash. Infa­mous­ly, in Liv­er­pool, the city was forced to hire an emp­ty fac­to­ry to store corpses as the gravedig­gers struck. The UK had to go to the IMF for a £2.3bn loan. By the time an elec­tion was called in 1979, the Con­ser­v­a­tive par­ty under Mar­garet Thatch­er won.

Thatch­er famous­ly used her man­date to take on the British labor move­ment piece by piece, until what was once one of the strongest and most mil­i­tant labor move­ments in Europe was destroyed. Today in Britain unions scarce­ly exist out­side the pub­lic sec­tor, and strikes are a minor issue eco­nom­i­cal­ly and polit­i­cal­ly.

Although the social move­ment of the 1960s and 1970s were filled with hope, by the late 1970s the move­ment had reached an impasse. It could con­tin­ue to force the state to increase its social spend­ing, but it was unclear how to fund it. Equal­ly, it could con­tin­ue to increase wage demands, but it was clear that this was reduc­ing prof­it oppor­tu­ni­ties and dam­ag­ing the econ­o­my. The next step seemed unclear, and many believed the moment for a break with cap­i­tal­ism had passed.34 As the­se hopes fad­ed, the emerg­ing voic­es from the Right for a return to pre-war lib­er­al­ism began to gain favor.

Of course, the Left did not sim­ply aban­don its project, and the debates of this peri­od remain of real inter­est.35 And although across Europe the labor move­ment was suf­fer­ing defeats: the mass arrests in Italy 1979-1981,36 the defeat at FIAT Mirafiori (1980),37 the UK Min­ers’ Strike (1984), Wap­ping (1986), etc. There were oth­er attempts to find anoth­er route for the Left. Per­haps the most suc­cess­ful was François Mitterrand’s elec­toral vic­to­ry in France in May 1981. This brought togeth­er much of the Left, many of the mil­i­tants of 1968, along with many of the polit­i­cal refugees flee­ing per­se­cu­tion in Italy. Mit­ter­rand was elect­ed on a rad­i­cal plat­form named the “110 Propo­si­tions for France.” This involved a major push fur­ther towards more social con­trol of the econ­o­my. There were sev­er­al nation­al­iza­tions and the min­i­mum wage, statu­to­ry hol­i­days, pen­sions, health insur­ance for the unem­ployed, social hous­ing, fam­i­ly allowances, tax­es on wealth, were all increased, while simul­ta­ne­ous­ly the work­week was reduced. How­ev­er, as this hap­pened, cap­i­tal began to leave the coun­try. With infla­tion con­tin­u­ing to rise, France faced a per­sis­tent and seri­ous bal­ance of pay­ments prob­lem. The franc was deval­ued in Octo­ber 1981, again in June 1982, and yet again in March 1983! Ulti­mate­ly, Mit­ter­rand was forced to aban­don his left-wing eco­nom­ic pol­i­cy and launched the “Franc Fort” (Strong Franc) pol­i­cy. This involved a major shift to aus­ter­i­ty, and in many ways the end of post­war social democ­ra­cy. From this point on across Europe, the par­ties of the Left reori­ent­ed them­selves towards a pro-mar­ket, neolib­er­al approach to the econ­o­my.

Neoliberalism?

Despite the appear­ance of neolib­er­al­ism as an intel­lec­tu­al move­ment, it is impor­tant to treat it as nei­ther a pure­ly intel­lec­tu­al phe­nom­e­non nor as a return to nor­mal. Neolib­er­al­ism emerged as a respon­se to the pro­longed polit­i­cal insta­bil­i­ty and eco­nom­ic down­turn of the 1965-1985 peri­od. While the pro­longed polit­i­cal insta­bil­i­ty is often under­played and reduced to the momen­tary mad­ness of May 1968, the eco­nom­ic down­turn is often over­played. By almost any mea­sure, Euro­pean economies were doing bet­ter in the 1970s than at any point since. The growth rate was high­er, the invest­ment rate was high­er, the unem­ploy­ment rate was low­er and inequal­i­ty was low­er. Com­pared to the eco­nom­ic sit­u­a­tion in the 70s, the only clear improve­ment for work­ers today is that infla­tion has sta­bi­lized at a low lev­el. How­ev­er, low infla­tion pri­mar­i­ly ben­e­fits cred­i­tors and cap­i­tal own­ers. Oth­er changes also ben­e­fit cap­i­tal­ists. Strikes have gone down dra­mat­i­cal­ly. Tax rates have sta­bi­lized and the growth of the pub­lic sec­tor has been more or less halt­ed (although con­trary what much of the left might say, it has not reversed) (see Table 4). And, by most mea­sures, the prof­it rate has risen again.

Pre­sum­ably in 1975 it was pos­si­ble for Europe to con­tin­ue to devel­op away from cap­i­tal­ism and place the econ­o­my under increas­ing demo­c­ra­t­ic con­trol. Whether this might have been achieved through social­ist rev­o­lu­tion, autonomous action, or leg­is­la­tion, is unknown to us because, of course, it nev­er hap­pened.

In the West­ern Euro­pean coun­tries where rev­o­lu­tions did hap­pen,38 despite their rev­o­lu­tion­ary com­mit­ments, the­se soci­eties quick­ly entered the West­ern lib­er­al order. The high points of work­ers’ auton­o­my in Italy and the UK were crushed, and the more neb­u­lous forms of auton­o­my among squat­ters and envi­ron­men­tal­ists in North­ern Europe were grad­u­al­ly hacked away at, so that lit­tle remains but some inter­est­ing con­cert venues and the embar­rass­ment of the Green par­ties. Where leg­isla­tive reform was attempt­ed, most sig­nif­i­cant­ly in France under Mit­ter­rand, the renewed free­dom of cap­i­tal to flow across bor­ders brought about rapid bal­ance of pay­ments prob­lems, forc­ing the reforms to be aban­doned.

In short, by the ear­ly ’80s the Left was at an impasse while the Right had a clear agen­da: lib­er­al­ize!

Seen from the Right, the prob­lem of the Euro­pean econ­o­my and the rea­son for the down­turn was an over-empow­ered labor move­ment and exces­sive gov­ern­ment inter­ven­tion in the econ­o­my. What was nec­es­sary there­fore was to facil­i­tate the process of pri­vate firms com­pet­ing for prof­its via the mar­ket. By stim­u­lat­ing trade and prof­it-mak­ing, this would lead to increased invest­ment, growth and employ­ment. Cen­tral to this process was increas­ing cross-bor­der Euro­pean trade.

IV: The Second Wave of European Integration (1984-Today)

The sec­ond wave of Euro­pean inte­gra­tion began with the Sin­gle Euro­pean Act (1986) and was prop­er­ly estab­lished with the Maas­tricht Treaty (1992). The Maas­tricht Treaty is per­haps the most sig­nif­i­cant of all treaties relat­ing to Euro­pean inte­gra­tion. It cre­at­ed the Euro­pean Union and along with the Treaty of Rome (1957), the Maas­tricht Treaty is the basis of one of the two “Treaties” that form the core of the Euro­pean con­sti­tu­tion.39

The core of the estab­lish­ment of this sec­ond wave of Euro­pean Inte­gra­tion was the cre­ation of Eco­nom­ic and Mon­e­tary Union (EMU) under Maas­tricht, which in turn involves two key ele­ments: the cre­ation of the Sin­gle Mar­ket and the cre­ation of the Euro.

It is worth dis­tin­guish­ing the Sin­gle Mar­ket from the Com­mon Mar­ket. The first was estab­lished under the Sin­gle Euro­pean Act (1986), the lat­ter under the Treaty of Rome (1957).

The core of the com­mon mar­ket (i.e. the EEC) was, as dis­cussed ear­lier, the cre­ation of a tar­iff free area with­in Europe for the inter­na­tion­al trade of nation­al­ly pro­duced goods. The­se goods were, even when pro­duced by multi­na­tion­als, pro­duced with­in nation states in a man­ner laid out by nation­al leg­is­la­tion. The log­ic behind this process was to demo­c­ra­t­i­cal­ly man­age the tran­si­tion to free trade. This involved the incor­po­ra­tion at the nation­al lev­el of work­ing-class and farm­ers’ orga­ni­za­tions into cap­i­tal­ist man­age­ment. The aim was to main­tain liv­ing stan­dards and avoid the chaos of the inter­war years, while still get­ting the ben­e­fits of high­er lev­els of trade and mar­ket expan­sion and inte­gra­tion. In oth­er words, the log­ic was one that saw the post­war main­te­nance of a mar­ket soci­ety through the exer­cise of social con­trol over the mar­ket.

The Sin­gle Euro­pean Act is often pre­sent­ed as sim­ply being a part of the fur­ther exten­sion of an unde­ter­mined process of “ever closer union.” It is often sug­gest­ed that it was sim­ply a mat­ter of “com­plet­ing” the com­mon mar­ket.40 How­ev­er, the log­ic of the cre­ation of the sin­gle mar­ket was qual­i­ta­tive­ly dif­fer­ent from the cre­ation of the EEC. Where­as the cre­ation of the EEC was embed­ding the mar­ket with­in wider social con­trols, the move towards the sin­gle mar­ket was aimed at mak­ing greater aspects of soci­ety sub­ject to mar­ket con­trol.

The first wave of Euro­pean inte­gra­tion aimed at empow­er­ing both the mar­ket and the nation state, by reduc­ing polit­i­cal and social tur­bu­lence through the cre­ation of demo­c­ra­t­ic con­trols over the mar­ket econ­o­my. The sec­ond wave of Euro­pean Inte­gra­tion, on the oth­er hand, involved reduc­ing polit­i­cal and social tur­bu­lence by remov­ing the mar­ket from demo­c­ra­t­ic con­tes­ta­tion.

The Sin­gle Euro­pean Act, and the Maas­tricht Treaty which fol­lowed, com­mit­ted Europe not sim­ply to cre­at­ing a com­mon mar­ket free of tar­iffs for inter­na­tion­al trade with­in Europe, it aimed at cre­at­ing sin­gle mar­kets ruled and reg­u­lat­ed by a com­mon set of rules and reg­u­la­tions deter­mined at a Euro­pean lev­el.

The pre-his­to­ry of the SEA is rather telling about its devel­op­ment. The wordy dec­la­ra­tions by heads of states on the need for Euro­pean uni­ty con­tin­ued through­out the ’70s and ear­ly ’80s. But over time the focus of the­se announce­ments, reports, draft treaties and white papers shift­ed from the ephemer­al fed­er­al­ist goal of “polit­i­cal union” to what has always been the core of the Euro­pean project: eco­nom­ic inte­gra­tion.41

Inter­est­ing­ly, this peri­od of the mid-80s, in par­tic­u­lar around the SEA, is per­haps the only point in the his­to­ry of Euro­pean inte­gra­tion when the UK plays an agen­da-set­ting role in Europe. Desmond Dinan writes “Mit­ter­rand and Kohl42 had suc­cumbed to Thatcher’s min­i­mal­ist pro­gram­me.“43

The core of the SEA was a com­mit­ment to imple­ment the 279 pro­pos­als in the 1985 Com­mis­sion White Paper on the Inter­nal Mar­ket and cre­ate a sin­gle mar­ket by Decem­ber 31, 1992. This involved har­mo­niz­ing eco­nom­ic reg­u­la­tion of a huge num­ber of indus­tries across Europe – there­by the reg­u­la­tion of the inter­nal Euro­pean mar­ket would be fun­da­men­tal­ly Euro­pean, replac­ing the sys­tem of nation­al reg­u­la­tion.

France’s enthu­si­asm for this process is of inter­est. As not­ed above, Mitterrand’s agen­da for push­ing social democ­ra­cy for­ward col­lapsed in ’83/’84 with the Franc Fort pol­i­cy. In respon­se to this shift Jean-Pier­re Chevène­ment, the Min­is­ter of Indus­try, resigned and was replaced by Lau­rent Fabius.44 In his first speech as min­is­ter, Fabius announced that “the state does not intend to become a sub­sti­tute for the role of enter­pris­es and entre­pre­neurs,” and launched a series of reforms under the mot­to “Mod­ern­ize or decline.” It is again­st this back­ground of the turn to mar­ket lib­er­al­iza­tion, and the notion that France must “adapt itself to the con­di­tions of the new world econ­o­my,” that the French government’s atti­tude to the SEA and Maas­tricht should be under­stood. The aim was for France to bind her­self to Germany’s strong Deutschemark and to adjust her inter­nal mar­kets by lib­er­al­is­ing and inter­na­tion­al­is­ing.45

Maastricht

While the Sin­gle Euro­pean Act marked the launch of the sec­ond wave of Euro­pean inte­gra­tion, the Maas­tricht treaty marked its estab­lish­ment. At the core of the Maas­tricht treaty were two core ele­ments: insti­tu­tion­al change and eco­nom­ic inte­gra­tion.

The insti­tu­tion­al changes brought in by Maas­tricht were sub­stan­tial. For one, Maas­tricht estab­lished the Euro­pean Union. Sec­ond­ly, it estab­lished a new struc­ture of the Euro­pean Union, which was to last until the pass­ing of the Lis­bon Treaty.

The new struc­ture brought togeth­er an array of forms of Euro­pean coop­er­a­tion that had pre­vi­ous­ly been sep­a­rate under the com­mon frame­work of the EU. Part of the log­ic here was to increase Euro­pean inte­gra­tion in areas beyond eco­nom­ic inte­gra­tion by tying them insti­tu­tion­al­ly to eco­nom­ic inte­gra­tion. Under Maas­tricht, the EU was struc­tured around “the three pil­lars of the EU.” The­se were the Euro­pean Com­mu­ni­ty (EC), Jus­tice and Home Affairs (JHA), and Com­mon For­eign and Secu­ri­ty Pol­i­cy (CFSP). Intu­itive­ly, this maps onto the econ­o­my (EC), law (JHA), and for­eign affairs (CFSP). The Euro­pean Com­mu­ni­ty was basi­cal­ly the EEC renamed and was by far the most impor­tant pil­lar of the EU. The oth­er two pil­lars that were cre­at­ed under Maas­tricht took over from rel­a­tive­ly minor insti­tu­tions, but it was hoped they would grow in impor­tance. Jus­tice and Home Affairs took over from TREVI, which was lit­tle more than a means to facil­i­tate cross-bor­der coop­er­a­tion in respond­ing to ter­ror­ism, in par­tic­u­lar the grow­ing num­ber of left-wing armed actions and by Pales­tini­an groups with­in Europe.46 Com­mon For­eign and Secu­ri­ty Pol­i­cy (CFSP) took over from “Euro­pean Polit­i­cal Coop­er­a­tion” – the name given to the then exist­ing insti­tu­tion which aimed to give form to the peren­ni­al­ly unre­al­ized dream that one day Europe would have an inde­pen­dent and unit­ed for­eign pol­i­cy.47 The com­pe­ten­cies of nei­ther the JHA nor the CFSP pil­lar grew much over time, as deci­sion-mak­ing under the­se pil­lars was based on con­sen­sus. There­fore, many of the respon­si­bil­i­ties under the JHA and CFSP pil­lars were trans­ferred to the EC pil­lar, to allow for eas­ier deci­sion-mak­ing. With the Lis­bon Treaty the pil­lar sys­tem was abol­ished, and the EU was given a sin­gle legal per­son­al­i­ty. Nev­er­the­less, the insti­tu­tion­al changes under Maas­tricht were sig­nif­i­cant, mark­ing the cre­ation of a sin­gle struc­ture in rela­tion to which essen­tial­ly all future moves to greater Euro­pean inte­gra­tion would be ori­ent­ed.

The sec­ond major change with the cre­ation of the Euro­pean Union under Maas­tricht was the com­mit­ment to the cre­at­ing the Eco­nom­ic and Mon­e­tary Union (EMU). The euro is the cen­tral plank of the EMU. Every mem­ber of the EU is a sig­na­to­ry to the Maas­tricht treaty and as such every coun­try, bar­ring two,48 is com­mit­ted to join­ing the com­mon cur­ren­cy. How­ev­er, join­ing the euro is a three-stage process. First, the coun­try must reach a set of “con­ver­gence cri­te­ria.” Sec­ond, it must join the Exchange Rate Mech­a­nism II (ERM II).49 The third and final stage is adopt­ing the euro.50

Per­haps as sig­nif­i­cant as the euro itself was the cre­ation of the sys­tem through which coun­tries adopt the cur­ren­cy. There are four con­ver­gence cri­te­ria. First, there is a tight lim­it on infla­tion.51) Sec­ond, there is an extreme­ly tight lim­it on gov­ern­ments fis­cal­ly: debt to GDP must not exceed 60% and gov­ern­ment deficits must not exceed 3%. Third, exchange rates must be sta­ble with the euro. Final­ly, the inter­est rate of 10-year gov­ern­ment bonds must be below a cer­tain lev­el.52

With the cre­ation of the “Sta­bil­i­ty and Growth Pact” in 1996 the two ele­ments of the fis­cal con­ver­gence cri­te­ri­on – the 60% debt rule and the 3% deficit rule – were made per­ma­nent. All coun­tries must, after acces­sion to the euro, remain with their debt at or below 60% and with their deficit at or below 3%. If they do not meet the­se cri­te­ria, they must be on a path towards real­iz­ing them.

There­by all EU coun­tries, with the par­tial excep­tion of the UK, have com­mit­ted them­selves to hav­ing the same reg­u­la­tions for the indus­tries in their economies and hav­ing the same macro­eco­nom­ic sit­u­a­tion. Indus­tri­al reg­u­la­tion and mon­e­tary pol­i­cy are now decid­ed at a Euro­pean lev­el, not a nation­al lev­el, while nation­al fis­cal pol­i­cy in the form of expan­sion­ary or con­trac­tionary pol­i­cy is sim­ply pre­clud­ed by Euro­pean law.

After Maastricht

Since Maas­tricht the sec­ond wave of Euro­pean inte­gra­tion has not abat­ed. There have been three major changes to the Treaties since Maas­tricht. First there was the Ams­ter­dam Treaty, which was main­ly about two things: the CFSP pil­lar, and the fact that many cen­ter-left gov­ern­ments had been elect­ed and want­ed to reform the Maas­tricht treaty by increas­ing the pow­er of the Euro­pean Par­lia­ment, and by includ­ing some “social” issues in the Treaty.53 Then there was the Nice Treaty, which was pri­mar­i­ly about amend­ing the vot­ing arrange­ments in the EU to allow for the acces­sion of East­ern Euro­pean coun­tries. Final­ly, there was the Lis­bon Treaty. This was basi­cal­ly the EU Con­sti­tu­tion under a dif­fer­ent name. It involved a large num­ber of changes includ­ing, as men­tioned above, the abo­li­tion of the pil­lar sys­tem. The main thing the Lis­bon Treaty did was push Maas­tricht fur­ther, in terms of turn­ing the Euro­pean insti­tu­tions into a sin­gle inte­grat­ed whole. But beyond that the Treaty did not change the direc­tion or speed of Euro­pean inte­gra­tion dra­mat­i­cal­ly.

In terms of Euro­pean eco­nom­ic inte­gra­tion things also pro­ceed apace. Build­ing on the suc­cess of the reg­u­la­to­ry homog­e­niza­tion brought about by the Sin­gle Euro­pean Act, more and more aspects of eco­nom­ic life with­in the EU are being homog­e­nized. In some areas this is gen­er­al­ly wel­comed; for exam­ple, the cre­ation of a sin­gle Euro­pean tele­coms mar­ket has result­ed in tech­no­log­i­cal improve­ments and low­er roam­ing charges, although it has also over­seen the pri­va­ti­za­tion of tele­coms com­pa­nies. Today it is hard­er to think of aspects of eco­nom­ic life that are reg­u­lat­ed by the nation­al state rather than the EU,54 and the extent of Euro­pean reg­u­la­tion of mar­kets with­in Europe is only increas­ing. For exam­ple, today, there is a major dri­ve to move the reg­u­la­tion of all aspects of the finance indus­try, e-com­merce, and patents to a Euro­pean lev­el. In addi­tion to the ever-increas­ing com­pe­ten­cies of the EU with regards to the reg­u­la­tion of mar­kets, the com­pe­tence of the EU over nation­al eco­nom­ic pol­i­cy has also increased.

As men­tioned above, the 60% debt rule and the 3% deficit rule were expand­ed under the Sta­bil­i­ty and Growth Pact to cov­er all coun­tries all the time, not just in the peri­od lead­ing up to adopt­ing the euro. How­ev­er, in 1998 Ger­man debt went above the 60% mark, where it has remained since (with the excep­tion of 2001 when it dropped to 59%). Like­wise, France went over the 60% lim­it in 2002 and has remained above it ever since. There­fore, in 2005 the rules were changed to allow for breach­es but requir­ing that coun­tries have a Medi­um Term Objec­tive (MTO) where­by they would return to the 60% debt, the 3% deficit and a 1% “under­ly­ing deficit.” Since the cri­sis this has been extend­ed fur­ther, and now every coun­try must have bind­ing nation­al leg­is­la­tion regard­ing the 60% debt and the 3% deficit rules.

In addi­tion, the EU has sig­nif­i­cant­ly increased it over­sight of nation­al eco­nom­ic pol­i­cy. This began with the Broad Eco­nom­ic Pol­i­cy Guide­li­nes (BEPGs), which coun­tries had to send to the EU Com­mis­sion explain­ing how their eco­nom­ic pol­i­cy was in line with Euro­pean objec­tives. Then in 1998, the Euro­pean Com­mis­sion began to issue Coun­try Speci­fic Rec­om­men­da­tions (CSRs) explain­ing how coun­tries should improve their poli­cies. In 2000 the ten-year Lis­bon Strat­e­gy was launched, which aimed to bring Euro­pean eco­nom­ic and social pol­i­cy more in line and tried to use the BEPG/CSR frame­work to achieve that. How­ev­er, the Lis­bon Strat­e­gy was not a major suc­cess, and was replaced in 2010 by the Europe 2020 strat­e­gy.

More sig­nif­i­cant­ly, in 2011 a new process known as the Euro­pean Semes­ter was launched.55 It is a rather com­pli­cat­ed process of eco­nom­ic sur­veil­lance through which the EU mon­i­tors nation­al eco­nom­ic devel­op­ment. It com­bi­nes and inte­grates

  1. A rein­forced Sta­bil­i­ty and Growth Pact, with sig­nif­i­cant sanc­tions if coun­tries breach the set objec­tives
  2. A Macro­eco­nom­ic Imbal­ance Pro­ce­dure which sets out 10 objec­tives which a coun­try must achieve
  3. The overview of nation­al bud­getary plans by the Euro­pean Com­mis­sion
  4. A rein­forced process around Coun­try Speci­fic Rec­om­men­da­tions
  5. A set of sanc­tions for coun­tries that are fail­ing to achieve their tar­gets
  6. An annu­al frame­work through which this entire process is organ­ised
  7. A frame­work through which coun­tries that are fail­ing to address their prob­lems are dealt with

In addi­tion to the­se recent reforms, dur­ing the ongo­ing eco­nom­ic cri­sis Ire­land, Por­tu­gal and Greece have been placed in EU/ECB/IMF recov­ery pro­grammes, which deter­mine eco­nom­ic pol­i­cy for a few years.56

Hav­ing now fol­lowed the process of Euro­pean inte­gra­tion up to the cur­rent day, it is now pos­si­ble to make some gen­er­al remarks. I have already made a dis­tinc­tion between the first wave and sec­ond wave of Euro­pean inte­gra­tion. The first was an attempt to gain con­trol over the mar­ket, in order to both avoid social­ist change and facil­i­tate the inte­gra­tion of labor and agri­cul­tur­al inter­ests into cap­i­tal­ist gov­er­nance. The sec­ond wave was qual­i­ta­tive­ly dif­fer­ent. Over the last thir­ty years, with the sec­ond wave of Euro­pean inte­gra­tion, greater and greater respon­si­bil­i­ty for eco­nom­ic reg­u­la­tion is being shift­ed to the Euro­pean lev­el. This hap­pened in respon­se to the polit­i­cal impasse faced by the Left, and the new polit­i­cal eco­nom­ic sit­u­a­tion that had devel­oped by the 1980s. Con­trol over eco­nom­ic reg­u­la­tion was tak­en out of the hand of demo­c­ra­t­ic nation­al states and trans­ferred to the Euro­pean Union.

V: The European Union as State Form

This brings us back to the Mid­dle Ages – to what might have seemed the slight­ly eso­ter­ic start to this arti­cle. As described above, the emer­gence of cap­i­tal­ism was char­ac­ter­ized by a divi­sion of social pow­er into eco­nom­ic pow­er and polit­i­cal pow­er. Eco­nom­ic pow­er is the pow­er to buy and sell, in par­tic­u­lar to buy labor-pow­er and sell the com­modi­ties pro­duced. Polit­i­cal pow­er, on the oth­er hand, is pow­er over vio­lence. The con­trol over vio­lence implied in polit­i­cal pow­er involves not only the exer­cise of vio­lence, but also the deter­mi­na­tion of when and how to exer­cise that vio­lence. This deter­mi­na­tion process involves set­ting down rules, and the con­tes­ta­tion of those rules. Less abstract­ly, it is through the state that laws are made, con­test­ed and enact­ed. The­se laws cre­ate the frame­work through which social repro­duc­tion occurs under cap­i­tal­ism. The state there­by uses its con­trol of vio­lence to deter­mine the frame­work through which eco­nom­ic life occurs, and acts as a means and forum for the con­tes­ta­tion and change of this frame­work.

We can there­fore see how with the post­war set­tle­ment, the frame­work through which eco­nom­ic life occurred was changed by the expan­sion of state action into aspects of eco­nom­ic life that were pre­vi­ous­ly con­sid­ered out­side the scope of pol­i­tics.

We can also under­stand what has hap­pened with Euro­pean inte­gra­tion. The first wave of Euro­pean inte­gra­tion was an aspect of the gen­er­al expan­sion of state action into pre­vi­ous­ly non-polit­i­cal spheres. The devel­op­ment of the wel­fare state and the incor­po­ra­tion of the orga­nized work­ing class into cap­i­tal­ist gov­er­nance at a nation­al lev­el went hand in hand with Euro­pean inte­gra­tion. The EEC and the orga­ni­za­tions that pre­ced­ed it devel­oped to facil­i­tate the demo­c­ra­t­ic gov­er­nance and orga­ni­za­tion of inter­na­tion­al eco­nom­ic activ­i­ty. This was the inter­na­tion­al dimen­sion of the pri­mar­i­ly nation­al process of the post­war set­tle­ment.

The sec­ond wave of Euro­pean inte­gra­tion is rather dif­fer­ent. This too can be under­stood as the inter­na­tion­al dimen­sion of a pri­mar­i­ly nation­al process. But this nation­al process was a process where­by demo­c­ra­t­ic inter­ven­tion in the econ­o­my was being reduced. How­ev­er, this did not mean sim­ply dereg­u­la­tion or pri­va­ti­za­tion. In Europe it involved the trans­fer of pow­er over eco­nom­ic reg­u­la­tion out of the hand of the nation­al state and onto a supra­na­tion­al lev­el. Increas­ing­ly, the laws that gov­ern eco­nom­ic activ­i­ty in the EU are deter­mined at a Euro­pean lev­el.

While the pow­er of the feu­dal lord was bifur­cat­ed into the eco­nom­ic pow­er of the mod­ern employ­er and the polit­i­cal pow­er of the mod­ern state, the devel­op­ment of the EU over the last 30 years involves a fur­ther bifur­ca­tion. The polit­i­cal pow­er of the state involves the cre­ation, con­tes­ta­tion, and imple­men­ta­tion of the legal frame­work for eco­nom­ic life and the rise of the EU involves the bifur­ca­tion of this polit­i­cal pow­er. The EU now cre­ates the reg­u­la­tions that gov­ern almost all aspects of eco­nom­ic life in Europe. How­ev­er, both the con­tes­ta­tion and imple­men­ta­tion of the­se reg­u­la­tions remains at a nation­al lev­el. This is not sus­tain­able.

Today, the polit­i­cal con­tes­ta­tion of eco­nom­ic life, which has been the core of lib­er­al democ­ra­cies based on uni­ver­sal suf­frage, is increas­ing­ly impos­si­ble. In each nation­al state, gov­ern­ments change, but the poli­cies do not. Poli­cies are not set by nation­al gov­ern­ment, but by the EU. But it is not pos­si­ble to demo­c­ra­t­i­cal­ly change the gov­ern­ment of the EU, or to demo­c­ra­t­i­cal­ly change the poli­cies it pur­sues.

This has not only drawn out­rage from the Euro­pean elec­torate, but also from nation­al gov­ern­ments. In 2012, when Olli Rehn, the Euro­pean com­mis­sion­er for eco­nom­ic and mon­e­tary affairs direct­ed the Bel­gian gov­ern­ment to cut between €1.2 bil­lion and €2 bil­lion from its bud­get, a gov­ern­ment Min­is­ter respond­ed: “Who knows who Olli Rehn is? Who has seen Olli Rehn’s face? Who knows where he comes from and what he’s done? Nobody. Yet he tells us how we should con­duct our eco­nom­ic pol­i­cy.”57

The super­fi­cial solu­tion to this “demo­c­ra­t­ic deficit” would be to return to nation­al democ­ra­cies. This is not an unpop­u­lar idea. We see this demand being raised by both the far right and the far left. In France, the qua­si-fas­cist Front Nation­al was the largest par­ty in the 2014 Euro­pean Par­lia­ment elec­tion win­ning one in every four votes cast. In the UK the right-pop­ulist UK Inde­pen­dence Par­ty also topped the poll. In Italy, the “Five Star Move­ment” went from noth­ing to win­ning 20% of the vote. In social demo­c­ra­t­ic Den­mark, the extreme right Dan­ish People’s Par­ty also topped the poll.

How­ev­er, the super­fi­cial, and obvi­ous­ly pop­u­lar, appeal for a return to nation­al democ­ra­cy does not cor­re­spond with the social pos­si­bil­i­ties that exist today. I have tried to describe at some length the cri­sis in respon­se to which the EU and the sec­ond wave of Euro­pean Inte­gra­tion devel­oped. And I have tried to show that the alter­na­tive route pur­sued by the Mit­ter­rand gov­ern­ment in France in the ear­ly 1980s did not and could not work. In the pres­ence of free cap­i­tal move­ment, the kind of poli­cies that Mit­ter­rand pur­sued will always end with bal­ance of pay­ments crises.

This is not to pose some grim inevitabil­i­ty to the Euro­pean devel­op­ment, but rather to point to the fact that the scope of change that has occurred over the last 150 years is mas­sive, and that to change the direc­tion of its fur­ther devel­op­ment involves more than polit­i­cal ambi­tion or a change in polit­i­cal focus. The post­war set­tle­ment hap­pened where there was an immi­nent threat of social­ist rev­o­lu­tion and where, due to wartime cap­i­tal con­trols, it was very hard for cap­i­tal flight to occur. We are liv­ing in a very dif­fer­ent world.

Europe is at an impasse. Eco­nom­ic reg­u­la­tion now takes place at a Euro­pean lev­el, but the social con­tes­ta­tion of eco­nom­ic issues is con­tained at an impo­tent nation­al lev­el. It seems most like­ly that Euro­pean inte­gra­tion will con­tin­ue to fol­low the path mapped out in this arti­cle for the fore­see­able future. Despite this, one fact remains: all struc­tures of gov­er­nance rely on the pas­sive con­sent of the gov­erned. It is hard to see much hope for social­ist change in Europe. But it is equal­ly hard to see European’s pas­sive con­sent last­ing indef­i­nite­ly.


  1. The name given to the Euro­pean Com­mis­sion, the Euro­pean Cen­tral Bank and the Inter­na­tion­al Mon­e­tary Fund. 

  2. See for exam­ple John Gilling­ham, Euro­pean inte­gra­tion, 1950-2003: Super­state or new mar­ket econ­o­my? (Cam­bridge: Cam­bridge Uni­ver­si­ty Press, 2003), Harold James, Mak­ing the Euro­pean Mon­e­tary Union (Cam­bridge, Mass.: Har­vard Uni­ver­si­ty Press, 2012), or David Marsh, The Euro: The Bat­tle for the New Glob­al Cur­ren­cy (New Haven, Conn: Yale Uni­ver­si­ty Press, 2011), which all provide won­der­ful his­to­ries of the EU despite their lib­er­al assump­tions and diplo­mat­ic focus.  

  3. At times this cri­tique leads to vac­u­ous calls for a “Social Europe” to coun­ter­bal­ance eco­nom­ic inte­gra­tion, as though social pol­i­cy is some­how dis­tinct from eco­nom­ic pol­i­cy. 

  4. This extends down from seri­ous aca­d­e­mic work such as Wal­ter Lip­gens, A His­to­ry of Euro­pean Inte­gra­tion (Oxford: Claren­don Press, 1982) and Desmond Dinan Ever Closer Union (Bas­ingstoke: Pal­grave Macmil­lan, 2010) down to the Euro­pean Com­mis­sion claims about its own his­to­ry. See foot­note 17. 

  5. See some of the argu­ments in Daniel Levy, Max Pen­sky, and John Tor­pey, eds., Old Europe, New Europe, Core Europe: Transat­lantic Rela­tions After the Iraq War (Lon­don: Ver­so, 2005).  

  6. Jan Zielonka, Europe as empire: The nature of the enlarged Euro­pean Union (Oxford: Oxford Uni­ver­si­ty Press, 2006). 

  7. As already men­tioned, I will be address­ing the devel­op­ment of the EU by look­ing at how Euro­pean respons­es were pro­vid­ed to nation­al and Europe-wide polit­i­cal and eco­nom­ic crises. Unlike much of the lit­er­a­ture on the devel­op­ment of the EU, I will not be engag­ing in detailed diplo­mat­ic or leg­isla­tive his­to­ry. My approach here is not the norm but it is also not par­tic­u­lar­ly nov­el. A sim­i­lar the­o­ret­i­cal argu­ment to mine has been pre­sent­ed pre­vi­ous­ly by the arti­cle by Wern­er Bone­feld in his edit­ed vol­ume, The Pol­i­tics of Europe: Mon­e­tary Union and Class (New York, N.Y: Pal­grave, 2001). And my attempt to give a mate­ri­al­ist analy­sis of Euro­pean inte­gra­tion draws on and echoes the work of lib­er­al eco­nom­ic his­to­ri­ans, in par­tic­u­lar, Alan Mil­ward, The Euro­pean res­cue of the nation state (Lon­don: Rout­ledge, 1992) and Bar­ry Eichen­green, The Euro­pean Econ­o­my Since 1945: Coor­di­nat­ed Cap­i­tal­ism and Beyond (Prince­ton Uni­ver­si­ty Press, 2008). 

  8. This school has also been referred to as “Polit­i­cal Marx­ism” and as “Cap­i­tal-Cen­tric Marx­ism.” Cen­tral to this is the work of Robert Bren­ner (See in par­tic­u­lar his arti­cles in Trevor Hen­ry Aston and Charles H.E. Philpin, eds., The Bren­ner debate: agrar­i­an class struc­ture and eco­nom­ic devel­op­ment in pre-indus­tri­al Europe (Cam­bridge Uni­ver­si­ty Press, 1987), and Robert Bren­ner, “The ori­gins of cap­i­tal­ist devel­op­ment: a cri­tique of neo-Smithi­an Marx­ism,” New Left Review 104, no. 1 (1977), 25-92). Oth­er major fig­ures and works include Ellen Meiksins Wood, The orig­in of cap­i­tal­ism: A longer view (Lon­don: Ver­so, 2002), Charles Post, The Amer­i­can road to cap­i­tal­ism: Stud­ies in class-struc­ture, eco­nom­ic devel­op­ment, and polit­i­cal con­flict, 1620-1877 (Lei­den: Brill, 2011), Hei­de Ger­sten­berg­er, Imper­son­al pow­er: His­to­ry and the­o­ry of the Bour­geois State (Lei­den: Brill, 2007) and Ben­no Teschke, The Myth of 1648: Class, Geopol­i­tics, and the Mak­ing of Mod­ern Inter­na­tion­al Rela­tions (Lon­don: Ver­so, 2003). 

  9. The major Eng­lish lan­guage com­pi­la­tion of this debate is Hol­loway and Sol Pic­ciot­to, State and Cap­i­tal: A Marx­ist Debate, (Lon­don: E. Arnold, 1978). Hei­de Gerstenberger’s Imper­son­al Pow­er, men­tioned above, grew out of this debate. 

  10. As Karl Marx writes in vol­ume 3 of Cap­i­tal: “The speci­fic eco­nom­ic form, in which unpaid sur­plus-labor is pumped out of direct pro­duc­ers, deter­mi­nes the rela­tion­ship of rulers and ruled, as it grows direct­ly out of pro­duc­tion itself and, in turn, reacts upon it as a deter­min­ing ele­ment. Upon this, how­ev­er, is found­ed the entire for­ma­tion of the eco­nom­ic com­mu­ni­ty which grows up out of the pro­duc­tion rela­tions them­selves, there­by simul­ta­ne­ous­ly its speci­fic polit­i­cal form. It is always the direct rela­tion­ship of the own­ers of the con­di­tions of pro­duc­tion to the direct pro­duc­ers – a rela­tion always nat­u­ral­ly cor­re­spond­ing to a def­i­nite stage in the devel­op­ment of the meth­ods of labor and there­by its social pro­duc­tiv­i­ty – which reveals the inner­most secret, the hid­den basis of the entire social struc­ture and with it the polit­i­cal form of the rela­tion of sov­er­eign­ty and depen­dence, in short, the cor­re­spond­ing speci­fic form of the state.” Karl Marx, Cap­i­tal: A cri­tique of polit­i­cal econ­o­my, Vol 3 (Har­mondsworth: Pen­guin, 1981), 927. 

  11. What fol­lows is of course mere­ly an illus­tra­tive sim­pli­fi­ca­tion. 

  12. The issue here is not that the emer­gence of the bour­geois state allows for the free res­o­lu­tion of class con­flict. If this were the case, the notion of class would dis­solve into that of cit­i­zen­ship. Rather, the point is mere­ly that the state pro­vides a forum for the medi­a­tion of class con­flict, not for its res­o­lu­tion. 

  13. It is per­haps worth quot­ing from the found­ing pro­gram of the Fourth Inter­na­tion­al to get some fla­vor for this rev­o­lu­tion­ary fer­vor: “The world polit­i­cal sit­u­a­tion as a whole is chiefly char­ac­ter­ized by a his­tor­i­cal cri­sis of the lead­er­ship of the pro­le­tari­at… Mankind’s pro­duc­tive forces stag­nate… The bour­geoisie itself sees no way out… The present cri­sis, far from hav­ing run its full course, has already suc­ceed­ed in show­ing that ‘New Deal’ pol­i­tics, like Pop­u­lar Front pol­i­tics in France, opens no new exit from the eco­nom­ic blind alley… Inter­na­tion­al rela­tions present no bet­ter pic­ture… All talk to the effect that his­tor­i­cal con­di­tions have not yet ‘ripened’ for social­ism is the pro­duct of igno­rance or con­scious decep­tion. The objec­tive pre­req­ui­sites for the pro­le­tar­i­an rev­o­lu­tion have not only ‘ripened’; they have begun to get some­what rot­ten. With­out a social­ist rev­o­lu­tion, in the next his­tor­i­cal peri­od at that, a cat­a­stro­phe threat­ens the whole cul­ture of mankind. The turn is now to the pro­le­tari­at, i.e., chiefly to its rev­o­lu­tion­ary van­guard. The his­tor­i­cal cri­sis of mankind is reduced to the cri­sis of the rev­o­lu­tion­ary lead­er­ship… The present cri­sis in human cul­ture is the cri­sis in the pro­le­tar­i­an lead­er­ship. The advanced work­ers, unit­ed in the Fourth Inter­na­tion­al, show their class the way out of the cri­sis. They offer a pro­gram based on inter­na­tion­al expe­ri­ence in the strug­gle of the pro­le­tari­at and of all the oppressed of the world for lib­er­a­tion. They offer a spot­less ban­ner. Work­ers – men and wom­en – of all coun­tries, place your­selves under the ban­ner of the Fourth Inter­na­tion­al. It is the ban­ner of your approach­ing vic­to­ry!”; “The Death Agony of Cap­i­tal­ism and the Tasks of the Fourth Inter­na­tion­al: The Tran­si­tion­al Pro­gram.” 

  14. The Atlantic Char­ter,” August 14, 1941. 

  15. Bar­ry Eichen­green, “Insti­tu­tions and eco­nom­ic growth: Europe after World War II,” in Eco­nom­ic Growth in Europe since 1945, eds., Nico­las Crafts and Gian­ni Toniolo (Cam­bridge Uni­ver­si­ty Press, 1996), 41. 

  16. Mil­ward, The Euro­pean res­cue of the nation state, 30-31. 

  17. The Euro­pean Union itself, in a slight­ly sil­ly imi­ta­tion of the US found­ing fathers, lists the­se peo­ple along with Joseph Bech (Lux­em­bourg), Johan Willem Beyen (Nether­lands), Win­ston Churchill (Unit­ed King­dom), Alcide De Gasperi (Italy) as the “The Found­ing Fathers of the EU.” 

  18. Schu­man Dec­la­ra­tion,” May 9, 1950 

  19. Treaty con­sti­tut­ing the Euro­pean Coal and Steel Com­mu­ni­ty,” April 18, 1951. 

  20. Mil­ward, The Euro­pean res­cue of the nation state, 83. 

  21. Today the ECSC does not exist and the Treaty of Paris was allowed to lapse. 

  22. Today the “con­sti­tu­tion” of the EU com­pris­es two treaties, a num­ber of pro­to­cols and the Char­ter of Fun­da­men­tal Rights. Col­lec­tive­ly they are gen­er­al­ly referred to as the “Con­sol­i­dat­ed Treaties” or sim­ply the “Treaties.” The two treaties are: the “Treaty on Euro­pean Union” (TEU), which is an amend­ed ver­sion of the Maas­tricht Treaty, which estab­lished the EU, and the “Treaty on the Func­tion­ing of the Euro­pean Union” (TFEU), which is an amend­ed ver­sion of the Treaty of Rome, which estab­lished the EEC. “The Con­sol­i­dat­ed Treaties.” 

  23. There is a sub­stan­tial dif­fer­ence between the com­mon mar­ket and the sin­gle mar­ket. I dis­cuss this in Sec­tion IV of this arti­cle. 

  24. The dif­fer­ing approach­es to deal­ing with this need to social­ly cush­ion the shift to free trade sheds some light on the com­par­a­tive devel­op­ment of the EEC and the Euro­pean Free Trade Asso­ci­a­tion, which was the UK’s pro­posed alter­na­tive. 

  25. The agree­ment on CAP was a major issue in par­tic­u­lar for France. After the war, the agri­cul­tur­al heart­land of pre-war Ger­many was in what had become East Ger­many and Poland. 

  26. The first expan­sion of the EEC was slight­ly rocky, with ear­lier appli­ca­tions in 61 for mem­ber­ship being vetoed by De Gaulle. The UK, Ire­land Den­mark and Nor­way applied for mem­ber­ship. But when De Gaulle vetoed the UK’s appli­ca­tion the entire expan­sion process was sus­pend­ed. Nor­way sub­se­quent­ly with­drew from the process and remains to this day out­side the EU. The rea­son for De Gaulle’s veto is gen­er­al­ly explained by his anti-Amer­i­can­ism. In Decem­ber 62 the UK and US reached an agree­ment where­by the US would provide the mis­sile deliv­ery tech­nol­o­gy for the UK’s nuclear war­heads. De Gaulle saw this as the UK aban­don­ing its mil­i­tary sov­er­eign­ty and accept­ing its inter­na­tion­al posi­tion as sub­or­di­nate to the US. There­fore in Jan­u­ary 63, De Gaulle declared at a press con­fer­ence that if the UK joined the EEC, the com­mu­ni­ty “world not endure for long [but] instead would become a colos­sal Atlantic com­mu­ni­ty under Amer­i­can dom­i­na­tion and direc­tion.” Desmond Dinan, Ever Closer Union, 40-41. How­ev­er, as Andrew Moravc­sik points out a much larg­er con­cern for De Gaulle appears to have been the risk that the UK would veto the still on-going CAP nego­ti­a­tions. Indeed on the day of the above-men­tioned press con­fer­ence De Gaulle observed pri­vate­ly that the UK should be free to join the EEC after the CAP was irre­versibly agreed. Andrew Moravc­sik, The choice for Europe: social pur­pose and state pow­er from Messi­na to Maas­tricht, (Itha­ca, NY: Cor­nell Uni­ver­si­ty Press, 1998), 190-191. 

  27. Wern­er Report,” Octo­ber 8, 1970. 

  28. Mac­Dougall Report,” April 1977. 

  29. See Tony Brown’s paper on the emer­gence of the Social Action Pro­gram­me, “Some­thing Worth Work­ing For: The Emer­gence of the 1973 Social Action Pro­gram­me.”  

  30. Death Agony of Cap­i­tal­ism,” 1938. 

  31. The mea­sure­ment of the prof­it rate is a high­ly con­tentious issue. So for exam­ple, some find no uptick in the prof­it rate in the 80s. How­ev­er, there is lit­tle debate on the fact that the prof­it rate in West­ern Europe declined in the 1955-75 peri­od. 

  32. In Italy, the invest­ment rate fluc­tu­at­ed much more. The post­war rise in the invest­ment rate end­ed in the mid-60s but from that point on it is hard­er to see a trend. 

  33. If a cur­ren­cy start­ed at the bot­tom of its band, it could increase by 4.5%, and, vice ver­sa if a coun­try start­ed at the top of its band. If both hap­pened simul­ta­ne­ous­ly the first coun­try could appre­ci­ate by 9% again­st the sec­ond. 

  34. See for exam­ple Eric Hobsbawm’s arti­cle “The for­ward march of labor halt­ed,” 1978. 

  35. See in par­tic­u­lar the vol­ume In and Again­st the State, 1979. 

  36. Italy 80-81: After Marx, Jail! The Attempt­ed Destruc­tion of a Com­mu­nist Move­ment (Lon­don: Red Notes, 1981). 

  37. See Mar­co Rev­el­li, “Defeat at FIAT,” 1980. 

  38. The Car­na­tion Rev­o­lu­tion in Por­tu­gal (1974) and the Athens Poly­tech­nic Upris­ing in Greece (1973). 

  39. The “Con­sti­tu­tion for Europe” (2004) was of course nev­er imple­ment­ed, but was replace by the Lis­bon Treaty (2007), which car­ried through the pro­posed constitution’s reforms as amend­ments to the Treaty of Rome (1957) and the Maas­tricht Treaty (1992). There­by mak­ing the Treaty of Rome (renamed the Treaty on the Func­tion­ing of the Euro­pean Union (TFEU) and the Maas­tricht Treaty (renamed the Treaty on Euro­pean Union (TEU), the con­sti­tu­tion of Europe. The­se two treaties, along with a series of pro­to­cols and the Char­ter of Fun­da­men­tal Rights of the Euro­pean Union, form the “Con­sol­i­dat­ed Treaties” or sim­ply “the Treaties.” See foot­note 22. 

  40. The offi­cial title of the Com­mis­sion White Paper on the Inter­nal Mar­ket (1985) was “Com­plet­ing the Inter­nal Mar­ket: White Paper from the Com­mis­sion to the Euro­pean Coun­cil.” 

  41. This devel­oped from the ear­lier men­tioned Paris sum­mit in Octo­ber 1972, to anoth­er in Decem­ber 1974, to the Doc­u­ment on the Euro­pean Iden­ti­ty of Decem­ber 1973, the state­ment in the Hague of Novem­ber 1976 to the “Solemn Dec­la­ra­tion on Euro­pean Union” of Stuttgart in June 1983. In 1984, the Euro­pean Par­lia­ment approved a “Draft Treaty estab­lish­ing the Euro­pean Union,” known as the Spinel­li Draft. The­se events helped cre­ate the impe­tus for the com­mis­sion­ing of a report by the Fontainebleau Euro­pean Coun­cil of 25 and 26 June 1984, named the Dooge Report, and the pub­li­ca­tion of a White Paper on the Inter­nal Mar­ket of 1985 by the Delors Com­mis­sion in Decem­ber 92. The Dooge Report (1985) and the Com­mis­sion White Paper on the Inter­nal Mar­ket (1985) formed the basis of both the SEA (1986) and (along with the lat­er Delors Report on Eco­nom­ic and Mon­e­tary Union (1988) the Maas­tricht Treaty (1992). 

  42. Hel­mut Kohl was the Ger­man Chan­cel­lor for the astound­ing long peri­od of Octo­ber 1, 1982 – Octo­ber 27, 1998. He was pro-mar­ket con­ser­v­a­tive but played a rel­a­tive­ly minor role in the SEA nego­ti­a­tions when com­pared to Germany’s role in the rest of the Euro­pean inte­gra­tion process. 

  43. Although, as the Sin­gle Euro­pean Act was the most sig­nif­i­cant set of reforms to advance Euro­pean inte­gra­tion since 1957, it is odd to call it a min­i­mal­ist pro­gram­me. Dinan is fur­ther mis­tak­en to imply that where­as Thatch­er was con­cerned with eco­nom­ic inte­gra­tion, this was of less con­cern for oth­er coun­tries. Desmond Dinan, Ever Closer Union, 82. 

  44. Fabius short­ly after­wards went on to be appoint­ed Frances youngest ever Prime Min­is­ter, and lat­er went on to spear­head the suc­cess­ful “No” cam­paign again­st the EU Con­sti­tu­tion in 2005. Today he serves as France’s For­eign Min­is­ter. 

  45. Andrew Moravc­sik, The Choice for Europe, 332-347. 

  46. The 1972 Munich Olympics mas­sacre by the Pales­tini­an group “Black Sep­tem­ber” was a major moti­vat­ing fac­tor in the estab­lish­ment of TREVI. 

  47. This has been on the cards since the estab­lish­ment of the West­ern Euro­pean Union (WEU) in 54, through the French “Fouchet Plan” for Euro­pean inde­pen­dence from NATO in the 60s, all the way up to Fran­co-Ger­man oppo­si­tion to the Iraq war (2001-2003), the cre­ation of the EU For­eign Min­is­ter with the slight­ly absurd title of “High Rep­re­sen­ta­tive of the Union for For­eign Affairs & Secu­ri­ty Pol­i­cy” under Lis­bon (2007) up to this year’s attempts to respond joint­ly to the tur­moil in Ukraine. Despite all the­se ini­tia­tives, Europe, despite its size and impor­tance, strug­gles to act col­lec­tive­ly on ques­tions of secu­ri­ty and defense on a world scale – a fact that, most prob­a­bly, is not a cause for tears. 

  48. Dur­ing the nego­ti­a­tions, Britain got an “opt out” where­by it was the only coun­try in the EU which would not join the Euro and have its cur­ren­cy float freely. Then the ref­er­en­dum in Den­mark on the Maas­tricht Treaty was defeat­ed, so the gov­ern­ment nego­ti­at­ed a num­ber of opt outs, includ­ing one where­by it would not have to adopt the euro, but would have to remain with­in 2.25% of a fixed exchange rate (essen­tial­ly the same arrange­ment as the “snake” men­tioned ear­lier). Final­ly, Swe­den, despite hav­ing com­mit­ted to join­ing the Euro, has avoid­ed doing so through a loop­hole in the treaties. 

  49. Pri­or to the launch of the euro in 1999 the ERM II was named the ERM. The need for this name change is com­plete­ly beyond my com­pre­hen­sion. 

  50. As not­ed in foot­note 48, Den­mark is not part of the Euro. It is in the ERM II. Den­mark does not have to pro­gress fur­ther because of their opt out. Lithua­nia, which is the only oth­er coun­try cur­rent­ly in the ERM II, will adopt the euro in 2015. The legal loop­hole men­tioned in rela­tion to Swe­den is that despite meet­ing the con­ver­gence cri­te­ria, they have not joined ERM II, and there­fore their adop­tion of the Euro­zone is inten­tion­al­ly at an impasse. 

  51. The infla­tion rate must not be 1.5% high­er than the unweight­ed aver­age of the three low­est infla­tion rates in the EU. (If it is deemed that the any of the low­est infla­tion rates are low for “excep­tion­al” rea­sons they are exclud­ed from this cal­cu­la­tion. 

  52. This is sim­i­lar to the infla­tion rate cri­te­ria. The yield must not be 2% high­er than the un-weight­ed aver­age of the three low­est infla­tion rates in the EU etc. 

  53. It is indica­tive of both the changes over the last 30-40 year in social struc­tures and the self-under­stand­ing of the left and its project that “social” ques­tions are seen as sup­ple­men­tary and/or sep­a­rate from eco­nom­ic ques­tions. 

  54. Health­care and pri­ma­ry lev­el edu­ca­tion are two indus­tries that remain large­ly reg­u­lat­ed at a nation­al lev­el. It is easy to see the com­par­ison here by com­par­ing pri­ma­ry with third lev­el edu­ca­tion. Or by com­par­ing the reg­u­la­tion of the pro­vi­sion of health­care with the approval process for drugs and devices used in health­care. The for­mer dif­fers coun­try-by-coun­try, while the lat­ter is more-or-less the same across the EU. 

  55. The Euro­pean Semes­ter process has been estab­lished through two sets of leg­isla­tive reforms called the “Six Pack” and the “Two Pack.” Infor­ma­tion regard­ing and links to this leg­is­la­tion is avail­able online at “EU Eco­nom­ic Gov­er­nance.” 

  56. A num­ber of accounts of recent devel­op­ments in Europe dur­ing the cri­sis have been pub­lished. Car­lo Bas­tas­in, Sav­ing Europe: How nation­al pol­i­tics near­ly destroyed the euro, (Wash­ing­ton, D.C: Brook­ings Insti­tu­tion Press, 2012), Paul Legrain, Euro­pean spring: Why our economies and pol­i­tics are in a mess - and how to put them right (2014) and David Marsh, Europe’s dead­lock: How the euro cri­sis could be solved, and why it won’t hap­pen (New Haven, Con­necti­cut: Lon­don, 2013), are all good, albeit quite dif­fer­ent from each oth­er. 

  57. Quot­ed in Paul Legrain, Euro­pean Spring, 425. 

Author of the article

is currently a PhD candidate in economic history at the Economics, Econometrics and Finance department at University of Groningen in the Netherlands.