1

“Europe a la Quatre”

ECSA-CANADA May 1, 2010

James A. CaporasoProfessor

Department of Political ScienceUniversity of Washington

2

Introduction

Explore the development, growing pains, and possibilities of an emerging European government, the European Union

What the EU will become? Still in the position of Puchala’s proverbial “Blind man and Elephant”

3

Developmental DNA of EU is different: part WP state, part regulatory state, part a fragmented post modern state

o Don’t attempt to resolve this question

o Instead, engage with a more practical set of issues

Basic idea-- four “emerging Europes”, coexist but not tightly coupled, but pushes and pulls among them are likely to shape Europe’s future course

What are the four Europes?

Economic Europe

Social Europe

Fiscal Europe, the Europe of the redistributive (welfare) state

Democratic Europe

5

I. Economic Europe

Treaty of Rome (and subsequent treaties) are economic documents

Their core is the creation and perfecting of a market for goods, services, labor, and capital

Four fundamental freedoms

Direct effect

6

This has led to markets for goods and underlying factors

o Free trade area

o Completion of markets for capital and labor (1992)

o EMU in 1999 (today there are 16 members of EMU)

o A Europe which speaks with one voice internationally in commercial affairs

7

Economic Europe successful in many ways, but it is an incomplete project

o Jobs

o Growth

o Skills and training

o Education

o Unemployment/ pensions

8

II. Social Europe

Markets do not exist in a vacuum

o Starting with Durkheim and Polanyi, up through institutional economics, we know that markets are not abstract systems of economic exchange

o Legal and cultural foundations

o Markets are embedded in a vast system of laws, mores, and social protections

o When a new sphere of exchange is created (labor mobility in EU), a new layer of social regulation not far behind

o Labor markets: continuity of working life, pensions, place of consumption delinked from territory

9

ECJ’s jurisprudence went logically from

o Constituting workers (meaning of worker)

o Creating a labor market

o Dealing with “failed labor exchanges”

o Providing for the social conditions for labor mobility: family reunification, portability of benefits, supplementary allowances for family members, access to subsidized local housing etc

10

Progress in other areas of Social Policy

o Gender Equality

o Anti-Discrimination: racial, religious, disability, sexual orientation, age

11

Overall evaluation of social Europe

o Many social rights are derivative of workplace participation

o the Treaty gives direct effect in area of economic freedoms

o the European level achievements are in tension with national rights

o Illustrate with Viking Case

12

Viking case

Finnish-flagged ship with Finnish crew wanted to reflag in Estoniaand replace Finnish crew with Estonian crew. The FinnishSeamen’s Union undertook industrial action against the vesseland asked its affiliates to show solidarity by not negotiating anagreement. So the right to freedom of association, a rightprotected by the Charter of Fundamental Rights, clashed withright of freedom of establishment

The Judgment

ECJ said that collective action was a restriction on Viking’s Freedom of Establishment. However, ECJ decided on limited grounds, so this is still an open question

13

Significance

o Calls into question national right to strike under certain conditions

o National social achievements, even when embedded within a constitution, as they are in Finland, are not immune from the economic logic underwritten by the “Four Freedoms”

o Yet, ECJ recognized that EU was not just an economic arrangement but also a social one, and that worker interests, including right to strike, were legitimate public actions

o Viking case, and a related Laval case (posted workers) will have to be played out but they appear to give precedence to free movement rights over industrial action

14

Conclusion

Achievements of Social Europe are impressive, but incomplete, derivative of market participation, and potentially at odds with national systems of social

protection

15

III. FISCAL EUROPE

May seem odd that in the EU where they

Have a common commercial policy

Have their own currency and monetary policy

Have integrated product and factor markets

Produce a huge amount of economic legislation

o Yet, fiscal powers are so weak

16

So what? This may not be a bad thing

Two answers to “so what?” question

o First, since the economy is region-wide, this creates tensions between economic Europe, fiscal Europe, social Europe and yet to be discussed “democratic Europe”

o Second, lack of a fiscal Europe prevents a more effective European-level response to the financial crisis today

• Coordinated regulatory response is possible

• Common fiscal response is not

17

“EU” response

Adoption of EERP (European Economic Recovery Plan)

Coordinated injection of liquidity, stabilize markets, bolster demand, and shore up labor markets

Overall stimulus, including automatic stabilizers, is 5% of GDP

Also, EU promised to address broader issues of

Regulation

Competition

Structural policy (infrastructure, R & D)

Market flexibility

18

All good, but how was the response carriedout? National or EU level?

EERP, a product of Commission proposal

adopted by the European Council in Dec 2008

It set down principles to govern national level responses

Thus, control seems to come from member states; initiative from Commission

19

Also, while most stimulus money comes from national level, the Commission sets high coordination standards

Assures that individual responses don’t have negative spillovers

No beggar thy neighbor policies

Tries to overcome dilemmas implicit in situations where a strong fiscal stimulus from A creates incentives for free-riding in B

Overall, Commission has tried to channel national responses in a more coordinated and productive direction

20

VI. “Democratic Europe”

Are problems of democracy structural or identity-based?

If the former, then institutional solutions

If the latter, then development of a demos is necessary

21

Structural Problems

o Concentration of executive authority

o Lack of balance between executive and legislative authority

o EP elections do not lead to responsible government (Hix)

22

Problem of Demos

o Primordial

o Civic

o Community of common stakes

o Discursive community

o Common will formation

23

EU, a community of common stakes with emerging sense of shared institutions (a civic community and a community of shared fate)

Common problem solving capacity of EU institutions, where institutions gain strength through collective action; potentially synergistic

24

V. Europe tout ensemble

Now, I hope the play of words in the title is clear

“Europe a la quatre” is also, at same time, “Europe a la carte”

Four-part Europe is a Europe of bits and pieces

But we should try to see the whole picture: how do these parts fit together?

Economic Europe is already well on the way toward full economic integration

25

But,

Social, fiscal, and democratic Europe lag far behind

Social Europe is mainly about the regulatory structure needed to make markets function

Fiscal Europe exists as a system of coordination, but not as an autonomous system of policy making at EU level

Democratic Europe has made progress but sits uneasily between a regulatory state and a Parliamentary Government and doesn’t have “a people” supporting it yet

26

Some say that this picture of a “fractured Europe” is natural and simply a logical response to the desire to have one’s economic cake and social/fiscal/national sovereignty too

What we see therefore is a constitutional bargain which accents high levels of economic cooperation (and compromises of sovereignty) but the retention of power, authority, and identity at the national and sub-national levels

Some truth but it underestimates the strains of a four-part Europe. Functionalists “bank on” these strains and see in them the motor of integration. If the EU is to be effective and democratic, it will have to move on four tracks, account taken of the different speeds of each, but always recognizing that the journey and destination are shared

27

Questions or Comments?

Thanks!