EH 5: European integration and capitalist diversity Flashcards
EU integration since the 1990s and neoliberalism
Since the 1990s, the EU has initiated a number of initiatives which strengthened its transnational neoliberal character
-> The European single market
-> the European Monetary Union
-> Lisbon Agenda
single market
launched 1986, entered into force in 1993
-free movements of goods, services, capital, people
-big shift to how european integration worked before (mainly trade was liberalized)
-idea: create one transnational market
-no longer need to harmonize safety measures for example, but mutual recognition, but also supranational institutions
monetary union
-launched in 1991
-single currency adopted in 1999
-Maastricht criteria: criteria countries should adhere to if they want to join monetary union
-> fiscal and monetary discipline (indebtment, price stability etc)
-> part of neoliberal consensus -> strict budget deficit very contrary to keynsian fiscal politics
->impose discipline on southern countries
-low inflation: neoliberal ideas
-ECB’s only goal: price stability (FED: employment + price stability)
Lisbon Agenda
-overall ambition of Lisbon Agenda/strategy: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion
-> very neoliberal idea
-> social investment: welfare state not only to compensate for risk of unemployment, sickness etc, but idea that you can also use welfare state as an investment vehicle, in the sense that you empower people to become more productive (education, child care etc)
Copenhagen Criteria
Eastern EU Enlargement -> Copenhagen Criteria -> major reshaping of countries that wanted to join
big questions what to do with neighboring countries: instable, insecure, bankrupt countries, but they also didnt want to exclude
-France thought enlargement would mainly benefit Germany, Brits (Thatcher) promoted enlargment (more countries, less consensus, more deregulation), Germany not too eager
-but after Northern Enlargement: Sweden was very pro Enlargement
-> establishing of criteria
Membership requires:
- stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities, -the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the Union.
-Membership presupposes the candidate’s ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union.
-The Union’s capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries.
-> tension between poorer countries having to play by the same rules as advanced countries -> no level playing field -> “solved” by liberal development state
shaping Eastern Europe’s politics and political economy
-new in this accession: criteria plus very tight monetoring, strong EU involvement in policy making -> pre accesion monetoring, commission decided who would make it -> Accession Partnerships
Accession Partnerships (APs):
-very detailed strategies, evaluating progress
-extended EU-level influence over policy-making to an extent that went beyond the EU’s role in the domestic policy processes of its member-states
-contained implicit economic policy models: -> The APs promoted a remarkably uniform view of what a ‘market economy’ should look like
-> The socio-economic system they implicitly endorsed had a more ‘Anglo-Saxon’ flavour than a coordinated market economy/ social market economies of France or Germany or the ‘Latin’ economic systems in the southern EU
-no explicit rationale was presented for this agenda, even though it covered so many functions of the modern state, no real reasoning for this involvement
-were not traditional negotiations between equal partners. Rather, they set unilaterally conditions which the applicant states had to comply with
external inventives model
Europeanization of Eastern Europe via the external incentives model
EIM: bargaining model: actors are interested in maximizing their own power and welfare
-> benefits outweigh costs for Eastern Europe, because membership poses such a big relief in the sense of access to markets, modernization etc
so they accept conditions
EU accession and FDI
no specific EU legal instruments to foster FDI
but: relied on membership conditionality and the instruments developed for the accession process to promote foreign capital inflows
-EU & International Financial Institutions required liberalization of capital movement
-In its APs and Annual Reports, the EU suggested privatization via foreign ownership in a number of strategic sectors – not only manufacturing!!!!
-Openness to FDI crystallized as one important condition for membership
-Indirect effect on FDI inflows: Eastern Europe’s compliance with the European rules and regulation opened these economies for capital flows and provided legal security for investors (signaling effect, seen as more reliable for foreign investment)
Accession, membership association with financial support
in parallel with its neoliberal deepening and peripheral enlargements -> EU has also developed instruments to support lesser developed regions
European Single Act Aim (art. 130a): Reduce the gap between different regions and the lagging behind of less prosperous regions -> Methods: Funds with a structural aim (“structural funds”) & European investment bank (EIB)
The 1992 European Union Treaty (Maastricht Treaty): Promotion of balanced and harmonious development in the whole of the Community, economic and social cohesion
Lisbon agenda and preperation for enlargement:
-more genours strucutral funds for existing member states
-Preaccession instruments for countries waiting to join the EU
-Budget for enlarged EU
since 2007: new member states have also been major recipients of structural & cohesion funds
challenges of peripheral integration during transnational market making
regional market making:
-Presupposes the creation of a level playing field by abolishing national obstacles to the four freedoms, while
-Assuring that liberalization does not destroy the competitive capacities of the periphery
->The solution: a “liberal developmental state”
developmental state
(i) views economic growth as its main objective
(ii) intervenes moderately in the market by planning the economy’s non-competitive sector and by adopting strategic industrial policies
(iii) operates an active macroeconomic policy
(iv) is politically supported by a developmental class coalition formed of entrepreneurs, workers, public bureaucrats and sectors from the old dominant class which holds political power and embraces a national development strategy,
-> thereby standing in opposition to a conservative or liberal coalition made up of sectors of the pre-industrial dominant class, rentier capitalists and financiers
In contrast, a liberal developmental state mostly focusses on fostering state capacities to help improve economic outcomes
liberal vs liberal developmental state
liberal:
goals:
-abolishing national discrimnatory measures
-stregthen regulatory capacity
-strengthen transnational market making capacities
liberal-developmental:
goals:
-increse market power of peripheral economic actors
-strengthen market preserving state capacities
-administrative capacity (creation of an impartial efficient public bureaucracy)
systematic difference of state capacities between Eastern and Southern Europe
Eastern Europe performs better on all dimensions of state capacities, with the exception of the administrative capacity. Why?
Southern Europe: “getting the incentives wrong”
-Little supranational surveillance and institution building (market preserving and admin capacities)
-Integration to EMU initially fostered, but then released Southern Europe from having to develop competitive capacities
-While the EU tried to “discipline” national governments by disbursing Structural Funds to local governments, national governments resisted this move
Eastern Europe: getting the institutions right -There was much tighter micromanagement and surveillance during the East European process
-Competition for FDI fostered state capacities
