Negative and Positive Integration

Like other policy areas, the developments pertaining to welfare services show that, to a large extent, the process of Europeanization has gone hand in hand with one of neoliberalization. From an analytical point of view, however, the notion of neoliberalism is too broad and versatile. In this regard, the seminal distinction introduced by Fritz Scharpf between positive and negative integration is particularly useful in order to understand how marketization has become institutionally embedded with regional integration. Inspired by the theory of international trade (Tinbergen 1954) , the distinction between negative and positive integration was introduced in European studies by Scharpf in the late 1990s (Scharpf 1999). Negative integration implies horizontal integration through the removal of national tariffs and regulations, which are seen as obstacles to the building of a single European economic space; in that sense, it is essentially market enabling. The building of the common market ruled by the four freedoms enshrined in the Treaty of Rome (free circulation of goods, people, capital and services) is the typical illustration of the logic of negative integration. Positive integration, in contrast, involves the setting up of common policies and instruments at the European level and is geared towards market correcting. Such instruments can be distributive as well as regulatory, as in the case of the common agricultural policy. Politically, negative integration is mostly associated with the rise of neoliberal global capitalism—it is, for instance, the main policy device used by the WTO—while positive integration would contribute to the regulation of capitalism, or the building of a social market economy at the supranational level.

Of course, the distinction between positive and negative integration should not be seen in a cartoonish fashion. Empirically, these two types of policy change are not mutually exclusive. In fact, most EU policies account for a policy mix containing elements of both negative and positive integration (removal of national regulatory barriers and former policy practices accompanied by new policy instruments). In the realm of welfare services, liberalization directives include both deregulation, that is the suppression of specific national regulation in order to open national markets to (foreign) competition, and provisions aiming at re-regulating markets at the supranational level in the form of a so-called public service obligation, which obliges one provider at least to take in charge the continuity of public service even if it is not profitable. Thus, it is the ‘thickness’ of such re-regulation (clarity of EU legislation and legal security, capacity to constrain economic actors, ability to actually serve users’ interests and protect their rights, effectiveness of implementation on the ground, etc.) and the existence or absence of common policy instruments (regulatory bodies, sources of funding, etc.) which eventually determine whether a specific policy contributes rather to positive integration or negative integration. However, as noted by Scharpf (1999, p. 44), the rationale behind negative integration is that, according to the theory of economic comparative advantage, the internationalization of trade leads to economies of scale and a decrease in prices resulting from competition, thus generating welfare gains which make market correction unnecessary. In this perspective, regulation is rather seen as an instrument of protectionism and a source of distortion in competition. While negative integration is used in virtually all regional and international trade agreements, positive integration implies a deeper degree of integration with more evident distributive and political aspects.

Beyond its heuristic relevance, the crucial point in Scharpf’s compelling book is that it connects types of integration with the conditions for democratic politics to shape the economy. His argument is that, ‘the institutional capacity for negative integration is stronger than the capacity for positive integration, interventionist policies and the interests they could serve, are systematically disadvantaged in the process of European integration’ (1999, p. 49). According to Scharpf, ‘national polities find themselves under conditions of a “competition among regulatory systems” that may prevent all of them from maintaining market-correcting policies that were previously supported by democratic majorities’ (ibid., p. 3). Such disembedding of the economy from political processes has eventually undermined the democratic legitimacy of policy making at both the national and regional level.

The explanation put forward by Scharpf for the prevailing of negative integration is essentially of an institutional nature. On the one hand, the supremacy and direct effect of European law on the legal order in the Member States has led to the constitutionalization of competition law which focuses on market creation through free competition. On the other hand, the strong institutional position of the ECJ and the European Commission, mainly based on their ability to use EU law, has allowed them to fight and win political battles against Member States reluctant to market opening. Insofar, integration through the market and integration through law have overlapped in significant ways. This has been especially the case with the liberalization of network industries and utilities (transport, energy) in the early days of the Single Market. The other side of the coin is the weakness of positive integration, often hampered by the need to find a consensus among Member States’ governments in the Council. The diverse constellation of interests as well as the need for unanimity or large majorities empowers veto players willing to prevent European policy making and maintain the status quo. Agreement on the type of interventionist, market-correcting policies among national governments are all the more unlikely in that they may have ‘fundamentally conflicting views regarding the proper role of public policy vis-a-vis market forces and regarding the role of European policy vis-a-vis the nation state’ (ibid., p. 78). More recently, Scharpf reiterated his argument by claiming that the EU ‘cannot be a “social market economy”’ (Scharpf 2010).

Scharpf’s argument is essentially institutionalist and structuralist as his work puts the stress on the fundamental asymmetry between negative and positive integration which characterizes the set up and functioning of the EU. On the one hand, the power of the non-majoritarian institutions, in particular the legal prerogatives of the EU Commission (1999), or the role of the ECJ. In this regard, he questions the legitimacy of its Kompetenz-Kompetenz and the need for a conflicts law (2010; see also Joerges 2009a). On the other hand, the functioning of the Council is grasped through his earlier concept of ‘joint decision trap’ (Scharpf 1988): under de facto unanimity, Member States’ preference for maintaining their own institutional arrangement drives decision making to the status quo. Although he recognizes that not only interests but also norms and ideas prevailing among certain actors shape the politics of negative and positive integration (1999, p. 66), he tends to treat them as fixed properties and does not investigate them as such. Interests and ideas at the national level are conceived in a stylized fashion by referring to social market economies versus liberal market economies.

By combining an institutional analysis inspired by Scharpf’s work with a sociological approach focused on politicization, this book aims to shed light on the fluidity of multi-level politics, possible changes in Member States’ positions, and the way in which ideational battles are actually fought within the institutional setting of the EU, including in relation to global politics. Discursive institutionalism and the sociology of transnational collective action both provide useful tools in this regard. The rationale underlying this approach is that today’s EU finds itself in an era characterized by a ‘constraining dissensus’ (Hooghe and Marks 2009) where politicization matters. The continuous strengthening of the European Parliament (EP)’s legislative competences means that it now provides important channels for contentious politics. Strategically, the EP has consistently asserted itself by stressing its role of representation and transmission of citizens’ and civil society’s grievances. Moreover, national governments have to deal with the effects of such politicization in the domestic realm. This book therefore taps into the broader question of democracy in Europe by asking to what extent contestation and conflict over welfare can shape decision making at the supranational level.

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