II. Critical approaches to European political economy

Introduction: Critical political economy and European integration

Introduction: The EU as a political economy problem

The European Union (EU) is an elaborate beast, but at its most basic it is a political economy phenomenon. European integration is an exercise in market making, arguably on an unprecedented scale and certainly in ways that yield a complex set of multi-level relationships between economic space on the one hand and the exercise of both regulatory and political authority on the other. Put simply, the EU’s central raison d’etre amounts to the accomplishment of an area where constraints on economic transactions across national borders are minimised and, ideally, eradicated. The achievement of the ‘four freedoms’ — of goods, capital, services, and persons — might appear, at first sight, to be a highly technical matter — and is often presented as such. But market making also implies market regulation. Put another way, the development of a single market across any group of countries must also imply the construction of an institutional order to set the rules of the game for that market, to safeguard that the market stays free and competitive and to ensure that contracting member-states do not renege on their treaty commitments. The upshot is that the EU is often depicted as a ‘regulatory state’ — a form of authority charged with the establishment, maintenance, and reproduction of a market order (Majone 1997).

This last claim — of the EU’s status as a regulatory state — is not only an analytical statement. It is also a normative position — that the EU should be like this.This then begs the question of what a regulatory state does (or should) not do. If an authority is established, first and foremost, to make and maintain a market, then it does not follow that the authority has no responsibility for market correction — for the kinds of social policy interventions that seek to diminish the negative societal effects of market freedom. Equally, if the art of regulation is presented and performed as a solely technocratic exercise, then we might ask what role democratic authorisation has in determining the scope and nature of the market and of the substance of the policy regime that sets market ‘rules’. In short, we might ask questions about the legitimacy of the EU’s regulatory state (see Wincott 2006 for a critique along these lines).The asymmetry between the Europeanisation of market making and the failure to develop large scale supranational policy competence in areas of market correction and social policy is well known and much debated (Scharpf 2010). The relevance of politics should be obvious. Markets are made and governed. Understanding, who makes markets, why markets are made, how markets are made and in relation to which values, and in what ways markets ae governed sit at the heart of political economy analysis.

In the EU’s case, the market order imagined in the 1957 Rome Treaty is accompanied by a distinctive institutional framework that has also developed into a quasi-constitutional legal order. But we also know that the EU’s economic space is subject to a variety of modes of governance, some of which — particularly those seeking to establish and enforce fiscal norms for member states — appear to have been fashioned relatively recently in the wake of the Eurozone crisis. The move beyond the common market to the creation of a common monetary regime and in particular the management of that regime in crisis raises acute questions about the relationship between political authority and economic governance in Europe, not least in light of the austerity treatment meted out to debtor Eurozone states.

Perhaps it is helpful to think about the political economy of European integration in terms of three long-standing and largely (unresolvable) dilemmas or tensions (see Rosamond 2017b for more detail).The first is the tension between market making and social solidarity. Does the former imply the erosion of the latter? Can the latter be protected in light of the former? The second is the tension between the development of a supranational legal/constitutional order and the requirement of democratic authorisation. Are markets made through democratic means? Or does the creation of authoritative institutions and systems of economic law effectively by-pass popular consent and democratic scrutiny? The third is the tension between the cosmopolitanism of a supranational market order and the persistence of communitarian/national identities. How does free factor movement impinge upon cultural identities and does the growth of transnational economic exchange activate nativist political sentiment and countervailing economic nationalist claims? In short, the study of the EU must attend to the origins and operation of the European market order, to the related regime of supranational economic governance, and the extent to which the consolidation the internal order and its regime plays a shaping role in the global economy more generally. To follow this logic also requires a focus on the range of political factors, including interests, ideas and institutions, that shape the workings of this emergent economic space.

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