Do rights matter?

Comparing inequalities in the governance of the EU

Charles Dannreuther

Everything economic science posits as given, that is, the range of dispositions of the economic agent which ground the illusion of the ahistorical universality of categories and concepts employed by that science, is, in fact, the paradoxical product of a long collective history, endlessly reproduced by individual histories which can be fully accounted for only by historical analysis.

(Bourdieu 2005: 5)

An implicit ontology of the people and the relation between the people and the state often shapes how we think in normative terms about politics

(Petit 2005).

Introduction: Representing inequalities in the EU

Inequality has been a constant thread of debate within the European Union. Established as a system for mediating differences between nation states with unequal access to raw materials, the study of the EU has typically focused on inequalities between large and small states within the EU, between states in and out of the EU, between the member state institutions and the supranational institutions, and between these supranational institutions of the Commission, the European Parliament and ECJ Commission and the Parliament. Each of these has taken the focus of inequality to concern the exercise of power between rational actors, be they the national interests of states, the bureaucratic interests of the Commission, the democratic rights of the EP or the constitutional aspirations of the ECJ. These debates reflected normative agendas: balancing the relationship between the intergovernmental and supranational institutions would help to secure peace in Europe; decisionmaking effectiveness would result from qualified majority voting in Council; greater democratic credentials would accompany equal powers for the Parliament in the legislative process.

These inequalities were of the utmost relevance to the “village” of Brussels and the intellectual community that sought to develop the EU as a polity. Essentially the inequalities under discussion concerned power and so were informed by notions of national interest, legislative procedure and accountability. These institutionalised relations would manifest themselves in the outcomes of policy negotiations such as the CAP, ERDF, Cohesion Fund and most recently the Global Adjustment Fund. But the characteristics and needs of the society of the European Union have been poorly represented. Inequality in the economies and societies of the EU, and the policies and processes designed to address them have and remain predominantly national concerns in both analysis and practice even as the EU evolves into something new¹.

Debates over how Europe should balance the impact of global economic change with the wishes and needs of European society had become increasingly vocal even before the current financial crisis set in. The EU’s Lisbon Agenda specifically addressed this tension in 2000 by explicitly linking its response to globalisation to social inclusion. The strategy of pursing competitiveness that had been introduced and formalised in the 1990s now became the method for delivering social inclusion and economic sustainability within a global economy. For the first time the Eu explicitly linked its strategic goals and policies directly with those of the member states and their populations.

So ambitious was this scheme that some of the EU’s institutions began to debate the EU’s Social Question.² In 2007 and 2008, for example, the Commission held a consultation over what the social reality of the EU was for its citizens and prepared a series of proposals for the European Council meeting based around the idea of a renewed social agenda.³ The significance of the Social Question was that it refers directly to the late C19th and early C20th when the main social compromises in European nation states were forged between the state, trade unions, business and the middle classes. These were central and not always happy periods in which the role of the nation state was cemented in social institutions.

Like the Lisbon Agenda this social reality stocktaking placed special emphasis on a solid evidence base with which to assess the progressive realisation of rights of groups to social inclusion and equality. This evidence has contributed to further debates concerning the Eu’s role in societal issues and specifically a recent proposal for an Eu wide measure for poverty. This was proposed on the basis that people related to other groups across the EU in terms of their real and subjective notions of poverty.⁴ The question of how to measure and address inequality across the EU has therefore become one of practical concern. A renewed Lisbon Agenda called “EUROPE 2020 - A European strategy for smart, sustainable and inclusive growth” has confirmed the method and approach of its predecessor.⁵ The proposal confirms the integration of economic environmental and social goals and on the use of performance targets as the main instrument for realizing these ambitious goals.⁶

The question that this chapter seeks to address is how the EU justifies its interventions in relation to inequalities and what the implications are for these approaches in the realisation of its objectives, such as those outlined in the EUROPE 2020 vision. So far, it appears that the inequalities of power between the member states of the EU have been transmuted into inequalities between social groups within the member states of the EU. We begin with justifications for intervention that draw on utilitarian, Pareto then welfare economics to highlight the role that fact value distinctions play in the study of inequality. We then examine how deontological accounts, with their emphasis on universal outcomes and rights are difficult to operationalise within a multi-level governance system like that of the EU. Next we explore the role of organisational bias, and specifically the importance of categorical distinction in maintaining hierarchies of opportunity drawing on Tilly’s notion of “durable inequalities”. The redefinition of European society as individuals has dramatically altered the representation of inequality in the EU but without addressing the main sources of these inequalities. We shall briefly demonstrate this through social indicators such as those used in the Lisbon Agenda and European Employment Strategy as an explanation for the transmutation of durable forms of inequality within the EU. Finally we examine how the greater participation of civil society organisations may assist in addressing these failures.

146 Charles Dannreuther Equality and the Union

Deciding which inequalities matter and how to address them presents a range of problems for policy makers and analysts.⁷ The identification and representation of inequality reveals assumptions of power and often objectivity, points that reflect competing political ontologies of the European Union.⁸ The following section begins from the normative arguments that used to justify interventions by the EU to address inequality in order to introduce the link between fact and value and in order to demonstrate some of the challenges facing the EU in addressing the inequalities that it contributes to.

Utilitarians and social choice

The clearest and most cited justification for European integration, if more often implicit than explicit, is still usually presented in utilitarian terms: by avoiding further war European integration has helped “to prevent the happening of mischief, pain, evil, or unhappiness to the party whose interest is considered”.⁹ Fifty years of European integration have indeed benefitted the European community of individuals (and communities) with peace and prosperity, not least through the promotion of individual interest through its four freedoms. For utilitarians, the fact that the consequence of European integration has been greater happiness and fewer fears for the many is enough. The problems arise in deciding what it is that makes people happy and so which inequalities need to be addressed before others.

Social choice explores how peoples satisfy their preferences through their choices in conditions of ideal information and without imposing harm (or taxation) on others. The pursuit of such “ideal” conditions has been a central policy standpoint for the Single market programme in its focus on the removal of market distortions. In a classic liberal pursuit of common goals the negotiation and harmonisation of regulations to realise the Single Market programme and more recently in Service Directive explicitly advocated positive sum benefits to the member states.¹⁰

Arrow observed that it was logically impossible for individual preferences to produce a social choice without some authoritarian or non-participatory input. If there are many preferences they cannot be ordered in a linear fashion to inform effective policy choices, a conclusion he demonstrates across a range of different social choices. His observation that this may only be possible through methods that are “imposed or dictatorial”¹¹ has played out more keenly than he could have imagined in the Euro-scepticism that followed Delors’ proposal for a redistributive agenda to accompany the Single Market.

Welfare economists and social choice theorists have therefore argued that the best way to make such judgements is through developing indices for making comparisons between individual well-being, or better still “type to type” well-being. This also allows individuals to take responsibility for their outcomes within their type.¹² This asserts the agency of the individual so that the choice that they make is not conflated with the situation they find themselves in. In Dowding’s words:

Any measure that tries to include the choice that people make given their situations, as well as the actual outcomes they gain, will fail to adequately address that freedom of choice without a theory that specifies what rational choices are. Inevitably such analyses will be both moralized and controversial. The alternative is to accept choices made without criticism. Public policy can thus be developed at an institutional or structural level (specifying principles of distribution) using rough global comparisons across types of people.¹³

Recent Commission discussions of cohesion policy have drawn attention to the importance of different methodologies in measuring convergence across the EU.¹⁴ The discussion demonstrates how methodologies infer different mechanisms and possibilities for the removal of inequalities. Beta convergence draws on neo-classical growth theory to focus on the rate of catch up¹⁵ while Sigma convergence focuses on the reduction of regional disparity accommodating the possibility of structural regional inequalities. Both of these approaches indicate impediments to the operation of the free market. The Gini coefficient describes degrees of economic inequality within a population. The Atkinson index the movement within a population and the Thiel index explores average inequality within and among subgroups, making it useful for exploring the impact of inter member state convergence with intra member state regional divergence.¹⁶ Each provides a measure of inequality that presents type to type comparisons according to the inequality being explored and to a lesser degree the effectiveness of the likely intervention. Beta convergence indicates the efficiency of the market in resolving inequality, while Sigma convergence implies the possibility of additional intervention while Gini, Atkinson and Thiel all assert the likelihood of inequality but focus on different measures of it. Central to their significance are the objectivity claims that accompany these measures derived from their rigorous methodologies and substantial datasets. But there is less of a discussion of what the political implications of such surveys are for the EU and the implications that they have for both relations within the EU and specifically the amelioration of inequality across its society.

By following Pareto and rejecting redistribution as a mechanism, welfare economics also rejects the utilitarian moral justification for the greatest happiness to the greatest number. This cost may seem worth paying given the interest of member states in limiting their contributions to the EU’s budgets. But the problem emerges that without the utilitarian morality the actions of the EU as a political system are severely constrained. The EU is, for example, unconvincing on the need for Germany to help Greece in order to save the Euro because it cannot make arguments on the basis that the richer member state must suffer for the benefit of all. Germany must make the decision herself.

Deontological approaches

The best that the EU can do is to refer to the rules (e.g., Broad Economic Policy Guidelines) and institutions (e.g., ECB) of the Eurozone which enshrine clear moral rules that ought to be followed. Such deontological approaches play far more to Kant’s Categorical Imperative to “act only according to the maxim by which you can at the same time will that it should become a universal law”.¹⁷ Germany’s support for the Greek economy will help to sustain the universal monetary orthodoxy that the Eurozone has linked itself to. Deontological approaches place limits on the choice of individuals to assert specific rights, like property rights, or norms, such as welfare and social justice because they are right regardless of their consequences. In some cases the choices may be starker. In the pursuit of economic integrity, the BEPG propose a serious limitation on the range of choices that elected governments can make in relation to the size of the public deficit and the possibility of public sector led growth.

The problem for the EU in much of its history has been that the “universe” of application has not been represented consistently across different policy areas or competencies. Property rights have enjoyed far greater universal application across the history of European integration than social rights have.¹⁸ In large part this is because the compromises that evolved to support the liberal international trading system in the post-1945 period had been reached at the national level. For social policy, among others, the national level retained its significance as the initial site for the practical realisation of goals that were and had been universal to those communities. The national capitalisms seen as contrary to a supranational social agenda, are so because they were practiced at the national level rather than because the values of universal provision were given an explicitly German, or French flavour (for example). The institutionalist methodologies that prevail in the VoC debate tend to downplay this distinction between fact and value, displaying values as norms and the facts in the repetitive habits of these organisations. Notions of universalism or consequentialism are rejected in favour of endogenous order and path dependent change.¹⁹ Hence the varieties of capitalism come with fact and value integrated into a package of national social and economic relations. Without a macro-level theorisation of what makes these institutions similar, explaining how they all contribute to a stable period of accumulation for example, it is unclear which social relation is worthy of comparison across countries or what universal beliefs these national capitalisms share.²⁰

The VoC literature demonstrates that institutional configurations endure over time. This is in part because of institutional inertia.²¹ But it is also because the institutions reflect compromises that unified cleavages of class during periods of nation building. These cleavages are especially evident in the transformation of welfare provision across the EU. Ferrera demonstrates how the changing of boundaries was central to the changing nature of welfare in Europe.²² The strength of the social compromises was made possible through their ability to institutionalise social rights that was in turn made possible by enabling dissent to be expressed through effective voice functions. Location and voice were bounded by notions of solidarity to form enduring social compromises that sustained universal values. The expansion of supranational competencies and the subversive influences that this has had on notions of solidarity and community has eroded much of the substance of these compromises.²³ In its place, the Lisbon Agendas approach shows a promise that was too early for Ferrera to evaluate.²⁴

Durable inequalities

Sociological approaches to European integration studies have increasingly argued for engagement with traditional notions of power in understanding social institutions.²⁵ Tilly’s Durable Inequalities placed special significance on these institutional characteristics in the maintenance of inequality. The key mechanism was the persistence of “categorical pairs” that define unequal value producing resources societies: men and women, black and white, young and old. These are classifications of groups that have been formalised within organisations to have real meaning because of the fact that they are related to each other: women earn less than men because there is a hierarchical distinction in labour markets and organisational prejudices that favours men. Such inequalities are significant as they reproduce themselves in new times and environments in order to maintain the privileges of the hierarchy. So “stereotype threat” describes how less equal groups perform according to how they feel they ought to perform, rather than to their best ability (boys in schools, caste groups in India).²⁶

Despite his association with historical sociology, Tilly’s conceptualisation of inequalities has been criticised as overly ahistorical. In addition and in part because of the relational perspective he pursues, the durable inequalities approach has also been seen as overly dependent on cost benefit calculations at the expense of an analysis of the individual’s experiences.²⁷ Yet this is to understate the motives of Tilly in exploring the importance of relational factors contributing to inequality. As Olin Wright argues, “durable inequalities” draws extensively on functionalist arguments in establishing that the opportunity hoarding that explains why inequalities endure is sustained through categories that are given real meaning through organisational bias.²⁸ Such purposeful agenda setting power is a clear characteristic of organisational functionalism, while the interest in explaining deep inequality through the exploitation of organisational bias rather than the means of production specifically.²⁹

These categorical distinctions may well be important in explaining the fact of inequalities in society and in part the immediate mechanisms that sustain them. As we have seen above the identification of type for type groups for comparison is an important consideration for welfare economists. The use of categories is also essential in the development of the social indicators that enable comparison. These categories are central to the strategic interventions of the UN’s Millennium Development Goals (MDGs) and the EU’s Lisbon Strategy. These were both landmark political initiatives intended to demonstrate the ability of the EU to address the challenges of globalisation and of the international community to address global poverty. Both of these programmes have raised the profile of inequality for policy makers in identifying performance criteria and convergence towards shared benchmarks.³⁰ Both have also used the language of rights to legitimate their interventions and to define the categories in which improvements in performance would be evaluated. The next section explores how the rights based approach of the Lisbon Agenda avoids many of the problems of universal, social choice and deontological approaches. But we then go on to assess how effectively it has been in addressing the challenge of “durable inequalities” that Tilly has described.