neoliberalism – European Strategist

European Commission’s neoliberal agenda in France: weaker employee rights

Published on 22nd August 2016

Comment & Opinion / Komentáře a názory/Economics / Ekonomie

If you are following political developments in France a bit, you couldn’t have missed the recent waves of massive strikes and protests that hit the Hexagon. The cause is Hollande’s government push for “reforms” to the labour law. Obviously, the word reforms here stands for a range of measures in line with neoliberal tenets that take away rights from employees and give them to corporations. Namely, allowing less favourable local agreements on wages (to undermine collective bargaining of national trade unions) or making it easier to hire and fire staff. Crucially, the French government decide to invoke Article 49.3 of the Constitution that gives it the power to bypass parliament and impose reforms by decree. That way it also sidestepped critics in its own ranks, such as Parti socialist MP Laurent Baumel, who called the move ‘anti-democratic’ and labelled it as ‘a heavy-handed way of using the constitution to prevent the nation’s representatives from having their say.’

What is less apparent is that the French government’s attack on employee rights has a European dimension. Revealed recently by the association Corporate Europe Observatory, the European Commission is using all its new powers gained after the financial crisis of 2008 to move France in the direction of ‘liberalisation of labour code’. ‘Simply put, France has been required flat out to ensure higher profitability for businesses by driving down wages,’ say the authors of the study. For those interested in how the European Union stands on the side of austerity and neoliberalism, this is an interesting read that shouldn’t be missed.

Brexit is a revolt against globalisation: Interpreting the UK vote

Published on 6th July 2016

Politics / Politika

European political scene is in quite a disarray. “Right now, we are two or three bad elections away from the end of NATO, the end of the European Union and maybe the end of the liberal world order as we know it,” quipped historian Apple Applebaum back in March (Applebaum 2016). Applebaum, wife of the Polish neoconservative politician Radosław Sikorski, thus perfectly anticipated the panic felt nowadays by our elites. Inadvertently, she also revealed how Western elites see European integration: as a project tightly intertwined with the neoliberal worldview and globalisation. In their vote for Brexit, British working classes revolted against what the EU seems to increasingly stand for: self-proclaimed global elites and their policies that benefit only the increasingly few.

Let us be perfectly clear: for Europe and for the West, Brexit is a moment of fundamental historical importance. British “red Tory” thinker Phillip Blond is not exaggerating when he states that “Western ballot boxes never before seen a greater rejection of globalisation” (Devecchio 2016). The EU came to be squarely identified with globalisation and all social and economic insecurities that it entails. For British voters, these materialised mostly as fears of immigration, which have both cultural and employment-related aspects.

Explaining voting patterns

A look at the voting patterns across Britain gives evidence to deeper divides that separate the winners and losers of globalisation, and which are also visible in other European countries. (Note that for political reasons, Scotland and Northern Ireland remain exceptional cases.) Charts are telling in showing deep class divisions. In a country where one year of undergraduate university education costs £9000 (more than €10,600), one of the best predictors of how people voted was their education level. “Remainers” tended to have university degrees, while those without higher education were much more likely to be in the Leave camp. Similar results are seen when we look at the median income – the richer the voter is, the more likely they were to vote Remain. In the UK, income and education are closely linked to geography, which explains why “bobo London” is the only part of England where people voted for staying in the EU.

Another significant factor is the trans-partisan character of the vote against the EU. As several observers already noted, Brexit would not be possible if a large proportion of Labour supporters did not vote against the Remain campaign of the party leadership. The party leader Jeremy Corbyn is himself a eurosceptic, who likely very much dislikes the authoritarianism of the EU’s neoliberal policies, lately openly revealed in last year’s economic diktat imposed on Greece, against the wishes of its people expressed also in a referendum. Why officially being in charge of Labour’s Remain campaign, his support was lukewarm, which is also the reason why his Members of Parliament (MPs) are at the moment working hard to get rid of him. What it ultimately shows, however, is that Corbyn is much more connected to the wishes and fears of the party rank and file than the MPs, who are mostly “champagne socialists” still day dreaming about the heydays of New Labour under Tony Blair.

As John Cassidy put it in The New Yorker, the implication is that “the British working classes and lower middle classes, particularly those living in the provinces, have delivered a stinging rebuke to the London-based political establishment, which was largely in [favour] of staying in the [EU]” (Cassidy 2016). The explanation is that for the working classes, salaries are at rock bottom and zero-hour contracts along with other “market reforms” put in place by the Conservative government made sure their jobs are more precarious than ever before. Property prices are astronomical, class sizes at state schools are too high, waiting times in NHS are too long. Meanwhile, good education, better jobs, and fenced-off private properties are concentrated in the hands of the growingly smaller number that are profiting from these neoliberal policies.

These are real concerns that are often disparaged or completely ignored by those with good jobs, good education, those who freely travel across Europe and come from better off families. In other words, by the European elite. Labelling Brexit as a triumph of xenophobia, ignorance or even senility (pointing to the preference of elder electorate for Leave), does not allow one to get any better understanding why an increasing number of people are standing up against the EU. Arrogant and patronising comments, of the like of Jean-Claude Juncker, President of the European Commission, who spoke about treating British people as deserters in the run-up to the referendum (Macdonald 2016), only paint the EU’s portrait in even darker colours. They also prevent from helping us to understand that Brexit is a part of wider revolt against globalisation, which includes both left-wing and right-wing populist movements in Europe (Greek Syriza, Spanish Podemos, Irish Sinn Féin, French Front National, Austrian FPÖ, even Slovak SMER or Hungarian Fidesz), as well as the appearance of Trump and Sanders in the US.

Concerns about immigration do not equate racism

Most of concerns with globalisation and the EU in the UK crystallised as the immigration issue. On the one hand ignored by the left (“because it is racist”), on the other, embraced by the right under the argument of positive economic contribution. While there are genuine xenophobes with hate towards black people, Eastern Europeans or Muslims, most voters cannot be simply dismissed as bigoted. The best example of this is a large proportion of second- or third-generation Commonwealth immigrants, who also supported Brexit on immigration grounds. If gross immigration to the UK was 630,000 in 2015 (or about 1 % of the UK’s population!), this represents a huge downward pressure on UK salaries and raises yet new identity concerns (Hawkins 2016). John Harris gives a plethora of practical examples of these real life concerns (Harris 2016):

town of Peterborough where people claim only non-UK nationals were hired because they worked for insane shifts for risible rates;
agricultural communities in Lincolnshire, divided between new arrivals with jobs and miserable locals who lost theirs;
largely pro-EU Manchester, where British-Asians talk about leaving the EU, likely because they feel their traditional jobs are at threat;
builders in South Shields, who had their hourly rate come down by £3 because of immigrants from eastern Europe; or
a mother in Stourbridge wanting a new school for “our kids”.

And so on. What is clear is that identity, immigration and economic concerns are closely interlinked. Identity is fundamentally nothing abstract – it is about shared and established patterns of living together in one space that generate understanding and prevent conflicts. It is about trust and predictability, which are built only over time, creating common history in the process. When contrasted to individual and gradual migration patterns, mass immigration poses a huge challenge for identity precisely for these reasons. This is of course in addition to the race to the bottom created by downward pressures on salaries and social security. Losing a job can in turn generate a loss of identity among those who previously took pride for providing income to their family – or simple buying a builder or fisherman in their community. With its recent push for “refugees”, a majority of whom seem to behave more like economic migrants, the EU only added the final piece into its image of the most visible European promoter of unrestricted flows of people.

Divisions in the liberal camp – a fake people’s revolt?

However, the referendum did not only divide working classes with those with a higher income – it also fragmented the British liberal elites. Leaders of Brexit campaign were all liberals who opposed the EU in the name of deregulation. This number includes the outgoing leader of UKIP Nigel Farage, who may be a social conservative, but remains an ultra-liberal on economic issues. It also makes for a big difference, between the liberals in the UK and in many other European countries, perhaps apart from central Europe. Speaking of France, Alain de Benoist noted that “while in our country, the majority of liberals are convinced that the fundamental goal of European treaties is imposing liberal tenets, starting with free circulation of goods and services, people and capital, in England many think that the market needs neither institutions nor treaties” (de Benoist 2016).

The support of a proportion of British liberals for Brexit obviously does not mean that they suddenly took up the flag of the people, realised their ideology is misguided, and decided to address fears of globalisation. Phillip Blond again correctly points out that this represents the greatest paradox – and tragedy – of the vote for Brexit: “the working classes seeking protection against globalisation followed libertarians who believe that the UK should unilaterally abolish its tariffs” (Devecchio 2016). For his part, Paul Mason from The Guardian does not shy away from calling the referendum “hijacked” and “a fake revolt” with people “falling for a scam” (Mason 2016). Mason is quite correct not only because British liberal elites have no interest to rescue people from globalisation and perverse effects of capitalism. Other reason is that nation-states are no longer capable of protecting its citizens against the power of transnational corporations, “globbish” cultural forces, or hyper-fluctuations of financial markets. British “independence day” is an illusion because the UK regained sovereignty in name only.

Tragedy of the EU and its great unfulfilled promise

The greatest tragedy of the European Union is that it did not fulfil its potential and failed on its biggest promise. That promise was to make citizens and peoples stronger rather than weaker in the face of globalisation and neoliberal capitalism. But that would have required starting European integration from bottom-up, from culture and politics, and not from economic integration. Inevitably, that would have also meant a slower expansion of the EU – building qualitative, democratic, strong structures at the expansive of quantity and extension. The UK, traditionally a maritime and transatlanticist power, always felt oddly in the continental club and attached itself closer to the US than to its European counterparts. As Belgian economist Paul de Grauwe notes, the EU has neoliberal policies at its core: its single market and trade agreements opened up the gates to globalisation, while its fiscal rules and ‘structural reforms’ put countries into an austerity straightjacket. So instead “of helping those who suffer from [globalisation], [the EU] has set up policies that hurt these people even more. It is no surprise that the losers revolt” (Grauwe 2016). Ultimately, all of us are those losers, because instead of living in communities that allow us to strive for excellence and make us stronger personalities, we are living in market societies that encourage selfishness, individualism, consumerism and wasteful lifestyles.

Martin Heidegger, a German thinker who also lived in turbulent times, used to quote poet Friedrich Hölderlin in saying that “where danger is, grows the saving power also.” For the EU, history did not end yet. However much its elites may seem incapable of reflection on what are the reasons for people’s despair over European integration, at its roots there is still the promise that the EU can be a katechon, a regulator of globalisation, rather than its chief harbinger. It is time for people and those who are on their side to grasp this thought and realise that all freedom movements against globalisation and neoliberalism need to be by necessity pan-European.

Publication bibliography

Applebaum, Anne (2016): Is this the end of the West as we know it? Anneapplebaum.com. Available online at http://www.anneapplebaum.com/2016/03/04/is-this-the-end-of-the-west-as-we-know-it/, updated on 3/4/2016, checked on 6/27/2016.

Benoist, Alain de (2016): Brexit : vers un effet domino en Europe ? Boulevard Voltaire. Available online at http://www.bvoltaire.fr/alaindebenoist/brexit-vers-un-effet-domino-en-europe,265172, updated on 6/29/2016, checked on 6/30/2016.

Cassidy, John (2016): Why the Remain Campaign Lost the Brexit Vote – The New Yorker. In The New Yorker, 6/24/2016. Available online at http://www.newyorker.com/news/john-cassidy/why-the-remain-campaign-lost-the-brexit-vote, checked on 7/5/2016.

Devecchio, Alexandre (2016): Phillip Blond : «Jamais la mondialisation n’avait connu un tel rejet dans les urnes». In Le Figaro, 7/1/2016. Available online at http://www.lefigaro.fr/vox/monde/2016/07/01/31002-20160701ARTFIG00368-phillip-blond-jamais-la-mondialisation-n-avait-connu-un-tel-rejet-dans-les-urnes.php, checked on 04-07-16.

Grauwe, Paul de (2016): The EU Should Take The Side Of The Losers Of Globalization. Social Europe. Available online at https://www.socialeurope.eu/2016/07/eu-take-side-losers-globalization/, updated on 7/4/2016, checked on 7/5/2016.

Harris, John (2016): ‘If you’ve got money, you vote in … if you haven’t got money, you vote out’. In The Guardian, 6/24/2016. Available online at http://www.theguardian.com/politics/commentisfree/2016/jun/24/divided-britain-brexit-money-class-inequality-westminster, checked on 6/27/2016.

Hawkins, Oliver (2016): Migration Statistics. House of Commons (Briefing Paper, SN06077).

Macdonald, Alastair (2016): Juncker says on Brexit: British ‘deserters’ to get no EU favor. In Reuters, 5/20/2016. Available online at http://www.reuters.com/article/us-britain-eu-juncker-idUSKCN0YB1O3, checked on 29-06-16.

Mason, Paul (2016): Brexit is a fake revolt – working-class culture is being hijacked to help the elite | Paul Mason, 6/20/2016. Available online at https://www.theguardian.com/commentisfree/2016/jun/20/brexit-fake-revolt-eu-working-class-culture-hijacked-help-elite, checked on 7/5/2016.

Chantal Mouffe on post-democracy: “It’s like a choice between Pepsi and Coke”

Published on 6th May 2016

Politics / Politika

Chantal Mouffe is a well-known Belgian political theorist focusing on the concepts of post-liberalism, neo-marxism and radical democracy. Mouffe gave her talk in Stockholm on 3^rd May 2016 in Stockholms Kulturhuset for the occasion of publishing the Swedish translation of her most recent book ‘Agonistik’ (‘Agonistics: Thinking the World Politically’ in English original).

Photo by Pamela Shultz Nybacka, 2016 — Photo by Pamela Schultz Nybacka, 2016

Mouffe currently holds a professorship at the Department of Politics and International Relations, University of Westminster, UK, where she directs the Centre for the Study of Democracy. She became widely known for her book Hegemony and Socialist Strategy from 1985, written together with Ernesto Laclau. The post-marxist text alters some of the key concepts of traditional Marxism (such as shifting away from the stress on class division or belief in the eventual struggle-free harmonious society) and introduces most of the key concepts of Mouffe’s later work.

In her political theory, Mouffe takes inspiration namely from Karl Schmitt and his theory of the political, the neo-Marxist theorists Antonio Gramsci or post-structuralism notions of Jacques Derrida. For further reading see the above mentioned Hegemony and Socialist Strategy (1985), The Democratic Paradox (2000), a collection of texts on radical democracy, or most recently published the Agonistics: Thinking the World Politically (2014). From texts focused on art as radical tool in democratic systems look up for example articles Artistic Activism and Agonistic Spaces (2007) or Art and Democracy: Art as an Agnostic Intervention in the Public Space (2008).

The Stockholm’s one-and-half hour talk was fast paced and down to the point, in accord to Mouffe’s direct persona, if slightly less coherent from the moderator Stefan Jonsson’s side. Mouffe started by offering a comprehensive explanation of some of the most prominent concepts of her theory, such as that of the political, the agonistic mode of radical democracy, and the notion of passion as a vital element of political struggle. She then continued with a more detailed description of the role of passion as mobilising element in politics, the problems of contemporary post-democracy and the ultimate need for radicalisation of democracy in order for its effective implementation.

Mouffe, coming from a post-marxist stance, visualises the current state of Western society as that of a post-democratic, neo-liberal existence. Modern democracies, while maintaining the image of traditional democratic system, are more and more controlled by the elites and in their nature deny the original heterogeneous principles of a true democracy. To contest this, Mouffe presents a model of ‘radical democracy’ that aims to bring the real democratic principles back into a functional mode. In order to do this, she emphasises the need for agonistic role of the political, the ‘agonistic pluralism.’

Agonism, from the Greek word agon for struggle, focuses on the potentially positive aspects of certain forms of political conflict. This is not to say that all political conflict has positive effects, but that it is inevitably present in all political representations through different antagonistic parties, and has to be taken into account and used to our benefit.

The agonistic mode, although similar to Marxism in the emphasis on the always present political struggle, differs from Marxism in that it does not predict eventual elimination of the conflict into a harmonious society. There will always be conflict present in agonistic society. However, this conflict is not that of enemy nature, but rather that of adversaries’ confrontation, that of legitimate opponents mutually contributing to the political struggle. In order for such model to work, it is necessary to come to an ultimate, limited agreement upon basic values, a so called ‘conflictual consensus.’

It must be noted that according to Mouffe, the crucial question of a democratic politics is not to arrive at hegemonic consensus, as is currently misinterpreted in the European Union’s policies. On the contrary, the notions of ‘we’ and ‘they’ need to be established in all their antagonist plurality, since their existence is vital for any political conflict. The key role of democracy is then to convert these antagonistic conflicts into positive results.

Key problem of post-democratic, neo-liberal system is most of all the lack of real alternative, a concept vital for democracy. We have reached a post democratic’ stage presented by the absence of alternatives to neoliberalism and neoliberal globalisation. Mouffe states that the state of political alternatives is like the “choice between Pepsi and Coke.” The post-democracy aims for a more or less homogenous society of ultimate consensus and shuns any more or less ‘extreme’ options. This can be seen on the rise of populistic centrism with both left and right wing parties continuously shifting toward the middle of the political spectrum in order to attract more voters and preserve a happy façade suitable for everyone.

Mouffe’s radical democratic mode emphasises the importance of having a plurality of different struggles, the possibility of confrontation between hegemonic projects and representation of the whole range of political scale. Such elements should form the core of a democratic system. Radical democracy cultivates plural practices, mobilisation and passion that will challenge neo-liberal practices.

The element of passion in political activity is another strong term in Mouffe’s political theory. First of all, she emphasises the distinction between passion and emotion. Where emotion is an individual occurrence, passion serves as powerful and inevitable political tool: that of mobilising a common affect in a political domain. It produces an affective dimension that brings people together in collective identities. Passion should and cannot be excluded from democracy as it is essentially what mobilises affect in a progressive dimension needed for democratic representation. Without passion, it is impossible to be politically successful.

Through passion it is possible to overcome the crisis of political representation in the post-democratic, neo-liberal society. Large groups of citizens are either completely omitted or strongly under-represented on the political scene. Mouffe gives example of young people and working classes in their traditional (social democratic) sense. We have to constantly address the creation of a multi-polar world, with initiatives on the whole scale of the political spectrum (both horizontal and vertical) as a solution to under representation of the public. Collective will that is mobilised within these movements can only be truly expressed within the framework of representative democracy.

Mouffe presents a very down-to earth model of democratic system that can be empathised with both by the radicals and the pragmatists. The problem remains, however, that her theories lack certain consistency in terms of practical solutions. At the end of the talk I was left with a number of questions. What happens then, when we have achieved the necessary scale of plurality in the democratic representation? How exactly will this help when dealing with the super-bureaucratised system of the EU’s governmental bodies? Mobilisation and passion are indeed very much needed but would it not be easier to reform already existing structures, even if that means coming from slightly different political stances, rather than to constantly create new, radical democracy movements?

Alice Maselnikova, 6th May 2016

The Neoliberal Union: EU and its model of economic integration

Published on 17th October 2011

Economics / Ekonomie

The following analysis can be also downloaded as a pdf file by clicking on this link. Given the article’s extent (about 18 pages), it should make the content more readable.

To accuse the European Union (EU) of supporting of unfettered rule of market forces in the form of neoliberal policies is increasingly common under the fiscal and economic crisis that engulfs Greece and the eurozone. But the connection made between the Europe’s transnational union and this strand of economic thought is far from being new. The French voters rejected the draft Constitutional Treaty in the national referendum in the spring of 2005, because they perceived its silence on social policy as a threat to the French social model.¹ According to the French left-leaning monthly Le Monde diplomatique, the recent Lisbon Treaty only refurbished the same neoliberal principles that were already once rejected by the French people, but now without giving them the possibility of rejecting them again.² A thorough discussion of the principles behind the current form of European integration is therefore crucial for understanding the future prospects of the European project, especially since commentators from both the political left and right agree that further integration would be possible only when it would be backed by the support of the European public.³ Furthermore, if the presence of neoliberal policies in the European foundational treaties is confirmed, this might also engender debates on the fundamental principles of constitution-making: would it be legitimate if any future European constitution or constitutional treaty also clearly specified the principles (neoliberal or other) according to which its policies must be developed?⁴

In order to further this debate, this essay discusses the institutional structure and policies of the EU and, agreeing with some other commentators that discussed the same topic, it argues that the EU promotes a specific model of capitalism that can be best understood as ‘embedded neoliberalism’.⁵ In doing so, the approach of this work is following. First, it develops a model of neoliberal economics. Second, it continues by giving a brief historical overview of how this model competed for influence with other alternative models of capitalism at the EU level and states the reasons for its victory in the 1990s. And thirdly, it discusses the institutionalization of neoliberalism and overviews the major EU policies that can be associated with it.

The Political and Economic Principles of Neoliberalism

As even many authors that are critical of neoliberal policies acknowledge, the term ‘neoliberalism’ is eminently vague.⁶ It is often used pejoratively to describe the global spread of market economy and consumerist lifestyle at the expense of the traditional welfare state, thus avoiding rigorous analysis of the phenomenon.⁷ Thorsen and Lie, who manage to provide a very thorough overview of the concept, observed that the main problem when approaching the available literature is that ‘there does not seem to be anyone who has written about neoliberalism from a sympathetic or even neutral point of view.’⁸ Notwithstanding such problems inherent to the debate, for the purposes of this essay it suffices if neoliberalism is defined in terms of the core policies that are associated with it. Apart from Thorsen and Lie’s critical study, it is David Harvey’s A Brief History of Neoliberalism that provides a dispassionate introduction to the topic. He defines neoliberalism as being

in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets and free trade.⁹

Consequently, the role of the state is minimised to that of the preserver of the institutional framework appropriate to the free market economy. However, this does not entail that the state loses any of its political authority. Quite the contrary, as could be seen during the Reagan and Thatcher administrations in the US and UK respectively, ‘a more authoritative state must now concentrate on providing the conditions under which individual entrepreneurship, self-government, freedom and responsibility can be possible.’¹⁰ In other words, although its nominal sphere of influence is to be reduced, the state has to first roll back the ‘nanny’ welfare state and thus secure the legal framework for the inhibited running of markets. In this way, it also ensures the inviolability of the private property, or guarantees the defence and policing of the country. Furthermore, the state is put in charge of the privatisation of state-owned companies and of public utilities that aims at extending the domain of the market economy by creating new markets. The tight fiscal and monetary discipline, the liberalisation of trade and capital markets and the ‘flexibilisation’ of labour market are thus natural steps to be taken by the state when following the neoliberal principles. On the international scale, neoliberalism is associated with the promotion of reducing trade barriers and enhancing capital mobility and ‘together with the application of new information-based technologies, [it] facilitate[s] the emergence of less constrained multinational corporations able to negotiate the very favourable terms of investment with national governments’.¹¹ Obviously, neoliberalism could be also studied from the perspective of its underlying political philosophy, where the most important conclusion is that in putting the political emphasis on the individual, the differences between liberalism and neoliberalism are only slight.¹²

Foundation of the EU and Neofunctionalism

The European Union began as a project of economic, not of political integration. Jean Monnet, a key architect of the ECSC, explicitly based his views of the future of European integration on neofunctionalism.¹³ The neofunctional theory of regional integration was first developed by the American political scientist Ernst Haas, who argued that establishing economic interdependence between several countries will give the process its own internal dynamics, thus leading to the political integration through a series of ‘functional spillovers’.¹⁴ The 1985 White Paper of the European Commission on the creation of a single market in this way claimed that ‘just as the Customs Union had to precede Economic Integration, so Economic Integration has to precede European Unity,’ thus confirming that the neofunctionalist approach to the integration persisted as the dominant model throughout the Union’s whole history. The neofunctionalist approach can be criticised for giving excessive predominance to economy at the expense of politics or culture, as indeed many authors have done,¹⁵ but it is not directly connected to neoliberal policies. Similarly, the idea of economic integration has no necessary connection to (neo)liberalism as it is entirely possible to conceive an integrated economic system that would have upheld more social democratic values, protected its members against the negative effects of economic globalisation, and/or integrated only certain sectors of economy while supporting the local producers against large transnational corporations.¹⁶ While the idea of a common market is therefore not (neo)liberal per se, this work argues that the actual economic integration of the EU has been made according to fundamentally liberal principles, which consequently provided it with the institutional basis for the political shift to ‘embedded neoliberalism’ by the early 1990s. In order to analyse whether the EU contained neoliberal policies since its foundation, it is now necessary to turn to concrete policies that were behind such abstract phrases as ‘economic integration’.

The Development of the Economic Integration: Neoliberalism, Neo-Mercantilism, and Social Democracy

The European Coal and Steel Community was created as the first supranational institution in 1951 to encourage the expansion of iron and steel production and of heavy industry and, more generally, with the aim of preventing any future wars between France and Germany. As Christoph Hermann notes, it was ‘inspired by the notion of coordination and cooperation rather than market-mediated competition.’¹⁷ It was only the establishment of the European Economic Community (EEC) in 1957 that took the first steps to a free trade zone by creating a customs union with a common external tariff. Thus, in Article 3 of the Treaty of Rome, one can read that member states subscribe to a gradual development of a ‘common market free from distortions to competition’ – an idea with clearly liberal roots. At this point, thus distinguishing it from later neoliberal policies, the common market meant only free circulation of goods – free movement of labour, capital, and services were only institutionalised with the signing of the Single European Act (SEA) in 1986. The single European market of SEA was considered the last-resort response to the economic crisis Europe underwent in the early 1980s, when individual national therapies failed. Its aim was to create a ‘healthy’ pan-European competitive environment, with flexible capital and labour markets that would make it easier for the firms to carry structural readjustments that were until then hampered by the welfare regimes of individual member states.¹⁸ As Stephen Gill remarked, SEA marked a key shift in the European community’s policies towards a form of neoliberalism, for at that point ‘scientists, journalists and politicians succeeded in presenting the Single Market as the breaking-up of incrusted and rigid structures of European labour and social regulations.’¹⁹ Hermann observes that a key part of SEA was the principle of mutual recognition for those goods and services for which the EU did not regulate.²⁰ This principle had an inherently liberalizing tendency, since as no overarching regulation, supervisory procedures or common standards on goods were established, it has allowed the use of the lowest standards to be found among the contemporary 27 member states. This leads Hermann to conclude that the common market ‘has thus become a neoliberal market characterized by weak regulations or even deregulation.’²¹ This also amounted to a de facto liberalisation of the external trade policies, as the principle of mutual recognition has also applied to them.²² Furthermore, as Fritz Scharpf observes,

it required the liberalization of hitherto protected, highly regulated and often state-owned service-public industries and infrastructure functions, including financial services, air, road and rail transport, telecommunications and energy; and it extended the reach of European competition law to all national polices that could be regarded as distortions of free competition.²³

As described by Bastiaan van Apeldoorn, the establishment of the single market coincided with the creation of an elite forum of Europe’s emergent transnational capitalist class – the European Round Table of Industrialists (ERT). Founded in 1983, this lobby currently unites 50 CEOs of ‘of major multinational companies of European parentage covering a wide range of industry and technology’.²⁴ Apeldoorn’s analysis tries to show that the ideological development of ERT can be considered a microcosmos of the EU as a whole. In the early 1980s, ERT was dominated by European industrial capital, which had the major interest in protecting the European market from the global competition. Apeldoorn calls the model of capitalism to which they subscribed ‘neo-mercantilism,’ characterizing it as promoting defensive regionalisation as against globalisation.²⁵ At the same time, neo-mercantilism was largely compatible with the social-democratic strand of capitalism to which at least nominally subscribed Jacques Delors and his three Commissions (1985-94).²⁶ Delors’ support for the ‘European champions’ was a direct correlate of the neo-mercantilist arguments of ERT, but European industry was also willing to concede a further point to social democracy by supporting a certain level of social partnership with European labour.²⁷ The social democratic model also supported the ‘European social model’ of mixed economy that would complement ‘negative’ market integration, would strengthen supranational institutions, or ensure high levels of social protection for workers.²⁸ Nevertheless, the neo-mercantilist project, gradually faded into background when ERT, since the late 1980s fully controlled by globalised sections of European capital, shifted its support to ‘embedded neoliberalism’. The lobbying of ERT in support of neoliberal policies consequently played a vital part in undermining the social-democratic plans of Delors.²⁹ Furthermore, Andy Storey concludes that the support for neoliberal policies within European companies is likely to become even more entrenched as their sales outside Europe grow when compared to European markets.³⁰ Thus, he notes, between 1987 and 2000, the top nineteen companies of the European parentage increased their non-European sales from 34% of turnover to 46.2%, while within the EU their sales almost did not increase at all.³¹ Apeldoorn thus describes the embedded neoliberalism as a hegemonic project of ‘a class-conscious transnational business elite’.³² The difference between the embedded and ‘pure’ liberalism is in this way marginal: the difference lies in the former’s effort to co-opt other social forces such as trade unions by incorporating into the neoliberal discourse certain aspects of social policy. The social policy at the EU level thus acquires the ‘market enabling’ at the expense of traditional social policy instruments such as social protection or income redistribution. When compared to national welfare state models, the remit of the market remains unrestricted and the social policy itself acquires the character of facilitating the workers’ participation in the labour market (e.g. for instance through training or requalification). On the other hand, all efforts that would have provided for a substantive EU social policy and that would have balanced out the fiscal constraints imposed on the member states by the treaties, EMU and SGP so far failed.³³ A clear example of market-enabling social policy is present in the Europe 2020 strategy recently put forward by the Commission. Although it claims that it sets out a vision of ‘Europe’s social market economy,’ it stresses that the European economy must be restarted by privileging an economy ‘based on knowledge and innovation’, ‘fostering high-employment’, and ‘modernis[ing] labour markets and empower[ing] people by developing their of [sic] skills throughout the lifecycle with a view to increase labour participation’.³⁴ When it comes to the social dialogue and partnership that the European founding treaties refer to (Arts. 152 & 153 of the Treaty on the Functioning of the European Union), the most of the commentators argue that trade unions have at best a mixed record when engaging with the EU politics.³⁵ In this way, Andy Storey then adds that that ‘engagement there has been has tended towards the containment of the unions within corporatist structures rather than seriously challenging neoliberal policies.’³⁶

In criticising this lack of a full-fledged social policy at the EU level, it must be noted that the authors such as Scharpf argued that an option of having a traditional welfare state at the EU level is in practice foreclosed by the diversity of European welfare state models and that only an intergovernmental co-operation based on the strengthened Open Method of Co-operation is in practice feasible.³⁷ In this model of strengthened co-operation of Scharpf, or Iain Begg and Jos Berghman, a common approach to social policy would be adopted and be enforceable at the EU level, while its implementation would still remain national, with sufficiently extensive provision for national differences.³⁸ If such option is open, it should be concluded that there is clearly no other reason than the member states’ and the EU’s commitment to neoliberalism that would explain the lack of political will in implementing such European model of social policy provision.

Economic and Monetary Union and Stability and Growth Pact

A crucial further step in the process of ‘neoliberalisation’ of the EU has been the Economic and Monetary Union of the EU (EMU) that was completed in three stages between 1990 and 1999, with the Euro as the common currency being adopted in 2002.³⁹ For purely pragmatic political reasons (it was perceived as a crucial step in the long-term development of the economic integration), the EMU was backed in the late 1980s even by the ‘Europeanist’ part of ERT.⁴⁰ The EMU is administered by the independent European Central Bank (ECB) that is endowed with an explicit anti-inflationary mandate, maintaining high interest rates to this end. Commenting on the latter, Scharpf thus observes that the monetary union has not only deprived the member states of the capacity to control exchange rates according to local economic exigencies, but also of the the ability to control interest rates.⁴¹ This entails that the interest rates set by the ECB to correspond to average conditions in the Eurozone ‘will be too high for economies with below-average rates of economic growth and inflation and too low for countries above the average. Hence they will further impede the recovery of sluggish economies and add to inflationary pressures in countries with high growth rates’.⁴² Indeed, the disparities between different regions are a problem in any larger state, but then they are solved by national redistribution policies, which are, as was stated above, unavailable to the EU.

The Stability and Growth Pact (SGP), which was as a part of EMU adopted in 1997, adds further neoliberal constraints on the fiscal policy of the member states. Its purpose is to monitor the fiscal discipline of the EU member states and potentially sanction the offending members. Although its efficiency was recently doubted,⁴³ for the purposes of this essay it suffices to say that the criteria it officially sets are clearly neoliberal. Thus, according to the SGP, the annual budget deficit of the member states should not be higher than 3% of their national GDP and their national debt should be lower than 60% of their GDP. These rules were softened in 2005 (budgetary objectives are now reviewed every fourth year and countries with a low public debt and a potential for high growth are allowed a budgetary deficit of 1% of GDP in the medium term), but their fundamental neoliberal nature remains unchanged.⁴⁴ By the SGP and other above stated measures related to the EMU, the European law thus effectively bans the use of those national macroeconomic (Keynesian) instruments that could positively influence national growth.

European Treaties

The presence of neoliberal policies is the most fully developed in the European founding treaties themselves. They will be discussed by referring to the last, post-Lisbon consolidated version of Treaty on European Union (TEU) and Treaty on the Functioning of the European Union (TFEU).⁴⁵ The Art. 26 of TFEU, which outlines the principles of the internal market, thus states that it ‘shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties’. The Art. 119.1 of TFEU expands this by confirming that the adoption of an economic policy will be ‘conducted in accordance with the principle of an open market economy with free competition’. The third point of the same article further adds that the guiding principles of economic and monetary policy will be ‘stable prices, sound public finances and monetary conditions and a sustainable balance of payments’. The only exceptions to the free running of the markets that are mentioned in the treaties are in the Arts. 27 and 144. The first of these states that the Commission can decide on temporary derogation from the principles of free market for the ‘economies showing differences in development’, however, such provisions ‘must be of a temporary nature and must cause the least possible disturbance to the functioning of the internal market’. The Art. 144 contains a similar clause that allows the governments to take precautionary protective measures in case of a sudden crisis in the balance of payments. The Art. 21.2e of TEU also mentions that in its foreign policy, the EU shall ‘encourage the integration of all countries into the world economy, including through the progressive abolition of restrictions on international trade’. This clear adherence to the neoliberal project is further expanded in the Art. 206 of TFEU, which states that the Union will contribute ‘to the harmonious development of world trade, the progressive abolition of restrictions on international trade and on foreign direct investment, and the lowering of customs and other barriers’. Finally, if the member states adopt measures that distort competition and the principles of free market as laid down in the treaties, the Arts. 258, 259 and 348 of TFEU allow the Commission or any member state to bring that matter before the European Court of Justice. The Art. 260 of TFEU then stipulates that the Court’s decisions are binding and the member states that fail to comply are liable to fine specified by the Commission.

Notwithstanding the presence of these neoliberal provisions in the EU treaties, some authors such as Laurent Pech argued that the leading critics of neoliberalism ‘are mysteriously selective in their reading’.⁴⁶ Pech therefore points out that TEU and TFEU also contain what he considers an ‘extensive set of social objectives’.⁴⁷ Is it possible to confront such charge? Indeed, Pech is right when he notes that the present treaties explicitly mention a number of social commitments. One should thus recall the Art. 3.3 of TEU that states that the Union shall establish ‘a highly competitive social market economy, aiming at full employment and social progress, and a high level of protection and improvement of the quality of the environment’ (it should be noted that some authors would certainly see argue a contradiction between ‘highly competitive’ and ‘full employment and social progress’). Similarly, the Art. 153 of TFEU recounts an extensive list of the objectives that ‘the Union shall support and complement’ to the activities of the member states. They range from the commitment to the improvement of working conditions (a) and working environment (b), to the combating of social exclusion (j).

Nevertheless, in the light of the actual institutionalisation of the EU treaties as recounted higher above, one should question the seriousness of these commitments. Surely, if that commitment carried more than rhetorical weight, the EU would not subsume social policy under that general neoliberal framework, which was analysed over the course of this essay. The goal of combating social exclusion, or building a truly social market economy is certainly not compatible with the weak institutionalisation of the social dialogue with the employees, absence of substantive social policy, weakly regulated common market that favours ‘high competitiveness’, or the policies of fiscal austerity promoted by the EMU and SGP. It is rather the case, as Apeldoorn pointed out, that such subscription to social policy goals is characteristic for the political project of embedded neoliberalism with its effort to co-opt the other social strata to what still remains essentially a neoliberal project. In the end, however, such support for social values does not go beyond mere rhetorical commitment.

Conclusion

As Douglass North suggested already in 1991, the structure of the EU, including both its constitutive treaties and its actual policies, is ‘not politically innocent, but rather facilitates or hinders the adoption of specific political programs’.⁴⁸ In this essay it was argued that the model of capitalism promoted by the EU can be best described as embedded neoliberalism. To this end, a general model of neoliberalism was developed and consequently applied when analysing the development of the EU’s economic integration from Jean Monnet to the last amendment of the constituting treaties by the Treaty of Lisbon. Firstly, the claim that the neofunctionalist project of economic and political integration was inherently (neo)liberal was dismissed. Secondly, it was shown that in the 1980s the project of embedded neoliberalism, supported by the European Round Table of Industrialists, won over other two competing models of capitalism: neo-mercantilism and social democracy. The subsequent development in the EU, as best perceived in the establishment of Economic and Monetary Union and fiscal constraints imposed by the Stability and Growth Pact, then proceeded along the lines of embedded liberalism, with a limited commitment to social policy, which acquired market-enabling character. Finally, the neoliberal character of the European economic integration was confirmed by analysing the essential principles of the Treaty on European Union and Treaty on the Functioning of the European Union.

* I have written this paper in 2010 as a part of completing my MA European Studies at King’s College London. This version has a slightly reworked introduction that sets it in the context of the eurozone’s fiscal crisis.

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