European government, politics and policy

Summary

On July 20, 1816, Pierre Maze, a middle-aged farmer and part-time tile maker, sat in the interrogation room at the prévôtal court in Périgueux. The discomfort he felt was not because of the summer heat, nor the arduousness of the journey that had brought him there: his home in the place known as Planèze, part of the village of Neuvic, was only a few hours’ ride along the Isle river valley from the administrative capital of the department of the Dordogne. Rather, his anxiety stemmed from the fact that he was about to be questioned on two dangerous charges: inciting others to overthrow the government and assault on the king. His actions had not threatened the king's life, however, but merely the stability of his government: unlike assassins of earlier eras, armed with knives, Maze's crime was one of words.

When the men of the court entered the room, Maze composed himself. Fifteen witnesses who lived in and around Neuvic had testified to the words he had spoken at the time of Carnival, earlier that spring. Maze had moved about the fairs and marketplaces, they stated, entering into the taverns to encourage his fellow citizens not to pay their taxes. “Don't pay taxes to this potato-eating king, to this king with his plaster face,” he was reported to have said. “Bonaparte is set to land with 600,000 men; Louis XVIII will flee and take our money with him, like he did the first time.”

Summary

On a brisk morning in February 1796, Thomas Bordas, an illiterate weaver from the village of Segonzac in the Dordogne, stood in the cold, listening to the president of the local administrative council deliver a long, elaborate, and—quite frankly—uninteresting speech. The speaker took pains to praise the hard work of the Parisian deputies who had recently completed the Constitution of the Year III, exalting the French Republic and its most recent government, the Directory. Bordas suspected that the presentation was drawing to a close when it came time for those assembled to swear an oath of loyalty to the Republic. But unlike earlier revolutionary oaths, which had required an unobjectionable statement of loyalty to the nation and a promise to uphold liberty and equality, the new oath of the Year IV demanded that citizens testify to their “hatred of royalty.” As first the municipal officers and then other citizens, in turn, began to pronounce aloud “I swear to despise the monarchy and to remain faithful to the Republic and to the Constitution of the Year III,” the villagers began to talk among themselves in low voices, and Bordas’ own frustration grew. He looked nervously from side to side, as if seeking the solidarity of his neighbors. Finally, he could take it no longer. He stepped forward, interrupting the speaker, and said loudly that this manner of swearing oaths meant nothing and that it was only the self-important municipal officers who insisted upon it.

Summary

The argument that country dwellers held political opinions in the eighteenth century scarcely needs to be made. People have always thought about and talked about the issues that affect them personally. And those opinions may well have been informed ones: villagers received plenty of news and information from the outside world, either via administrative channels (through intendants and subdélégués to village municipal councils and local parish priests) or informal ones (including reported news, rumor, and individuals’ statements of their opinions and ideas). Informal channels long antedated the Poste du roi and continued in this period as a major means of communicating. Laura Mason has suggested that, during the French Revolution, political songs “outpaced printing presses and police alike” in conveying controversial opinions, and, indeed, it is not uncommon to find that news borne by a government-appointed messenger had already been received hours or days before via informal channels. Rumors of the attempt on Louis XV's life in 1757 reached the southwestern town of Auch, for example, by the correspondence of a merchant in Bordeaux, who had the news from an express courier who had stopped in Bordeaux on his way to Spain; given the shocking nature of the news, locals were unsure whether to believe it until corroborating evidence arrived in the form of the official letter from the secretary of state. Country people were both curious about developments taking place and well used to getting their information from people they knew or met.

In this important new book, Giandomenico Majone examines the crucial but often overlooked distinction between the general aim of European integration and the specific method of integration employed in designing an (ill-considered) monetary union. Written with the author's customary insight and precision, this highly topical and provocative book reviews the Union's leaders' tradition of pushing through ambitious projects without considering the serious hurdles that lie in the way of their success. Regional and European integration topics are discussed, including credibility of commitments, delegation of powers, bargaining and influence activities, adverse selection and moral hazard. The author also offers a deeper examination of the specific crisis of monetary integration, arguing that it might be more effectively achieved with inter-jurisdictional competition and suggesting how integration should be managed in the globalized world.

Summary

From transaction-cost economics to transaction-cost politics

In spite of its growing importance in the new institutional economics and in political science, the transaction-cost approach to the analysis of institutions has not yet found significant applications in studies of regional, and in particular European, integration. Since this and related approaches – such as the economic theory of clubs discussed in the preceding and in later chapters – play an important role in the general argument developed in the present book, it seems advisable to introduce at this point the key ideas of the transaction-cost approach. Generally speaking, transaction costs are the costs of operating an economic, a political, or a social system. In case of the market system, Ronald Coase’s characterization is still the clearest:

In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal with and on what terms, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on.

(Coase 1988: 15)

Thus the costs of using the market system may be classified as: (1) costs of preparing contracts, i.e., search and information costs, narrowly defined; (2) costs of concluding contracts: bargaining and decision-making costs; and (3) costs of monitoring and enforcing the contractual obligations. Such costs are clearly different from the costs of producing goods and services – the only costs considered by neo-classical economics – but they are as real and significant as production costs. Following Williamson (1985) we can think of transaction costs, whether they arise in economic or in political systems, as the social equivalent of friction in physical systems. The same author also emphasizes the comparative nature of transaction-cost analysis, which consists in calculating ‘the comparative costs of planning, adapting, and monitoring task completion under alternative governance structures’ (cited in Dixit 1996: 31). The writings of scholars such as Ronald Coase, Oliver Williamson, and Douglass North have led to the recognition that various transaction costs are the primary reason why competitive markets do not function as effectively as suggested by neo-classical theory.

Summary

The principle of equality in the EU

A key element of the ideology of European integration is the basic equality and equal dignity of all the member states, from the smallest to the largest: no leader but a ‘collective leadership’ as the principle of equality of all member states has sometimes been characterized. This principle of formal and (to the extent possible) substantive equality has inspired all the European treaties and also the day-to-day practice. It is reflected in the design and modus operandi of the European institutions. Indeed an important, if tacit, responsibility of the Commission is to ensure that the interests of the smaller member states are sufficiently taken into consideration – which explains why the smaller countries have always been the strongest supporters of the supranational executive. Clear evidence of the importance these member states attach to membership in the Commission is the promise made by the European Council after the failure of the first Irish referendum on the Lisbon Treaty (in June 2008) to abandon the planned reduction of the number of Commissioners – a promise meant to facilitate the success of the second referendum. The price of the concession is not negligible, however: as Piris (2011) points out, a Commission with twenty-seven, or more, members is hardly capable of taking decisions.

A direct consequence of the principle of equality is the fact that nobody can claim to govern the Union and, as a corollary, the absence of the traditional government–opposition dialectic. The European Commission, which many Euro-enthusiasts used to see as the would-be kernel of the future government of a politically united Europe, in fact looks more and more like an international bureaucracy and less and less like a proto-government. Even the European Council – the most likely candidate to provide leadership at the supranational level – is only able to achieve what the member states want it to achieve, with agreements hammered out – often bilaterally – beyond its walls (Peterson and Shackleton 2012). There are good reasons to believe that, short of a radical transformation, political leadership will always be an extremely scarce commodity in the EU. The belief in the equality of all the member states and in unanimity as the optimal decision rule, at least in the case of politically sensitive decisions, has deep ideological roots.

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Central issues

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Regionalism, old and new

The revival of regional integration in the 1980s – which Jagdish Bhagwati (1993) labelled the ‘Second Regionalism’, in contrast to the ‘First Regionalism’ of the 1960s – raises a number of issues, starting with the question why the first regionalism failed (with the notable exception of the European Economic Community (EEC)), while this time regionalism is likely to endure. The conversion of the United States (US) to regionalism is of major significance in this respect. As the key advocate of multilateralism through the post-war years, its decision to travel the regional integration route seems to have tilted the balance at the margin from multilateralism to regionalism. A second important factor has been the widening and deepening of the European Community/Union (EC/EU). Thus, the fear that European investments would be diverted to Eastern Europe was cited by President Salinas of Mexico as a factor decisively pushing him toward the North American Free Trade Agreement (NAFTA). He felt that a free trade area embracing all of North America would enable Mexico to get the investments needed from the US and Canada, as well as from Japan (Bhagwati 1993; Vega Cànovas 2010). In his comment on Bhagwati’s article, Robert Baldwin considered the likelihood of a gradual drift of the North American regional bloc to include a number of other Latin American countries. This enlargement would be driven by pressures from these countries to tap into the US market but another important factor that might drive the expansion of an American-centred bloc, according to Baldwin, ‘would be the growing influence of the European Community in trade, macroeconomic and foreign policy matters. US political and economic leaders may adopt the view that it is necessary to expand such a bloc in order to match the increasing political and economic power of the Community’ (Bhagwati 1993: 54).

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Central issues

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Central issues

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Central issues

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As globalization of competition has intensified, some have begun to argue a diminished role for nations. Instead, internationalization and the removal of protection and other distortions to competition arguably make nations, if anything, more important. National differences in character and culture, far from being threatened by global competition, prove integral to success in it.

(Porter 1990: 30)

Efforts at European unification are raising questions about whether the influence of nations on competition will diminish. Instead, freer trade will arguably make them more important While the effective locus of competitive advantage may sometimes encompass regions that cross national borders. . .Europe is unlikely to become a ‘nation’ from a competitive perspective. National differences in demand, factor creation, and other determinants will persist, and rivalry within nations will remain vital.

(Ibid.: 158–9)

Nations can reconcile social purpose with individual aspirations and initiatives and enhance performance by their collective synergy. The whole is more than the sum of the parts. Citizens of a nation will respond better to state encouragement and initiatives; conversely, the state will know better what to do and how, in accord with active social forces. Nations can compete.

(Landes 1998: 219)

Farewell to the nation state?

According to the federalists of the immediate post-WorldWar II period, it was impossible to rebuild a democratic, prosperous and powerful Europe starting with the nation states: only a strong federation could solve the great problems of the post-war period. The establishment of a federal super-state, the Italian federalist Altiero Spinelli argued, would have to precede the political and economic reconstruction of the national states, the former being the necessary foundation of the latter. The government of the future European federation was supposed to be responsible not to the national governments but directly to the peoples of the states of the federation. Indeed, since the construction of a European federal state was supposed to precede the reconstruction of the national governments, the federalist ideology would necessarily supersede the ideological divisions of the past.

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Central issues

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Fait accompli and total optimism

According to the Treaty on European Union (TEU), Article 107 (1), ‘The ESCB [European System of Central Banks] shall be composed of the ECB and of the national central banks.’ This wording makes clear that the authors of the treaty had assumed that all member states of the EU would join the monetary union – an overly optimistic assumption, as it turned out. As we shall see in the present chapter such a priori optimism is (or was until recently) a characteristic feature of the political culture of European integration – and one reason why crises always find EU leaders unprepared. When the euro was introduced, an American political economist wrote: ‘Prudence might have counselled that the European Union take certain steps well before the creation of the euro area’ (Henning 2000: 41). He was referring to what economist Charles Wyplosz has called the ‘dark secret’ of monetary union: the fact that the relevant article of the Maastricht Treaty is so ambiguous that it is not clear who is actually responsible for the exchange rate of the euro, see chapter 1. Even Wim Duisenberg – who as (first) president of the ECB should have been better informed about the financial conditions of would-be members of the monetary union – was absolutely delighted when, in January 2001, Greece adopted the euro. Like many other Euro-enthusiasts the Dutch central banker was convinced that for the sake of European integration it was important to have as many countries as possible in the monetary union. Thus, possible risks were totally ignored (Lévy 2012). These are only few examples of the unconcerned, not to say reckless, attitude which until recently prevailed among EU leaders – not just in monetary policy but in all areas of European competence. Henning, like the majority of American experts, counselled prudence, but the truth is that prudential reasoning is foreign to the Monnet strategy of fait accompli which, as mentioned in chapter 1, goes back to the beginnings of European integration.

Summary

Central issues

European government, politics and policy

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Conclusion

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Introduction

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2 - From Émotion Populaire to Seditious Words: Rural Protest in the Ancien Régime

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Frontmatter

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Rethinking the Union of Europe Post-Crisis

4 - Deepening integration: transaction costs and socio-political limits

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8 - The limits of leaderless Europe

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10 - EU development policy

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Introduction: varieties of regional integration

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Frontmatter

12 - Common Security and Defence Policy

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9 - Common Commercial Policy

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4 - Nature of EU external competence

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10 - The nation state between globalization and regional integration

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13 - The external dimension of the internal energy market

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Table of instruments and legislation

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2 - A political culture of total optimism: its rise and fall

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8 - The EU and international institutions

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European government, politics and policy

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Rethinking the Union of Europe Post-Crisis

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