The New International Economic Environment: Technological Revolution

During the last decades of the twentieth century, a new chapter opened in world economic history: the robust new technological revolution, led by information and communication technologies. This was combined with a near-total internationalization of the world economy, or globalization. Internationalization had a long history in Europe, going back to the late nineteenth century and more directly to its reemergence after World War II after the backlash in the interwar decades. However, the transition from the 1970s to the 1980s became the real watershed for its breakthrough. Globalization emerged as a new policy that replaced colonialism for the leading economic powers, but it also had an objective economic base in the new technological and corporative-managerial revolution.

The communication and technological revolution that conquered the advanced world after 1980 like the British industrial revolution had 200 years before, has a history that is several decades long. Its beginning goes back to World War II, when the first mainframe computer, the British “Colossus,” started decoding German military communications at the beginning of 1944. The other most visible invention of the time, which had monstrous worldwide reverberations, was the atomic bomb, or, better put, the path-breaking use of nuclear energy.

Black Prophecies – or the Rise of a European Superpower?

World War II destroyed and weakened most of Europe, and the Cold War soon divided the continent into two separate and hostile halves. The West needed American financial and military assistance to rebuild its economy and to secure itself from outside dangers. A third of a century later, however, Western Europe rose as an economic superpower and the cradle of the welfare state. Besides postwar prosperity and its successful adjustment to globalization after the shock of the 1970s, the most important factor of Europe's rise was its rapid integration process, the foundation and enlargement of the European Union.

However, frightening negative demographic trends accompanied and counterbalanced the main positive trends. Europe's population is decreasing and aging and the ratio of active to inactive people will be 50:50 in a few decades. Rapidly increasing immigrant labor is replacing the inadequate domestic labor force. Immigrant minorities, mostly from non-European Muslim cultures, are rapidly increasing. Integration or assimilation is painfully slow, or non-existent. A part of the immigrant population, especially the illegal ones, form a new underclass. Anti-immigrant hostility and intolerance are fueling extreme right-wing political trends. The minority question became a source of explosive tension on the continent. Quo vadis Europa in the twentyfirst century? What will take over and dominate, positive or negative tendencies?

Dramatic Demographic Changes

Since 1980, a new chapter opened in the demographic history of Europe. As Massimo Livi-Bacci suggests, five main phenomena deserve special attention: the decline of mortality; the decline of birth rates to below replacement levels; the rapid aging of the population; the end of mass emigration and the beginning of immigration; and last, changes in social rules and behavior (marriage customs, family structures).

Indeed, the mortality rate declined to ten deaths per 1,000 at the end of the twentieth century. The decline of infant mortality played an important part in this change. At the turn of the century, only eight to ten infants died per 1,000 live births.

These changes were the culmination of a permanent demographic trend, which gradually accelerated in three distinct, two- to three-decade periods of the twentieth century: the quarter-century interwar period, a quarter-century post-World War II period, and the two to three decades ending at the turn of the twenty-first century. In the end, death rates dropped to one-third and infant mortality to less than one-tenth of the early twentieth-century level. Moreover, the regional differences within Europe, which were significant even in the mid-twentieth century, virtually disappeared.

The new developments were largely the outcome of improvements in health care, the “therapeutic revolution” of the later part of the century. This was also closely connected to the rise of the welfare state in both halves of the continent, which guaranteed full health insurance for all citizens.

Major political and cultural-intellectual trends and events of historic proportions, most of which were surprising and unpredicted, have characterized Europe during the three decades since 1980. The outcome has been a dramatic transformation of the continent. I am going to discuss those elements of this political transfiguration that were of particular historical importance.

Unquestionably, the number one factor in bringing about these global changes was the collapse of communism and the Soviet superpower. The Cold War division of Europe and the world, which had determined its history since 1945, finally ended. The danger of war was eliminated. A closely related “side effect” of the end of communism was German reunification, a gigantic historical event in itself that nobody wanted to see outside Germany, but which no one was able to stop.

The announced “new world order” became a chaotic disorder. Europe rearranged itself and realized a new European order, though not without huge dramas, including the division of states along ethnic or religious lines, sometimes attended by civil wars, armed struggles, and terrorist methods in fighting for independence. These changes accompanied another equally historic change, a milestone in European history, which was the transformation and elevation of the European Community, both in terms of its expansion and its radically “deepened” integration. It took deep roots during the Cold War. This development began the elevation of Europe as a superpower.

Why write a book called Europe since 1980? What is Europe? And why focus on 1980? Was 1980 a turning point in the history of the old continent? This volume attempts to answer these questions, pointing to both global changes and unique European developments that were the main factors, as manifold as they were interrelated, in the dawning of a new historical period.

The first of these factors in order of importance, though not in chronological order, was the collapse of communism and the Soviet Union, and consequently the division of Europe. This had an overwhelming impact on every aspect of post-1990–1 Europe. Europe became a safer place and more united. A failed system disappeared and half of the continent emerged onto the road of a difficult but promising transformation. However, the western half of Europe also changed. The half-century-long rivalry between capitalism and socialism during the Cold War influenced Western society and politics. Besides the very visible arms race and the sometimes hysterical witch-hunting, the challenge of socialism inspired social awareness as well as a “social market” policy. This political competition had a long history, stemming from Chancellor Otto Bismarck's social insurance policy that he instituted to take the wind out of the sails of the rising social democratic movement in late-nineteenth-century Germany.

World War II, the most shocking historical and demographic catastrophe in European history, undermined Europe's position in the world. About 40 million Europeans perished, and huge parts of the continent were left in ruins. At their postwar nadir, the combined Gross Domestic Product of Austria, Germany, Italy, Belgium, and France had declined to less than half its prewar level. Bombing and street fights fatally destroyed Berlin, Dresden, Hamburg, Leningrad, Warsaw, and Budapest. The population of the Soviet Union, Poland, and Yugoslavia was literally decimated, the European Jewry was nearly eliminated, and tens of millions of people were uprooted. Devastation, inflation, and starvation left Europe on its knees.

Moreover, the clouds of a rising new conflict darkened the horizon at the end of the war. A creeping Cold War, with conflict and confrontation between wartime allies, brought uncertainty and fear to the shocked continent. The Soviet Union occupied and soon sovietized the countries east of the River Elbe that it had liberated from Nazi German and local fascist rule. The Eastern half of the continent was isolated from the West by a Soviet-type economic system and social-political regime and formed separate Soviet-led economic and military arrangements. In terms of trade, travel, and communication, exchange between the two halves of Europe was limited to a minimum. Several people believed that Stalin wanted to enlarge his buffer zone by occupying additional parts of the continent.

The Rise of a New Zeitgeist

Ideological and cultural trends do not know state borders. In the second half of the twentieth century, the “Western world” – meaning Western Europe, North America, and Australia – were more closely connected than ever before. The United States of America, the recognized leader of the Western world, had special influence. The new ideological and cultural trends since the 1970s and 1980s were not narrowly European, nor merely American, but “Western.”

The role of Western Europe was decisive, however. Neo-liberalism, one of the most important new ideological trends, was the child of both the Vienna School of Economics and the Chicago School of Economics. The newly emerging anti-Enlightenment philosophical trend, postmodernism, was strongly French, while neo-conservatism emerged in the United States. Decisive new political trends, such as the dramatic decline of the Left parties, were British and Italian-influenced, while traditional social democracy remained intact in Scandinavia. The rise of single-issue movements and leftover left-wing trends, such as the Green movement, was strongest in Germany. Feminism conquered Scandinavia and had strong roots in the United States as well. New populism emerged in Italy, while extreme right-wing populism was equally strong in France and Austria.

The “dual-crises” of the 1960s and 1970s, together with rising globalization and the transforming world order, generated a major about-face in the cultural-ideological environment of the Western world. The sudden change generated doubts about the policy, and harsh critiques erupted about the unintended negative side effects of postwar policies and institutions.

It is a great pleasure to introduce this volume edited by Elias Mossialos, Govin Permanand, Rita Baeten and Tamara Hervey. It is a volume which continues the success of two earlier books commissioned by the Belgian government and published by Peter Lang Publishing Group in 2002. The topic of this contribution is a crucial one. Indeed, one can hardly imagine a subject closer to the lives of European Union (EU) citizens than an exploration of how EU law and policy has influenced, and will continue to influence, the health systems of the 27 Member States. This two-dimensional perspective means that this work will certainly be studied with great interest by all concerned with the functioning of the EU as well as by those wanting to discover more about national health systems.

In principle, in light of Article 152 of the EC Treaty, national authorities are solely responsible for health care. Yet, though the Member States are free to decide how to deliver and organize health services, they must do so in compliance with other aspects of the Treaty, in particular with the fundamental freedoms and elements of competition law. Put differently, national health systems are not enclaves of national sovereignty insulated from European market integration. While EU legislators may not regulate health care as a means of promoting social cohesion, they may, however, enact legislation relating to those aspects affecting the establishment and functioning of the internal market. Given that national health systems are deeply rooted in social solidarity and welfare, the “constitutional asymmetry” (to borrow the term used by Fritz Scharpf)laid down in the Treaty gives rise to important tensions.

Introduction

Throughout the European Union, health care systems traditionally have been characterized by extensive regulatory intervention. National and regional authorities intervene mainly to ensure equal access, sustainability, quality, safety, equity and efficiency of health care for the citizens residing in their territory. Given the multitude of different actors involved, they need to align these overall principles and objectives with the interests of stakeholders to ensure the stable cooperation of all the players in the system.

Increasingly, this high level of public intervention has been challenged on the part of the European Community. Regulation in the field of health care is being scrutinized with regard to its conformity with EU law, particularly Community rules on free movement (of persons, goods and services). As different forms of mobility in the EU increase and also extend to all sectors, including health care, national measures and mechanisms increasingly run the risk of being seen as unjustified obstacles to free movement, which is prohibited under the EC Treaty. This chapter will focus particularly on the impact of the EC Treaty rules on free movement of services, which encompass both the principles of free provision of services (Article 49–50 EC) and of free establishment of providers (Article 43 EC).

Mainly spurred on by the jurisprudence of the European Court of Justice (the Court) and the action undertaken by the European Commission, the application of these two principles has gradually made its way into national health systems and has extended far beyond the specific cases of patient and provider mobility.