brought him down. It was the corset of the Stability Pact that forced Portugal—a small country unable to ignore it—into slashing social benefits and plunged the country into a steep recession in 2003. The government in Lisbon did not survive either. The notion that today’s EU comprises little more than a set of innocuous technical rules, as value-neutral as traffic-lights, is an idle one.
Historically, there was from the beginning a third vision of what European integration should mean, distinct from either federalist or inter-governmentalist conceptions of the Community. Its farsighted theorist was Hayek, who already before the Second World War had envisaged a constitutional structure raised sufficiently high above the nations composing it to exclude the danger of any popular sovereignty below impinging on it. In the nation-state, electorates were perpetually subject to dirigiste and redistributive temptations, encroaching on the rights of property in the name of democracy. But once heterogeneous populations were assembled in an inter-state federation, as he called it, they would not be able to re-create the united will that was prone to such ruinous interventions. Under an impartial authority, beyond the reach of political ignorance or envy, the spontaneous order of a market economy could finally unfold without interference.
By 1950, when Monnet was devising the Schuman Plan, Hayek himself was in America, and played little part in shaping discussion of integration. Later, rejecting the idea of a single currency as statist, in favour of competing private issues, he would come to the conclusion that the Community itself remained all too dirigiste. But in Germany, there was a school of theorists that saw the possibilities of European unity in similar terms, the Ordo-Liberals of Freiburg, whose leading thinkers were Walter Eucken, Wilhelm Röpke and Alfred Müller-Armack. Lacking Hayek’s intransigent radicalism, they were close to Ludwig Erhard, the reputed architect of the post-war German miracle, and thereby had more real influence in the early days of the Common Market. But for thirty years, this was still a somewhat recessive gene in the make-up of the Community, latent but never the most salient in its development.
With the abrupt deterioration in the global economic climate in the seventies, and the general neo-liberal turn that followed in the eighties, Hayekian doctrine was rediscovered throughout the West. The leading edge of the change came in the UK and US, with the arrival of Thatcher and Reagan. Continental Europe never produced comparably radical regimes, but the ideological atmosphere shifted steadily in the same direction. The collapse of the Soviet bloc sealed the transformation of working assumptions. By the nineties, the Commission was openly committed to privatization as a principle, pressed without embarrassment on candidate countries along with other democratic niceties. Its most powerful arm had become the Competition Directorate, striking out at public sector monopolies in Western and Eastern Europe alike. In Frankfurt the Central Bank conformed perfectly with Hayek’s pre-war prescriptions. What was originally the least prominent strand in the weave of European integration had become the dominant pattern. Federalism stymied, inter-governmentalism corroded, what had emerged was neither the rudiments of a European democracy controlled by its citizens, nor the formation of a European directory guided by its powers, but a vast zone of increasingly unbound market exchange, much closer to a European ‘catallaxy’ as Hayek had conceived it.
The mutation is by no means complete. The European Parliament is still there, as a memento of federal hopes forgone. Agricultural and regional subsidies, legacies of a cameralist past, continue to absorb most of the EU budget. But of a ‘social Europe’, in the sense intended by both Monnet and Delors, there is as little left as a democratic Europe. At national level, welfare regimes that distinguish the Old World from the New persist, of course. With the exception of Ireland, the share of state expenditure in GDP remains higher in Western Europe than in the United States, and the larger part of an academic industry—the ‘varieties of capitalism literature’—is dedicated to showing how much more caring ours, above all the Nordic versions, are than theirs. The claim is valid enough; the self-satisfaction less so. For as the numbers of long-term jobless and pensioners have risen, the drift of the age has been away from earlier norms of provision, not beyond them. The very term ‘reform’ now means, virtually always, the opposite of what it denoted fifty years ago: not the creation, but a contraction, of welfare arrangements once prized by their recipients. Historically, the two chief structural advances beyond the post-war gains of social democracy—the Meidner plan for pension funds in Sweden, and the thirty-five-hour week in France—have both been rolled back. The tide is moving in the other direction.
Today’s EU, with its pinched spending (just over 1 per cent of Union GDP), minuscule bureaucracy (around 16,000 officials, excluding translators), absence of independent taxation, and lack of any means of administrative enforcement, could in many ways be regarded as a ne plus ultra of the minimal state, beyond the most drastic imaginings of classical liberalism: less even than the dream of a nightwatchman. Its structure not only rules out a transfer, of the sort once envisaged by Delors, of social functions from national to supranational level, to counter-balance the strain these have come under from high rates of unemployment and growing numbers of pensioners. Its effect is to accentuate, rather than compensate, pressure on national systems of social provision, as so many impediments to the free movement of factors of production. As a leading authority explains: ‘The neo-liberal bias of the EU, if it exists, is justified by the social-welfare bias of current national policies’, which ‘no responsible analyst believes can be maintained’—‘European social policy exists only in the dreams of disgruntled socialists’. The salutary truth is that ‘the EU is overwhelmingly about the promotion of free markets. Its primary interest group support comes from multinational firms, not least US ones’. In short: regnant in this Union is not democracy, and not welfare, but capital. ‘The EU is basically about business’.11
3
That may be so, enthusiasts might reply, but why should it detract from the larger good that the EU represents in the world, a political community that stands alone in its respect for human rights, international law, aid to the poor of the earth, and protection of the environment? Could the Union not be described as the realization of the Enlightenment vision of the virtues of le doux commerce, that ‘cure for the most destructive prejudices’ as Montesquieu described it, pacifying relations between states in a spirit of mutual benefit and the rule of law?
In the current repertoire of tributes to Europe, it is this claim—the unique role and prestige of the EU on the world’s stage—that now has pride of place. What it rests on, ubiquitously, is a contrast with the United States. America figures as the increasingly ominous, violent, swaggering Other of a humane continent of peace and progress—a society that is a law to itself, where Europe strives for a legal order binding on all. The values of the two, Habermas and many a fellow-thinker explain, have diverged: widespread gun culture, extreme economic inequality, fundamentalist religion and capital punishment, not to speak of national bravado, divide the US from the EU and foster a more regressive conception of international relations. Reversing Goethe’s dictum, we have it better here.
The crystallization of these images came with the invasion of Iraq. The mass demonstrations against the war of 15 February 2003, Habermas thought, might go down in history as ‘a signal for the birth of a European public’.12 Even such an unlikely figure as Dominique Strauss-Kahn, recently installed head of the IMF, announced that they marked the birth of a European nation. But if this was a Declaration of Independence, was the term ‘nation’ appropriate for what was being born? While divergence with America over the Middle East could serve as a negative definition of the emergent Europe, there was a positive side that pointed in another conceptual direction. Enlargement was the great new accomplishment of the Union. How should it be theorized? In late 1991, a few months after the collapse of the Soviet Union and a few days after the summit at Maastricht, J.G.A. Pocock published a prophetic essay. A trenchant critic of the EU, which he has always seen as involving a surrender of sovereignty and identity—and with them conditions also of democracy—to the market, though one never yet completed, Pocock observed that Europe now faced the problem of determining its frontiers, as ‘once again an empire in the sense of a civilized and stabilized
