But the term is over-rated. Neo-liberalism has in general been less a principled conviction than a pragmatic tacking to regime change, whose practitioners have mostly been professed socialists—Thatcher’s government was the exception in openly proclaiming the virtues of capitalism. Ideologically speaking, therefore, since it adopts pro-market policies with stealth rather than candour, let alone ardour, ‘neoliberalism is a dull weapon’, incapable of delivering a quietus to the baleful alliance of unions and transfer-recipients who block change in the old Union.27 The distressing fact is that since the departure of Thatcher, ‘there is no serious, organized political constituency for classical liberalism anywhere in Europe today, not even on the conservative political right’.28 But without a return to it—the concluding judgement—the Union is at risk of discord and decline.
Framed by a strong economic theory, Gillingham’s book is nevertheless, in keeping with its subject, essentially a political history of European integration. For the European economies themselves, the commanding study comes from Barry Eichengreen, who teaches at Berkeley. In many ways, The European Economy since 1945: Coordinated Capitalism and Beyond (2007) moves in close parallel to Gillingham’s work. In certain others, it reverses its signs. Eichengreen covers both Western and Eastern Europe throughout, but his periodization is identical. The economic history of the continent divides into two contrasting phases, the watershed between them lying in the early seventies. In the first phase, ‘extensive growth’ was achieved by making good wartime destruction of capital and diversion of manpower, and then drawing on a backlog of (principally American) technological advances and still abundant reserves of rural labour, to make up for lost time and converge towards US levels of productivity and income. In the second phase, ‘intensive growth’ was required, demanding riskier investments in faster and more abrupt forms of technological innovation. Eichengreen’s story is of the way Europe flourished during the former, then stumbled at the latter.
What made extensive success possible, he argues, was a set of institutional arrangements comprising a mixture of cooperative trade-unions, responsible employers’ associations, long-term bank credits to industry, and last but not least, governments taking active charge of the needs of growth, in some cases with elements of indicative planning. This ‘coordinated capitalism’ was a historically admirable model in its time. But once the limits of extensive growth were reached, it became a fetter on Europe’s ability to adapt to the imperatives of intensive growth. The new conditions demanded lower taxes, less job protection, greater income disparities, higher levels of general education and R&D, and—most important of all?—more venture capital for innovative start-ups, raised from readier-to-gamble financial markets rather than stick-in-the-mud banks. Rooted in attachments to the past, European resistance to these changes exacted a heavy price. Between 1945–1973 and 1973–2000, GDP growth per capita fell by over half.
As for the onset of the crisis that brought extensive growth to an end, though completion of industrial catch-up and running-out of rural labour also come into it, Eichengreen lays main emphasis on the breakdown of labour restraint in Europe in the late sixties and early seventies, as a new generation of workers with no memories of mass unemployment set off a wage explosion that led to a decade of inflation. But as an explanation of the deceleration of growth, this will hardly do, since without any comparable union militancy, the slow-down took hold in America as well. Elsewhere, the epochal change is attributed to the impact of discontinuous technological innovation and financial globalization. But these are never themselves causally grounded, remaining descriptions rather than historical explanations, in this much like regime change in Gillingham’s account.29
Politically, of course, Eichengreen’s study is far more generally benevolent to Europe. His intellectual sympathies, more clearly on display in Globalizing Capital (1996), have lain not with Hayek, but Polanyi. The Hungarian was in nearly every way the antithesis of the Austrian, and the unstated difference is plain in The European Economy since 1945. The embedded liberalism of the post-war settlement that Gillingham treats as at best a provisional expedient, already laden with vices to come, becomes the notably effective and imaginative—unspontaneous—order of a coordinated capitalism, which only earns Eichengreen’s praise. His respect for what it represented persists to the end. Europe’s recent productivity record may not be so much worse than that of the US; if Americans earn more, Europeans are not necessarily worse off, since they enjoy more leisure and security, and are surrounded by less poverty and crime. The EU needs to adjust to intensive growth, but are not parts of it already showing the way? The Dutch and Irish, he suggests, have already got things more or less right, with neo-corporatist arrangements that combine fiscal discipline, wage moderation and hi-tech investment. Perhaps European capitalism may not have to renounce its habits of coordination after all, but merely slough off one set of them for another.
The suggestion, however, is half-hearted—more a wistful glance back than a confident look forwards. It is not just that in small countries like Holland or Ireland, external vulnerabilities have always favoured corporate solidarities not readily achievable elsewhere. Equally significant, what in each case Eichengreen singles out as the key to their success is essentially wage restraint. His general instruction to Europe for getting on board the train of intensive growth is the same. Labour must settle for less—flatter incomes, more wage dispersal, and less job security.30 In other words, a standard neo-liberal package in just the ironically pejorative sense Gillingham gives the term.
The European Economy since 1945 ends by asking whether the EU could not adopt Anglo-Saxon-style financial markets—as it is now more or less sensibly doing—without following suit in its labour and product markets. That will depend, Eichengreen suggests, on whether further technical innovation in the next decades is incremental or radical. If it were the former, the European model would be open to reinvention; if the latter, international competition would probably force thoroughgoing Americanization. Formally, judgement is left suspended there. But substantively, there is no doubt which prospect is inscribed in the logic of the argument. Earlier, Eichengreen has already made clear that ‘comprehensive’ reform of the European model is required, and explained at length that enlargement of the EU provides it with an open-shop East to match the US South—obviously, to far larger potential dynamic effect than parish-pump concertation in Wassenaar or Dublin could ever furnish. So, too, he concedes that the probability is that technical innovation will continue to involve radical and discontinuous, rather than gentle or gradual, changes.31 Entailed, if never stated, is only one plausible outcome: that ultimately, the Old World is likely to be compacted into the shapes of the New.
From economics to sociology is a short step in the literature on the Union—no more than a stroll across the hall at Berkeley, to the office of Neil Fligstein, the author of the most ambitious study of the social underpinnings of European integration, misleadingly titled Euroclash.32 Taxing much discussion of the EU with too state-centred a focus, Fligstein sets his sights on a larger reality, ‘the creation of a European society’. This is not the same object as explored by scholars like Göran Therborn or Hartmut Kaelble, tracking social changes since the war in every domain of life across the continent.33 Fligstein’s aim is to demonstrate, with a mass of carefully assembled statistical evidence, the emergence of something more specific: the sphere of social interactions created by, and tied to, European integration. What forms do these take? First and foremost, there is the market: the daily transactions of rising intra-European trade, and the increasing numbers of intra-European mergers and acquisitions, enabled—but also regulated—by the directives of Brussels, where business interests gather to press their cases and concerns, also in increasing numbers. ‘These figures tell a compelling story’, Fligstein writes, of how ‘trading, litigating, legislating and lobbying’—the ‘key indicators of European integration’—have grown over time.34 Travel within Europe has steadily grown, to a point where by 1997 a quarter of the population of the pre-enlargement EU had been outside their native country in the past year. European-wide civic associations too—professional, scientific and non-governmental organizations—have multiplied. Culturally, two out of every three West Europeans can speak a second language; well over a million students have followed courses
