The New Old World (19 page)

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—
un
spontaneous—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 outside their homeland; degrees in higher education are gradually being harmonized.

But if a genuinely European society, distinct from the particular national communities that make up the EU, has crystallized, it is not shared equally by all inhabitants of the Union. Those who have materially benefitted most from integration, who interact socially most often across national borders, and who have the strongest sense of a collective European identity, form an upper-class minority, drawn from business, government, high-income professions and the academy. A larger middle class has only intermittent contact with life beyond local frontiers, while the lowest classes have little or none. Since these layers are the most exposed to the costs—however temporary—of economic integration, they are potential protesters against it. Undeniably, Europe has so far been—at any rate socially and culturally—a ‘class project'. A clash of interests could therefore break out over it, in conditions of economic crisis.
³⁵

But though bannered in its title, the notion of a clash is purely virtual in Fligstein's book, without any presence in it. In part this is because the lower classes, lacking any sense of a supranational identity, simply do not belong to the European society that is the focus of his work, and so fall outside its framework. But more fundamentally, it is because a force is at work within that society which transcends the possibility of any conflict of interests. For the upper classes that compose it do not just consist of the wealthy, with their often selfish attachment to their own good fortune, but also of a more selfless group, motivated by ideals—the educated. These, Fligstein suggests, are ‘the real moral engine of the EU'. For ‘at its core, one of the reasons that educated people support the European project is because the European values they espouse are identical with the Enlightenment values that have been a hallmark of educated people for over two hundred years. Indeed, if Europe stands for anything, it is the completion of the Enlightenment project of democracy, rule of law, respect for the differences of others, and the principles of rational discourse and science'.
³⁶
With ethical guidelines as compelling as these, why should the Union fear division over mundane questions of relative advantage? As higher education spreads, more and more young people will study abroad, and ‘the best new jobs' in a shifting economy will increasingly be ‘in services such as banking, real estate, and insurance', or computer programming, requiring higher
skills and paying higher salaries. Predictable sociological changes should of themselves create a more unified Europe, imbued more evenly with the values of the Enlightenment.

So glowing with enthusiasm for the forward-looking achievements of the Union is Fligstein that his work might have more aptly been entitled
Eurodash
. Again and again, he is ‘amazed', as he recounts, at ‘the marvellous character of what has happened'. On page after page, the epithet ‘remarkable' resounds like a compulsive refrain.
³⁷
But triumphalism of vocabulary is not matched by coherence of construction. On the one hand, no more than ‘a very small number of people are deeply involved with other Europeans on a daily basis', ‘only a tiny part of the population is directly involved', while ‘the vast majority of Europeans still remain firmly tied to the nation'. On the other hand, those with ‘deep economic and social ties with their counterparts across Europe' comprise 10 to 15 per cent of the inhabitants of the Union—that is: no less than 38 to 56 million people, or at the upper range more than the entire population of Britain or Italy, and not far short of that of France. As for those who are ‘partly European', they compose another 40 to 50 per cent of the population—or getting on for 200 million.
³⁸
The fantastical nature of these figures is the product of a switch of definitions. Whereas an emergent ‘European society' is computed by intensity of actual social interactions, measured objectively, these inflated percentages are simply taken from opinion polls that asked people whether, notionally, they felt European or not. It goes without saying that the gap between the two is enormous. The reality answers to Fligstein's first description, not his second. Those deeply involved, on a daily basis, with non-nationals form a very small minority of the citizens of the EU, one that has fallen since enlargement. To speak of them as a ‘society', as if they composed a self-connecting whole, is a metaphor, not a truth.

That even this minority scarcely possesses much self-awareness of its existence is suggested by the appearance of
Euroclash
itself. American dominance of a field of work could hardly be more graphically expressed. In a bibliography of some 260 items, there is just one book in French, one in German. Even allowing for writing in English by Europeans—overwhelmingly from the cultures closest to the United States: Germany, Scandinavia, the Netherlands—the proportion of authors originating outside the Anglosphere is about one-seventh of the total. All central references to work on the Union in the body of the text itself are to American scholars. It would be wrong to impute this to parochialism. Fligstein has made use of what findings from the continent were material to his research. But here, as elsewhere, Europeans figure as under-labourers, whose work has been employed for a synthesis exceeding them.

If these stand as currently the most authoritative economic and social prognoses of the Union, what do the rival historical theories of integration as a political process have to say about the present, in the wake of the rejection of the European Constitution? Moravcsik, as might be expected, allows no doubts to cloud an unfailingly sunny vista. The Union has just completed its most successful decade ever, with an enlargement to the east that has cost little and required no significant modification of its already satisfactory institutions. These continue to deliver policies which, he can inform satisfied readers of
Prospect
, are ‘in nearly all cases, clean, transparent, effective and responsive to the demands of European citizens'.
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What then of the Constitution? Little more than an unnecessary exercise in public relations, whose demise, far from representing a failure of the EU, actually demonstrates its stability and success.