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globalization and europe

Globalization and Europe

Introduction

According to Joseph Stiglitz, globalization is “the removal of barriers to free trade and the closer integration of national economies”.[1] The notion of globalization is frequently associated with a single model of modernity that arises spontaneously with the triumph of market forces and universal free trade. Stephen Gill cites a 1992 Oxford lecture by John Fleming, at the time the chief economist of the European Bank for Reconstruction and Development (EBRD), who argued “that ‘all countries are the same’ for the purpose of [economic] policy (despite their different histories) and that the problem of economic reform was premised on two historical ‘facts,’ namely ‘the uniformity of human nature’ and the ‘universality of technology’ ”.[2]

Celebrating the victory of liberal democracy over fascism and communism, Fukuyama declared in The End of History, published in 1992: “there is a fundamental process at work that dictates a common evolutionary pattern for all human societies—in short, something like a Universal History of mankind in the direction of liberal democracy”[3]. Fukuyama added: “Economic forces encouraged nationalism by replacing class with national barriers. . . . Those same economic forces are now encouraging the breakdown of national barriers through the creation of a single, integrated world market”[4].

This same conviction has led many authors to the conclusion that states and national institutions will ultimately be subordinated to the requirements of global markets. According to De Navas-Walt, Proctor, and Mills, “transnational and multinational” structures and processes are becoming more inclusive than the state; have a greater effect on key issues and, in that sense, may become more “sovereign” than states; and tend ultimately to challenge “the authority, legitimacy, policymaking capacity, and policy-implementing effectiveness of states.”[5]

The experience of the European Union (EU) both confirms and refutes such projections. Originating in tentative steps towards economic integration, the reshaping of Europe has indeed transformed the continent from one of authoritarian rule, poverty, and wars into an area of democracy, prosperity, and stability. On the contrary, the European community is the result of a long and arduous process of institution building over a period of several decades. Economic forces did not exclusively create the new Europe; rather, the European Economic Community and today’s European Union have gradually institutionalized the continent-wide market in order to build the community. Economic integration, for the Europeans, has been one of several tools that have been utilized for the purpose of community building. The Europeans did not integrate in order to have a single market; they have created the single market in order to integrate.

The literature on globalization abounds with references to the marginalization of nation-states and the increasing irrelevance of national governments. The European experience, on the contrary, has involved reconciling national histories and institutions in a common ethical project. The globalization literature assumes that universal markets will necessarily raise per capita GDP. The European project requires that markets raise the GDP to promote social well-being. The “nation” and the “welfare state” are the bêtes noires of globalists. In Europe, they have been integral components of a community-building process. Modern Europe fulfils the expectations of globalists in the sense that it transcends national divisions and the hatreds of past generations. But the European experience also confounds those expectations by demonstrating that community building, including liberalized markets, presupposes an institutional framework that takes account of national specificities while, at the same time, promoting continent-wide economic integration.

Thomas Christiansen (2005) captures this duality of the European Union when he comments that the EU can be regarded, on the one hand, as a form of “turbo-charged globalization,” culminating in a legal order that is “based on the needs of economic integration.” On the other hand, he notes that the opposite case can be made just as persuasively. The European Union can be interpreted as moving toward a “supranational polity,” whose purpose is precisely to institutionalize social protection against the contingencies of globalize markets[6].

The way Christiansen describes the duality is certainly instructive—if one begins with the conviction that globalization is the universal process against which Europe should be measured. It must be noted, however, that the origins of the European Union actually predate the whole globalization debate by several decades. [7]

Today’s European Union is the product of deliberate and purposeful action. The founders of modern Europe set out to create a new community with democratic norms and social values that all Europeans might share. The European Union presupposes international cooperation as a condition of European integration. Each member state of the Union has a mission in Brussels to represent and, when necessary, to defend national interests. The Council of Ministers, one of the main institutions of the EU, is composed of representatives of national governments.

Clearly, building the Union has not involved “removing” the national elements of the European community. National governments have served as important institutions in the community-building process, and this inclusion of national institutions respects both the reality of national histories and the impossibility of conceiving integration as a purely technical economic undertaking. National institutions express the ethos of particular communities; and promotion of a European ethos has necessarily involved national governments in defining the norms and rules to which all Europeans might subscribe. Whereas proponents of globalization often suppose that universal community lies beyond the nation-state, the European Union has been created precisely through a number of interstate Treaties. The European community has not spontaneously happened in response to economic forces; it has been built. Integration has been the policy; community is the result.

Social and Economic Dimensions of European Integration

Article 2 of the original text of the Rome Treaty of 1957, which was the founding treaty of the European Community, made the following provision:

The Community shall have as its task, by establishing a common market and progressively approximating the economic policies of the Member States, to promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and close relations between the States belonging to it.[8]

The Preamble to the Treaty emphasized both economic and social progress in the context of an “ever closer union,” whose “essential objective” was “constant improvement of the living and working conditions” of the populations of the member states. Social progress was given concrete meaning in terms of eliminating regional differences.

Maastricht amended the Rome treaty (Article 3a.2) by projecting a single currency within the context of Economic and Monetary Union (EMU). Article 4a established a European System of Central Banks and a European Central Bank (ECB). Along with the decision to establish the euro, the Maastricht Preamble also confirmed the member states’ “attachment to fundamental social rights as defined in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers.”[9]

The Charter referred to just employment: safe and healthy working conditions; fair wages; establishment of trade unions; collective bargaining; protection of the working conditions of young persons; equality between female and male employees; protection of maternity; and provision of vocational training, health care, social security, and welfare benefits as the rights of both domestic and migrant workers. In neoliberal terms, all of these provisions appear to contradict the presumed universal requirements of economic efficiency. Neoliberals prescribe a minimal role for government in the interest of emancipating the spontaneous wisdom of the market. They typically formulate the issues in terms of a choice between the “absolute” efficiency of free markets— which seems always to entail curtailment of social welfare programs in the name of lowering labour costs—or else the “absolute” inefficiency of the welfare state. Those responsible for building the European community have never accepted the need to make such a choice. At a conference organized in Tokyo in 2001, Poul Nielson, then European Commissioner for Development Co-operation and Humanitarian Aid, said that the European Union incorporates a “market economy,” but not a “market society.” The EU aims “to give globalisation a human face. It reflects our own values, our aspirations, and ambitions as to what direction development in this world should go.”[10]

This awareness of the social nature of citizenship finds institutional expression in EcoSoc, the Economic and Social Committee. Established in 1957 by the Treaty of Rome (Articles 257-262 EC), EcoSoc was to advise the Council of Ministers on draft legislation regarding social and economic matters. Contrary to the economistic premises of globalization theory, Article 257 stated that EcoSoc “shall consist of the various economic and social components of organized civil society, and in particular representatives of producers, farmers, carriers, workers, dealers, craftsmen, professional occupations and representatives of the general interest”[11]. In European terms, individual and particular economic “interests” have been understood as legitimate when they affirm civil society with reference to the common interests of its separate and distinct elements, that is, when they contribute to the creation of community.

In February 1989, EcoSoc issued its opinion, and in March the European Parliament (EP) passed a resolution on “the social dimension of the single market,” followed in September by seven further resolutions on “economic and social cohesion.” In the meantime, at the Madrid Summit of June 1989, “the Member States pointed out that, in the context of establishing the single European market, the same emphasis should be placed on the social aspects as on the economic aspects.” Following consultations with labor and business, the Council published its final draft of the Charter in October 1989; in November the European Parliament passed its own resolution on the matter; and on December 9, 1989, the Council adopted the Charter, which was signed by all member states but the United Kingdom.

The 1989 Charter specified no new fundamental rights. The real importance of this new Charter lay in the fact that the Turin document had been adopted by the Council of Europe—an organization that is not institutionally a part of the EU—whereas the 1989 Charter of the Fundamental Social Rights of Workers was debated and adopted by the Community. The result was to amplify the salience of the social rights of citizens in the context of accelerating the economic dimension of European integration.

The Making of the European Community

Whereas Europe has been building integrative institutions for several decades with the aim of consolidating a social and economic community, proponents of neoliberal globalization see things from a quite different perspective: all that is needed to achieve global integration is to discipline states in their fiscal policy, privatize public assets and, of course, tear down tariff barriers. The experience of Europe shows that building a real community is by no means so simple.

In 2004 the governmental expenditures of several European Union countries—including Germany, Portugal, Italy, the Netherlands, Belgium, Austria, and Greece—accounted for 45-50 percent of GDP, while in several others— including Denmark, France and Sweden—the figure was substantially higher than 50 percent. According to globalization theory, such countries should be dramatically “uncompetitive” in the new global economic system. The data, however, show exactly the opposite to be true. Looking at the average growth of GDP per capita over the years 1995-2004, Martin Wolf of the Financial Times shows that there was no discernible difference between countries with advanced welfare states and others more committed to liberalism and “free” markets.[12] In the United States, for example, the average rate of per capita GDP growth was just over 2 percent, a rate exceeded by Greece, Luxembourg, and Sweden, and virtually identical to that in such high-tax countries as France or Belgium.

Wolf drew the obvious conclusions. First, the notion that higher government spending ruins a country’s competitive posture in world markets is “nonsense,” and “no link exists between the size of government spending and a lack of something one could reasonably define as ‘international competitiveness.’”[13] Second, it is pointless in light of this evidence to pursue a debate “that takes the form of ‘private sector good, public sector bad’ ”; “Health and education do not suddenly become far less important than holidays in Ibiza merely because they are financed through taxation.”[14] Finally, what actually does matter is the way in which taxes are spent and the purposes they serve. If publicly financed health care is less costly than a private system, then surely the consequence must be to make a country in the first category more competitive than one in the second. Wolf summarized his findings as follows:

What does indeed matter is the efficiency with which money is both raised and spent. But tax levels are only one of many determinants of economic performance. Far more important are the quality of institutions, particularly of public administration and the judiciary; the security of property; the probity and public-spiritedness of politicians; the soundness of money; the quality of education, health and infrastructure; and the extent of arbitrary regulation of economic activities. Monomania is usually a mistake. An exclusive focus on the tax burden is an example. [15]

The countries of the European Union have chosen a “market economy,” but not a “market society.” The persistence of the welfare state has quite probably been one of the foremost reasons why Europeans have been willing to integrate national economies. Social insurance is, after all, insurance, and with insurance any rational person may be more willing to accept the possible risks associated with major economic changes.

Given the fact that the economic performance of European welfare states has not significantly differed from that of the United States over the past decade, it is appropriate to make some further brief comparisons between the two. A report of the US Department of Commerce in 2004 on poverty and health insurance concluded: “The official poverty rate in 2003 was 12.5 percent, up from 12.1 percent in 2002, [and] 35.9 million people were in poverty, up 1.3 million from 2002”.[16] A similar report on poverty in Europe, compiled in 2004 by Eurostat, the central statistical office of the EU, states that “9% of the EU population were persistently at risk- of-poverty in 2001”[17]. Despite having a population that at the time was about 90 million larger than that of the United States (US: 288, the EU: 378 millions), the European Union actually had 2 million fewer citizens living in poverty (EU: 34; US: 36).

Proponents of globalization promise prosperity for the whole world if it becomes more like America, but at home prosperity eludes many Americans.

The European Commission summarized these ideals in the 1995 Report on the Operation of the Treaty on European Union. Europe is no longer deciding its future behind closed doors.”[18] One of the Treaty’s basic innovations in terms of democracy is the concept of European citizenship.

The origins of the EU predated today’s debate over globalization and were a response, instead, to Europe’s own history and culture. Europe’s experience is historically and culturally specific. In that sense, the European Union is a standing refutation of market fundamentalism and a resounding rebuke to naïve theories of market-driven globalization.

Bibliography

Bainbridge, Timothy, The Penguin Companion to European Union. London: Penguin Books. The Community of Europe and Globalization, 2002

Christiansen, Thomas, European Integration and Regional Cooperation. In The Globalization of world Politics, 3d ed. edited by John Baylis and Steve Smith. Oxford: Oxford University Press. 2005

Dennis, Ian and Anne-Catherine Guio Poverty and Social Exclusion in the EU, Statistics in Focus, Population and Social Conditions, 2004.

De Navas-Walt, Carmen, Bernadette D. Proctor and Robert J. Mills Income, Poverty, and Health Insurance Coverage in the United States: 2003. U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau. 2004

European Commission, Report on the Operation of the Treaty on European Union. SEC(95) 731 final.. 1995

Fukuyama, Francis, The End of History and the Last Man. New York: The Free Press. 1992

Gill, Stephen, Knowledge, Politics, and Neo-Liberal Political Economy. in Political Economy and the Changing Global Order, edited by Richard Stubbs and Geoffrey R.D. Underhill. Don Mills: Oxford University Press. 2000

Nielson, Poul, European Commissioner for Development Co-operation and Humanitarian Aid Humanitarian Crises: Challenges for the 21st Century, Speech given at the International Conference: Partners in Humanitarian Crises, U Thant International Conference Hall, United Nations University Tokyo, 25 January 2001.

Stiglitz, Joseph E. Globalization and Its Discontents. New York: W.W. Norton. 2002

Wolf, Martin “More Public Spending Does Not Lead to Slower Growth.” Financial Times, March 23, 2005

Wyatt, Derrick (ed.) Rudden & Wyatt’s EU Treaties and Legislation. 8th ed. Oxford: Oxford University Press. 2002

[1] Stiglitz, Joseph E. Globalization and Its Discontents. New York: W.W. Norton. 2002 pp ix
[2] Gill, Stephen, Knowledge, Politics, and Neo-Liberal Political Economy. in Political Economy and the Changing Global Order, edited by Richard Stubbs and Geoffrey R.D. Underhill. Don Mills: Oxford University Press. 2000 pp 53.
[3] Fukuyama, Francis, The End of History and the Last Man. New York: The Free Press. 1992 pp. 48
[4] ibid. pp 275
[5] De Navas-Walt, Carmen, Bernadette D. Proctor and Robert J. Mills Income, Poverty, and Health Insurance Coverage in the United States: 2003. U.S. Department of Commerce, Economics and Statistics Administration, U.S. Census Bureau. 2004 pp. 9
[6] Christiansen, Thomas, European Integration and Regional Cooperation. in The Globalization of world Politics, 3d ed. edited by John Baylis and Steve Smith. Oxford: Oxford University Press. 2005, Pp. 579-587
[7] ibid. pp. 587-590
[8] Bainbridge, Timothy, The Penguin Companion to European Union. London: Penguin Books. The Community of Europe and Globalization, 2002 pp. 468
[9] Wyatt, Derrick (ed.) Rudden & Wyatt’s EU Treaties and Legislation. 8th ed. Oxford: Oxford University Press. 2002 pp. 100
[10] Nielson, Poul, European Commissioner for Development Co-operation and Humanitarian Aid Humanitarian Crises: Challenges for the 21st Century, Speech given at the International Conference: Partners in Humanitarian Crises, U Thant International Conference Hall, United Nations University Tokyo, 25 January 2001
[11] Wyatt, op. cit pp. 82
[12] Wolf, Martin “More Public Spending Does Not Lead to Slower Growth.” Financial Times, March 23, 2005
[13] ibid
[14] ibid
[15] ibid
[16] De Navas-Walt, Proctor and Mills op cit p 9
[17] Dennis, Ian and Anne-Catherine Guio Poverty and Social Exclusion in the EU, Statistics in Focus, Population and Social Conditions, 2004. p 3
[18] European Commission, Report on the Operation of the Treaty on European Union. SEC(95) 731 final.. 1995

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