The European Union and Global Capitalism

Since its origins in the immediate post-World War II period, the EU has experienced changes of both an evolutionary and transformative nature. Scholars have proposed a variety of historical narratives to make sense of these changes and, as we shall see, these narratives in turn can be related to theories of integration. Precisely because of this, historical narratives – and the theories to which they are linked – are never straightforward, neutral, or objective. This is because it is never entirely clear which events and facts are more important than others. In the words of the distinguished historian and international relations scholar E.H. Carr, ‘When we attempt to answer the question, what is history?, our answer, consciously or unconsciously, reflects our own position in time, and forms part of our answer to the broader question, what view we take of the society in which we live’ (1961: p. 5). Hence, even though historians have a moral and intellectual obligation to seek the truth, their narratives cannot but reflect different judgements or their ‘view’ of society. History can always be written from a variety of perspectives, and different perspectives illuminate different aspects or ‘facts’ of history. The history of the EU illustrates this point. The first part of this chapter introduces three narratives of the EU: widening, deepening, and interstate bargaining. By juxtaposing them, it is possible to highlight what each reveals and conceals. Moreover, because the narratives of deepening and interstate bargaining correspond to the traditional theoretical perspectives on European integration, we also begin to introduce in this part the mainstream theories of the EU.

Chapter 1 concluded that it is important to be sensitive to social and historical context when analysing the EU. This is not only about taking history seriously. More profoundly, it concerns the philosophical issue of what should be the starting point of analysis. According to critical theory, that cannot be some ahistorical myth about universal human ‘nature’, whether Smithian or Hobbesian. Social developments are not adequately captured when we see history merely in ‘whiggish’ terms as movement (or lack thereof) towards the ideals of this or that myth. What human nature is and might become is itself inseparable from history and particular social relations as emerged through real historical developments. As Marx put it, ‘man [sic] is not an abstract being squatted outside the world. Man [sic] is the human world, the state, society’ (1843: p. 131). This does not mean that social development should be reduced to a random flow of events. History is not just, as Arnold Toynbee (1957) put it, one damned thing happening after another. It is because human practices (ranging from mundane everyday routines, to business cycles, to foreign policy in hegemonic epochs) tend to repeat themselves within certain time frames that social science is possible in the first place. It is these repetitions that create the regularities that social science can study. But repetitions and regularities do not last forever. Sometimes big events become decisive in social developments – think of the significance of the storming of the Bastille or the Winter Palace as turning points in the French Revolution and Russian Revolution, respectively.

Chapters 1 and 2 explored the main concepts and theoretical debates concerning European integration. We argued that traditional integration theories contain important blind spots that account for their inability to explain key developments in the history of the EU and that critical political economy provides a more satisfactory framework for understanding these developments. The chapters that follow analyse in more detail the key institutional developments and initiatives of the last 30 years, beginning in this chapter with the Single European Market (SEM). The creation of the SEM spearheaded a period of major neoliberal transformation in Europe and established the preconditions for the development of the monetary union, which will be explored in the next chapter. Indeed, the period of the 1980s that gave rise to the SEM and then the EMU is often referred to as the ‘extended relaunch’, because it gave new impetus to European integration after the empty chair crisis and the ensuing period of ‘eurosclerosis’ and institutional paralysis that accompanied the collapse of Bretton Woods in 1971. This chapter starts out with a descriptive overview of the key diplomatic and institutional events surrounding the relaunch. We then take note of the neo–institutional turn in political science that coincided with the relaunch. Traditional approaches were informed by the neo-institutionalist turn to produce a new generation of theoretical perspectives on the EU: regime-theory – intergovernmentalism, multilevel governance, and constructivism – which promised a way out of the supranationalist–realist impasse.

Money and finance are not like other commodities. As a unit of account, store of value, and medium of exchange, money serves critical social steering functions; thus it stands alongside the monopoly of coercion as a crucial element of sovereignty. The power of determining future production and consumption possibilities is also in no small measure exercised through finance. Monetary and financial relations are decisive to the nature of structural change in the EU and in world order more generally. In the words of David Calleo (2003: p. 1), international monetary relations serve ‘as a metaphor for general political economic relations in the world system’. The significance of forging a Single European Market in financial services SEMFS and the EMU is beyond dispute. However, the implications of these novel developments for European economic stability and well-being warrant serious reconsideration. The financial crisis that spread over the world in 2008 raises serious foundational questions about the validity of traditional accounts. In this chapter, we will argue that the anomalies that the financial crisis posed for understanding the nature of money and finance in the EU demand a more radical theoretical recasting. In the first section, we will review broader historical developments of money and finance in Europe and situate the institutionalization of the EMU and the SEMFS and the current crisis in this broader context.

The European Community was founded by six states that, with the exception of southern Italy, are situated within the relatively confined and homogenous socioeconomic space in north-western Europe. Since 1973 the EU has expanded dramatically to encompass a vastly larger population and geographical area. Following the enlargements of 2004, 2007, and 2013, the number of member states increased from 15 to 28 and included a much wider range of socioeconomic structures and political cultures than ‘the original six’. Whatever the current and fraught accession negotiations may bring, the prospective memberships of Turkey and Serbia will not diminish this reality. More generally, the striking growth of nationalism and Euroscepticism throughout the EU, generated by the Eurozone and migration crises, pose major obstacles to further enlargements. As the British referendum on ‘Brexit’ indicates, it is possible that one or more member states might withdraw from the EU, a process that was given a legal mechanism in the Lisbon Treaty. The successive enlargements have dramatically transformed the EU. The entry of the UK along with Ireland and Denmark in 1973 simultaneously raised the EU’s global profile while exposing it to greater American influence. The accession of Greece in 1981 followed by Portugal and Spain in 1986 helped to consolidate democratic transitions, but increased socioeconomic heterogeneity. The process of enlargement and expansion into Central and Eastern Europe that started in the 1990s with the collapse of the Soviet Union, and that continues today in the form of European Partnerships, also greatly enhanced the EU’s global weight even as it further entrenched American power across the continent.

The previous chapter underlined the geopolitical significance of the Suez Crisis for the European powers and for the creation of the EC. Suez confirmed that France and Great Britain had been reduced to subordinate status within a bipolar world and that the United States would not necessarily support their efforts to retain their colonies or help them to exercise primacy over them after formal independence was achieved. The shock of Suez strengthened France’s determination to move forward with the EC as a countervailing power to the United States, and therefore to reach a positive agreement at the Messina IGC. Although Britain sheltered under the umbrella of the ‘special relationship’ even Harold Macmillan, who replaced the chagrined Anthony Eden as Prime Minister, would soon apply for EC membership, setting in motion a long and stormy courtship that would culminate in Britain’s entry in 1973. That the Suez Crisis also served as a catalyst for the Treaty of Rome indicates that Europe’s postcolonial condition was an important factor in European integration. Not only did the EC provide a new institutional framework through which to manage advanced capitalist social relations that, by their nature, could not be confined within nation states of the moderate European size; it also furnished a new means of collectively managing relations with the capitalist periphery of the former colonies. This chapter continues to focus on Europe’s external relations, a focus that began in the previous two chapters on enlargement and transatlantic relations.