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The European Union: From unification back to integration

English Pages, 9. 11. 2006

The past 50 years of the European integration process is usually considered to be a success, even if it is very difficult to prove it, to evaluate it analytically, or to measure it. Scientific measurement is very problematic in such complex processes.

To express doubts and suspicions has become politically incorrect, but we must be „correct politically“. The way of looking at the European integration process and its results must be sharper and more serious than before, especially in academic institutions.

We are, undoubtedly, at an important crossroad and we have to make a turn. We have to interrupt the creeping unification, socialization and bureaucratization of the European continent, resulting from the realization of the idea that formal, rigid institutionalization of Europe is a positive thing and that it is more important than anything else. Some even believe that the formal institutionalization of Europe exists instead of anything else.

The EU develops. By accepting ten new Member States, mostly former communist countries in Central and Eastern Europe, the EU has been considerably enlarged. This increased not only the economic disparities but also the transaction costs of the EU functioning, ruling and decision-making. It amplified the difficulty of complying with unnecessarily “harmonized” rules and decisions for so many different countries. It also increased the EU’s democratic deficit.

At the same time, the EU has continued – at an accelerated speed – to expand the number of pages of its legislation, which now deals with almost every aspect of human life and touches all kinds of human activities. Roughly speaking, from 22,000 pieces of legislation in the EU about 12,000 were introduced between 1997 and 2005, compared to 10,000 during the 40 years from 1957 to 1997. More EU legislation means less personal freedom for everyone as well as a radically diminished role of member states and of national parliaments.

There is no end to this. The attempt to accelerate the unification and de-democratization process by means of the European Union Constitutional Treaty was rejected in two crucial countries (which was recently underlined by the German Constitutional Court decision), but creeping unification goes on as if nothing happened.

The economic side of the matter is not any better. Very sluggish economic growth in Europe persists. The European common currency – the euro – was successfully launched but the launching itself was not a convincing proof of the positive contribution of this monetary arrangement to the economic development and to – however defined – social welfare in the Euro-area. The costs – demonstrated by the statistically visible economic growth slowdown since its introduction – have not been recognised. It has been politically incorrect to even suggest such a link. Denmark was clever not to join it.

I have many doubts about the recent developments in Europe and disagree with the fashionable effort to solve the existing problems by creating an “ever-closer Europe”. The political project to do certain things together – in spite of all existing historical, political, economic, cultural or religious differences and incompatibilities – was a positive and meaningful idea. But this idea needs to be rationally implemented. What does it mean to do certain things together?

When I look back at the last half a century, I see two different integration models or techniques of integration in Europe. The first one can be called the liberalisation model. It was characterised by inter-European opening-up, by the overall liberalisation of human activities, by the removal of barriers at the borders of countries as regards the movement of goods and services, of labour and capital, and of ideas and cultural patterns. Its main feature was the removal of barriers and its basis was intergovernmentalism.

The second one, which I call the interventionist and harmonisation model, is characterised by centralisation, regulation, harmonisation of all kinds of “parameters” of political, economic and social systems, by standardisation and homogenization of human life. Its main features are regulation and harmonisation orchestrated from above, and the birth of supranationalism.

The first model was, the second one is. I am in favour of the first one, not of the second. I am convinced that the unification of decision-making at the EU level and the overall harmonisation of societal “parameters” went much further than was necessary and more than is rational and economically advantageous. As an economist, I am, of course, aware of “externalities”, of “spillover effects” and of “continental-wide public goods”. These phenomena undoubtedly existed and exist and should be properly reflected in European institutions and the EU legislation. However, they do not dominate. The second stage of the European integration process has been based on the false idea that they do dominate.

I consider it wrong. I suggest, therefore, redefining the whole concept of the European Union, not just to make cosmetic changes. I suggest going back to the intergovernmental model of European integration. I suggest going back to the original concept of attempting to remove barriers. I suggest going back to the consistent liberalisation and opening-up of markets (not just economic ones). I suggest minimising political intervention in human activities. Where intervention is inevitable, it should be done close to the citizens (which means at the level of municipalities, regions and states), not in Brussels.

Free, democratic and prosperous Europe is not compatible with democratic deficit, supranationalism, etatism, and with an increase in legislating, monitoring, and regulating us.

We need a political system which must not be destroyed by a postmodern interpretation of human rights, by the weakening of democratic institutions which have irreplaceable roots exclusively inside the states, by the “multiculturally” brought about loss of a needed coherence inside countries, and by the continental-wide rent-seeking of various NGOs.

The economic system must not be constrained by excessive government regulation, by fiscal deficits, by heavy bureaucratic control, by attempts to perfect the markets by means of constructing “optimal” market structures, by huge subsidies to privileged or protected industries and firms, and by heavy labour market legislation.

The social system must not be wrecked by all imaginable kinds of disincentives, by more than generous welfare payments, by large-scale income redistribution, by all other forms of government paternalism.

We should not forget or leave aside the teaching of social sciences, of classical liberalism, of economics. Everything is written there, and at our disposal. We should use it, even in our thinking about the EU.

Václav Klaus, University of Copenhagen, Denmark, November 9, 2006