The EMU and the Transatlantic and Social Dimensions of the Crisis of the European Union

Paper Presented at the 7th Conference of the European Sociological Association Institute of Sociology, Nicolas Copernicus University of Torun, Poland, September 9-12, 2005.

Introduction

Despite being a vestige of the social sciences where positivist and empiricist principles continue to reign, the assessments of the EMU in EU studies have been overtaken by events in a rather remarkable way. The ‘non’s’ and ‘nee’s’ of the referenda on the Constitutional Treaty in as pro-EU countries as France and the Netherlands, the contempt with which Europeans hold the political establishment and increasingly cast their vote for populist mavericks, the lack of credible responses that political elites have to this contempt, and nearly two decades of economic stagnation, fly in the face of the euphoric or at least sanguine assessments that the academic mainstream has made.

To this we can add the ‘external’ dimension of ‘European foreign policy’, where the EU has failed to demonstrate any significant moderating influence on the most imperialist of postures of the United States, not the least in Iraq. This was an event that made a mockery of the idea of a ‘Common Foreign and Security Policy’ (CFSP) based on ‘common positions’. One member state (Britain) considered the position of two others (Germany and France) in the UN Security Council to be so unreasonable that it unilaterally decided to go to war with the USA against Iraq, without a UN (let alone CFSP) mandate.

Contrary to this turn of events, available to all to observe through mass media, EU studies continues to sing the praises of the success of the European Union and the project of its common currency. For Charles Kupchan (2003, p. ), ‘Europe is arriving on the global stage. Now that its single market has been accompanied with a single currency, Europe has a collective weight on matters of trade and finance comparable to that of the United States’. With a considerably more moderate tone, Erik Jones (2002: p. 191) calls the EMU a ‘minor technical improvement’, and as long as we do not get distracted by the monumental symbolism of the single currency, but focus on the merits of the improvement for ‘highly contingent’ distributive politics, there is no reason not to suppose a progressive move towards systems stability. Very much in line with this, Anton Hemerijck (2002) speaks of the EMU as part of a successful ‘self-transformation’ of the ‘European social model’ and Martin Rhodes (2002) argues that the EMU actually is strengthening European welfare states.

To be sure, academics should look for the counter-intuitive and that which is not immediately apparent, and when they substantiate this it adds profoundly to knowledge. However, we argue that with regards to the aforementioned assessments of the implications of the EMU, this is not the case. Instead, we challenge the conventional academic wisdom, shared by enthusiasts of European integration on both sides of the Atlantic, that the launching of the Euro represents the achievement of an unprecedented level of European integration and a shift towards a more even balance of power between the EU and the United States. When one abandons the parsimonious, but overly simplistic ‘basic force’, functionalist, and formal-institutionalist models of power upon which this conventional wisdom is based, and rather adopts a more structural and dialectical conception of power, a very different conclusion emerges.

The EMU is firmly subordinated to the minimalist hegemony that has characterised the ‘strategic coordination’ (pace Jessop, 1990: pp. 359-60) of US policy since the end of the Bretton Woods era (Cafruny, 1990). Consequently, the aspirations of the European ‘power bloc’ of dominant socio-economic interests and socio-political elites to build a monetary union to promote competitiveness, regional autonomy, and sustained growth (Sandholtz & Zysman, 1989) is self-limiting, given the neo-liberal underpinnings of the system as it has developed since the Maastricht Treaty. This is because the neo-liberal project is inherently connected to a transnational financial and monetary order which displaces economic and social contradictions from the United States to other parts of the world, including Europe.

In pursuit of this argument, the paper is organised as follows. It begins with a preliminary discussion of a conceptual nature. The objective of this section is to clarify and justify some of the central terms we use in order to advance our thesis. This includes the term ‘crisis’. We will also justify why we insist on continuing talking about American in addition to neo-liberal, hegemony. This implies clarifying our position about the nature and status of the nation state in the contemporary global political economy.

The second section demonstrates how the EMU fits into the more recent phase of American ‘minimal hegemony’. In contrast to the ‘integral hegemony’ of the Bretton Woods era, underlying power relations and conflicts of interest within the Euro-Atlantic space are more visible and the system rests on a narrower social base. The system is nevertheless still hegemonic: overt coercion rarely needs to be used because of shared intersubjective knowledge frameworks among elites and dominant classes, effective disciplinary structures, and a lack of viable systemic alternatives.

The third section outlines in some detail the inconsistency of the design for long term growth term prospects in Europe - in regulation theoretical parlance, this can be understood as the failure to institute an adequate mode or regulation to enable an emergent regime of accumulation. We contend that the stagnation of the European economy is a function of the neo-liberal accumulation strategy itself and not some postulated ‘Euro-sclerosis’.

The fourth section addresses the socially disintegrative implications of this development. With special reference to developments in the largest states at the very core of the Euro-zone, France and Germany, it accounts for a crisis of representation that is resulting from a politics of welfare state retrenchment that is counter-productive in its objective to revive economic growth.

© 2005 All Rights Reserved. Alan W. Cafruny & J. Magnus Ryner

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