Speech by President Higgins at the inaugural event of the Brexit Institute Giving the European Union a Future that will Engage Citizens - A Shared Challenge
Dublin City University, 25 January 2018
The challenges which will test the European Union in this century – climate change, global migration, the future of work – are common to us all on our fragile and shared planet.
Professor [Brian] MacCraith,
May I begin by thanking you for your kind invitation to address this conference here in the Helix today. May I also acknowledge the engagement that Professor Fabbrini has had with my Office and wish him the very best in his role as Principal of the Brexit Institute.
The Institute is a welcome addition to the institutions on this island devoted to the study of the European Union. We have now entered a time in which we are, all of us, attempting to make a reflection on what form of Union, might engage the hearts and minds of peoples with differing sources and experiences of citizenship. I know that the future of our relationship with our nearest neighbour, and the future of the shared legal framework and institutions which have done so much to bring peace to this island, are rightly to the forefront of the minds of our Governments, and while I as President of Ireland share these concerns and am anxious to be informed of their developments, my remarks this morning are to the deeper issue of which they are a part - the Future of the European Union.
“We, civilisations, now know ourselves to be mortal.”
When these words were written by Paul Valéry in 1919, he was reflecting on the devastation that the empires of Europe had inflicted upon themselves, upon their subjects and upon others, through the devotion of their formidable industrial power and scientific knowledge to total war and mutual destruction. “Everything has not been lost”, Paul Valéry continued, “but everything has sensed that it might perish. An extraordinary shudder ran through the marrow of Europe.”
A similar great shudder, reinforced perhaps by the further slaughter of the Second World War, must have been felt by the leaders of the six European nation states who met in Rome sixty-one years ago, on the 25th of March 1957, to lay the foundations of the European Union.
Aware that Europe had, for the second time in the century, come to the brink of total moral and material collapse, reached a nadir in relation to respect for human life, freedom and dignity, the founders of European integration were seeking to invoke a new shape to their relationships, a shape that would give longevity to what might be a potential European solidarity of peoples and, in the process, give as instruments to achieve this, their nations shared institutions of peaceful cooperation.
Valéry’s ‘shudder’ reminds us of the importance of context and how we must in our reflection be aware of changes in context, whether stated or hidden. The commitment given to each other by the six founding states in Rome stood in contrast to that imperial impulse which had subjected Europe to decades, if not centuries, of warfare, and certainly for many of the peoples of the world was the insatiable source of centuries of oppression.
Only five months before that fateful meeting in Rome in 1957,
Konrad Adenauer, the Chancellor of West Germany, and Guy Mollet, the Prime Minister of France, while conducting negotiations in Paris on the shape of the future Common Market were interrupted by a phone-call from the then British Prime Minister, Anthony Eden, who informed a shocked French leader that Britain was unilaterally withdrawing from the Anglo-French attack on Egypt as the military adventure had incurred the displeasure of the United States.
It was a salutary lesson for all three leaders. They were learning that European nations could no longer continue to subject large swathes of the planet to imperial rule without international implications.
At that time, the majority of the peoples of the Global South of course still faced a long and unremitting struggle for independence, self-determination and national freedom. That struggle is one that we must never forget as Europeans, its hurt carries the imprint of a legacy of empire, part of the European legacy that must be acknowledged. It is a legacy that requires to be transacted in an adequate ethical exercise of remembering. The consequences of its being perceived as continuing to exist in alternative forms in the collective memories, without acknowledgement, and without being confronted, erodes mutual trust. However, let us in Ireland not forget either that while the imperial project was one under which this country suffered, it was also one, in the administration and defence of which, many of our people partook in the past.
The best aspirations for European integration then gave an expression to a very different logic to that which had plunged the continent and world into war twice in a century. These aspirations represented much more than a yearning for idealism, and still represent today the triumph of idealism over cynicism, of hope over fear, and of the promise of international solidarity and new collective achievements over the lure of any seduction to the abuse of national power.
Sovereignty, in the new circumstances envisioned, it was suggested, would be neither imposed nor extinguished – as it had been so often in the European past - it would be shared, and thus in its sharing be enabled, to create, not an exclusive and demarcated zone of control, but a common space, one which endures today, one in which our citizens might travel, study, and work freely, encountering each other in a spirit of friendship and amity. Aspects of it have come to be, as over three million students have crossed borders to study. Over one million babies have been born to couples who studied under the Erasmus Programme.
It is important to recall that the objectives which the Union commits itself, now contained in Article 3 of The Treaty on European Union, reflect, inter alia, the inheritance of some of Europe’s most egalitarian and humane traditions. Those were traditions that, in their source, were not confined to Europe. They included traditions that had in many instances been often brought to Europe from afar. That rich scholarship, philosophy, moral instinct and generous impulse that contributed to and drew on an enriched European thought would yield an impulse towards the promotion of social justice and protection, equality between men and women, solidarity between generations, economic and social cohesion and solidarity between Member States. These principles reach their fullest expression through the rights enumerated in The Charter of Fundamental Rights, which has had legal effect throughout the Union since 2009.
May I suggest that the past ten years have severely tested our collective commitment to such a rich and enabling moral patrimony. The trajectory towards increasing inequalities of income, wealth, power and opportunities within societies and between nation-states, evident since the early 1980s, has continued, and continues to be presented in an arrogant abjection of empirical test or consideration as to social consequence, as some natural order of things, rather than the outcome of a policy paradigm sourced in a narrow version of political economy which has yielded so painfully slowly, if at all, to critique, and still more slowly to change.
We have had a tacit and, in recent decades, accommodating, narrowing of intellectual work, an intolerance of critique and a blind acceptance of a unilinear vision of growth, the components of which, I repeat, are neither made matters of empirical critique, or social test.
As a consequence, economic and social cohesion has fractured, and political policies resiling to, and deploying, rhetoric once thought banished from the continent of Europe have seized their moment and begun to re-emerge.
In the absence of an adequate and inclusive discourse, and emboldened by those who seek to mimic the language of the far-right for short-term electoral advantage, these political forces – exploiting and drawing on the despair, alienation and anomie of so many citizens - seek to divide us against one another on the grounds of ethnicity, religion and nationality. While not succeeding in recent electoral contests to achieve majorities in the short term, their gains represent a formidable challenge to any future social cohesion.
In responding to these developments, it is important that we use words such as ‘populist’, ‘nationalist’, and ‘ethnic’ with care. These words as concepts after all have in history been used for emancipatory purposes on occasion. We must instead engage with the factors that facilitate the abuse of such terms in current circumstances.
We are entering a time when, for the first time in many years, the future shape of the European Union has become a matter of contestation and everyday debate. This conference today reflects that realisation. In the shadow of the UK referendum result, and of those social forces which have given rise to so much doubt across Europe, we are invited to imagine and define, through deliberation, and with regard to the necessary courtesies of discourse, the outlines of the European Union that we seek.
The European Commission, under the leadership of President Juncker, issued a very welcome White Paper on the Future of Europe last March, and has issued a number of reflection papers on globalisation, on deepening economic and monetary union, on the future of European defence, the future of the Union’s financial framework, and on what the Commission has referred to since the 1980s as the ‘social dimension’.
This of course complements the Report issued by the Presidents of the Commission, European Central Bank, European Parliament, Eurogroup and the European Council on proposals for the completion of economic and monetary union.
Political leaders across the Union have begun to make their own contributions. Some seem to seek, or envisage as adequate, a renewal in the existing institutional arrangements and practice what some have called a methodological revision. I do not share their optimism.
May I take the opportunity therefore to welcome in particular the interventions by President Macron in Athens and Paris in favour of recognising and acknowledging the depth of the crisis of social connection that threatens any version of a strong, efficient, and inclusive Europe. Some of us may not agree with the totality of his argument, but I would like to recognise the courage, the vigour and the spirit in which it is has been offered in those speeches.
In enunciating his vision and his programme - and it is refreshing to see a leading politician outline a programme for Europe – he has enriched and enlivened what has been for some time a moribund debate. However, it is important too that it be clearly understood that from the outset any Franco-German agreement on the future of the Union will not suffice to answer the deep and sincerely held concerns of those who have sought as their hopes for the European Union the vindication of their aspirations for it to be a Union of equals for the benefit of all European citizens.
Above all, I would like to agree with President Macron – in the strongest terms - that we are at a moment when we must recognise that the Union cannot, as in the past, be reconstructed from above, but can only, if it is to survive in this new century, be renewed and rebuilt from below.
This is necessary if we are to recover any sense of authenticity in our pursuit of the democratic ideals invoked at the founding of the Union - so recently recapitulated by the leaders of the Twenty-Seven in Rome last March - and used to legitimate every successive Treaty change since that time.
For so many citizens in the Union these ideals cannot be recognised in the social outcomes of policies that often indeed seem to contradict such language and its principles. Public spectacles replete with rhetorical flourishes have come to be perceived by European citizens as simply an abuse of the symbolic, an inadequate disguise for the absence of authenticity in the transition from policy exposition to practice.
As an imbalance between competitiveness and cohesion, in European Union aspirations and rhetoric, has deepened it has become clear that the great challenge that confronts the Union, and one of the great tasks of the next decade, will be to achieve cohesiveness within the communities and between the communities of our common European home – and I include the tasks facing the Irish State. Such a cohesiveness might enable us as a Union to practice social responsibility abroad.
It is only by achieving this goal – by rebuilding our capacity and our willingness to work together to lead fulfilling lives in all spheres of human activity – that we can confront the global challenges that will be common to all humanity in this century: the pressing demand for a just and sustainable development; the imperative of welcoming those fleeing war, persecution, famine and natural disasters; and above all the urgent necessity to address the causes of climate change and mitigate its consequences.
Our common European institutions must be adequate and sufficient to enable the restoration and protection of social cohesion. This is not simply a matter of the ‘social dimension’ of the Union being addressed by the recasting of those existing Directives relating to the social acquis, as important as they may be.
Restoring social cohesion requires something far more searching - nothing less than a critical examination of the institutional framework of economic and monetary union, the assumptions on which they operate, and of the manner in which we understand globalisation, by which I mean, inter alia, the liberalisation of capital and goods markets, and the consequential rise of the economic and largely non-transparent power and authority of the multinational corporation.
Neglecting this critique, advocating for ‘business as usual’, while failing to take on these challenges is to allow this century to emerge as an authoritarian one, one in which the opposing extremes in the European Street will come not from any mediating institutions already weakened, often denied support. In the atmosphere of a single version of economic theory many of the mediating institutions have been damaged, often, and unfairly, presented as part of the colluding apparatus of an imposed austerity.
There is nothing inevitable in any of this. We should have by now not only rejected the hubristic and fallacious prognostications of such as Professor Fukuyama. There is an alternative vision available to be offered for an emancipatory rights-based European international vision. It is in our heritage. There is a scholarship and a practice that sustains such an option.
For example, one of the most morally compelling visions of European internationalism - considered by the European Institutions as one of the founding documents of European integration - emerged from the Italian resistance movement, in that remarkable manifesto composed in 1941 on the island of Ventotene by Altiero Spinelli, a member of the Italian Communist Party, and Ernesto Rossi, one of the founders of the anti-fascist Giustizia e Libertà.
The manifesto of Ventotene, in its emphasis on the peopled economy, the shared prospect of humanity, composed in captivity as it was, is remarkable for containing a demand for a federation of European states dedicated to disarming the worst passions of European nationalisms, and in asserting that such a federation could only be achieved, and would only be preserved, if it was capable of continuing ‘the historical process of the struggle against social inequalities and privileges’, and of recognising that:
These demands were not modest, and they required - in the eyes of the authors of the manifesto - the social regulation of private property, the nationalisation of utilities, an egalitarian distribution of both urban and rural land, equality of educational opportunities, and the displacement of charity by the provision of ‘food, lodging, clothing and that minimum of comfort needed to preserve a sense of human dignity’.
The home of the European Parliament, which gives democratic voice to the emerging European demos, is now named after Altiero Spinelli.
Let us not forget that the democratic nation-states which emerged after Second World War in Western Europe were influenced by those who had led the Resistance. The constitutions adapted at the end of the Second World War contained social and economic rights, which were given a material reality through the construction of national welfare states. These constitutional initiatives represented distinctive national traditions, reflecting both historical contingency and path dependency, structure and agency. They were not merely idealistic. They were pragmatic in the best sense and they sought their support, and they got it, in the European Street. Neither were they in any technical sense, because of this, perceived as lesser. In fact, their proposals had an empirically based scholarship as sources of policy.
The British Labour Government of 1945-1951 pursued its ‘New Jerusalem’ – something Harold Laski called a ‘revolution by consent’ - through a commitment to full employment, nationalization of major industries, the construction of the National Health Service, and the reform and strict control of the financial sector.
The French Fourth Republic created a technical public body composed of economists, le Commissariat général du Plan, to co-ordinate and plan (on an indicative basis) the post-war economy. In Germany, the post-war Federal Government was heavily influenced by the economic philosophy of ordoliberalism, first promulgated by leading economists in the 1920s, which envisioned the role of the state as the creator and regulator of the competitive market economy.
The origin of the term ‘social-market economy’ can be found in the writings of Alfred Müller-Armack, though the Germany which developed may have been somewhat more social than the ordoliberals were comfortable with, and Germany’s corporatist model reflected the traditions and strengths of Europe’s most powerful and influential labour and trade movement.
Taken together, while they did not reflect all of the most fervent hopes of the leading elements of the wartime anti-fascist movement, particularly its communist and socialist components, these developments did reflect a post-war mind of Europe, that recognized a role for the state, and they constituted a great advance in the recognition of social rights and of the responsibility of the democratic state to regulate, govern and manage the economy in the interests of all the people.
I have outlined these admittedly stylized and necessarily exaggerated portraits – even while omitting Four of the original Six, the social democracies of Northern Europe, the nations of the Communist Bloc, the Iberian countries then under the rule of dictators, and of course the Irish State – to provide an illustration of the diversity of institutions in the leading industrial countries in post-war Europe.
Students of comparative political economy and comparative social policy will be very aware of the construction of typologies of European states by reference to a constellation of historically determined economic, social and political arrangements. For example, the political economists Peter Hall and David Soskice have used the term ‘varieties of capitalism’ to refer to analytically distinct models of capitalism while the Danish sociologist Gøsta Esping-Andersen identified, in his 1990 work The Three Worlds of Welfare Capitalism, three distinct welfare regimes.
While there is an argument that all states can be shown to have begun, under the influence of a hegemonic economic discourse, to converge towards a turbo-charged version of the liberal model, we can still identify strikingly different economic and social institutions whether in the labour market, in the financing and ownership of, and relations between firms, or in the degree to which states meet the most basic needs of their citizens.
Scholars of comparative economic and social institutions can of course construct any number of typologies to classify and compare nation-states, and the Member States of the European Union. What matters now is whether the project of European integration is capable of drawing, or willing to draw on this diverse array of institutions, and in its project of integration be sustained and enhanced by recognizing diversity, and whether such an integration can meet the demand for social justice and social cohesion. There is a nightmare possibility – that diversity will not be taken into account, that the adjustment to an un-empirically tested market without the need for popular assent will prevail.
Asserting that diversity has been recognized will not be sufficient. The European Street will seek evidence in their lives that it has.
The demand for social cohesion was, we should not forget, recognized at the beginning of the Union. The institutional origins of the Union lie in the Schumann Declaration, given legal form through the Treaty of Paris which established the European Coal and Steel Community. The Coal and Steel Community contained the embryonic components of the future Europe: a technocratic executive in the form of a High Authority; a parliamentary assembly; a court of justice; a council of national ministers; and a common regulated market in coal and steel.
That Community reflected a mélange of the social-market and dirigisme models: the High Authority had significant powers to fund and direct investments yet it was also committed to combat excess concentrations or abuse of dominant market positions. This latter is now of course a battle lost and we are left with flimsy rationalizations of its inevitability and its occasional hubristic flourishes as to its ultimate universal benefit. This is an ideological position that eschews empirical test.
Though one would not say the early institutional forms of the European Union were infused with the spirit of Ventotene, it was significant that the High Authority of the Coal and Steel Community was empowered to direct enterprises to raise wages, to instruct states to compensate workers for wage reductions, and to direct financial aid to offset the negative effects of technological advances in the industry on the workforce, including programmes of early retirement, transitional allowances, mobility grants and re-training.
Let us recall too that these features were felt to be required to give the Community legitimacy in the eyes of the workers, particular those German workers in the Rhineland who would be most directly affected by a shared approach to coal and steel.
The Social Democratic Party of Germany, re-founded in 1946 on the principle of ‘a socialist Germany in a socialist Europe’ was profoundly suspicious of any project of European integration led by its domestic opponents. Its leader, Kurt Schumacher, feared what he saw as a Europe constructed on the foundations of, in his words, ‘capitalism, clericalism, conservatism, cartels’.
Kurt Schumacher, a politician of immense moral courage - imprisoned in Buchenwald by the Nazis for ten years - was an early exemplar of the truth that one can be a passionate advocate of European unity, and at the same time be a trenchant critic and opponent of defective institutional design, and the absence of ethical intent in the specific projects of Union.
When the European Economic Community was formed in 1957, it took the form of a political commitment to create a common market. In retrospect, of course, all things can take on the appearance of inevitability, but we should recall that for Jean Monnet, the intellectual architect of the Coal and Steel Community, the common market was a scheme considered too vague - and to a man who was, after-all, the leading technician within le Commissariat général du Plan – too economically liberal to succeed in ensuring European integration. In 1955, Jean Monnet posed the question, ‘Is it possible to have a Common Market without federal social, monetary and macro-economic policies?’.
As to the first point – that of a common social policy, and I here would concur with Perry Anderson that it is of no small significance that social considerations came first in Jean Monnet’s thinking – the International Labour Organisation was asked to appoint a group of independent experts, led by the Swedish economist Bert Ohlin, to prepare a report on the social effects of closer European co-operation.
There was a considerable fear, recognized in the 1956 Ohlin Report, that a reduction in tariffs, and the gradual movement towards a tariff-free common customs area, when combined with the free movement of capital, would lead to an agglomeration of investment in existing centres of industry, to the disadvantage of those countries with higher social and labour standards, and that those countries would find it hard to raise such standards.
In a word, many saw the danger of the existing social floor, so hard fought for in the Six becoming a social ceiling.
The Ohlin Report recommended provisions for the free movement of labour, equivalence between paid holiday schemes and the principle of equal pay for men and women be included in the Treaties.
The enumeration of a requirement of equal pay for equal work (now Articles 157 and 158 of the Treaty on the Functioning of the European Union) reflected the social provisions of the constitution of the French Fourth Republic.
They themselves were adaptions of the great legislative victories of the Popular Front in France in the 1930s - and would prove to be of immense importance in this country when Ireland acceded to the European Economic Community.
One of my predecessors in the Presidency, Dr. Patrick Hillery, as the first European Commissioner appointed by Ireland, ensured that these Treaty obligations were reflected in a Directive, and furthermore courageously refused to grant Ireland a derogation from its provisions despite significant pressure to do so.
The Ohlin Report reflected the assumptions of what we might now call the Bretton Woods era, that period between 1945 and 1973 in which the international policy regime for capital and finance dramatically suppressed, restricted and regulated the role of the financial markets in allocating resources through the control of capital movements, state ownership of banks and other market interventions. The international monetary system revolved around a system of fixed but flexible currencies pegged to the dollar, which acted as the anchor and international reserve currency.
This era has been termed one of ‘embedded liberalism’, in which governments were enabled to pursue domestic policy goals such as full employment and the building of the welfare state. When faced by balance of payments crises governments could restrict capital mobility or adjust their exchange rates, rather than reducing government expenditure.
In this context, Ohlin and his colleagues assumed that members of the Common Market would use the traditional Bretton Woods policies at their disposal to protect their desired social and labour standards. We should also recall that the Member States had retained a large degree of autonomy under the acquis, at least prior to the Single European Act, that enabled them to intervene in their own economies.
Social Europe was not then deemed to be in danger, or that it was even something that was necessary to articulate, in 1957. It was generally believed that domestic autonomy would be protected, and that social policy did not need to be Europeanised to be enhanced. It was not until a summit in Paris in April 1972 that the social objectives of the Community were recognized as being as important as its economic objectives and it is from them that the term ‘Social Europe’ first became widespread.
The resultant Social Action Programme of 1974 in many respects bears the hallmark, and carries the spirit of the student and worker protests of ’68. It represents what, in retrospect, appears to be a high point of ambition, both in terms of its analytic content and its programmatic intent. If I may quote from the second paragraph of the Programme submitted by the then Commission to the Council:
There are continuing, and in some cases worsening, problems over the distribution of income and wealth within the Community, and over worker participation within industry. There are problems caused by the failure of the infrastructure in some sectors to keep pace with the demands on it.
And then there are the problems caused by growth itself - problems of industrial pollution, of a deteriorating environment, of a conflict of values in some cases between industry and society, disruptions to the pattern of life, and a growing dependence on migrant workers whom society is not always ready to accept as citizens while it continues to require their services to maintain its standard of living’.
May I suggest that such an analysis is now, unfortunately, more apposite than ever. The solutions proposed were then nothing less than a harmonization of labour standards, worker participation and industrial democracy towards the highest level then extant in the Community, which at that time meant West German standards, and the preparation of the Directive on equal pay between men and women, to which I have already alluded. Can we imagine the European Commission of today making such proposals and in such terms? May we anticipate it as an agreed statement from Davos?
Jean Monnet, reflecting in 1978 on the events of ’68 in France, and of the brief alliance of radical students and workers, wrote that, ‘the cause for which they had fought still remained: it was the cause of humanity. And I believe that we have still not adequately responded, either before or after that salutary warning.’ Can we imagine a fonctionnaire of that stature today speaking with such acuity and with such sympathy with the European Street? Our times are reflective, I suggest, of a lost discourse. A vacuum has emerged that must be filled by public discourse, a vacuum that cannot be met by competing rationalizations from the silos of the European Institutions.
That very moment – when Social Europe was proposed as a solution to many of the challenges with which we still struggle today, and which, may I suggest, have grown in severity to this day - coincided with the beginning of a radical shift in the manner in which the relationship between the economy and society was understood, or construed, with implication for the role of the state.
I am speaking of course of the ideology that dares not speak its name, that political theory of economic governance known as neoliberalism. We know its structures all too well – the market, neoliberals suggested, could and should allocate resources. The pursuit of private profit was suggested as being more efficient than public provision for public purposes. The laws of the market – though drafted and enforced by the state – now carried the new logic and were elevated to the status of immutable and unchangeable laws of nature.
It would be a mistake, may I suggest, to read the Treaty of Rome as a sui generis legal text, devoid of institutional and social context, and to imply that it was a neoliberal charter. That would be to ignore the context I have outlined.
The collapse of Bretton Woods regime in the 1970s and the transition to an international monetary system based on international capital mobility and financial deregulation in the 1980s significantly undermined the capacity of states to rely on such mechanisms as were identified in the Ohlin Report.
I believe it is important for us, if we wish to be authentic in our discourse, to recognize that this was a policy choice – reflective of new intellectual and above all political orientations - on the part of states and international institutions. Institutions, just like political parties have an identifiable intellectual history, even with the best of rhetorical cover.
‘Globalisation’, and here I refer specifically to the liberalization of finance and capital markets, is far too often spoken of as if it is some kind of phenomenon that is external to the political process, one which cannot be managed. International co-operation to manage such flows has been painfully slow to develop, and in truth a laissez-faire philosophy still prevails. As a result, a significant minority of capital accumulators have benefited. From such lassitude it is publics who have been the losers.
Within the European Economic Community, the response to the monetary instability of the 1970s was a suspension of plans for economic and monetary union. Instead, a number of attempts were made to establish an intra-European fixed currency regime, the most durable of which proved to be the European Monetary System. A commitment to maintain fixed rates within a narrow band without frequent revaluations within the Monetary System required, for some countries policies that constituted the abandonment of full employment as a policy. Monetary policy, a key part of the Bretton Woods policy mix, was subordinated to the necessity to retain fixed rates.
A more advanced form of monetary co-operation was considered desirable following the Single European Act, which advanced the completion of the internal market and provided for the removal of all capital controls by 1990. Tommaso Padoa-Schioppa, one of the architects of monetary union, has argued that this capital liberalisation within the Community inevitably led to monetary union itself.
It was Padoa-Schioppa who used the phrase the ‘inconsistent quartet’ to refer to the impossibility of pursuing free trade, free capital mobility, fixed exchange rates and an autonomous national monetary policy simultaneously.
By the late 1980s, a political commitment to the internal market required free trade and free capital mobility, while the functioning of the common agricultural price level of the EEC’s Common Agricultural Policy required stable exchange rates. The creation of a shared currency governed by a single monetary policy under the influence of all Member States was then, unsurprisingly, a preferred option for most Member States, rather than the maintenance of a fixed exchange rate regime, fidelity to which would determine each state’s monetary policy.
This familiar sequencing of integration was not inevitable – during the late 1960s the Six Members of the European Economic Community had advanced plans to create an economic and monetary union which would have facilitated the removal of capital controls and further liberalization of trade.
I refer to the Werner Plan, presented to the Council and the Commission 1970, seems out of time when compared to the European Monetary System and the monetary union many of the Member States of the European Union are members of today.
Let me make two observations: first, the Werner Plan envisioned a ‘centre of economic decision making’, answerable to a European Parliament elected by universal suffrage, responsible for co-ordinating national budgets and utilising both fiscal deficits and surpluses to maintain, amongst other objectives, full employment; and second, that the proposed ‘centre of economic decision making’ and the proposed Community system of central banks should pursue the same economic objectives.
We might speculate how differently such a version of institutions or their role, being underpinned by such different assumptions, might approach the economic policy of the European Union today.
Instead of such a set of proposals as the Werner Plan might suggest economic and monetary union has followed those precepts agreed at Maastricht – an independent central bank which is solely devoted to achieving price stability and national fiscal policies constrained by the Growth and Stability Pact and now by the Fiscal Stability Treaty.
The agreement of the Fiscal Compact, that which many have seen as a quasi-constitutionalism of anti-Keynesian macroeconomic policy, and the administrative schema which complements it – the European Semester, the Macroeconomic Imbalance Procedure, the renewed Stability and Growth Pact and so on – have embedded another level of economic co-ordination.
For many of us – and I do not just speak of those whose political careers have been spent on the left, for I think there may be some sympathy within the European Institutions for a similar view – the recommendations directed to countries in the European Semester reflect a partial, limited, and very particular view of economic and social policy, whether it be in the demand for flexible labour market policies or neoliberal reforms of social protection, all of course advanced under the rubric of ‘structural adjustment’.
From the European Street it might be asked where are we to discuss – see justified and empirically tested - the assumptions that are made in those ‘structural adjustment’ proposals, or the bases for the calculated possible outcomes in relation to economic growth or efficiency, not to speak of social consequences or further loss of cohesion.
The Five Presidents have suggested, as part of their prospectus for an Economic Union, a stronger focus on employment and social protection as part of the Semester process. Will that be accompanied by a willingness to debate and dispute fundamental assumptions of what constitutes an ‘efficient’ economic model, on the part of both the Commission and Council members? How is this to be made fit with movements for a European Union of the future that seeks to build a movement for reform from below?
The interpretation of the acquis communautaire by the Court of Justice of the European Union has also developed on a very particular trajectory since the mid-1970s, and that direction has had troubling implications for Member States’ domestic commitments to social and labour law. As Fritz Scharpf and others have so convincingly detailed, integration has occurred through case-law and between the Luxembourg Compromise of 1966 and the re-emergence of qualified majority voting in the late 1980s, it played the leading role.
In early landmark judgements, the European Court of Justice declared that it saw itself as being at the centre of a new supranational legal order and through the doctrines of the supremacy and direct effect of European Union law became a key driver of integration.
The construction of this legal order took place through the referral of cases by national courts to the Court of Justice. By its nature, this form of integration was negative, taking the form of the striking down of what were considered barriers to the freedom of free movement of goods, services, capital and workers.
While there may have been disquiet regarding the closing of the scope for Member States to regulate business on grounds that it violates the ‘rules of the market’ embedded in the Treaties, few expected that the Court of Justice would elevate those economic freedoms above what we consider fundamental rights, such as the right to strike. Yet, for example, the so-called Laval quartet of cases in the late 2000s raised the prospect that the Court would do just that, and it has. Furthermore, they raised the prospect that the social acquis would operate as a ceiling, rather than a floor.
These judgements were reached before the incorporation of the Charter of Fundamental Rights into the acquis, and I hope – as I know that many of us who advocated for the Lisbon Treaty in this country do - that the Charter will have an appreciative effect on judicial reasoning when fundamental rights seem to conflict with the economic freedoms. History would not suggest that we can be optimistic.
However, may I suggest that these judgments reflect the confluence of a number of very specific logics: first, that the Treaties reflect, above all, a European Economic Constitution which establishes a framework for very specific model of the market economy; second, the continuing influence of neoliberal philosophy; and finally, that until social and labour rights are categorically given the same priority – if not a higher one - as economic freedoms in the Treaties, the latter will prevail. These issues must be clarified by public debate and through engagement with the European Street.
May I suggest that this latter point – the delicate balance between the economy and society - was implicit in work of the Commission led by Jacque Delors in the 1980s.
The Single European Act was above all, as the legal scholar Christian Joerges has suggested, a project of integration through market building – it represented a re-regulation of an expanded new market, as evidenced by European legislation on consumer protection, health and safety, and protection of the Environment.
Jacques Delors, as we know so well, recognized that the creation of this new market demanded a form of regulation at least equal in scope and effect. Yet we also know that his vision was not fulfilled, and that the Social Chapter, as welcome and hard fought as it was, has proved inadequate. Indeed, in this time of declining trade union membership, the voice of the representatives of labour has never seemed weaker.
We have not yet reckoned with the consequences of the profound collision of the social and the economic represented by the Single European Act and the Maastricht Treaty. National social policies, and national economic policies designed to ensure social protection, must now comply with the exigencies and demands of an internal market whose intrinsic logic is ever more informed by neoliberalism.
The traditional policies of the Bretton Woods era are no longer possible within the confines of economic and monetary union. Yes, the Treaty of Amsterdam was a very welcome, if partial, attempt to regulate this new European market and to co-ordinate the action of Member States through the inclusion of Employment Charter, and yes, the Treaty of Lisbon, by enumerating the values and objectives of the Union and settling the question of whether the Charter of Fundamental Rights was part of the acquis, represented an advance.
The Five Presidents have suggested that Economic and Monetary Union will ultimately lead to a Banking, Fiscal and Political Union. As the political negotiations on the shape of the Banking Union – most importantly of course the future financing of the Single Resolution Fund for failed banks - is ongoing I do not wish to comment directly on that issue. I do, however, wish to suggest that the European Street will not give their consent to the creation of what they correctly see as an enduring Austerity Union. The internal market cannot be the ne plus ultra of the European legal order – we must recall that for the European Street, indeed for all democrats in the Union, the laws of the market are seen as, and must be experienced as, instrumental, not intrinsic.
The economy, as the manifesto of Ventotene reminds us, must be subordinated and subject to the democratic will of the people. I have spoken of the diversity of our economic and social models in Europe – let us take, I suggest, this observed diversity not as a negative, but as a medley of opportunities which we should celebrate and from which we should extract the very best materials for the future.
I do not wish to be too prescriptive on the kind of institutional change required in the coming years but let me suggest a number of questions that I see as crucial: can the macroeconomic framework of the European Union sanction and protect a diversity of models, both in terms of welfare states and alternative models of capitalism?
Can the formulation of monetary policy be accommodative of such difference? Can the rules of the internal market yield where they can and surrender when they must to the demands of the dignity of labour?
May I suggest that to the European Street the very project of European integration at its best was and is itself instrumental as post-war Europeans were invited only to vindicate those values and objectives for which the Union came into existence and to which indeed is now constitutionally committed, even if they are contradicted by social outcomes. They supported European Union values which they saw as necessary, and above all which could bring an end to centuries of internecine war and of imperial domination. Rosa Luxembourg once stated that the foundation of socialism must be ‘not European solidarity, but international solidarity, embracing every region, race and people on Earth… Every partial solidarity is not a stage towards the realization of genuine internationality, but its opposite, its enemy, an ambiguity under which lurks the cloven hoof of national antagonism’.
The First World War should have taught us that peace does not rest on common markets or globalization. That war occurred at a high point of the interconnection of free capital and goods markets. No, peace depends on a shared commitment to one another, on our capacity of compassion, empathy and sympathy, and to institutions which do not divide or harm society, but rather institutions which unite and protect it.
Let us therefore in the European Union lift our gaze to encompass the needs of all humanity, all of their history, their possible futures, and let us do such with recognition of all of our cultural diversity.
After all the challenges which will test the European Union in this century – climate change, global migration, the future of work – are common to us all on our fragile and shared planet.
Our best aspirations, our sustainable future, can only be met by restoring social cohesion and promoting social justice within our institutions here at home, within the institutions of the European Union, and within our global institutions. Our horizons must be limitless, for we, all of us, owe to each other an imprescriptible moral duty. We need a new mind for our times, a mind informed by hope rather than fear, not only for Europe but for humanity itself on our shared and vulnerable planet.