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Abstract
In the debate for and against European integration economists had an important part in so far as from the beginning European integration took on an essentially economic connotation. Among them Francois Perroux had a rather original position: he based his critique of European economic integration on a series of analytical tools that he developed in his critical reflection on the limits of a part of the dominant economic theory. The link between Perroux’s criticism of neoclassical economics and his position on European integration is particularly interesting because it makes Perroux’s position original and provocative among the various reflections on Europe and it gives us some important hints to further reflect on the role of economic theory and especially on the important tie between economic theory and policy.
Acknowledgments
I am grateful to Richard Arena, Fabrizio Bientinesi, and Jean Cartelier for their valuable comments and suggestions. I also thank this Journal’s two anonymous referees for their very constructive and helpful remarks.
Usual disclaimers apply.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 Ideas and proposals for a possible unified Europe date indeed even earlier: we may mention, for instance, the 1814 Saint-Simon’s book with its emblematic title De la réorganisation de la société Européenne, ou de la nécessité e des moyens de rassembler les peoples de l’Europe en un seul corps politique, en conservant à chacun son indépendance nationale (see on this Marchal Citation1964); Victor Hugo’s opening speech at the Peace Congress in Paris, 1849 (see Jay et al, Citation1849); Proudhon’s 1862 essay titled Du Principe fédératif et œuvres diverses sur les problems politiques européens (see Gurvitch Citation1965).
2 As, for instance, Maurice Allais, Raymond Aron, Jean Bénard, René Courtin, André Marchal, Jacques Rueff, Alfred Sauvy, Daniel Villey, and Jean Weiller.
3 Translations of Perroux’s quotations used in this work are mine.
4 In his writings Perroux largely recognized the important contribution made by the Theory of Monopolistic Competition developed by Chamberlin (Perroux Citation1960b, Citation1961a, Citation1991). The “Chamberlin revolution” – as he called it – is considered a fundamental step for the development of economic theory to the extent that it overcomes some of the neoclassical shortcomings by introducing the crucial concept of differentiation. Chamberlin “takes into account a world populated by real individuals, different from one another, that want and use different, heterogeneous commodities” (1961a, 111) and different firms, that produce and sell products differentiated by price and quality. As such “the theory of monopolistic competition is far more general than the theory of perfect competition” (1960b, 92). Indeed Perroux belongs to the critical line of all those who were highlighting the inadequacies of the assumption of perfect competition: among the many we may mention, following Bocage (Citation1985, 53-54), John M. Clark, Paul McNulty, Gary Becker and Herbert Simon.
5 Over time, Perroux increasingly got involved in the problem of underdeveloped countries and of the third world as important part of his reflections on economic development (Weiller Citation1989; Blardone Citation2005; Poirot Citation2007; Guillen Romo Citation2010).
6 The EDC caused a long and divisive debate in France where it was severely criticized (most nobly by Michel Debré and Pierre Mendes-France). It failed to obtain ratification in the French Parliament on the 30 August 1954. See on this the interesting reconstruction in Aron and Lerner (Citation1956); see also Gillingham (Citation2003, 29–32) and Bossuat (Citation2012, 97–107).
7 Monnet resigned from the High Authority of the ECSC in 1954 after the EDC rejection.
8 It was drafted by the Spaak Committee where a particularly important role was played by Pierre Uri who was one of the closest Monnet’s collaborators, economic and financial adviser of the General Planning Commissariat (1947-52), and director at the ECSC (1952-59).
9 The text of the Rome Treaty neglects also other issues included instead in the Spaak Report, as for instance the pooling of the air transport and the creation of a postal union.
10 In a very neo(ordo)-liberal style, Rueff defined the institutional market as “the market which creates a geographical area where the individual behaviours are governed to a large extent by price mechanism…The institutional market is different from the Manchesterian market because its laisser passer is not absolute but limited to a geographical domain where the creation of institutions without whom the market would not exist and last has been possible. Its laisser faire is not absolute but is limited by the interventions that would allow it to be morally and politically accepted ” (1958, 6–8)
11 Allais defined competitive planning as a third way between laissez-faire and authoritarian planning which is grounded “in the organization of freedom within a legal framework (…) and guarantees at maximum the individuals’ spontaneous movements towards their goals” (1950, 29). He emphasized the fundamental role of the state which is considered the only authority “able to control monopolies and combinations of entrepreneurs and trade unions” (ibidem). It is in the very actions recognized as falling within the competence of the state that emerges the neoliberal essence of the concept of competitive planning. Competitive planning was in fact in antithesis to the idea of indicative planning which was prevailing in France until the 60s and provided a framework of actions that went far beyond the preservation of market competition (Hackett & Hackett Citation1963; Caldari Citation2020). See also fn. 37.
12 However, when making a study of structure it is necessary to define the time period taken into account in the analysis because structures are characterized at the same time by factors of inertia (mental habits, institution) that change only very slowly and by variable factors that tend to change faster (Marshall 1920; Perroux Citation1952b, vii–x; Marchal Citation1959, 84–108; Barre Citation1963, 192–193). I will not enter here the terms of the debate on the relationship between structure and time period: it would take us too far from the theme of this work but see Barre Citation1950 and Citation1963; Flamant Citation1954; Levy Citation1960.
13 The dynamic perspective finds its roots in Wagemann’s contribution on conjuncture and structure (Citation1931) where the structure is considered what is more permanent, the conjuncture what is in transformation but between the two there is a functional relationship so much so that it is in the structural variations that Wagemann seeks the explanation of the cycle (Clémens Citation1952, 973); and then in the contribution of Åkerman (Citation1952, Citation1955), who highlights how there is a close interdependence between structure and conjuncture in the sense that “structural transformation is the real and fundamental phenomenon (…), the conjunctural variations (…) are the result of this transformation” (1955, vii).
14 This means to follow a meso-economic approach (see on this Barrere Citation1978; Uri Citation1987; Chassagnon Citation2015).
15 There were, however, also some criticisms, most notably Blaug’s: in his 1963 paper, he underlines the incoherence in the meaning given to “domination” in different periods of Perroux’s research (as a synonymous of monopoly power, as a new version of the Schumpeterian innovation, or as a such loose term that “any phenomena can be fitted into it” p. 360) and largely minimize the significance of such a contribution; then in his 1966 review of Perroux’s Citation1965 reprints of the essays on Schumpeter, Blaug claims that it was still not clear to him what domination meant (p. 378). Blaug’s critiques highlight some important elements of weakness in the concept of domination and indeed we must recognize that the theory of domination has not become a standard tool in economic analysis as Perroux himself wished but it remained “an incomplete theory” (Cunha Citation2018, 9). However, in his criticism, Blaug does not seem to understand the complexity of the domination phenomenon and above all he seems to miss the fact that this phenomenon, in Perroux, can assume different connotations depending on the time and space considered.
16 Through the use of private constraint, a private macro-unit (group of firms) may for instance induce the creation of compulsory complementarities for the purchasers, may impose its product by means of advertising and marketing expenses, may put pressure on public powers to obtain some monopolistic position or to change the rules of the game to its advantage (1961a, 255). Public constraint may be exercised by the state through the imposition of taxes, fixing and/or changing the rules of the game, and fixing prices and quantities (1961a, 92 and 265-68).
17 Along with other important studies like for instance Lösch, Citation1938; Brocard, Citation1939; Douglass C. North Citation1955; Isard Citation1956; Hirschman Citation1958 just to name a few.
18 In France, during the ‘60s the concept of development pole was adopted for economic planning and the texts of both the Fourth and the Fifth Plans refer to the need of creating or stimulating development poles for their propulsive effect on the environment (Quatrième Plan Citation1962–1965, 39; Cinquième Plan Citation1966–1970, 121-122; see also Boudeville Citation1966).
19 Perroux recalled as an example the Italian Bari-Taranto pole (1973b, 835; 843): however, that pole is far from being an example of success to the extent that it has instead become representative of the failure of what are called the “cathedrals in the desert” (or “white elephants”) that are unable to actually promote a long-lasting and widespread development in the area where they are settled. In this consideration it seems therefore that Perroux was forgetting the important distinction – he himself emphasized - between growth and development, growth pole and development pole.
20 It did not have indeed a long life: in 1967 the EEC, ECSC and Euratom merged together and ECSC lost its peculiar nature (see Alter and Stainberg Citation2007; Lee Mudge and Vauchez Citation2012).
21 Machlup (Citation1977, 261) emphasized Perroux’s “apprehensive concern” for a possible “dominant position of Germany within the Union”. This remark which is not followed by any further explication is in my view rather defective: on the one hand, it seems to reduce Perroux’s attitude to a sort of French anti-German sentiment cliché and on the other hand it hides the interesting meaning of Perroux’s position. It is in fact true that Perroux often insisted on the risk (for him inevitable) of the German prevalence within the European Union in the making; this prevalence was indeed then (and still is) testified by the facts, notwithstanding more often understated (see for instance Balassa Citation1962, 202–204). But the interesting aspect is that that risk was conceived as unavoidable on the basis of the tools that characterize his reasoning and, moreover, that in his view that prevalence would have, in the medium and long run, jeopardised the construction of a truly cooperative asset at European and world levels.
22 Perroux’s opinion on the average global data echoes also in his criticism of both the neoclassical and Keynesian analyses that, for him, ignored the important but necessary meso-dimension of the economic systems: at the micro level, the neoclassical theory expresses demand as a function of price D = f(p) developed from the function of utility U = f(q); at a macro level, in the Keynesian framework the demand for consumption goods is expressed as function of Income C = f (Y) whereas the idea of “global investment” ignores the fact that it consists of several investments made by many and different groups (1950b).
23 This risk was stressed for instance by several Italian economists, particularly attentive to the North-South divide like F.Vito, P.Saraceno and M.Fanno to whom we may add B.Balassa C.Kindleberger A Marchal G.Myrdal, P.Streeten, and J. Weiller just to name a few.
24 Perroux’s idea of “human economics” embodies two different but connected conceptions: “economics of the whole man” (économie de tout l’homme) and “economics of any man” (économie des tous les hommes).
25 In August 1938 on occasion of the presentation of Walter Lippmann’s book The principles of the Good Society in Paris, the Lippmann symposium took place where the main characteristics of a neo-liberalism were outlined. Among the participants, there were some of the most important liberal thinkers like Robbins, Hayek, Rökpe, Aron, Polanyi, and von Mises.
26 In France, far more than in other countries, the debate on the third way was very vivid and, especially after 1932 when the effects of the economic crisis started to be felt in the country, the efforts to develop an alternative to liberalism and socialism resulted into two main solutions: planning and corporatism. Planning was suggested by neo-liberals and socialist unionists; whereas corporatism was supported by catholic conservatives, anti-communist unionists, academics, royalists, and employers (Kuisel Citation1981, 98–104). Indeed, corporatism and planning often overlapped (see Pirou Citation1933; Citation1937; Citation1939) and were imbued with some elements of neo-liberalism (Denord Citation2001; Diemer Citation2014). Such a combination of corporatism-planning-neoliberalism was in fact the backbone of the French design developed for European construction soon after WWII (see on this Cohen Citation2006a; Citation2006b; Denord Citation2016; Caldari Citation2021a).
27 Perroux was deeply inspired by Mounier’s Communitarian personalism and founded, in 1942, the review Économie et Humanisme, which was “firmly personalist and communitarian”.
28 He was appointed among the experts in the project of the Constitution for the “Conseil National” created in January 1941 and as general secretary of the Carrel Foundation in 1942.
29 Most of the supporters of corporatism during Vichyhad to keep pace with the new post-war political and social conditions and an important metamorphosis had to be brought into play with the final rejection of the term “corporatism” and new nuances given to the word “communauté” (see on this Cohen Citation2006a).
30 The strict connection between corporatism and federalism largely characterize the idea of European integration in the post-war France, as explained in the detailed analyses by Cohen Citation2006a and Beaud Citation2004a.
31 This aspect represents the main difference with respect to the Monnet’s functionalism, which had not questioned the existence of nations. See also below.
32 In his neo-corporative period, Perroux defined a community as “an organic whole …which hierarchizes complementary functions that create fusions of activity and awareness… in view of some common goals. It has an organization which corresponds to its structure” (1942, 72); each community is therefore made up of interrelated parts, it is characterized by different kinds of activities and some common task; it is organized according to a hierarchical functional structure. Furthermore, “there cannot be any true community without a leader” (1942, 166) as in the case of families, firms, local communities, and nations (on this Cohen Citation2004; Citation2006b), otherwise it risks complete anarchy (Perroux and Urvoy Citation1943; see on this Thruiller Citation2003).
33 Monnet’s functionalist approach as well refers in fact to a neo-corporatist structure: i.e., a European economy divided by main sectors (steel, coal, atomic energy) and controlled by High Authorities (see Caldari Citation2021a).
34 Perroux often recalled the important contribution of Bergson to the concept of open society.
35 Perroux (Citation1954a, 382–83) recalls here the intuition of Aristide Briand (in his speech to the League of Nations, 5 September 1929) that was indeed little understood in its potential significance: the promoters of European integration – the federalists particularly – emphasized the importance of “devaluation of borders” aiming however at substituting a few little blocs (each with its own borders) with a larger bloc (and its own well-determined borders) (see Beaud Citation2004b).
36 Perroux referred to Hayek’s contribution (1939) as representative opinion on the matter (1954a, 605). The assumed starting point, he noted, was that a federal union becomes –automatically, necessarily – a large single free market where prices are different only in terms of transport costs. Given these premises, all the economic advantages of a large competitive market (diminution of productive costs, larger division of labour and specialization, better consumer satisfaction at lower prices and so forth) naturally followed from the federal union. For Perroux, Hayek’s reasoning simply supposed as already solved the many real difficulties and did not verify if and how they could be actually overcome (1954a, 606): in particular the difficulties connected with the process towards federalization. Indeed, Perroux stressed, the creation of any federal union, like the USA, requires several difficult and complex steps and involves long periods of struggles (and wars) to fix the rules of the game and thereafter for the adaptation of the old economic structures to the new order (1954a, 606). Hayek did not dwell upon these aspects and gave the end of the process (i.e., the birth of a federal state) as the premise of his reasoning. The same was true, for Perroux, for most federalists.
37 Indicative planning, that is a planning compatible with free market and competition, was the standard tool of the French economic policy in the post war period, since the creation of the General Planning Commissariat (1946). Jean Monnet was the first General Planning Commissioner. Monnet and his small team of collaborators (E. Hirsch, R. Marjolin, A. Sauvy, J. Fourastier, J.-R. Rabier, J. Ripert, P. Denis, R. Auboin, L. Kaplan and J. Vergeot P. Uri), in the crucial years of the European construction, tried to spread and to make accepted the idea of planning also at the European level. The most important (and last) attempt was made when Robert Marjolin was Vice-President of the European Economic Community (EEC) Commission (from 1958 to 1967) and he promoted a communitarian Action Programme to go beyond a customs union and introduce some long-term common projects and outlooks, in order to achieve a remarkable economic development, social welfare and quality of living for all the parts involved. His attempt was unsuccessful face to the strong ordoliberal ideas which permeated the European milieu (Caldari Citation2020 and Citation2021b).