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ABSTRACT
This article regards the EMU as part of a broader strategy to revitalize the European economy by creating a strong European base within the transnational finance-led regime of accumulation. Examining the broader implications of this strategy, the article applies the Coxian conceptual triangle of state–civil society complexes, social relations of production and world order. As far as the reconfiguration of the European state–civil society complex is concerned, the article shows first that the European Union has built up quite remarkable, however, primarily introverted governance capacities in the fields of monetary and financial market policies. Secondly, with respect to the social relations of production, it points out that changes within the European financial environment tend to undermine the particular social conditions and relations which have underpinned innovation and productivity growth so far. Finally, in terms of world order, the article shows that the material and organisational capacities of the EU are still much too weak to challenge the dominant role of the US. Nevertheless, under conditions of global trade imbalances, economic stagnation, and the crises of social reproduction and political legitimacy it is likely that transatlantic cooperation will become more difficult.
Notes
1 The first wave of ‘Americanisation’ in western Europe took place in the decades after the Second World War. It was mainly based on the emulation of superior fordist patterns of mass production and mass consumption in the US.
2 The concept of ‘interactive embeddedness’ refers to the manifold processes of social, political and economic regulation of financial reproduction. It should not be confounded with the understanding of (dis-)embedding strategies and tendencies in the work of CitationPolanyi (1957) or with the concept of ‘embedded liberalism’ invented by CitationRuggie (1982) who both refer to the very nature of a particular historical configuration of development.
3 For Cox (1987: 12), the different terms ‘production relations’, ‘social relations of production’, and ‘power relations of production’ refer to the same relationship, however, with a different emphasis. ‘Production relations is the broadest term, including the relationship between the people involved and the world of nature, i.e. technology, as well as the relations between the various groups of people and the legal and institutional forms to which these relations give rise and which structure them. The term social relations of production} focuses attention more specifically on the pattern or configuration of social groups engaged in the process, and the term power relations of production} focuses on the dominant-subordinate nature of this pattern of social relations’.
4 EASDAQ, however, did not receive the support of established markets, larger investment firms and national governments. Initially, the established financial centres were concerned about too rapid liberalisation and exceedingly harsh competition, whereas banks and governments tried to secure control in financial market affairs by setting up national ‘new markets’ within a broader, electronically linked European network. In the meantime, intensified competition broke up this network, and EASDAQ was taken over by NASDAQ shareholders and has been called ‘NASDAQ Europe’.
5 Furthermore, there is the Banking Supervision Committee (BSC) which has been established in 1998 within the European System of Central Banks (ESCB) in order to support supervision and stability of monetary and financial relations. And there was the ‘Group de Contact’ (GdC) which from 1972 onwards first informally coordinated daily supervisory procedures, and then supported the BAC and BSC.
6 This process was promoted by particular reform coalitions, composed of financial players, supervisory authorities, governmental actors, and stock exchanges themselves, anxious to modernize rivalling financial centres (CitationMoran, 2002: 267–8).
7 In this context, financialisation can be ‘defined as the engagement of non-financial businesses on financial markets’ (CitationStockhammer, 2004) and can be measured in terms of financial income as share of operating surplus. Without doubt, financialisation has gained momentum even within the European Union. So far, however, it is unevenly spread, i.e. rather important in the UK and France, while still modest in Germany and Italy.
8 This was one important point of contention in the Basel II negotiations on a renewed regulatory framework for credit risk assessment and capital requirements.
9 A study, commissioned by the CitationEuropean Parliament (1999), observed: ‘(t)here is little doubt that public investment expenditure has reduced substantially throughout the EU during the 1990s. (…) Using the same two periods as in relation to private investment, i.e. 1991 to 1994 and 1995 to 1998, the average fall in EU 15 government investment expenditure (as gross fixed capital formation) over the first period was –0.6% and over the second period was –4.3%. Comparisons with the US are instructive. The corresponding two period figures saw a fall of only 0.1% and over the first period and a rise of 2.0% over the second period. Moreover, perhaps less expectedly, the average ratio of government investment expenditure to GDP was 4.7% during 1991 to 1994 and 4.3% during the period 1995 to 1998. This was despite, it should be noted, a more rapidly growing US total economy than was the case for the EU. The comparable ratio figures for the EU 15 and for the EU 11 are 2.9% for the first period, and 2.3% for the EU 15 and 2.5% for the EU 11 during the second period. This means that public investment, as a share of GDP, in the US is now almost double that of the EU 11′.
10 Disciplinary subordination means total exposure to global financial firms and thereby to the vagaries of global financial markets. This path is taken by economies unable to follow a self-determined path of development. Relying on foreign capital and investment, they often accumulate huge foreign debt. As a consequence, they then have almost no chance of resisting various pressures, which are exerted by private creditors, the US government and the IMF and World Bank, to remove national barriers to the free flow of funds, to give full rights of operation to foreign financial investors, and to redesign national financial systems according to external requirements.
11 In comparison to the US, the bargaining approach of the EU can be characterized as relatively ‘soft’. In the case of Latin America the US, for instance, has tried to negotiate with each country individually in order to pit them against each other, while the EU has been less critical of regional trade agreements and prefers common negotiations. The more modest stance of the EU can also be studied in the negotiations of the Financial Services Agreement (FSA), as an appendix to the GATS talks. In this context, the US bargaining attitude was rigid, while the endeavours of the EU were more directed towards reaching any agreement on binding common rules and regulations (CitationDobson and Jacquet, 1998: 80–5; Garten, 1995: 56–7).
12 According to the statutes of the IMF, however, one big advantage of merging quotas would be a transfer of the fund to the country with the largest quota share, which then would be the EU (CitationBini Smaghi, 2004: 230).
13 This means that the ‘structural power’ of the EU in international finance, i.e. its capacity to determine the structure and mode of operation of global finance (CitationStrange, 1994), should be conceived of primarily as ‘systemic power’, derived from the economic process of financial integration, rather than ‘strategic power’, i.e. the ability to define and control the global financial agenda. On the various faces of ‘power’ see CitationLukes (1974).
14 The new member states in Central and Eastern Europe seem to be most anxious to join the EMU (CitationRostowski, 2003). Whether this would strengthen the EU as a global financial actor, remains an open question, since economic developments and the improvement of intra-European coordination in monetary and financial affairs is difficult to forecast. Things are different with the British membership. It would have a serious impact, as it would significantly scale up the overall size of the Eurozone and facilitate transatlantic cooperation, by simultaneously advancing European ambitions for financial leadership.