Garavini on Warlouzet, 'Governing Europe in a Globalizing World: Neoliberalism and Its Alternatives following the 1973 Oil Crisis'

Author: 
Laurent Warlouzet
Reviewer: 
Giuliano Garavini

Laurent Warlouzet. Governing Europe in a Globalizing World: Neoliberalism and Its Alternatives following the 1973 Oil Crisis. Routledge Studies on Government and the European Union Series. London: Routledge, 2018. 288 pp. $145.00 (cloth), ISBN 978-1-138-72942-1.

Reviewed by Giuliano Garavini (New York University Abu Dhabi (NYUAD)) Published on H-Diplo (May, 2019) Commissioned by Seth Offenbach (Bronx Community College, The City University of New York)

Printable Version: http://www.h-net.org/reviews/showpdf.php?id=53497

The early history of European integration was written by European federalists, such as Walter Lipgens, who tended to highlight the role of the “European saints” who first dreamed of a European federation and eventually launched the European Coal and Steel Community (ECSC). The second wave of historical studies was spearheaded by the books of British economic historian Alan Milward, first The Reconstruction of Western Europe: 1945-51 (1984) and then European Rescue of the Nation-State (1992). Milward describes European integration as one of the strategies deployed by postwar Western European elites to help the reconstruction of European nation-states after the devastation of World War II. According to Milward, European integration was not a project aimed at overcoming the nation-states but a project to reinforce them.

After Milward, the research on the ECSC, the European Economic Community (EEC/EC), and eventually the European Union (EU) exploded in many different directions, often benefiting from financial contributions by the European Commission, either in the form of research funds or through the creation of “Jean Monnet Chairs” in EU academic institutions and beyond. Until the financial crisis at the end of the 2000s and the following “migrant crisis,” most studies of European integration were supportive when not enthusiastic, as with the European Dream written by American futurologist Jeremy Rifkin (2004). The same generally positive evaluation was shared by the best historians of modern Europe, either because, as Mark Mazower argued in Dark Continent, the EC/EU “is part of the European attempt to adapt European capitalism to the needs of an increasingly global era,” or because, as argued by Tony Judt in Postwar, for all its problems the EU was a “good thing,” considering both the “newfound freedom to travel, work, study anywhere in the Union” and its budget with “redistributive quality, transferring resources from the wealthy regions to the poorer ones.”[1]

After the beginning of the financial crisis of 2007-8 the narrative of the EC/EU changed quite dramatically as bitterness toward Brussels spread in most European countries, leading for the first time the citizens of an EU member to vote to exit the “European dream.” While EC/EU historiography still lacks grand narratives and key reference points, the likes of Milward’s books, we are much closer to identifying key macro issues with which historians will deal for some years to come. One of these is certainly the relationship between the creation of the EEC in 1957 and the waning of European colonial empires after their progressive rise for more than a century. Another key question (not unrelated to the previous one) is the link between the creation of the EU at the beginning of the 1990s and the parallel success of global neoliberalism (although it must be noted that this success never went unchallenged).

This “neoliberal question” is the one tackled by Laurent Warlouzet, a French historian with a detailed knowledge of the historiography of the EU to which he has contributed both with numerous publications and with his assistance in creating a network of “young” researchers on history of European integration (Richie).[2] His detailed research into British, French, and German government archives, as well as into the archives of the European Commission and of transnational organizations such as European trade unions and business groups, place him well to understand the evolution of the EC since the 1970s in what he defines as a “globalizing world.”

His starting point is the “shock of the global” (the term Warlouzet uses frequently) of the 1970s when Western European nations faced a decline in growth rates both in 1974-5 and in 1979-80, a boom in unemployment, an increase in inflation rates, and, except from West Germany, negative trade balances. Remember that Western European countries were coming from a prolonged period of tremendous economic growth, thus had significant means available to deal with the multidimensional crisis of their Keynesian development model, as well as adapt to the rise of the Global South. Still, they needed to outline a strategy to deal with structural economic and social change, both within Europe and beyond it.

There are two core arguments in Warlouzet’s account. The first is that the EC was not the only international organization in which Western European leaders and diplomats invested their political capital. The EC/EU emerged as a solution only after “other alternatives at the national and international level had been exhausted” (p. 246). For example, measures to “control multinationals,” one of the key international issues debated in the 1970s, were attempted both at the Organisation for Economic Co-operation and Development (OECD) and at the United Nations levels. Additionally, monetary cooperation among EC countries, embodied in the launching of the European Monetary System (EMS) in 1978-9, was reinforced only after the failure of the global Keynesian stimulus package (also known as the “locomotive theory”) attempted after the G7 meeting in Bonn in the very same 1978.

The second argument is that the “neoliberal turn” of the EC at the end of the 1980s was never total, nor was it a given. Other economic policies were attempted since 1973. The different strategies that Warlouzet identifies are: “socially oriented” policies, “neomercantilism,” and “market-oriented policies.” Examples of such socially oriented policies were the efforts to control multinationals or the European Commission’s projects to reduce working time (and thus boost employment), such as the Vredeling directives. While these efforts led nowhere, the EC was successful in the 1970s on other social issues, such as promoting health legislation, environmental protection, and gender equality. Examples of neomercantilist policies were EC efforts to promote a privileged relationship with former colonies in Africa and elsewhere embodied in the Lomé Convention of 1975, protection of textiles within the General Agreement on Trade and Tariffs (GATT), and support to the restructuring of the ailing steel industry, as well as intergovernmental cooperation on specific sectors, for example, with the launching of Airbus in the aviation sector. Finally, examples of market-oriented policies were the rise of stability-oriented monetary policies embodied by the EMS (approved without the creation of a European Monetary Fund) and later by monetary union in Maastricht, and especially by the rise of “competition policy”—a policy that already existed in the 1957 Rome Treaty but had been given little practical application until the middle of the 1980s. The symbol of the rise of market-oriented European integration was the launching of the Single Market project in 1985, followed by the signing of the Single European Act in 1986, and just after that the launching of the GATT Uruguay Round to open up global trade, eventually leading to the birth of the World Trade Organization (WTO) in 1995.

According to Warlouzet, socially oriented and neomercantilist policies at a European level faced so many obstacles because of the perceived inefficiency of traditional dirigiste tools, such as state aid and nationalizations; of the failure of policies of fiscal stimulus at the national level; and of the weakness of transnational European networks pushing for socially oriented regulation of globalization. Furthermore, technological innovation disrupted such sectors as communications and finance and allowed for internationalization of supply chains, while at the same time making it harder to control both trade and capital movements.

Even though the sequence of the chapters might suggest a linear succession between socially oriented, neomercantilist, and market-oriented policies, Warlouzet argues that the three tendencies remained present at the same within the EC/EU (a bit like the Holy Trinity) even after the launching of the Single Market project and the creation of the EU. The permanence of this trinity, according to Warlouzet, is embodied in Jacques Delors’s approach and strategy. A French socialist leader with deep connections to the trade unions, Delors became president of the European Commission in 1985 and relaunched and revived European integration during his ten years of tenure. According to the French European Commission president, the market-oriented policies of the Single Market, eventually boosted by monetary union, had to be compensated by the reinforcement of regional redistribution and of social dialogue, and were to be accompanied by direct EC/EU action in support of high technology (neomercantilism). Warlouzet considers that the key “neoliberal dynamic” of the EC/EU was mainly its focus on competition policy (here is where the influence of German “ordoliberalism” and of Margaret Thatcher’s “new Conservatism” played the most), while it would be hard to qualify social dialogue and cohesion funds as neoliberal policies (p. 207).

With this book, Warlouzet helps to explain why the EC/EU became more important for Western European policymakers (and citizens) during the 1970s and 1980s. We get much closer to the decision-making process and constraints of elites in France, West Germany, and the United Kingdom as even socialist leaders came to see the market approach as a possible way to help middle-class consumers. We understand much better why the Single European Act was signed in 1986 rather than before, but we are still quite far from answering the question: was the EU a neoliberal project? My feeling is that, even accounting for the different roads that were attempted up to the signing of the Maastricht Treaty and for the complexity of a Brussels machinery that operates in so many different sectors and offers some space to democratic participation, the answer should be in the positive rather than in the negative.

The entirely new focuses on competition policy that contributed to the dismantling of previously state-dominated industrial sectors in many EU members, on free capital movement and on stability-oriented monetary policies that put national welfare states under constant pressure, and on efforts to achieve the single market through the liberalization of key service sectors from transport to energy and telecommunications were far more disruptive and socially regressive than any of the EU policies aimed at limiting the rise of wealth inequality within the EU members (a “social dialogue” with basically no teeth), or among EU members (cohesion funds that are one-third of a EU budget that overall accounts for less than 1 percent of the total value of the EU economy).[3] In fact, both income inequality and regional inequality in the EU, after decades of convergence, never stopped increasing since the 1980s.[4]

The EU not only was an instrument to implement market-oriented policies within Europe but also promoted neoliberal policies globally. As argued, among others, by Quinn Slobodian in Globalists: The End of Empire and the Birth of Neoliberalism (2018), neoliberalism is not about dismantling regulation but about creating a new regulatory environment and global order that insulates markets against sovereign states, political change, and demands for greater equality and social justice. Renato Ruggiero, a top Italian diplomat who worked for years at the European Commission and eventually became the first director-general of the WTO in 1995, soon after taking office voiced the neoliberal credo very clearly: “We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy.”[5] The EU was a key protagonist in shaping neoliberal globalization after the 1980s. It was very successful at it, if we consider that before the beginning of the financial crisis fourteen of the largest financial groups in the world were European (only three were American), while European corporations still thrive as the EU represents the biggest and more open trading block in the world. One of the few books that explains how and why European politicians and EU bureaucrats spearheaded neoliberal globalization in the case of finance is Rawi Abdelal’s Capital Rules: The Construction of Global Finance (2007). Warlouzet gives us some new factual and interpretative inputs. But we are still waiting for other historical studies to clearly summarize for a wider public the EU’s fundamental contribution to neoliberal globalization in key sectors, from trade, to foreign direct investment, to global governance of natural resources, to human rights.

Notes

[1]. Mark Mazower, Dark Continent: Europe’s Twentieth Century (London: Penguin, 1998), 408; and Tony Judt, Postwar: A History of Europe since 1945 (New York: Pengiun, 2005), 732.

[2]. See Richie, https://www.europe-richie.org/.

[3]. “How the EU Budget Is Spent,” European Union, https://europa.eu/european-union/about-eu/eu-budget/expenditure_en (accessed April 29, 2019).

[4]. Joan Rosés and Nikolaus Wolf, “The Return of Regional Inequality: Europe from 1900 to Today,” VOX (March 14, 2018): https://voxeu.org/article/return-regional-inequality-europe-1900-today.

[5]. United Nations Conference on Trade and Development, “UNCTAD and WTO: A Common Goal in a Global Economy,” UNCTAD, October 8, 1996, https://unctad.org/en/pages/PressReleaseArchive.aspx?ReferenceDocId=3607.

Giuliano Garavini is currently senior research fellow in the humanities at NYU Abu Dhabi. He is author of After Empires: European Integration, Decolonization, and the Challenge from the Global South 1957-1986 (2012). His new book The Rise and Fall of OPEC in the Twentieth Century will come out this July with Oxford University Press.

Citation: Giuliano Garavini. Review of Warlouzet, Laurent, Governing Europe in a Globalizing World: Neoliberalism and Its Alternatives following the 1973 Oil Crisis. H-Diplo, H-Net Reviews. May, 2019. URL: http://www.h-net.org/reviews/showrev.php?id=53497

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