In their recent paper ‘Regulation Theory and the Political Economy of the European Union’ (2016) 54(1) Journal of Common Market Studies 53-69, Bieling, Jäger & Ryner critically assess ‘how regulation theory has interpreted the single market, financial liberalization and EMU as a suppression of alternatives to neoliberal post-Fordism, or finance-led accumulation, in Europe’.
Their paper focuses on a high-level discussion of two selected economic crises (the 1970s and the ongoing crisis started in 2008) and uses it to situate the EU’s regulatory responses within a Gramscian analytical framework, thus arguing that ‘understanding the EU’s current conjecture of Eurozone crisis management requires a neo-Gramscian extension of regulatory theory, stressing transnational patterns of capitalist accumulation and power relations’.
The paper is interesting because they claim that the ‘implemented institutional and regulatory reforms can be interpreted as the manifestation of what Gramsci [Selections from the prison notebooks of Antonio Gramsci (Int’l Pub, 1971) 104] called a “passive revolution”, i.e. of power-preserving piecemeal changes “from above” without active mass politics … the passive revolution within the EU is, however, unlikely to become successful. At least for the time being, it is in trouble because central contradictions of accumulation and the latent overaccumulation crisis remain unsolved. The rift between the core and the periphery is deepening and uneven development in the European Union is very likely to remain a severe threat for the future of European integration’ (Bieling, Jäger & Ryner, 2016: 65).
Their observation of the overall trend and current weakness of the European integration strategy can hardly be contested and it seems clear that more fundamental changes are necessary for the European (but not only) economic crisis to be cured at its roots. Their paper clearly puts the European financial capitalism model at such root position – which is relatively uncontroversial. One of the passages of their analysis I find particularly relevant is that they stress that part of the causes that fuelled the ‘financialization’ of the (European) economy was a change in economic structural conditions three decades ago.
As they point out. ‘[s]ince the 1990s, European integration has … been characterized not only by intensified – institutional and regulatory – competition and a rather restrictive monetary and financial policy setting, but also by the transition towards a European financial capitalism … This transition took place against the background of structural over-accumulation of capital, so that, in view of missing fields of productive investment, increasing amounts of profits and savings were absorbed by banks and institutional investors, both trying to exploit prospected yields offered by deregulated financial markets … some other processes stimulated finance-dominated accumulation as well, such as rising public debt; the privatization of public enterprises such as industrial conglomerates, banks, insurance companies or providers of other public services and infrastructure; and, most importantly, the introduction and promotion of (private) capital market-based pension schemes’ (Bieling, Jäger & Ryner, 2016: 62).
Their paper is clear in stopping at the level of identifying the issues that support the insufficiency of the (current version) of the European financial capitalism model to offer a solution for the future, and laying out a research agenda for the future. However, in my view, their approach already seems to clearly suggest a need for a reversal of some of the trends that led to the (current version) of the European financial capitalism model. If that is the case, then I would disagree with that path of development, at least at the regulatory level.
The difficulties derived from liberalisation and competition-based reliance in the market cannot only be overcome by abandoning the path of development of the European (financial) capitalism model, which is not constrained to neoliberal post-Fordism. An alternative view of Bieling, Jäger & Ryner’s account is that the difficulties derived from the asymmetrical economic integration in the EU result not from too much centralisation of economic decision-making and regulation-based liberalisation, but from too little economic integration and solid regulatory and oversight mechanisms.
Thus, the alternative system for the future need not lie too far from neoliberal post-Fordism, and can well be developed on the basis of a properly understood liberal economic model based on sound public policy (and, possibly, a further federalisation of the European Union) – or what has been termed a (neo)-ordoliberal approach to European economic integration and regulation [for background discussion, see I Herrera Anchustegui, 'Competition law through an Ordoliberal Lens' (2015) 2 Oslo Law Review 139-174].
Doing otherwise would presume that the State can be a better manager of economic growth, technological development and social wealth than it (has been) a monitor of private arrangements building up to social preferences. I do not think this to be a solid point of departure and could hardly see the public sector directly developing the activities needed to overcome current challenges when it is hardly able to react and reconduct their spillovers.
Looming security issues aside for the purposes of this discussion, there are areas where the State clearly needs to revisit its role and policy – and taxation and social welfare are the two obvious priorities in my view, together with a reconstruction of the system of independent regulatory agencies and a clear push for an effective use of information technologies to improve all of these roles. Other than that, the issue of the de-financialization of the European economy seems beyond the reach of the State, exception made of the use of taxation to create incentives in that direction.
In this day and age, it is hard to see how claims of the existence of ‘a “passive revolution”, i.e. of power-preserving piecemeal changes “from above” without active mass politics’ talk to reality. Mass politics have not disappeared, they have simply morphed into mass apathy (or wilful ignorance), and the politics of the day are of social media window-dressing activism, coupled with non-acknowledged consumerist hypocrisy. The real challenge is for each of us to really start putting our money where our mouth is or, conversely, to be honest and put our mouths where our money is. But, quite simply, the State cannot do it for us and should not substitute our liberty for its discretion. All it can do is create mechanisms that constrain our choices, both directly (taxation) and indirectly (market regulation, including the imposition of desirable environmental and social standard throughout the economy).
More specifically from the perspective of my pet topic of public procurement law, the State needs to stop pretending to act as a ‘good citizen’ by buying green and social, or coming up with any new wave of ‘smart’ procurement policies that only apply to 20% of GDP – thus allowing it to resort to the same window-dressing strategy to cover its broader regulatory failures (the bulk of the economy, 80% cannot be reoriented or changed merely ‘by example’) that we enjoy in covering our poor consumerist choices with social media activist stunts – and start focusing on the proper use of public procurement as a tool to channel the ever scarcer public funds in the most effective way possible.
In my view, this is the progressive approach that is required in order to overcome the difficulties derived from the asymmetrical economic integration in the EU and the (current version) of the European financial capitalism model. Aborting the project of transformation of the European state from a 19th century model towards a true 21st century model half way through would be unwise. I will not be surprised if this triggers more criticism as a neoliberal scholar, though ....