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Ever Challenged Union: Exploring Ways Out of the Crises
Belfast, 29-30 June 2015
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The ’Res Publica’ - a new Approach for European
Integration Theory?
Thilo Zimmermann - PhD Candidate - Scuola Superiore Sant’Anna di Pisa, Italy
June 4, 2015
Abstract
Theories of European Integration (EI) have failed to foresee the euro crisis
and so far they also could not give adequate answers how to solve it. In this
paper I will revisit the main theories of EI regarding three main issues: First,
their handling of the (alleged) contradiction between sovereignty and federalism. Second, their modeling of economic problems. Third, their assumptions
about the main drivers of EI.
I will argue that, first, historically the concept of sovereignty and federalism are deeply mingled, the concept of a modern, industrialized nation stated
had always been accompanied by the idea of a federation. Second, I will argue that the current theories of EI are based on the concept of ’economic
interdependence’, which still entails the concept of nation states. Especially
in the euro area this concept does not make sense anymore. Third, I will
argue that the main driver of EI is not ’economic advantage’ but the fear of
economic domination.
I will conclude that a theory of EI should be based rather on the concept
of European-wide externalities ans public goods than on ’economic interdependence’. I will propose a republican paradigm, rather than a federalist
one, to explain hot to govern these public goods.
1
What’s wrong about EI-Theory?
All major theories of European integration have one thing in common: if you
look at their basic statement, then European integration should actually not
face much problems. The neo-functionalists stated that European integration is a self-sustaining process in which political elites and technocrats create
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and cultivate - often unintended - ’spill-overs’ which will keep the process of
European integration on track towards the final step of a European federation. Federalists argued that European integration is simply a necessity and
could (or better: should) be implemented immediately. Liberal Intergovernmentalists argued that the pace of European integration is determined by
national governments. They will accordingly adjust the pace of integration
when economic interdependencies make it necessary. All theories focus on
economic factors and oversee geopolitical and security issues. They ignore
the fact that European integration actually started as a geopolitical project
to avoid war and domination in Europe and that only later economic integration came into play. Even worse, they exclude all European history before
WWII, they have therefore difficulties to explain why European integration
started after WWII (or if it maybe started even before).
Non of the theories of European integration was able to foresee the huge
problems that Europe was and is facing. The most evident phenomena of
this problem is, that - also 50 years after the launch of European integration
- Europeans do still not know what the European Union actually is and what
it is supposed to become in the future. Indeed, the ’founding myth’ of the
European Union, the Schuman declaration and Monnet’s step by step integration, does not seem to inspire many Europeans for a stronger European
integration.
It seems therefore that these theories are doing something wrong. They
focus on wrong factors of European integration. The euro crisis seems for
the most part to be a crisis of thinking. It seems therefore that a new
approach is needed to explain European integration and to overcome the
current crisis of European integration. A theory that combines the strength
of political and economic approaches and offers a new framework to explain
what is happening in the last 50 years in Europe (and before), also under
geopolitical aspects. A theory that is especially able to deliver something
that Europe badly needs, if it wants to survive: a source for a kind of a
European identity. An idea of Europe that everyone (or at least the vast a
majority) can agree on.
In this paper I will first revisit the current theories of European Integration and analyze their viewpoint on three fields:
1. The role of nation states: sovereignty vs. federalism
2. Modeling of economic problems: economic interdependence vs. Europeanwide externalities and public goods
3. Main driver of European integration: economic advantages vs. fear of
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economic domination
I will emphasize that the federalist approach is much older and has to be seen
as a complement idea to the concept of sovereignty. It did not ’suddenly fall
from heaven’ into Schuman’s hands, as the ’founding myth’ of the European
Union suggests at a first glance. Furthermore, Federalism did not create a
coherent and convincing concept how economic externalities are structured
in a federation and how a European federation would be able to manage
externalities better than the concept of a semi-federal European Union. It
failed especially to create a European alluring idea of European identity
which would have made it possible to convince people for a federation. The
basic problem is, that a federation of states does still build of the concept of
’states’.
Neo-functionalism was able to create a coherent framework that explained how to launch a process of integration after WWII, however, its assumptions were heavily based in the Bretton Woods system. Neo-functionalism
came therefore to its limits when the Bretton Woods system failed. Furthermore, neo-functionalism is not a ’complete’ theory of European integration
as it is dependent on a broader framework (the Bretton Woods agreement)
and does not have a clear ideology, where European integration should lead
to. Furthermore, both theories, federalism and neo-functionalism, are based
on the concept of interdependence between two - more or less still sovereign
- nation states.
I will argue that especially in the euro area this argument does not make
any sense anymore. Theories on economic integration should rather built
on the concept of externalities and public goods as this concept helps to
overcome the trap of national thinking. Regarding the governance of these
public goods, I will propose an republican approach in order to implement
public good theory into European integration theory.
Furthermore, I will argue that these driving forces of European integration are connected to the modernization of the European society, of the
’Great Transformation’ (Polanyi, 1957) of the old feudal society into modern nation states and market economies. The European unification can then
be understood as an alternative to the old, feudal order in Europe. The
real opponent of European integration is not the nation state, but feudalism and domination. A European unification would therefore be the end
point of the Enlightenment in Europe, the final and irreversible transition
from self-inflicted immaturity to autonomous self-determination, as the Slovak philosopher Slavoj Zizek has stated (Zizek, 2015). From this historical
perspective it makes more sense to define the end point of European integra3
tion not as a United States of Europe or a European federation but rather
as a European Republic, the fulfillment of the Enlightenment in Europe.
2
Federalism: ’Political’ Externalities of Sovereignty
and the Destructive Force of the Nation State
The concept of a European federation is intellectually closely connected to
the concept of sovereignty. This seems to be a paradox, as the sovereignty
problem is today one of the biggest obstacles for a European federation.
2.1
Sovereignty and Federalism
The idea of a federation emerged shortly after Jean Bodin had defined
the concept of sovereignty, which became the basic idea of modern nation
states. Jean Bodin developed the concept of sovereignty, meaning legal selfdetermination, during the reformation to define the modern territorial state
which was independent from external influences (Bodin, 1629/1576). Concurrence with other legal systems, like the canon law of the catholic church,
had therefore to be eliminated. In other words: power structures should
be internalized into centralized political institutions to guarantee efficient
conflict resolution.
According to Burgess, the idea of foedus ’constituted the first serious
challenge to Jean Bodin’s classic conception of the state’ and his concept
of sovereignity’ (Burgess, 2004). Many of his contemporaries criticized or
rejected Bodin’s ideas (e.g. to legitimize political constructions like the German Empire) Bodin’s work became therefore a catalyzer for the development
of federal ideas (Davis, 1978, p. 46). Proposals for a united and peaceful Europe were made by the Duke of Sully, right-hand of the French King Henry
IV (A Christian Republic) and William Penn (Penn, 1944/1693).
The basic critique on Bodin draw was that it internalizes power structures
only within the state. Bodin’s concept does not leave much possibilities
to organize relations of human beings between two states. These relations
remain external. This methodological weakness remained tolerable as long
as mainly power relationships had to be internalized and the (economic)
relations between individuals of different states remained low. This changed
during the industrial revolution, when people throughout Europe interacted
more and more economically.
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2.2
Federalism and Republicanism from Napoleon till WWI
Bodin’s idea of sovereignty had soon been supplemented by other influences.
Since the Glorious Revolution of 1688 in England, there have been attempts
to set legal limits to the power of the king. The republican ideology, reborn
in the Italian city states, proposed that the head of the state should be a representative of the people, no one should be subject to an hereditary monarch.
The republicans argued that power relations should be embedded in a legal
system. Domination can only be avoided if rule over people is institutionalized by a legal system. Republicanism seeks therefore to ’internalize’ power
relationships into laws. The republican idea was especially developed by
countries with a strong commercial sector, such as the Dutch Republic and
the Polish-Lithuanian Commonwealth, as the legal system helped to develop
the economic relationships. Furthermore, the republican order strengthened
the political position of the merchants.
A turning point of the Republican and Federal idea was reached with the
American and French revolutions in the end of the 18th century. The war of
independence was a victory of republican and federalist ideas over the British
Empire. The founding fathers developed the federalist idea theoretically in
over 85 ’federalist papers’.
The relationship between Republicanism and Federalism was elaborated
further by Immanuel Kant in his influential work ’Perpetual Peace’ (2007/1795).
Kant argued that peace is not the ’natural state’, it ’must, therefore, be established’. Kant sees a republican order in all states as a precondition for
perpetual peace. The reason is, that in a Republic the decision about war
has to be made by consent. Furthermore, the members of the Republic ’have
to fight in their own persons; to supply the costs of the war out of their own
property; (Kant, 2007). The advantage of a Republic is therefore that it
internalizes the costs of war inside a legal decision making process.
The republican order inside a national state does, however, not solve the
problem of conflicts between two states. Kant argued that ’by their very
contiguity to each other’, state ’may and ought to demand from any other’
to enter into a International Federation of the Peoples in order to solve these
problems (Kant, 2007). The idea of a modern nation state was therefore
right from the beginning embedded into the idea of a Federation to internalize
external conflicts and make perpetual peace possible. Kant acknowledged,
however, that these states need a certain degree of homogeneity (all need
to be republics) in order to join this federation (Duchhardt, 2005, p. 18).
States who wish to join the federation need therefore to adapt themselves.
With the French and American revolution, the ideas of Enlightenment
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became a political program. The French Revolution aimed to destroy the
last remainders of the feudal order. The revolutionists thought to substitute
the feudal order by a rule of law. The Napoleonic Code, established after
the revolution in 1804 by the French Emperor, aimed to internalize power
relationships into a legal and economic system. It was the first modern legal
system to follow a clear pan-European scope. Napoleon introduced the law
in the countries he conquered. It is likely that he had in mind to create a
European federation if he had won the Battle of Leipzig.
After Napoleons attempt to unite Europe under French hegemony failed,
the principles of full national sovereignty, voluntariness and equality of nations, dominated the further process of European history (Duchhardt,
2005, p. 22). The Holy Alliance, founded by Prince Klemens von Metternich, aimed to encounter the revolutionist ideas of republicanism, democracy
and secularism in Europe. However, the Holy Alliance did not contain any
direct compulsive articles. It did therefore not seek to create institutions
to solve conflicts between European states. It just invoked on the idea of
a ’Christian Nation’ that linked all European people. The Holy Alliance
launched therefore an era of restauration, in which the monarchies sought
to guide the political process in Europe again. They created a system of
mutual support to suppress liberal movements in European states. However,
some scholars see the Holy Alliance also as step towards European integration. It was an ’attempt to replace European chaos and European anarchy
by a common system based on common principles and a common outlook’
(Coudenhove-Kalergi, 1940, p. 81). It was in its character, however, a
truly intergovernmental institution.
The Holy Alliance caused a long-lasting shiftback from republican ideas
on the European continent. The Republican idea prevailed, however, on
the new continent. The South American countries followed the example
of North-America and proclaimed their independence in the beginning of
the 19th century. The Monroe-Doctrine, released by the US President in
1823, refused to tolerate any interference of the European monarchies towards the new independent republics in South America. The Republican
movement of the new continent was accompanied by efforts to create a PanAmerican Union, which should contain the Latin American and later also
North-American states. Till the Foundation of the European Community in
the 1950s, the Pan-American movement was seen as an much more advanced
example of integration and a possible role model for Europe (CoudenhoveKalergi, 1923, p. 70-80).
The idea of a European Federation played, however, a significant role in
the concepts of the liberal movements in Europe in the 19th century. The
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intellectual heydays of the concept of a European Federation became the
revolutionary years of 1848/49 (Duchhardt, 2005, p. 26). At the International Peace Congress in Paris in 1849 Victor Hugo dreamt that ’a day
will come when those to immense groups, the United States of America and
the United States of Europe shall be seen placed in presence of each other,
extending the hand of fellowship across the ocean, exchanging their produce,
their commerce, their industry, their arts, their genius’ (Hugo, 1849).
One of the intellectual forerunners of European Federalism as well as
liberal internationalism became the Italian activist of the Risorgimento,
Giuseppe Mazzini. In his writings Mazzini combines the concepts of democracy, republicanism and nationalism. According to him, only democracy and
self-determination could guarantee peace in the long run. However, he saw
the nation state only as ’a necessary intermediate step in the progressive
association of mankind’, which ’might one day be able to to join together
and establish a ’United States of Europe’ (Recchia and Urbinati, 2009,
p. 2).
The institutional conception of such a Federation remained, however,
vague in Mazzini’s writings. His ’immediate concern was the revolutionary
transition from despotism to democracy’ (Recchia and Urbinati, 2009,
p. 20). Mazzini saw therefore the democratic and republican nation state as
the crucial agent in the ’political project against oppression and despotic rule’
(Recchia and Urbinati, 2009, p. 10). The main tasks of the Federation
was to resolve conflicts, allow transparent negotiations between states and to
(militarily) defend the ’shared values’ and ’political achievments’ from nondemocratic forces outside the Federation (especially from the Holy Alliance)
(Recchia and Urbinati, 2009, p. 18).
The role of the Federation remained therefore limited. Mazzini paved
therefore also the way to what would later become the liberal and the functional theory of international relations (see Chapters X and X). He believed
that democracies will ’become more and more intimately associated’ by the
interaction of their people and that their domestic politics will ’graduatly
unite around a common faith’ (Recchia and Urbinati, 2009, p. 17).
Garibaldi, a companion of Mazzini, proclaimed that the transition to
modern, democratic republican nation states can just be executed from the
bottom. The process towards nation states and a European federation must
be borne from the people. However, with the abatement of the revolutions in
Europe in 1848/9, the so called ’Garibaldi’ solution came to an end. In the
following decades the ’Cavour’ solution, a unification by force from the top,
created finally nation states in Italy and Germany. This ’perverted’ process
of unification did therefore not only separate nationalism from liberalism
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(as it happened in Germany under Bismarck) but also the idea of nation
states from the idea of a European federation. Whereas the first process is
acknowledged in the literature, the second one, the separation from the ideas
of nation state and a European federation, has been so far overseen.
2.3
Peace, Idealism and Federalism: The Pan-Europa Movement of the Interwar Period
The rest of the story is known: nationalism took over till the catastrophe
(the great seminal catastrophe) of the 20th century. The First World War
has shown the European people how devastating nationalism can be, if it is
not embedded within an international or European framework. The interwar
period saw therefore for the first time a Pan-European movement that was
driven by a a significant social group of the society and were not just some
abstract thoughts of some single intellectuals. Their ideas remained of course
futuristic for their time, however, for the first time politicians started to
become interested into the ideas of European integration in order to avoid
another war.
2.3.1
Richard Nikolaus von Coudenhove-Kalergi
The forerunner of this new European movement was Count Richard Nikolaus
von Coudenhove-Kalergi (1894 – 1972). Molded by the atrocities of WWI,
which he understood as a European civil war, Coudenhove-Kalergi developed
the idea of ’Pan-Europe’ (1923). Following the Philosophy of Plato and
Schoppenhauer, Coudenhove-Kalergi argued that the idea of Pan-Europe can
only be realized by the will of the Europeans (Coudenhove-Kalergi, 1923,
p. VII). Nations were not based on race, common blood or other material
facts but are ’Geistesgemeinschaften’ in which everyone shares common ideas
and principles (Coudenhove-Kalergi, 1923, p. 137).
Coudenhove-Kalergi argued that Europe’s hegemony over the world has
been, due to WWI, for ever lost. Furthermore, other regions as Pan-America,
the British Commonwealth or the Soviet Empire were much more advanced
in creating leagues or federations. Europe (of the 1920s) remains therefore
the source of instability in the World (Coudenhove-Kalergi, 1923, p. 20).
However, WWI had, according to Coudenhove-Kalergi, finally decided the
struggle between Metternich’s and Mazzini’s approach towards European
integration. Before WWI, there did not exist one Republic on the old continent. Till 1922 around 16 republican states were founded in Europe. Mazzini’s idea of an Republican federation had therefore won (Coudenhove-
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Kalergi, 1923, p. 33).
In the Pan-American movement he saw an important threat - if Europe should remain fragmented - or an important hope - if Europe should
be able to create a federation itself. Coudenhove-Kalergi called therefore
for an European Monroe-Doctrine, Europe should belong to the Europeans
(Coudenhove-Kalergi, 1923, pp. 76 and 85).
2.3.2
The Pan-Europa Movement and the Briand Memorandum
Coudenhove-Kalergi founded a Paneuropa movement and quickly found important supporters: the German Reichsbankpräsident (1923-1930 and 19331939) and later Hitler’s Minister of Economic Affairs (1934-37), Hjalmar
Schacht, became ’the principle speaker at the first demonstration of the PanEuropean Union in the Reichstag’ (Coudenhove-Kalergi, 1940, p. 57).
Other important members were Albert Einstein, Thomas Mann, Konrad
Adenauer, Sigmund Freud and Georges Pompidou. The French foreign minister Aristide Briand was elected the president of the movement in 1927.
In 1930 Briand published a memorandum which called for a ’European
collaboration in the sphere of economics, public works, communications,
credit, currency, social questions, hygiene, intellectual co-operation, and
inter-parliamentary union, as well as for the creation of European sections of
certain international organizations and institutions’ (Coudenhove-Kalergi,
1940, p. 60-61). Briand sent the memorandum to 26 European countries,
their answers were ’all favorable in principle’, as ’all were united in recognizing the necessity of a European rapprochement’(Coudenhove-Kalergi,
1940, p. 62-63). However, after Stresemann’s sudden death and after the
establishment of a German-Austrian Customs Union, after Briands loss in
the French presidential election and after the ’Machtergreifung’ (Seizure of
Power) of the Nazis, the Briand memorandum remained without any political results (Coudenhove-Kalergi, 1940, p. 64). The first governmental
initiative to create a European Unity failed therefore, long before Robert
Schuman hold his famous speech on 9 May 1950. However, Briands initiative was at least able to draw the public attention towards the Pan-European
ideas and ’most economic leaders had clearly realized the possibilities for German industry involved in the organization of a common European market’
(Coudenhove-Kalergi, 1940, p. 66).
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2.4
WWII as a Federalist Moment? Spinelli’s Social Federalism vs. the Nazi Großraumwirtschaft
The second world war can in many perspectives be seen as the peak of the
intellectual federalist movement. The war imposed by Germany on the old
continent has destroyed many nation states. However, the future European
visions of the Nazi’s for Germany did not built on the restoration of full
national sovereignty for all states. One of the main war aims of Nazi Germany was to create a continental European order that was economically
independent from the rest of the world. The aim was to create a European ’Großraumwirtschaft’ that could subsist in autarky. It aimed therefore
to establish at least a ’European’ sovereignty (dominated by German hegemony), independent from the rest of the world. This order was supposed to
guarantee economic stability to the European continent and to manifest the
leading role of the ’aric race’. This was at least the plan for West Europe.
To establish ’peace’ and ’stability’, East Europe was supposed be re-ordered
by race and reshaped territorially, also to win new ’Lebensraum’ for the aric
race. The consequence was the deportation and murder of millions of people
in East Europe.
During the peak of the Nazi Empire, in the years 1940/41, different ministries of the Nazi government developed plans for the post war period. It
foresaw to integrate some countries (like Belgium) into the German Empire, others should be brought under German hegemony by a kind of faked
European federation. Even the introduction of a European currency was
discussed.
Most of these plans remained, however, blueprints. The only pillar of a
European order that was already established during the Nazi era, was the the
introduction of a European wide clearing system. All imports and exports
in Europe had to be processes by a clearing system based in Berlin. The
Bank of International Settlements in Basel (originally created to deal with
the German reparations of the Versaille treaty) played a crucial role in this
system.
The excessive nationalism of the fascists did not lead to a rebirth of the
national state, but to the complete destruction of the European state system.
It was the end point of the sovereign nation states, as they had existed
before. WWII had shown that egoistic drives of nation states can destroy
the nation state itself if it is not embedded into an international order. In
May 1945 most states in Europe were occupied or ceased to exist for other
reasons. Paradoxically, the disappearance of national states in 1945 opened
a small window of opportunity to create a real European federation. WWII
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was therefore the endpoint of the separation of federalism and nationalism
that started with the ’Cavour solutions’ in the 19th century. Nation states
were ready to give up parts of their national sovereignty in order to get
international stability and peace.
The most radical proposal for a European federal order after WWII was
put forward by the activist of the Italian resistance, Altiero Spinelli. During
their confinement in 1941, Spinelli and Ernesto Rossi wrote the ’Manifesto di
Ventotene’. They argued that the national state had once been a ’powerful
stimulus to progress’ and ’the most effective organization of collective life
within the framework of the whole human society’. However, nationalistic
states are concerned only about their own prosperity, ’without the least regard for the damage this might cause to others’, they have lost their feeling of
being an entity within a higher, regional or global, order. Spinelli concludes
that the principle of the absolute sovereignty of the state leads to a ’desire
to dominate’ other states. Embedding the nation state into a federation is
therefore the only way to avoid domination (Spinelli, 2014/ 1941).
Furthermore, Spinelli and Rossi saw the European Federation as a percondition for a socialist revolution in Europe. In the Manifesto they wrote:
’The truly fundamental principle of socialism [...] is the principle which states that the economic forces must not dominate
man, but rather – like the forces of Nature – they must be subject
to man, guided and controlled by him in the most rational way,
so that the broadest strata of the population will not become
their victims.’ (Spinelli, 2014)
This principle is the reason why Spinelli urged on an immediate establishment of supranational democratic European institutions. The aim of his
’democratic radicalism’ was that these political institutions should decide the
political and economic development of the government and make ’rational
solutions’ possible and to void economic domination. European integration
should not become a pawn of economic forces. This approach put Spinelli in
a sharp contradiction to Jean Monnet (a French business man), Ernst Haas
and other ’Neofunctionalists’.
2.5
The End of Federalism? Or: Why did Federalism fail?
The reasons for the failure of federalism are manifold. The destruction of
Europe brought also a lot of problems for the possible creation of a European
Federation. Among the European people there was still no awareness of the
necessity to create a European Federation. Most people were facing severe
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problems in every day life and local/ national institutions might have been
considered to deliver faster and more efficient solutions. There was therefore
no broad movement that was asking for European Unity.
The federalist call for the immediate creation of a European federation
came also along with a lot of theoretical problems. Especially the functionalists (see 3) criticized that the federalists had actually no clue how a
federation would work in detail, how the responsibilities between the federation and its members should be shared. Mitrany stated that ’the ”European”
federalists have been so fascinated by a readily convenient formula that they
have neither asked how it works where it exists, nor whether its origins bear
any relation to the problem of uniting a group of states in the present social ambience’ (Mitrany, 1965, p. 129). As the situation of 1945 was even
more catastrophic and confusing then 1919, ’any pre-arranged constitutional
framework would be taken wholly out of the air’ (Mitrany, 1943, p. 21).
He saw therefore the main challenge for the post WWII-period to bring the
world ’back into working relationships’ (Mitrany, 1965, p. 136). It was
up to Ernst B. Haas (1958) to create later a synthesis of functionalism and
federalism and to define a way how the creation of a federation out of a
functional institutions could work.
Furthermore, there was also no benevolent hegemon who had been interested to assert the creation of a European Federation. Germany had not
only lost the war, but also his credibility in WWII. had been defeated during
the war and parts of the French society had been collaborating with Nazi
Germany. The USA became, after Roosevelt’s death, much more oppositional to the communist Soviet Union, the upcoming cold war led to the
division of Europe. The USA and Great Britain favored a loose integration
of Western Europe (that might become closer integrated in the long run), but
they did not see the necessity to create a strong European Western Union
immediately after WWII.
The most important decision that made the immediate creation of a
European federation after WWII unlikely, was the decisiveness of the Truman
administration to remain engaged on the European continent in the long run.
The USA became (and in many respects still are) the guarantor for peace,
stability and prosperity in (Western) Europe. As the USA was delivering
this ’public good’, there was no urgent need to create a federation. Most
people did also doubt that the creation of a European federation would have
been successful, even if the USA would have left the continent.
Furthermore, the reorganization of the International Order from 19441949 followed much more the logic of the functional paradigm. Already in
1944 the Bretton Woods agreement defined the basic economic architecture
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for the post-war period. The US-Dollar would become the key currency
(which made a European currency/ paying system redundant), the three
pillars of the IMF, the Worldbank and the WTO was supposed to manage
economic coordination problems on the global level. The Marshall Plan and
the OEEC were established in order to support economic cooperation. Also
the Council of Europe, founded in 1949, followed a strictly functional logic.
Furthermore, the military integration followed an intergovernmental pattern. NATO, founded in 1949, is an association of independent, sovereign
states, although it delivers collective security and military structures are
subject to NATO command.
Summing up, Europe’s failure to unify under a federalist paradigm started
with the failed revolutions in Germany in Italy in the 19th century. The
unification of these countries by the ’Cavour’ solution lead to an distorted
nationalism and a separation from the idea of federalism from the creation
of modern nation states. This process reached its destructive peak during
WWII. Nationality as an ideology prevails till today and is a main obstacle
for the European unification process. Since the 1950s federalism was mixed
up with functionalism to make it more ’processable’, as we will see in the
next section. This may have been necessary, taking into consideration the
difficult circumstances of this time. However, it also caused the ’strange’
construction of the European Union today.
3
Neo-Functionalism: Exploiting Externalities to
enforce European Integration
Neo-functionalism is a mixture of functionalism and federalism. Functionalism was a concept invented in the 1930s by David Mitrany (1888-1975) as a
major critique of the federal approach. Already in 1930 Mitrany wrote an
article ’Pan-Europa - A Hope or a Danger?’ (Mitrany, 1930) in which he
argued that regional integration would transfer the problem of nationalism
only to a higher (European) level. The process of the ’ever growing industrial
and commercial concentration’ would give incentives to create an ever bigger (European) market. A regional integration approach would create, furthermore, several more or less economically autonomous blocs, which would
stand in concurrence to each other (Mitrany, 1930, p. 460). Proposals like
the Pan-European initiative of Briand and Stresemann could therefore, according to Mitrany, have positive effects for the economy, but negative effects
on world peace.
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3.1
Functional Institutions to Deliver Specific Public Goods
In his famous pamphlet ’A working Peace System’ (1943), Mitrany proposes
functionalism as an alternative to the federal approaches for the time after
WWII. He objects any approach which puts a constitutional and ideological
issues of international integration at the beginning of the process, like federalism does. He admits that the question about what comes first, a democratic
society or a national state, might have been relevant for the republican activists of the 19th century, however, in the post WWII era ’we are concerned
with the organization of the world, in its active working relations’, and not
with the construction of a state (Mitrany, 1943, p. 14-15). Functionalism is
therefore a more flexible approach that can involve also contradicting poles
together in a process towards an international society.
The blueprint for his functional program are the (national) economic
reforms of the Roosevelt administration in 1932/33 (the New Deal). The
reforms were successful in transforming the USA from a loose federation to
a real nation. Although a multiple of problems existed at the same time
(such as the economic crisis, unemployment, the banking crisis, ect.), ’every
problem was tackled as a practical issue in itself’ and ’no attempt was made
to relate it to a general theory or system of government’ (Mitrany, 1943,
p. 21). In other words: Roosevelt created national institutions which delivered single national public goods that solved the ongoing problems. The
result was ’a great constitutional transformation [...] without any changes
in the constitution’ (Mitrany, 1943, p. 22).
The only way to solve the multiple problems of the economy and security on the international and national level is for Mitrany to create separated
function institutions for each problem. Regarding the question of constitutional legitimation and ideological influences, Mitrany argues that the ’only
possible principle of democratic confirmation is that public action should
be undertaken only where and when and in so far as the need for common
action becomes evident and is accepted, for the sake of the common good’
(Mitrany, 1943, p. 32). Governments should therefore only create functional institutions when there is a consensus that the public good that these
institutions created is needed and accepted.
The problem of a regional federation is that it ’would bind together some
interests which are not of common concern to the group, while it would inevitably cut asunder some interests of common concern to the group and
those outside it’ (Mitrany, 1943, p. 32). The problem is therefore that the
’fixed’ rules of a European federation would maybe not take into consideration the nature of the externality problem it wants to solve. This problem
14
was expected to be especially important in the post war time, when ’nations
will be split much worse then in 1919’ and ’any pre-arranged constitutional
framework would be taken wholly out of the air’ (Mitrany, 1943, p. 21).
3.2
The Monnet Method and ’Federal-Functionalism’
Neo-Functionalism is the first coherent approach to explain European integration. Neo-functionalism was especially constructed as a counter theory
to the dominating realistic approach in International Relations during the
1950s. Whereas Realism built on the concept of a strong sovereignty and saw
the nation state as the main actor, neo-functionalism argued that also pressure groups inside the nation state influence international relations (Bache
and George, 2011, p. 8).
Jean Monnet has often been credited to be the actual founder of the European Union. It was him, who developed, in strong opposition to Altiero
Spinelli, a technocratic ’step by step’ approach of European integration. The
Schumann declaration, which was written to a large extent by Jean Monnet, is often seen as the starting point of European integration. It marked
a turning point of the French policy towards Germany. Instead of trying
to dominate Germany, the French foreign minister proposed, building on
Mitrany’s functional approach, to put the crucial sectors of the industrial
economy, coal and steel, under a common authority. Monnet described the
aims of the Schuman plan in his ’Memoirs’. The Schuman declaration offered, according to Monnet, the possibility to launch a European economic
integration process, embedded in the general US geopolitical architecture for
Western Europe. This US architecture was based on the principle of containment and the logic of the cold war. The Monnet Method combined the US
demand to transform Germany with the French desire to control Germany
(Monnet, 1976, p. 344-46). It should therefore not be forgotten that the
actual external determining factor of European integration is (till today) the
framework of the cold war logic. Changes in this framework (like in the late
1940s, the early 1970s, the 1989/ 1990s and maybe also the 2010s) determine the space in which European integration can take place. These changes
coincide therefore with major changes in European integration.
Monnet argued that, as the modern industrialized economy of his time
was based on steel and coal, people do not feel secure anymore as long
as these resources are not possessed in common (Monnet, 1976, p. 347).
The German economic domination, which was based on the possession of
these resources, was for Monnet the main obstacle for European integration
(Monnet, 1976, p. 346). The Schuman plan can therefore be seen as an
15
attempt to break this domination (and therefore, in its aim as a continuation of the Versailles treaty, however, by different means). The declaration
foresaw the immediate integration of this ’limited but decisive point’ as ’a
first step in the federation of Europe’ .
Today the main theories, neo-functionalism as well as liberal intergovernmentalism, argue that European integration follows an economic logic:
politicians forge European integration because it promises certain economic
advantages. However, according to Monnet the basic driver for European
integration was originally something else: the fear of economic domination.
A theory of European integration must therefore deal more in detail about
where this domination derives from and how it can be handled.
Furthermore, the aim of this method was not to equilibrate but to fuse
the interests of both economies (Monnet, 1976, p. 371). It was therefore
Monnet’s aim to create more than an international institutions that would
help to solve some externality problems. He wanted to launch a process to
merge the externalities of both countries. Today we are indeed confronted
with European-wide externalities and not with interdependencies or externalities between nation states, as I will argue in section 5.
In his work ’The Uniting of Europe’ (Haas, 1968/1958), Ernst B. Haas
developed a coherent theory of European integration, building on the works
of David Mitrany and Jean Monnet. Haas wanted to use the functional instruments, defined by Mitrany, to describe how a process towards a European
federation could be launched. The main focus of his work was therefore to
explain, ’if and how’ political integration leads to a new ’political community’ (Haas, 1968, p. 3-4). In a community, people are said to be loyal, when
they ’habitually and predictably over long periods [obey] the injunctions of
their authority and [turn] to them for the satisfaction of important expectations’ (Haas, 1968, p. 5). Communities in the West are therefore, according
to Haas, characterized by group conflicts inside the community and an accepted body of believe, namely the believe in the rule of law, to solve these
group conflicts (a principle developed by republicanism). A consens is accordingly achieved, ’if the legislature, by majority vote, enacts law’ (Haas,
1968, p. 6). In other words: people create a community when they create
institutions that internalize certain externalities which occur out of the relationships between the people and when they hold on to these institutions
even if they do not always represent their ideological preferences.
The neo-functional approach was theoretically and practically built on
the international framework of the Bretton Woods agreement. The Bretton
Woods institutions were themselves separated ’functional’ institutions, that
followed Mitrany’s logic of a working peace system. The Bretton Woods
16
System provided economic and financial stability to Europe, economic interdependence was, due to capital controls and fixed exchange rates, limited.
Only in this ’stable’ circumstances the decision-making rationality could follow the so called ’disjointed incrementalism logic’, which lead slowly but
continuously to a European federation. Incrementalism is a method of working developed by Charles E. Lindblom, which favors small incremental steps
rather than large changes. Neo-functionalism modelized therefore Monnet’s
’step by step’ approach, including is assumption that European integration
is embedded into the US geopolitical architecture.
The existence of a federal state was for Haas not a pre-condition for
political community. In order to create political community is was more
important to choose the right sectors that should be integrated in order to
launch a process that leads to political community. Those sectors should be
chosen according to estimations which interest groups and political parties
would prefer supranational solutions and which groups also tend to organize
themselves on a supranational level (Haas, 1968, p. 9-10).
Haas was especially concerned with economic integration. According to
Haas, economic integration can lead to central decision making, if ’[u]nequal
distribution of economic benefits may give rise to political opposition where
non existed before’ as this may lead to ’demands, expectations and loyalties
of the political actors effected by the process’ (Haas, 1968, p. 13). Economic
integration leads therefore to political integration, if common institutions are
needed to distribute the gains of economic cooperation .
Haas concludes that political integration can be defined as
’the process whereby political actors in several distinct national settings are persuaded to shift their loyalties, expectations and political activities toward a new centre, whose institutions possess or demand jurisdiction over the pre-existing national states’ (Haas, 1968, p. 16).
Economic integration leads therefore to political integration, if it creates
certain externalities, which need to be governed by a new supranational
institution. Individuals affected by these externalities will automatically
turn to those supranational institutions which are supposed to solve the
externality problem. In the beginning of this process, nationalism might still
be ’supreme’. Hass failed however, to define the nature of these externalities
more in detail. This is one of the main reasons why his theory came into
trouble in the 1970s (see below).
Furthermore, also Haas pointed out that a certain ’European doctrine’
was still missing. Different interest groups had different interests in Europe.
17
Neo-liberals saw the advantages of supranational institutions in the fact that
technocrats would be detached from national voters and they would have little possibilities to intervene in the economy. Socialists saw the possibility to
overcome the weaknesses of capitalism by a European-wide economic planning, which would presuppose a democratically legitimized full federation. In
General, however, the idea of Europe remained ’empty’(Haas, 1968, p. 2829).
The most important contribution of the neo-functional literature was the
definition of the so called ’Spill-over Effect’. It claimed that the integration
of certain sectors could influence the integration of other sectors. Actors
might call for a supra-national integration also of these sectors. The process
could lead in the long run to ever more integration and in the end to a
quasi-federation.
Schmitter stated that there are two important factors which decide whether
a Spill-over is likely to occur. The first one is the ’underlying interdependence of functional tasks and issue arena’ (Schmitter, 1969, p. 162). Only
if they exist and are ’latent or ignored in the original convergence’ and if
there exist pressure groups which are affected by these underlying externalities, spill-overs are likely to be the consequence of integration (Schmitter,
1969, p. 162). The second factor is the existence of ’creative’ politicians
and technocrats, who are willing and able to ’redifine and expand central
organizational tasks’ (Schmitter, 1969, p. 162). Two further measures to
forecast a Spill-over effect are the scope and the level of the arrangement.
The scope regards the number of social groups affected and the importance
of the policy, the level regards the initial commitment. If it is a political
aim to create spill-overs, politicians and technocrats have to be aware of
the minimal conditions to make new functional agreements of certain sectors
’inherently expansive’ (Schmitter, 1969, p. 163).
3.3
The End of Bretton Woods and the obsolescence of NeoFunctinalism
In the 1970s Ernst B. Haas, the most prominent scholar of neo-functionalism,
had proclaimed the ’obsolescence’ of the theory (Haas, 1976). Haas argued
that the neofunctional theories were not able to take into consideration the
problems of the new global world order, that emerged in the 1960s and
especially the 1970s after the break down of the Bretton Woods agreement.
These new world order was characterized by so called ’turbulent fields’ in
winch ’each actor is tied into a network of interdependencies with other
actors which are as confused as the first’, the resulting ’confusion dominates
18
discussion and negotiation (Haas, 1976, p. 179).
As a consequence, the logic of ’disjointed incrementalism’ in international
decision making was substituted by ’fragmanted issue linkage’, in which governments link different fields of decision-making together. The whole logic
of the neofunctional theory, which was supposed to lead in the end to a European federation, was undermined (Haas, 1976, p. 183-5). The key task,
according to Haas, to redefine the neofunctional hypothesis, is to unveil
the relationship between ’integration’ and ’interdependence’ (Haas, 1976,
p. 208-212).
4
Liberal Intergovernmentalism
The most severe critique of the functional-federal approach was expressed by
Andrew Moravcsik in the 1990s. Moravcsik argued that the self-critique of
the neo-functionalists should be taken seriously. The EC should no longer be
seen as a unique historical case which can be explained only by a ’sui generis
path towards a future federalist endpoint’ (Moravcsik, 1993, p. 478). He
attacked the neo-functional view of a self-sustaining European economic integration and of entrepreneurial supranational actors which would forge European integration. Instead of trying to create a unique ’European’ theory
of regional integration, scholars should try to embed European integration
into a more ’general theory of national policy responses to international interdependence’ (Moravcsik, 1993, p. 478). The EC could then be seen as
a normal international institution in international relations.
Moravcsik then tried to explain European integration as a counter-strategy
of member states to overcome the problems caused by economic interdependence. Following the liberal theories of economic interdependence developed
by Richard N. Cooper, Moravcsik argued that ’increasing transborder flows
of goods, services, factors, or pollutants create “international policy externalities” ’ . International policy externalities are defined as costs and benefits
that affect ’politically significant social groups outside [the] national jurisdiction’, governments co-operate in order to (re-)gain ’control over domestic
policy outsomes’ (Moravcsik, 1993, p. 485).
Moravcsik tries to explain the European integration process by using
three main assumptions of International Political Economy (Moravcsik,
1993, p. 480):
1. The state is a rational actor that calculates costs and benefits of its
policies
19
2. National Preferences define the actions of the state (according to the
liberal theory of state-society relationship)
3. Interstate negotiations are analyzed with an intergovernmental approach (Issue linkage)
The evolution of the EC can then be understood as a ’series of rational choices
made by national leaders’ (Moravcsik, 2003, p. 18), the EC itself as ’an
international regime designed to promote policy co-ordination’ (Moravcsik,
1993, p. 478).
Moravcsik distinguishes between three major policy areas which possess different ’characteristic distributions of costs and benefits’ (Moravcsik,
1993, p. 488). These three areas are:
1. the liberalization of the exchange of private goods and services
2. provision of socio-economic collective goods
3. provision of non-economic collective goods
The first area is the core of the EC. The main profiteers of these policies
are producers of trade-able goods. The possibility of this pressure group
to influence the decision-making process and their intense interest to do
so creates a ’systematic political bias in favor of producers vis-à-vis those
with more diffuse interests, such as tax-payers and individual consumers’
(Moravcsik, 1993, p. 488).
Examples for socio-economic collective goods are (according to Moravcsik) ’marcoeconomic stability, social security, environmental protection, public health and safety standards, and an acceptable distribution of income’
(Moravcsik, 1993, p. 491). The national provision of these public goods are
undermined by rising economic interdependence. Coordination can help governments to re-gain the possibility to provide these public goods. However,
’[w]hen governments have divergent macroeconomic, environmental and social goals, then co-ordination is likely to be costly and difficult’ (Moravcsik,
1993, p. 492).
Non economic collective goods like geopolitical and security externalities
play according to Moravcsik only an underpart. He reject therefore the realist
view that security concerns determine all other policy areas in international
relations. Instead he argued that national interests are issue specific without
any hierarchy. He goes even so far to say that only where economic interests
are not strong, geopolitical considerations come into play (Moravcsik, 2003,
p. 5-7).
20
The main difference between liberal theories and republicanism is the
assumption about preferences, as Besson and Marti have pointed out. Liberal
theories (in political theory as well as economics) presume that preferences
are fixed and an agent (the homo oeconomicus or the national government)
is simply maximizing these preferences. Republicanism, however, assumes
that preferences can be changes by interaction between citizens, e.g. by
public debates, an open, transparent decision-making process ect (Besson
and Marti, 2015). The republican approach is therefore nearer to Monnet’s
notion to ’merge’ the externalities of the European countries.
5
Setting Out a new Economic Basis to explain European integration: Public Goods vs. ’Interdependence’
In the previous sections we have seen that all main theories of European
Integration contain certain flaws which made it difficult for them to explain
the European integration process. Federalists did not have a coherent plan
how to set u a federation. Furthermore, they did not analyze the underlying
economic problems in detail. As a consequence they were not able to convince a majority of people why a European federation should be necessary,
especially an immediate creation of a European federation seemed to be a
far too much ambitious project. The easy-catching concept of a nation state
offered more convincing solutions to solve economic problems, at least on the
surface. Today fiscal federalism tries to combine theories of federalism with
economic considerations, however, so far with only limited success.
Neo-functionalism, on the contrary, did explicitly built on economic arguments in order to describe a path towards a European federation. However, they overlooked all geopolitical considerations of European integration.
They did not see that the main driver of European integration was not economic advantage, but the fear of economic domination. Furthermore, neofunctionalism failed because its basic assumptions were built on the framework of the Bretton Woods agreement. This contained two problems: first,
Bretton Woods was an international, not a European system. This made it
difficult right from the beginning to see the ’Europeaness’ of neo-functional
step by step integration. The second problem was that only in a Bretton
Woods world a ’disjointed incremental decision making’ lead to a ’definable
institutional pattern’. With increasing ’turbulent fields’, ’confusion dominates discussion and negotiation’ and due to ’raising inderdependence’, the
procedure of disjointed incremental decision making was substituted by ’frag21
manted issue linkage’. In short: when Bretton Woods was abolished, also
neo-functionalism began to totter.
Liberal Intergovernmentalism tried to solve the problem by arguing that
European institutions are regimes to manage economic interdependence. The
driving forces behind European integration are the nation states, the European Union does not and should not lead to any special institution. The
outcome of the European integration process is simply the ’maximization’
of an intergovernmental game, where governments are restricted by fixed
national preferences.
The problem of the liberal approach is that it built on the concept of ’interdependence’. This concept entails that economically still different countries would exist who would be in general ’independent’ but are, for whatever
reasons, on some economic fields quite ’interdependent’. This assumption
might be true for two countries in a trade union, maybe it could still be
defended for two countries of the European Union (although already here I
have my doubts), it is for sure not valid anymore for two members of the euro
area. Here the ’interdependence’ became, due to the common currency, so
strong that the very concept does not make sense anymore. I will therefore
argue that the concept of ’interdependence’ has to be substituted by the concept of European public goods and externalities, which exist throughout the
euro area or the European Union. These public goods can not be governed
by an intergovernmental process but call for a European governance. I will
argue that a republican approach is better suited to explain the governance
of public goods and to integrate public goods into the current debate on
European integration.
5.1
What are Public Goods and Externalities?
Today’s Public Good Theory distinguishes between four basic categories of
goods: public, private, club and common goods. This categorization depends
on the kind of externality problem that underlies this kind of good.
Musgrave was the first one to describe the two characteristics of nonexcludablity and non-rival consumption to define the different categories
of goods (Musgrave, 1959). Non-excludability means that no one can be
effectively excluded from the consumption of a good, e.g. a street light. Nonrival consumption means that the consumption of the good by one person
does not influence the consumption of the good by another person. The
street light, for example, is non-rival in consumptions (as long as there are
not to many people on the street), whereas an apple is rival in consumption,
as only one person can eat it. Today Musgrave’s characteristics are used to
22
group the following kind of goods:
Paul A. Samuelson’s article ‘The pure theory of public expenditure’
(1954) is often been seen as the starting point of modern public good theory.
Samuelson described a ‘collective consumption good’ as a good ‘which all
enjoy on common in the sense that each individual’s consumption of such
a good leads to no subtraction from any other individual’s consumption of
that good’ (Samuelson, 1954, p. 387). Samuelson’s article was therefore
the foundation of the non-rivalrous criteria that define public goods.
Samuelson showed that - in contrast to private consumption goods - for
collective consumption goods ‘no decentralized pricing system can serve to
determine optimally’ the output level because ‘it is in the selfish interest of
each person to give false signals, to pretend to have less interest in a given
collective consumption activity’ (Samuelson, 1954, p. 338). These goods
can therefore not be delivered by the market or at least not without governmental intervention. Samuelson’s paper draw, however, serious critique
due to the sharp dichotomy he draws between private goods and collective
consumption goods. According to Samuelson, all goods that are entering
more then one utility function are ’collective consumption goods’.
However, it is possible to show for nearly any good that in one way or
another it is entering several utility functions. Buchanan offered therefore
another class of ’impure’ public goods, club goods, which are non rival in
consumption but excluadable. For a club good it is therefore important to
define the optimal number of ’members’ (Buchanan, 1965). Garret Hardin
coined the expression of the ‘Tragedy of the Commons’ (1968) to define the
23
forth group of goods: common resource goods. These are goods which are
rival in consumption but non excludable. Examples are pastures, forests
or fountains. According to Hardin, common resource goods will always be
overused, as it is in the personal interest of each individual to maximize his
own utility, and not that of the community.
On the framework of public goods a vast literature was developed to
define national, regional or even global public goods. These public goods
had to be delivered by the state, as the market was not able to deliver
them efficiently, due to the failure of the pricing system, as explained by
Samuelson.
Externalities describe costs or benefits that influence an individual (or
a company) although the individual did not choose to be influenced by the
source of the externality. Externalities are therefore conceptually closely
connected to the public good characters of non-rivalry and non-excludability.
A collective consumption good, as described by Samuelson, enters more than
one utility function. Non-excludablity means that is can not be controlled
who consumes a certain good.
5.2
How to define ’European’ Public Goods?
The crucial question to answer now is how to distinguish ’European’ from
national, regional or global public goods. One approach could be to simply identify which European institutions provide already certain European
Public Goods, as Couré and Pisani-Ferry (2007) did. However, Collignon
pointed out that this approach assumes (similar to Moravcsik) that common
policies were launched on a European level, because member sates agreed
on it (Collignon, 2011b, p. 5). The existence of European Public Goods is
therefore explained by the joint decision of member states. However, these
approaches do not explain thoroughly why member states decided at all to
delegate or pool competences to a European level. These approaches are
therefore not able to solve the crucial problems of current European integration theory, which I described earlier in this paper. Furthermore, Collignon
pointed out rightly that approaches like this of Couré and Pisani-Ferry’ do
not take into account the European-wide externalities problems, which affect
European citizens and which made governments react to these externality
problems. They just deal with the -already provided - solution, not with the
underlying problem. Deriving the existence of European public goods from
existing European policies can therefore not be an adequate methodology.
To be able to define European public goods it is therefore necessary to
define the underlying externality problems. It has to be clear which exter24
nalities exist, who they affect and which institution is governing (or should
govern) them (Collignon, 2011b, p. 5). The categorization of what is a
public good and what not is therefore not externally given, but a socially constructed fact (Kaul and Mendoza, 2003) , created by the people affected
by the externality. Collignon argues therefore that a European public good
is a good, which has been declared a European public good by a European
democratic decision-making process in the European Union (Collignon,
2011b, p. 5). This decision-making process needs, however, a comprehensive
understanding of the underlying externality problems.
Collignon pointed out that it is especially important to distinguish between two categories of goods and their underlying externality problem. The
first category of goods are club goods, which are excludable for certain member states. For club good problems, voluntary cooperation is possible, because member states have an incentive to join the club and therefore to give
trustable commitments, as non-following of the commitment could be punished with exclusion. For ’European club goods’, intergovernmental negotiations between member states are possible. They are possibly even the most
efficient solution. The only remaining problem is asymmetric information.
This problem can be solved by creating some common institutions, as the
European Commission, which will distribute equally information. This institutions do not need a direct democratic legitimation (Collignon, 2011a,
p. 13).
The other kind of good is a ’European common resource’ good. The
problem of a common resource good is that you cannot exclude anyone from
consuming it. Furthermore, common resources represent a zero-sum game
(Collignon, 2011c, p. 7). Voluntary cooperation will therefore fail because
each individual is ’tempted to act in a way that is directly opposed to the
overall collective interests’. The ’owners’ of this common resource good have
therefore in a Republic the ’right and the authority’ to set up an institution
that is able ’the to use, if necessary, legitimate violence (the power of government) in order to prevent individuals from increasing their personal benefit
at the cost of the common interest’ (Collignon, 2011a, p. 13). For European common resource goods, intergovernmental negotiations will therefore
not lead to efficient results (Collignon, 2011a, p. 13). Collignon argues if
European common resources goods are administered in an intergovernmental
way, citizens are deprived from their right to ’own’ this goods (Collignon,
2013, p. 12).
25
5.3
How to Govern Public Goods, Club Goods and Common
Resource Goods?
An example for a club good problem could be a member state who wants to
join the ’club’ of the euro area. The state has an incentive to give trustable
commitments, because otherwise he will stay out of the club. The negotiations about joining the euro area could therefore in principle be executed
by intergovernmental institutions. However, the euro crisis has shown that
it was difficult to exclude a member state, once he had joined the club. Although Greece broke its commitments (and even lied to the other members)
it was not excluded from the club, because the costs of an exclusion would
have been to high for the other member states and the European project
as a whole. This indicates that regarding the governance of the euro area
there are underlying other externalities which make an intergovernmental
management difficult.
Collignon’s main argument is that although European ’club’ goods might
have been dominant in the beginning of the European integration process,
since the introduction of the common market and the common currency,
European economic integration is mainly characterized by common resource
problems. Increasing cooperation leads to increasing interdependencies and
therefore an increasing number of European public goods (Collignon,
2011a, p. 14). Collignon points out that especially the euro is a common
resource good. He derives this characteristic of the euro from fact that, on
the one hand, the ecb has, according to the European treaties, to keep money
scarce. There is therefore a rivalry in consumption in ’euros’. On the other
hand, the imperative of macro-economic stability presupposed that at least
all commercial banks in Europe have unlimited access to central bank liquidity (limited only by the interest and minimum reserve rate) (Collignon,
2011c, p. 7). This argumentation, however, needs further explanations and
ramifications. One problems is, that the first assumption (rivalry) is based
on a legally agreed treaty, whereas the second one (non-excudablity) is only
based on ’economic necessity’, which is a weaker ’social fact’. Furthermore,
if only banks have unlimited access to money, than the euro remains and
excludable good for the average citizen.
26
6
A Federalist or a Republican approach to govern
Public Goods?
Once it is accepted that public good theory is a better starting point to
argue for economic governance in Europe, the next question is how this
public goods should be governed. There exists already a large literature
regarding Fiscal Federalism, which tries to explain at which level a public
goods should be delivered. Here I will argue that republicanism offers a more
coherent and for Europe more suitable framework to explain how European
public goods should be governed.
6.1
Federal vs. Local Provision of Public Goods
A major contribution regarding the governance of public goods was given
by Musgrave. In his article ‘The Voluntary Exchange Theory of Public
Economy’ (1939) he developed the idea that public expenditure fulfills three
main tasks: the allocation of resources, the distribution of income and wealth
and the stabilization of the macro economy (especially employment, output
and inflation). His book ‘The Theory of Public Finance’ (1959) became
finally a seminal work on the public expenditure field. Musgrave tried in
this book to combine market theory with Keynsian economics and developed
mathematical tools to determine the efficient level of public good provision.
Oates tried to develop tools to locate the right level of public good provision. His theory of fiscal federalism, developed in (1972) and (1999), recommends that macro-economic stabilization and the distribution of income
and wealth should be executed by a central government, while allocation
should be managed by a local government (Eriksson, 2008, p. 11). Public
Goods should be provided at a central level because local governments are
restricted in their abilities to levying taxes on production factors that can
more freely out of their sphere of influence. (Eriksson, 2008, p. 11). The
provision of public goods at a local level, however, brings the advantage that
local governments are much better able to identify the preferences of the affected individuals. The allocation of resources should therefore be managed
by a local government.
6.2
An Alternative Approach to Interdependence: The Res
Publica and Public Goods
Collignon derives the necessity of a European governance from the necessity
to govern European Public Goods. He turns therefore the logic that domi27
nated within the tradition of European republicanism and federalism. Kant’s
concepts of a perpetual peace proposed national republics which join into
a federation to secure peaceful interaction. However, the economic realities
have changed within the last 200 years. Due to the industrialization and
the digital revolution, human interaction is not limited anymore by national
borders. Due to this increasing interaction, more and more externalities and
public goods emerge on a European (and also global) level. This causes the
obsolescence the concept of a Federation of Republics (to borrow Ernst B.
Haas famous description of functionalism) and calls instead for a European
(Federal) Republic to govern European Public goods.
Collignon argues that the Republic is ’conceived as a community based
on law, i.e. legal rights and obligations by individuals seeking joint welfare’
(Collignon, 2011a, p. 7). In the republican tradition the people own public
property in common. For Republicans, freedom means that the individuals
are not subject to any king or despot, but that indeed the government is subject to the people (Collignon, 2013, p. 4). Power structures are therefore
’internalized’ into a system of laws, as we have seen before.
The republic is concerned with the ’res publica’, the ‘public affair’. The
government is for Republicans only an agent responsible for the administration of these ’public affairs’ and especially of public property (Collignon,
2013, p. 4). In a republic, the users of public goods have a ’right to determine collective preferences’ (Collignon, 2011a, p. 4). Furthermore, ’the
legal community of republican citizens emerges from their status as common property owners (Collignon, 2011a, p. 11). According to Collignon,
Cicero’s ’res publica res populi’ should therefore not be translated as ’a commonwealth is the property of a people’ but rather as ’public goods are the
goods of the people’ (Collignon, 2011a, p. 7). Furthermore, the English
’commonwealth’ expresses in a very elegant way the idea that a group of
citizens gathers to create a common or public good (Collignon, 2008b,
p. 63). The republic focuses therefore on the common welfare and seeks to
increase the welfare (Collignon, 2013, p. 4).
6.3
Solving the Sovereignty Problem with the Concept of
Res Publica
The public good approach proposed by Collignon helps also to solve some
paradoxes regarding issues of sovereignty and European integration. As we
have seen earlier, the concept of sovereignty (meaning ’legal self-determination’)
put some severe challenges to European integration. Even if the public good
is defined probably - with all its underlying externatlities and the group of
28
people that it affects - there remains the problem about how the ’sovereign’
can control the institution that manages the public good.
Problems occur especially if sovereignty is derived from cultural identity, the state and its institutions and not from the people who are affected
by decision of the state. Collignon unveils the fallacy in this logic in the
Maastricht ruling of the German Constitutional court (BVerfG). The constitutional court decided that as long as there is no ’European demos’, national
parliaments and institutions must play an important role to legitimize European institutions democratically (Collignon, 2007, p. 19-22). The European Parliament has for the BVerfG indeed only a ’supporting function’,
which may be increased by democratic institutional reforms.
Collignon points out that this - conservative - understanding of European
integration undermines the republican principle that the will of the people
is defined by debates and consultation of the people who are affected by the
res publica. The ruling of the BVerfG represents therefore an obstacle for
the creation of a European democracy. The problem is that the BVerfG
derives sovereignty from the single nation and their people as a whole, not
from the individual citizens who are affected by the decisions of an institution. Due to this (non-republican) methodological approach, democracy
can, according to the BVerfG, only be maintained in Europe by intergovernmental decision making (Collignon, 2007, p. 19-20). However, with the
increasing importance of common resource goods on the European level, the
ruling of the BVerfG comes incrementally into conflict with the economic
reality in Europe. From the republican perspective, intergovernmental decision making undermines sovereignty, especially if common resource problems
are concerned.
Collignon argued that also political federalism failed to give a comprehensive proposal how the prerogatives should be distributed at the different
levels of governance. Political federalism created ’geographical’ subunits, defined by political identity, not by economic necessity. Fiscal federalism gave
a more sophisticated answer as it models these different political identities
as ’heterogenious preferences’, the distribution of the prerogatives should
then consider the different preferences vs economy of scales in public good
provision(Collignon, 2011b, p. 12).
The crucial problem of these theories is that they assume fixed preferences (Collignon, 2011b, p. 13). However, as Monnet said, the process of
European integration is ’not to equilibrate but to fuse the interests of both
econonmies’, which means here that it aims to unite the preferences of the
European citizens, not to simply balance them (see Monnet section 3.2).
Collignon showed that under republican presumptions, if preferences are de29
fined in a public debate, actors have bounded rationality and the transparent
democratic decision-making process forces the citizens to reveal their preferences, then the preferences inside a polity will indeed converge (Collignon,
2008a). It is, however, important to create the institutions which make this
process possible.
The public good logic presented here would - strictly speaking - propose
to set up an adequate institution for each single European public good that
emerges. This method of direct democracy is followed by small republics
like Switzerland. In a huge polity like the European Union, however, ’the
complexity of European public goods creates excessive functional separation
between different public goods and this makes democratic control practically impossible’. Collignon proposes therefore a (European) parliamentary democracy, where ’policy issues are bundled together and controlled
by parliaments that represent the sovereign for a limited period of time
(Collignon, 2011b, p. 14). He concludes:
’Hence, the efficient and democratic management of European public goods would require that citizens exert their ultimate authority as the sovereign by electing the European Parliament, which then controls the Commission as the agent of
European citizens. In this way, public goods could be administered democratically without falling into the trap of inefficient
intergovernmentalism or identitarian federalism.’ (Collignon,
2011b, p. 14)
6.4
Republicanism and European Identity: Encountering the
Fear of Economic Domination
The republican approach proposed by Collignon can also help to overcome
some obstacles regarding European integration which are discussed under
the issue of (an agreeably missing) ’European identity’. As I stated before:
I think it is necessary to create a historically deeper ’story’ of European integration, in order to obtain some kind of ’European identity’. This story
should at least start with the beginning of the industrialization, European integration can than be understood as a process to solve externality problems
between modern industrialized economies and to avoid economic domination. Furthermore, in the process of industrialization, the European people
were liberated from bondage and other forms of slavery and create modern
democratic states.
The republican tradition plaid an important role in this process. It is one
of the oldest tradition of political philosophy, it can be traced back to the
30
Greek polities and the works of Plato and Aristotle, to the Roman Republic
and later to Cicero, to the Italian city states till the French and American
revolutions (Collignon, 2013, p. 3). It finally culminated in Kant’s perpetual peace and the exclamation of the enlightenment towards the people
to ’emergence from his self-incurred immaturity’ and ’Sapere Aude! [Latin
translated: Dare to know, from Horace]. Have courage to use your own
mind!’ (Kant, 2013/1784). It played an important role in the democratic
movements in Europe during the 19th century, as we have seen. Especially
the Greek Republicanism aspired many European intellectuals as Victor
Hugo and Giuseppe Mazzini. Republicanism can therefore be a source to
create a European identity.
The main obstacle to create a European identity is the neo-liberal concept
that is dominating European integration. Many citizens associate European
institutions with instruments to impose neo-liberal policies by undermining
the authority of sovereign national decision-making process. More and more
cities in Europe perceive the neo-liberal agenda policy as an act of domination.
An alternative to the neo-liberal concept of Europe could therefore be a
socialist Europe, as Altiero Spinelli and many federalists have proposed it.
However, in terms of political philosophy the real opponent of liberalism is
not socialism but republicanism, as we have seen. Liberalism claims that the
’democratic will’ is the aggregation of pre-political, plural, individual interests. Republicanism believes, however, that the democratic will is formed in a
public debate on the base of civic virtues. Both theories accept therefore that
it is necessary to form a democratic will, but they disagree in the way how
this can be done. As liberalism pre-supposes fixed, pre-political preferences,
it is compatible with intergovernmental methods. Republicanism, however,
claims that a democratic will can only be created by a public debate that
influences the preference formation of the participants (Collignon, 2008a).
Republicanism is therefore not categorically rejecting a neo-liberal economic
agenda but it emphasizes the democratic procedure by which it must be
decided weather the people want a more social or neo-liberal reform agenda.
European Republicanism follows therefore a legal and an economic rational. The legal logic is that freedom can only be maintained if power
structures are internalized into a legal system. Everybody can participate to
contribute to the formation of this legal system. Only in this way (economic)
domination can be avoided. The economic logic is embedded in the public
good concept: everyone who is affect by the public good should be able to
participate in the creation of an institution to manage this public good. In
the Republican thought, the state ’belongs’ therefore to the citizens. This
31
is the difference to the concept of ’nation’ where the citizen ’belong’ to the
state (Collignon, 2011c, p. 6). A European democracy, which overcomes
national ideologies, can therefor only be build on a republican basis. It is
not possible, as Collignon pointed out, to ’build a peaceful Europe on tribal
feelings of [national] identity’(Collignon, 2008b, p. 63).
7
Conclusions
In this paper I have argued that current theories on European integration
were not able to foresee the euro crisis. Even worse, they seem unable to
give adequate answers how to solve it. I identified three major fields in which
the major fallacies of the current theories lie: first, a wrong conception of
the historic relationship between sovereignty and federalism. The conception of a nation state must not necessarily stand in opposition to a federation. Intellectually both concepts are closely connected, although they might
partly contradict themselves. Second, the economic problem in Europe, and
especially inside the euro area, are better modeled by of European-wide
externalities and public goods than by the concept of ’economic interdependence’.Third, historically the main driver of European integration is not
economic advantage, but the fear of economic domination.
I concluded therefore that a republican approach, based on economic
externalities and public goods, is superior to explain European integration.
A republican approach can help to overcome the theoretical obstacles that
the concept of sovereignty has put to European unification. Furthermore it
is able to model the underlying European-wide economic problems in a more
coherent way. Finally, republicanism is deeply concerned with the thread of
domination, a republican approach can therefore indicate ways how to avoid
economic domination.
In addition, the vision of a European Republic could also solve the identity problem. Republicanism is deeply connected to the European history,
it is a true and common European heritage. A European Republic could
therefore inspire many Europeans to stand of for a more integrated Europe
and to regain access to European political institutions.
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