Critique of neoliberalism in the context of European economic integration

Essays | | 18-11-2019, 00:00

 

 

In this paper, I will try to analyze the emergence and development of neoliberalism as part of the European integration discourse from the neo-Gramscian perspective, explaining its  expansion  by using the hegemony theory and also criticize some aspects of neo-liberalism with deep insight. In his article,“Neoliberalism in the European Union”, Christoph Hermann argues that until the 1980s, European integration was largely restricted to the trade in goods and the removal of customs tariffs which had hindered  a deeper economic integration. In the 1970s, in the face of the economic crisis and increasing global competition, some groupsof the European big business  aimed to create a single European market and achieve great economies of scale to be able to compete more successfully with their American and Japanese rivals. The 1970s’ crisis of European capitalism intensified ideological opposition to the post-war Keynesian model and brought neo-liberal forces in the limelight. However, European economies had some market-constraining  institutional elements that prevented the effective distribution of resources and did not allow it to adapt to changing global conditions after the crisis. As indicated in the article, neo-liberals belived the stagflation of the European economy to have resulted from  economic rigidities stemming from excessive public intervention. So, neo-liberalism focused on these public interventions in order to deepen the integration: the strong position of organized labor; not flexibilized and overwhelmingly arranged labor markets; heavily welfare-oriented state. [1]

 

Davide Bradanini’s article – The Rise of the Competitiveness Discourse- a Neo-Gramscian Analysis – explains the neo-Gramscian theory of hegemony. As indicated  in his article, hegemony, the most important concept in this concept, focuses on the leading class’s domination over the subordinated classes through bounding ideas and material conditions together. In contrast to the classical realist approach, this theory views relations as spreading  from the state level  to the level of citizens and authorities. It tries to show that the role of social forces becomes a crucial part of hegemony when the production process surpasses  the national level and capital accumulation becomes  transnational. Hegemony requires subclasses to obey the ruling class with active consent. Another important aspect of hegemony is the development of an ideology and worldview (ideological hegemony) in order to enable the lower classes to accept their position as legitimate. The historical block refers to the relationship of sovereign social forces with the dependent social forces in a given national context. One of the most influential social and transnational market forces is the European Round Table Industrialists which is an institution that enables organic intellectuals to formulate a consistent hegemonic project for the transnational European capitalist class.[2] If we apply the role of ERT to the hegemony theory, we can easily identify its role in  developing a world vision and ideology in order to shape the European decision-making in the integration and made the subordinated class accept these created values as their own goals and values. I want to mention that the coercion of EU policy conditions under ERT to the CEE countries to accept deregulation and liberalization during the enlargement is  a perfect  example of neoliberal ideological hegemony. I would also like to criticize neoliberalism using the concept of “new constitutionalism”   developed by Stephen Gill. The new constitutionalism defines the political and legal framework of disciplinary neoliberalism which preaches shielding economic policies largely from the responsibility of political accountability. The neo-Gramscian theorist Stephen Gill explains the expansion of neo-liberalist hegemony through impact and role of technocratic management (like ECJ, EMU, Commission and its competition policy) which take economic policy away from democratic control. [3]

 

In line with Stephen Gill’s concept of “new constitutionalism”, I believe that by urging deregulation and reducing political accountability, neoliberalism reduced the capacity of national governments in favour of market forces. In other words, the role of national governments of the member states gets gradually reduced, and their ability to protect the losers of globalization erodes. As indicated in Neoliberalism in the European Union by Hermann, EU regulates and controls member states by imposing fiscal policies within the framework of the Growth and Stability Pact, leaving them unable to set employment targets freely.  After the emergence of neoliberalism, free trade has been a major focus of economic integration and it created an inconceivable process of innovation which inhibited to benefit equally from this innovation. We can see that there occurred an absolute failure in providing compensation who are losers in globalization, although neoliberalism asserts that liberalization must compensate losers when losses are permanent. [4] As Christoph Hermann argues, European institutions expect that the Member States will consider employment objectives in their national employment strategies which means a lack of social policy in the process of integration. The Member States are not able to pursue employment and other social policies due to economic and legal constraints within EU. For example, there is a hegemony and direct influence of European Court of Justice jurisdiction over EU law and European Monetary Union by focusing on the price stability and budgetary austerity, opposing to social democratic form of capitalism. [5]

 

The main reason for the increase in the number of losers in the integration process is the hegemony of neoliberalism entrenched by the European institutions’ structural reforms and fiscal policies. The main structural reforms such as the attack on organized labor, individualization of unemployment, flexibilization, and deregulation of labor markets and privatization serve the interests of social forces that aim at shifting from welfare- to workfare-oriented policies. Moreover, these structural policies are reinforced by fiscal rules such as budgetary austerity and monetary restraint. Transnational companies and ERTs are the most important winners of globalization in Europe. Their subtle but firm hegemony has been secured through their significant influence upon European institutions. Yet, the EU continues to favour these winners maintaining structural reforms relying on austerity-based fiscal policies, instead of assisting losers who are mainly the lower strata. My opinion is that the persistence of these neo-liberal economic policies, the insurgence of losers will directly impact on the economic integration and will result with the exit from the union, like Brexit.

 

Gramsci also elaborates on the notion of crisis of hegemony. He distinguishes organic crises, which are structural and can’t be managed well enough in the existing socio-economic order. According to him, one of the main reasons for the organic crisis is that the ruling class begins to collapse from below. This situation occurs when the subclasses end their consent and turn against hegemony.[6] This model may be applied to the disgruntlements of the outsiders of globalization. For a long time, all social groups benefited from European integration and a seemingly stable consensus was dominating. The economic crisis in 2008 which brought forth endemic problems with employment in many European countries, made many citizens feel to be the losers of the integration process, triggering the erosion of this consensus. Facing this challenge, the EU institutions have taken over most of the economic decision-making power from the national governments, and neo-liberal regulations and reforms have only gained momentum. Describing the situation in the Gramschian terms, deteriorating economic prospects and decline of active consent of the subordinated class brought the repressive aspect of technocratic management to the fore. The dissolution of the Euro-optimistic consensus can be illustrated with the rejection of the European constitution draft by Dutch and French voters in 2005. As indicated in Hermann’s article, this draft was based on the strengthening of tight financial discipline with the focus on stable prices and monetary conditions. Re-write a new constitution can’t be a solution to the crisis and disintegration. To improve the sustainability of European economic integration, issues such as unpopular austerity measures, stagnation of real salaries and the increasingly unequal distribution of wealth should be dealt with.

 

 

About the author: Sabina Jahanli is a recent graduate from one-year master’s degree Program in

International Relations of Central European University. She has also graduated from

Budapest Business School’s International Relations MA Program in 2018. She has

participated in Student Scientific Conference which is a national research competition

in Hungary and was awarded first place twice in 2016 -17. She has also been a visiting

student to Centre for EU- Russia Studies at University of Tartu in 2019.

 

Works cited

Bradanini, Davide. 2009. "The Rise of the Competitiveness Discourse—A Neo-Gramscian Analysis."

Bruges Political Research Papers 4-9. file:///C:/Users/babek/Documents/wp10_bradanini.pdf.

Gill, Stephen. 2000. "Theoretical Foundations of a Neo-Gramscian Analysis of European Integration." In

Dimensions of a Critical Theory of European, by Hans-Jürgen Bieling & Jochen Steinhilber, 15-33.

Marburg: Forschungsgruppe Europäische Gemeinschaften (FEG).

http://edoc.vifapol.de/opus/volltexte/2013/4320/pdf/s13.pdf.

Hermann, Christoph. 2007. "Neoliberalism in the European Union." Studies in Political Economy 61-90.

Leichenko, Karen L. O'Brien & Robin M. 2003. "Winners and Losers in the Context of Global Change."

Annals of the Association of American Geographers 95.

Mattli, Walter. 1999. "Chapter 4 – The European Union." In The Logic of Regional Integration: Europe

and Beyond, 68-108. New York: Cambridge University Press.

Xing, Li. 2006. "The Crisis of Hegemony and Counter-hegemony under Transnational Capitalism."

Research Centre for Development and International Relations (Aalborg University) 6-11.