Hayek v. Polanyi in the European Union

“Much of this surely has to do with the tribalism that John Q. was talking about last week – a lot of US intellectual politics is based on affect. ”

I’m not sure that this is quite fair on two points; first, lots of intellectual politics everywhere is based on affect. More importantly, on the broader point of whether it’s reasonable to think of the EU as essentially a “left” experiment, I suspect that the tendency stems from skepticism about the (contingent, accidental, problematic) nation-state as ideal vehicle for the leftist political project. Skepticism about the nation-state generates enthusiasm for (or at least interest in) supranational projects, etc.

Which is not to say that Hopner and Schafer are wrong; it’s obviously true that supranational entities can have right/negative effects, and the EU may be such an entity.

Eventually the EU will be obliged to decide if it is a Confederation or not. If it is, we can only expect an awkward Hayek-ian least-common-denominator sort of system, leaving the awkward questions of regulation unresolved. It will all end badly, as surely as the UN has been rendered impotent, run up on the reef of sovereignty by the oxymoron of United Nations.

Switzerland was once such a confederation. Nobody would fight for it when Napoleon invaded. Back and forth they went until the formation of the current federal state, which is currently trending right-ish, much exercised by the influx of all those immigrants. Switzerland still calls itself a confederation but it’s a unique amalgam of direct democracy and republican principles. Such a model might serve well as a basis for the EU.

I have always resisted the idea that nationalism is deeply connected to democracy — that only the nation-state has been able, as a matter of historical fact, to construct the social institutions in which democracy can flourish. But I might have to reconsider, based on the record of the EU.

The EU has dedicated itself to the destruction of national preferences. University admissions have been mentioned above, but the the economic dimension has, of course, been critical. Above all, there are to be no impediments to the free movement of capital, but this means that all enterprises should be privately owned, and that shares should be marketable equally throughout the EU. Hence the opposition to the German Landesbanken (not to mention the quasi-public ownership of VW), the Slovenian worker funds, and to any form of regional policy that gives preferences, subsidies or whatever to firms for maintaining employment in locations that depend on them.

The problem is, when I try to imagine what democracy means in a world like the one we live in, I keep bumping into stakeholder governance, public ownership (especially in finance), and decentralized hooks by which local polities can dig their tendrils into enterprises. The institutional expressions of these sorts of things are anathema to the EU.

It is an interesting question whether there is a bizarro-EU, situated in an imaginary universe, which is able to achieve transnational integration through a widening of democratic control rather than its curtailment.

I was quite surprised to learn that EU members are forbidden from explicitly favoring their own nationals for access to their public universities

I don’t see that all member countries are complying with this, Romania off the top of my head. Where’s the text of that rule? I know it’s an ambition of the Bologna declaration, but that also stresses the autonomy of institutions.

Australia and NZ had free reciprocal access to benefits until 10 years ago. IIRC, the NZ government made a transfer to Aust to offset the net balance of payments to Kiwis. The breakdown of the agreement was due to fiscal strains but to a dispute over migration policy – NZ allowed an effective backdoor route to Australia. We may get this sorted out again, as the injustice of the current situation, applied to those who have been paying taxes for some time, is obvious.

Looking at the EU case, I assume that Schengen makes the migration issue irrelevant (feel free to correct me). So, I think the issue could easily be addressed at the EU level by a set of relatively modest contribution adjustments to offset net imbalances in welfare. That doesn’t mean it will be, but it looks entirely feasible to me.

I’m obviously very distant, but my perception is that the strains in the EU so far have been more about labor market competition than about welfare “Polish plumbers” than “Polish layabouts”. The reports I’ve seen on anti-immigrant sentiment about welfare burdens seem to me to focus on immigrants from outside the EU, rather than movement within it.

I’m not attempting any kind of gotcha here, Henry. Just a simple question. There was a time not so long ago when you were quite bullish about the prospect of this crisis prompting a democratising integrationist push. I wouldn’t blame you if you were somewhat less sanguine about that. Are you?
Perhaps you’d want to suggest that happy outcome as one of two possible longer term responses to the dystopia described above, the other being entropy and the redivision of Europe.

This picture expresses what I think of as a leftist perspective on the benefits of the EU. Unfortunately, I think this benefit gets taken a little too much for granted these days.

They must be using “Hayek” in a very limited sense, because the EU suggests a complete breakdown of feedback mechanisms that are essential to the Hayek view coupled with a an ECB playing the role of unaccountable planner with a single minded focus on ignoring various price signals that doesn’t seem very Hayek-like. And wouldn’t Hayek suggest that removing the price signal of varying currencies is an enormous mistake?

“if you look at it right…”

You don’t have to look at it very cock eyed to suggest that the EU has fallen into the planning/insulation from feedback problem, or perhaps has had the problem from the beginning.

Trying to define its failures along Hayek/Polanyi contours seems odd. It took the worst of both, so of course it is a mess.

_It took the worst of both, so of course it is a mess._

No, the worst of Hayek is support for regimes that murder leftists in football stadiums.

For this once US leftists and rightists have it right. The European right by the way has the same opinion than the US right (UKIP, Wilders, …), it is only in parts of the European left that the European project is seen only for the bad parts (although even Syriza ultimately is pro-European seeing the benefits of the long term project far outweighing the current short term hassles).

What the right has always opposed in the European integration is the ability to tax at the European level and harmonize taxation policies. The article is right in concluding that it has been a successful opposition until now and that therefore the current EU construction is from a solidarity/redistribution (and hence democracy) point of view more of a nuisance than a help.

That said, the direction of the recent EU proposals (including the almost consensus on putting up a Tobin tax) is a clear sign that this design error will have to go. The current nation state social security systems were by the way mostly put in place by the parties that are currently in charge in the EU (Merkel and Hollande are in that tradition).

The odd one out more and more is the UK (together with Scandinavian countries and the Netherlands who have a history of being outsiders). Either there are politicians in the UK that finally succeed in convincing voters that they are more important than the City and other British traditions or the EU needs to move ahead without the UK (every single attempt to have a social dimension to the EU and/or to give some tax authority to the EU has been effectively veto’d by the UK in the great tradition of Thatcher).

The UK left joining the euro-bashing just has the effect of a self-fulfilling prophecy, in this case not one of Europe staying too much on the right but of the UK becoming even more of a colony of US capitalism (I’m sure US capitalists will grandly leave the UK in the delusion that Brittania still rules the waves).

“I don’t know Sebastian, did Hayek recommend different currencies for Arkansas and New York, so as to get extra signally goodness?”

Yeah, sort of: http://www.iea.org.uk/publications/research/choice-in-currency-a-way-to-stop-inflation

The difference being his solution didn’t involve geographic monopoly of any size.

Ah, we’ve just been treated to another parallel between the US right and some on the European left. The tendency to divide people into Real America and the rest. (Guido’s preferred term is “outsiders”.) Historically, one of the rock solid blocking votes on tax harmonisation is the Irish one. If you’d like to perform an excommunication, Guido, then CT would be the place to do it.

While I agree with Sam @23, it seems to me that the EU is doomed, because the EU politicians (the central bank and the commission) are hell-bent on destroying it.

@23
Please read Polanyi, yeah that guy in the title of the thread.

Otmar Issing, ‘Hayek, Currency Competition and European Monetary Union’, the eighth annual Hayek Memorial Lecture (London: Institute of Economic Affairs, 2000).

The American right are against a more social democratic version of the EU from twenty years ago, correspondingly the American left (and much of the European left) cling to the idea of an older EU not badly contaminated by neoliberal dogma.

Ever closer union, right or wrong, is just as morally empty a vision as earlier nationalist ones.

Sam Tobin-Hochstadt@23

The “benefits” I’m referring to is that (a) there have been no wars between any of the EU countries since its founding

Or Malaria epidemics. The absences of any malaria epidemics in Europe over the last sixty years can only be due to the EEC/EU.

More seriously there has not been just one European Project, today’s version was not the version of the 1980s or the 1970s so the question has to be asked which versions or parts of the European Project are you in favour of? Or are better environmental standards inseparable from reduced popular democratic control of monetary policy?

Well, in 18, I talked about both EU taxation and harmonization.

It may well connect with Belgianness in the sense that in Belgium the Flemish nationalists are questioning the authority of Belgium to tax or to harmonize taxes. The stated reason to take away the Belgian authority on taxation is to allow the regions to lower taxes so as to be ‘more competitive’. Obviously this would also break the solidarity between regions and employees across the regions and thereby break the Belgian social security model (& this model is probably not the worst in the world).

Interestingly, the ‘right’ for Belgium to define taxation levels is questioned specifically because somehow the entity Belgium is, for nationalists, democratically illegitimate.

One way a European authority over taxes (either by harmonizing them or by directly raising them) would address specifically the point in the original post would be that it would for instance make it harder for wealth to seek out the weakest link and forcing the whole chain to become weaker. Downward pressure on taxation of the rich is not a European phenomenon but the only way to resist it in Europe is by resisting it as one Europe.

I don’t particularly like Verhofstadt but in many ways, yes, his proposals make sense, at least directionally.

Sam Tobin-Hochstadt 07.17.12 at 1:50 am
“This picture expresses what I think of as a leftist perspective on the benefits of the EU. “

Unfortunately google translate cannot translate it correctly. Must be some local language and not hoch Deutsch, to be specific it doesn’t understand, ‘e’, ‘kän’ and ‘bißje’.

Antoni: “e” = ein (a), “Kän” = kein (no), “bißje” = bisschen (a bit, a little while)

Sharks. Next question.

Sebastian: I think you’ve muddled up your Polanyis in that last comment.

We’re talking about the culture and economics Polanyis right?
I haven’t read the final paper, as I’m not about to spend good money on a bad blog debate. I read the working paper. I do however seem to have combined the culture and economics Polanyis and the spontaneous order Polanyis into one person. I would have done better if I had looked them up on Wikipedia instead of working off stupid memory from more than a decade ago.

The paper, in working form, smacks of cucumber, closer to chicken or shark: cucumbers are green, chickens are sometimes red, green and red are colors therefore chicken! Wait cucumbers are slick and bumpy, therefore shark!

They are certainly right that the EU isn’t very Polanyi/economics-and-culture-are deeply-related oriented. The problem is that you have to squint super hard to get anything Hayek-like out of the EU. I’m pretty sure that Hayek wouldn’t have a big problem saying that if you throw out everything he said about prices, planning, and centralized stupidity, and focused ONLY on what he said about confederations WITHOUT taking into account the rest of it, you are going to get silly looking results.

The EU looks ‘more’ like a Hayekian confederation than a Polanyi culture-embedded state, I guess. So in super limited terms of offering a rebuttal against the paper they don’t like, they win! But the debate they are winning is silly. A Hayek-like criticism of the EU using all of the general Hayek-like criticisms would be pretty much right. And in addition to all of those criticisms, a Polanyi-like criticism of the fact that the economic analysis of the EU fails to deal with the fact that economics is culturally encoded would also be pretty much right. The EU is essentially nothing like either of them describe as a good thing, so to decide which one is ‘closer’ is number of angels on a pin…

Re the left/right question: There has always been both a left and a right tradition of Euro-scepticism. The mainstream media and politicians found it convenient to delegitimize Euro-scepticism as a right-wing nationalist phenomenon so left critics could easily be ignored.

Guido, I should learn not to get involved in interesting threads when I don’t have reliable internet. I’ll be travelling for the rest of today, so may not get back to you. Here’s my thoughts about why your way may not be the right way to go.

Start with an obvious practical problem. In redressing market failures (the second phase of the “double movement”, to use Polanyi’s term), you’re not going to be setting absolute standards. If you were, then you’d have to be asking yourself what level of protection you’d want to set, and I can tell you your answer on that now if you like. You’d look across the EU and on each measure of social protection you’d to choose the highest one you could see. Why? Because any other answer would force you to travel round the continent telling specific groups of people who had voted for specific social protections that they would have to remove these protections at your insistence. So, rather than do any of that, you’re going to be setting minimal standards at the bottom end above which people are free to build additional protections, on the model of the minimum wage. Europe already involves a fair bit of this. But because you want to make a difference, what you’re going to do is apply the same principle more broadly.

Fine. Where’s your mandate? Not at the national level. We can assume that if the Irish wanted the corporate tax rate that the French think appropriate for them, they’d have said something. Perhaps even voted for it.
Nor does a judicial mandate fit the bill. In the working paper there’s a discussion of the role played by the ECJ, and of the inherent limits to this role from your point of view.
Finally, to suggest that you’d get a pan-European electoral mandate would merely involve taking on the task of fixing the democratic deficit on top of everything else. It may narrowly help your argument, but at the cost of a retreat from reality.
Happily a model does exist, readily available in Europe today for reaching these kind of agreements. The best example of it currently is the Fiscal Pact. It’s a centralised decision taken at the level of the European Council, which is then voted through national parliaments. (German bullying isn’t a required feature, but it does help concentrate minds.) I have to say I don’t think it’s remotely realistic to put your agenda through those hoops. The fiscal pact is one thing – a minimum standard setting the percentage of GDP by which spending can diverge from revenue in a given year. But rewriting the tax code, and the benefits system, and the labour regulation handbook by this method would represent rather more of a stretch.

So, anything more ambitious than a low minimum standard will face insurmountable obstacles getting through. And even that more modest objective will struggle to secure support and legitimacy. You might justifiably respond that a determined optimist pushes on regardless. But there’s one final problem which ought to stop you dead. If you were asked to highlight one cause of the eurozone crisis, and one blockage to its resolution, a good answer on both questions would be the one-size-fits-none interest rate. Tax rates are a tool of macroeconomic management. As is the overall fiscal pattern determined by the government. Likewise the generosity (or otherwise) of the benefits system and the burden (or otherwise) of regulation. These are things that can be tweaked in response to asymmetric shocks. To choose to bind governments’ hands so tightly on fiscal policy while they are unable to run their own monetary policy would not only be a mistake. It would also in the current environment be in supremely poor taste.

I’m sure that the EU’s structure is vastly more complicated than I understand. Be that as it may, I’m not sure how you can suggest that the EU doesn’t have strong centralized components when the ECB effectively threatened to destroy Italy’s economy unless they got rid of a prime minister that the ECB didn’t like. Whatever you want to call that, it sounds rather central as opposed to distributed.

Now maybe you can come up with some really complicated explanation about how that is really all about deference to local governments, but I’m not going to make that argument up in the hopes that it might be good.

“It doesn’t talk at all about the inflation fighting aspects of the ECB.”

Quite. And talking about the European Union being ‘Hayek’-like without mentioning the ECB and its incredibly centralized planning mechanism is kind of like trying to talk about a Marxist analysis without wanting to talk about labor and capital issues.

If the EU project fails, a huge part of the failure will be because the ECB is being bat shit insane with its central monetary policy. Now maybe that is because the project was impossible. I don’t know. But you can’t talk about Hayek and the EU while ignoring that rather enormous elephant in the living room.

“I do know that one area in which the EU has not been any more ‘progressive’—perhaps even less progressive—than the US is agricultural policy, specifically subsidies.”

I’m not too sure but I thought the EU subsidy policy is in fact more progressive than in the US because it does much more to support conservation and environmentally friendly practices and to prevent overproduction, whereas the US is still mostly subsidizing production.

I seem to have one comment stuck in moderation, can someone fish it out please?

I’m not too sure but I thought the EU subsidy policy is in fact more progressive than in the US because it does much more to support conservation and environmentally friendly practices and to prevent overproduction, whereas the US is still mostly subsidizing production.

Are you quite sure about that?:

http://www.monbiot.com/2011/11/28/big-farmer/

“How many Franco-German wars were in the century between 1812 and 1914?”
One I think? The Franco-Prussian War in 1870.

So you have just one year of war in a full century, and they didn’t have EU! Of course, they also didn’t had Germany for most of the time.
Now your homework: reading Polanyi’s “The Great Transformation” first chapters.

One odd thing about the Hayekian argument given his views in other areas is its optimism that revenue and spending assignments can be aligned to ensure that everything is internalized at the sub-federal level. Maybe for classic fiscal instruments that can be done. But would Ireland and Spain have financed their property bubbles through an integrated banking system if they had known their own taxpayers would be picking up the bill when it all went wrong? By the time everyone realizes that, though, it’s too late, from the small federalist perspective. Cleaning up that mess ends up with the federal layer bigger.

“You would not think, in the normal course of events, that a sensitive and intelligent person would go to Ghana”

And you wonder where J Otto’s hostility came from?

Those criticizing the EU for being undemocratic seem to presuppose that the decision making process in nation states is democratic – and that is simply not the case in the vast majority of cases.

Exactly — and the same dynamic applies in questions of state vs. federal power in the US. The notion that state governments are, by definition, more responsive, transparent, or accountable is laughable on its face (spend some time carefully following the goings-on in Albany if you need convincing)…but that doesn’t stop it from being trotted out when convenient.

“How many Franco-German wars were in the century between 1812 and 1914?”
One I think? The Franco-Prussian

You’re forgetting the Battle of Nations, and Waterloo . . .

@Sebastian
“If the EU project fails, a huge part of the failure will be because the ECB is being bat shit insane with its central monetary policy.”

From wikipedia: “In 1976, in a paper on The Denationalization of Money,[44] Hayek advocated that rather than re-instituting a government-mandated gold standard, a free market in money be allowed to develop, with issuers of money competing with each other to produce the best, most stable and healthy currency.”

I think you are very wrong when you say that the centralized ECB is something “anti Hayek”.
Hayek’s theory was that a decentralized market was superior to central planning, but by “decentralized market” he did mean the price mechanism. He didn’t say “unlimited freedom to all” but “the only limit of freedom should be the price mechanism”.
The prices mechanism is important because it conveys information about the actual cost of the stuff consumed, so a lack of stability in prices is a very bad thing from the point of view of austrian economics. In fact austrian economists were mostly goldbugs; from the wikipedia quote above Hayek rejected goldbuggism in favor “free money issuing”, but only because he believed that this would lead to the “most stable” currency.
This is because austrian economists believed that fiat money and fractional reserve were in essence a sort of forgery, that could disrupt the “information value” of prices, so he hoped that “free money issuing” could force money issuers to print few to none money.

In other words, Hayek clearly was an anti-inflation freak, and the ECB is clearly following an Hayekian policy of “no inflation at any price”.
Now you can argue that Hayek hated everithing with the word “central” in its name, including the ECB, but I strongly believe that he would have appreciated a lot present ECB policy, expecially since it is evident that, if states like Greece or Italy exit the euro, the first thing they do is to print like mad.
In this sense, I think that the ECB is the most Hayekian part of the EU, and you are wrong when you say that inflation fighting is the ususal wrong metric used by a burocracy, because “price stability” is exactly the base of austrian economics before than ECB policy, and pertains to Hayek (and his idea of the markets) more than to Draghi.

The agricultural subsidy issue is more complicated. There is not just one but many different kinds of ag subsidies. Some of them are quite benevolent, others aren’t. Some are a waste of taxpayer money, some are a giveaway to big landowners, some are actually cost effective means of achieving a social good (conservation, land stewardship, preservation of agricultural knowledge and culture). Of the bad subsidies, some are bad for rich countries’ taxpayers but don’t affect other countries at all. Some genuinely hurt farmers in the developing world because they promote dumping.

If Monbiot says that most EU ag subsidies are in the wasteful or malevolent category, I tend to trust his word because he usually does his research. Now dsquared’s criticism is valid in part insofar as those he criticizes are guilty of oversimplification and exaggeration but then, so is he. The byline “There is nothing wrong with developed world farm subsidies” is nonsense. There is something wrong with certain kinds of subsidies. Apart from that, DD makes some surprising claims.

DD: “Farm subsidies in the EU and USA mean that we sell some kinds of foodstuffs (mainly grains, milk products and sugar) to Africa and other countries cheap. So cheap, in fact, that the Africans etc can buy our imported goods cheaper than they can produce them for themselves. This is good news…”
“This is why Africa does in fact export a lot of food to the EU and USA; it exports value-added prepared vegetables, cocoa, palm oil and other commodities in which it has a comparative advantage. Believe it or not, David Ricardo’s trade theory works.”

Please. When India imports sugar from the EU (because some so-called Free Trade agreement actually forces them to do so) even though its farmers can produce sugar much more cheaply than European farmers, that is absolutely not Ricardo’s theory at work. It’s pretty much, well, the opposite. In DD’s theory, dumping should always be welcomed as good news. It’s good for consumers, so nothing can be wrong with it. DD wouldn’t take that argument seriously when applied to his own economy. I think I can stop here.

“So giving out about how the authors misrepresent Hayek since they ignore the profoundly unHayekian institution of an autonomous ECB, dedicated to fighting inflation seems a non-starter …”

No. The thread went like this. I suggested that the EU suffers from the centralization/lack of accountability/information problems that are pretty much the main thing Hayek wrote about again and again. You replied with EU “not particularly centralized”. I responded by noting that the EU has the ECB which apparently has the power to say to Italy “you know what, sure you’ve been keeping your deficit down to almost nothing for a bunch of years before the world wide depression, and your debt is mostly what you were saddled with from a generation ago, but we don’t think you’ve gone far enough so replace your prime minister immediately or we will blow up your economy” looks pretty damn centralized in the important areas.

Your reply is……lets change the subject.

And even on the dodged subject, you’re missing the point.

Hayek was about the discovery process, normally through prices. His whole freaking point was that good systems which allow the discovery process to work are better than those that don’t. His whole schtick was that individuals and small groups weren’t going to be coming up with better answers. His non-process personal answers are of course equally subject to that criticism. Both you, and the original paper cited, want to talk about Hayek as if he wanted to be a central planner, analyze his ideas that way, and ignore the process problems. Saying that a central planner, temporarily agrees (sort of) with one of Hayek’s concepts about outcomes while ignoring his critiques on process does not mean that the planner is being Hayekian.

If you’re for abortion rights, and a dictator legalizes abortion (because of overpopulation) while still kidnapping and torturing political opponents and barring women from high status jobs, you wouldn’t say that he had a progressive or pro-woman or pro-human rights state and then try to limit it to a discussion of abortion. You’d say that he got an end outcome on one area that you agree with if you squint hard enough, but that he isn’t running a pro-human rights state.

Hayek may or may not have thought that confederation would be a good idea, and if you squint REALLY hard you can sort of argue that the EU is ‘more’ like a confederation of that style than certain other specialized labels you might use. But the way the ECB exercises its power is straight up central planning process. It decides a host of economic situations that it desires and wields the interest rate like a club to get these outcomes out of countries like Italy.

The EU, all over the place, but especially through the ECB squelches local information signals and feedback to get one size fits all solutions. That is about as anti-Hayek as you can get.

“Hayek advocated that rather than re-instituting a government-mandated gold standard, a free market in money be allowed to develop, with issuers of money competing with each other to produce the best, most stable and healthy currency.”

Random lurker, you then say “The prices mechanism is important because it conveys information about the actual cost of the stuff consumed, so a lack of stability in prices is a very bad thing from the point of view of austrian economics.” That isn’t Hayek at all. Forcing price stability on changing events is the height of stupidity from Hayek’s point of view. Prices need to change in response to changing events. That is how they work.

You then take that misinterpretation all the way up to “Hayek clearly was an anti-inflation freak, and the ECB is clearly following an Hayekian policy of “no inflation at any price”.”

Even if that were true, and I’m pretty sure it isn’t as Hayek’s outcome oriented writing on those questions appears to be mixed, the whole point of Hayek is that your system has to be open enough to local information (usually through prices) that *if you are wrong, you’ll notice it*.

You can’t treat Hayek like a central planner, find places where the ECB central planners maybe-sorta-kinda agree with him, see that they implement it, and call that Hayekian. He wasn’t a central planner, he was someone who thought that he if were wrong about outcomes and policies, the process of discovery would correct it.

Hayek’s insights were process insights. Yes, Hayek had ideas about where he thought good processes might end up. Yes, he was probably right about some of them and wrong about others. No, you can’t call ramming those end states through in direct opposition to all of his process insights ‘Hayek-like’. The ECB is not Hayek-like.

Sebastian, with all respect, if I am asked whether Sebastian Holsclaw or F.A von Hayek is a better guide to the thought of F.A. von Hayek, I am going to go with the latter. Let me repeat myself: the fact that Hayek was Sometimes Apparently Unsound on the question of independent monetary authorities with monomaniacal fixations on price stability suggests that the ECB is not incompatible with Hayek-thought in the ways that you suggest. And as for your claim that Hayek Is Process All The Way Down, I look forward with great interest to your detailed explanation of how authoritarian militaristic coups can be understood as a process of catallactic discovery …

Using your admin privileges to lift my last name isn’t distracting enough for me to notice you abandoned the argument. But bravo anyway.

So in Henry world, the actions of the ECB aren’t evidence for centralization, Italy just misplaced their prime minister, and Hayek advocating strongly for competing currencies but mentioning once that a central bank might be ok is reason to say that the ECB is Hayek like, and btw please ignore everything else ever written by Hayek on the importance of feedback.

Ok. That is scholarly work right there!

The hidden email address. He could have an excellent memory for names that almost everyone spells wrong. Better than his comprehension of Hayek clearly. Im not overly worried about it even though it was a slimey move.

lamadredeltopo 07.18.12 at 5:12 am

” So you have just one year of war in a full century, and they didn’t have EU! Of course, they also didn’t had Germany for most of the time.”

If one limits it to Franco-Prussian Wars; if one includes the wars that Germany fought, there are more. They were just short. From http://en.wikipedia.org/wiki/Timeline_of_German_history#1800s:

1848 – 1849 The Revolutions of 1848 in the German states
1848 – 1851 First Schleswig War
1864 Danish-Prussian War
1866 Austro-Prussian War; Battle of Königgrätz
1870 Franco-Prussian War

There was no shortage of conflict in Europe after 1815, but the Crimean and the Franco-Prussian wars were the only major great-power wars between 1815 and 1914. That period was thus one of relative peace in Europe — i.e., relative to the centuries that preceded it — even if Polanyi’s label “the Hundred Years’ Peace” in the opening chapter of The Great Transformation is a bit of rhetorical exaggeration. Here is Polanyi (p.5):

Apart from the Crimean War — a more or less colonial event [?] — England, France, Prussia, Austria, Italy, and Russia were engaged in war among each other for altogether only eighteen months [in the 1815-1914 period]. A computation of comparable figures for the two preceding centuries gives an average of sixty to seventy years of major wars in each. But even the fiercest of nineteenth century conflagrations, the Franco-Prussian War of 1870-71, ended after less than a year’s duration with the defeated nation being able to pay over an unprecedented sum as an indemnity without any disturbance of the currencies concerned.

One may or may not accept Polanyi’s explanation for this period of relative peace in Europe — namely, the role of “international finance” — but that’s a separate point. He is right about the 1815-1914 period as one of relative great-power peace in Europe. (The Franco-Prussian War had high casualties and was disastrous for many caught up in it (see Zola’s The Debacle), but it was relatively short.)

Henry, which inconvenient bit of the argument about the original post am I sidestepping?

You are sidestepping the fact that the ECB offers good evidence of EU centralization of the sort that falls squarely within the routine Hayekian critique.

Trying to talk about the EU as Hayekian stretches the term to uselessness. You have to actively ignore the huge majority of his work and grasp at one offs to do that. It’s irritatingly bad scholarship that would be instantly noticed if done about Marx or Keynes (both of which had some bad policy prescriptions that couldnt fairly be called Marxist or Keynesian if you were talking about institutuions as a whole) which doesn’t get any better just because you are talking about Hayek.

There came a time during the Iraq War when almost all honest commentators recognized that it was a debacle, and those who had opposed it asked for (or demanded) an account from those who had supported it. For the most part, these were not forthcoming, which is a sore point to this day between former supporters and opponents of the war. The important thing was not an apology, but an actual analysis of, if you now think you were wrong, what in your thinking was wrong.

Was there a poster on this site who was critical of Maastricht as such five or six years ago? Some, notably Henry and I think John Q., were critical of the undemocratic way it was being imposed, and others defended this, but did anyone argue that the unification itself, as specified in the Maastricht treaty, was a bad idea?

It seems to me that the bulk of the European left did support the treaty and should now answer for that. When I lived in Europe, most of the left treaty opponents I knew were dreadlocked anti-globalization types reeking of pot; the “respectable” left was all for it. I think this has a lot to do with affect – with liberal tribalism, and it has a lot to do with what Robert said in comment 2 and Peter in comment 6, the left supported this largely out of hostility to the nation-state, and perhaps in light of this debacle that should be re-evaluated. When I argued here that the transnational character of the EU would undermine the social solidarity necessary for political support of the welfare state, I was ignored or attacked. Is this not happening?

There is no “euro in general”; there is the EU as it exists. Just as proponents of the Iraq War could not hide behind “we would have favored a war better handled than it was by Bush” – advocating the war meant advocating what was on the table, not some platonic ideal form of such – proponents of the EU cannot hide behind the idea that there is some other ideal EU that they would be justified in supporting. If you supported this, you are accountable for supporting this.

The judge analogy would only have a possibility of working if I were to argue, solely on the basis of the problems of the EU, that all supranational institutions were illegitimate.

«[…] the left supported this largely out of hostility to the nation-state, and perhaps in light of this debacle that should be re-evaluated. When I argued here that the transnational character of the EU would undermine the social solidarity necessary for political support of the welfare state, I was ignored or attacked. Is this not happening?»

What is happening is that the nation-state, a misnomer by the way, is against the solidarity. What they would not tolerate in themselves, they want outwards. What you propose is to give to it.

The second sentence of the second paragraph above is my paraphrase of what Antoni is doing. I think that is obvious, but I wanted to state it in case anyone was obtuse or dishonest enough to characterize it as my own position.

The biggest problem in the EU right now is the ECB, which is not a national institution but a European one. It is using the crisis to undermine the welfare state in various countries, in accordance with its ideological preferences and perhaps banking industry interests.

As for the nations resisting the solidarity, the solidarity has to be constructed. If the people do not feel this solidarity, the EU does not get to select a new people. In a large nation like America, the richer regions subsidize the poorer ones. New York and California have subsidized Alabama for decades and will continue to do so for the foreseeable. This is not even a political issue, because, despite regional tensions, there is sufficient national solidarity that this is seldom even mentioned politically. Is Germany going to subsidize Greece? F-o-r-e-v-e-r? I don’t think the possibility is even seriously discussed. IF the people do not support this, there is no use stamping your foot and insisting they must. Nor is the problem primarily the hoi polloi. There is nothing hoi polloi about the ECB, and it does not translate simply to “Germany”. It is the voice of a European elite that does not feel the solidarity with the multinational EU poor, and is behaving accordingly.

Martin Bento 07.19.12 at 7:57 pm
«The biggest problem in the EU right now is the ECB, which is not a national institution but a European one.»

Whose main defect is that it was shaped to the preference of one member.

«It is the voice of a European elite that does not feel the solidarity with the multinational EU poor, and is behaving accordingly.»

That is an understatement. (Which means that, here, I agree with you)

What I mean by trust? that if I do as he says all will go well.

“proponents of the EU cannot hide behind the idea that there is some other ideal EU that they would be justified in supporting.”

Some on the radical left were all out anti-EU but admittedly, that was a minority. The problem with your characterization however is that we are long past arguing about EU or not EU. The EU is a fact of life. Analyze it, criticize it, reform it, revolutionize it – great. What is not productive as a political position is to wish it weren’t there.

that In the single nation states there would be more solidarity:
It seems to me that in most european countries there are neoliberal governments and German stance vs debtor nations is not that different from lombardy stance vs sicily inside Italy.

The centralisation involved in the creation of the EU and particularly the Euro has been sold to the left as allowing more left wing policy and to the right as allowing more right wing policy than national politics would allow. This is the trick or con. At the moment the policy mix in the euro zone is clearly right wing and hard money. So the soft pro EU left are proven by results to have been duped. Or if you like Thatcher was right to be hostile but for the wrong reasons. Namely her objection to the project of integration was the loss of power of the National state. The actual development of policy at the EU level has been entirely to favour big business and banking at any cost. Based on a erroneous theory that a single currency on its own could erase differences in productivity at the National and regional level. As a purely economic system the Euro has increased divergence between states not reduced it. I assume this is a very big mistake rather than deliberate. But no one running the EU wants to admit they got it wrong.

Random, political institutions cannot be evaluated solely on the basis of how they function when the authorities are wise and benevolent. Most any institutions will be fine then. And a big part of the problem with the EU is that the institutions are not very democratic. A lot of people foolishly acceded to this because of anti=populism – they wanted to see the wise elites prevail over popular ignorance, which requires weakening democracy.

Whether further integration can solve the problems remains to be seen. I don’t see any way it will happen, though, without very loud protest against the problems, analysis of the causes, and condemnation of those who have created them.

As for comparing what is happening between the EU and member states to tensions between those states and certain regions, I don’t think these things are comparable. We’re seeing austerity measures imposed that double existing unemployment rates, tear up existing pension contracts, compel replacement of elected officials, etc. I don’t think Italy has been doing anything on that level to Sicily recently. Furthermore, some of the neoliberality we are facing is, in fact, written into the Maastricht treaty – the deficit constraints and the inflation-only mandate of the ECB, for example. Supporting that treaty was supporting the institution of neoliberal rules.

Martin, I admit you have a point.
However I believe that there is a lot of neoliberality inside the nation states. For example those who say that the various nations should exit the euro usually think that debtor nations should devalue to boost exports and reduce imports. That would be a very mercantilistic policy and would be a tragedy in europe where big slices of each country’s gdp are based on intra european trade, trade wars could be very nasty.
For this reason I don’t think that the EU is playing a completely negative role in this crisis, a disruption of the euro could be even worse.

Random, in my book, neoliberalism and mercantilism are too different things. And, yes, breaking up the EU will be very painful, and this too was by design and openly so declared, so it is not a fact that should be counted in the EU’s favor. In fact, it’s something else that should have made people suspicious. If you start a new job, and the boss says, “You’ll love it here. By the way, you’ll have to put on this shackle”, it might be time for some chin-scratching.

Martin, I disagree with this. Since neoliberalism asks for policies that tend to push down wages, in pratice it is a form of mercantilism: if Italy solves its problems by devaluating its currency, or through internal devaluation, it is actually dumping its acting mercantilist. I believe that since the beginning the Eu and its predecessors were crafted exactly to avoid this outcome (the problem is not that exiting the EU is painful, but that europe without the EU might be very disfunctional).
The actually existing EU limits mercantilism through devaluation but not other forms of (unconscious) mercantilism.
The point is that, to solve present problems, we would need keynesianism on a European scale, and while it seems unlikely with really existing EU, it seems even more unlikely wthout a EU.