40 / 169
THE STATE OF THE EUROPEAN UNION
40
Faith in markets or political design?
The opposition between “more” and “less”
Europe, as discussed in the political arenas of
many Member States and brought under the
spotlight in the 2017 French presidential elec-
tions, hides conflict lines that are far more sig-
nificant when considering the future of the EU.
Arguing “for” or “against” European integra-
tion reveals little about concrete political pro-
grammes. Representatives of European multina-
tionals may lobby for a deepening of the EU, but
what they want is generally a Europe with mar-
ket liberalism. A right-wing party like the AfD in
Germany may embrace the same market liberal-
ism, but it would think it could only survive with-
in the borders of a state. The more marked the
political and public opposition between “pro-
Europeans” and “Eurosceptics”, the less clear
the arguments become. Critiques of the prevail-
ing mode of integration and crisis management
are often incorrectly branded anti-European and
nationalist. Support for a reform programme
and further development of the EU, on the other
hand, is prematurely interpreted as an attempt
to establish a European super-state that would
involve giving up national sovereignty.
If people do not argue on the basis of cul-
tural identity or national feeling, as has become
increasingly fashionable due to pressure from
right-wing populists, the question of distribu-
tion of functions between the EU and Member
States is a functional one. If common public
goods exist or are generated in Europe, why
shouldn’t regulation and governance be at EU
level? The principle of subsidiarity, which self-
proclaimed defenders of national interests are
so fond of citing, always works in two direc-
tions. On one hand, if it makes political sense to
handle something at the level of a Member
State level and its authorities, it is kept at that
level. A new bypass is a case for a local magis-
trate and the local authority; organising a health
system is the task of a national parliament and
a national health ministry. On the other hand,
correctly applied subsidiarity also means that all
areas that a Member State cannot regulate
alone, due to cross-border externalities or com-
mon requirements, are handled or at least coor-
dinated at supranational level. This applies for
trade policy in the internal market and control
of migration in the EU.
The big conflict regarding the future devel-
opment of the EU goes beyond a simple ques-
tion of being for or against the integration pro-
ject. The main line of demarcation for many
political conflicts actually relates to economics.
There is a theoretical disagreement between a
belief in a union of states that automatically
makes optimal use of the benefits of market in-
tegration on the one hand, and a belief in the
need for political intervention and design to cor-
rect market failures on the other.
Thus the ongoing debate about reform of
the currency union, which started amid the euro
crisis in 2011, reveals two central and diametri-
cally opposed economic paradigms, which have
prevented agreement thus far. This conflict exists
between the Member States of the Union, and
also inside many national political arenas.
Germany’s ruling coalition of Christian Democrats
and Social Democrats contains both supporters
of a stability union and of a fiscal union; the vast
majority, including many Social Democrats, sup-
port a stability union. Both concepts are ex-
plained into detail in the following two sections.
A stability union based on faith in the market
In the political debate on the restructuring of the
currency union, those who advocate a stability