exercises in populism—putting issues the masses cannot understand, and which should never be on a ballot in the first place, to referenda—democracy remains intact, indeed enhanced. Considered soberly, all is for the best in the best of all possible Europes.
In an unreflective sense, this case might seem to appeal to a common immediate experience of the Union. If asked in what ways they have personally been affected by the EU, most of its citizens—at least those who live in the Eurozone and Schengen belt—would certainly not mention its technical directives; they would probably answer that travel has been simplified by the disappearance of border controls and the need to change currencies. Beyond such conveniences, a narrow stratum of professionals and executives, and a somewhat broader flow of migrant workers and craftsmen, have benefitted from occupational mobility across borders, though this is still quite limited, with less than 2 per cent of the population of the Union living outside their countries of origin. In some ways, more significant may be the programmes that take growing numbers of students to courses in other societies of the EU. Journeys, studies, a scattering of jobs: agreeable changes all, not vital issues. It is this expanse of mild amenities that no doubt explains the passivity of voters towards rulers who ignore their expressions of opinion. For nearly as striking as repeated popular rejection of official schemes for the Union is lack of reaction to subsequent flouting of it. The elites do not persuade the masses; but, to all appearances, they have little to fear from them.
Why then is there such persistent distrust of Brussels, if so little of what it does impinges on ordinary life, and at that quite pleasantly? Subjectively, the answer is clear. There are few citizens who are not banally alienated from the way they are governed at home—virtually every poll shows how little they believe in what their rulers say, and how powerless they feel to alter what they do. Yet these are still societies in which elections are regularly held, and governments that become too disliked can be evicted. No one doubts that democracy, in this minimal sense, obtains. At European level, however, there is all too obviously not even this vestige of accountability: the grounds for alienation are cubed. If the EU really had zero impact on what voters actually care about, of course, their distrust could be dismissed as a mere abstract prejudice. But in fact the intuition behind it is accurate. Since the Treaty of Maastricht, the Union has by no means been confined to regulatory issues of scant incidence or interest to ordinary folk. It now has a Central Bank, without even the commitment of the Federal Reserve to sustain employment, let alone its duty to report to Congress, that sets interest rates for the whole Eurozone, backed by a Stability Pact that requires national governments to meet hard budgetary targets. In other words, determination of macro-economic policy at the highest level has shifted upwards from national capitals to Frankfurt and Brussels. What this means is that just those issues that voters do indeed usually feel strongest about—jobs, taxes and social services—fall squarely under the guillotines of the Bank and the Commission. The history of the past years has shown that this is no academic matter. It was pressure from Brussels to cut public spending which led the Juppé government to introduce the fiscal package that detonated the great French strike-wave of the winter of 1995, and brought him down. It was the corset of the Stability Pact that forced Portugal—a small country unable to ignore it—into slashing social benefits and plunged the country into a steep recession in 2003. The government in Lisbon did not survive either. The notion that today’s EU comprises little more than a set of innocuous technical rules, as value-neutral as traffic-lights, is an idle one.
Historically, there was from the beginning a third vision of what European integration should mean, distinct from either federalist or inter-governmentalist conceptions of the Community. Its farsighted theorist was Hayek, who already before the Second World War had envisaged a constitutional structure raised sufficiently high above the nations composing it to exclude the danger of any popular sovereignty below impinging on it. In the nation-state, electorates were perpetually subject to dirigiste and redistributive temptations, encroaching on the rights of property in the name of democracy. But once heterogeneous populations were assembled in an inter-state federation, as he called it, they would not be able to re-create the united will that was prone to such ruinous interventions. Under an impartial authority, beyond the reach of political ignorance or envy, the spontaneous order of a market economy could finally unfold without interference.
By 1950, when Monnet was devising the Schuman Plan, Hayek himself was in America, and played little part in shaping discussion of integration. Later, rejecting the idea of a single currency as statist, in favour of competing private issues, he would come to the conclusion that the Community itself remained all too dirigiste. But in Germany, there was a school of theorists that saw the possibilities of European unity in similar terms, the Ordo-Liberals of Freiburg, whose leading thinkers were Walter Eucken, Wilhelm Röpke and Alfred Müller-Armack. Lacking Hayek’s intransigent radicalism, they were close to Ludwig Erhard, the reputed architect of the post-war German miracle, and thereby had more real influence in the early days of the Common Market. But for thirty years, this was still a somewhat recessive gene in the make-up of the Community, latent but never the most salient in its development.
With the abrupt deterioration in the global economic climate in the seventies, and the general neo-liberal turn that followed in the eighties, Hayekian doctrine was rediscovered throughout the West. The leading edge of the change came in the UK and US, with the arrival of Thatcher and Reagan. Continental Europe never produced comparably radical regimes, but the ideological atmosphere shifted steadily in the same direction. The collapse of the Soviet bloc sealed the transformation of working assumptions. By the nineties, the Commission was openly committed to privatization as a principle, pressed without embarrassment on candidate countries along with other democratic niceties. Its most powerful arm had become the Competition Directorate, striking out at public sector monopolies in Western and Eastern Europe alike. In Frankfurt the Central Bank conformed perfectly with Hayek’s pre-war prescriptions. What was originally the least prominent strand in the weave of European integration had become the dominant pattern. Federalism stymied, inter-governmentalism corroded, what had emerged was neither the rudiments of a European democracy controlled by its citizens, nor the formation of a European directory guided by its powers, but a vast zone of increasingly unbound market exchange, much closer to a European ‘catallaxy’ as Hayek had conceived it.
The mutation is by no means complete. The European Parliament is still there, as a memento of federal hopes forgone. Agricultural and regional subsidies, legacies of a cameralist past, continue to absorb most of the EU budget. But of a ‘social Europe’, in the sense intended by both Monnet and Delors, there is as little left as a democratic Europe. At national level, welfare regimes that distinguish the Old World from the New persist, of course. With the exception of Ireland, the share of state expenditure in GDP remains higher in Western Europe than in the United States, and the larger part of an academic industry—the ‘varieties of capitalism literature’—is dedicated to showing how much more caring ours, above all the Nordic versions, are than theirs. The claim is valid enough; the self-satisfaction less so. For as the numbers of long-term jobless and pensioners have risen, the drift of the age has been away from earlier norms of provision, not beyond them. The very term ‘reform’ now means, virtually always, the opposite of what it denoted fifty years ago: not the creation, but a contraction, of welfare arrangements once prized by their recipients. Historically, the two chief structural advances beyond the post-war gains of social democracy—the Meidner plan for pension funds in Sweden, and the thirty-five-hour week in France—have both been rolled back. The tide is moving in the other direction.
Today’s EU, with its pinched spending (just over 1 per cent of Union GDP), minuscule bureaucracy (around 16,000 officials, excluding translators), absence of independent taxation, and lack of any means of administrative enforcement, could in many ways be regarded as a ne plus ultra of the minimal state, beyond the most drastic imaginings of classical liberalism: less even than the dream of a nightwatchman. Its structure not only rules out a transfer, of the sort once envisaged by Delors, of social functions from national to supranational level, to counter-balance the strain these have come under from high rates of unemployment and growing numbers of pensioners. Its effect is to accentuate, rather than compensate, pressure on national systems of social provision, as so many impediments to the free movement of factors of production. As a leading authority explains: ‘The neo-liberal bias of the EU, if it exists, is justified