Politics and Finance in the European Union
Law and economics yearly review, Forthcoming
105 Pages Posted: 19 Sep 2015
Date Written: September 17, 2015
The European Union‐wide financial crisis has shown the degenerative effects of an advanced capitalism including, among others, the limits of a growth‐model that proved to be inadequate to balance out certain uneven realities.
Some basic points of the regulation concerning the European financial system seem to have become obsolete given that European Union ‘political’ institutions were not able to contest the ‘market power’. Thus, this paper analyses the relationship between ‘politics’ and ‘finance’ in the European Union context, highlighting the modalities by which the European Union exercises its deliberative powers based on a process substantially influenced by a co‐decision model.
We focus our analysis on the causes of delays and divergences among the Member States in the homogenization process and on the negative impact produced by an austerity policy on a program of common growth. In such respect, our research considers the ‘role of politics’ in the European financial system, looking at the values on which it is grounded and at the devices that politics put in place to set up the economic processes. In this perspective, we analyze the organizational model adopted within the European framework and, in particular, the dynamics that govern a proper management of the decisional powers within the EU. Our analysis starts from the recognition of certain evolutionary steps (such as EEC, EMU, EU and, more recently, ESFS and EBU) characterized by the predominance of technique over politics and then illustrates the role of the ECB (highlighting the most significant economic measures recently taken within the EU context, including Quantitative Easing and the Fiscal Compact). Then, we briefly explain the features of a construct based on the ‘single currency’ and the theory of its ‘irreversibility’. Finally, we explore the unfulfilled expectations of the euro, describing the different situations of the main Member States (Germany, France, UK and Italy) and including the case of Greece.
We argue that harmonization of the existing rules will not achieve the integration process set up by the Founding Fathers of the European Community since the socio‐cultural gap among the Member States is now accompanied by a widening of the economic gap. Therefore, the EU faces unequal positions impeding a convergence of interests toward the creation of a political union. Hence, the need to explore whether an alternative is possible, even though to date it appears unclear and not well determinable.
We conclude that politics should recover its primacy after identification of new methods of intervention appropriate to revive growth. In our view, the competent European authorities should carry out their duties without the myopic eye aimed at the protection of individualistic national needs, but with the consciousness that they must foster, in any event, the common goal of an integration aimed at the development of the EU. This appears the only way to hope that the technique effort, accompanied by the political action, could support the dream of a Europe ‘united in diversity’, avoiding that such an idea would become an utopia.
Keywords: Politics, finance, europe, eu, european union, european financial system, euroscepticism
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