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Abstract

A crisis that is currently stiffing the Euro Zone does equally suspend and shadows the debate on the European integration, that actually remains a different issue and, why not, still useful. This integration needs some more corrections: the old model revising, updating or readapting to a new reality and answers to questions sticking around this crisis. Reassessing specific concepts just starts here.
The economic integration:
concept and end of process
Liviu C. Andrei
National School of Political Studies
and Public Administration (NSPSPA), Bucharest
Abstract. A crisis that is currently stiffing the Euro Zone does
equally suspend and shadows the debate on the European integration, that
actually remains a different issue and, why not, still useful. This integration
needs some more corrections: the old model revising, updating or
readapting to a new reality and answers to questions sticking around this
crisis. Reassessing specific concepts just starts here.
Keywords: integration; European & non-European type integra-
tion(s); incipient & advanced integration(s); customs union; economic
convergence; monetary union; fiscal union; optimum currency area.
JEL Codes: E00; E52.
REL Code: 20B.
Theoretical and Applied Economics
Volume XIX (2012), No. 10(575), pp. 55-70
Liviu C. Andrei
56
Economy and economics are parallel activities, sometimes associating
with each other in dynamic, sometimes on the contrary. The economic thinking
is likely to form its own schollar staff concomitantly with its own assertion of
ideas. The economic integration, in such a context, stays a big project in way,
but it still is much too early to talk about its (positive or negative) ending. Away
from real effects produced and induced, this integration did for certain do one
thing: a specific economics and economic thinking area.
1. Basics of integration – Bela Balassa and Jacob Viner
There is a rather interesting schollar names’ association to talk about.
Firstly, Bela Balassa (1928-1991) was a Hungarian professor of economics that
also aquired values of his country’s anty-communist revolution of 1956. Then,
repression pushed him to leave his country first for Austria. And then, his
scientific merits demonstrated in his economic graduation area
(1)
. It is in this
context that he produced in 1961 his own model about the European
integration, that was rather following its evolution eversince – a five steps
process: (i) free exchange area, (ii) customs union, (iii) common market, (iv)
economic union, (v) economic and monetary union
(2)
.
This was estonishingly looking like a programatic document for the
European Community and later Union and the European Commission should be
really proud of this, if it had been its issuer. Actually, the Commission usually
abstains from long term programmes issuing, theories and ideologies
(3)
.
The Balassa’s teoretical contribution to the integration topic development
was decissive. First of all, it is correct placing the free exchange area and
customs union at the integration’s foundation and starting point, plus in their
direct succession. Though, these two concepts were not quite „created” by the
author, plus concepts arisen in the following model stages are – contrary to the
earlier model stages’ description – rather arguable. Just taking into account
those advanced stages as expected to come in place significantly later from the
paper’s time (in early sixties)
(4)
. But Balassa succeeds something else about
concepts of common (unique) market, economic and economic-monetary union:
to become the parent of these titles eversince vehiculated by all, from the EU’s
official documents to independent schollars, in their papers and debates.
Secondly, I believe in another merit of Balassa, the one of detail matter
and of a genius intuition that recalls the way that more than one hundred years
earlier David Ricardo had foreseen the huge activity size of international trade
as starting from the second part of the 19th century. Or, Balassa was doing
something similar in 1961, be it indirectly – through the monetary union stage
brought in the integration model – he foresaw the draw-back and decline of the
The economic integration: concept and end of process
57
world-wide money order that was very well in place at the time of his
elaboration. This is about, of course, the Bretton Woods international
Agreement and international monetary system (IMS/1944-1971) – that was the
successor of all, the last World War, economic crisis and international monetary
system of the gold standard (Andrei, 2011). Once more, the presumtive
monetary union of this European States’ formation could not be expected at that
time, but as the retort of an equally presumtive doubtful evolving of the
international money order. And that whereas the last was no longer at its timid
start (1944), not yet in its later (1971) decline either. Just note for the effects
area that the European Commission took its first range of monetary measures in
1971, exactly ten years from the Balassa’s elaboration. Back in 1961, the
Bretton Woods IMS really was on its upward evolving, be it for its short period,
as seen from today.
The other schollar name associated with the basics of the European
integration was coming from the other side of the Atlantic
(5)
. This is Jacob
Viner (1892-1970), a Canadian citizen of Romanian origin that attended a
fruitful university professor of international trade career at Princeton
University. Unlike Balassa, Viner focuses on the incipient part of the
integration process and stays in the universal economic thinking with his theory
of the customs union (Viner, 1950). The schollar reveals that the international
economy – and especially a States’ formation platform initiative and procedure
of this type – is succeptible of producing (among other things) the opposite
effects of trade creation and trade perversion. So, despite his limiting analysis
to the incipient integration of his time, the schollar here found, especially in
trade perversion type phenomena, another larger area of phenomena that belong
to the contradictory characteristic of all integration phases and developments all
over. See in later years (since 1999-2002) the example of contredictions
between the Euro Area and the rest of EU Member States, or the one of the EU
extension toward its eastern geographic side (2004 and 2007), versus the “No!”
vote against the project of European Constitution on the western (old) side of
the Union. See equally the essence contrediction between reinforcement of the
Union through its enlargement and its opposite weakening by diluting the
overall integration degree. See also the multiple contredictions broght in by the
Common Agricultural Policy (Programme) and so on.
Viner, at his time, was just finding the example of the injust advantage of
the inside the Union firms producing and exporting to inside the Union
consumers, over all other producers, consumers, State governments and other
categories of interests competing in the same area. But my point is that
miningless irony and speculations, as presumable on the Viner’s demonstration
so should be rejected
(6)
in favour of a true tragic condition of this process – the
Liviu C. Andrei
58
initiator States always feel committed to express attachement to market,
competition and all liberal values whereas integration itself comes to undermine
them in facts, by its proper functioning.
As summarising from above, there were two schollar names that founded
the theory of European integration in the immediate post-World War Two years
(fifties and early sixties), as „classics” of this topic. A substantial specific
bibliography was gathered eversince, so that we currently live as the generation
that feels forced to do two things, in alternative: revise or reject such a theory.
2. Criticism of the Balassa Model
Recall from above the very „genius” of Balassa, claimed for the last
integration stage identified in his model on the (economic and) monetary union.
Ironically, the arguable part of the author’s elaboration arises from the same
part of the paper.
(1) First of all, now, in 2012, the economic and monetary union is done,
as the common currency does its job for one decade time already – can anybody
assert that the integration process is also done, be it as restricted on the Euro-
Zone?! I mean not at all and some authors argue that the monetary approach
currently overpasses the real economic evolving (Dinu et al., 2004). Besides, a
fiscal approach is expected to knock at the EU’s door, as similarly to the
monetary one once in the past. Plus, it is the shame that Balassa did not
approach any of fiscal aspects of the integration, all the less as for a distinct
stage, as properly to his view.
(2) Second, the author seems to have missed here another genius ability –
let us admit that he has foreseen at least the common currency’s birth (1999-
2002), as equivalent to the monetary union stage of his model; or that such a
stage could extend to the earlier Maastricht Treaty of the Union (1992), with its
“Convergence Criteria”. But, there is an obvious mistake: the last were drawn
by the European Monetary Institute (EMI), the predecessor of the today
European Central Bank (ECB). And whereas the last relates to the common
currency period, the previous had also enough to do with the earlier EMS
(Andrei, 2009a). An EMS that came up as the retort to its precedent “Monetary
Snake” of the early seventies. Or, can this context be fully and properly
understood ? The meaning of this tissue of facts and events is that the monetary
approach is far from similar to “the last stage’ of the Balassa’s paper of 1961 –
no common currency of the two centuries’ joining as possible without its
previous EMS of the eighties, and the same EMS cannot ignore the earlier
“Monetary Snake” either. Actually, the common currency was coming up as the
very solution for a previous IMS in collapse danger (McKinnon, 1992) – as
The economic integration: concept and end of process
59
similar structure with the Bretton Woods IMS that had imploded in 1971
(Triffin, 1973).
It is true that the other report, the one between EMS and “Monetary
Snake”, was a little different story. The „Snake” was the fastest reaction tool
available to Europeans against the sick dollar floating of 1971, whereas
previously, the treaties of Rome (1957) – basing the Community-Union –
hadn’t mentioned any about money. Later on, during the “Snake”
’s working,
Europeans realised the sad paradox of their dependence on the US – at least, as
for a weakening monetary reference – at the same as previously – when the US
had been strong, as during the War and at the end of it. That was why they
started working on the next EMS, but so, on the other hand, Balassa both
reached his genius of foreseeing the forthcoming monetary union earlier than
the EC-EU and made the mistake of shrinking this to the “last stage” of the
integration process. By both aspects, the EU integrated and an independent
researcher on its evolution do obviously split up from each other. And
concomitantly, the very truth here revealing is that the “Monetary Snake”
(1971) was becoming the starting point of the monetary approach of the
European Integration.
(3) This above is the reasoning of recognising the monetary approach of
the EU as a long-term one, and so the monetary approach was working
concomitantly with other objectives and approaches of the integration, like the
common market, so trade and even some fiscal approaches – see the VAT
unifying in order to fight the injurious fiscal competition among Member States.
But the same reasonoing has two parts – the second one “attacks” the
structure itself of the Balassa’s description, the stages construction idea. Or, it
might be correct keeping a stage view on the incipient parts of the integration
like the free trade area and customs union – they might be able to fill the
beginning and come in a proper succession with one-another. But things are
different for the common (unique) market and economic-monetary union: there
cannot be similar “stages”, as long as built on various objectives, but they stay
valid concepts. Actually, the very weak point of the Balassa’s shaping view on
the European integration seems to be its “stages” idea, together with too much
separation between successive stages, as also criticized by Tsoukalis (2000).
(4) In reality, the Balassa’s five stages – or six stages, as also taking into
consideration the above presumtive fiscal approach aren’t able to cover the
European integration description, but just the liberal face of it. And a precision
here comes as necessary on the EU’s integration project, as out of ideologies
(7)
not even the “free market” here qualifies as basic ideology, but the free
economy is approached in a verry pragmatic way: no possible integration
approach out of a common market! The last also might limit to just a tool of
Liviu C. Andrei
60
fulfilling other targets and ojectives – see the ones related to welfare and social
cohesion. As in theory, integration feels free to become a very „socialist”
undertaking – and that might explain its popularity for the socialist and social-
democrat political thinkings, as in detail and against the old communism here
viewing only the “contemporary capitalism” with its “internal and self-
destructing contredictions”.
Or, this above digression is for clarifying the integration as (much) more
than building a “larger market economy for its welfare benefits”. The Balassa’s
model sees itself overpassed by facts, as correspondingly, but previously
overpassed on the objectives area. The European integration economics
identifies from its very beginning with “two economics”: (a) the one of liberal
values – free trade, common market, competition, economic union, optimum
currency area etc. – and (b) the other, non-liberal – see concepts of:
budget(ing), interventionism and policies, regional and sustained development,
social cohesion, structural funds etc. Moreover, the two ranges of concepts
specifically play for: objectives (b) and instruments (a), but even more
interesting to be revealed is that the Union’s two economic faces of the
integration commits itself to work concomitantly: meaning, the (b) objectives
group of concepts isn’t concieved to expect the (a) liberal performances to be
achieved. In our view, this might be taken as a generous mentality that worth as
much as the idea of integration.
3. A new retort picture of the European integration
Bela Balassa ought to remain the parent of the European integration
economics eversince his model elaborated in 1961. The age of this paper just
requires its criticism and revising, as developed above, and the below lines just
come to put the same ideas into a consistent and more comprehensive picture
description, the one in which enough items of the primary (Balassa’s) descript-
tion will keep their initial validity and significance. First of all, as concluded
above, it is the previous “five stages” idea that comes to be dropped out.
3.1. Just two big stages, instead of the previous five
The first two stages of the Balassa’s model – (i) free trade area and (ii)
customs union – worth to be kept as such, plus they can be atributed to a larger
stage now to be called incipient integration. The primary argument for such a
reconsideration consists in the double appropriateness of these sub-stages for
both the “zero moment” of integration and their succession between, as
underlined above. But there is one more equally significant argument to be
The economic integration: concept and end of process
61
considered: the other part of the integration will so come to be called as
advanced integration and so will regard the other set of Balassian concepts –
other than free trade area and customs union – in a larger view, as below
explained:
(1) This will make distinct the European type integration (see European
Community that once became European Union) from the other States
Formations of integration aimed throughout the world. This is finally succeding
to explain the more than one hundred States enlargement of the integration
undertakings world-wide, as opposite to a certain “impopularity” of the
European type integration of the EC/EU born once in fifties. The EU’s
development did coexist with similar State formations initiatives born in North
Africa, Middle East, other Arab zones, Central and Latin Americas (Andrei,
2009a).
There is even a two integration types’ simultaneity on the same European
continent since (beside the EU) the European Free Trade Area (EFTA) equally
exists. Currently, this States association have enough weakened, but the
Europe’s recent economic history reveals significant moments in which the EC
and EFTA were comparable sizes and so the two integration types were
preserving individual specifics as even more obviously – see the time before the
UK’s accession to the EC.
Besides, there is a kind of “asymetry” to talk about as between – not
exactly the two types, but about – the two philosophies of integration that lay
behind. Both integration types contain what was already called above the
incipient integration, but this is quite different for each: the one (EU) takes it at
incipient integration in a long term evolving concept; the other (the EFTA type)
takes the same (free trade area & customs union) as the whole integration
process without any evolving on long term programmes and time horizons.
This above explanation already expresses something about integration in
its restricted and large senses. For a full view about the large sense economic
integration, there is one more step to be accounted: here including the
integration out of States formation. This is about IMS again, here including
older monetary unions and even the so called international gold standard
(Metzler, 2006).
(2) The frontier between incipient and advanced integrations – as seen
from the EU side – is also the one between the integration moments or type in
which Member States can leave the Union whenever national interest or so
might require as such – and such facts really occured (Andrei, 2009a) –, and a
European Union situation in which such an initiative reduces to strictly
hypothetical (theoretical or impossible) – and there still is no case, despite
plenty of vicisitudes of the process evolving.
Liviu C. Andrei
62
(3) Thirdly, it is about the difference between an incipient integration
dominated by the Member States’ initiative – as political, administrative,
diplomatic and in international law terms and as an alternative internationalisation
– and, vis-a-vis an advanced integration in which it is the events that put pressure
on the States’ initiative and concomitantly the internationalising aspect wipes out
slowly but irreversibly. There might here be repeated the example of the same
monetary approach developed by the EU: the “Monetary Snake” of early seventies
was proving more or less necessary for the post-Bretton Woods international
pressing context and/or the integration evolving, whereas the folowing EMS (1979-
1999) and especially the common currency implementation (1999-2002) proven
increasingly needed (Andrei, 2010)
(8)
. Meanwhile, the advanced integration of
EC/EU was entered as in facts; the need for fiscal union seems to reiterate context
in the post-common currency implementation time (Andrei, 2009b).
To be added to these above that reshaping the integration dynamic on two
stages also wipes the primary model’s frontiers between each of stages – a
complex inter-condition of integration components of every development
moment comes instead. The true separation between the newly settled “two
stages” rather consists in:
the incipient integration basing on the customs union picture; customs
union together with its precedent free trade area are the key concepts of
this section;
the advanced integration basing on the common (unique) market
concepts; economic convergence and optimum currency area are the
key concepts of this other section (Andrei, 2009a).
3.2. The optimum currency area
There is a new precision to be made: the optimum currency area (OCA)
isn’t to be mixed up with terms like “Euro-Zone”, economic-monetary union
and “the seventies” (that all mean the same). The OCA is a Mundell-
McKinnon(Mundell, 1961, McKinnon, 1992) origin concept that translates an
open view upon the euro currency – as a nominal anchor -- outside the Euro-
Zone and even outside the EU area – as contrary in a way to the integration
trend that economically “closes” the integrated area.
3.3. The non-liberal Union
Recall from the above first paragraph end the idea of the “second
European economics”. It is paradoxical that an European Union once started
from a hundred percent political initiative currently keeps no political thinking
The economic integration: concept and end of process
63
bias, not even for the presumable “free market” ideology – recall that
communist regimes, acting contrary to this ideology, were continuously
emphasising their ideology and its “superiority” together with every programme
option on all time terms, but also recall how strongly the same States, as post-
communist States in the early nineties had acted as contrary, for the market
economy. The EU slightly, even unnoticely skipped all debates between
liberalism and its opposite, here prefering the pragmatic logic: market and
corresponding competition stay sine qua non needed to ensuring economic
efficiency, growth-development and welfare producing; though, it is the same
for differentiations of all kind resulting from market functioning: see regional,
individual and for groups on all performings. But the essential difference is
between these differentiations acting within a national territory or within a
States integrated area: the last faces as much danger of des-integration, as its
member States were initially free for their joining together.
The solution here found to the unacceptable welfare and development
inter-States and inter-regions differentiation is the one of Tsoukalis (2000) type
– see “accomplishing the customs union’s aims by the (next) common market
stage structure”. In a similar order, the liberal approach’s inconvenients are
assumed to be fought by the other non-liberal one – namely, through
interventionism, policies, here including structural and social policies, funds,
including structural funds, and approaches. Concretely, the non-liberal regional
development is aimed to correct social inconvenients of the liberal approach of
the common-unique market.
4. The current development of the European integration
And recall the last lines above for stressing the idea that even a
presumable perfect market functioning would be assumed to induce problems in
the social area. But our common market isn’t achieved either and despite the
highest degree of integration within the Euro-Zone and EU area ever atteint as
world-wide, there is still enough to do about (Yves Thibault de Silguy, 1998).
4.1. Imperfections of the unique market: a general view
We just mentioned about the Euro-Zone and EU, and the idea of a
difference in terms of integration degrees already starts clarifying. However, the
same is similarly about within the Euro-Zone alone, as properly called
“economic and monetary union” in the Balassa’s terms – member national
economies are not (yet) perfectly convergent between each-other and individual
economies still work in different phases of the business cycle. The current
Liviu C. Andrei
64
international economic crisis
(9)
, in a complete and so correct evaluation on the
European area, is certainly much more than some States’ negligent over-
indebtness – at least, this might hide a precipitate States’ intervention on
compensating hugely imbalanced private capital outflows and it will be their
causes to be searched the really relevant point. Differences in national member
States’ economic competitiveness are certainly causing part of this kind of
current phenomena – and this might become a new example for the Balassa’s
model’s error on placing the common market as the third-intermediary stage of
the integration developing.
Whereas these above suggest economic imperfections of the unique
market, there are also to be highlighted aspects of the opposite side of the so far
integration developed. See just a few of these as obvious as not looking
favourable to all parts. A first example might be the foreign direct investments
(FDI) inflows in the Central-Eastern European (CEE) countries, as former
candidate countries to joining the Union – the old member countries of the EU,
and especially the today Euro-Zone member countries had been dominant in the
Central and Eastern European (CEE) countries’ FDI portfolio for a good while.
Then, in the 2004 and 2008 waves of the EU extending to its Eastern side, the
same FDI flows sharply dropped down (Andrei, 2008). Or, the explanation of
such an event starts where FDI are likely to be considered the internalization of
the international competition imperfections and white spots – joining the unique
market and its competition curb the FDI process and flows and they are
expected to lower even on longer terms.
Another example comes as related to what is happening to the FDI
Western-Eastern flow of the EU region, as a whole: some multinationals move
their fillials within the EU region or off, for the same profound reason of the
regional market competition regaining that throughs out the previous investor’s
specific advantages in a country, region or part of the region – see the examples
of prevoiously lower wages and salaries and/or (basic) prices of raw materials
in the host countries, as compared to the FDI source countries, that vanished in
time
(10)
. And the list of examples is enough able to continue here, but more
important to be here extracted is that an imaginable “perfect competition” on
the EU (or just Euro-Zone) market would get similar to the image that David
Ricardo had on the international trade about two century time ago: producers
and exporters of the region would easy work just home and get their revenue
and good profit on a stable price area, no investing abroad – now, within the
Union region – needed and existent fillials would be eliminated – or re-directed
abroad, into the rest of the world, as alternatively, for the Union’s case.
The economic integration: concept and end of process
65
4.2. Post-economic and monetary union
Now recall our old approach of the fiscal union and its comparison to the
already done monetary approach (Andrei, 2009b). This is the advanced
integration phase, the one in which Europe already becomes a distinct space in
this world and the one in which – see the above (2) paragraph – there are events
pressing on national initiatives of the EU Member States (Andrei, 2009a). The
monetary approach took several decades to bring in the common currency and
so the last stage of the Balassa’s model. But there might be also another debate
in this picture: could this monetary union stage be only common currency
based, and not alternatively base on national currencies – as in the EMS picture,
that was also able to support a coordinated behaviour of those currencies ? So,
the conceptual entity difference between the one-common and plural money
that is the national currencies alternative is one of the most obvious things in
the today Europe, as similar as the Balassa’s model’s frontier between stages.
In other words, the frontier between EMS and common currency – nearby
the larger one between the incipient and advanced integration phases –
witnesses that only the common currency drags in the central bank type
authority for the Union, that is the EBC. The last “absorbs” the central banks of
the Euro – Zone Member States into its subordination, more or less as in the
American Federal Reserves’ way and keeps as primary political objective the
price stability inside the Zone – actualy, this is the Euro currency’s
management before all. In such an order, this is the specific banking status and
what all central banks do for their aferrent territories (national and/or federal) in
the post-war and present economy – this is the ECB for Euro and the Euro –
Zone, as well.
Or, despite already told (Andrei 2009b; 2010), it has to be reiterated that
this is the very key institution of the newly advanced phase of the integration.
The presumable full status of the economic and monetary union’s central bank
equally includes an equal part cooperation with the Union’s (...) government
as well as in all State and State federation types structures. Or, here there is the
specific of our Union and the way that events push States’ initiatives and facts
in the current period: the ECB here works together with Member States’
governments (instead of the Union’s government). All central banks face
enough difficulties in this corporatist way of “equal part” relationship with
corresponding government – in the same order, but different circumstances, it is
even harder for the ECB to deal with a number of national governments in
managing the common currency. The Member States’ governments have
neither a common agreement to represent them vis-a-vis the ECB, nor any other
formal structure that could make them a consistent and unitary whole – the truly
Liviu C. Andrei
66
rational lonely alternative of this “vicious plurality” here remains the Union’s
Government that formally is the European Commission (EC).
Or, the last exerts a kind of “residual” governing, as regarding the
common currency management, despite that the EC, as all governments in this
world, subordinates the Union’s budget activity – this is not just formal, but real
fact, as taken together with that the EU’s budget is itself a “residual” budget in
the area. Its tasks limit to funding some EU’s policies, here including the
Common Agricultural Programme (CAP) and regional-sustained development.
The ECB’s, EC’s and EU’s budget’s inter-relationships disclose that, despite
the high stage of integration currently developing on this continent, the real
political power inside this Union belongs to individual Member States, as
similarly to the pre-integration moments of the immediate post-War and even to
pre-War times. And there are not even all EU Member States fairly sharing this
political power, but super-powers come back on their old positions. See
especially the crucial moments of this international financial crisis, in which no
EU’s voice, but the ones of Germany and sometimes of France.
Thirdly, the same EC, ECB and EU’s budget context here rises a question
that comes for the first time in the world history: To whom the common
currency really belong? Alternative answers naturally being: Member States or
their Union legal entity. Whether the answer points to the previous, this is what
we actually have and our above description points to a tissue of contredictions
of, plus an expectable come-back of the national currencies, be it the way of the
former EMS – but this is just shifting two sets of contredictions, the current one
here above described and the former one related to the nominal anchor, as
perishable and so condamned as much as it already was once; this would be just
a turning the history clock back.
Alternatively, whether the answer to that question points to the Union,
this is the direction that current events press this time in. First, the EC will
strengthen and the Union will so become a federative government structure; the
EU’s budget will strengthen at the same by its restructuring from its current
residual state; but budget relates to the fiscal system, that here implies the fiscal
union, as the exact financial translation of this new order of facts starting from a
Union capable to manage its own currency
(11)
. It is certain that this new post-
monetary approach will take a new couple of decades and the political power
structure is here assumed as drastically restructuring (Andrei, 2009b), but the
unknown of this development remains in the Union’s authority’s specific
weight – the one currently feeding a good part of the already born and vivid
Euro-skepticism throughout the area.
Both alternative options are now called to answer a common question:
“Believing or not in this (kind of) integration?” The presumable answers, in my
The economic integration: concept and end of process
67
view, will come specifically close to the ones related to the current crisis: did
integration contribute to this, in its own way? Does the “Euro-Zone crisis”
prove the uncosistency or incomplete EU’s monetary approach up to 2002? Is
the presumable fighting of this crisis assumed to step on the integration’s
requirements, or, on the contrary, to stop or step-back from this process, as a
false and injurious future?
5. About the proper end of the integration process
Recall from above that the alternative non-EU and EFTA type integration
is likely to exclude any terms of development, evolution and long-term; on the
contrary, the EU integration sees its contradictory development in each Balassa
model’s stage, moment and important zone of acting. Since the wrong answer
about ending integration together with implementing the monetary union, the
same question authomatically re-rises. It is for a paper like this, basing on the
primary integration model’s criticizing, to complete by its own answer. So,
when the European integration would be assumed as fulfilled?
Unfortunately, it isn’t yet the moment of such an answer, but the one of
other two preliminary precisions. Firstly, as this EU type integration overpasses
the economic area of judgement, the same for this moment that is here searched
for. Secondly, there will be an economic, administrative and governing
structure to talk about and here recall the way that – on another plan of the same
facts – even democracy shouldn’t be called to renew or re-invent its forms. So
the governing structure, that fits both the integration’s appropriate end, as
aimed, and democracy preserved on appropriate and veryfied forms. Let us
recall that today the EU proved original in the “right way” by succeding to
implement this new type of currency, but its “originality” now prolongates to
the “wrong way” of supporting it in the default of some basic tools of the latest,
like treasury, central budget and certainly, a well to do government working this
way in context.
The conclusion on this above is just one: the States-federative structure;
no alternative end of the process, except for continuing on an endless
contradictory context and series of facts – or these facts include the current
situation in which the EU documents seem to avoid any debate and perspective
analysis about, here including the fiscal union hypothesis. The end and
accomplishment of integration is supposed to come when no any more
contradictory pressure of events. As for the past, this new States formation was
born conversely than all the other State or federation entities of the world: the
central bank – monetary authority – first, for a government – political authority –
to come later on, and this to play “equal part” with the monetary authority for
Liviu C. Andrei
68
managing the formation’s money. This formation would be expected to reach
its own identity step by step and this is institutionally complete when there will
be all: government, central bank, money, strong budget and unitary taxation
or, at least this is what we can currently see around. Of course, the unitary
taxation identifies with the fiscal union, in which’s picture taxes will be paid to
Brussels first, and then to Bucharest, Sofia and Berlin, and these latter as rather
local taxes, in a new Union’s fiscal structure – all these meaning that
reinforcing the Union means something we don’t like to call “re-centralization”.
The last – directly meaning shifting the State authority position to the
second level of power – is, more precisely, what strenghtens the contrary
pressures of Euro-skepticism, nationalism and anty-Unionism. We live in the
period in which these opposite pressures – in favour and contrary to the
integration achieved – seem rather comparable, but this might remain
meaningless for even the immediate future – here recall that once, in sixties and
early seventies the non-EU type integration seamed more successfull even in
Europe, events went in the contrary sense just when even the today EU was just
incipient integration itself at that time. The present is still able of producing
enough surprises, in its turn.
That is why, once getting certain that the current trend of the EU type
integration leads to the States-federative structure, I personally do not dare to
really bet on such a future as similarly – the mass of current and next future
devolopments is able to contain enough unexpected and unexpectedly powerful
items acting in all possible directions. See the today crisis moments in which,
on the one hand, the Union looks stepping back to national (i.e. German) power
re-assertion, on the other the recent Fiscal Treaty – that might be able to be a
right start on the long way towards the presumable fiscal union, as advanced
integration on its old continuous way – came up as sustained by even the same
German super-power in the area.
Finally, instead of a „prophecy” in the matter of European integration, let
me have two more ideas below in this paper: the one is for a certain aspect, the
other reveals another unknown. As for certainty, it is sure that a presumable
integration advance on isn’t to be taken as an “utopia” of the “old times”, and
foreseeing or expecting the federative structure in place would be no longer an
issue of personal support or ideological option either, in a zone expected to
sharp feelings at least on these both sides. Concretely, the Union is a new entity
joining a political game together with the State entities, local public
administrations and citizens and their groups. Or, this larger context would even
allow the Union to act in favour of public administrations, regions and/or
citizens in a kind of “theory of games” against the Member States’ authority
as by consequence, citizens might not necessaryly deplore the national
The economic integration: concept and end of process
69
authority’s political step back or hate the “supranational” idea when seeing their
own interests in dynamics.
As for less certainty, recall from above the unique market’s evolving.
This is certainly the liberal part of the process, that is why this looks sometimes
contredictory, other times silent advance and with no direct and visible linkages
with the here above debated institutional developments. Market gives form to
the European region’s demand-supply on long terms and, irrespective of
institutional developing, its component (segment) industries act on more or less
market competition.
Notes
(1)
See a career that followed at the Yale University, at the World Bank, as consultant, and
finally as a professor at the John Hopkins University (Wikipedia).
(2)
According to B. Balassa: Towards a Theory of Economic Integration, Kyklos International
Review for Social Sciences, 17 pages, 1961. See also Balassa (1961).
(3)
In the comminist style, as for instance.
(4)
And such an aspect comes to be deepened and detailed in the below paragraphs of this
paper.
(5)
The curious anecdotic detail is that both classics of the European integration economics
(Balassa and Viner) have fulfilled their scientific careers out of Europe, on the Northern
American continent.
(6)
See a rather journalist speculation on such “companies taking an unfair profit” from the
integration process for really concluding that it was just them initiating a whole integration,
as very “convenient” for their own “restraint interests” etc.
(7)
Here recall the old communist ideology joining specific long term programmes of such a
type.
(8)
Let us repeat that it twas about the imminent collapse of all IMS founded on the nominal
anchor that would be the national currency of a Member State (McKinnon, 1992).
(9)
That deserves at least a distinct description, like the one of this paper.
(10)
There is to be understood that the FDI condition is as complex and large that these basic
prices can be taken as just part of it (Andrei, 2008).
(11)
The way that simply relates to the correspondence between the aimed money-price stability –
the one that also includes a balanced depreciation on longer terms – to a maximum budget
deficit of 3%, as related to the annual GDP.
Liviu C. Andrei
70
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Warburg Dillon Read
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The new bankruptcy of an IMS seemed to share the same excessive exchange rates floating symptom and was at least confirming the complexity of the money and monetary issues of both earlier and modern-contemporary times, plus specific differences between. But even the contrary: the mid-eighties seemed to feed the idea that the international money didn’t necessary need once more the “old style” IMS remaking for tempering exchange rates floating and so having the monetary order back into the international area. More issues, like international currency areas and their optimality, monetary unions and finally the European story of the common regional currency shared by several national areas all come to be considered within this last ‘Part five’ and all similarly look confirming fiat money, as the ‘new’ and/or ‘true’ money. 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Foreign Direct Investments and Economic Growth in the Perspective of Joining the EU, Doctoral paper defended at the Romanian Academy of Sciences/Institute of Economic Forecasting
  • Dalina Andrei
Andrei, Dalina (2008). Foreign Direct Investments and Economic Growth in the Perspective of Joining the EU, Doctoral paper defended at the Romanian Academy of Sciences/Institute of Economic Forecasting Andrei, L.C. (2009a). Economie europeană, Editura Economică, București
Economie europeană. O prezentare sinoptică International Money in a Historical Perspective
  • M Dinu
  • C Socol
  • M Marinaş
Dinu, M., Socol, C., Marinaş, M. (2004). Economie europeană. O prezentare sinoptică, Editura Economică, București McKinnon, R. (1993). " International Money in a Historical Perspective ", Journal od Economic Literature ", (29), pp. 1-45
Money and Market in the Economy of All Times, Xlibris co The Theory of Economic Integration
  • L C Andrei
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Andrei, L.C. (2011). Money and Market in the Economy of All Times, Xlibris co. Bloomington, UK Balassa, B. (1961). The Theory of Economic Integration, London, Allew and Unwin, 1961