Dr Martin Holmes
This collection of reviews cover fifteen different publications over a period of seven years. Some reviews are full of praise, others less so. Some of the books reviewed were Eurosceptical in tone, some were Euroenthusiast, some sought to keep the burgeoning controversy over Europe at a distance. Taken together they form a representative sample of the recent literature of European integration.
All the reviews reproduced in this collection are faithful to the original without any subsequent editorialisation or embellishment. Thanks and acknowledgements are due to Peter Aspden, Literary Editor of the Financial Times, Martin Ince, Deputy Editor of the THES, Dr Chris Rowley, Editor of the Asia-Pacific Business Review, and Keith Carson, the Editor of Eurofacts, for permission to reproduce reviews accordingly.
Times Higher Educational Supplement 1.11.91
Economic Policy After 1992
David Gowland and Stephen James (Eds)
ISBN: 1 85521 205 6
Published 16 May 1991
Britain, Germany and 1992: The Limits of Deregulation
Stephen Woolcock, Michael Hodges and Kristin Schreiber
Pinter/RIIA £22.50 and £8.95
ISBN:O 86187 171 5 H/B
0 86187 172 3 P/B
Published 17 May 1991
The academic market for books on 1992 and related topics is now so oversupplied that new books on this familiar theme require a specific Justification. By and large Economic policy after l992 succeeds In fulfilling this requirement. Editors David Gowland and Stephen James have assembled five additional contributors to a stimulating series of articles on aspects of the current EC debate covering financial policy, taxation, public purchasing, budgetary policy, industry policy and macro-economic strategy. Nonetheless the quality of the contributions varies widely.
Keith Hartley's excellent short article on public purchasing forcefully argues that the EC Commission "needs to be vigilant and active in repeatedly reminding its member states of the extra costs involved in using government contracts to support national champions". Andrew M. Jones' thoughtful consideration of tax harmonisation carefully balances the opposing viewpoints concluding that advocates of harmonisation must recognise, inter alia, that substantial costs will be imposed on member states. David Gowland's authoritative article on financial policy is model of analytical brevity although repudiating the case for leaving the ERM in ten lines is perhaps too brief to carry intellectual conviction. Stephen James, in an otherwise excellent chapter on industrial policy, is too ready to dismiss fears of a protectionist Fortress Europe. In April 1991 both GATT and the IMF castigated EC protectionism, the latter arguing that "the trade wall around the EEC has risen and will rise even further in the years ahead".
On the other hand the editors' choice of Giovanni Palmerio to provide "1992: an Italian perspective" fails dismally. His plea for regional policy plus protectionism shows no awareness of the complexity of that particular debate not least in Italy where Antonio Martino has powerfully argued the opposite case. Palmerio's article lacks any scholarly edifice containing only one reference - and that to the Cecchini report.
Equally unconvincing is the contribution by Profs Georgakopoulos and Hitiris on the EC budget. The damaging inconsistencies of the Common Agricultural Policy receive scant attention; Its £17 per week per household burden of costs on domestic consumers is disregarded.
Overall, however, this collection of articles is worthy of recommendation. The topics considered are treated in a concise and rigorous manner which will particularly appeal to undergraduate readers.
By contrast to the broad approach of Gowland and James the Chatham House Paper, Britain Germany and 1992: the limits of Deregulation is a highly specific and detailed study of international political economy. The authors, Stephen Woolcock, Michael Hodges and Kristin Schreiber have produced a very impressive analysis of the different approaches to 1992 of Britain and Germany which covers mergers, public procurement, technical standards, telecommunications and financial services. The authors write with clarity and authority and the book will have no trouble Justifying itself in the congested "1992" market. Although the study identifies some areas of policy convergence it is the difference in style and substance across a range of policies which stands out. British policy leading to 1992 is identified as being more voluntarist and market based than Germany's consensual selective interventionism. The latter is, of course, close to mainstream thinking in the EC and the authors correctly argue that "... the British voluntarist approach (whether in the form of self regulation of markets or negotiated collective bargaining at company level) will come under growing pressure from EC legislation." Specifically, for example, the contrast between British antagonism and German enthusiasm for the Social Charter could hardly be greater. While British business has applauded the Thatcher trade union reforms to dismantle the 1970s corporate state, German business has reaffirmed its social dimension which "... extends to company level and finds its statutory expression in Mitbestimmung (shared management) [to] provide employees with places on the supervisory boards of companies." The authors, while careful to maintain scholarly objectivity, show more sympathy to the German model.
My main caveat about the book is that it probably has not gone far enough in stressing the differences between the two countries particularly in economic terms. Although the Chatham House emphasis is essentially focused on political and international relations factors I felt that the authors might have found room to mention that Germany has a balance of payments surplus on visibles and a deficit on invisibles whereas for Britain it is - and always has been - the other way round. Britain and Germany have totally different patterns of trade and their trading interests at GATT have widely diverged as last December's fiasco over the CAP and the July G7 meeting revealed. Moreover Germany buys very little from Britain while one third of Britain's balance of payments deficit is with Germany. These economic factors may be more important In explaining the contrasting approaches to 1992 than the examples cited by the authors.
Times Higher Education Supplement 19.11.93
Adam Smith Goes to Moscow. A Dialogue on Radical Reform
Walter Adams and James W. Brock
Princeton University Press, 156 pp, hb £12.95
Published October 1993 (UK)
This is a gem of a book for which the authors Walter Adams, Professor of Economics at Trinity University, Texas, and James Brock, Professor of Business at Miami University, Ohio, deserve great credit. Although only 50,000 words long, the complex issues of the economic transformation to the market in Eastern Europe are ingeniously explored through a fictional dialogue between an advisor who preaches Adam Smith and a cynical politically hardened prime minister who is such remedies for his country. The flow concise, fast and intellectually robust; it is liberally sprinkled with witty aphorisms and the ubiquitous Eastern Europe joke; pertinent reflections on western economies illuminate the argument and an apparatus of scholarly footnotes adds academic rigour. Although Robert Heilbronner's introduction judged that the authors' sympathy was ultimately with the prime minister - and against a swift transformation to the market - my own view that the authors have succeeded in engineering an intellectual draw which, in a footballing metaphor, would be a 4-4 thriller.
The analytical precision of each viewpoint can be gauged by the fact that no fewer than seven areas of economic reform are covered in detail: the broad agenda, marketization, monopolies, privatisation, macro-economic stabilisation, the proper role of government, and the tension between politics, culture and history on one hand and economics an the other. So impressive and vivid is the writing that the two protagonists acquire per-venalities so that a dilemma is created between the requirements of practical politics (the prime minister) and the necessity to promote the primacy of economics over political obstructionism (the advisor!.
The dialogue is not country specific - ignore the "Moscow" in the title - which enables the discussion to range over the whole experience of Eastern Europe since 1989, drawing on examples from most of the post-communist economies. This very fact is significant in that the utter failure of communist economics enabled a radical Adam Smith approach to appear plausible in a way which is inhibited in social democratic western welfare capitalist states. Privatising health care has had more public support in Poland than Britain, for example. The advisor argues for a fully free market economy not a regulated, welfarist middle way on a Mitterrand, Harold Macmillan, or LBJ Great Society model. The Prime Minister, while no apologist for communism. believes that the transitional pain involved in the move to a free market is unacceptable unless the population is safeguarded against unemployment and social misery. A gradual move to the market, step by step, tempered by what is politically pragmatic is what the Prime Minister, albeit begrudgingly, will accept. To the advisor privatisation must occur quickly whatever method is chosen; to the Prime Minister privatisation creates problems of unfair land distribution, monopoly power, and the capacity of the ex-communist nomenklatura elite to perpetuate its own power by controlling the process.
To this reviewer, having been an advisor to Eastern European governments and having discussed economic transformation one to one with Macedonian Prime Minister Crvenkovski, the dialogue rings true to the dilemmas of reform. It would be a mistake to infer, however unintentionally, that most post-communist politicians are as sceptical of reform or most advisors as committed to the free market as the fictional dialogue would indicate. There are many advisors of the Jacques Attali/John Fleming kind who see little role for laissez-faire (though their regime at the European Bank for Reconstruction and Development has unquestionably diminished the intellectual credibility of economic interventionism). Nor should the IMF be seen as the bastion of pure monetarist rectitude. Equally many Eastern European politicians are fervent free-marketeers not least the Prime Minister of the Czech Republic Vaclav Klaus who has castigated the EEC as socialist and argued that the "'Third Way" between the market and socialism leads only to the Third World. Judged by the economic implosion of Tito's Third Way, which substantially precipitated the tragic descent into civil war, Mr. Klaus has a valid point. Moreover even those Eastern politicians who in opposition, or on the campaign trail, have taken the view of Adams and Brock's sceptical Prime Minister have found it necessary to pursue moves to the market when in power, particularly in the absence of any credible alternative. Thus the Lithuanian communists have maintained the reform process following their 1992 election victory; and the Polish Communist: and their Agrarian allies have vowed to continue marketisation after their September 1993 election triumph. Even President Iliescu of Romania, who ran for office on an unashamedly communist economic platform, has now authorised privatisation And the encouragement of foreign investment having only two years ago, scared off investment from Mercedes.
My main reservation about the book concerns the lack of discussion of trade issues - beyond a couple of pages in the chapter on the monopoly problem. The biggest problem - or perhaps the most intractable - which the Eastern European face is the continued lack of access to western markets because of protectionist barriers especially on the so-called "sensitive" products of agriculture, steel, coal and textiles. The United States is a petty offender in this regard usually because of the entrenched strength of Congressional lobbies. Macedonian Prime Minister Crvenkovski informed me with exasperation that textile quotas to the USA had been cut because of the South Carolina textile lobby. Adams and Brock should have made more of justified complaints of this kind.
But the real villain for protectionist barriers against Eastern Europe is the EEC which systematically excludes, or imposes colossal tariffs upon, the very produrts in which the Eastern Europeans have a comparative advantage and which the western European consumer is eager to buy. The Common Agricultural Policy does not merit one mention in Adam Smith Goes to Moscow but every policy maker in Eastern Europe is aware of its viciously damaging effects on exports, the acquisition of much needed foreign exchange, and the mutually beneficial growth of pan- European trade. No wonder former Polish Prime Minister Suchocka told EC trade Commissioner Leon Britton at their March meeting that "... the time for financial aid and credit from the EC has passed. Today we need, above all, greater openness in the EC market for Polish products."
The importance of the trade issue to the Eastern Europeans demonstrates that the post-communist economies have made impressive progress on the lines advocated by Adams and Brock's fictional advisor. The West asked the East to undertake the three crucial and interrelated tasks of macroeconomic stabilisation, privatisation, and decriminalisation of small scale enterprize. Virtually all countries have embarked upon this Journey, albeit at differing speeds and with differing levels of success. The fictional sceptical Prime Minister approach has rarely prevailed for long. But the East also asked the West for three areas of assistance. Both humanitarian aid and technical assistance have been forthcoming as requested, but access to Western markets has been either begrudgingly conceded after tortuous negotiations, or blatantly denied. In short, Eastern Europe has moved on from the simple dichotomy of Adams and Brock's evaluation of whether arid how to move to a market economy. It is because the decisions have been taken to move to the market that the next stage of development - export growth - has moved up the agenda. Nonetheless Adam Smith Goes to Moscow is a brilliant and fascinating read. But perhaps Adams and Brock's sequel should be David Ricardo Goes to Brussels in order to liberate European trade from the Atlantic to the Urals.
Times Higher Educational Supplement 28.1.94M
Making trade policy in the European Community
J. P. Hayes
Macmillan, 202 pp, £40
Publication December 1993
Anyone who requires a full understanding of the many forces which shape EU external trade policy need look no further than this excellent book. Written under the aegis of the authoritative Trade Policy Research Centre at Reading University by Mr. J. P. Hayes, a veteran of the Trade & Finance division of the FCO, the World Bank, and the OECD, this study analyses in depth the role of EU institutions, the input from individual countries, the extent of pressure group lobbying, and - most significantly of all - the intellectual background ranging from liberal free trade theory to tightly closed mercantilism. Although Mr. Hayes' personal experience is that of a participant and practitioner, his book is an academically rigorous contribution to political economy scholarship which shows an outstanding command of both primary and secondary source material. Not since the publication of R. C. Hine's 1985 work on EEC trade policy has a book so comprehensively assessed the myriad of factors Which made this subject so complex.
Following on from Prof. Hine's conclusion that external EEC trade policies were becoming more protectionist, Mr. Hayes elaborates upon the growth of EU policies such as anti- dumping, quantitative controls, voluntary export agreements and "orderly marketing" agreements. He notes, quite rightly, the EU's ambiguous attitude to GATT, distrusting American- inspired liberalism on the one hand but fearing retaliatory protectionism on the other. The EU appears to support GATT in principle - as Article 110 of the Treaty of Rome suggests - while objecting to specific measures which would liberalise, inter alia, European market access. Although the book does not deal with the Common Agricultural Policy - an omission the author justifies on grounds of space - the recent protracted Uruguay round would confirm the overall conclusion that protectionism is strongly rooted in EU policy. Such restrictive policies, as Mr Hayes points out, are often of dubious internal economic benefit, discriminating essentially against EU consumers. Indeed the hook's conclusions in favour of trade liberalisation where possible, and in the questioning of the benefits of trade restrictions, are similar to those advanced by Alan Oxley, Australia's GATT ambassador 1985-9, in his highly acclaimed The Challenge of Free Trade published in 1990. Like Oxley, Mr. Hayes is quite capable of referring to trade "concessions" (with conspicuous inverted commas) to argue that trade liberalisation is not a zero sum game of winners and losers but is intrinsically and mutually beneficial.
The most significant chapter concentrates upon the intellectual influences on trade policy in which Mr. Hayes evaluates the philosophical approach to trade which is often ignored by conventional textbook analyses. He stresses the lack of any liberal trade theory in Prance and how this has pushed the French to take a more hawks stance as the Uruguay round experience has so graphically illustrated. My only serious reservation is that the author somewhat neglects to provide a critique of customs union theory itself. How far do customs unions such as the EEC initially reduce internal trade barriers while in the medium to long term progressively increase them externally? Is this process likely to lead to short run trade creation but long run trade diversion? Did the EEC reach this stage in 1977 when, as Mr. Hayes argues, its protectionist contours become more visible? If the answer to these questions is affirmative, is customs union theory fatally flawed and the Fortress Europe an inevitable outcome? Judging by the depth of knowledge this book exhibits, no-one is better qualified to answer these questions than J. Hayes.
Times Higher Educational Supplement 27.05.94
Rise and fall of a Sterling idea
Thinking the Unthinkable: Think-Tanks and the Economic Counter-Revolution, 1931-83
388pp. £25 00
ISBN O 00 223672 9
This excellent book will further enhance Richard Cockett's growing reputation for original scholarship already firmly established by his highly acclaimed studies of both press promotion of 1930s appeasement and David Astor's Observer.
In Thinking the Unthinkable he traces the origin, painfully slow development, political triumph and ultimate decline of free market classical liberal think-tanks over a 50-year period. Cockett argues that an intellectual counter-revolution to collectivist and Keynesian notions paved the way for ThatcherismÑand freemarket political economy elsewhere in the worldÑby the sheer power of ideas that captured the intellectual high 'ground. By demonstrating the superiority, in both theory and practice, of economic liberalism over statist intervention, the tide of mid-20th-century intellectual fashion, which spawned Britain's post-war consensus, was vanquished after 1979.
The author has intentionally not written another history of Thatcherism; indeed his chronicle of the rehabilitation of free- market liberalism effectively ends with Mrs Thatcher's political success. This book traces the history of an idea. not the history of a political party.
Such an enterprise is fascinating enough. not least in its originality. But it is the author s scholarly methodology that makes this a brilliant book. Indeed it is a pleasure to read a work of contemporary history based on academically rigorous primary research rather than the currently fashionable tomes in which the author's computer technology has outstripped both industry and intellect. Cockett's research is painstaking and meticulous. The command of archival sources is awesome; the bibliography is extensive but not indiscriminate the information of more than 70 personal interviews is used sparingly but with telling effect: primary documentation illuminates every chapter; quotations are given in full to avoid the out of context distortions that so often disfigure contemporary monographs: the appendices are a mini-archive of historical gold nuggets: and scholarly objectivity is scrupulously observed despite the ideologically controversial subject matter. Occasional flashes of dry humour are impishly inserted to lighten the text: in a book about intellectuals Chris Patten is described, with conspicuous inverted commas, as an 'intellectual" and Milton Friedman is unusually articulate for an academic".
As may he expected the book evaluates the contributions of Hayek and FriedmanÑthe former being more influentialÑas well as analysing the process whereby the Mont Perelin Society was established in 1947 to promote classical liberalism. The intellectual isolation of the early Mont Perelin participants is vii idly portrayed, as is their overall preference for influencing the movement of ideas, particularly among influential opinion-formers rather than for activist campaigning within exicting political parties.
The specifically British developments focus on the foundation of the Institute of Economic Affairs and its gathering intellectual impact under the astute and talented leadership of Ralph Harris and Arthur Seldon. Cockett perceptively conveys the difficulties and disappointments the IEA experienced. not least during the U-turns away from market economics during the 1970-74 Heath government. Ironically Heath's wretched failure provoked an explosion of new thinking I amenable to free-market radicalism. Consequently. by the mid 1970s. under Sir Keith Joseph's aegis, the Centre for Policy Studies had broken new ground by encouraging its director Levered Shaman to think the unthinkable in preparation for government. Cockett convincingly argues that I just as the IEA changed the intellectual climate. and the CPS prepared for government., so the Adam Smith Institute produced the detailed micro-political blueprints for legislative change once the Thatcher Revolution had captured the citadels of power. Only by the mid-1980s did this self-regenerating process run out of steam. The free market critique of the Welfare State was ignored in j favour of peripheral tinkering and diverted into the. cul-de-sac of the' Poll Tax. for which, as the author I argues. few think-tanks wish to claim paternity.
The failure to reform the Welfare State meant that the Thatcherites presided over a state sector that was scarcely different, from that they inherited. Indeed I between 1979-80 and 1990-91 the after inflation real increase in public spending was 37 per cent for healyh, 35 per cent for social security and 16 per cent for education and science. An overall reduction in the burden of taxationÑlong championed by the free-market think-tanksÑwas frustrated by indirect tax rises, principally VAT, that offset income tax cuts. Moreover, they failed to foresee the fratricidal disputes over Europe that would threaten the Thatcherite free-market transformation more effectively than either of the two main opposition parties. As the author shrewdly observes, the Bruges Group was not founded until 19889. by which time the erosion of Mrs Thatcher's authority, and the corrosion of her government's purpose, were so far developed that the 1990 coup d'état was highly probable.
But the intellectual origin of Mrs Thatcher's downfall can be traced back to the incompatibility of her ideology with that predominant on the Continent. Thus Cockett persuasively argues that 'It is ironic that at the very moment when Geoffrey Howe was finally breaking free from Britain's fixed exchange rate regime in 1979, Britain's European partners were embarking on the creation of the European Exchange Rate System. thereafter a slow fuse under the Thatcher government of 1980s, eventually detonating in 1990. Nothing that the economic liberal intellectual and propagandists wrote or said in the 1950s, 1960s or 1970s prepared the Conservative government for the complexities of dealing with the European issue in the 1980s. This was their failure.
A further irony. which the author s primary research material indicates, is that the issue of floating v. exchange rates largely responsible for .Mrs Thatcher s downfall was one which the free-market liberals had long debated. Antony Fisher, whose financial benevolence established the IEA, had attacked fixed exchange rates (the then Bretton Woods system) in his 1947 book The Case for Freedom; and significantly the IEA's first publication in 1955 was George Winder's The Free Convertibility of Sterling, which also argued for a floating rate. In her famous implied rebuke to Nigel Lawson that you can't truck the markets", Mrs Thatcher was following the long- established classical liberal position of anathema to a fixed rate for the pound.
By the late 1980s, however, many 'of those who had marched with IEA over the years - such as Lawson and Samuel Brittan - had now deserted the pure free market preference for floating in favour of the continental destination inherent in European Community membership. In this way the monetarists. who had emerged triumphant over the Keynesians in the 1970s, fell out fatally among themselves in the late 1980s. Indeed the division between the domestic monetarists (Thatcher, Walters, Minford)who favoured a floating pound, versus the exchange rate monetarists (Lawson. Howe, Major) who favoured the Exchange Rate Mechanism was just as passionate as that of the old monetarist v. Keynesian battles of a decade before.
Cockett's absorbing. lively and stimulating account does not cover the details of this monetarist civil war, which falls just outside the author's time frame:. But no one is better equipped than Cockett to elucidate, this .debate should his next book carry on from where ,em>Thinking the Unthinkable left off.
The Financial Times 30.6.95
Unemployment in Europe: problems and policies
ISBN:Hb 0415 11824 7
Pb 0415 11825 5
Publication Date: June 1995
Published Price: f37.50 Hb
Valerie Symes writes with authority and clarity about the problems of structural unemployment in Europe concentrating on its urban dimension; five illuminating case studies - Montpellier, Manchester, Barcelona, Rotterdam and Frankfurt am Main - add an impressive weight of carefully researched evidence to bolster the economic theory of three introductory chapters. Dr. Symes deserves great credit for the thoroughness of her primary research and for the ease with which a multitude of technical and statistical tables are clearly presented. While it would be going too far to say that she writes with the style and fluency of a Keynes or a Robbins, it is a pleasure to read a serious work of economic complexity which does not retreat into u psycho-babble of impenetrable jargon. Dr. Symes' book will be appreciated, therefore, by the intelligent layman as well as the professional economist.
As well as examining such aspects of urban unemployment as ethnicity, gender, demography, age, educational achievement, and occupational sector change, the author scrutinises the policy options suggested over the past decade at both national and EU levels. Rightly, a whole chapter is devoted to EU policy in which social funds and regional transfer payments have become institutionally prominent following the passage of the Maastricht Treaty. Although Dr. Symes is no proselytiser for any specific EU remedy, she is broadly sympathetic to its approach based as it is on microeconomic solutions.
If the strength of this book is in its microeconomic detail so there also lies its intellectual weakness. The macroeconomic causes of high European unemployment are casually referred to but not adequately discussed. Twenty years ago most economists analysing unemployment overconcentrated on macroeconomics to the exclusion of microeconomics; Dr. Syrnes is typical of 1990s analysts in making the opposite mistake. She argues, for example, European unemployment is higher than in than in the US and Asia-Pacific even though the European growth rate between 1981 and 1991 was only marginally lower. But the appalling EU growth rate since 1991 compared to America's impressive performance and Asia- Pacific's brilliant performance explodes this view. A macroeconomic analysis explains why. During the recession of the late '80s and early '90s the Americans and Asians sensibly cut their interest ruses while the Europeans - urged on by the creation of a single currency through ERM narrow band convergence criteria - increased theirs in step with the Bundesbank. To compound this error the Europeans have maintained higher real interest rates ever since in the pursuit of exchange rate targeting of the franc fort type. In Denmark, for example, during 1992-4 inflation was around 1%, interest rates 10% and unemployment 10%. Structural factors were conspicuous by their absence; high unemployment was the direct consequence of a grotesquely overvalued exchange rate procured by maintaining a politically determined parity with the Dmark. Consequently, Britain's lower level of unemployment, compared to its continental neighbours, explained by its liberation from the ERM in September 1992 which has provided a competitive advantage to exporters.
Nor can fiscal expansion or fine-tuning, to which Dr. Symes refers, be a macroeconomic solution to an overtight monetary policy. Unless European interest rates are set to reflect domestic monetary circumstances - rather than to target exchange rates on the Maastricht model - unemployment will remain permanently high. Fiscal transfers, regional policy, and better training schemes attack the symptoms not the cause while in the process boosting budget deficits.
The microeconomic and structural solutions which this book advocates have become a new orthodox version of an old remedy. In the 1930s when real, as opposed to nominal, interest rates were too high to bring about significant reductions in unemployment, all sorts of make-work microeconomic schemes were invented by Roosevelt in the United States and by the National Government in Britain. All such schemes, along with the curse of protectionism, failed to make a real difference. In the 1990s a similar obsession with microeconomic tinkering, plus the protectionism of the CAP and "industrial strategy" advocates, are preventing the necessary re-evaluation of monetary policy. No-one denies that structural unemployment. exists in Europe as the city surveys Dr. Symes' cites clearly prove. But to ignore the cyclical nature of Europe's unemployment, or to relegate cyclical factors to footnote status, does a disservice to the truth and to the unemployed themselves.
Dr. Symes has written an excellent book on structural and urban unemployment in Europe albeit without tackling the real causes of the unemployment itself.
Asia - Pacific Business Review, Vol 2, No. 3, Spring 1996
The Economics of the Common Market: Integration in the European Union
Penguin 1995 PBK
It is not difficult to see why Dennis Swann's The Economics of the Common Market is now into its eighth edition. Since its first publication in 1970 it has become an invaluable textbook to several generations of undergraduates who have appreciated its clear and concise style supplemented by voluminous up-to- date statistical information. Indeed it is probably a compliment to say that The Economics of the Common Market has been more referred to than read; the extent of detailed economic data is highly impressive in a work of only 400 pages. No doubt a more comprehensive bibliography - and a more thorough and imaginative index - would assist students even more but these shortcomings must be the responsibility of Penguin rather than the author.
The subject areas covered include customs union theory, monetary union, the 1992 Single Market, Regional Policy, Social Policy, the Common Agricultural Policy, Fisheries Policy, and the EU Budget. Nor are political developments neglected where they directly determine economic outcomes. Swann rightly examines the political economy of global challenges facing the EU not least its relationship to central and eastern Europe and the tangled and unsatisfactory relationship with the United States. Recent developments such as the 1993 Uruguay Round of GATT and the CAP Setaside reform are outlined with commendable factual clarity.
Swann has few axes to grind; he is favourable to economic integration but he is not uncritical of several EU policies. He acknowledges - as few Euroenthusiasts are prepared to do - that the Single Market has some considerable way to go before it can be regarded as an unqualified success. But neither he an economic Eurosceptic. The discussion of the ERM and monetary union, while acknowledging the problems of 1992-3, is broadly favourable to the eventual emergence of a single currency. The social. dislocation of high unemployment and low growth is pushed well into the background and, Swann coos not accept that the implosion of the ERM implies the abandonment of monetary union as an intellectually flawed concept. The "Walters critique" of the ERM is mentioned hut not critically analysed (and is incomprehensibly deleted from the index).
Good though the book is as an undergraduate text - with an appeal to the general reader additionally - The Economics of the Common Market is dedicated to information not ideas. Its weakness lies in a failure to communicate the intellectual battle of economic philosophies which has been a constant feature of the economic integration process since the 1950's. The clash between continental mercantilism and Angle-Saxon market-oriented economics is scarcely considered let alone judged. The undergraduate reader will not he tempted to take. the study of European economics much further simply by reading Swann: as in many textbooks, factual assertion is no substitute for the kind of complicated analysis that includes broader value judgements.
Nonetheless, the eighth edition of The Economics of the Common Market is good enough for my first-year undergraduates just as the first edition was good enough for me in l970.
Times Higher Educational Supplement 25.10.96
Managing the British Economy in the 1960S: A Treasury Perspective
Sir Alex Cairncross
ISBN 0 333 65075 1
The Economy of Ireland; Policy and Performance of a small European Country
J.W. O'Hagan (ed.)
ISBN 0 312 15823 8
Integrating Southern Europe: EC Expansion and the Transnationalisation of Spain
ISBN 0 415 12441 7
European Integration and Disintegration: East and West
Robert Bideleux and Richard Taylor (eds.)
ISBN Hbk 0 415 13740 3
Pbk 0 415 13741 1
The Politics of European Integration
ISBN Hbk 0 415 11297 4
Pbk 0 415 11298 2
The Stateless Market: The European Dilemma of Integration and Civilization Paul Kapteyn
ISBN Hbk 0 415 12232 5
Pbk 0 415 12233 3
Economic Growth in Europe Since 1945
Nicholas Crafts and Gianni Toniolo (eds.)
Cambridge University Press, 600 pp
All but one of these books deal with the Europeanisation of what was once national political economy. The way in which individual countries have adapted to an increasingly integrated European economy, the role of the political institutions of the KU, and the prospects of expansion further eastwards are recurrent themes.
The one exception is Sir Alec Cairncross's superb Managing the British economy in the 1960s: a treasury perspective. This is a book for the economic policy connoisseur in which Cairncross draws extensively on his wide experience as a participant in Treasury policy formulation. His analysis, admirably self-contained in 300 words, is supplemented by excellent statistical tables, a useful calendar of main events and a dramatic Personae listing up to 80 key individuals. Cairncross's verdict on the 1960s is sober and balanced; he has - for a policy insider - surprisingly few axes to grind. He rightly argues that, by and large, the international economic climate was conducive to expanding trade and full employment, and that the period was one of rising living standards with economic growth "a good deal faster than in the 1950s and much faster than in the 1970s". The countdown to, and consequences of, the 1967 devaluation are comprehensively described, throwing fresh light, incidentally, on the 1990s' fashionable folly of decrying a competitive exchange rate in favour of ERM discipline leading ultimately to a single European currency. Indeed, partly as a consequence of devaluation, the healthy balance of payments surplus of 1970 contrasted with the considerable deficit of 1960. It is all the more remarkable, therefore, that within four years the British Economy had suffered the severe meltdown of the disastrous Heath administration. 1970-4 is outside the scope of Cairncross's book but - as far as the great debate on Britain's economic decline is concerned - he makes a powerful case for the exculpation of the 1960s governments. If Cairncross is right, the British economy, while underperforming in internationally comparative terms, was not on the road to a currency debauched stagflation when Harold Wilson lost office in June 1970.
The fortune of the British economy is never too far from the fortune of the Irish economy as The Economy of Ireland edited by J.W. O'Hagan makes clear. But since 1973 a more important dimension has been the link to the EU by which, as Jonathan Haughton argues, "Ireland has become a district of Western Europe, perhaps with little more autonomy than a typical state of the United States". But the fifteen contributors, far from bemoaning this fact, either accept it as unavoidable, or positively revel in it. Covering virtually every aspect of the Irish economy in commendable depth, each chapter bar one contains a thorough analysis which will delight the generations of students who Will plunder The Economy of Ireland as an essential text. Only Mary O'Sullivan's weak and disappointing chapter on manufacturing and global competition fails to maintain the high academic standard; I have no way of knowing whether editor O'Hagan deliberately placed O'Sullivan's contribution as the last but that is undoubtedly the best place for it. By contrast, among the most impressive contributions are Alan Matthews' assessment of agricultural competitiveness and rural development, Dermot McAleese's consideration of inflation and the balance of payments, and John O'Hagan's comprehensive coverage of unemployment. The particular strength of O'Hagan's analysis is its cross- reference to different types of unemployment in OECD countries; moreover, he wisely focuses on the nature and type of employment including the impact of technological change, the extent of skills mismatch, and the consequences of employment protection legislation. In the 1990s, he concludes, the problem is that a "large proportion of the Irish unemployed are long-term and that solutions must reach out to political and social factors which lie beyond conventional economic analysis".
While the contributors collectively make a good case for defending Ireland's "district" status within the KU, perhaps more could have been made of alternative developmental models. Has the massive EU subsidisation of the Irish economy inhibited the creation of competitiveness and entrepreneurial dynamism? Has the CAP prolonged the dependence on agriculture to the disadvantage of other sectors? Is high unemployment a price worth paying for eventual monetary union? Have investment, trade and tourism links with the United States been retarded by adherence to EU external trade protectionism? Would Ireland have prospered more if, like other small countries - Switzerland, Iceland and Norway - it had retained more of its economic sovereignty? Has Ireland liberated itself from Britain's hegemony only to become an agricultural appendage to a German economic Reich? These questions require more convincing and imaginative answers than those which O'Hagan has assembled.
Although Spain joined the EU more than a decade later than Ireland, many of the same problems of economic development have been encountered. Otto Holman's Integrating Southern Europe: EC expansion and the transnationalisation of Spain is an original and fascinating account of this process. Notwithstanding Holman's predilection for impenetrable Marxist jargon - there is even a quotation from Mao Tse Tung, whose Five essays on philosophy (1977) appears in the bibliography - the substantive issues of post-Franco economic policy are often shrewdly assessed. Holman debunks the late Socialist government's self-image as instigators of social and economic modernity, correctly observing that a "rapid deterioration of the Spanish economy started in 1991 and came openly to the fore in the post-Maastricht year". Only generous fiscal transfers from the EU net contributor states have disguised an unbalanced under-utilised economy beset by up to 20% unemployment and a near-permanent recession. The receipt of such extensive larqesse through the EU's Cohesion Fund has created a clientelistic and corrupt politics of appeasing regional nationalism with grants and subsidies which tackle the symptoms not the causes of chronic unemployment. This pitiful situation has become even more pronounced following the left's 1996 narrow election defeat whereby the new right of centre government is held hostage to regional blackmail in order to cobble together its parliamentary majority. Such political weakness is not conducive to purposeful economic policy. Holman pessimistically concludes that:
it remains to be seen whether Spain can meet the EMU convergence criteria in due course, and if so, only at high social costs. In fact, while inevitably generating greater social cleavages at home and in risking major confrontations with both trade unions and the less competitive sections of Spanish business, the Socialist government's pursuance of its European ambitions may nevertheless result in Spain ending up on the wrong side of a future two-tier Europe.
Such an analysis runs directly counter to accepted wisdom but Holman makes a well-substantiated case which may be difficult to refute.
Just as Ireland joined in the 1970s, and Spain in the 1980s, so it was expected that the post-communist countries of central and eastern Europe would join the EU in the 1990s. That prospect now appears more likely the other side of the millennium as is cogently argued in European integration and disintegration: East and West, edited by Robert Bideleux and Richard Taylor. The editors contribute no less than six of the fourteen chapters, which cover individual countries across the full breadth of Europe, as well as the more general themes of security policy, the COMECON experiment, and the EU's eastern expansion. Setting the tone the editors state their belief "that the principles, practice and study of European integration should be taken in the round, avoiding a narrow and self- centred concern with the development of the Kleineuropa (Little Europe) of the KU". Refreshingly they argue that "KU relations with Eastern Europe should be handled not as part of the external relations' of the EU but as part of the internal relations of Europe as a whole". The book's contributors live up to the editors' expectations. Several of the fourteen individual chapters are excellent, especially Bideleux's introduction and Taylor's analysis of Russia, in which the political impact and appeal of Zhirinovsky is convincingly assessed. Taylor is surely right to argue that Chechnya may not benefit Zhirinovsky - or other potential leaders who profess imperial Russian ambitions - if the political cost is borne by grieving mothers and widows. Taylor sympathetically considers Russia's eternal option of looking either East or West and concludes, with much validity, that "there are powerful cultural and historical reasons why the Russians will never look to the real' East for their paradigms: they have always regarded themselves as bulwarks of European civilisation against Asia, as hearers of Western cultural values to the East".
Other notable contributions include Bruce Haddock's critique of the crisis of legitimacy of the Italian state, Francois Duchene's unravelling of French motives for European integration, Frances Millard's penetrative perspective on Poland, and Clive Ponting's assessment of Churchill and Europe. Ponting is a lively and iconoclastic writer, who is not to the taste of the intellectually fastidious, hut his chapter is tightly argued and assiduously documented from primary sources. He argues persuasively that Churchill was, in his 1946 Zurich speech, an important instigator of European integration but that he envisaged Britain as a supporter not as a participant. In his 1951 paper to Cabinet colleagues, Churchill unequivocally stated that "I have never thought that Britain ... should become an integral part of a European federation". Pontiny concludes that to claim Churchill as the original pro- European Conservative is a serious misunderstanding of his views. Moreover, "even to claim him as a Thatcherite' on Europe would misrepresent his position. He believed in an imperial Britain as a world power. On that. basis Britain could never be part of a European Federation". While Ponting may lack the finesse of scholarship which Professor Max Beloff has recently brought to this subject, he has, nonetheless, performed a signal service in assisting the process of rescuing Churchill from those who, erroneously, claim him as a friend and ideological soulmate.
Churchill did not live to see British membership of the (then) EEC, nor the extent to which federation is now on the political agenda. Evaluating this process is the purpose of The politics of European integration: a reader edited by the Jean Monnet Fellow in European Integration at Nottingham Trent University, Michael O'Neill. I am sure that I will not be the only reviewer, or reader, of this book to be baffled by its bizarre structure and organisational content. The first six chapters, covering 144 pages, provide a theoretical construct to the subject of integration. The level of repetition, augmented by jargonistic overkill, makes for dull reading; the few substantive points raised could surely have been summarised into two introductory chapters at most. The remaining two hundred pages are devoted to 46 different documents deemed relevant to the integrationist theme. However, instead of being intelligently divided on the lines of historical background, economic integration, institutional supranationalism, and federalist theory, all 46 contributions are strung together without any sub-editing at all. The effect is a complete loss of intellectual precision and scholarly focus which leaves even the most avid of enthusiasts with a very long slog. Moreover the contributions offer no variety of viewpoint - all in principle favour integration - so that the degree of repetition is just as pronounced as for the elongated six-chapter introduction. Such a structure will certainly not be user-friendly to students who find the politics of European integration already complex enough. I would recommend to Michael O'Neill the reader from my own student days, European Community: Vision and Reality edited by James Barber and Bruce Reed (1973). Sub- divided into seven sections, and buttressed with a fine bibliography, the extracts range from Churchill's Zurich speech (which does not make the O'Neill top 46) to the inter- relationship between EC law and national sovereignty.
A more thoughtful approach to the same topic is provided by Paul Kapteyn, a lecturer in sociology at the University of Amsterdam, in The Stateless Market. Sensibly divided into three sections - history, negotiations and conclusions - Kapteyn analyses not only the familiar theoretical concepts but also their practical applicability in the two specific cases of Common Agricultural Policy fraud and the open borders policy of the Schengen Treaty. Without finding all his arguments persuasive - especially his underestimation of the forces of external trade protectionism - Kapteyn writes with authority and clarity, confronting the major issues in considerable analytical depth. Among the topics perceptively discussed are the origins of the CAP in the context of FrancoGerman relations, the political dimension of the Schengen Treaty negotiations, the incompatibility of Mrs Thatcher's free market ideology to continental political economy, the role of German post-war guilt in propelling a federalist agenda, and the consequences of the Uruguay Round of GAIT leading to the new World Trade Organisation (WTO). Kapteyn's book was originally published in 1993 so that a number of references, not least to President Mitterand's influence, have been superseded by events. Nonetheless undergraduate students should still find The Stateless Market a useful contribution to the literature.
Last, and by no means least, is Economic Growth in Europe since 1945, edited by Nicholas Crafts and Gianni Toniolo. This is an awesome textbook of profound and rigorous economic analysis which will prove invaluable to generations of economics students - and other informed readers besides. Nick Crafts has already established his reputation as one of Britain's foremost economic historians; this book will enhance his reputation further. Crafts and Toniolo provide both an excellent introductory chapter and a concluding chapter which reviews the preceding country studies of Denmark, Italy, West Germany, East Germany, Ireland, Spain, Portugal, Sweden, Holland, France, Belgium, and Britain. Additional to the formidable country analyses are Barry Eichengreen's shrewd assessment of the decline of the post-war consensus, Andrea Boltho's thoughtful dissection of exchange rate policy, and Marcus Olson's stimulation review of the "varieties of Eurosclerosis". The overall strength of Economic Growth in Europe since 1945 lies in the wise judgement of the editors to impose a thematic uniformity on the contributors so that the "golden years" of 1950-73 can be contrasted with economic growth performance thereafter. This watershed division creates an intellectual reference point for each of the countries studied which enables the reader to draw comparative points across all 18 chapters. The lists of figures and tables, plus a comprehensively helpful bibliography, renders fully intelligible the myriad of footnotes and statistical data. The editors and contributors are to be congratulated on this work as are Cambridge University Press for its production and indexing. If the EU's recent economic growth rate had been as impressive as this analysis of it, I suspect that the current tide of Euroscepticism would be but a meandering stream. While Europe's growth rate lags so decisively behind that in North America and Asia-Pacific, serious and well-founded doubts about the further integration of the continent are sure to grow.
The Truth Will Out
Britain Held Hostage: The Coming Euro-Dictatorship
Available from eurofacts
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All Eurosceptics who heard Lindsay Jenkins' speech to the 1995 Bruges Group conference, and who subsequently read her excellent paper on the "godfather" of the EU, Altiero Spinelli, have been long awaiting her book. They will not be disappointed. Britain Held Hostage is both a chronological and a thematic account of the origins and development of European integration which accurately chronicles how Britain, through the venality of the Heath generation, slowly but surely surrendered its sovereignty. Ms Jenkins writes with authority, clarity and analytical precision and is the master of the extensive primary and secondary source material with which her account is commendably illustrated.
Although inevitably she travels territory which has been covered by Bernard Cannily and John Laughland in their authoritative studies of the German origins of the ideology of "Euro-peanism," she adds to their analysis a timely consideration of the role played by the Americans from the 1940s onwards. To be sure, there were those wise Americans, such as Cordell Hull, who were suspicious of the mercantilist customs union economics favoured by the continentals since the 17th century. In the Commerce and Agriculture Departments they correctly argued that the political economy of European integration was antithetical to the American's globalistic trading policy. But the White House, guided especially by the state Department, viewed the EEC as an extension of Cold War politics whereby western interests would bolstered against communism. The Americans saw European integration, in which Britain would actively participate, as a process which Washington could control; the continentals, by contrast, saw the same process as an alternative to Washington's leadership enabling Europe, in the fullness of time, to stand up to either the American or the Soviets. In short, just like the British proponents of EEC membership, the American exaggerated - to the point of self delusion - just how far they could lead, shape, change and mould Europe. Tragically, as Ms Jenkins argues, this delusion still grips the policy élites in Washington and London to this day.