4 - From the Beginning

Summary

This chapter returns to the original discussions about market integration in Europe, to show that policymakers in the 1950s faced the same trade-off that we face today (local democratic accountability vs overall efficiency), but prioritized differently. There are several possible explanations for why Europe eventually choose a different path than the one laid out in this chapter. One explanation lies in a radically different international context in the immediate postwar period. Another explanation has to do with the declining influence of labour in Europe. The pages that follow provide a glimpse into both explanations.

Whatever the reason, it is clear that Europe, anno 2021, is a very different beast than the one imagined in the Treaty of Rome (ToR). In 1957, the common market was still being directed by a ‘Community’ (not a Market, or a Union), and the reason for creating a common market for labour (as well as for services and capital), was to ‘promote throughout the Community a harmonious development of economic activities, a continuous and balanced expansion, an increase in stability, an accelerated raising of the standard of living and closer relations between the States belonging to it’ (ToR, 1957: Art. 2, emphasis added).

This chapter looks back on Europe's initial motivation to build a common market, in order to show how far Europe has strayed from its original ambitions. I begin by reminding the reader of the general post-war context and the plethora of new international agreements promising to build a better Europe. Although it is easy to forget today, Western policymakers in the 1950s were afraid of repeating the failures of the interwar period, which produced massive unemployment, deflation and political radicalization. Entrenched in a Cold War with their state socialist adversaries, policymakers in capitalist democratic states were committed to maintaining full employment.

I then turn to focus on the debates around creating a common market in Europe, by examining three influential reports from the time: a 1953 book by James Meade; a 1956 report from the International Labour Organization (ILO); and the White Paper-like report used to inform the 1957 Treaty of Rome. Each of these very different reports demonstrated an awareness of, and a concern about, the challenge of integrating national markets with varying wage and social protection levels.