PATCH AND fiddle or think anew? You have to be profoundly pessimistic to think that the reconstructed European Commission will not make radical changes to the way it operates - if only because were it to fail to reform itself, the European Parliament would bite its head off again. But there is, nevertheless, a profoundly important choice its new leader, Romano Prodi, will have to face. Does he take the broad line of development of the Commission of the past, and indeed of the EU itself, as a given? Or does he take the opportunity of rethinking the Commission's whole raison d'etre?
You do not get many shots at reforming large bureaucracies; this is a once-in-a-generation opportunity. Were you designing the European Commission now, you would come up with quite a different organisation. So, start from first principles and ask: what are the comparative advantages of Europe?
Forty years ago it was clear that the various European countries provided too small a market for their large commercial companies to enjoy economies of scale. Initially in coal and steel and then more generally in other traded goods, Europe needed a common market. Most of the subsequent triumph of European development has been the result of exploiting such economies of scale. The better European companies have been able to expand across the continent, while the worse have gone to the wall. What was needed was a Commission that could push forward the efficiencies that would result from this larger trading zone, remove barriers, promote fairer competition and so on. It also had to administer an agricultural policy, but that, from an economic point of view as opposed to a financial one, was the lesser task. I think that the Commission deserves considerable credit for the way it has pursued that goal. The European economy is vastly more efficient as a result of its work, and you could certainly argue that the single currency will extract further gains from economies of scale, as prices and costs become more directly comparable across Europe and greater efficiency follows. But that is the position as of now. The nature of the world economy has moved on, and while there may well be further gains in efficiency to be made, the growth points of the world economy are no longer in manufactured goods but rather in services. What are Europe's strengths and weaknesses in this new world? The most remarkable thing about Europe's economy is its diversity. Different regions are good at quite different things. There is a common theme in luxury goods: the world's best luxury products, from Paris and Milan fashions to German cars to Scotch whisky, are made in Europe. But that apart, the variety is more notable than the similarities. While Europe as a whole has a strong record in the medium and upper- medium technologies, it is not so strong at the very top end of the scale. Nor is it strong in the new computer-related technologies - with the exception of Scandinavia, which dominates global mobile communications, and the partial exception of the UK which does well in some software, as well as in pharmaceuticals. From a European perspective one of the disturbing lessons of the 1990s is that many of the new information technologies have been developed in the US, and not in Europe. …