European Union: Power and Policy-Making

By Jeremy J. Richardson | Go to book overview

15

A European regulatory state?

Giandomenico Majone

THE STATE IN MODERN POLITICAL ECONOMY

The aim of this chapter is to show that it is analytically useful to think of the European Union (EU) as a 'regulatory state'. Such a characterisation is not meant to be either a legal definition or an anticipation of future political developments towards statehood. As Friedrich Nietzsche once said, nothing that has a history can be defined, and conceptions of the state have changed repeatedly in the course of European history. Rather than proposing a new definition of the EU or discussing whether this sui generis system meets some minimal requirements of statehood, therefore, this chapter analyses the Union in terms familiar to students of the role of the state in advanced market economies.

Now, modern politico-economic theories of the state distinguish three main forms of public intervention: redistribution, macro-economic stabilisation, and regulation. The redistribution function includes all transfers of resources from one social group to another, as well as the provision of 'merit goods', that is, goods such as elementary education or publicly financed medical care, that the government compels individuals to consume. The stabilisation function is concerned with the preservation of satisfactory levels of economic growth, employment, and price stability. It includes fiscal and monetary policy, labour market policy, and industrial policy. Finally, the regulatory function attempts to correct various forms of 'market failure': monopoly power, negative externalities, failures of information, or insufficient provision of public goods such as law and order or environmental protection.

Naturally, all modern states engage in redistribution, in macro-economic stabilisation, and in regulation. However, the relative importance of these functions varies from country to country and, for the same country, in different historical periods. Thus, until recently most European countries attached greater political significance to redistribution and to economic stabilisation and development than to the correction of market failures through economic and social regulation. These priorities are reflected in labels like 'welfare state', which emphasises the redistributive function of the state, and 'Keynesian state', which emphasises the stabilisation function.

On the other hand, American scholars often refer to the federal government as a 'regulatory state' (see, for example, Seidman and Gilmour 1986; Sunstein 1990; Rose-Ackerman 1992). This terminology-a neologism in Europe-indicates that in the United States the regulatory function has been historically more important than the other two functions. In fact, prior to F.D. Roosevelt's New Deal and to the fiscal revolution that took

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