John Pinder

European Community and nation-state: a case for a neo-federalism?

The European states did not afford their citizens security and prosperity between 1914 and 1945. Many British writers put the blame on national sovereignty. Laski warned in 1933 that until we recognise that an interdependent economic world ... is incompatible with a system of political units which bears no relation to that inescapable unity, we shall have left untouched the central cause of war.1 Robbins wrote in 1939 that the anarchic political organisation of the world is the root disease of our civilisation and went on to advocate a European federation after Germany was restored to democracy.2 Such was the consensus by early 1940 that Ivor Jennings was able to start his book A federation for Western Europe by affirming that the desirability of replacing international anarchy by international government is so generally recognised in Great Britain that it needs no demonstration.3 Among the many academics, journalists and politicians who wrote at that time on that assumption, a number, including Beveridge, Brailsford, Hayek, Jennings, Robbins, Wilson and Wootton, worked together in the Federal Union Research Institute to produce proposals for a postwar European federation, centred on Britain, France and a democratic Germany, with a federal legislature, executive and court, with its own armed forces and basic economic powers, and with federal laws and taxes applying directly to the European citizen.4 This remarkable intellectual effort accompanied a major movement of public opinion, with Federal Union, the organization founded in 1939 to promote the idea, gaining 10,000 members by the spring of 1940, and with editorial support from The Times, The Guardian, The New Statesman and The Spectator.5 This may help to explain why, when Churchill presented to the Cabinet on 16 June 1940 the proposal that France and Britain shall no longer be two nations, but one Franco-British Union, with common citizenship and a common executive, he saw to his surprise the staid, solid, experienced politicians of all parties engage themselves so passionately in an

Integrating Divergent Economies: The Extranational Method

HETHER the yardstick be inflation, external balances or growth rates, the behaviour of European economies in the 1970s has been extremely divergent. In reaction, the discussion of integration has concentrated on the need for convergence. But the effect has been the opposite of the intention: integration has been prevented because attention has been diverted from the practicable to the impossible. Although hopes have been raised once more by the launching of the European Monetary System (EMS), they are only too likely to be dashed once again, unless the reasons why the earlier scheme for economic and monetary union failed are properly understood. For the EMS could be driven into the same cul-de-sac as the project for European Monetary Union (EMU) if its development is based on the same insistence on convergence as a precondition of further integration.

The Reform of International Economic Policy: Weak and Strong Countries*

A LTHOUGH we are now in the fourth year after OPEC quintupled the price of oil, the performance of the advanced industrial economies is still very bad. Unemployment is around 5 per cent or more in most OECD countries. Industry is working far below capacity. Production lost through normal growth forgone in the last three years must amount, cumulatively, to above a third of the OECDs annual gross domestic product (GDP), or a thousand billion dollars. Inflation has been reduced to rates of around 5 per cent in only two or three countries, and in several countries remains much higher. There is no reliable prospect that unemployment will be reduced; and there are grounds to fear that attempts to reduce it will send inflation spiralling upwards again. Within this sombre perspective, international attention tends to focus upon the troubles of certain weak countries: Britain, Italy and, to a lesser extent, France. These countries certainly have great problems, which it is one purpose of this article to consider. But awareness of their particular ills should not divert attention from the defects of economic management, both national and international, which are general among Western countries today. These defects allowed the international instability which caused the British and Italian difficulties to get out of hand; a sound and expanding international economy would be of the greatest help in resolving their difficulties; and, even if these countries solved their special problems by their own efforts alone, the general malaise of the Western economy would remain. It is necessary, therefore, to consider this malaise, and the consequent need for a reform of economic management, in relation not only to the weaker countries but also to the strong countries and to the international economy as a whole. The weak countries include some very diverse economies with two things in common: high inflation and balance-of-payments deficits. The term weak is somewhat misleading, as it gives the

Reflections on the economies of the West

Andrew Shonfields great book, Modern capitalism, which showed how public power is used in the market system, still stands as the best explanation of the success of Western economic management in the 1950s and 1960s. But it did not foresee the economic failures and the backlash against big government of the 1970s and 1980s. So he set out to write a new book, to which he gave the working title Modern capitalism two, in order to explain the reasons for these developments and to suggest what should be done about them. He died leaving three completed chapters and a rich vein of drafts, articles, notes and an outline for the rest of the book. The first three chapters, published in 1982 as The use of public power, told the story of Western stagflation in the 1970s. Shonfield rebutted modish political monetarism (p. 91) which ignored the success of the 1960s (pp. 1 lff); but he accepted that a critique of earlier thinking was needed, which did not lead simply to new traditionalism (p. 67). The rest of the material, which continues the critique and goes on to indicate solutions to which it could lead, has been edited by Zuzanna Shonfield and is now published as In defence of the mixed