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The Failure of Economism in Western and Eastern Integration Policy

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The Failure of Economism in Western and Eastern Integration Policy A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Schüller, Alfred Article — Digitized Version The failure of economism in western and eastern integration policy Intereconomics Suggested Citation: Schüller, Alfred (1978) : The failure of economism in western and eastern integration policy, Intereconomics, ISSN 0020-5346, Verlag Weltarchiv, Hamburg, Vol. 13, Iss. 9/10, pp. 227-235, http://dx.doi.org/10.1007/BF02929246 This Version is available at: http://hdl.handle.net/10419/139563 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu INTEGRATION The Failure of Economism in Western and Eastern Integration Policy by Alfred Schiller, Marburg * The proposition that economic integration can help to smooth the way to political integration has been described by Wilhelm R6pke on many occasions as a dangerous manifestation of economism 1. The experience of the EC and the CMEA tends to bear out this opinion. he term "economic integration policy" is in partner countries that this form of integration can T this article understood to denote the measures only function if there exists at least a federal-state aimed at removing obstacles to economic inter- constitution. A possible criterion for a further course between the states of a certain economic differentiation between institutional forms is area with the intention of improving the division whether the communitization relates to all or only of labour and of directing thereby the productive a few economic areas. In the former case F.W. forces into optimum channels according to scar- Meyer speaks of horizontal integration, in the city considerations. The theory of integration dis- latter of vertical integration 3. But whatever form tinguishes the following forms according to the the integration is to take, its minimum requisite degree of economic entanglement2: is an efficacious payments union able to ensure long-term equilibrium of international payments 4. Functional Integration of the First Degree com- prises free trade zones and customs unions and Economistic Integration Policy is concerned essentially with the removal of tariff and non-tariff barriers to trade. Under free trade Economistic is the term used here to describe conditions the exchanges of goods are charac- measures of integration policy which are confined terized by a relative output maximum which to "purely" economic sets of facts and part- Giersch has called the "trade optimum". solutions and are not consistent with the overall Functional Integration of the Second Degree is political or economic order desired or indicated the term applied to the Common Market. The ex- on conceptual grounds. To justify apposite modes tent of the international division of labour is not of procedure, which are often labelled "prag- determined by the absence of trade obstacles of matic", the following arguments are advanced: the mentioned kind alone but by the elimination [] Uniform progress to political and economic of institutional constraints on factor migration. All integration is according to order-political theory goods, services, personal and capital movements desirable but for the time being unattainable. are free. Here and today we should undertake what is Institutional Integration of the First Degree is the practicable. Economic part-solutions are best term for an incomplete economic union. It in- suited to this aim. Inherent in this argument is a volves extensive harmonization of the national danger that it leads to the adoption of the line of economic policies. Institutional Integration of the least political resistance. Second Degree, finally, denotes full economic 3 F. W. M e y e r, Die europ~ische Agrargemeinschaft und ihre and monetary union: uniformity of economic Auswirkungen auf die gegenw~rtige und zukSnftige Handelspoli- tik und das Transferproblem (The European agrarian community policy is achieved by supranational authorities and its effects on the present and future trade policy and the transfer problem), in: Gutachten zu Fragen einer europw with such far-reaching political powers over the Agrargemeinschaft, Bonn (Ausw~rtiges Amt) 1953, pp. 225-253. More recently: H. W i I I g e r o d t, Sectoral Integration: Agricul- * Philipps-Universit~t Marburg. ture, Transport, Energy and selected industries, In: F. M a c h- 1 For the last time in 1966 in his essay on "Nation und Weltwirt- l u p (ed.), Economic Integration' Worldwide, Regional, Sectoral, schaft" (Nation and the world economy), in: ORDO, Vol. XVII, London-Basingstoke 1976, pp, 117-128. 1966. 4 Cf. W R ~ p k e, Gemeinsamer Markt und Freihande~szone 2 Cf. B. B a I a s s a, The Theory of Economic Integration, Lon- 28 Thesen als Richtpunkte (Common market and free trade zone. don 1962. 28 theses as guideposts), in: ORDO, Vol. X, 1958, p. 41. INTERECONOMICS, No. 9110, 1978 227 INTEGRATION [] Inferior economic part-solutions - such for tional transition to a central monetary authority instance as are incompatible with the desired in the EC are according to the Commission's order in the community - inevitably involve inte- report to be created by a five-year programme. gration sacrifices but would nevertheless be war- ranted because these are outweighed by the Article 39 of the Treaty of Rome of March 25, 1957 great overall gains for the integration policy which showed already that agriculture was intended to can be expected to ensue eventually. act as a pioneer for the integration policy of the EC. This article contains more economic-policy [] It is because of the existing differences in targets for agriculture than for other economic economic structure and level of development sectors. Although the EC countries had no uni- between the member countries that for the time form concept for the Community's overall political being no real progress towards integration is and economic order, Article 40 put the EC coun- possible. Only with progressive alignment of eco- tries under an obligation to carry through a com- nomic development levels will the order problems mon agricultural policy. The requisite compe- which are now standing in the way of a more tences were to be transferred to Community extensive division of labour such as would benefit organs (the Council of Ministers, the Commission all parties disappear, and this, as it were, by and the Assembly). Of the possible solutions the themselves. Order-politically viable and efficient EC countries chose the creation of European integration solutions are thus seen to depend market orders, in some ways the most far-reach- ultimately on development-economic factors. ing form of integration. Over 95% of all agri- A few examples will be given to show that eco- cultural products are by now covered by market nomistic integration attempts are not confined to orders. A system of common minimum prices, one system. As such attempts are however inevi- safeguarded by manifold internal and external tably devoid of a foundation in order theory, this defence and support measures, is the cardinal kind of integration policy cannot lead far no feature common to all of them. Incomes conform- matter whether it is applied to any specific system ing to the parity principle, i.e. in line with the or not. incomes levels of "comparable" occupational groups, are thereby to be guaranteed to farmers. The Example of the EC The common prices are fixed mainly by the rules applying to cartel prices: the weakest partner and The EC is guided by the exemplar of far-reaching the marginal operation provide in principle the institutional integration. Conditions resembling yardstick for price decisions. those of a domestic market are to be created by advancing beyond a customs union. For some According to the economistic point of view this members, foremost amongst them probably the price policy purports to promote integration Federal Republic of Germany, economic inte- through alignment of the incomes levels. It is gration is also a motive force driving Europe to however due to this policy that agricultural pro- political union - albeit at the price of economic duction and productivity reserves are again and drawbacks. The typical example is agriculture again being underestimated and that investment which is enacting one variant of isolated vertical stimuli are created in contradiction to the reality integration. The European monetary union pro- of agricultural surpluses as if specific shortfalls vides another example of the economistic inte- had to be
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