The Political Economy of the European Union (5770M062)
Class notes
Lectures 'The Political Economy of the EU' - extensive summary!
39 views 4 purchases
Course
The Political Economy of the European Union (5770M062)
Institution
Universiteit Leiden (UL)
Lectures 'Institutions of the European Union'
Mandatory course of the minor European Union Studies, Leiden University
Semester 2
5 EC
Catalog number: 5770M063
Lectures by Dr. Vera Scepanovic
The Political Economy of the European Union (5770M062)
All documents for this subject (1)
Seller
Follow
joellethewessen
Content preview
The Political Economy of the European Union
Mandatory course of the minor European Union Studies, Leiden University
Semester 2
5 EC
Catalog number: 5770M063
Lectures by Dr. Vera Scepanovic
Lecture 1
The political economy of the EU introduction
Dr. Vera Scepanovic
Today:
- What is ‘political economy’?
- What is the EU?
- Case study - the Banana Wars
- This course
- Stages of International Economic Integration (IEI)
- The ECSC
- The EC and the Common Market
- The Treaty of Maastricht and the Common Market
- Between Maastricht and Lisbon
- The Lisbon Treaty
Block 1: What is ‘political economy’?
'Classical political economy'
- Typically, the field is associated with the following men:
› Karl Marx: journalist
› John Stuart Mill: upright citizen, worked for the EIC, part of the Parliament
› Jean Jacques Rousseau: philosopher, poet
› Adam Smith: academic
- They set the foundations for this field of research in the 19th century
- All very different men, and had different responses to the societal & economic effects of
the industrial revolution, but they were all concerned more or less with the same
questions:
› What makes something valuable?
› Does the state have any responsibility / duty / right to intervene in the economic
activity of its citizens?
› How can we in a society in which resources are vastly differently distributed
peacefully coexist? What institutions do we need for this?
What does 'economy' mean?
- Comes from the Greek word for house 'econ' and management -> the management of the
household
- Management of the houshold of the polity -> how can we manage a state at the state-
level?
Classical political economy (19th century) -> economics (20th century) -> neoclassical
economics (late 20th century - 21st century)
- Economics is many things. What we normally think about when we mention it, is a
distillation of late 20th century economic thought -> neoclassical economics
, - Neoclassical economics = paradigm (late 70s - now), a pattern of thinking; a set of
assumptions that you internalise so that you look at the world in a certain way, so you
have certain expectations & ideas of what makes for a good research question
- The neoclassial paradigm:
› Grounded in micro-economics: concerned with the decisions of firms and
individuals
› There should not be lots of differences between macro- (state-level) and
micro-economics; same assumptions
› A highly refined set of shared assumptions:
› Utility maximization: everyone wants more of things that make them
happy
› Rational choice
› Perfect information
So, all in all, decisions are made by independent individuals who
have the capacity to make a decision & have sufficiently enough
information to decide rationally over what they are doing
› Methodological individualism: look at the behaviour of firms and individuals and
expect that large bodies act in the same way, not very interested in the behaviour
of groups
› It is the individual level that drives the economy
› Social-science based (predictive): we produce theories that are valid at the
widest possible level -> predictive theories, general principle
› In order to get to predictive theories, we need lots of data -> statistics
› Econometric modelling
What is ‘political economy’?
- The evolution of the political economy as it is now: classical political economy (19th
century) -> economics (20th century) -> neoclassical economics (late 20th century -
21st century)
- But there were other paradigms: classical political economy -> economics -> ...
› (Keynesian) Macro-economics
At the macro level, things work differently
› Development economics
› Institutional economics
› Behavioural economics
› Economic anthropology
› Economic sociology
› Comparative politics (CPE)
› International relations (IPE)
- Economics vs. political economy
Economics Political economy
Ontologically positivist Predominantly positivist, but open to
- Believes that the world is external interpretivist/constructivist approaches
and that there is a single objective - Also understands that the way we
reality to any research phenomenon understand the world shapes the
or situation regardless of the world
researcher's perspective or belief (so
not postmodernist)
- So, believes that there are facts that
can be proven, that reality is the
same for each person if (s)he looks at
reality objectively
, - Observation in 'reality' =
measurement in 'reality'
Empiricist, focused on generalization and Empiricist, but highly sensitive to context
abstraction, universalist in its assumptions (emphasis on bounded rationality)
Methodologically unified (quantative, data- Methodologically omnivorous: quantative and
driven), methodological individualism qualitative, but also textual interpretation,
hermeneutics (the theory and practice of
interpretation), discourse analysis, emphasis
on collective actors
Disciplinary cohesion Multi-disciplinary
The Eurozone Crisis
- From 2009 onwards
- Contagion-effect: poor performance of some Eurozone states suddenly started to
unbalance the others
› Most Eurozone countries are severely endebted, but for most this is a non-issue:
these are big, wealthy economies, they can bankroll their debtors
› Debtors like to put their money in these economies, because where else
can they safely store their money?
› But then, in the course of the Eurozone crisis, these countries start having
difficulties with borrowing -> the interest rates at which people are willing to
lend to these countries are going up
› So not a realist problem, but more so how these debts are perceived by the
capital markets
› Constructivist approach -> this should not happen, their economies are sound,
but interest rates are going up
- How do we stop this?
› Lots of European countries come together and create the European Stability
Mechanism in 2010 -> create a fund from which they will bail out / rescue
countries with too much debt
› Consequently, interest rates go up -> people don't understand why
European countries did this, now everybody knows they cannot borrow
easily anymore
› Confidence goes down even more -> it gets even harder to borrow
- 2012: Mario Draghi, President of ECB, says 'we will do whatever it takes to rescue the
Eurozone countries, and trust me, it will be enough'
› ECB constitutionally is forbidden from buying bonds from EU states by the
Treaties
› It is not clear what Draghi could or will do, but suddenly interest rates start going
down -> this is the turning point
› More constructivist, and less positivist -> clear that money is a made-up
thing
What is 'political economy' in this course?
- ''Political economy research investigates the integration between politics and economics.
That is, how political factors influence economic outcomes such as trade or economic
growth and how economic outcomes affect politics.'' - Definition from Dür, Moser and
Spilker (2020)
- The way that law, history, the international context, national-level institutions and
political competition among organised interest groups shape the institutions of market
, governance at the EU level, and consequently the economic outcomes such as trade,
growth, and the distribution of wealth among different actors
Block 2: What is the EU?
What is the EU?
- The EU is a very diverse polity
› Diverse in levels of development, size of the economy, languages, political and
social systems, institutional and administrative traditions
- Combines supranational (federal) and intergovernmental features, and the balance
between them is not fully settled, not 100% clearly divided
› Intergovernmental in social and welfare policies
- Asymmetric integration: more integrated in some policy areas than others
- Variegated integration: the growing integration of world markets, which make it
especially inappropriate to study varieties of capitalism in isolation
- Not a positive, but a regulatory state
› A regulatory state: the expansion in the use of rulemaking, monitoring and
enforcement techniques and institutions by the state; a state pursuing an
economic policy priviledging the regulation of market exchanges over direct
intervention
› The role of the state in both the economy and society is shifting from
positive intervention to arm's-length regulation and arbitration
› When a state is regulatory, it signals a formal end of Keynesian demand
management as the dominant economic policy paradigm and highlights
the creation of new administrative tools to steer market dynamics
- Primary of integration through law
- Primacy of market integration
Block 3: Case study - The Banana Wars
The Banana Wars
- A trade conflict between the EU and the US that lasted for 20 years - neither of which
produced bananas
› The EU and US treated certain banana-producing countries differently
- EU is the biggest supporter of WTO but grossly violates its rules
- Estimated 2,3 billion USD per year additional costs to European customers
- More than 200 million USD costs to companies due to US sanctions
- Intra-EU conflict between North and South
› In order to solve this problem, the EU external trade policies had to be changed
completely -> doesn't make sense economically
- In 1990, the EEC still had 3 parallel banana trade regimes
› FR, IT, UK, GR, PT, ES (most of these countries used to have colonies in this
region) offered duty-free access to ACP states and imposed stiff tariffs on
everyone else
› Supported a preferential system essentially for the former colonies
› BE, NL, LUX, DK, IE 20% tariff on all banana imports
› DE duty-free access for Central American /Latin American bananas (still protocol
to the Treaty of Rome!)
- In 1992 the EU was established
- In 1993 the Common Market Organisation for Bananas was established
› A separate institution for the import of bananas!
› Mix of tariffs and differential quotas for all imports
› This was immediately challenged by Central American countries, US
- In 1995 the WTO was established
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller joellethewessen. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $8.10. You're not tied to anything after your purchase.
