The most significant accomplishments of European Integration are seen in economic growth and
welfare gains, the extension and reinforcement of democratic government under law and peace.
Integration can be seen as a process rather than an outcome. The change that happened in the last
fifty years is mainly the result of the contest of policy making on state and market being the two
principles of social, political and economic organisation. Four stages of integration can be
distinguished. It started in the 1950s with the founding of the European Economic Community (EEC)
followed by the regime change in the 1970s into a liberal substitute with the state unharnessed from
the economy. The 1980s were characterised by globalisation and economic liberalism as a new
market system and a series of eventually correctable setbacks concluding. Over time there has been
an asymmetrical three-level independence game: nationally, internationally and regional. The
process might rather be called negative integration, caused by and absence of demos – a sense of
(European) nationhood. Furthermore integration is a mutable process and changes substantially over
time. It can take different forms (polymorphous) and is refractory, resistant to change. So elements
that characterize integration might explain events but are never predictable. Markets are seen as a
principal actor. Neoliberal institutionalists look at how governments and organisations adapt to
market changes while classical liberals think of the independence of orders; the interpenetration and
mutual reinforcement of the economic, political and legal.
The end of the war gave rise to a so-called embedded liberalism. A state of mind, financial and
commercial policies and economic regulatory agencies. Interweaving and interpenetration of state
power and market economy, but two distinct approaches in favouring the first or the second. The
Schumann plan, which lead to the ECSC a year later was helpful to bring Germany and France more
or less together. Monnet’s plans however led to as much progress as delay in integration. With the
fall of Walter Hallstein, there came rise to states’ initiatives instead of that of persons. Monnet’s
terminology remains, Europe, however, was founded by post World War 2 liberalization that led
through opening up markets, restoring competition principle and dismantling the regime of control
to integration. Germany in early 1950s took the lead and example position in restoring trade and
competition in the region. The product of this was not only the EEC but the seen remaining countries
formed also the EFTA. The systems were very competitive and as to on which integration would built,
it would go either way. When Hallstein turned his office in Brussels in a European capital, France left
the delegation. Upon his return seven months later condition was to give all countries (six in total)
veto right. As from then, integration was no longer dependent on Brussels but rather on
development of member states.
Hayek states that ‘the competition principle, if allowed to operate, sets in motion a mutualy
reinforcing reciprocal process in which the market and self-government together reduce interstate
conflict and promote economic growth.’ Markets and institutions are co-evolutionary and co-
dependent, although the how depends on the context. So without intervention of the government, a
system could be self-sustaining. The damaged economy should be put in a newest of market-
confirming institutions. A federation, Hayek thought, would be necessary to solve the situation of
Germany after the war. It was however Wilhelm Röpke who came with a solution: a prosperity that
stands or falls with the interweaving of German industry with international trade. Unexpectedly
Ludwig Erhard rose as director of the Economic Administration and, in absence of anything better,
managed to pull through his currency reform plan. This entailed mainly open competition. Also
Habeler got ideas that included the interweaving of state and economy in order to achieve European
Integration.
,Jean Monnet, as Father of Europe, thanks his title mainly to the context of a recovering Europe and a
supreme US. He was driven by an idée fixe economic modernization and the survival of France as a
nation and Europe as a civilization in a political way would only be possible with a federal union. The
US at first was weary on its involvement in post-war Europe. A bit PR campaign shifted circumstances
and adoption of the Marshall Plan followed. Next a flow of capital into Europe was arranged with the
conference in Bretton Woods. The IMF functioned only 15 years as it was intended, Keynes did
however manage to establish the dollar (backed by gold) as the world monetary standard. Both could
only work out with the Marshall Plan creating the European Payment Union (EPU) and German’s
liberalization. Also on trade, the only part of the plan that actually did come true was the GATT as
predecessor of the WTO, but only functioning since the 1970s. Monnet knew however what people
could help him and he became a top-level advisor and policy maker of the Marshall plan. He also
held close relations with the United States. Though none of the plans was accepted, the Organisation
of European Economic Cooperation (OEEC) was founded. Later it would become a discussion forum
and benchmarker of global liberalisation as OECD (Organisation for Economic Cooperation and
Development). In 1950 Monnet’s next step was done through Schuman who invited Germany (and
others but less specific) to join in the European Coal and Steel Community with a High Authority as
main feature. It never really worked as it was intended but cannot be seen as a failure. Concerning
preventing war the power and threat of America were way more influential than the joined European
heavy industry. Also these industries in particular had already good bonds and it became less
important anyway since American coal and Arabian oil were spilling on the markets. However in the
first five post-war years coal was scarce and the target of the Occupation in Germany. Joining these
two countries on this industry meant a new European Spirit. Germany after many negotiations
rounds was willing to give up the Ruhr area and as a compromise the High Authority and not
individual countries would have the control. The sectorial approach on European Integration, as
started with the ECSC, had no progress nor did it have the wished effects on technological and
organizational change. So Monnet again came up with supranationalism, which by use of
compromise and consensus could make fast decisions. Most countries were willing to talk about
supranationality, but not about political sacrifice. In two ways the Us played a very important role in
the influence of Monnet and the rise of functionalism in Europe. On the last matter the US were the
perfect example in which 13 colonies build a state with bound nationality. Functionalism would
therefore start with the creation of institutions, starting in the ECSC, and a spill-over effect. The
influence of Monnet was enlarged by the many friends he made who helped to promote, develop
and implement his proposals. Amongst them many Americans that got influential functions after the
war.
The Pleven plan, or European Defence Community, was proposed as a Euro-army but practised as a
tool for French power and security. National parity would only be achieved after years and it was
intended though not communicated that the EDC would never function independently from the
NATO. Nothing but symbolic politics of a ‘European’ initiative. Here also an institute like the HA at
the ECSC would keep overview. In May 1952 it was accepted and it had started the discussion on a
European Political Community (EPC), that together with the ECSC and EDP already propose fusion in
a European Federation. That the EDC remained so long was first caused by high dependence on
American aids, Washington pressed high on remaining the EDC. It was only after the retreat in
Vietnam that the French, most dependent on the finances and therefore most pressuring, dared to
let the EDC die. Monnet was forced to step down June 1955 as president of the ECSC and UK, US and
, France set in motion the NATO alternative to German rearmament – the occupation of West
Germany ended. This also proposed the EDC was unnecessary, but the hit on the integration process
was small and had only short-term effect. The ECSC was not able to really ‘hurt’, use the power
given, but created the new idea of supranationalism. It transferred power, got the authority to act on
behalf of Western Europe and were used as starting negotiations on the later EEC. Monnet’s
persuasiveness rather than effectiveness of plans contributed significantly so did his connections like
the by him hand-picked first president of the European Committee, Walter Hallstein.
So integration –or the idea of ‘Europe- got stuck after ending the EDC. In the next few years, from
Messina to Rome and the future EEC, a re-launch was initiated. Economic growth defines the 1950s
due to currency regulations on inflation and agreements on trade barriers and tariffs. It was only
France and Great-Britain in the way of a customs area. The latter had earlier refused to join the ECSC
and now denied participation in the ‘Messina’ but came up with an own Free Trade Area. It would be
bigger and more competitive but lacked UK leadership and US encouragement. The European Free
Trade Association (EFTA) was formed and joined by all, but agriculture was left out of it now. This
was needed by France to avert repudiation. This was also the point where Monnet brought in the
plans for EURATOM, although it had no chance at all to actually contribute to integration. France
would never share its nuclear achievements in name of Europe and for Germany it seemed talking to
the US as a partner was way more beneficial. France won hugely by the treaty of Rome, mainly by
including escape clauses, and it could again play a leading role in the integration process. The EFTA
in the meantime (consisting of Britain, Austria, Denmark, Norway, Portugal, Sweden and Switzerland)
was the non-supranational organization with no intern tariffs but no rules on external tariffs. But
since West Germany did not join, it remained the weaker of the two though a good alternative
model. It was in the 1950s that world trade increased threefold, the European economy
internationalized and the German Europeanised.
The Pax Americanan, as was the idea to help Europe to recovery and prosperity, became more like a
Pax Universalia with authority and responsibility shared. A significant step on integration was taken
by the GATT in Geneva, although the outcome was a series of bilateral agreements. The combination
of tariff reduction and elimination of quotas stimulated trade growth hugely. The OEEC then fathered
the European Payments union, a line between the Marshall plan and the EEC and EFTA. The EPU
became one of the most successful post-war liberal economic institutions by providing, like the IMF,
‘an automatic mechanism for multilateral settlement of bilateral clearing balances between
members. It caused for Europe to double its dollar holding between 1949 and 1956. The EPU stopped
operating two years later, as was expected for Europe was more or less on its feet, easily creating
convertibility again. In figures the EDU was economically a big success, and it had been a politically
strong instrument with its lending power and institutional status. It was within five years after it
ceased operations that the growth in foreign trade in a 10-uear period outpaced that of the GDP.
Liberalization had begun. Elimination of restraints caused increased in output and consumer
satisfaction as well as increase of direct controls in world trade and finance. European integration
results of in to a large extend the interplay of national and international economic influences.
The prosperity of Europe depended upon West Germany for a big part as it became one of the major
trading nations of the world. They were pioneer on liberalization, in relaxing import restrictions in
solution to the fixed parities. Germany backed up deficits by other countries although still strictly
regulated in many sectors itself. Ten years after Marshall’s initiative of liberalization, competition
