The Qualitative Shift in European Integration: Towards permanent wage pressures and a ‘Latin-Americanization’ of Europe?

Reinert, Erik S. and Kattel, Rainer (2004): The Qualitative Shift in European Integration: Towards permanent wage pressures and a ‘Latin-Americanization’ of Europe? Published in: PRAXIS working papers No. 17

Abstract

US economist Hyman Minsky jokingly used to claim that there are as many varieties of capitalism as Heinz has pickles, that is 57 varieties (Minsky 1991). In this paper we argue that economic integration provides a similar analytical problem: economic integration can take many forms, and some are more conducive to wealth and freedom than others. Colonialism was probably the first form of international economic integration, and a very close form of integration at that. Intuitively we understand that what the European Union has attempted to achieve – ever since Winston Churchill called for ‘a kind of United States of Europe’ in a 1946 Zurich University speech – is something qualitatively very different from colonialism.

In this paper we argue that European economic integration has made a qualitative shift from one type of economic integration to another, from a Listian symmetrical economic integration to an integrative and asymmetrical integration. We argue that this change – originating in a new definition of the nature of capitalism – is measurably threatening European welfare, first in the economic periphery and secondly potentially also in the core countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Varieties of capitalism; economic integration; Europe; structural change
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; P - Economic Systems > P1 - Capitalist Systems > P10 - General

References

Akamatsu, Kaname (1961). ‘A Theory of Unbalanced Growth in the World Economy’. Weltwirtschaftliches Archiv, 86, 196-217.

Audretsch, David B. (2004). ‘Diversity: Implications for Income Distribution’. In Reinert (2004a), Globalization, Economic Development and Inequality: An Alternative Perspective, Cheltenham, Elgar.

Backhaus, Jürgen G. (2001) ‘Constitutional Causes for Technological Leadership: Why Europe?’. Independent Institute, Working Paper, 39.

Boston Consulting Group (2003). ‘Made in China: Why Industrial Goods Are Going Next’. Available at http://www.bcg.com/publications/files/Made_%20in%20China_Why%20Industrial_%20Goods_Are%20Going_Next_IG_OfA_%20Nov%2003.pdf.

Boston Consulting Group (2004). ‘Riding the Next Wave of Outsourcing’. Available at http://www.bcg.com/publications/files/Riding_the_Next_Wave_of_Outsourcing_Jul04_CP_OfA.pdf.

Botero, Giovanni (1590), Delle cause della grandezza delle città. Libri tre, Rome: Presso Vincenzio Pellagallo.

Buchanan, James (1979). What Should Economists Do?. Indianapolis: Liberty Fund.

Castaldi, Carolina, Mario Cimoli, Nelson Correa, Giovanni Dosi (2004). ‘Technological Learning, Policy Regimes and Growth in a ‘Globalized’ Economy: General Patterns and the Latin American Experience’. Labouratory of Economics and Management, Sant’Anna School of Advanced Studies, Working Paper Series, 01/2004.

Chang, Ha-Joon (ed.) (2003). Rethinking Economic Development. London: Anthem.

China Statistical Yearbook (1999). Available at http://www.stats.gov.cn/yearbook/ml/1999_e.htm.

Cimoli, Mario (ed.) (2000). Developing Innovation Systems: Mexico in a Global Context. New York, Continuum International Publishing Group.

Cimoli, Mario and Nelson Correa (2002). ‘Trade Openness and Technological Gaps in Latin America: A ‘Low Growth Gap’’. Labouratory of Economics and Management, Sant’Anna School of Advanced Studies, Working Paper Series, 14/2002.

Cornia, Giovanni Andrea (2004). “Rapid Change and Mortality Crises’. Available at www.networkideas.org.

Cunningham, W. (1905), The Rise and Decline of the Free Trade Movement, Cambridge: Cambridge University Press.

EBRD (2000). Transition Report 2000. London: Hyway Printing Group.

Ernst, Dieter (1997). ‘From Partial to Systemic Globalization: International Production Networks in the Electronics Industry’. The Berkeley Roundtable on the International Economy, Working Paper 98.

Esping-Andersen, Gösta (2002). ‘Towards the Good Society, Once Again?’. In Gösta Esping-Andersen et al. (eds.), Why We Need a New Welfare State. Oxford: Oxford University Press, 1-25.

European Commission (1999). European Economy No. 68. Statistical Annex. Brussels: European Commission.

European Commission (2004). Third Report on Economic and Social Cohesion. Available at http://europa.eu.int/comm/regional_policy/sources/docoffic/official/reports/pdf/cohesion3/cohesion3_part1_ecosoc_en.pdf.

Eurostat (2003). Employment and Labour Market in Central European Countries. Detailed Tables, Theme 3, Population and Social Conditions. Eurostat.

Eurostat (2004). Employment in the Market Economy in the European Union. An Analysis Based on the Structural Business Statistics. Detailed Tables, Theme 4, Industry, trade and services. Eurostat.

Foxwell, H.S., Introduction to Anton Menger’s The Right to the Whole Produce of Labour, London, Macmillan, 1899.

Frank, Robert and Philip Cook (1996). The Winner-Take-All Society. New York, Penguin.

Frank, Simona (2004a). ‘R&D Expenditure in the European Regions’. Statistics in Focus, Science and Technology, 3, Eurostat.

Frank, Simona (2004b). ‘Patent Applications to the EPO from the EU Regions 1997 to 2002’. Statistics in Focus, Science and Technology, 7, Eurostat.

Freeman, Chris (1998). ‘Innovation Systems: City-state, National, Continental and Sub-national’. Available at http://www.ie.ufrj.br/redesist/P1/texto/NT02.PDF.

Freeman, Chris (2004). ‘Income Inequality in Changing Techno-Economic Paradigms’. In Reinert (2004a), Globalization, Economic Development and Inequality: An Alternative Perspective, Cheltenham, Elgar.

Graham, Frank (1923), ‘Some Aspects of Protection Further Considered’, in Quarterly Journal of Economics, February, pp. 199-227.

GRIPS Development Forum, http://www.grips.ac.jp/module/prsp/FGeese.htm

Götzfried, August (2004). ‘High-Technology and Knowledge-Intensity Leading to More Value Added’, Innovation and Patents, Statistics in Focus, Science and Technology, 8, Eurostat.

Hilferding, Rudolf (1910), Das Finanzkapital. Eine Studie über die jüngste Entwicklung des Kapitalismus, Vienna : Verlag der Wiener Volksbuchhandlung Ignaz Brand & Co.

Hirschmann, Albert O. (1958). The Strategy of Economic Development. New Haven: Yale University Press.

Horvath, John (2002). ‘Globalisation and the Nature of Networks’. Available at http://www.heise.de/tp/deutsch/html/result.xhtml?url=/tp/english/inhalt/co/13587/1.html&words=Globalisation%20nature%20networks.

Horvath, John (2003). ‘Hungary’s New Economy’. Available at http://www.heise.de/tp/deutsch/html/result.xhtml?url=/tp/english/inhalt/co/14027/1.html&words=Globalisation%20nature%20networks.

Hume, David (1768). The History of England. 6 vols. London: Cadell.

International Labour Office (2004). Global Employment Trends. ILO: Geneva.

Kalvet, Tarmo (2004). The Estonian ICT Manufacturing and Software Industry: Current State and Future Outlook. Institute for Prospective Technological Studies - Directorate General Joint Research Centre. European Commission: Sevilla.

King, Charles (1721). The British Merchant or Commerce Preserv’d. 3 vols. London: John Darby.

King, Lawrence P. (2002) ‘Emperor Exposed: Neoliberal Theory and De-modernization in Postcommunist Society’. Available at http://sociology.berkeley.edu/faculty/evans/king_the_emperor_exposed.pdf. Kregel, Jan, Egon Matzner, Gernot Grabber (eds.) (1992). The Market Shock. An AGENDA for the Economic and Social Reconstruction of Central and Eastern Europe. Austrian Academy of Sciences / International Institute for Peace. Ann Arbor: University of Michigan Press. Krelle, Wilhelm (1962), Verteilungstheorie. Tübingen :Mohr.

Krueger, Andreas (2004). ‘Regional Gross Domestic Product in the Candidate Countries 2001’. Statistics in Focus, General Statistics, Theme 1, 2, Eurostat

Krugman, Paul (1980), Rethinking International Trade, Cambridge, Mass.: MIT Press.

Krugman, Paul (1996), Development, Geography and Economic Theory, Cambridge, Mass.: MIT Press

Lall, Sanjaya (2000). ‘The Technological Structure and Performance of Developing Country Manufactured Exports, 1985–98’. Oxford Development Studies, 28, 3, 337-369.

List, Friedrich (1841), Das Nationale System der Politischen Ökonomie, Stuttgart & Tübingen: Cotta.

Mill, John Stuart (148/1929), Principles of Political Economy, London: Longmans, Green.

Minsky, Hyman (1991). ‘The Transition to a Market Economy’. Working Paper no. 66, Annandale-on-Hudson, N.Y.: The Jerome Levy Economics Institute, November.

Misselden, Edward (1622). Free Trade or, The Meanes to make Trade florish, wherein the Causes of the Decay of Trade in this Kingdom are discovered. London: Simon Waterson.

Mittag, Hans-Joachim (2004). ‘Labour Costs in Europe 1996 – 2002’. Statistics in Focus, Population and Social Conditions, 9, Eurostat.

Morgenthau, Henry, Jr. (1943) Germany is Our Problem. A Plan for Germany. New York: Harper.

Nurkse, Ragnar (1953). Problems of Capital Formation in Underdeveloped Countries. New York: Oxford University Press.

OECD (2004). Economic Outlook No. 75, June 2004. Annex tables available at http://www.oecd.org/dataoecd/5/46/2483884.xls.

Paine, Robert (ed.) (1977). The White Arctic. Anthropological Essays on Tutelage and Ethnicity. St John’s Memorial University of Newfoundland.

Perez, Carlota (2002). Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. Edward Elgar Publications.

Perez, Carlota (2004). ‘Technological Revolutions, Paradigm Shifts and Socio-institutional Change’. In Reinert (2004a), Globalization, Economic Development and Inequality: An Alternative Perspective. Cheltenham, Elgar.

Porter, Michael (1990), The Competitive Advantage of Nations, London : Macmillan.

Porter, Michael (2004), Competitiveness in Rural U.S. Regions: Learning and Research Agenda, Boston: Institute for Strategy and Competitiveness, Harvard Business School.

Prak, Maarten (2001). ‘Early Modern Capitalism: an Introduction’. In Maarten Prak (ed.) Early Modern Capitalism: Economic and Social Change in Europe 1400-1800. London, Routledge, 1-21.

Reinert, Erik (1980). International Trade and the Economic Mechanisms of Underdevelopment. Ph D. thesis, Cornell University. Ann Arbor, Michigan, University Microfilms.

Reinert, Erik (1998). ‘Raw Materials in the History of Economic Policy; or, Why List (the Protectionist) and Cobden (the Free Trader) both Agreed on Free Trade in Corn.’. In G. Parry (ed.) Freedom and Trade. 1846-1996. London: Routledge.

Reinert, Erik (2003). ‘Increasing Poverty in a Globalised World: Marshall Plans and Morgenthau Plans as Mechanisms of Polarization of World Incomes’. In Chang (2003) Rethinking Economic Development. London: Anthem.

Reinert Erik (ed.) (2004a). Globalization, Economic Development and Inequality: An Alternative Perspective. Cheltenham, Elgar.

Reinert, Erik (2004b). ‘Globalisation in the Periphery as a Morgenthau Plan: The Underdevelopment of Mongolia in the 1990s’. In Reinert (2004a) Globalization, Economic Development and Inequality: An Alternative Perspective. Cheltenham, Elgar.

Reinert, Erik (2004c). How Rich Nations got Rich. Essays in the History of Economic Policy. Working paper Nr. 1, 2004, SUM - Centre for Development and the Environment, University of Oslo, Norway. Available on http://www.sum.uio.no/publications

Reinert, Erik S. and Sophus A. Reinert (2003). ‘An Early National Innovation System: the Case of Antonio Serra’s 1613 Breve Trattato’. Institutions and Economic Development/Istituzioni e Sviluppo Economico, 1, 3. Available on www.othercanon.org

Robbins, Lionel (1952). The Theory of Economic Policy in English Classical Political Economy. London: Macmillan.

Rosenstein-Rodan, P. N. (1943). ‘The problems of Industrialization of Eastern and South-Eastern Europe’. Economic Journal, 53, 202-211.

Samuelson, Paul (1948). ‘International Trade and the Equalization of Factor Prices’. Economic Journal, 58, June.

Schick, Allen (2003). ‘The Performing State: Reflection on an Idea Whose Time Has Come but Whose Implementation Has Not’. OECD Journal on Budgeting, 3, 71-103.

Schmoller, Gustav von ([1884] 1944). Das Merkantilsystem in seiner Historischen Bedeutung. Städtische, Territoriale und Staatliche Wirtschaftspolitik. Frankfurt a. M.:Klostermann.

Schumpeter, Joseph (1939). Business Cycles, a Theoretical, Historical, and Statistical Analysis of the Capitalist Process. New York: McGraw-Hill.

Schumpeter, Joseph A. (1954). History of Economic Analysis. New York: Oxford University Press.

Serra, Antonio (1613). Breve trattato delle cause che possono far abbondare li regni d’oro & argento dove non sono miniere. Naples: Lazzaro Scorriggio.

Singer, Hans (1950) ’The Distribution of Gains between Investing and Borrowing Countries’, i American Economic Review, Papers and Proceedings, vol. II, nr. 2, Mai 1950. reprinted in Singer, Hans W. (1964), International Development, Growth and Change. New York : McGraw-Hill.

Sneijers, Petra (2004). ‘Industry and construction in the New Member States and Candidate countries’. Statistics in focus, Industry, Trade and Services, 23, Eurostat.

Sombart, Werner (1928). Der Moderne Kapitalismus. 6 Vols. Munich and Leipzig: Duncker & Humblot. The key volumes have been translated into French, Spanish, and Italian. French: L’Apogée du Capitalisme, Paris, Pauot, 1932 (2 Vols.). Spanish: El Apogeo del Capitalismo, México DF, Fondo de Cultura Económica, 1946 (2 Vols.), Italian: Il Capitalismo Moderno, Turin, Unione Tipografico-Editrice Torinese, 1967.

Steingart, Gabor (2004). Deutschland. Der Abstieg eines Superstars. Munich: Piper.

Tiits, Marek, Rainer Kattel, Tarmo Kalvet and Rein Kaarli (2002). The Estonian Economy. Competitiveness & Future Outlooks. R&D and Innovation Policy Review. Tallinn: R&D Council of the Republic of Estonia.

UNCTAD (2004). Development and Globalization: Facts and Figures. New York and Geneva: United Nations.

UNCTAD (2003). World Investment Report. FDI Policies for Development: National and International Perspectives. New York and Geneva: United Nations.

UNIDO (2004). Industrial Development Report 2004. Industrialization, Environment and the Millennium Development Goals in Sub-Saharan Africa. UNIDO: Vienna.

Veblen, Thorstein (1899). The Theory of the Leisure Class - An economic Study of Institutions, New York : Macmillan.

Verein für Sozialpolitik (1873). Verhandlungen der Eisenacher Versammlung zur Besprechung der Sozialen Frage am 6. und 7. October 1872. Leipzig, Ducker & Humblot.

Vernon, Raymond (1966), ‘International Investment and International Trade in the Product Cycle’, Quarterly Journal of Economics, May 1966. Vol. 80, pp.190-207.

Williamson, Oliver E. (1985). The Economic Institutions of Capitalism. The Free Press: New York.