TheMarketForIdeas

1. What is the European construction?

Society is a component element of Popper’s third world, i.e., of the world formed by objectivizing the content of thoughts (ideas, theories, desirability, etc.), objectivation achieved mostly by social action. This means that the social “objects” (therefore the economic “objects” too) appear, become and disappear only by social action. One may say that the social ontology is, simply, the effect of the social praxeology, that society is a political product (supra-individual cause and effect). Therefore, the social construction is a teleological construction obtained by completing the universal causes (material, efficient, formal) with the final cause (purpose). Being a teleological construction, the social construction is an intellectual construction (intellectual project), therefore a normative process, not a natural process (as one of the parents of the European construction, Robert Schuman, believed). There is a man-society coevolution (positive feed-back and negative feed-back, respectively), which essentially makes the social construction an auto-poiesis (auto-organisation, auto-fixing, auto-reorganisation, hyper-cycle, etc.). Furthermore, we need to accept that the social “production/reproduction” is an evolutionary process, i.e., a double-dependent process: a) state-dependent (on the desirable state within the particular intellectual project, included); b) path-dependent, i.e., history-dependent. The evolutionary feature of the society combines, however, emergence (present within the evolution of the natural world) with the plan (present in the case of the social world). Within this context we may identify “mutations” (memes, signs), “natural selection” (where the selection unit is the institution) in the social dynamics.

Generally, there are two ways of social construction: a) emergence: the social phenomena occur due to human action not subsumed to a pre-set purpose (non-deliberative construction) – see the libertarianism (Hayek particularly and, generally, the Austrian School); b) intellectual project: human action is subsumed to the accomplishment of the pre-set purpose (deliberative construction).

The construction of the European Union follows the path of the intellectual project: it is the outcome of accomplishing a purpose, i.e., the construction of an economic, social and political structure with a high level of cohesion and convergence. Theoretically, the European construction aims: a) capturing the synergy effect by increasing the number of components of the European integrative system (national states), and by reducing the transaction costs by dismantling the economic borders between the member states; b) increasing the resilience of the integrated system following its solidary action.

The aimed (designed) purpose of the European construction was to establish a macro-institution (mechanism) which to dissipate in time the possible conflicts induced by the competition for economic sources between the European states. The achieved (actually accomplished) purpose of the European construction is the establishment of a symbiotic, inter-statal macro-structure, having the potential to ensure the economic development and the social progress in a concerted (convergent, symmetric, harmonized) manner.

The inter-statal concertation within the European Union can take any of the following three theoretical forms in order to accomplish its purpose: a) minimal concertation (mere coordination of policies, strategies and programs); b) medium concertation (aiming economic, social and institutional convergence); c) maximal concertation (federalization). The European construction adopted, so far, the medium inter-statal concertation.

The strategy of the European construction targets three dimensions: a) deepening (D) – evolution on the vertical, structural-institutional; b) widening (W) – transversal/oblique evolution, by increasing the level of public policies communitarization; c) enlarging (E) – evolution on the horizontal, by increasing the number of member states. In order to ensure the sustainability of this strategy in terms of intensity and even chronology, the following relation of order must exist between these three dimensions: .

The evolutive process of the European construction[1] involves three dependencies which one should take into consideration in drawing up strategies and programs:

1. State dependence: the member states have different states (economic, social and institutional) – SD. Consequently, the acceptance of several speeds of member states integration is not an undesirable idea; nevertheless, it has to be inversely proportional to the level of the initial state of the individual countries. The operational way of doing this is to accept institutional wormholes for the states with disadvantageous initial states, so they can speedy catch up, not in a “normal” historic time;
2. Path dependence: the member states come with different histories (“biographies”) – PD, the acceptance of specific (asymmetric) integrative phenomena/events consistent with the (“biography”) of the individual member states is desirable. The operational way of doing this is to particularize phenomena/events/processes function of these histories (“biographies”), for instance, for the former communist member states;
3. Ethos dependence: the member states come with different axiological matrices – ED. Consequently, it is necessary to avoid the liberty of circulation of values as much imperatively as in the case of the four economic liberties, respectively like in the case of the liberty of circulation of information (fifth European liberty, non-economic). The operational way of doing this is to except the ethos from imperative integration, leaving things to run naturally (just like was Schuman demanding for the entire European integrative process).

2. Current risks of the European project

A first risk is that of breaking the strategic correlations in the European construction. The most important such correlation is that between the three dimensions of the European construction mentioned above. In practice, this correlation, crucial in terms of sustainability and efficiency, has been simply reversed:. Consequently, elements of unsustainability appeared and additional transaction costs for all the member states, which limited or annihilated the foreseen effect of synergy specific to systems (particularly to large systems, such as that of the European Union).

A second risk is that of breaking the SD conditionality (state dependence), for instance by forcing (faking) the verification of the Copenhagen criteria for the accession to the EU. Such forcing might appear out of economic or even political reasons, and might lead to imposing unfeasible (unrealistic) kinematics to the new member states, which are not prepared for the intra-European competition[2].

A third risk is breaking the PD conditionality (path dependence). This means neglecting the process of transforming the economic growth into economic development (transfer of the dimensional accumulation into structural changes). Consequently, the macroeconomic indicators improved in some member states (in Romania, too) but the sustainability of these indicators worsened, which means that the long-term vulnerability of the evolution of these member states increased.

A fourth risk is that of breaking the ED conditionality (ethos dependence), that is, of neglecting the axiological matrices of the member states, particularly of those from the fifth wave of accession (2004 and 2007, respectively). Consequently, the process of integration gets artificialized after the nominal accession to the EU (development of perceptions of imposed phenomenon, un-essential, axiologically unsupported, regarding the process of integration). The paternalist culture, particularly, has been neglected within the process of forming new values associated to the Europeanism[3].

A fifth risk is that of asymmetric distribution of the “dividends” of the integrated European system. The asymmetry of power (economic, politic and military) generates the possibility of asymmetric distribution of the common advantages of an integrative inter-statal structure[4]. This asymmetry of distributing the “dividends” originates in the asymmetry of economic mechanism: the stronger countries rather produce economically, the weaker countries rather consume economically. Therefore, the trend of stronger (advanced) member states to catch up the “losses” generated by the process of integration (effects of their quality of net contributors to the European budget), at the expense of the less advanced member states, which function preponderantly as markets, less as production centres. This situation makes the consumer states vulnerable both in terms of their potential of economic development[5] and in terms of establishing and maintaining their capacity of defence against violent foreign aggressions (military, for instance). Within this context, we may also speak of an asymmetry of the institutional mechanism: bailing out, via the system of the European budget (structural and cohesion funds) of the “political correctness”-type affiliations. Anyhow, although this risk has been sometimes identified and even mentioned in various political statements, the trend of “monopolizing” the dividends of integration is yet to be offset institutionally in an efficient manner.

A sixth risk is that of coming up with a myth of the distribution of economic development within the European Union (see also footnote no. 5). The economic development (ensuring the economic structures capable of self-supporting) has been considered only at the level of the aggregated (integrated) system, not at the level of each individual member state. Consequently, an excessive dependence of the less developed states on the more developed member states can be noticed (see the export-import relation of goods and services expressed by the commercial surpluses of the stronger member states and by the trade deficit of the less strong member states). The well-known phenomenon of hubbing: a small advantageous asymmetry tends to increase the advantage (and vice versa: a small disadvantageous asymmetry tends to increase the disadvantage)[6]. Within the context, separate economic (and, probably, not only!) negotiations appear of the powerful EU states with third party states (out of reasons regarding the energy, natural resources, etc.)[7].

A seventh risk is that of maintaining the asymmetric shocks. The macroeconomic adjustment within the EU requires, same as at the national level, a fiscal-monetary mix. As the monetary policy is common while the fiscal policy is national (although it is coordinated, harmonized, etc.; see the European semester, the Fiscal Pact, the Euro plus Pact, etc.), the risk of asymmetric shocks persists. Consequently, the member states of the Economic and Monetary Union (the euro zone) can adjust their national economies by transferring the negative externalities of the common monetary policy decisions towards the member states that are not within the euro zone. For instance, ECB decision to reduce the monetary policy interest rate leads to a higher inflation in the euro zone which is thereafter transferred, via the so-called imported inflation, to the member states not included in the euro zone. Or, quasi monetary activities of the governments (ministries of the public finances) from the member states which are not members of the euro zone (for instance, public loans) can lead to effects of investor crowding-out from the euro zone member states towards the non-euro zone member states. Within this context, the fiscal union is a desiderate as important as, at this moment, “completing” the euro zone with all the EU member states which are not yet euro zone members (including Sweden and Denmark, not just the emergent member states).

The eighth risk is that of solidarity becoming a myth. The common use of resources (therefore, the symmetry of treatment) as founding myth of the EU was not a political “maxim” for the integrated system. Consequently, a perception forms, that in case of “damage”, each member state is on its own. An example is that if to set the level of insurance for the bank deposits under the impact of the 2007-2011 financial crisis, when there was no concertation regarding this level, which allowed the possibility of transfers of capital between the member states through the arbitrage of this level[8]. Another example is the never-ending discussion, resumed under the current mandate of the European Commission, regarding the two speeds of the process of European construction. Although, through the Treaties, the EU edifies a pattern of market social economy, this pattern is not seen in the political practice, except for the politically correct discourse.

3. European construction and sustainability

First, we should distinguish, while discussing this problem, between sustainability and durability. This distinction is not merely terminological, but it refers to important conceptual distinctions. Sustainability refers to logic living systems[9] (for instance, an ecosystem, an economic policy), while durability refers to logic non-living systems (for instance, a rock, a building, a comet). Therefore, while the durable systems don’t have (and don’t need) entropic exchanges with their environment, the sustainable systems have (and need) entropic exchange with their environment (for instance, energy, norms, policies). A system is sustainable if, and only if, it verifies four conditions of sufficiency: 1) it is a logic living system; 2) it contains exclusively hyper-cycles[10]; 3) it contains a dominance of automatic stabilizers[11]; 4) it contains structural redundancies.

The actional (praxeological) paradigm of the current world is the paradigm of optimality, whose aim is to reach the extreme value of an objective under given restrictive conditions. Under the conditions of the current actional paradigm, five types of consequences result:

1. operational: un-reintegrable negative externalities (pollution, global warming, etc.);
2. social: excessive polarization of the economic product distribution (structural poverty);
3. political: globalization of processes (unstimulating homogenization);
4. logical: reproducibility of unsustainability (sustainabilisation of unsustainability);
5. psychological: nature is dominated by man (the logic of existence is hierarchical – man is at the top of the hierarchy).

It can be noticed that the non-human living nature never developed principles of optimization; it only developed principles of surviving (sustainability) – hence the huge costs of evolution, which ensured, however, perpetuity.

The future actional (praxeological) paradigm is the paradigm of sustainability, which aims to accomplish that value of an objective which ensures the replication of the process at least at the immediately previous level. Under the conditions of the future paradigm, the following consequences appear, which care logically derivable from the content of the paradigm of sustainability:

1. operational: reintegrable negative externalities;
2. social: excessive de-polarization of the economic product distribution;
3. political: regionalization of processes (self-stimulating communication);
4. logical: reproducibility of sustainability;
5. psychological: nature is unitary (the logic of existence is that of network – there are no privileged network knots).

It is noteworthy that, until now, only the non-living nature (principle of the minimal action – Maupertuis) and man developed principles of optimization. However, while optimization in the non-living nature doesn’t produce negative externalities (because there are no purposes), man generated devastating negative externalities which demand, now, the transfer to the paradigm of sustainability.

There are four trends which claim the paradigm of sustainability in the European construction:

1. the necessary production of unsustainable outputs generated by the paradigm of optimality: predictable exhaustion of the unrenewable natural resources (energy, first), which might fire up again the inter-state disputes (either classical/orthodox, or unconventional) to gain control over the natural resources, with a concomitant irreversible deterioration of the natural environment, both living and non-living (the near cosmos included);
2. trends of non-political hegemony generated by globalization: process of extra-statal monopolization of the economic and social segments (see the trans-national companies);
3. trends of axiological autonomization of the consumption: transformation of consumption into the brand of personal and social success; transformation of the economic growth into a purpose per se (see the Stiglitz-Sen-Fitoussi critique);
4. trends of devaluation of the human condition: the natural right of a decent life depends much too less on individual “parameters” and way too much on institutional and optimality parameters (pauperization).

4. The X-Exit phenomenon

All the critical problems (risks) regarding the European construction, mentioned earlier, lead recently to a centrifugal phenomenon within the EU: the X-Exit phenomenon (ex.: Br-Exit): by X-Exit phenomenon we understand a diffuse (uncrystallised) perception at the level of the member states citizens (assumed by the decision-making politicians[12]) of a structural (institutional, too) dysfunctionality of the EU, which bears on the significance, credibility, sustainability and desirability of the Union.

There may be three distinct forms of manifestation of such perception:

1. reticence, formal/official, regarding the acceptation or support of specific European institutions (examples: member states opposing the entry of other member states within the Schengen area or euro zone); member states which demanded and have the opt out clause (the right of not being compelled to join the euro zone); refusal of some member states to accept totally the obligations of contribution to the formation of the European budget;
2. transmission of official or semi-official signals regarding the possible exist from the Union, when the national desires are not met accordingly and unconditionally;
3. actual exit from the Union, according to art. 50 from the Lisbon Treaty – example: Great Britain (date of exit from the EU: March 2019 – during the Romanian presidency of the EU Council).

The impact of the X-Exit phenomenon is obvious:

• economic: shrinking economic market (of goods, services, labour force); lower economic potential of the EU (lower GDP); smaller EU population (which affects EU role as global actor); lower European budget;
• institutional: changes in EU Treaty and in the Treaty for EU functioning; replacing the multilateral treaty of EU member states with bilateral treaties between the EU and the X-Exit country;
• psychological: establishment of a contagious precedent; lower trust in EU stability, robustness and sustainability (increase of the Euro-sceptic stands);
• human: problems of the EU member states people who migrated to the X-Exit state; problems of the people from the X-Exit state who migrated to other EU member states.

5. Romania and the European project

Ten years after the accession, Romania still speaks of the EU in the third person:

• at the technocrat level: the involvement of the Romanian experts in the working groups of the European Commission is, still, insignificant;
• at the attitudinal level: the Romanian authorities are, still, rather passive about the normative activity of the European institutions[13].

Romania is “challenged”, today by some opportunities that should be exploited:

• relocation of the European agencies after the Brexit (more so as Romania doesn’t have, yet, any such agency on its territory[14]);
• suggesting (and supporting) projects which serve, concomitantly, the national and EU interest, on the opportunity of taking the rotational leadership of the EU Council, as of January 1^st, 2019[15].

The European project will enter a process of rethinking, even of conceptual and political re-founding, after the experience of the Br-Exit and given the perspective of the centrifuge trend from some EU member states (some even founding members). Within this context, Romania must be present (at it maximum potential) within this crucial process on which the future of the European integrative structure depends. I also consider that Romania will have to reject (the Romanian President has already taken publicly this stand) a Europe with two speeds.

• A Europe with two speeds is contradictory with the principle of solidarity (NB: unfortunately, the Lisbon Treaty doesn’t state the healthy European principle “Unity in Diversity”).
• A Europe with two speeds only reduces the economic and social cohesion and convergence, which are principles of common European policy.
• A Europe with two speeds should be built exactly on the principles of solidarity, cohesion and convergence – meaning that all emergent member states should be assisted so as to develop at higher speed than the developed member states (for instance, using the institutional EU wormholes)[16].

6. Some topical problems

Within the above context, I think that the following matters should be topical for the conceptual reconstruction of the European Union:

• persistence of the “double measure” in matter of sanctioning the member states which breach the provisions of the Maastricht Treaty regarding the criteria of nominal economic convergence: this behaviour of the European Commission is inacceptable for the member states which observe the Maastricht Treaty, bearing, in consequence, the connected costs;
• inexistence, in the European treaties, of a set of criteria for real economic convergence which to ensure that the accession of the new member states to the Economic and Monetary Union (the euro zone) doesn’t introduce vulnerabilities or risks of instability within the EU[17];
• excessive autonomization of EU bureaucracy towards the European society: the enormous technocrat (and even politic) apparatus which supports the European project is a huge consumer of financial resources, on the one hand, and a signal towards the European citizens that the main objective of the bureaucrats is to preserve the existing bureaucratic structures, not to solve the problems of the European project;
• the deterring lack of EU leaders able to have a courageous, coherent and persistent vision of political, institutional and cultural construction at the level of a large aggregated (integrated) system[18];
• the European project needs to be approached from the perspective of the social philosophy, not from the narrow perspective of the short-term local economic (or even geostrategic) interest and exasperating asymmetric;
• it is necessary to have a new European project, which to integrate the contemporary phenomena, trends and challenges, with the same lucidity and good faith as in 1957, but taking into account the lessons learnt over the past 60 years of European construction;
• the new European project should mean, simply, a project of conceptual and institutional reconstruction of the EU;
• the dominance of the financial capital (and, by consequence, of the banking capital) in the political decision within the EU impairs the efficacy of the common European policies or of the national policies harmonized at the European level, which bears on the real economy, therefore on the transfer of the economic growth to the standard of living and quality of life in the member states.

7. Quo vadis?

I think that nine directions should be of interest for the European political decision-makers at this moment. These directions should start from rethinking, as adequate, the Treaty of the European Union and the Treaty for EU functioning:

• introducing the asymmetry of the EU functioning rules in favour of the less developed member states;
• allowing institutional “wormholes” for the less developed member states;
• equitable distribution between the member states of the synergy effects (“dividends”) of the European integrated system;
• introducing a single European tax based on the principle “pays more who can pay more” (thus actually objectivising the principle of solidarity within the EU);
• formal introduction (in the Treaties) of the constraint to achieve the real economic convergence in the EU, not just the nominal convergence[19];
• development of the economic structures, including the development of a set of criteria of real economic convergence, similar with the set of criteria for nominal economic convergence introduced in the Maastricht Treaty (proposal: holding a meeting of the European Council in Bucharest);
• immediate acceptation into the euro zone of the EU member states that are not yet euro zone members, irrespective of the stage of verifying the criteria for nominal economic convergence (NB: Romania verifies all five criteria), based on the following arguments: a) the criteria of nominal convergence have no relevance (and are not even sustainable) without criteria for real economic convergence – or, the real, irreversible, economic convergence is achieved within the euro zone, not outside it; b) the single currency is rather a cause, not the effect of integration (or economic convergence);
• urgent achievement of the EU Fiscal Union (symmetric to the Economic and Monetary Union): this will remove the asymmetric effects of the common monetary policy which appear in the absence of the common fiscal policy. At the same time, the European budget might become an instrument of macroeconomic adjustment within the EU, allowing, by Treaties, the existence of imbalances (deficit or surplus) in the European budget;
• starting the institutional crystallization of the Political Union of the EU: this is the only solution to “capture” entirely the synergy effects generated by a large aggregated system, such as the EU. It would also be the first step towards the establishment of a European federal state (the current federal states are established on language, ethnic or cultural affinities).

[1] There are three “macro-accessions” to the European Union: 1) nominal accession (signing the accession treaty) – for instance, Romania: 01.01.2007; 2) accession to the Schengen space; 3) accession to the euro zone. There also are “micro-accessions” (accession to different European strategies or documents): for instance, the Fiscal Pact, for the euro zone (which Romania also joined).

[2] After the moment of nominal accession (which, therefore, is a moment, not a process!), there are three concomitant (and inter-correlated) processes of integration within the EU: 1) economic integration; 2) institutional integration; 3) cultural integration.

[3] The concept of Europeanism is yet to be clarified (we wonder why Horizon 2020 Program doesn’t fund at all such studies, crucial for the general philosophy of the European construction).

[4] The EU is neither a federation of states (such as the USA), nor a confederation of states (such as Switzerland), but an inter-statal political construct of contractual sharing (through the Treaties of functioning of the Union) of the sovereignty between the state and the Union.

[5] The economic development is revealed by the positive changes in the economic structure of a country (by economic sectors, branches, labour market, etc.), being different from the mere economic growth, which is simply a dimensional increase of the macroeconomic indicators. Therefore, development is a structural process which ensures the irreversibility of the particular process, while the growth is an exclusively dimensional process, reversible in the absence of development.

[6] The hubbing phenomenon is a consequence of the networks (NB: within the EU, the network phenomenon is inherent).

[7] For instance, the separate interests of some member states regarding the Russian energy and natural resources, or the convergent political interests of some member states with those of Russia.

[8] As it is known, the euro zone is yet to develop a unitary system which to guarantee the bank deposits.

[9] A system is of logic living if it verifies two conditions (predicates) of sufficiency: 1) it is a dissipative system, a system which “dispenses” entropy, and 2) it is an artefact. The developed concept of logic living system is presented in our paper Studii de economie. Contribuții de analiză logică, epistemologică și metodologică, Editura Economică, București, 2009.

[10] Any output of one of its subsystems from its environment is input for another subsystem of its or for another system from its environment. If the input refers just to another subsystem of the particular environment, that system is self-sustainable. The concept of hyper-cycle has been introduced in the scientific research by Manfred Eigen.

[11] Meaning that any positive feed-back is wrapped by a negative feed-back.

[12] It is difficult to discern between the assumption, by the politicians, of a public perception and the inculcation, by the politicians, of such public perception. The actual case is, probably, several politicians-public iterations in the generation/formation of such perception.

[13] However, at the political level, in the European Parliament (and in its permanent commissions) the Romanian European parliamentarians are more active and, sometimes, even representative.

[14] It seems that, unfortunately, again, Romania didn’t use properly this opportunity.

[15] There should be coordination, in this respect, with Bulgaria, which will assume EU Council presidency as of January 1^st, 2018, given not just the similar negative “ratings” of the two states within the EU, but also because we accessed the EU within the same “wave” (second stage of the fifth wave).

[16] Maybe we should implement the concept of society in practical intention, proposed by Jurgen Habermas, concept which joins the economic progress with the social/moral progress. In terms of the economic order, I think that the ordo-liberalism of the European integrated system would fit the principle of intra-European solidarity.

[17] The Romanian Academy could, through its research centres and institutes, propose a scientific foundation for such set (a draft already exists, as a matter of fact).

[18] As of 2004, the European Commission ceased to have visionary leaders; it only had leaders able to maintain the “ship” afloat (which, actually, is not an easy thing to do).

[19] Including by the definition and introduction in the Lisbon Treaty of a set of criteria of real economic convergence, similar with the set of criteria for nominal economic convergence introduced in the Maastricht Treaty (proposal: holding a meeting of the European Council in Bucharest, in the first half of 2019).