The 1992 Project and the Future of Integration in Europe by Dale L. Smith & James Lee Ray

Author:Dale L. Smith & James Lee Ray [Smith, Dale L. & Ray, James Lee]
Language: eng
Format: epub
Tags: Emigration & Immigration, Social Science, Political Science, General
ISBN: 9781563242557
Google: mI0YDQAAQBAJ
Amazon: 1563242559
Goodreads: 32206012
Publisher: Routledge
Published: 1992-09-29T00:00:00+00:00

Domestic Political and Policy Games

It is clear that governments frequently set out to deliberately restructure markets and the institutional arrangements that govern them for reasons of their own (ideological, political, international competition, war-preparation, and war-fighting). Alternatively, structural change may be precipitated by intrastate or state society policy stalemates that produce escalating economic performance problems (inflation, balance of payments deficits, budget deficits, misallocation of investment, and so forth).

It has been argued (Emerson 1988; Woolley 1990) that the real significance of the SEA and the 1992 Project is that governments and EC institutions have set out to change the information sets, future expectations, and thereby the behaviors of economic agents and national political actors. The strategy was deliberately adopted to make irreversible precommitments to new consitutional rules of decision making such as majority voting, the norm of mutual recognition, the substantive commitment to financial deregulation and monetary policy coordination. These commitments would be enforced by automatic market penalties. By making such precommitments, government's and EC institutions' economic policy objectives became credible in the eyes of private agents as well as in the eyes of political actors in domestic political games (for example, in struggles over relative power in national financial policy networks).

We can hypothesize a variety of reasons why EC governments facing increased international competition might pursue financial and monetary integration:

• To try to accelerate the pace of domestic change in financial service regulatory institutions and policy networks (because of power concentrations in the historical role of banks, notaries, stock exchanges, etc.). Examples are Italy and Spain.

• To overcome persistent budget deficits because of political alignments or institutional stalemates (Italy) or constitutional arrangements (Portugal?) by tying the hands of governments in favor of European commitments.

• To help control domestic inflationary forces by embracing the discipline of a Bundesbank-dominated European monetary policy—Britain in the 1990s, France since 1983, Italy since 1979.

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