the long-term failing pursuit of competitiveness through continuous adjustment

The Long-term Failing Pursuit of Competitiveness Through

Continuous Adjustment

First Draft for discussion at the

Structural Adjustment comes to Europe workshop,

14/15 November 2013, Roskilde University, Denmark

Dr Alex Nunn

Director, Centre for Applied Social Research (CeASR),

Leeds Metropolitan University, UK, [email protected]

&

Dr Paul Beeckmans

[email protected]

mailto:[email protected]

mailto:[email protected]

Alex Nunn and Paul Beeckmans

Draft: The Long-term Failing Pursuit of Competitiveness Through Continuous Adjustment 2

Contents

The Long-term Failing Pursuit of Competitiveness Through Continuous Adjustment ................................ 1

Abstract ......................................................................................................................................................... 3

Introduction ................................................................................................................................................... 4

World Market integration and the politics of competitiveness ..................................................................... 5

Europe 2020 and the contemporary pursuit of competitiveness ................................................................. 10

The long-term (failing) pursuit of competitiveness by the EU ............................................................... 10

Crisis as moment of ‘opportunity’ .......................................................................................................... 10

The role of foreign trade and the world market ...................................................................................... 13

Increased hard governance in the Euro-Area .......................................................................................... 13

Strengthened policy coordination in the European Semester ................................................................. 14

Enforcing continuous adjustment on capital ........................................................................................... 17

Enforcing continuous adjustment on labour and the individual/household ............................................ 19

Securing continuous proletarianisation ................................................................................................... 21

Maintaining legitimacy and overcoming resistance ................................................................................ 23

Conclusions: what are the prospects for resistance and where should it focus? ......................................... 24

References ................................................................................................................................................... 28



Abstract

Europe stands at a cross roads. At least since the Delors White Paper of 1993, the European Commission

has been in pursuit of a political economy of 'competitiveness', and many member states (MS) (and

previously candidate/accession countries) have willingly adopted this same agenda. The same concerns

about the rising tide of international competition underpinned the 1993 paper as now underpin Europe

2020, and in the meantime the failed Lisbon Strategy. The present structural adjustment processes being

visited upon bailout countries, and willingly adopted by some others – notably the UK – are very much

part of this pursuit of competitiveness, through cheapening labour power to facilitate both a functioning

and competitive internal labour market and externally in relation to rising and existing international

challengers. But for 20 years competitiveness has continually failed as a political, social and economic

strategy and is unlikely to 'succeed' in the future, without dramatically undermining living standards

across Europe.

This paper will critically review Europe 2020 and the successive updates and reviews produced through

the Annual Growth Surveys and the OMC process with MS and place this analysis in the context of key

global economic changes, such as the rise of East Asia and the wider BRICs. It will argue that while

learning from the history of structural adjustment elsewhere is interesting, what is needed to understand

reform in Europe today is not an analysis which starts from the notion of ‘one off’ adjustments, however

painful and protracted they might be. Rather, it is suggested that what is developing is a continual process

of social and economic reform (‘adjustment’) for competitiveness in a global environment where the

completion of the world market is becoming a realistic possibility. To challenge this, it is necessary to

look forward rather than backward, and to ask questions about the sustainability of competitiveness per se

and from there to propose and debate alternative solutions based on principles of solidarity, sustainability

and innovation for a different kind of Europe with a different set of relationships within and beyond

European borders. To debate the political viability of such alternatives it is necessary not just to learn

from previous struggles elsewhere, but to think in an interdisciplinary way about how changing European

and global dynamics might shift the nature of politics and class coalitions in and beyond Europe in the

future.



“… our idea of Europe needs to go far beyond the economy. We are much more than a market. The

European ideal touches the very foundations of European society. It is about values, and I underline

this word: values. It is based on a firm belief in political, social and economic standards, grounded in

our social market economy….” Jose Manuel Barosso State of the Union Speech 2013, (Barosso 2013).

Introduction

This paper develops a scalar-relational argument in the context of the ‘new materialist’ framework as

proposed by Cammack (2010; 2013, forthcoming). Following Cammack it suggests that over-riding

concerns with a politics of competitiveness are evident in key EU strategies and that this arises at least

partly from the process of world market integration. While still incipient, it is only when this process is

complete that the true logic of capital – as identified by Marx and Engels – will emerge. Even in advance

of this market pressure though, the paper argues that the EU institutions have been fully committed to the

logic of competitiveness, for at least two decades. This is evident in the post-crisis reform of macro-

economic management in the Euro-zone and the governance of Europe’s ‘social market economy’

through the employment and social policy reforms contained within Europe 2020 and its associated plans

and monitoring frameworks. The paper suggests that a scalar-relational approach helps to understand the

linkages between global pressures for market integration, the complete commitment of the EU institutions

at the macro-regional scale to these global pressures and their attempts to use multi-scalar governance,

requiring commitment from active MS, to implement the extension of market discipline and deep reform

required to secure the logic of capital as competitiveness. Far from being based on ideas of a minimal

state or the creation of supra-national states in place of nation-states, this requires the establishment of

complex and highly interventionist state apparatus, including at the sub-state level. These considerations

change the spatial, scalar and geo-political analysis of what and who competitiveness is actually for.

When viewed in this way competitiveness cannot be seen as competitiveness for Europe in relation to the

rest of the world, but instead has to be seen as for capital in relation to labour in Europe and the rest of

the world. Taken together this suggests that adjustment is neither a one-off process or just focussed on

‘bailout’ countries. Rather it is continuous (unending) and universal, albeit highly uneven. 1

1 The intention is not to undermine though the current extent and intensity of the effects of adjustment on the

populations of these countries.



The political and social implications of these relatively simple qualifications for the desire to learn from

structural adjustment elsewhere are multiple. First, and negatively, the analysis set out here might be

thought to limit the scope to use strategies of ‘scale jumping’ to bypass the state imposition of adjustment

to seek more progressive alternatives at the European level. However, when adjustment is viewed as both

continual and universal the scope for solidarity might be transformed. It shifts the analysis of structural

adjustment as something ‘Germany is doing to Greece’ through the auspices of the ‘troika’ to something

that policy elites and capital are doing to labour across Europe, and elsewhere, but including in Germany

for instance. As EC President Barosso recently argued (Barosso 2013), the big danger to the success of

continual adjustment is a lack of political legitimacy – hence his return to the theme of ‘social Europe’,

which is taken here to be defined by the content of employment and social policy reform in the Europe

2020 process and is captured in the phrase ‘social investment welfare state’. To gain that legitimacy,

policy elites need to narrate an image of the European project that appeals to electorates. The

implications of continual adjustment for future living standards, appeals to welfare and state provision,

open up the possibility to challenge that legitimacy in favour of an alternative and more progressive,

solidaristic and environmentally sustainable Europe. Careful analysis of agendas and opportunities within

the EU institutions reveals opportunities to press for these kinds of political gain.

World Market integration and the politics of competitiveness

There has long been an attempt to take space and scale seriously in Marxist debates on IPE. Concerns

with issues of scale and space have a long history in the Marxist (for a discussion see Charnock 2010a;

Charnock 2010b) and critical geography (Brenner 2001; Swyngedouw 2004) literature. Shields and

Macartney (2011) suggest that a scalar-relational approach can help to identify the “specific constructions

of household, gender, consumption, employment and the state, and how they use and articulate space”

and from there to focus on the ways in which “relations of domination, inequality and injustice” (381) can

be challenged. Here they hark back to the concerns with the ‘politics of scale’ and its use in political

strategies of ‘scale jumping’ to resist capitalist oppression (e.g. Smith 1992). It is argued in this paper

that considerations of scale and space can help to unpick the drivers, and therefore the sites for

contestation, of the contemporary structural adjustment agenda in Europe, which, it is argued, reflects a

long-term commitment to use the European integration process to develop a multi-scalar (if failing) meta-

governance to embed the logic of capital (Jessop 2006), as laid out below.



This paper contends that the ‘new materialist’ framework advanced by Cammack (2010; 2013,

forthcoming). provides the perfect way to integrate concerns with space and scale to better understand the

structural adjustment currently unfolding across Europe. This structural adjustment is not understood as a

one-off or spatially focussed process occurring only in those countries subject to bailout and

conditionality, but as the emergence and development of a universal and continuous – if spatially and

temporally uneven – process of adjustment to the logic of competitiveness, heavily influenced by the

changing scale of contemporary capitalist development. Central to this is a continual pressure to produce

competitive spaces of capitalist production, that incorporate the reproduction of states but also the

production of new scalar-relationships between macro-regions, states and sub-state units extending down

to the contested (re)production of household and individual subjectivity.

Cammack argues (2013, forthcoming) that a political economy of competitiveness is increasingly

dominating the concerns of policy makers at all levels, as a result of the empirical proximity and potential

for the completion of the world market. Following Marx (and Engels) in The German Ideology, from

there the Manifesto of the Communist Party, the plan laid out in The Grundrisse and finally Capital,

Cammack argues that it is only when the completion of the world market, as envisaged by Marx and

Engels, draws near that the true logic of competition fully takes hold as the structuring factor of the

international system.

The role of competition in Marx’s work is manifest at multiple scales. Most obviously it is manifest in

inter-capitalist competition, where the search for additional surplus value drives capitalists either to

increase the amount of labour power employed (absolute surplus value) or, more importantly, to increase

the rate of generation of surplus value (relative surplus value) and others to replicate and generalise

innovations or to go out of business (Marx 1867: Ch12).

It is manifest also in the competition of individuals and households to sell their labour power in the labour

market. This is enforced through repeated patterns of proletarianisation. In the first instance – at the

genus of capitalist social relations – this is marked by the coercive ejection of workers from previous

forms of subsistence (Marx 1867: 507-14). Across history, this has taken various forms such as land

enclosure or dispossession of other livelihoods or shock therapy as in the dispossession of workers in the

former Soviet bloc of ownership of the notionally collectivised means of production in those societies.

But proletarianisation is not a one-off process. Class struggle to resist commodification in the first place

or to create conditions under which commodification no longer holds is an important feature of capitalist

development. So class struggle and inter-capitalist competition leading to the creation of welfare states



created spatially and historically specific institutional conditions in which unemployed labour is protected

from the full effects of commodification, as well, ofcourse, as the lack of it. As Friedman noted so long

ago, unemployment benefits create institutional shelters from commodification (Friedman 1977). Where

these and similar conditions are in place, a continuous process of proletarianisation is required to compel

labour to offer itself for commodification. Unemployment systems with fixed durations, benefit

conditionalities or Active Labour Market Policies (ALMPs) which encourage job search activity are

measures by which a continual proletatianisation is held in place in the context of welfare systems that

partly shelter labour from this imperative (Nunn 2013a). The intention is that individuals and households

are forced to compete to sell their labour power.

Competition also takes place across spaces which might be organised more or less tightly into political

communities with institutional structures and coterminous borders. Most obviously this occurs between

nation states where trade takes the form of the confrontation of commodities from different countries.

Since commodities embody the social relations and forces of production in each country, foreign trade is

one mechanism by which the social relations and forces of production in one space confront those in

another. As they do so, a competitive effect takes place which helps to transform domestic production

and wider social, institutional and ideological arrangements too (Cammack 2013, forthcoming: 8-9):

“The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely

facilitated means of communication, draws all, even the most barbarian, nations into civilisation. The

cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls…It

compels all nations, on pain of extinction, to adopt the bourgeois mode of production….” (Marx and

Engels 1848: 16).

Since the social and technical organisation of production literally produces particular social and

technological configurations of space – for instance in different degrees and characters of urbanisation

and the built environment (e.g. mills, factories, Skyscrapers) (Smith 1992; Charnock 2010a), this

competitive effect transforms the production of space (and through communications infrastructure: time)

also.

So rather than requiring reinsertion into the analysis, space is always central to the new materialist

framework because spatial configurations of the relations of production are central to the logic of

competition, as Marx conceived it. It is this that International Relations Realists (Waltz 1957;

Mearsheimer 2001) are only partially grasping at when they describe territorial logics of power and

competition. The implication of Marx and Engels’ quotation above is that institutionalised political



communities – such as, but not only, states – are also an active agent in the interaction between scales.

States intervene to promote competitive industry within their borders (Burnham 2001: 107) and to speed

along the process of transforming subjectivity, as the policy fad for promoting ‘employability’ attests.

But in doing so, political communities such as states (but also including macro-regions, city regions etc.)

also add emphasis and potentially contestation to competitive pressures at the broader scale of the world

market (Cerny 1997).

The importance of scale to understanding contemporary continuous adjustment in Europe has been

significant from the outset. The beginnings of contemporary concerns with competitiveness in Europe

can be traced back to a scalar problem which simultaneously involved, and resulted from, intra-European

and world market integration in the Cold War era, when market integration limited by the scalar politics

of bi-polarity threatened to unleash the logic of competition on ‘Western’ states. Indeed the politics – and

adjustment – of the 1970s were partly driven by this and as political processes sought to cope with and

impose the spatial fix (Harvey 1982: 414) pursued by capital and some states over the course of the 1980s

(Cammack 2010: 266). Subsequently the end of Cold War bi-polarity ultimately further opened up the

scale of world market integration.

The Delors White Paper on competitiveness, the pre-existing push toward increased economic integration

and the contemporaneous beginnings of the fast-tracked enlargement to take in the former Communist

states of Eastern Europe emerged in this context, amid concerns first about the competitiveness of EU

member states (MS) in comparison to Japan and the United States and more latterly the BRIC nations.

Echoing the point above, the changing balance of EU external trade mirror this shift in emphasis about the

major competitors. In 2001 Chinese imports to the EU amounted to about a quarter of those from the US,

whereas by 2010 Chinese imports to the EU had increased by nearly 200% and it was the single biggest

exporter of goods to the EU. Over the same period imports from both the US and Japan stalled (Eurostat

2011). The dynamic character and scale of world market integration has shaped the major policy

concerns facing European integration.

Scale is important now too. As Cammack (2013, forthcoming: 21) shows the realistic possibility of the

completion of the world market may now drive the logic of competitiveness in the way that Marx and

Engels envisaged. This is driven in particular by (a) the integration of huge new sections of the global

population (in emerging market economies) into the global working class and (b) the differential rate of

productivity growth between these new spaces of capitalist production and the West (Cammack 2010), a

trend only exacerbated by the ongoing malaise following the 2008 financial crisis. As the trade statistics



above attest, this is a significant development and has resulted in at least a doubling of the global working

class since the early 1990s (Smith 2010: 141).

In scalar-relational terms what this amounts to is the increasing dominance of world market integration

over other scales of political authority, even as those other levels – particularly the state – are required to

negotiate and manage crisis pressures associated with that dominance (Jessop 2010). At the same time

macro-regional scales can be a useful site to defer decision making to overcome legitimacy concerns with

‘fast’ policy making at the national level (Jessop 2010). Additionally, sub-state levels are used to create

localized institutional conditions to manage the complex interventions required, for instance to manage

skills demands; ensure continuous proletarianisation, legitimacy and consent; overcome technological and

transport barriers etc. arising from the interaction of class struggle and the effects of competition (such as

the creative destruction/moral depreciation of technology and the built environment). Competitive cities

and City-regions, often with specifically designed localities (witness the politics of ‘regeneration’) are

part and parcel of this continuous reproduction of space through related scales of accumulation and

political authority. Even if there are inbuilt pressures toward political organisation at a global level, the

idea that this will inevitably lead to a world state (Wendt 2003) ignores the requirement for smaller scales

of political authority to manage the crisis tendencies in that process and particularly arising from the

dominance of capitalist imperatives among the integrating pressures (Burnham 2001; Jessop 2010; Jessop

2012).

However, the existence of multiple scales encourages protagonists in class struggle to use different scales

to press their interests in the way that Smith describes as ‘scale jumping’ on both the part of labour and

capital. Here the emphasis is on the ways in which multi-scalar governance in the EU is assisting capital

and its policy elites to jump scales, using supra-state levels to produce a narrative about the necessity of

state-level reform in the way that Hay and Rosamond (2002) suggest that national elites have used

European integration to justify otherwise unpopular domestic reforms. Similarly, macro-regional elites

can use those scales to pressure resistant national institutions, to secure national compliance or can even

jump scale themselves, using direct connections between macro-regional processes and sub-state levels to

secure compliance with pressures at broader scales. The use of EU structural funds, research funding and

the ESF have been one mechanism whereby macro-regional pressures have linked directly to sub-national

institutions and scales. However, that policy elites at both European and national level exaggerate the

competitive threat and use crisis as an opportunity to push through reform in advance of market pressure,

doesn’t mean that there is not a material process underpinning the narrative they construct. That material



process is given by national class struggle mediated by the competition between national economies and

macro-regional integration.

The current crisis and responses to it can be seen as the product of real and imagined/manipulated

pressures arising from the intensification of competitiveness that themselves result from the expanded

scale of market integration and the uneven development of national capitalist social relations and forces

of production. This too has differential spatial and scalar dynamics. At the level of Europe as a whole it

is manifest in simple concerns with the productivity of European economies on aggregate in relation to

competitors in the emerging economies in particular. Within Europe it has the characteristics of ensuring

(a) continuous proletarianisation, and in specific national economies of ensuring that opportunities for

institutional protection from competitiveness (such as cheap credit to fuel state sponsored and privately

financed growth) are closed off and competitive disciplines are re-asserted; and (b) a continual pressure to

reorganise capital, labour and political institutions to facilitate relative surplus value improvements.

Europe 2020 and the contemporary pursuit of competitiveness

The long-term (failing) pursuit of competitiveness by the EU

The idea that a lack of competitiveness is at the route of the problem in relation to the ongoing crisis is

now hardwired into key EU economic and social strategies. This is not new; as long ago as 1993 the

Delors’ White Paper on competitiveness committed the EU to the objective of competitiveness (European

Commission 1993), a commitment that was substantially reasserted through the establishment of the

Luxembourg, Cardiff and Cologne processes (European Commission 1996; German Presidency of the

European Council 1999) and, from 1997 onwards, and the ill-feted Lisbon Strategy (European Council

2000) which set the (failed) aspiration to be the “most knowledge intensive economy in the world by

2010”. Despite this consistent articulation of the need for competitiveness, expressed increasingly in the

form of targets, to be pursued through ‘soft’ governance or ‘Open Method of Coordination’ as the

Commission calls it, by 2010 the EU seemed to be no closer to the objective. The Lisbon Strategy was

therefore widely regarded as a failure through successive reviews and at its conclusion (Kok 2004; Jessop

2006; European Council 2009).

Crisis as moment of ‘opportunity’

Despite the failure of the Lisbon Strategy, the EU has continued to trumpet competitiveness as its number

one political and economic goal. The 2010 publication of Europe 2020, leaves no doubt about this. The



crisis overtaking Europe by that time was presented as both a short-term problem and as an opportunity

for facilitating deeper and longer-term change associated with the logic of competitiveness:

“Economic realities are moving faster than political realities, as we have seen with the global impact

of the financial crisis. We need to accept that the increased economic interdependence demands also a

more determined and coherent response at the political level. The last two years have left millions

unemployed. It has brought a burden of debt that will last for many years. It has brought new pressures

on our social cohesion. It has also exposed some fundamental truths about the challenges that the

European economy faces. And in the meantime, the global economy is moving forward. How Europe

responds will determine our future. The crisis is a wake-up call, the moment where we recognise that

‘business as usual’ would consign us to a gradual decline, to the second rank of the new global order.

This is Europe's moment of truth. It is the time to be bold and ambitious.” (European Commission

2010d: Preface).

The crisis is presented as having exposed Europe’s ‘structural weaknesses’ of insufficient productivity,

labour supply and demographic change alongside the institutional weaknesses of EMU. Following the

well worn logic this will lead to particular problems because:

“…competition from emerging economies is intensifying. Countries such as China or India are

investing heavily in research and technology in order to move their industries up the value chain and

‘leapfrog’ into the global economy.” (European Commission 2010d: 8).

The implication is clear

“Europe is left with clear yet challenging choices. Either we face up collectively to the immediate

challenge of the recovery and to long-term challenges – globalisation, pressure on resources, ageing, -

so as to make up for the recent losses, regain competitiveness, boost productivity and put the EU on an

upward path to prosperity (‘sustainable recovery’). Or we continue at a slow and largely

uncoordinated pace of reforms, and we risk ending up with a permanent loss in wealth, a sluggish

growth rate (‘sluggish recovery’) possibly leading to high levels of unemployment and social distress,

and a relative decline on the world scene (‘lost decade’)….our exit from the crisis must be the point of

entry into a new economy. For our own and future generations to continue to enjoy a high-quality of

healthy life, underpinned by Europe’s unique social models, we need to take action now…” (European

Commission 2010d: 8-10).



The vision articulated in Europe 2020 for ‘Europe’s social market economy’, was to foster smart

(knowledge economy/innovation), sustainable (resource efficient/green agenda) and inclusive (high levels

of employment/social cohesion) growth, which if implemented would “deliver the competitive social

market economy of the twenty first century, boosting confidence of market actors, companies and citizens

alike”(European Commission 2010b: 2). As the crisis pressures have evolved and taken effect “the rapid

pace of the restructuring is challenging but also presents an opportunity to tap potential new sources of

growth and jobs. Such adjustments come on top of, and often serve to correct, longer-term

competitiveness challenges faced by many of our economies” (European Commission 2012f: 8).

Thus the crisis was to be used as an opportunity for the EU institutions to secure MS commitment to the

logic of competitiveness, acting as a strategic partner in the process but also locking-in this commitment

to the European process of supra-national policy coordination involving deep reform at a number of

related scales including state and sub-state levels down to the level of the individual and household.

It is worth noting that, like the Lisbon Strategy before it, the documents that follow the initial

establishment of Europe 2020 take on an increasingly disappointed tone, over the commitment of MS to

fully exploiting the crisis. So AGS2012 comments

“Inspite of the urgency of the situation, progress by Member States in implementing the guidance of

the 2011 Annual Growth Survey is below expectations. There is not yet full ownership, at national

level, of the radical changes which have been decided in terms of future economic governance.”

(European Commission 2011a: 3).

AGS2013 suggests that this might be because while “structural reforms are an essential part of restoring

Europe’s competitiveness … these decisions are often difficult to take” (European Commission 2012f: 1)

and alongside the continuing social effects of crisis that require short-term management this means that

“… overall Europe is lagging behind its objectives”. (European Commission 2012f: 1). Barosso’s 2013

State of the Union speech goes further, urging all that will listen to ‘make the case for Europe’ to justify

the degree of economic and social reform demanded, in the familiar logic of ‘no alternative’ to a Europe

built on competitiveness. As we shall see, the main risk identified by the President of the European

Commission is not a technical aspect of economic policy but a lack of political will to undertake reform

(Barosso 2013).



The role of foreign trade and the world market

It is not hard in the suite of documents, strategies and plans that flow out of Europe 2020 to find evidence

for an understanding of the spatial and scalar-relational dynamics associated with world market

integration and the role of foreign trade painted above. Everywhere trade is depicted in the standard

liberal model as a vehicle for growth.

Europe 2020 and the subsequent flagship initiatives and monitoring documents of the European Semester

are replete with familiar refrains to increase research and development, innovation and productivity;

deepen and strengthen the internal market; while opening up opportunities in external markets by

negotiating market access, “expanding the area in which EU rules apply…” (23) and fostering political

alliances with key emerging economies. The treatment of the prospects for the use of external policy is

perhaps most revealing for the politics of global competitiveness. First it reveals the desire to spread the

EU’s own commitment to competitiveness to others, thereby undermining any sense that competitiveness

is strictly about the success of the EU vis-à-vis other geo-political units. Second, the strategy continues

with the familiar assumption that the development of liberal (economically) capitalism in other parts of

the world will lead to the emergence of predictable class structures, generating demand for EU goods and

services, so long as the EU can stay at the crest of the innovation wave. But while increased trade

liberalisation is always presented as creating potential for future exports it is also acknowledged that

increased trade with emerging markets is generating competitive pressures for internal adjustment:

“Trade is a strong driver of growth. There is a huge untapped potential for export of EU goods and

services, but Europe's exports were hit hard by the collapse in global trade. The positive export

performance of some Member States shows that success in global markets rests not only on price

competitiveness but also on wider factors such as sector specialisation, innovation, and skills levels

that enhance real competitiveness.” (European Commission 2010b: 9).

Increased hard governance in the Euro-Area

If competitiveness has been a touchstone of EU strategies since the early 1990s then the role of the EU in

coordinating economic policy predates this, extending back to the Single European Act. The 1993 Treaty

of the European Union committed EMU MS to key neo-liberal cornerstones such as an independent

central bank, price stability and fiscal discipline, in preparation for monetary Union and the - introduction

of the Euro. All this was to be backed up by peer and EC surveillance, monitoring and discipline in the

form of the Excessive Deficit Procedure (Nunn 2005: Ch4). In the wake of the institutional problems



realised by the Euro-crisis from 2010 onwards these provisions have been substantially strengthened for

the Euro-zone and beyond through the establishment successively of the Euro-Plus Pact (the

Competitiveness Pact) (European Council 2011), the Six Pack (European Commission 2010g; Council of

the European Union 2011), the Treaty on Stability, Coordination and Governance (including the Fiscal

Pact) (European Commission 2012d; European Commission 2012i) and the so called Two-Pack

(European Commission 2012b).2

Collectively these provisions strengthen the measurement criteria of the pre-existing Stability and Growth

Pact (the 6 Pack); increase surveillance and monitoring procedures in relation to fiscal policy and by

extension in the Euro-area all other aspects of government policy (Euro-Pact Plus, 6 Pack, TSCG) and

lock-in fiscal policy commitments first into national legislation (Euro-Pact Plus) and then for supra-

national sanction via the Reverse Qualified Majority Voting system (6 Pack, TCSG) and even through the

European Court of Justice (TCSG). Moreover, the two-pack enables the Commission to pre-vet MS

budget plans and medium term financial plans and require them to re-write them in the event that they

judge the budget to break SGP/EDP rules. Taken together this is a major strengthening of the locking-in

of fiscal discipline at the macro-regional level for most states, other than perhaps the UK, which is only

governed by the 6 Pack. But under the cover of fiscal policy discipline is extended to other areas of the

MS policy also. For instance, in the Euro-Pact Plus requires MS to adjust wage bargaining procedures to

end indexation to ensure wages fall below productivity and that sustainable public finances are judged

against specific areas of public spending such as health, pensions and welfare benefits and also commits

MS to enhanced tax policy coordination. Additionally, changes in the European Semester (see below)

have introduced further fiscal monitoring in the form of the annual Alert Mechanism Reports (ECOFIN

Council 2012; European Commission 2012a) which cover MS outside some of the enhanced surveillance

mechanisms above. Subsequent Council (European Council 2012; President of the European Council

2012a; President of the European Council 2012b) and Commission proposals have sought to further

extend ‘deeper coordination, endorsement and surveillance at the European level” to all economic and

fiscal policy choices including taxation and employment (European Commission 2012c: 11).

Strengthened policy coordination in the European Semester

2 Not all countries are signatories to all these packs and pacts. Participants are as follows: Euro-Pact Plus: all MS to

varying extents except CZ, HU, SE, UK; Six Pack: all 28 MS; TSCG: 26 MS (except UK, CZ); two-Pack: Eurozone

only.



The spectre of the ‘failed’ Lisbon Strategy haunts Europe 2020, leading to the establishment of a new

‘architecture’, what would become the ‘European Semester’, which is essentially based on tightened soft-

governance with the establishment of high level and detailed EU-wide targets by the Commission and

European Council, followed by National targets and action plans, annual monitoring and production of

country-level recommendations by the Commission (see Figure 2). Europe 2020 then, alongside its

associated governance mechanisms, is intended to facilitate the embedding of the politics of

competitiveness at a national as well as an EU-wide level. This is the deep reform that sits alongside the

headline governance of fiscal and monetary policy through the various ‘packs’ and ‘pacts’.

Figure 1: Europe 2020 Headline Targets

A detailed audit of country-level prescriptions is beyond the scope of this paper, but a quick review of the

Annual Growth Surveys since 2010 and the analysis of the EU economy that they rest on is illustrative for

debates about the future of continual adjustment in Europe.

AGS 2011 (European Commission 2011a) reaffirms the EC’s commitment to continual adjustment, in the

context of the crisis and the need in particularly for higher productivity growth. It singles out three main

areas for action: fiscal consolidation; labour market reforms to promote employment and the rather

ambiguous ‘ensuring growth’. The first is straightforwardly associated with spending reductions and in

some cases tax rises alongside financial sector reform. Included in here also though is a key element of

continual adjustment: structural changes to the economy to correct macroeconomic imbalances and

specifically ‘strict and sustained wage moderation’. In relation to the labour market, ALMPs and

benefit/tax reform is encouraged to ‘make work pay’, retirement ages should be increased to facilitate

longer-working and employment protection should be reduced to prevent insider/outsider problems and to

avoid ‘labour market rigidities’. Ensuring growth is interpreted as the promotion and faster adoption of

1. Employment

o 75% of the 20-64 year-olds to be employed

2. R&D

o 3% of the EU's GDP to be invested in R&D

3. Climate change / energy

o greenhouse gas emissions 20% (or even 30%, if the conditions are right) lower than

1990

o 20% of energy from renewables

o 20% increase in energy efficiency

4. Education

o Reducing school drop-out rates below 10%

o at least 40% of 30-34 year-olds completing third level education

5. Poverty / social exclusion

o at least 20 million fewer people in or at risk of poverty and social exclusion



single market reforms in a number of sectors, principally the Services Directive; establishing state

financial flows to subsidise the private sector ‘investment’ in infrastructure and services and to secure

‘efficient’ energy supplies.

Figure 2: Annual European 'Semester' for Economic and Social Policy Coordination

Ofcourse it is easy to say that these high level strategies have little impact on Member States who only

imperfectly and selectively implement them. But as Figure 2 shows the European Semester is designed to

prevent this. Therefore the Commission’s Progress Report which accompanies the AGS as an annex

looks across Member States’ National Reform Programmes. The first Progress Report (European

Commission 2010a) suggests that indeed MS were only partly committed. It suggests that for the most

part there are targets set for the implementation of Europe 2020 but that there were notable gaps and that

in many domains (e.g. employment) the targets set on aggregate would be less than required to satisfy

EU-wide objectives. The Single Market and Joint Employment Reports present an analysis across MS of

progress in implementing the strategy and detailed Country Recommendations address the shortcomings

of individual MS, who are supposed to respond to these.

Publication of Annual Growth Survey November •Assesses progress toward meeting Europe 2020 targets

•Contains an update on key economic and social policy priorities to meet the Europe 2020 targets.

European Council Endorses AGS March •Also considers Commission's Alert Mechanism Report on fiscal position in each member state

National Reform Programmes April •Member states set out how they will implement the advice in the AGS.

Country-Specific Reccomendations May •Commission assess Member states National Reform Programmes.

•Commission proposes country specific recomendations on amendments to national programmes

•European Council endorses recomendations.

Council formally adopts the country-specific reccomendations. June/July •This includes dispensing corrective policy 'warnings' to member states.



Whether in fact MS do respond to these pressures, or welcome them as a means of justifying reform

agendas that might be otherwise difficult to implement domestically is an empirical matter of

investigation in each case. That the mechanisms to encourage this are present though (and have been for

a long time prior to their ‘re-launch’ in the form of the Semester), and that their content is dominated by

the politics of continual adjustment for competitiveness can be easily observed.

Enforcing continuous adjustment on capital

Through Europe 2020, associated strategies and the European Semester monitoring process, the EU

commits to an ambitious agenda to re-organise capital in the MS to both increase internal competitiveness

but also competitiveness between the EU and the rest of the world, particularly the emerging markets.

“The EU has prospered through trade, exporting round the world and importing inputs as well as

finished goods. Faced with intense pressure on export markets and for a growing range of inputs we

must improve our competitiveness vis- à-vis our main trading partners through higher productivity.”

(European Commission 2010c: 14).

The Strategy endorses the familiar commitment to innovation as a general approach to secure this

productivity enhancing change. The Innovation Union (IU) ‘Flagship Initiative’ is designed to strengthen

European cooperation in the European Research Area and targets are set to increase the intensity of

European spending on Research and Development. To do this the IU programme spreads across multiple

sectors and institutions and reaches directly into the domestic organisation of capital and supporting

institutions. Universities are to be ranked according to specially designed metrics,3 funding streams

promote entrepreneurial endeavour inside them and associated curriculum reform and knowledge transfer.

A variety of programmes at EU and micro-regions are intended to promote SME and other firm access to

new technology and research. FP7 and Horizon 2020 research funding streams are at least partly aligned

with the objective of promoting innovation. A glance through the variety of projects funded reveals also

that projects which seek to secure similar innovation outside the MS are also funded. So Turkey – whose

candidacy for accession is in perpetual doubt – was the site for the (E2.7m) METU-MEMS project to

develop new micro-electronic engineering techniques.4 While small in value – it is just part of the

E11.5bn spent on the Instrument for Pre-Accession between 2007-2011 and part of the wider part of the

3 http://www.u-multirank.eu/

4 http://ec.europa.eu/research/regions/index_en.cfm?pg=success_stories&lg=en&id=24

http://www.u-multirank.eu/

http://ec.europa.eu/research/regions/index_en.cfm?pg=success_stories&lg=en&id=24



Neighbourhood Policy - this project is illustrative of the detail to which EU funded projects go to secure

changing organisation of capital, within and even outside their borders, always with the intention of

developing more widespread change. IU also acts as a soft-governance mechanism, continuing

previously employed practices of monitoring and reporting on MS policies and success in R&D and

innovation development and through this to increase peer-pressure and external logics of support for MS

activity (e.g. European Commission 2013c; European Commission 2013e).

Other Flagship Initiatives such as the Digital Agenda for the EU also aim to transform the organisation of

‘domestic’ (that is: capital operating in the EU rather than European capital) capital through the

application of new technology and expansion of liberalisation to new sectors. The website of the

Industrial policy for the Globalisation Era is illustrative here.

“In this era of intensifying globalisation, the concept of national sectors and industries is obsolete.

Coordinated European policy responses are needed. Europe also needs an approach that looks at the

whole value chain, from infrastructure and raw materials to after-sales service.” (European

Commission 2013b).

A glance inside the various strategies and Communications (e.g. European Commission 2010f) reveals a

commitment to promoting market access for the goods and services of external states to the EU and to

promote access for EU goods and services to external markets. As the Communication Trade Growth

and World Affairs (European Commission 2010h) makes clear, the Commission sees trade liberalisation

as a contributor to both internal adjustment and an integrated process of overseas development in the

familiar liberal story of trade liberalisation and market expansion. The Communication attempts to build

on the earlier European Council conclusion (European Commission 2010e) that internal liberalisation is

an essential precursor to external liberalisation and is linked to enhancing market pressures for adjustment

inside Europe and external states. As a corollary of this, single market legislation and rules are regularly

reinforced and the EU pushes the spread of these rules to ever more sectors. Everywhere – from

Barosso’s speech through to the AGS, and associated monitoring appendices the importance of further

liberalisation of energy, digital communications and transport sectors is promoted. The most recent AGS

2012 illustrates the point once again reinforcing the pressure to fully implement the Services Directive

and exhorting them to adopt EU-level standardisation practices to avoid non-tariff institutional barriers to

market integration (European Commission 2012f: 9).

A full survey of these policies and strategies, let alone the differential levels of external trade penetration

and effect in sectors and states, is beyond the scope of this paper, but the point is well illustrated by those



above. EU level action is clearly oriented toward the encouragement of competitiveness through the

continuous re-organisation of capital for productivity enhancement. This is not just conceived of as in the

interests of European citizens but, because similar processes are encouraged elsewhere too, this is also

conceived as in the interests of capital as a whole vis-à-vis labour, wherever it finds it. This is most

obviously promoted – as Marx and Engels predicted – through the confrontation of commodities and

domestic societies who must therefore adjust their organisation and relations of production to those

embodied in imports. So free trade inside and outside the EU is a central goal. But this is significant too

in that the agenda is promoted both through MS, and within them in direct scalar-relations between EU

and domestic institutions and capital itself through funding programmes and knowledge transfer.

Enforcing continuous adjustment on labour and the individual/household

If capital is to be restructured, then so too is labour. While a full review of the multitudinous strategies

and objectives associated with this is beyond the scope of this paper, consistent and illustrative concerns

include the need to up-skill labour for commodification in new sectors and in the context of reorganized

capital; the need to reduce labour market segmentation and to ensure that wage bargaining procedures

inside MS ensure that wage gains fall below productivity. As in strategies from the early 1990s on, all

these trends are frequently revisited in Europe 2020 and the AGS.

Upskilling is identified in Europe 2020 as essential to ensure that Europe benefits from job creation in

new occupations and sectors driven by innovation, with the estimation that 80m Europeans had low or

basic skills, 16m more jobs by 2020 would require higher skills and a further 12m low skilled jobs would

disappear (European Commission 2010c: 18). The AGS 2012 recommends that education and training

provision is focused more tightly on labour market demand, particularly sectors and occupations with

skills shortages (European Commission 2011a: 11) and AGS 2013 reaffirms this (European Commission

2012f: 10).

But as the evidence to suggest that upskilling will be successful is only very partial at best. As “the

European Commission’s flagship analytical review on employment and social issues” (European

commission 2011b: 3) Employment and Social Developments in Europe (ESDE) makes clear labour

market polarisation on the basis of the wage distribution is not matched in relation to the skills

distribution. When considered from the perspective of job holders’ qualifications, EU labour markets

demonstrate an alternative trend of upgrading. Put simply: workers are becoming more skilled across the

jobs distribution, but they are not necessarily getting paid any more for it. While there is evidence that it

is the lowest skilled that fare the worst in times of crisis and growth, and it is they that have found it



harder to recover employment once it is lost, skills do not act as protection from labour market insecurity

and do not necessarily lead to aggregate competitiveness.

Equally labour market segmentation which prevents labour from effectively competing with itself is

continuously targeted as a problem. The AGS 2011 comments that

“in some Member States employment protection legislation creates labour market rigidity, and

prevents increased participation in the labour market. Such employment protection legislation should

be reformed to reduce over-protection of workers with permanent contracts, and provide protection to

those left outside or at the margins of the job market.” (European Commission 2010b: 7).

Similar concerns are raised in AGS 2012 (European Commission 2011a: 10). To anyone who read the

frequent country recommendations as part of the BEPG and the European Employment Strategy in

relation to Germany in the 1990s and early 2000s, these exhortations are nothing new. What they aim at

is a level playing field so that the social relations bound up in production are exposed to the full set of

competitive pressures, including but not only those that arrive in the form of imported foreign

commodities. They include too those that are localised; from ‘outsider’ groups in the labour market,

themselves often economic migrants from other parts of the EU, whose competitive effects are spurred by

enlargement and free movement of people. To make this general principle a reality, specific

recommendations relate to the universal recognition of qualifications (including professional

qualifications outside the pre-existing process of harmonisation in the Bologna process) and the removal

and reorientation of Employment Protection Legislation (EPL). In the latter instance, on the one hand

there is the expectation that basic protections are offered to all workers:

“Member States could introduce more open-ended contracts to replace existing temporary or

precarious contracts in order to improve employment perspectives for new recruits” (European

Commission 2010b: 7).

But at the same time, this is combined with a pressure to reduce the extended protection that apply to

permanent and full time workers. What is clear is that if segmentation is to be reduced it will be through

levelling down, rather than up, for that will incentivise capital to hire:

“Reforming employment protection legislation in consultation with social partners, reducing the

excessive rigidities of permanent contracts and providing protection and easier access to the labour

market to those left outside, in particular young people”. (European Commission 2011a: 11).



ESDE 2011, shows that over the last decade a hollowing out of EU labour markets has taken place due to

structural shifts away from manufacturing toward services at the top and bottom of the income

distribution, the corresponding increase in temporary and casual work on the one hand and low wages

(with low minimum wages) on the other are also held responsible in the ESDE 2011 for rising inequality,

poverty and in-work poverty (17-200). ESDE 2012 continues to show a link between falling wages,

rising unemployment (including long-term unemployment) and welfare reforms as contributors to falling

household incomes, increasing social polarisation and in-work poverty (European Commission 2012h).

As elsewhere, there is nothing new in this prescription. It is fully in line with the vision of ‘Flexicurity’

(European Commission 2007b; European Commission 2007a; Andersen et al. 2009; Smith et al. 2012)

that had been an objective of the Commission for several years even prior to the onset of the crisis. But

taken together these seemingly contradictory pressures to open up opportunities to labour market

positions, while at the same time downgrading them in terms of security indicate the real objective to

render equal competition among labour. ‘Excessive’ EPL to protect ‘jobs’ is to be avoided while

awarding the state the rather onerous responsibility of maintaining ‘employment’ security. The sleight of

hand at work then in the Flexicurity mantra, is that states do not protect individual workers (and the

households dependent upon them) from labour market discipline, but extend this to them, while – in a

very large leap of faith – hoping that general economic conditions will supply the opportunities for re-

employment and state coordinated (if not always delivered) ALMPs will enable those individuals to cope

with the extension of risk. This is of dubious rationality given the evidence that the Commission itself

has marshalled about the role of increasingly casualised employment, competition and in-work poverty.

MS are also encouraged to reform wage bargaining processes to directly alter social relations in the

production process, specifically to push wage gains below productivity. This is a frequently asserted

objective and is to be backed up by state and EU-led strategies for continuous proletarianisation, again to

enhance competition in the labour market. Here Germany’s success – contra to that of almost the whole of

the rest of the EU – in suppressing wages, ensuring productivity gains and keeping prices stable is held up

as the example for the rest of Europe to follow.

Securing continuous proletarianisation

Since the Delors White Paper and the Jobs Study, EU MS have been encouraged to implement ALMPs.

This they have done with remarkable uniformity, and a series of recent studies show how ‘activation’ has

become ‘hardwired’ into the management of Public Employment Services across Europe (Nunn 2012;

Nunn 2013b; Nunn 2013a; Weishaupt et al. 2014 Forthcoming). This adoption of ALMPs is widely cited



as one of the reasons that the unemployment problem in Europe is not worse than it is. Whether that is

true or not is a counter factual question that is difficult to answer. The willingness of firms to accept

declining productivity while holding on to labour is probably at least as important. What is obvious

though is that there is a substantial unemployment problem5 in Europe, with several significant dynamics.

In some respects then, despite the apparent success of ALMPs, this resembles the context when they were

introduced. High unemployment, concerns about levels of inactivity and dropping out and increasingly

also about what economists call the ‘scarring effect’6 (European Commission 2012e:2; European

Commission 2013a: 2) of unemployment. The response is consistently articulated as further tightening of

benefit conditionality, and the deployment of activation measures (European Commission 2010b: 5-7;

European Commission 2011a: 11), though there is occasional inconsistency in relation to the question of

whether benefit/wage replacement ratios should be reduced during or only after labour demand starts to

rise, in order to incentivise work. By the time of AGS 2013, the real threat of dropping-out of the labour

market and the emergence of structural unemployment is seen as increasingly important. The solution –

in the form of the ‘Youth Employment Package’ - is posed as more activation (job search counselling

etc.) and targeted employment and training guarantee schemes to avoid scarring (European Commission

2012f: 10-11), higher quality training schemes to prevent skills mismatches and – once again - labour

market reform to prevent segmentation acting as a barrier to entry (European Commission 2012e). The

Joint Employment Report 2013 (European Commission 2012g) speaks in warm terms of MS where these

policies are being implemented but at the same time continues to argue for more action on segmentation

(admittedly to ease labour market entry) and measures to increase working lives.

5 First the sheer numbers. At the time of writing in October 2013 the unemployment rate across Europe

(28, including Croatia) measured nearly 11%, and was well above 25% in Greece and Spain, the two

worst effected countries. Youth unemployment is a particular worry with 23% of those under 25 being

out of work across the whole union, rising to 55% in Spain and only marginally less in Greece. Long-

term unemployment is also an increasing worry; the proportion of the unemployed who have been out of

work for more than a year has risen to over 40%.5 Add to this the increasing prominence of under-

employment, inactivity and in-work poverty and it is clear that there are significant problems related to

the under-commodification of labour power in the EU (Eurostat 2013).

6 For some background on the idea of scarring see (Blanchard and Diamond 1994; Machin and Manning 1999;

Arulampalam et al. 2000; Arulampalam 2001; Gregg 2001; Nunn et al. 2010)



By seeking to ensure that labour continues to compete for work when unemployed and for more work

when underemployed, and to stay in the labour market when exit may otherwise be possible (e.g.

especially for age-related reasons), the agency of the Commission and many MS is to hold a process of

continuous proletarianisation in place. This is continuous in two respects. It is continuous in that ALMPs

and other measures have sought to prevent long-term unemployment while not significantly addressing

job security for at least a decade (Nunn 2013a). In the Flexicurity approach, this is explicitly

acknowledged. Job security is jettisoned in favour of enabling workers to remain competitive and thereby

able to make ‘transitions’ back into work. Unsurprising then that the evaluation of Flexicurity found that

the concept had failed to balance security and flexibility in practice and that MS were in the main tending

toward the imposition of labour market flexibility while doing little to enhance security (Smith et al.

2012). It is continuous in another sense too though – in that the unemployed are expected to remain

continuously engaged with these services in order to enhance their employability and may therefore be

repeatedly affected by proleterianising interventions. Continuous proletarianisation is therefore a state-

led strategy to ensure that unemployed workers are not so protected from the disciplining effects of the

labour market by welfare provision that their labour power becomes de-commodified.

Maintaining legitimacy and overcoming resistance

As the crisis has unfolded across Europe many MS have witnessed episodic, and in some cases sustained,

mass protests which to some extent suggest the incipient emergence of legitimacy problems driven first

by the crisis itself, and second by the way in which it has been handled and perceptions of state and EU

action to prevent losses to capital while imposing costs on the rest of society through austerity: the much

vaunted 1%/99% argument of the Occupy movement. Spain (Charnock et al. 2012), Greece (Rüdig and

Karyotis 2013) and to a lesser extent elsewhere (Horn 2012; Mann 2012; della Porta et al. 2013; Kousis

2013) in particular have witnessed substantial popular demonstrations. In addition to this, Eurobarometer

surveys continue to show that the crisis is linked to declining popular trust in political institutions

domestically and at the EU level, increased pessimism about the future prospects of Europe and declining

support for the Euro, albeit with important national variations (European Commission 2013d).

This universally emergent, yet highly uneven, legitimacy problem is recognized by the Commission and

EU. For instance, Barosso’s 2013 State of the Union Speech marks a substantive turn back to themes of

‘social Europe’, and was apparently circulated around the entire Commission staff in an unusual move. It

is a partial about turn from face from Mario Draghi’s earlier and widely reported statement in 2012 that

“The European Social Model is already gone” (Blackstone et al. 2012). Similarly, consideration of the



AGS and Joint Employment Reports over the period between the establishment of Europe 2020 and the

time of writing display a continuing and growing concern with the implications of legitimacy issues for

securing the reforms ‘needed’. Barosso makes the point succinctly. While the speech is celebratory

about evidence of the credibility of reform based on financial spreads on government debt, he warns that:

“the biggest downside risk I see is political: lack of stability and lack of determination. Over the last

years we have seen that anything that casts doubt on governments' commitment to reform is instantly

punished. On the positive side, strong and convincing decisions have an important and immediate

impact.” (Barosso 2013).

Against the evidence that declining legitimacy might relate to putting markets before people, Barosso’s

answer is to continue with the same:

“In this phase of the crisis, governments' job is to provide the certainty and predictability that markets

still lack.”

In this endeavour the worry is that a ‘jobless’ recovery will not secure the required buy-in from

electorates to this continued logic. Put simply, the legitimacy of the strategy is hinged in the eyes of the

Commission and Barosso on securing continuous proletarianisation and the restructuring of labour as

described above: that is employment growth but with a weakened relative position for labour. He goes on

to urge a strident defence of the European political project making clear that the economic project and the

political project of integration are one in the same thing. ‘Peace in Europe’ should therefore be equated

with the hegemony of the single market and financial credibility over other concerns about the

distribution of power and resources. His logic here is the familiar liberal narrative of economic

integration and political cooperation being positively and mutually reinforcing. Consent will flow from

the distribution of the proceeds of growth. But as we have seen above, securing growth is also seen as

ensuring greater competition between labour, between workforces in Europe and between these and the

rest of the world. In short, ensuring legitimacy is dependent on the so far illusive pursuit of

competitiveness, which even if successful, would require a continual downgrading of the standard of

living in MS.

Conclusions: what are the prospects for resistance and where should it focus?

The process of continuous adjustment being attempted, with varying and uneven purchase, across Europe

is illustrative of the emergence of incipient pressures toward world market integration. This demonstrates



the dominance of this scale in relation to others but also the necessity of understanding the scalar-relations

between global processes – only the most dominant of which is market integration7 – to macro-regional,

state level and sub-state scales. Here we demonstrate that world market integration is itself promoted by

the macro-regional scale of EU institutions both within and between the EU and the rest of the world.

Through the confrontation of commodities embodying different social relations and forces of production

(international competition), trade liberalisation introduces market pressure to adjust domestic social

relations and forces of production to achieve international competitiveness, both within and outside the

EU, as Marx and Engels have it ‘on pain of extinction’. This process is instantly recognisable from the

narrative of EU level strategies and analyses. But it is clear that this market pressure is only incipient.

The process of proletarianisation is not yet complete on a world scale, and even in Europe it is not secure.

Welfare states protect parts of the potential workforce from commodification and other institutional

problems (such as EMU) shelter domestic populations from the effects of competition, through for

instance access to cheap credit without monetary and exchange rate implications of this. A lack of

exposure to external competition in some service, transport and energy sectors is at the heart of the EU’s

objectives to further extent trade liberalisation, at least inside the EU. Even where market pressures are

clearly not yet driving adjustment, it is heartily recommended by the EU. As such, the EU institutions are

far from neutral observers in the unfolding logic of capital; they are committed agents in the process.

Notwithstanding the political struggles that go on inside and between EU institutions, this analysis

suggests that the scope to use this scale – in a strategy of scale jumping – needs to be seen as highly

constrained, though as we argue below not totally impossible.

The current crisis has witnessed an important strengthening of the powers of the macro-regional scale in

the EU. Hence the elaborate institution building process that has followed the crisis, both for the Euro-

zone and for the wider EU. Where monetary and exchange rate policy are already surrendered to the

pooled sovereignty of the macro-regional scale – and have clearly limited the scope of other scales to

respond to the crisis (e.g. the inability to use monetary and exchange rate policy to take the weight of

internal – structural - adjustment) – the crisis has now occasioned the apparently much more substantial

transfer of fiscal policy to the macro-regional level too.

7 It is clearly possible to identify other pressures toward global integration such as the development of cosmopolitan

values etc. but these are clearly subordinate, and in many cases dependent on market integration (Jessop 2012).



But does this mean that other scales of political authority are weakening as a result? As instrumental as

the EU is at the macro-regional level in narrating the logic of capital, even in advance of market pressures

arising from world market integration, it cannot secure its agenda without the MS. So institution building

in relation to fiscal policy but also wider areas of deep reform for all MS (including those outside of the

Euro-zone) requires MS to implement the continuous adjustment agenda. It is precisely because of this

that the EU has not abandoned – and in fact has reiterated its commitment to (European Commission) –

the idea of the social investment welfare state. Hence also the development of soft governance and the

OMC in the European Semester. Here the extension of market discipline is not enough and is clearly

accompanied by a detailed set of reforms around highly active and interventionist states to ‘make markets

work’ by correcting skills mismatches, enforcing capital adjustment, reorganizing labour power and

ensuring continuous proletarianisation. The purpose of this agenda is underlined by the title of the ‘Social

Investment Package’: Towards Social Investment for Growth and Cohesion. The objective is to return to

stable and legitimised accumulation.

In sum, the discussion above suggests several implications for struggles against continual adjustment that

can be summarised here succinctly:

1. Adjustment is not just a one-off exercise or just focussed on bailout countries, notwithstanding

the greater social pain being inflicted in those places now. This means that despite surface

appearances there is a commonality of position between the national working classes across

Europe. Narrating those commonalities, though difficult, is a crucial part of any resistance

strategy (Horn 2012).

2. Continuous adjustment is not just about the extension of market discipline. It is also about the

establishment of complex and sophisticated social institutions that can hold proletarianisation in

place and support improvements in relative surplus value generation: a social investment welfare

state subject to multi-scalar meta-governance. This presents substantial pitfalls for those wanting

to resist continuous adjustment. Much oppositional action has in the past (in the case of structural

adjustment in developing countries or Thatcherite reform in the UK and neo-liberal reform in

continental Europe) been effectively co-opted by an interventionist, pro-skills and social

investment welfare state logic. This is (a) embedded in the logic of competitiveness and (b)

unlikely to be successful in the longer term precisely because of the complexity it demands and

also because of the pressures of world market integration highlighted above.

3. Over the long-term continual adjustment will demand downward adjustments of living standards

in many MS. The scope to patch over declining wage shares with imports of cheaper commodities



and the extension of credit is likely to be constrained as world market integration reaches the

limits of its possible scale. Though it has not been discussed here, it is also likely to come up

against substantial resource and environmental constraints. EU institutions are at the moment

only weakly prepared to deal with these constraints, but they will demand reform and trigger class

struggle.

For academic engagement with the resistance of continuous adjustment the second offers the most

obvious arena of engagement: through the various opportunities for the inclusion of expert opinion in

OMC and related discursive governance processes. However, the dangers inherent in this suggest that it

is the first and third that offer the most opportunity for genuine impact. The first implies that academic

engagement should be directed to demonstrating the universalism of continuous adjustment and therefore

the commonalities and importance of solidarity for affected national working classes. The existing

infrastructure of the trade unions is one but not the only opportunity to work through here. In relation to

the third, the EU institutions may offer (seemingly unlikely) scope for engagement. In existing FP7 and

in the newly emerging Horizon 2020 programmes a significant role is offered to the so far rather

ambiguous concept of ‘social innovation’. Existing programmes8 treat this as an empty signifier which is

only partly filled by attempts to define it as ways of correcting local market failures and dealing with

social and environmental externalities. Rather, social innovation could be addressed from perspective of

interdisciplinary research intended to identify ways in which new forms of economic production,

individual subjectivities, political decision making, community organisation, urban development and

resource distribution could be developed that could offer an alternative to continual adjustment. This

would need to go beyond simply validating cracks in the existing hegemony (Holloway and Sergi 2010)

of capital (as in the autonomist movement) and instead develop a multi-scalar proposition. For example it

would need to take into account pressures of global integration but seek to shift these from the dominance

of economic – capitalist imperatives – to human, social and political objectives. While the discussion of

the primary concerns of the EU institutions offered above does not suggest optimism about the scope to

use these to push for such an agenda, it may still be the case that this scale of organising is the only one

available to promote such an alternative and innovative social agenda.

8 https://webgate.ec.europa.eu/socialinnovationeurope/

https://webgate.ec.europa.eu/socialinnovationeurope/



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