The European Union
and economic
"globalization"
WHERE should we situate the European Community and its Economic and Monetary Union (EMU) within the world reorganization of capital? Is it nothing more than an ephemeral stage, reflecting a defensive, late, and impulsive reaction of the "Old World" against the power of Japan and the United States of America?
These are hardly original questions. They have been continually asked because for the past ten or fifteen years we have been living in a period of accelerated reorganization of world capitalism.
Since the signing of the Single European Act in 1986 a large number of books and articles have been written on this question and many different opinions have been given, from saying that there will be a European superpower in the next century, to the prediction of "non-existence" for the community after a probable "disconnection" of Germany and its return to "Mitteleuropa"
The attempt to construct a European Monetary Union cannot be reduced to a simple episode in the organization of trade among the European states. The relevance of the debate on the meaning of the European Union lies in its relationship to other major questions such as, for example, the interpretation of the long economic down cycle that began in 1973, the analysis of the new
8 International Marxist Review international division of labour and new forms of dependency, the dynamic of new productive technologies, the reorganization of companies and of labour, etc. All this converges in a re-assessment of contemporary capitalism after two decades of stagnation.
Because no immediately credible anti-capitalist alternative is in sight in the principal industrial countries, the capitalist crisis has encouraged or required a multitude of empirical adjustments — at first quite disjointed but later more coherent — in an attempt to overcome the accumulated contradictions of the preceding economic cycle.
It is enough to note the erratic fluctuations in the rates of profit and investments, the level of public and private debt, the amount of unemployment, the fragility of the international monetary system, the social dislocation in the Third World, to understand that the "way out of the crisis" cannot be planned by capitalist governments in advance.
The project of European capitalist integration is a complete operation which concerns the combined relations of the market, of capital, and of the different states.' And this is perhaps what gives rise to the concerns and speculation on the meaning of the EMU. Is a "European capitalism" in fact being formed?
What relationship exists between the monetary and political union project on the one hand, and the formation of a "European capitalism" or "European industrial interests" on the other? What is the future of the nation-state in Europe and what possibility exists for institutional stability of the Maastricht project?
And further, why is no one content with a simple free-trade zone? Is it not essentially the governments who are pushing the EMU (often evoking the term "political will"), rather than the employing class, which has more downto-earth concerns? The "buying frenzy" of the 1980s
The last ten years have seen an acceleration of industrial and commercial restructuring. Stock market operations — whether of a speculative character or not — showed that capital transcended national boundaries as never before. The last ten or twelve years of stock trading, with their calms and storms, tell quite an interesting story. The stock market crash of 1987, by weakening certain share values, made a big wave of take-over bids possible for a time. It facilitated a veritable "purge" in certain economic sectors, at the
The American market in particular was targeted, and the phases of the dollar's weakness served to determine the rhythms of the great plundering. British acquisitions in the United States rose from 8 in 1984 to 114 in 1988 (5year total: 407). Those carried out by German firms went from 4 to 29. Those
In this epoch of restructuring, the biggest buyers tended also to be the biggest sellers, inclined in particular to redefine the firm's "flagship" lines of business and manage the stock portfolio better. In France, during the years of the "buying frenzy" (1987-88) the three principal buyers (CGE, Thomson,
Still in France, there were several acquisitions per month by St. Gobain or
Thomson during 1988. BSN bought five Nabisco subsidiaries for US$2.5 billion. Pechiney acquired American Can. In 1989 Bull bought Zenith USA;
Michelin acquired Uniroyal, the number two American tire maker, for 10 billion francs. Rhône-Poulenc put up 8.5 billion francs to buy the chemical operations of RTZ and GAF. Between 1987 and 1989, 43% of the 70 large
French groups made at least one acquisition (25% effected in Great Britain and 25% in the USA). French foreign investments grew by 80% in 1986, by
44% in 1987 and by 45% in 1988. At the same time foreign investment in
During the same period, the German firm Siemens and the British firm
GEC bought Plessey, also a British firm. Siemens reacquired the telecommunications enterprise Rolm from IBM, which had a 50 percent share in the
U.S. marketing of telephone systems produced by this company. Siemens, in
Unilever, a Dutch company, proceeded between 1984 and 1989 to buy up a hundred other companies, representing an investment of about 45 billion francs! It bought the American firm Chesebrough for US$3 billion; it then divested those subsidiaries which, in its new portfolio, did not correspond to its basic business lines: two sporting goods companies and one heavy chemi-
An initial conclusion: the complex movement of capital concentration has involved simultaneously national, continental, and world capital structures.
Mergers and hostile takeovers have been carried out by diverse capital formations, corresponding to national, European, North American, or global strategies. Multinationals have been around a long time, but all this shows something really new. The notion of "globalization" of the world economy represengts something important in the real world. Something fundamental national or world level.
of Dutch concerns from five to nine.
France grew by 54% in 1988.?
cal operation which it resold to ICI.
The European Union and economic "globalization" 9 and Rhône-Poulenc) were also the three principal sellers.
addition, acquired the French information company IN2.
The global character of the world capitalist economy is not new, but what is new is the amount of capital circulating internationally as well as the mechanisms which govern certain international alignments. Besides, a partial retreat from the strategy of setting up majority-controlled subsidiaries has already been noted. Conversely, contractual forms of long duration have developed which have given rise to structures conforming to enterprises of
Do these developments lead towards the emergence of a genuinely "Euro-
In this regard there exists a great number of statistics on purchases, sales, and mergers during the 1980s. We will point out a few (see Table 1):
The first sign in 1985 was that of 212 European enterprises who made mergers in the area of research and development, 30% did so with enterprises of the same country, 26% within the European Community, and 74% with other countries. In addition 23% of the total created joint ventures in this way.
Another study summarizes that between 1982 and 1985 the 197 joint ventures created in the Community were for 24% national operations, for 35% operations within the European Community, and for 41% transnational
We can make use of other statistics on the most recent period. Concerning the establishment of "co-enterprises" by the thousand largest companies in the EC, between 1986 and 1990 171 were between "national" partners, 138 between partners within the EC, and 177 others. During the same period mergers (including absorptions and majority takeovers) were 899 between companies within the same country, 640 between EC companies, and 261
In general, the tendency is towards an increase in the number of operations, regardless of who participates. The total number of mergers in which these thousand EC companies participated rose from 303 in 1986-87 to 492 in
Within the European chemical industry alone, there were in 1988 240 mergers and acquisitions: 100 domestic, 101 "transatlantic", 24 between Euro-
10 International Marxist Review has changed.
different "nationality."
pean" industry?
mergers.s others.
1988-89 and to 622 in 1989-90.
A Monopoly game without borders peans, and 15 between Europe and Asia?
TABLE 1: Industrial restructuring operations among the largest 1,000 firms in the European
(a) Data drawn from the financial press concerning the operations of at least the thousand largest enterprises of the European Community, classified as a function of their financial data.
Mate is interises beiween enterprises of C memberstates and third countries in which the Common
Source: Commission on European Communities. Report on the policy of competition, various issues.
An Italian study shows that of 1,883 bilateral or multilateral cooperation agreements entered into by Italian firms between 1982 and 1985, only 15% were made between exclusively European enterprises.® The rest therefore involved a Japanese or North American partner, in whole or in part.
A study of France for the single year 1988 showed 464 mergers and acquisitions between French companies, 138 between a French company and that of another EC country, and 149 with a firm outside the EC. Within the number of consolidations during 1988, 93 were with non-EC countries, of which
50.5% were with American firms; 92 were with companies within the EC.
The respective authors of this type of study draw singularly contradictory
Mergers and acquisitions with majority participation
Number of operations
National percentagerb)
EC percentage(c)
Non-EC Percentage(d)
Acquisitions with minority participation
Number of operations
National percentage(b)
EC percentage(c)
Non-EC percentage(d)
Establishment of joint ventures
Number of operations
National percentage(b)
EC percentage(c)
Non-EC percentage(d)
Community countries: number and geographic distribution(a)
155
117
50.4
55.2
32.5
18.7
18.1
15.1
33
54
60.6
68.5
27.3
14.8
12.1
16.7
46
69
50.0
46.4
17.4
15.9
32.6
37.7
(b) Operations between enterprises within the same EC member state
(c) Operations berween enterprises of different EC member states
The European Union and economic "globalization" 11
1982/83 83/84 84/85 85/86 86/87
208
227
70.2
63.9
21.2
22.9
5.7
13.2
67
130
117
67.2
67.7
71.8
15.4
14.9
17.9
17.9
16.9
10.3
82
81
48.8
42.0
322
18.3
2A.7
17.8
32.9
33.3
50.0
87/88 88/89
492
303
383
69.6
55.9
47.4
24.8
29.2
40.0
5.6
14.9
12.6
181
159
63.5
64.2
20.4
23.3
16.0
12.6
90
111
129
40.5
43.4
27.9
27.9
31.5
26.7
12 International Marxist Review conclusions from them. Some point out a "predominance of intra-community operations" (Economic Perspectives of the OECD, December 1990) while for others there is proof that a convergence of European interests is far from being brought about.
The movement is basically national in effect. The German magazine Der Spiegel of Hamburg spoke in 1986, in relation to the consolidation movements in German of a "buying frenzy."
Every twelve hours a "big one" licks his chops, a smaller one slides under the wing of a stronger one, two of equal strength — or weakness — decide to join forces. '°
The article described in detail the infernal rhythm of consolidations and the volume of capital put into play. And according to this inquiry, most of the executives concerned justified this orgy of takeovers on the basis of the demands of world competition. The merger of Daimler and the aircraft manufacturer MBB made waves among the competition purists, sick of the antitrust fight. The year 1988 was the record year in West Germany, with 1,159 as opposed to 709 in 1985.
The same movement is unfolding in Japan. In 1988 the value of mergers and acquisitions doubled in comparison to the previous year. The merger of the two banks Mitsui and Taiyo Kobe in August 1989 created a mastodon which is now the second largest bank in the world.
In the United States we saw the "megamergers" with exorbitant costs of Chevron and Gulf ($13.2 billion), Texaco and Getty ($10.1 billion) in 1984, General Electric and RCA ($6.4 billion) in 1985, Campeau (Canada) and Federated Department Stores ($7.4 billion), Philip Morris and Kraft ($13.5 billion) in 1988. Smaller countries have seen a similar consolidation process.
There was a strong bank consolidation, for example, in November and December 1989 in Denmark: the formation of two cartels, Unibank Danmark and De Dansk Bank. Likewise in the Netherlands: the merger of NPG and Postbank (October 1989), ABM and Amro in March 1990.
The movement is consequently international without being necessarily trans-European. Over a period of three years the French company RhônePoulenc within three years bought the agricultural chemical operations of Union Carbide (U.S.), the mineral chemical operations of Stauffer (U.S.), the chemical operations of GAF (U.S.) and of RTZ (Britain), the seed operations of Clause (France), the vaccine operations of Connaught (Canada) and Rorer (U.S.). Since January of 1990 Siemens has entered into joint operations with IBM for the production of computer chips, in spite of its presence in the
The European Union and economic "globalization" 13 "European" Jessy project. Olivetti is working jointly with DEC on the Risk microprocessors and with Canon on printers. And the list goes on. New products, new markets
Conjunctural reasons related to stock markets can explain a record purchaser the years 1986-1989. An undervaluation of stocks, combined with the substantial "war chests" retained by many large firms, allowed them to embark on agressive the market, sometimes without regard to the cost. A study of the Brussels-Lambert Bank, in May 1989, notes that in 1987 Jacobs-Suchard took control of Côte D'Or with an offer to purchase stocks 50% above the previous closing price. The study's authors state that their calculations from the years 1970 to 1985 -- concerning 86 Belgian enterprises — allow them to conclude that the buyers paid on average 48% above the stocks' market value.
A study made by the American Securities and Exchange Commission before the crash in
1987 showed that the shareholders of acquired corporations... were "enriched" by some $167 billion. The premium prices paid to them on these occasions reached 30% on average above the market values."
But these stock market-related opportunities do not in themselves explain the new industrial and commercial strategies which inspired them.
At the same time the conjunctural recovery at the end of the 1980s probably favored certain risky purchases. In 1989 investment in Germany increased in volume by 9.1% and exports by 108%. From there merger-hungry enterprises like Siemens or Daimler drew their new ambitions.
The policies of industrial "delocalization" to take advantage of certain markets or certain sources of "research and development" (for example, the delocalizations of the French pharmaceutical industry to the United States) could have inspired some of these developments. The absolute increase in direct investments in the United States at the end of the 1980s has not, in effect, been simply done by mergers and acquisitions; it has been done also by reacquisitions and the direct creation of new companies. (see Table 2)
But none of this is sufficient to explain the breadth and the nature of the changes. There was a slow-down in the number of big mergers and acquisitions after the frenzy of the years 1987-1988, but there was no break in the process. A recent article in the Financial Times, covering the period from
The global evolution of direct foreign investment flow into the United States
January 1988 to June 1992, confirms a new increase in funds allocated to all
The reasons are therefore not conjunctural. We are witnessing a specific new phase in the movement of capital concentration and a significant evolution in the history of capitalism in relation to new conditions of production
The crisis opened in 1973 accentuated the difficulties in maintaining capital value within national economies. One of the responses to the crisis has been an increase in the rate of foreign investment in relation to domestic investment, with an especially increasing polarization of flow towards the
The production of capital goods has become largely autonomous in relation to other branches of industry. These goods constitute an object of rapid international exchange. They have become more and more mobile, making certain technological advantages acquired by pioneer firms more fleeting.
The gains from innovation must therefore bring more to the product than to the manufacturing process, except for the advantages gained by certain industrial delocalizations towards low-wage zones. The incessant innovation in capital goods production, the flexibility of final choice left to the buyer
(made possible by flexible production techniques) are among the new forms of competition and of research of comparative advantages. One must above all succeed in putting a product on the market first in order to corner the marand trade.
14 International Marxist Review
Year (flow)
1980
16.9
1981
25.2
1982
13.8
1983 11.9
1984 25.3 sorts of transnational operations.!2
OECD countries to the disadvantage of the Third World.'3
TABLE2
(from 1980 to June 1990, in billions of dollars)
Direct investments
(i) First half of the year 1990
Source: Department of Commerce, Survey of Current Business
Year (flow) 1985 19.0 1986 34.1 1987 46.9 1988 58.4 1989 72.2 1990(i) 10.5
ket and make one's own technical specifications the industry standard."
• The costs tend to increase, notably those of research and in investment in
• The volume of risk incurred is thus proportional to the level of capital involved and...to the imponderables of the market. The market gives its verdict a posteriori! Then investments of up to $100 million and five years are often needed simply to make a product known on a single continent.'' This is also what constitutes, for the needs of the firms, what is generally attributed to the "spontaneous" convergence of modes of consumption.
• It is necessary to envisige, among competing firms, partial and segmented alliances in order to reduce risks and take advantage very quickly of the financial and commercial means required for these new "international"
At the same time it is necessary to share risks and make compromises to guarantee a decisive share of the world market for this or that product. This is a new version of managed trade (material and non-material), not, in the classic manner, within a single multinational but among competing firms.
The test of market relations of the enterprise has for a long time rested and still rests on one simple counterposition: the export of products or the export of capital, the sale of merchandise or direct foreign investment [...) the movement of capital coming to take the place of the movement of products (...) Reality diverges from the models: on the one hand, the movement of products and that of capital are not inevitably counterposed to each other, they comhybrid and complex character to the content of international trade flow 18ive an increasingly bine with the movement of services and the transfer of information to
It is precisely the evolution of products, and notably the products which utilize the most innovative technology, which forges the new context of "globalization". The chief executive officer of the French Schneider Group has
When one speaks of world-wide standardization which has grown in electric components and in systematic research on large series, this can only cause costs to decrease, and when globalization of the market leads to the production in Illinois of practically the same product which comes from a factory in the Paris region, the consequences must be dealt with at the
The initial spending on research, and spending on plant and equipment is so equipment and commercial networks.
products.
stated:
level of the productive process.!?
The European Union and economic "globalization" 15.
This is why the 1980s saw a change in corporate strategy.
high that production units have to be on a qualitively new scale. This cannot be attained except upstream by company mergers and downstream by dere-
In Europe, the "single market" of the Single European Act (SEA) modifies the conditions of competition. It permits a certain redeployment of strategies thanks to the introduction of competitive norms, the opening of public mar-
The Common Market was up to now situated in a fragmented space: the subsidiaries in each country continued to represent the whole of their group for all products. The Single European Act changes the rules and permits spe-
The section on "free trade zones" permits in addition its extension toward the European Economic Area (EEA), itself mainly brought about by the reinforcement of trade between the EEC and EFTA and by the alliances of enterprises: the Swiss chemical industry in France and the FRG, agreements or takeovers Ericsson/Matra, Renault/Volvo, Electrolux/Zanussi are examples.
The wish of the Single European Act's proponents was to promote convergences between European companies thanks to the force of attraction set in motion by the disappearance of internal borders, the lifting of all non-tariff barriers and the disappearance of exchange risks. The integration of the markets must, according to them, in time favor industrial integration, favouring
But the SEA also opens up a large market to competition from American and especially Japanese businesses, which explains the appearance, as a reaction, of a sort of very protectionist "Europeanism", as exemplified by J. Calvet, the director of Peugeot. In effect the equal rights for non-European investors can favor all sorts of alliances in Europe itself between American or kets, etc.
Cumulative (1951-1987)
Full year 1988
Full year 1989
April-September 1990
Source: MOF
Total Japanese Foreign Investment and Japanese Investment in Europe
Total Investments
(billions of dollars) European component
139.3
47.0
67.5
27.7
15.1
19.4
21.9
23.9
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16 International Marxist Review gulation and the abolition of protectionism. Segmented strategies cializations and new alliances.!8 economies of scale and cross-border flows of capital.! Japanese partners. (see Table below)
The European Union and economic " globalization" 17
It is thus according to the product, according to the sector, or according to financial needs that a company chooses its alliances or its takeover attempts. The specific European dimension is only one of the possible parameters: Volvo made an alliance with Renault, and at the same time entered into a joint venture with Mitsubishi for production (ex Volvo-Car) in the Netherlands. Daimler Benz started major collaboration with Mitsubishi at the beginning of March 1990. Michelin cooperates in Asia with the Japanese Okamoto and the Korean Woon-Poong. Philips entered into an agreement with JVC on a factory in Malaysia. NEC reinvested capital in the French firm Bull. Kodak and the French firm Elf cooperate in pharmaceuticals. Fiat made an agreement with GE in telecommunications, energy, and transportation, but started collaboration with Westinghouse and Mitsubishi in gas turbines...And since then there has been the July 13, 1992 agreement among Siemens, Toshiba, and IBM to develop a new generation of computer chips. The appearance of European industrial interests
There is a great diversity in the corporate strategies of Europcan firms. There is no general movement towards the formation of a "European capitalism", in competition in the strict sense with the Americans or the Japanese. There are several corporate reorganization plans which intersect and combine. There are certainly strategies which are as much European as "transatlantic", let alone Euro-Japanese.
However, a specific European dimension is clearly perceptible in several fields.
The most important are those sectors and companies closely linked to public markets and for whom the Single European Act permits or imposes a new dimension by the opening of these markets and placing them in competition. Can one imagine the TGV high-speed train for simple journeys in France? Such a "product" has to find a broader market but also a political framework of another dimension. It is estimated that the total value of public markets in the ECU is 400 billion (about 15% of the GNP of the EC). At the same time in 1988 there was still only 2% of these markets which belonged to a member State different than that making the offer. The protectionist "exceptions" were to be reduced progressively and there were to be fewer and fewer sectors excluded from opening to the market (water, transportation, energy...down the line).
The arms manufacturers face several challenges: there is a reduction in
18 International Marxist Review world demand, an astonishing increase in the cost of new technologies, a redefinition of arms, and finally an uncertain relationship between NATO and European defence.
In this context it has already been possible to notice a movement towards European alliances and consolidation. The possible cancellation of the EFA aircraft due to budgetary deficits among the participants does not reverse the tendency. Companies such as British Aerospace, GE-Marconi, Thomson, Matra, Aérospatiale, MBB, Alenia, Agusta, Fokker collaborate and form interest groups on various arms projects. Apparently identical collaborative relationships exist with American firms. But it is the increase in exclusively European projects which is particularly striking. 2°
The recent agreement between the Dutch Fokker company and Dasa of Germany (subsidiary of Daimler Benz) has also allowed for a European consortium with the French firm Aérospatiale and the Italian firm Alenia. In this context it is easy to understand the relationship which exists between the military-industrial lobbies and the formulation of defense policy. Of note also is the existence of the EUCLID program, to which 800 million francs was appropriated in 1991 for joint research projects in war materiel and on the possibility since 1990 for European enterprises to answer requests by other armies of the IEPG (Independent European Program Group).?'
The banking and insurance sector is a sphere of activity for which the SEA is attractive, strengthening competitiveness, extending deregulation, and inviting the formation of cartels as preparation for the opening of the markets. In addition, pan-European (not reducible solely to the EC area projects are under way in the field of savings and loans: Eufisery allowing 40 million clients to buy from 18,000 issuers of certificates in twenty countries; Eufigest which has to manage common funds drawn on the Ecu. Numerous agreements among European banks and insurance companies have been reached since 1988, at the same time that a consolidation has taken place within each country. A group like the French Suez-Victoire group has underwritten the Danish Baltica group, Colonia of Germany, and Nieuw Rotterdam in the Netherlands. Baltica in turn extended its own influence in Britain, within the Hambros Bank. UAP, with the General Water Company, took control of the Spanish General Europea Group (GESA) and became the second largest administrative holding company in the world, with assets of 700 million francs. The German Dresdner Bank took control of establishments in France and moreover has reached an agreement of joint cooperation in Eastern Europe and Africa with BNP (National Bank of Paris) and so forth. The Spanish banking and insurance groups have been particularly involved in
The European Union and economic "globalization" 19 these operations, for the market in their country is saturated with them. The French and German companies have been quite active attempting to seal numerous alliances.
It is noteworthy at the same time that Germany, which has had to be the driving force of these banking restructurings in the EEC, has not yet been affected by deregulation. Specialization of establishments is, for this reason, still rare there, and it inhibits the possibilities for joint foreign operations and at the same time slows down the great pan-European upheaval.
Those branches of industry and products which are becoming marginalized in the wake of Japanese competition are, in a sense, another category. Notably certain European electronic and information subsidiaries show all evidence of a double standard. We have seen above that Bull, Philips and Olivetti had American and above all Japanese partners.2 Then they turned around and responded to the crisis which their industry faced and called for a vigorous EC industrial policy (Venice Forum, September 1991. Le Monde, October 2, 1991)! One finds the same attitude at Thomson (on the TVHD) and Siemens.
For these four spheres of activity—which sometimes intersect —the strategic European dimension and inter-European alliances are on the order of the day. The question remains, to what extent is it sufficient to put the EMU project on a sound footing.?3 The impact of harmonization
The SEA must eventually break new legal ground: the rights of companies (the by-laws of the European company among others) being brought into line with intellectual property rights, and a standardization of corporate fiscal policies. Even so, the problem of standards is more significant. Consequently, by necessity, the system of European and European Community standards must become a framework of constraint and defence corresponding to the new market strategies. A specific study of this field is completely necessary to the debate in which we are involved here.
At the outset, in effect, the SEA puts national norms into competition. 'But a parallel movement is underway, one of development of Community norms (the European Normalization Committee [CEN], the European Committee for Electricity [CENELEC] and the European Institute on Telecommunications Norms) and this, under pressure simultaneously from institutions which see an indirect means to an "industrial policy" and from enterprises striving
20 International Marxist Review for public markets with no boundaries. The growth of all the communications networks imposes this rationalization as well. A good example is that of the future integrated European aircraft guidance system in an increasingly crowded airspace.
The standards are in addition not exclusively and principally oriented towards health and safety or environmental protection. A large part of them serve to regulate a market and give some order to enterprises' overheads. They constitute an element in the institutional conditions of capital valuation. There are actually 408 documents adopted by the CEN and 889 by CENELEC. There are respectively 800 and 400 other standards which must be further elaborated for the larger market in 1993.25 The gradual substitution of some European standards for national norms makes a particular contribution to the development of juridical and specifically industrial space.26 The limits of industrial integration
Measures of industrial co-operation are intended to strengthen the competitiveness of certain enterprises and branches relative to Japanese or American competition. They look to finance research projects and to promote the competiveness of European industry. The "products of the future" will have a major attractive effect on uniquely European capital formation if not monopolistic interests. Biotechnology, high-definition television, the second generation of high-speed rail, the electric automobile, new materials, etc. will become the important factors for the coming forms of hegemony and regroupment in the markets. One already knows that the boat has been missed on HDTV and without doubt on the post-TV high-speed train.
Therefore, the Community framework exists, but even so it is not playing a central role. The Eureka program has existed since 1985 and has accompanied more than 400 projects (54.6 billion francs in grants between 1985 and 1990). Community financial interventions exist in as varied fields as those of the car of the future. Companies like Hermespace attempt to play a driving role in the definition of a European business strategy (Deutsch Aerospace, Aeritalia, Hermespace-France) even while depending on strong public intervention. The Jessy sub-program in electronics (27 billion francs), and that of high-definition television (HDTV) are also added, but to form nothing more definite than a "pseudo-industrial policy." In fact the money is not there. The volume of financing available to the Community in this field is proportionately much less than that to which the
The European Union and economic "globalization" 21 different countries (to begin with, the United States and Japan) are accustomed to putting in place their own industrial policies. Those enterprises which would like to develop into "the champions of Europe" do not have available to them at this time either a "Community state" nor, for the moment, a homogeneous institutional or juridical environment.
This evidently makes a great deal of difference in dealing with the Japanese and American heavyweights... but also with the Germans. The processes such as that with norms or that with research financing goes in the right direction, but they remain largely insufficient. The embryonic Community industrial policy always runs up against national barriers and into fights which the governments put up in defense (on the foundation of unemployment) of their own "national champions."27
Finally, certain sectors of the Brussels Commission who hold to a competitive environment as their principal doctrine do not envisage any industrial policy which would favor the formation of European oligopolies. We have seen this in the case of the possible take-over of De Havilland. Or again when it is a question of restricting the Eureka projects to the research and development of certain products, without extending this to their introduction into the market. This attitude is a strict free-market interpretation of the SEA. It was, because of this, one of the controversies in the preparation of the new Community texts on competition, signed in December 1989, which in principle required notification beforehand of any merger leading to total sales of 2 billion Ecus or more. The supporters of an active industrial policy of the Community are on the other hand the resolute opponents of rigidity on the doctrine of a competitive environment and generally denounce the weakness of the Community's para-state instruments.
Thus, depending on what analytical model we use for observing current developments we do not get the same picture. There is nothing surprising in this. We are dealing with contradictory changes within an extremely complex reality. Consequently, the selection of criteria of judgment determines a certain type of conclusion. If one pursues an interest in industrial alliances or by contrast in the relationship between states one will not arrive at the same results. We could, for example, have taken as a field of observation the competition developing among the Japanese, European, and North American "blocs". '. This approach in terms of regional poles, commercial balances, and trade between countries would enhance the weight of certain criteria. This would give a certain interpretation to the Uruguay round of GATT negotiations no more erroneous than any other, for it would furnish a simplified and
22 International Marxist Review discernible reading of the world economy from the starting point of the selection of a few parameters.
A complete representation of the evolution under way would require, by contrast, taking into account a great number of parameters. It is therefore legitimate and necessary to make a priori choices on a "plan of attack" which would be utilized to take account of the system's functioning. That only gives partial observations, determined by the initial methodological choice.
But do all "plans of attack" have the same pertinence for furnishing a diagnosis of actual changes? New relationships between countries and markets
Some may object that "by principle" the European Economic and Monetary Union will remain nothing more than a pious wish since its realization presupposes the end of national states, based incontrovertibly on the functioning of the system and the needs of the employing class. Employers have indeed depended on the state for providing a framework for trade, regulation of social order, etc. This will continue for a long time to come: national states will not outlive their usefulness tomorrow! But the discussion is something else again. It is necessary in effect to avoid carving into stone for eternity a certain type of relationship among states, capital, and trade structures. These relationships have a history, and they have been known to evolve. To deny that, in the debate on Maastricht, was evidently to arrive effortlessly at the conclusion that the only possible thing was a free-trade zone. The project to go beyond that to the formation of a monetary union without internal boundaries would constitute nothing more than a utopia in which the people — as romantic as Jacques Delors! — would be the pathetic heralds! This must be closely examined. The SEA, combined with the EMS, is already more than a simple free-trade zone. Free circulation of capital and financial services in the framework of a monetary system based on parities constitutes an unstable transition which can only find the markets it needs in the formation of the Ecu, that is, in unified money. The dominant financial and political sectors therefore try to bypass the framework of national frontiers and impose a partial transfer of funds between the national level and the Community level. One cannot remain indefinitely at this current unstable stage. Either monetary union is achieved in time (at several speeds, no doubt, that is by hierarchical concentric circles), or it will be the entire EMS and SEA which will reenter a crisis, pushing the European economic system far
backwards. The return to generalized floating exchange rates cannot be far away, but it is the entire SEA which will be undermined. It is a possibly catastrophic scenario but one which would most assuredly open an era of very
While it is true that the bosses and the owners of capital cannot do without intervention and public aid, it is more correct to say that the proper functioning of the system requires institutional interventions to guarantee the general conditions of production. The whole problem is to determine which general conditions are required at a given moment in the evolution of capitalism.
Nothing in this general necessity requires that the nation-state be the only
The current world "globalization" also brings out new needs for an institutional framework at the international level. Among them are the following:
• The strengthening of the authority and the decisions of the World Bank and
• The Louvre monetary agreements in 1987 and the attempt to fight against
• The constraint of the "Cooke ratio" decided in 1988 by which banks are required, beginning in 1993, to retain a minimum amount (8%) of their assets
All these things express both the strengthened attempt at a supranational structure and the end of an epoch in which the world economy was largely ruled by the hegemony of a single state.?There is therefore a tendency to add progressively new international gimmicks to a classically national structure.
Alexander Lamfalussy, the general director of the international regulatory bank, explained in his sixty-second annual report to that institution:
specific action is required (in the matter of environmental protection)... In most cases, it is reliance on market mechanisms which proves most efficient... We are discussing a field in which progress depends on cooperation on an international scale, not only because most aspects of it are endowed with a universal character and because the investment required is enormous, but also because of considerations of fair conditions of competition.30
But since this Universal Republic of Administrative Councils is not on the agenda, an important section of the European capitalists deem it necessary, in spite of often global strategies, to find at an intermediary European level a means of public regulatory intervention, which corresponds even partially to c-
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broad political and social crises. excessive distortions in exchange rates. to cover their investments. ' The European Union and economic "globalization" 23
24 International Marxist Review
This new dimension does not substitute for the national state; it adds to it sometimes in a contradictory and conflictual fashion.
It is necessary to guard against a perception of the development of European institutions and their relationship to the real economy as simple reproductions of the traditional relationship between enterprises and "their" national state. The problem is not that of the reliability or credibility of a European "state" which would necessarily have to be based on a European capitalism. There will not be a European state replacing the current Member States of the Community. 32 The question lies elsewhere: is it even necessary for the functioning of the system and the needs of capital that a European proto-state be formed? The answer to this question has to be in the affirmative. The EMU is a long-term necessity for overcoming the economic crisis: reorganization of the monetary system, German leadership of the Single Market, reorganisation of enterprises. The SEA finally establishes a legal framework allowing new synergies for the major commercial and financial interests which themselves are the objective basis for the stability of the strictly political project.
Thus the project of Economic and Monetary Union is not simply a mater of "political will" • It is a necessary link in the chain of changes in the world economy. That its development is filled with contradictions is not a surprise. That certain options remain open on the basis of factors as important as the recession or the social relationship of forces is obvious. That the whole project could collapse under the impact of major political crises and social conflicts remains a possibility. But its essential mechanisms are a product of the new needs of commercial production.
Therefore we should be very wary of any impressionism which would try to bury the affair at the least gust of wind from the financial markets or the smallest referendum. The Danish referendum shows that a section of the employers is not ready to give up. And while the discussions have been about Maastricht, many people have forgotten that there is in second place the Single European Act, which is perhaps less problematic for Danish sovereignty but just as important for socio-economic relations.
Finally, the "globalization" of the world economy and the EMU are not mutually exclusive. They are two complementary factors of the real evolution of the world capitalist economy. Notes 1. It is in this respect, for example, that it is not identical to the North American Free Trade
Agreement (NAFTA) between the United States of America, Canada and Mexico.
3. Chronique de l'Actualité de la SEDEIS, Patrick Joffre, March 15, 1986.
4. A. Jacquemin, M. Lammerant, B. Spinoit, "Compétition européenne et coopération entre entreprises en matière de RD", Evolution de la concentration et de la concurrence, no
S. Fifteenth report on competition policy, EC Commission, Brussels, 1986.
6. According to the 19th report on competition, EC, 1990, analysed in the Revue d'économie industrielle, no 3 by Alexis Jacquemin. The partnership betwen firms of "the Community" thus excludes that of other European countries, particularly the European Free Trade
9. Revue de la concurrence et de la consommation, no. 50, July-August 1989, Paris.
10. "Können nur die Mammuts überleben," in Der Spiegel, 1 December 1986.
11. Published in Problèmes économiques, 15 November 1989. French documentation, Paris.
13. At the beginning of the 1980s, foreign investment by European enterprises went mostly to the United States (61%). There was then a correction in the direction of European investment. The British case is different : 14 billion dollars invested in the USA in 1980, 51.4
14. It is obvious that these develoments deepen the gap between investment choices made by companies in order to win this huge world Monopoly, and the social usefulness of what
15. Patrick Joffre quoting K. Ohmae. op. cit. La Triade. Flamarion. Paris, 1985.
16. Chronique d'actualite de la SEDEIS "From international sales to world partnership." Pat-
17. Le Monde, 17 May 1991. At the moment when Schneider re-acquired the American firm
18. In adit spect the beg in of tie 1980s he Connedy had nerve ned racily co ace.
y. 1992, the New European Economy, "Evaluation by the EC Commission on the Economi ftects of Achieving an Internal Market'' EEC. De Boeck University. Brussels. 1981
20. Reported in the last issue of the GRIP (Permanent Institute of Research and Information on
Peace and Security: "Memento Defense-Disarmament 1992." Notably, the article by
Jean-Paul Hébert, "The Europeanization of the Arms Industry." GRIP, Brussels, January
21. Made up of the European allies of the Atlantic Alliance with the exception of Iceland. The
2. Study by the Bank of France, August 1989.
80, EC, 1985.
7. Le Monde, 4 October 1989.
8. Bocconi University. A. Sinatra. SDA-Bocconi. Milan, 1986.
12. Financial Times, 19 October 1992.
billion in 1986.
is produced.
rick Joffre, 15 March 1986.
Square D.
body was created in 1976.
The European Union and economic "globalization" 25
Association. These latter are included in international operations.
22. On 1 May 1991,Philips declared itself against the constitution of a single European compa-
23. "Single Market, Multiple Markets. European Strategies for Industrial Players." CPE-
24. "Standart, Procurement, Mergers, and State Aides," in The Single European Market and
26. One of the most important fields today is that of the pharmaceutical market in Europe. It will open the way for an important increase in norms of biotechnological materials.
27. "High technology enterprises and Europe", Philip de Woot, Gestion/Economica, Paris,
28. It exists also in materials an identical and necessary European norm.
30. Problémes économiques, French documentation. Paris, July 22, 1992.
31. This evolution corresponds in each case to the volume attained in trade among the EEC countries and the EEA: since 1985 the intra-Western European component of trade has risen from 26% to 33.5% of world trade. For the Scandinavian countries the component of their foreign trade with the EEC is 46% for Finland, 54% for Sweden, and 56% for
32. This is, in addition, what gives strength to a confederal interpretation of political union
26 International Marxist Review
Economica, Paris, 1990.