An Argument for The European Union as a Hayekian Federation.

I’m referring here to a very interesting item ‘Polanyi in Brussells? Embeddedness and the Three Dimensions of European Integration’ by Martin Höpner and Armin Shäfer,posted by Henry Farrell at Crooked Timber (a left leaning group blog on politics and political thought).  

‘Polanyi in Brussells?’ argues that we should see the European Union as the type of federation argued for by Hayek in The Road to Serfdom and Individualism and Economic Order, rather than as the more social democratic type of arrangement favoured by Karl Polanyi in which markets are embedded in social welfare, regulatory and redistributivistic, orders.  Höpner and Shäfer claim that the European Union is increasingly concerned with integrating economies in ways which are close to Hayek’s vision.  The evidence they present include European Union policies and laws, along with decisions of the European Court of Justice which favour tax competition between nations within the European Union and reduce the link between payment for welfare rights and receiving welfare rights.  That is within the EU it is increasingly easy to move company registration between states, competition with regard tı corporation tax is allowed which further promotes competition in income tax rates, since a large differential between these rates creates an incentive to declare incomes as corporate profit, and the right of citizens to claim welfare benefits anywhere in the Union which lessens the incentive for national tax payers to fund large welfare states within that nation.  The European Union does not have the power to tax directly or to establish welfare schemes, and is generally devoted to individual rights across the union, rather than reinforcing collective rights.  Extremely different labour relations laws fosters competition for the most mart friendly laws and so on.  Some of this refers more to extrapolation rather than what is happening right now.  However, they provide a convincing argument that any appearance that the EU is dominated by collectivism, welfarism and attacks on tax competition, is increasingly undermined the away the federation designs ruled which promotes competition between states on these issues, so promoting a limited state tendency.

The authors prefer a Polanyi social democratic type system to a Hayek market liberal type system, which is no less reason for people who prefer the Hayekian style of liberalism to take their arguments seriously.  Again, following on from recent and continuing blogging on Hayek and the European Union,  Hayekian liberalism, or classical liberalism in general, is not at all inherently opposed to the European Union federation.  

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