social psychology and personal relationships

European economic models compared: a political and human vision

April 5, 2024

On October 15, 2014, the budgets of each of the states that make up the euro area were delivered. The economic data presented were (in part) causing a bump in the main stock markets around the world. On the other hand, they are a symptom of economic stagnation and of a lack of important political consensus n Europe (the GDP of the third quarter of 2014 of the euro zone and of the European Union are respectively + 1% and + 1.4% [1]). These data (focused on the deficit and public debt) are ways (better or worse) of considering the good direction or not of the budgetary policies of a member state. The Stability and Growth Pact [2], ratified by the European Council in 1997 [3], it imposes a roadmap on the accounts of EU member states. This pattern is not an objective way of interpreting reality, but a subjective interpretation of it.

The configuration of European treaties benefits to a large extent the interests of the German state n - especially with regard to monetary policy [4]. The imposition of a policy of rigor, "to the German", does not necessarily imply that it will work in another territory with different realities. However, the German model, almost perfect in the imaginary of the institutions and member states (and citizens), lately seems to be weakening or, at least, its prospects for economic growth [5]. This disinflation - of around 0.7% of GDP - inexorably leads to the revitalization of infra-European geopolitics [6].

This is explained because the economic models of each state, are seen as an alternative to the criteria of a discouraged German economy. France is the best positioned state to question the policies of rigor , although the European Union has a vote in this contest - the Commission can sanction governments that fail to comply with the pact established in 1997 [7]. After all, the Germany of Merkel it forges the hardness -especially in the budgetary area- of the EU which gives it an important responsibility. The imposition of its economic model or another reconfigures the territorial realities with serious consequences.

A conceptual approach of economic models and hierarchies in the European framework

What are economic models then? In geopolitics, economic models are a territorial economic strategy where certain actors try to convince - or impose - to other states a certain vision on the economy and, therefore, society. The economic strategies are established in a will to impose by the economic force (and not so much by the military force) the control over other states within a framework of globalization. This rivalry resembles - as we said on another occasion in the article on: The disastrous effects of the Transatlantic Treaty - to what Joseph S. Nye called SoftPower or soft power [8].

From this point of view, the states become "economic predators" in order to perpetuate their comparative advantages in the economy. Since, as we have been saying, a model does not adapt as it grows in your territory ("endogenous") that imposed by the other ("exogenous"). The "aggressor" state benefits from an important economic rent if it manages to attribute its way of seeing the world to other states, guaranteeing, upwards , its ability to act as a central pivot. Thus, under a somewhat reductionist explanation, we went towards the creation of central and peripheral (or semi-peripheral) states. The state actors agree to the way of making the pivotal state whose hegemony is sustained by the ability to obtain more capital gains in the circulation of capital. What Immanuel Wallerstein [ 9] called the world-economy [10], in this case what would come to be the capitalist world-economy, resembles the materialization of an economic model over others.

Globalization would be - geographically - the crystallization of one or several visions: the hegemonic American vision and its subordinate European states - Germany, France and the United Kingdom would be the great standards. The latter, but with greater notoriety the Franco-German couple, rival the future of the European model, each one wants to leave his signature. Germany is seen as the epicenter of Europe with a strong subordinate (France) . On the contrary, France sees a Europe led by the Franco-German couple and tries to assert its political power for it [11], but perhaps it does not weigh in the same way (for the time being [12]).

A rivalry around the Franco-German couple

The German economic model comes from a current that appeared in the 1930s called Ordoliberalism or social market economy. This would consist of a space where the state would set a specific order of general rules to apply, then, the principle of competition and free market for companies. To a greater or lesser extent, most European states apply this economic model although it rivals French. This economic framework works very well in Germany. So much so that the German state, with a policy based on the export of industrial products of high added value, reinforces its status of domination to the detriment of the other states [13]. This has endeavored to become the factory of Europe (and part of the world). The other European states have been renegades to explore other routes seen the German success (The relocation of European industry has caused a lot of damage, especially in the countries of the South). However, the weight of Germany lies in its influence on the statutes and the policy of the European monetary system.

On the other side, we are confronted with the French model. This would consist of a much more controlled (politicized) social market economy. In other words, it would be a liberal model where the intervention of the state -more than in Germany- has guaranteed the growth of the country. The state is much more supportive, protectionist and therefore more sensitive to social needs. However, the weight of Germany in the economy is dragging, directly or indirectly, France and all other countries, to implement policies of budgetary rigor and market restructuring.

What are the consequences of the lack of European solidarity?

As we have already mentioned, economic models are economic strategies that, in the end, represent the sustenance of society. The forced German (and European) austerity has forced to break the welfare states, economic models who were deeply rooted in some of the European countries. The loss of a social model is valid throughout the Europe of Solidarity. ANDn Spain this process is very important and, even more, with the conservative government of Mariano Rajoy who has plunged headlong into the dictates of austerity. The problem, in our opinion, is not to seek GDP growth but to adjust to the needs (health, housing, decent employment ...) of the people the true sovereign.

However, if Germany has managed to impose its model in the other European states its hegemony remains less clear in view of the political pressure exerted by France (with the support of Italy who hosts the half-yearly presidency of the EU council). So much so that the ECB, the IMF and the EU seem to swing to positions halfway between both actors. Even so, the monolithic German vision removes one of the great burdens to re-launch the EU economy.

Bibliographic references:

[1] Data of September 5 in Eurostat
[2] On June 17, 1997, the stability and growth pact of the member states whose demands were focused on controlling the excessive public deficit (no more than 3% of GDP) and public debt (in public debt) was ratified in Amsterdam. no more than 60% of GDP is advised). The European Council published on 22 and 23 March 2005 an improvement of the resolution of 1997.
[3] During the European Council from 22 to 23 March 2005, the finance ministers found a political agreement to improve the management of the stability and growth pact ratified in 1997.
[4] "Économie et Géopolitique", Hérodote. Revue de géographie et géopolitique, La découverte, nº151, 2013, Paris.
[5] German industrial production has fallen by 4% this month of August. Also, the forecasts for the German economy -both by the German government or the IMF- have decreased considerably (from an approximate forecast of 2% to 1.2% of GDP in 2015). The conjunctural factors as well as the geopolitical factors have slowed down the German, European and world economy.
[6] Geopolitics understood as the "designation of a conflict, a rivalry of power in a territory which implies at least two protagonists" (Yves Lacoste).
[7] "Brussels requests the accounts from France" ("Bruxelles demand des comptes à la France"), Les Echos, 10/23/14, Paris.
[8] "The ability to influence the representations that leaders and populations make of certain norms of behavior or of certain political orientations".
[9] Immanuel Wallerstein is a world-renowned sociologist. He is a researcher at Yale University, directs the Fernand-Braudel Center in the study of economies, historical systems and civilizations at the University of Binghamton (NY). He is also a researcher associated with the Maison des sciences de l'Homme in Paris and, likewise, he has chaired the International Association of Sociology.
[10] "The world-economy is an expression used by most economists to describe, not an integrated system of production, but commercial relations between states." I. Wallerstein.
[11] "Économie et Géopolitique", Hérodote. Revue de géographie et géopolitique, La Découverte, nº151, 2013, Paris.
[12] Several studies suggest that the German economic weight will fall as its population, already very old, begins to lose cash. On the contrary, the high level of health in terms of demographic change suggests an increase in the French peso in the European economy.
[13] "Économie et Géopolitique", Hérodote. Revue de géographie et géopolitique, La découverte, nº151, 2013, Paris.
[14] //europa.eu/legislation_summaries/glossary/ex ...