Book review, Education and Science, EU – Baltic States, Legislation

*) The Economics of European Integration. 3^rd Edition, By Richard Baldwin and Charles Wyplosz. -McGraw-Hill Education Publishing, 2009. – 596 pp.

The book is divided into five chapters, revealing first, history of the European integration and the institutions assisting the process; second, the microeconomics of integration; third, the macroeconomics of monetary integration; fourth, EU micro policies; and fifth, integration’s monetary and fiscal aspects. The book is well balanced and richly supplied with plenty of tables and diagrams, which is a good supplement to learning.

Baldwin R. and Wyplosz Ch., both professors of International Economics at the Graduate Institute of International Studies in Geneva are leading economists and teachers; this is the third edition of the successful book. 

The book contents fit perfectly well into the educational purposes; isn’t it what the famous McGraw-Hill’s publisher was aimed at! Authors underlined that the publication “is a textbook for courses on European economic integration” (p.xi). Students as well as teachers in the Baltic States shall be glad to have such a book both on their shelves for references and on their desks as an excellent teaching material.

Actually, it is the students who can gain most from the textbook, as each chapter has a set of self-assessment questions, literature for further reading, useful websites and helpful references. As to the websites, the authors forgotten to change the main EU website into ec.europa.eu, which happened in 2006 (instead of europa.eu.int).    

Present integration theories in Europe rotate around three main ideas: federalism, neofunctionalism and liberal inter-governmentalism with the former as acquiring the leading positions. It is difficult to forget in this regard Ernst Haas, already in 1958 predicting that national political actors would be persuaded to shift their loyalties towards a new center the institutions of which would take over the national states (Haas, 1958).

However, I can’t help worrying about some things concerning the book: first of all, the title, it could still work as an appropriate one for a bachelor-level module, not any higher in European studies. Otherwise, the title should have turned into “European Union policies”. “Turning” the title into policies-line or, probably, to more appropriate “federation-type” would be feasible enough, in particular, after the European Union’s (1992) and Nice (2003) Treaties (to say nothing about the Lisbon, 2007, which actually ended playing with the term “integration”). The member states and politicians’ way of mind left “integration” outside their vocabulary and perspectives.

Suffice it to look, for example, into preamble of the first of the treaties forming the present Lisbon Treaty (that is, the TEU), as it is the preamble that provides us with the most important sign of understanding which the member states associate with their political and economic “intentions”. The word integration is used only 3 times, and it’s for a concise one-page text where all the words are weighed scrupulously! Remarkable, that twice the term is used in the sense of “a new stage” in European development and once as “implementing policies ensuring that advances in economic integration are accompanied by parallel progress in other fields”. 

In various European universities, for example in Riga Stradina University, the integration course for master students already in 2002 had been changed into the “EU Economic Policy” (though in the bachelors’ level the word integration is still applied in the syllabus); however, it is due in part to specific accession process that the Baltic States experienced during the enlargement. The University’s European Studies Faculty even published a textbook supplementing the masters’ module, supported by the Commission [Eteris E. European Union: Economic Policy, RSU, 2007. – 225 pp.]        

Second, the dubious division the authors have chosen concerning macro- and micro-economics in European development. It is to be remembered that in the classic “Guide to European Policies” by Nicholas Moussis already in 2000 (the 6^th edition) the coming changes were envisaged in pursuit to differentiate the policies. That was a couple of years before the Constitutional Convent started its unsuccessful work. In his guide, N. Moussis made sufficient policies’ classification and division (although, as a matter of fact, with a short introduction to history and stages of European integration). He made the following division of policies’ classification: citizens’ policies, those of horisontal and sectoral nature, and external policies.

Nowadays there is no need to imagine anything else but the federalist’s approach to member states – the EU institutions’ relationships: the LT has provided the member states with a clear-cut “division of competences” clearly directing to the federal structure of the Union’s economy (as well as other developmental directions). Isn’t it the end of “integration-like” approaches, shall we not leave it to the floor of purely theoretic discussions? One of the vital “finishing” examples of the latter was an excellent compilation of texts on European integration issues in Debates on European Integration (Ed. M. Eilstrup-Sangiovanni, 2006). As well as the second edition of another articles’ collection, European Integration Theory, issues by Oxford University Press in 2009.

Truly enough, the authors touched upon the new LT approaches to “competence division”, but that was not more than “scratching the surface” approach of the important subject, which is in fact a substitute for “integration”.  

And finally, theories of European integration have been extensively discussed in literature during the last 3-4 years; more theories are hardly needed, in particular of the “micro-macro” kind of analysis, which seemed quite outdated both in predicting the present economic and financial crisis and in finding ways out of it. That was, in essence, the British Academy’s answer (22 July 2009) to The Queen’s question of why had nobody noticed that the crisis was on its way.

In this regard it is wellworth taking into consideration Keynes’s dictum that “economics is a moral and not a natural science”, which means that educational courses in micro- and macro- economics should turn into economic and political history, economic theories, sociology, moral and political philosophy.

Instead, a practical affect of present “integration” (if one still wishes to use the traditional word instead of a new one) onto national economic and social development could be of an advantage to reveal an impact-analysis of presently formulated “division of competences”. Hence, economists in each member state shall make a book (both analytical and educational) on the integration’s impact on member states’ economies, in the sense of federal division of competences, e.g. textbooks like EU economic policy and the UK, EU economic policy and France, etc.

Besides, because of the old stuff the book is mainly based on, some observations and facts are simply misleading, e.g. “big-5” institutions on p. 68, are presently becoming the “big-7 institutional framework”; among EU main legal principles, except the two mentioned on pp. 66-67, there should be some others, e.g. direct applicability, legitimate expectations, etc. Then on p. 71, the Council’s summit is marked as the one in March 2008, though the photo is from German Council’s presidency, which was in the first half of 2007 (hence the famous Declaration on the 50^th anniversary of the EEC Treaty of 1957). The same can be said about the notorious “social dumping”, p. 245, which is all in the past. Such examples, unfortunately, can go on and on…    

What the authors does not explain (and this is the greatest disappointment) is where the “economics” of European integration is heading to; it is probably the result of outdated economic vision and the lack of political perspective for the region.

From 1 December 2009, the 27 Union’s member states are making their policies according to the provisions of the Lisbon Treaty (LT). The countries have had enough time to prepare their development plans according to LT, e.g. the text was available for considerations since 2007 (see: Official Journal of the European Union, 17 December 2007, C 306, pp. 1-199). On top of it, the Treaty’s final version was published in the OJ on 9.5.2008, C 115. No doubt, the authors could make some changes, as soon as the date of the book’s publication is 2009!

The changes that LT introduced into “integration” are so fundamental that taking them seriously enough would change both the whole structure of the textbook and the approaches to “integration”.

However still, the textbook can be of an important source of reference to students on the history of European integration; they have to know with what assets the European idea evolved during last almost 60 years of integration, entering the new stage envisaged in the new Lisbon Treaties.