Throughout the present decade, neo-liberal economic strategies—interacting with intense competitive pressures on world markets—have sought to remodel the capitalisms of Western Europe.footnote^＊ In the context of mass unemployment the drive towards a renewed subordination of workforces has found unity and direction in the demand for labour flexibility, while deregulation, trade union reform, tax reductions, have worked to widen the field of action for business enterprises, now revalued socially and culturally to become not only indispensable instruments of economic progress but even privileged sources of value and meaning.footnote¹ The culmination of this neoliberal advance is surely the European Community’s project to complete a single market in the twelve member states by the magical date of 1992. In concrete administrative terms, market completion brings a series of some three hundred detailed directives aimed at levelling the legal, technical and fiscal barriers to thoroughgoing competition on a continental scale.footnote² Though most of these measures seem dry and bureaucratic in themselves, their cumulative impact will be a major liberalization of economic activity. In most cases, the intention is not to substitute Community versions for existing national regulatory systems but merely to outlaw any impact of the latter on the free movement of commodities, services and factors of production: a veritable ‘bonfire of controls’ which will eclipse the minor relaxations first covered by that slogan.

Politically the ‘big market’ results from the capture by neo-liberal forces of the integration process in Western Europe. Only ten years ago a quite different content could be imagined for the developing Community, in, for example, a proposed exercise in indicative planning.footnote³ Today, integration means only the unification of national markets, with other definitions of cooperation and interaction either displaced by the neo-liberal formula or subordinated to it. Although the programme of directives to eliminate ‘barriers’ is as yet hardly begun, its potential is being eagerly anticipated in a wave of trans-European mergers and capital restructuring aimed at partitioning and stabilizing the new economic space. Formidable new interests are being constructed to shape future Europe-wide regimes in television, telecommunications, aviation and financial intermediation of all kinds, to redistribute market shares in sectors from confectionery and food processing to publishing and computers.

A widening gap seems to separate labour movements and democratic forces from any purchase over the economic and political processes at work. In the advanced democracies of Norway, Austria and Sweden, once content to trade with ec member countries while preserving nationally demarcated social and political systems, the costs of exclusion from the big market are being anxiously recalculated, while in the member states themselves an atmosphere of obsolescence surrounds previous national strategies for control and intervention in large-scale industry. It is hard even to recall today, for example, the aspirations of the French Socialist–Communist coalition of 1981–83 which, deploying all the economic instruments available to the nation state, offered not a change in but a change of society. The market completion programme at the same time accelerates the dissolution of national economies as distinct objects of control, thus excluding any repetition of the French experiment, and redefines the European Community in purely market terms as a huge field for the free play of private interests, increasingly open to global trade and investment flows and only minimally supervised by the tiny apparatus of the ec Commission.

Yet in spite of its extravagant presentation on the hoardings (‘Are You Ready for 1992?’; ‘Europe is Open for Business!’; ‘You Can’t Risk Missing This One!’) the big market, while monopolizing the attention given to European affairs, fails to arouse the interest or enthusiasm one might expect for such a vast undertaking. What will be the concrete results, the changes in everyday life, produced by this thorough reorganization of markets and rules of competition? There is, in fact, a remarkable disproportion between the immense scale of the programme, surely the mose ambitious practical expression yet of neo-liberalism, and the paucity of the results expected even by its advocates. The most important economic problem of the member states—the persistence over a decade of unprecedented levels of unemployment (currently 16.6 million in the ec)—will hardly be affected by the programme. Even the inflated guesstimates of the Cecchini Reportfootnote⁴—greeted by unanimous professional derision—offer only limited relief. The big market crowns the neo-liberal dominance of European policy formation but confirms the inability of neo-liberalism to master the central problem in Europe’s economic and social life. By 1992, then, a greater or lesser number of the three hundred directives will have come into force. (The stubborn resistance of entrenched producer interests is in fact delaying some of the most significant of the proposed liberalizations.) But, in advance, it is accepted that in 1992 or afterwards the achievement of the legislative programme, although it may bring some benefits to consumers, will not translate into any radical improvement in economic security or employment opportunities for the populations of the Community.

Is it possible to discern, through the approaching disappointments of post-1992 Europe, a more effective agenda for European recovery, based upon a deeper and more adequate account of the Community’s malaise than that provided by contemporary versions of Benthamite economic analysis? Below, we attempt to assess the Community’s present situation, not measured against the norm of general competitive equilibrium, but in terms of the concepts proposed by the theory of capitalist regulation.footnote⁵ We interpret the theory widely, not as a variant of Marxist economic doctrine but as a continuing effort to synthesize a coherent critical account of advanced capitalist systems which draws on all the theoretical sources available—Marxism, Keynesian and post-Keynesian economic analysis, structuralist and other critical social theory—and attempts to embody the most fertile hypotheses on the meaning and direction of present economic upheavals. Since the publication of the regulation school’s inaugural texts (the most influential, Aglietta’s account of us capitalism, being itself a dazzling work of synthesis), regulation theory has become increasingly diverse, even divergent.footnote⁶ But the productivity and openness of the writers involved and a commitment to overall theoretical coherence, have made their cumulative work perhaps the most effective challenge to the present dominance of free-market economic doctrines. Thus it seems useful to examine the process of European economic integration in the light of this developing body of theory. Our aim is not the immediate production of a policy agenda, but merely a critical assessment of present policies which could help clear the way for that task.

According to the neo-liberal analyses that have, over the last fifteen years, displaced the conservative variant of Keynesianism which previously dominated policy formation, Western Europe’s economic malaise results from a lack of structural adaptation. Thus far, but no further, their case might be accepted both by the proponents of regulation theory and by other heterodox commentators. Neo-liberal theory, however, proceeds to identify the desired structural renovation with the tendential outcome of a process of generalized market competition. Almost tautologically, it is then asserted that persistent structural inadequacies must derive from rigidities in market adjustment and barriers to free competition.footnote⁷ Considered in abstract terms, the argument is not implausible. It even seems to echo some of the Marxist accounts of the Depression of the thirties, which interpreted the unprecedented duration of that crisis in terms of a blocked competitive mechanism, and thus the inability of new and dynamic enterprises to supplant their older, inefficient rivals.

The neo-liberal case begins to meet difficulties when one asks for concrete examples of the rigidities and barriers in question. A decade ago, ready targets were available: Keynesian interventionism, which refinanced lossmaking industry rather than accept its supersession by new enterprise; over-mighty unions, imposing disabling constraints on the use of labour; high tax rates and bloated welfare budgets, which dammed the sources of individual motivation. The extreme case of Britain shows, however, that as each of these dragons is slain in the unchecked advance of free-market conservatism, the path to a renewed economic dynamic is not cleared. In the absence of a critical return to the premises of the neo-liberal agenda, the net has to be cast more and more widely, in the search for the market rigidities whose existence is given a priori. No element of state or civil society escapes assault as a version of totalitarianism appears in the refusal to recognize any limits to the drive for market-led economic reconstruction. If the mere decline of the labour movement does not secure a revival of entrepreneurial dynamism, then the obstacles must be sought in the health service, the educational system, indeed in the resistances of an archaic national culture. The very success of neo-liberalism in contemporary Europe, above all in Britain, forces it closer to this dilemma: either a frenzied fuite-en-avant, to raze every obstructive contour of the social landscape, or a critical revision of its metaphysical premises.