Essay
There is little reason to celebrate the 30th anniversary of the Single Market. We urgently need industrial policies that are truly European. This is essential, particularly in the fields of digital technology and ecological transition, which raises questions of means, in particular. We also need to change the competition policy to encourage consolidation of European companies, instead of fighting it.
Read the full publication "30 years of the European Single Market: New visions for a green Europe"
In 2023, we will celebrate 30 years, a full generation, since the European Single Market was established. What does the future hold for it? In order to agree on where we want to go from this point on, particularly between the French and the Germans, we must first agree on the results of its implementation.
The Single Market was based on a clear foundation: the uncontested domination of the ordoliberal ideology in the Europe of Helmut Kohl, François Mitterrand (post 1983) and Margaret Thatcher in 1986, when the Single Act preparing it was adopted. What Europeans needed were strict rules to strengthen competition and strong institutions to enforce them. There was no need for a bigger common budget, nor for common fiscal and social rules: if the rules guaranteeing competition were put in place and respected, the European economy would be boosted and the well-being of Europeans would increase.
The last 30 years have shown how wrong and damaging this vision was for Europe and its citizens. The Single Market has weakened the European economy and strengthened a deep Euroscepticism that today endangers the very survival of the European project, as the victory of Giorgia Meloni in Italy or the longevity of Viktor Orbán in Hungary attest.
The implementation of the Single Market has in fact led to the elimination of national industrial policies. This was a logical development: in a single market where trade in goods, services and capital was liberalized, it was no longer acceptable for one state or another to subsidize an activity to the detriment of economic actors in other countries of the Union. However, as no European industrial policy has taken over from these disappeared national industrial policies, it is hardly surprising that European players have missed the boat on all the industrial revolutions that have taken place over the last 30 years, unlike their Korean, Chinese or American counterparts, who have been actively supported in these emerging fields by their respective states. This has happened to the point that today Europe hardly exists in any high-tech sector.
One might have imagined that the Single Market would at least facilitate the emergence of truly European industrial giants through the consolidation of the various pre-existing national champions. However, this has not been the case in most sectors. On the one hand, globalization has pushed these national champions to seek their growth relays outside the Union, and on the other hand, the EU’s DG Competition has imposed a narrow interpretation of the notion of ‘dominant position’ that has prevented such mergers.
The logic of the Single Market, and the cult of competition that it has put in place, has also contributed to destabilizing and dismantling public services throughout Europe. Here again, it was not necessarily illogical to remove national specificities in certain fields if we wanted to unify the European market. But no European public service has taken over from the national public services that were called into question. The European Union still ignores the very notion of public service, which it only tolerates at times as an exception to the rules of competition.
Combined with the enlargement of the Union towards Eastern European countries, whose standard of living was much lower than that of Western European ones, the Single Market has greatly aggravated fiscal and social dumping within the Union in the absence of common fiscal and social rules. This problem culminated, in particular, with the episode of the so-called Bolkestein directive on the liberalization of service activities and the many abuses associated with "posted workers". Some progress has been made in recent years in the areas of posted workers and minimum wages, but much remains to be done, particularly in the fight against fiscal dumping.
It is probably in the field of energy that the Single Market, focused solely on competition, has shown most clearly not only its limits but also its profoundly harmful character for the European project. The development of artificial pseudo-competition in this highly capital-intensive sector has pushed up prices for users everywhere. By neglecting the most elementary constraints in terms of security of supply, security stocks and long-term planning of critical infrastructure, the Single Market has placed Europe in an excessively vulnerable position vis-à-vis the energy blackmail exercised by Vladimir Putin, which is currently threatening to plunge the Union into a serious economic crisis
In short, there is little reason to celebrate the 30th anniversary of the Single Market. What direction should we take for the future? If we accept the diagnosis formulated above, it follows logically that we urgently need industrial policies that are truly European. This is essential, particularly in the fields of digital technology and ecological transition, which raises questions of means, in particular. If the United States has a powerful industrial policy, even though it is a federal state, it is notably through its large federal defence budget. We also need to change the competition policy to encourage consolidation of European companies, instead of fighting it. We urgently need a European statute for the public sector and the non-profit sector that protects them from the encroachment of the private sector in the name of competition in areas where their action is legitimate. We must (finally) make progress on tax harmonization, especially on the taxation of corporate profits. In terms of social harmonization, we should, in particular, generalize Mitbestimmung (worker’s participation) and create a European model of corporate governance that gives employees their full place. Public transfers should also be developed within the Union to accelerate the convergence of living standards and salaries and to limit the incentive for the poorest countries to resort to social and fiscal dumping to ensure their development. Finally, we need a real Energy Union that no longer has the development of competition as its core but security of supply.
In short, a major turnaround is needed in relation to the catastrophic results of the policies pursued for 30 years in the name of the Single Market. Is it possible to move in this direction, especially at the Franco-German level? The ideas developed above are, in my opinion, the subject of a fairly broad political consensus in France. If they have not been implemented so far in Europe, it is mainly because German public opinion and governments have been firmly opposed to them and have very actively supported the ordoliberal logic that prevailed until now with the Single Market. However, we have perhaps reached an interesting turning point in this respect.
German public opinion, which is more sensitive to these issues than that of the French, has already accepted to enter into a planning and dirigiste logic in order to face the climate crisis with the Energiewende (energy transition). It seems ready to support this kind of approach on a European scale. With Trump, Putin and XI Jinping, the German public has also (finally) understood that their country can never be a great Switzerland that, while not caring about what happens in the rest of Europe, successfully exports big cars and machines to China, the United States and Russia. The German public has also (finally) understood that although its industry is much stronger than that of its neighbours, especially France, its future is not assured because it lacks sufficient expertise in the high-tech sector. And for this reason, it could accept (finally) the need for a European industrial policy.
In short, after having spearheaded the Europe of competition and ordoliberalism with the Single Market alongside the United Kingdom, Germany seems to be (finally) ripe to becoming, alongside France, a driver of an ambitious European public action in the service of ecological transition, social cohesion and the resilience of the European economy. But Germany is a slow-moving vehicle, and a race is on with the rise of the Eurosceptic far right and the weakening of the European economy due to the damage caused by the Single Market. Let's hope that together we will be able to turn things around in time...
