THE SINGLE EUROPEAN CURRENCY IN NATIONAL PERSPECTIVE

THE SINGLE EUROPEAN CURRENCY IN NATIONAL PERSPECTIVE

Also by Bernard H. Moss THE ORIGINS OF THE FRENCH LABOR MOVEMENT Also by Jonathan Michie CONTRACTS, COOPERATION AND COMPETITION: Studies in Economics, Management and Law (edited with Simon Deakin) FIRMS, ORGANIZATIONS AND CONTRACTS: A Reader in Industrial Organization (edited with Peter Buckley) THE ECONOMICS OF RESTRUCTURING AND INTERVENTION THE POLITICAL ECONOMY OF SOUTH AFRICA'S TRANSITION (edited with Vishnu Padayachee)

The Single European Currency in National Perspective A Community in Crisis? Edited by Bernard H. Moss Associate Institute of European Studies London and Jonathan Michie Professor of Management Birkheck College University of London

First published in Great Britain 1998 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 978-1-349-26581-7 ISBN 978-1-349-26579-4 (ebook) DOI 10.1007/978-1-349-26579-4 First published in the Uni ted States of America 1998 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 978-0-312-21531-6 Library of Congress Cataloging-in-Publication Data The single European currency in national perspective : a community in crisis? / edited by Bernard H. Moss and Jonathan Michie. p. cm. Includes bibliographical references and index. ISBN 978-0-312-21531-6 (cloth) I. Monetary unions. 2. Monetary unions-european Union countries. 3. Monetary policy-european Union countries. 4. Monetary policy -European Union countries. 5. Money-European Union countries. 6. European Union countries-economic policy. 7. Europe-Economic integration. I. Moss, Bernard H. 11. Michie, Jonathan. HG3894.S57 1998 332.4'94-dc21 98-13924 CIP Selection and editorial matter Bernard H. Moss and Jonathan Michie 1998 Chapters I, 3, 7 Bemard H. Moss 1998 Chapter 2 Jonathan Michie 1998 Chapters 4-6, 8-10 Macmillan Press Ltd 1998 Softcover reprint ofthe hardcover 1st edition 1998 978-0-333-72548-1 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting lirnited copying issued by the Copyright Licensing Agency, 90 Tottenharn Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to!his publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sourees. 10987654321 07 06 05 04 03 02 01 00 99 98

Contents List of Tables Preface and Acknowledgements List of Contributors vii viii ix Introduction Chapter 1. 1 The Single European Currency in National Perspective: A Community in Crisis? Bernard H. Moss 8 Part I National Perspectives Chapter 2. Chapter 3. Chapter 4. Chapter 5. Chapter 6. Part II Chapter 7. Chapter 8. Economic Consequences of EMU for Britain Jonathan Michie 37 France: Economic and Monetary Union and the Social Divide Bernard H. Moss Hoist with its Own Petard: Consequences of the Single Currency for Germany Jorg Huffschmid 87 Italy Towards European Monetary Union (and Domestic Disunion) Annamaria Simonazzi and Fernando Vianello 105 State Intervention and the Question of European Integration in Spain Miguel Martinez Lucio 125 Europe in Crisis? Is the European Community Politically Neutral? The Free Market Agenda Bernard H. Moss 141 The Economic Limits of European Integration John Corcoran 168 v 58

vi Chapter 9. Chapter 10. Contents EMU and the Democratic Deficit Bill Morris 181 Why 'Employability' Won't Make EMU Work Andy Robinson 191 Name and Subject Index 210

List of Tables 4.1 Export shares of GDP for four leading EC members, the USA and Japan 91 4.2 Trade balances of four leading EC members in the 1970s, 1980s, and 1990s 91 8.1 Differential pricing in the EU 172 8.2 How Europe's poor pay more for the CAP 173 8.3 Unemployed as a percentage of the civilian labour force (July 1996) 175 vii

Preface and Acknowledgements All the material collected together in this book was commissioned and written specifically for publication here. We are therefore grateful to the authors for having undertaken this work and for having responded quickly yet fully to all editorial suggestions. Early drafts of some of the papers were presented and discussed at a conference on 'The Single Currency in National Perspective' held in London in October 1996. We are grateful to UACES for having hosted that event. Of course, responsibility for the views expressed in the following chapters is solely that of the respective authors. We are also grateful to Linda Auld and Sunder Katmala of Macmillan for the speedy and efficient production of the book. Bernard Moss would like to add his acknowledgements to Professors Francis Snyder and Alan Milward of the European University Institute in Florence for introducing him to the subject, to Drs Steven Jeffreys, Valerio Lintner, and Amy Verdun for reading portions of the manuscript, to the anonymous reader for Contemporary European History for comments on an article drawn from material in this book, and to Rene Mouriaux of CEVIPOF for his insights and friendship over the years. Jonathan Michie would like to add his thanks to, first, his colleague and co-author Michael Kitson of St Catharine's College, Cambridge, for joint work on these and other topics. Chapter 2 draws on some of that work. Secondly, to John Corcoran for having commissioned a guest lecture on the topic at the University of Sunderland Business School, the text of which became the first draft for Chapter 2. Thirdly, to Bernie Moss for having suggested this book in the first place and subsequently driving the project through to completion. And fourthly, to Robyn May for assistance in editing the manuscript. Finally, this book would not have been possible without the love and support of our families and we would therefore like to add a special thanks to them; from Bernard Moss to his wife Neysa and son David, and from Jonathan Michie to his wife Carolyn and sons Alex and Duncan. Bernard H. Moss Jonathan Michie October 1997 viii

List of Contributors John Corcoran is Senior Lecturer in Economics, Economics Division, Sunderland Business School, University of Sunderland. Jorg Hulfschmid is Professor for Political Economy and Economic Policy at the University of Bremen. His specialisms are in European integration, economic concentration, the European arms industry and, recently, financial markets. Miguel Martinez Lucio is a Lecturer at the University of Leeds. Jonathan Michie is Professor of Management, Birkbeck College, University of London. He was previously at the Judge Institute of Management Studies, University of Cambridge, and before that worked in Brussels as an Expert to the European Commission. Bill Morris is General Secretary of the Transport and General Workers' Union (TGWU). Bernard H. Moss is a professor of history, associated with the Institute of European Studies in London, who has written widely on modern and contemporary France. With an LL.M. from the London School of Economics, he has expanded his interests to the European Union. Andy Robinson is Business Week's correspondent in Madrid and an economic journalist on Spain's financial daily, Cinco Dias. Annamaria Simonazzi teaches economics at the University of Rome - 'La Sapienza'. She has written extensively on monetary policy and unemployment, competitive deflations and the European Monetary Union. Fernando Vianello teaches economics at the University of Rome - 'La Sapienza'. Among his publications are the entry on the Labour Theory of Value in the New Palgrave Dictionary, and a number of essays on growth and income distribution, the investment function, the Italian economy and the 1992 EMS crisis. ix