European Union * "New
Economy"
and Single Market Mark 2
THE Lisbon summit adopted
"a new strategic objective for the coming decade to become the most competitive and dynamic knowledge-based economy in the world".
FRANCOIS VERCAMMEN 1 HE European power created in the aftermath of the Balkans war has added a new string to its bow — a merciless competitive battle through (or for?) the establishment of the "new economy". The EU will use the method that succeeded in establishing monetary union, and that has been applied since June 1999 for its "autonomous defense": a mobilisatory discourse (which seeks to be "popular") and a precise calendar with objectives and schedules, regular verifications and mechanisms of "self-constraint"
The PR hullabaloo about the "new economy" should not be allowed to hide three other measures adopted at the Lisbon Summit. They are still more important, amounting more or less to a "Single Market Mk 2" , or a new stage of the project embarked on in 1992. First, the completion of a "totally integrated and liberalized telecommunications market" [on an EU scale] by the end of 2001. It is a colossal market in terms both of size (the number of consumers) and capital invested. It links the telephone network with the Internet and will propel a new stage in the "cyber-economy". Until now Internet exchanges had mainly created a market for International Viewpoint #322 June 2000 15
*European Union consumers - essentially travel, music, videos and books. But now there will be "inter-company" trade (without intermediaries): a cascade of upheavals will affect the structures of the economy (branches born out of others which collapse; changes between and inside branches; distribution, the banking sector, the merger between telephone and Internet sectors).
### Date fixed
Also, a date has been fixed for the completion of a unified financial market (2005), which will lift all barriers so as to "encourage investment". This applies particularly to the government bonds market. Making access to capital easier and cheaper is a major objective: besides state loans, there will be "the modernization of the rules concerning the public markets" and, on another level (in another chapter of the text) there is mention of favoring the opening of pension funds through a European juridical and institutional framework
These masses of capital will be needed to support the centralization of capital ("mergers and acquisition") but also because the Lisbon Summit decided to eliminate remaining restrictions on services before the end of 2000, notably by speeding up liberalization in sectors like gas, electricity, postal services and transport (Jospin having given way on the very eve of the summit). The management of airspace will also now be included in this area.
The EU's real thinking in relation to economic development is summed up as follows: "efficient and transparent financial markets favor growth and jobs allowing a better allocation of capital at less cost". Hence, the EU "will pursue its efforts seeking to encourage competition and reduce the general level of state aid".
In this context big capital's pressure for a minimal fiscal harmonization could succeed, which would be the cherry on the cake.
In reality, we are witnessing a kind of
"Single Market Mk 2": 15 years after the
Cockburn report (1985) which began the road towards the "Single Market" (January
1993), a whole series of reports will, over the coming ten years, organize the submission of our societies to a new wave of
"commodification" ' The "new economy"
is the key to everything; it is supported by a demagogic ideological discourse and magical virtues are attributed to it.
16 International Viewpoint #322 June 2000
According to its ideologues, the economy is not only new in the "temporal" sense, but will overcome conjunctural cycles, supplant the "old" material economy, propel an unprecedented take-off of productivity and create "full employment"!
This is the discourse which dominates the documents of the Summit. Recent events on the stock exchange have brought things down to earth. As to the predicted "disappearance" of the traditional economy (notably manufacturing), Kumar Bhattachary, one of the most influential English economists, said recently: "We are not Gods. We cannot live off fresh air and spend our days operating our mobile telephones".
### Warning issued
As to the progress of productivity in the United States, and the possible benefits on the social level which could flow from it, a US establishment economist (Robert J. Gordon) issues this warning (before the respectable Federal Reserve Bank of Chicago): "there has been no acceleration of productivity in 99% of the [US] economy outside of the sector producing "hardware" for computers. On the contrary... the deceleration in the manufacturing sector is getting worse; if you take computers out of the durable goods production sector, the recession sharpened if you compare the period 1995-99 to 1972-95, and there is no progress at all in the sector of the production of non-durable goods.". 2
The conclusion is drawn by another expert, Steve Hancke, a former adviser to
Reagan: "You Europeans, you must pay attention... The US economic "boom"
owes very much more to deregulation than to the technological revolution".3
Despite this good advice from those who know something of the subject, the
European Council, held in Lisbon, nurtured the "fantasy" of the new economy, promising that "the passage to a digital economy based on knowledge, encouraged by the existence of new goods and services, will be a powerful factor of growth of competitively and job-creation"
So much for the ideology. Then there are the practical decisions which the bosses will welcome: "At last concrete objectives... which at least have a chance of being positive for entrepreneurs and consumers".4
A series of measures are supposed to be taken between now and 2003. They amount essentially to three things. stat three things:
1. A radical enlargement of the market for the consumption of computers: each school (each class, each pupil?) in the EU will be connected to the Internet. With its collateral multiplier effects in every family and, certainly, among all teachers. Internet access to all basic public services, which, in their turn, must be equipped to handle this. This would be accompanied by a radical cut in the cost of access. All crowned by a European plan of action which will put in place an "information superhighway" to interconnect the different networks on a continental scale;
2. A multiform support for capital "which flows directly from a regulatory environment favorable to investment, innovation and the spirit of enterprise" (European Council). This means a series of juridical-institutional, fiscal, (anti-) social measures favorable to "risk capital" and to small and medium companies: amount of start-up capital, banking guarantees and conditions of indebtedness, lowering of costs of company management.
### Synergy
An important aspect is synergy, orchestrated and paid for by the state, organizing "the key interfaces between enterprises and financial markets, between R & D and the training institutes, between advice services and the technological markets". It is not by chance that the Council has adopted the project of a "[European] area of research", with its inter-state coordination, its growing opening to the private sector, the adoption of community patent, the circulation of researchers in the EU, and so on.
3. The training of the workforce to familiarize it with computers and the
Internet is indispensable. This is not just about schools, but rather the creation of a general environment where permanent training throughout active life is carried out at least cost, outside school and the workplace. Education will be shaken up well beyond the presence of computers in the classroom: it adds up to a real "commodification" of all social relation (as illustrated by the Allègre reform of education in France - see article by Christian
Piquet, page 7 of this issue). *
1. Quoted in the Financial Times of April 17th 2000.
2. "Has the "new economy" rendered the productivity slowdown obsolete ?", June 1999.
3. Interview in Corriere della Sera April 18th 2000.
4. Financial Times, March 25th 2000.