Economic integration, democracy and the welfare state

Abstract

The article examines the difficulties of European welfare states in the face of European economic integration. Taking a clue from the experience of territorial sub-units in economically integrated federal nation states, the implication seems to be that economic competition impedes welfare state regulations that impose unequal burdens on capital incomes and mobile business, and that effective welfare state policies depend on the powers of central governments. By analogy, that would suggest a need for the Europeanization of social policy. At the European level, however, welfare state policies are impeded not only by the European democratic deficit, but also by deeprooted conflicts of economic interest among member states, and by the widely divergent structural characteristics of national welfare states. The article examines the implications of this constellation for democratic legitimacy. In the concluding section, discussion focuses on social policy options that may still be viable at the national level, and on European-level strategies that might be able to reduce economic competition among national welfare states.