Professor Gerschenkron goes to Brussels. Russian Catch-up Economics and the Common European Space1

European Journal of Comparative Economics, The, 2006 by Hedlund, Stefan

Abstract

Ongoing discussions between Russia and the EU on the formation of a Common European Economic Space bring back to mind Alexander Gerschenkron's classic essay on economic backwardness in historical perspective. This paper argues that the institutions that once produced a specific kind of catch-up economics in Czarist Russia still remain largely the same. Unless negotiations between Moscow and Brussels take into consideration such fundamental institutional incompatibility, attempts at harmonization, expressed by Brussels as an attempt tp spread Western values, will be doomed to fail. A cynical conlusion views potential convergence as adaptation by Brussels to traditional Russian institutional patterns of rule evasion, rather than a Westernization of Russia.

JEL Classification: N23, P26, P48, P52

Keywords: Gerschenkron, Russia, Catch-up, Brussels

The ongoing expansion of the European Union represents an ambitious project, with an unclear purpose and a highly debatable future. Since these are potentially controversial statements, it may be just as well to begin by being specific. When the Treaty of Rome was signed, back in 1957, the origtnal six founding members were clearly focused and their visions, while ambitious, were still sufficiently limited in scope to remain within the realm of the realistic. In consequence, during the first decades after the signing, those who followed the lead of Jean Monnet and Robert Schuman did manage to score some rather impressive successes. The stepwise expansion from six to twelve and then fifteen members could proceed without straying too far from the original path and purpose pallace, 1995).

By the end of the 1980s, however, the process suddenly began to spiral out of control. As policy makers began debating the possibility of a major expansion to the east, it also became clear that serious reform would be needed of the inner workings of what was then still known as the European Community. Institutions that had orignally been devised for a membership of six would be clearly unsuitable for a membership that might expand to four or even five times that number (Laurent, 1994).

At present, we are looking at the outcome of the change in tack that followed, and it is not a pretty sight. The EU is marred by numerous open rifts between members; most notably so on the issue of whether commonly adopted rules should apply equally to all, or only to the less powerful. With both the French and the Germans being in open and defiant breach of the once famed Stability Pact, the very notion of common rules is falling into disrepute, and with the French and Dutch popular referenda having scuppered all hopes for an acceptance within the near future of an EU Constitution, it is at the moment highly unclear both what the future may bring and - indeed - what Brussels may want the future to bring. The question of possible further enlargement must be viewed against precisely this background (Eichengreen et al, 1998, Rohrschneider, 2002).

When future historians turn to produce a more dispassionate account of what the story of EU enlargement was really about, they will in all likelihood point at the Maastricht Treaty of 1991 as the real watershed. That was the time when a development that might have continued to work for the good of all was shifted onto a path where the only remaining unequivocal beneficiaries belong to a swelling neo-nomenklatura of privileged Eurocrats and Euro-politicians, and where the democratic legtimacy of the construct as a whole is becoming increasingly shaky.

The reasons that produced this unfortunate transformation of a once successful undertaking can be understood only against the backdrop of events that were being played out at the time in the eastern parts of Europe. When they met in the small Dutch town that would lend its name to the Treaty of Maastricht, western European political leaders were clearly intoxicated by their impressions of the fall of the Berlin Wall, and by the ongoing dissolution of the Soviet Union. Rightly sensing that genuine history was in the making, they allowed collective hubris to go into overdrive and as a result proceeded to view as their mission that of founding a new superstate, the United States of Europe.

1. United States of Europe

A coolheaded analysis would have pointed at an approaching crossroads that was indeed of historical significance. In one direction lay a widening of the community, in its existing institutional format and with existing levels of ambition. In the other lay a deepening of the process of integration, to the point even of adopting the trappings of independent "European" statehood - ranging from flag and hymn to a common currency and a common constitution prescribing common rules for the adoption and harmonization of legislation. The choice was a real one, with fix reaching implications.

Opting for the former alternative would have allowed rapid integration of the former socialist economies into a family of nations that were motivated by the promotion of free trade and economic cooperation. It would, however, also have meant postponing further and deeper integration, to a point in time when numerous new members would be in a position to have a say over the ambitions of the core of old members.