Throughout the present decade, neo-liberal economic strategies—interacting with intense competitive pressures on world markets—have sought to remodel the capitalisms of Western Europe.footnote In the context of mass unemployment the drive towards a renewed subordination of workforces has found unity and direction in the demand for labour flexibility, while deregulation, trade union reform, tax reductions, have worked to widen the field of action for business enterprises, now revalued socially and culturally to become not only indispensable instruments of economic progress but even privileged sources of value and meaning.footnote1 The culmination of this neoliberal advance is surely the European Community’s project to complete a single market in the twelve member states by the magical date of 1992. In concrete administrative terms, market completion brings a series of some three hundred detailed directives aimed at levelling the legal, technical and fiscal barriers to thoroughgoing competition on a continental scale.footnote2 Though most of these measures seem dry and bureaucratic in themselves, their cumulative impact will be a major liberalization of economic activity. In most cases, the intention is not to substitute Community versions for existing national regulatory systems but merely to outlaw any impact of the latter on the free movement of commodities, services and factors of production: a veritable ‘bonfire of controls’ which will eclipse the minor relaxations first covered by that slogan.

Politically the ‘big market’ results from the capture by neo-liberal forces of the integration process in Western Europe. Only ten years ago a quite different content could be imagined for the developing Community, in, for example, a proposed exercise in indicative planning.footnote3 Today, integration means only the unification of national markets, with other definitions of cooperation and interaction either displaced by the neo-liberal formula or subordinated to it. Although the programme of directives to eliminate ‘barriers’ is as yet hardly begun, its potential is being eagerly anticipated in a wave of trans-European mergers and capital restructuring aimed at partitioning and stabilizing the new economic space. Formidable new interests are being constructed to shape future Europe-wide regimes in television, telecommunications, aviation and financial intermediation of all kinds, to redistribute market shares in sectors from confectionery and food processing to publishing and computers.

A widening gap seems to separate labour movements and democratic forces from any purchase over the economic and political processes at work. In the advanced democracies of Norway, Austria and Sweden, once content to trade with ec member countries while preserving nationally demarcated social and political systems, the costs of exclusion from the big market are being anxiously recalculated, while in the member states themselves an atmosphere of obsolescence surrounds previous national strategies for control and intervention in large-scale industry. It is hard even to recall today, for example, the aspirations of the French Socialist–Communist coalition of 1981–83 which, deploying all the economic instruments available to the nation state, offered not a change in but a change of society. The market completion programme at the same time accelerates the dissolution of national economies as distinct objects of control, thus excluding any repetition of the French experiment, and redefines the European Community in purely market terms as a huge field for the free play of private interests, increasingly open to global trade and investment flows and only minimally supervised by the tiny apparatus of the ec Commission.

Yet in spite of its extravagant presentation on the hoardings (‘Are You Ready for 1992?’; ‘Europe is Open for Business!’; ‘You Can’t Risk Missing This One!’) the big market, while monopolizing the attention given to European affairs, fails to arouse the interest or enthusiasm one might expect for such a vast undertaking. What will be the concrete results, the changes in everyday life, produced by this thorough reorganization of markets and rules of competition? There is, in fact, a remarkable disproportion between the immense scale of the programme, surely the mose ambitious practical expression yet of neo-liberalism, and the paucity of the results expected even by its advocates. The most important economic problem of the member states—the persistence over a decade of unprecedented levels of unemployment (currently 16.6 million in the ec)—will hardly be affected by the programme. Even the inflated guesstimates of the Cecchini Reportfootnote4—greeted by unanimous professional derision—offer only limited relief. The big market crowns the neo-liberal dominance of European policy formation but confirms the inability of neo-liberalism to master the central problem in Europe’s economic and social life. By 1992, then, a greater or lesser number of the three hundred directives will have come into force. (The stubborn resistance of entrenched producer interests is in fact delaying some of the most significant of the proposed liberalizations.) But, in advance, it is accepted that in 1992 or afterwards the achievement of the legislative programme, although it may bring some benefits to consumers, will not translate into any radical improvement in economic security or employment opportunities for the populations of the Community.

Is it possible to discern, through the approaching disappointments of post-1992 Europe, a more effective agenda for European recovery, based upon a deeper and more adequate account of the Community’s malaise than that provided by contemporary versions of Benthamite economic analysis? Below, we attempt to assess the Community’s present situation, not measured against the norm of general competitive equilibrium, but in terms of the concepts proposed by the theory of capitalist regulation.footnote5 We interpret the theory widely, not as a variant of Marxist economic doctrine but as a continuing effort to synthesize a coherent critical account of advanced capitalist systems which draws on all the theoretical sources available—Marxism, Keynesian and post-Keynesian economic analysis, structuralist and other critical social theory—and attempts to embody the most fertile hypotheses on the meaning and direction of present economic upheavals. Since the publication of the regulation school’s inaugural texts (the most influential, Aglietta’s account of us capitalism, being itself a dazzling work of synthesis), regulation theory has become increasingly diverse, even divergent.footnote6 But the productivity and openness of the writers involved and a commitment to overall theoretical coherence, have made their cumulative work perhaps the most effective challenge to the present dominance of free-market economic doctrines. Thus it seems useful to examine the process of European economic integration in the light of this developing body of theory. Our aim is not the immediate production of a policy agenda, but merely a critical assessment of present policies which could help clear the way for that task.