Overcoming Economic Nationalism: The “Invisible Hand” Solution of the European Union

Gerhard Wegner

Journal of Contextual Economics (JCE) – Schmollers Jahrbuch, 2019, vol. 139, issue 2–4, 421-436

Abstract: After the FirstWorldWar, a previously well-functioning economic order collapsed in Europe and the Western countries. Economic nationalism of the interwar period also changed the international economic order dramatically and became one issue of the ColloqueWalter Lippmann. After the “half- and three quarters Western democracies” (Tooze 2015) of the period prior to WorldWar I had turned into full democracies, they proved incapable of restoring the liberal prewar economic order domestically and in international trade. Bilateral and multilateral trade negotiations failed, giving rise to a new debate on the prerequisites of an international economic order. I argue that decades later the European Union found a solution to that issue. Of key importance was the gradual constitutionalization of the European Treaties. I show that the trade liberalization prepared by the courts resembles a concept suggested by Jan Tumlir but defies application to non-EU countries. By transforming fundamental economic freedoms laid down in the European Treaties into subjective rights through jurisprudence of the European Court of Justice, the process of trade liberalization occurred in a non-politicized mode. The incompleteness and tardiness of creating a Common Market was the inevitable price for this success story. A withdrawal from this constitutionalization of basic economic freedoms, as proposed recently, for example, cannot be recommended. Their arguments are being examined. The reduction of the European Treaties would lead to a re-politicization of trade policy bearing unforeseeable consequences for free competition.

JEL-codes: B25 B52 F02 F55 (search for similar items in EconPapers)
Date: 2019
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Journal of Contextual Economics (JCE) – Schmollers Jahrbuch is currently edited by Peter J. Boettke, Nils Goldschmidt, Stefan Kolev, Stephen T. Ziliak and Joachim Zweynert

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