The European Union: A Noble Dream or a Neoliberal Cage?
Gabriel Campoamor
The Founding Myth and the Neoliberal Turn
Since its conception amidst the ashes of World War II, the European Union has been presented as a project of peace, cooperation, and shared prosperity. The initial step, the European Coal and Steel Community (ECSC) established in 1951, was a visionary move to pool the very resources of war between historic adversaries, primarily France and the Federal Republic of Germany, under a common High Authority. This act of economic integration was explicitly designed to make war "not only unthinkable but materially impossible" and to lay the groundwork for a deeper political union. The subsequent Treaty of Rome in 1957, establishing the European Economic Community (EEC), expanded this cooperation to a common market, aiming to foster economic growth and an "ever-closer union" among the peoples of Europe. This early phase, often referred to as the "Fordist" era of European integration, was characterized by significant economic growth, rising wages, and the expansion of the welfare state in member nations, suggesting a model of market liberalisation balanced by social progress.
However, from the 1980s onward, a significant ideological shift began to redefine the European project. This "neoliberal turn" was not a sudden event but a gradual process embedded in successive treaties and institutional reforms. The Single European Act of 1986 and the creation of the Single Market in 1992 were pivotal moments, aggressively pushing for the "four freedoms": the free movement of goods, services, capital, and labour. While presented as a means to boost efficiency and prosperity, this framework was deeply influenced by ordoliberal and neoliberal economic theories that prioritize market competition and price stability.
This ideological shift was cemented with the Maastricht Treaty of 1992. The treaty not only paved the way for the single currency, the Euro, but also enshrined a specific economic model into the EU's constitutional framework. It established the European Central Bank (ECB) with a mandate focused almost exclusively on controlling inflation, and introduced strict fiscal rules—the infamous "Maastricht criteria"—limiting national budget deficits to 3% of GDP and public debt to 60% of GDP. These rules, born from a neoliberal belief that private markets are self-stabilizing and that government intervention is the primary source of economic instability, severely constrained the ability of national governments to use fiscal policy for counter-cyclical measures or social investment. Critics argue that these treaties effectively "locked in" a neoliberal model, making it incredibly difficult for member states to pursue alternative, more socially oriented economic policies.
The Institutions: A Question of Democracy and Power
The institutional architecture of the EU is a complex and often opaque system that raises significant questions about democratic legitimacy and accountability. While the EU appears to have all the characteristics of a democratic system, a closer examination reveals a significant power imbalance that favours executive and technocratic bodies over directly elected representatives, creating a "democratic deficit."
The European Commission: Often described as the "guardian of the treaties," the Commission is the EU's executive arm and holds the sole right of legislative initiative. This means that only the Commission can propose new EU laws, a power that gives it immense agenda-setting authority. All of this while the Commission is an unelected body. Its members, one from each member state, are appointed by national governments and approved by the European Parliament. This has led to accusations that it is an unaccountable technocracy, driving a deregulatory and market-oriented agenda with insufficient public oversight. The Commission's role in enforcing EU law, particularly the fiscal rules of the Stability and Growth Pact and competition law, has often been criticized for prioritizing market principles over social considerations, and for its lack of transparency in decision-making processes.
The Council of the European Union: The Council, composed of ministers from member state governments, is a key legislative body, sharing power with the European Parliament. Decision-making in the Council, especially on sensitive issues, often occurs behind closed doors in a complex web of committees and working groups, such as the powerful Committee of Permanent Representatives (Coreper). While this intergovernmental aspect ensures member states have a say, it also contributes to a lack of transparency and can lead to policy gridlock or bargains that reflect the interests of the most powerful states rather than the common good.
The only directly elected EU institution, the European Parliament, has seen its powers grow over time, particularly with the introduction of the "ordinary legislative procedure" (co-decision) which puts it on an equal footing with the Council for most EU legislation. It also has the power to approve or reject the appointment of the European Commission and holds budgetary authority. However, its influence remains limited in crucial areas. It lacks the right of legislative initiative and its powers of scrutiny over the executive, while strengthened, are often seen as insufficient. Furthermore, the complex "trilogue" negotiations—informal meetings between the Commission, Council, and Parliament to hammer out legislative compromises—are notoriously opaque, shutting out public scrutiny and undermining the democratic accountability of the legislative process.
The ECB: As architect of monetary policy for the Eurozone, the ECB's primary mandate is to maintain price stability, an inflation target of around 2%. Critics argue this singular focus, a hallmark of neoliberal monetarism, comes at the expense of other crucial economic goals like full employment. During the Eurozone crisis, the ECB's insistence on austerity and its role within the "Troika" (alongside the Commission and the IMF) imposed harsh fiscal consolidation on indebted nations, leading to deep recessions and social devastation, particularly in Greece. This has led to accusations that the ECB is not a neutral arbiter but a political actor enforcing a deflationary and creditor-friendly economic model.
The European Court of Justice (ECJ): The ECJ has been a major engine of European integration, establishing the principles of "direct effect" and the "supremacy" of EU law over national law. These landmark rulings have created a de facto constitutional order for the EU, where national sovereignty is significantly limited. While this has been crucial for creating a functioning single market, many of the Court's rulings have been criticized for prioritizing economic freedoms over fundamental social and labour rights. Landmark cases like Viking and Laval were interpreted as restricting the right to strike and collective bargaining if they were deemed to impede a company's "freedom of establishment." This has reinforced the view that the EU's legal order systematically favours market liberalisation over social protection, interpreting treaty freedoms as tools for deregulation.
The Neoliberal Cage in Practice: Austerity, Lobbying, and Social Dislocation
The theoretical and institutional biases towards neoliberalism within the EU have had damaging long-lasting real-world consequences, particularly evident in the response to the 2008 financial crisis and the pervasive influence of corporate lobbying.
The Troika and the Imposition of Austerity: The handling of the Eurozone debt crisis, especially in countries like Greece, Portugal, and Spain, starkly illustrated the punitive nature of the EU's economic governance. The "Troika" bypassed national democratic processes to impose brutal austerity packages in exchange for bailout loans. To meet the “Troika” criteria, the Greek government followed their instruction manual and had to cut the public spending, pensions, and wages; the privatization of state assets; and the dismantling of collective bargaining systems. These policies did not just fail to solve the debt crisis—in fact, Greece's debt-to-GDP ratio skyrocketed—they also created a humanitarian crisis, with unemployment soaring to over 25% (and 50% for youth), poverty levels increasing dramatically, and public health systems collapsing. The Troika's actions were seen by many as a form of "technocratic coup," where the democratic will of the Greek people, who had voted against austerity in a referendum, was ultimately ignored. This episode demonstrated that, within the architecture of the Eurozone, the principles of debt repayment and market discipline held precedence over national sovereignty and social well-being. The Stability and Growth Pact, which underpins this architecture, has been widely criticized for not promoting either stability or growth, but rather for forcing pro-cyclical cuts that stifle recovery and disproportionately harm public services like healthcare and education.
The Brussels Bubble, Lobbying and the Democratic Deficit: The EU's complex and multi-layered decision-making process creates numerous access points for lobbyists to influence policy, often away from public view. Brussels is home to one of the largest concentrations of corporate lobbyists in the world, with financial, chemical, tech, and agribusiness industries spending vast sums to shape legislation in their favour. The phenomenon of the "revolving door," where officials from the European Commission or Parliament leave their posts to take up lucrative jobs in firms they once regulated, is a persistent problem that raises serious concerns about certain conflicts of interest.
This intense lobbying pressure contributes significantly to the EU's "democratic deficit." While trade unions and NGOs also lobby, their resources are dwarfed by those of large corporations. This imbalance ensures that corporate interests are systematically over-represented in the policy-making process, leading to regulations that often favour profit over public health, environmental protection, and workers' rights. From the watering down of climate legislation to the weakening of financial regulations after the 2008 crash, the fingerprints of corporate lobbying are evident across a wide range of EU policies, reinforcing the perception of the EU as a "neoliberal cage" designed to serve the interests of capital.
The European Fortress and the Common Agricultural Policy
Beyond its economic and political structure, the EU's policies on migration and agriculture reveal further deep-seated contradictions, exposing a gap between its proclaimed value of human rights and environmental sustainability and the harsh realities of its practices.
"European Fortress": The EU's approach to migration and asylum is characterized by a bunker mentality, prioritizing the securitization of its borders over the protection of human lives and the right to asylum. A key instrument in this policy is Frontex, the European Border and Coast Guard Agency. Despite a mandate that includes upholding fundamental human rights, Frontex has been repeatedly accused of being complicit in human rights violations, including illegal pushbacks of asylum seekers on land and at sea. Numerous reports from NGOs, journalists, and even the EU's own anti-fraud office (OLAF) have documented how Frontex has turned a blind eye to the violent interception of migrant boats and their return to unsafe countries like Libya, a clear violation of international law and the principle of non-refoulement.
This militarized approach to border control has turned the Mediterranean Sea into a graveyard and created a humanitarian crisis at the EU's feet. This behaviour is not only inhumane but also hypocritical, as the EU simultaneously relies on migrant labour in key sectors of its economy. The focus on deterrence and externalization by paying countries like Turkey and Libya to act as Europe's border guards demonstrates a willingness to sacrifice human rights for political expediency, undermining the EU's claim to be a normative power founded on the rule of law and human dignity.
The Common Agricultural Policy (CAP): The Common Agricultural Policy is one of the EU's oldest and most expensive policies, consuming a significant portion of the EU budget. While ostensibly designated to support farmers and ensure food security, the CAP has been widely criticized for its regressive and environmentally damaging subsidy system. The vast majority of CAP payments are distributed based on the amount of land owned, meaning that large, intensive agribusinesses and wealthy, non-farming landowners receive the lion's share of the funds, while small, family-run farms struggle to survive.
This system creates a deeply unbalanced playing field, driving the consolidation of land into the hands of a few corporate players and contributing to the decline of rural communities. From an environmental perspective, the CAP has incentivized intensive farming practices that lead to soil degradation, water pollution, and a dramatic loss of biodiversity, including the decline of farmland bird populations. Despite successive reforms aimed at greening the policy, the fundamental model of subsidizing large-scale, industrial agriculture remains largely intact. This makes the CAP a prime example of how EU policy, under the influence of powerful lobbying interests, can perpetuate economic inequality and environmental harm, directly contradicting its own stated goals under initiatives like the European Green Deal.
Cracks in the Union: Brexit, Populism, and the Green Transition
The inherent tensions and contradictions within the EU project have, in recent years, manifested in a series of profound crises that challenge its very cohesion. The departure of the United Kingdom, the rise of right-wing populism, and the immense challenge of the green transition have exposed the deep political and economic fissures running through the continent.
The Lessons of Brexit: The United Kingdom's 2016 vote to leave the EU was a political earthquake, driven by a complex mix of national sovereignty concerns, anti-immigration sentiment, and a sense of being left behind by decades of deindustrialization and globalization. While the Leave campaign was dominated by the right, it drew support from across the political spectrum, including a "Lexit" current that argued the EU's undemocratic nature and its constitutional commitment to neoliberalism made progressive social and economic policies impossible to achieve within its framework.
The economic consequences of Brexit have been significant. Most analyses conclude that leaving the EU's single market and customs union has reduced the UK's GDP, trade, and investment compared to a scenario where it had remained. New trade barriers have created friction and costs, particularly for small businesses and sectors deeply integrated into European supply chains. Socially, Brexit has exposed and deepened divisions within British society and created significant challenges for public services, such as the NHS, which relied heavily on EU migrant workers. For the EU, while Brexit did not trigger an immediate domino effect some predicted, it served as a stark warning and has forced a conversation about the future direction of the Union.
The Rise of the Far-Right: Across Europe, far-right and nationalist populist parties have gained significant popularity. While the reasons are complex and nationally specific, a clear link can be drawn to the economic and social consequences of EU policies. The austerity measures imposed after the 2008 crisis, particularly in Southern Europe, created a fertile ground for anti-establishment movements. In countries like Greece and Italy, mainstream parties that implemented EU-mandated cuts saw their support collapse, while new populist forces on the right surged by channeling anger against both national elites and Brussels. The far-right has successfully weaponized issues like migration, scapegoating immigrants for economic insecurity and cultural anxieties that are not produced by them but by local and national elites. In this sense, the rise of the far-right is not an external threat to the EU but, in many ways, a product of its own neoliberal policy failures and its democratic and social deficits.
The European Green Deal: The European Green Deal represents the EU's flagship response to the climate crisis, an ambitious package of policies aiming to make Europe the first climate-neutral continent by 2050. It includes headline targets for emissions reductions, renewable energy, and nature restoration, and is backed by significant funding mechanisms. However, the Green Deal is also a site of intense political struggle. While lauded for its ambition, it faces criticism for its potential social impacts and its reliance on market-based mechanisms and technological fixes, a model often termed "green capitalism."
Critics argue that the Green Deal does not go far enough in challenging the underlying drivers of environmental destruction, namely the endless pursuit of economic growth and profit. There are serious concerns that the costs of the transition will be disproportionately borne by working-class households, for example, through carbon pricing on transport and heating, while polluting industries receive subsidies for unproven technologies. The recent farmers' protests across Europe highlight the tensions between environmental regulations and the economic precarity of many agricultural producers. Achieving a truly just transition that leaves no one behind will require a radical shift away from the EU's market-led approach towards one that prioritizes public investment, social equity, and democratic ownership of key sectors like energy. Without this, the Green Deal risks exacerbating social inequalities and fueling a right-wing backlash against climate action that will be very detrimental against all of us.
Conclusion: A Crossroads for Europe
The European Union stands at a critical juncture. The noble dream of a peaceful and prosperous continent, united in its diversity, remains a powerful and inspiring vision. The EU can rightfully claim credit for facilitating decades of peace between its members, creating a vast area of rights and freedoms, and establishing a single market that has brought economic benefits to many.
However, as this analysis has demonstrated, the dream is overshadowed by the stark reality of the "neoliberal cage." For decades, the European project has been fundamentally shaped by an economic ideology that prioritizes market competition, fiscal austerity, and deregulation over social solidarity, democratic accountability, environmental sustainability, a welfare state, and workers rights. This ideology has been hardwired into its foundational treaties, enforced by its powerful and, often unaccountable institutions, and defended by influential corporate interests.
The consequences are clear: a "democratic deficit" that alienates citizens from the centres of power; rising social and economic inequality both between and within member states; a brutal, militarized response to migration that betrays Europe's humanitarian values; and an environmental policy that,
despite its ambitious rhetoric, struggles to break free from a growth-dependent, capitalist logic. The crises of recent years are the predictable outcomes of the EU's inherent contradictions.
There are two diverging paths in front of us now.
The first is to continue with our current trajectory: an Europe that doubles down on market integration, fiscal discipline, and centralized, technocratic governance, while attempting to manage the social and political fallout with palliative measures. This path risks further alienating its citizens, deepening social divisions, and ultimately failing to meet the existential challenges of climate change and global inequality. It is a path that could lead us to the slow disintegration of the EU, not through a dramatic collapse, but through a hollowing of its democratic legitimacy and social purpose.
The second path is one of radical reform. This would require a fundamental break with the neoliberal orthodoxy that has dominated the last four decades. It would involve rewriting the treaties to subordinate market freedoms to social and environmental rights; democratizing the EU's institutions by giving real power to the European Parliament, including the right of legislative initiative; dismantling the punitive architecture of austerity and replacing it with a framework for sustainable public investment; and embracing a foreign policy based on genuine international solidarity rather than a "European Fortress".
This is a debate between those who believe the EU can be reformed from within and those who, from a "Lexit" perspective, argue that the institutional and legal cage is so rigid that progressive change is only possible by leaving it. Regardless of which position one takes, it is undeniable that the status quo is untenable. The European Union cannot survive as a project that is perceived by millions of its citizens as an engine of insecurity and a vehicle for elite interests. To reclaim its founding promise, it must transform itself from a neoliberal cage into a true democratic and social union. The choice between these futures will define the continent for generations to come.
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