The ‘European Miracle’

We normally think of competition as an adversarial process. In the case of economic regulation, for example, adversarial competition is supposed to resolve the contest between different approaches in favour of one particular regulatory regime so as to avoid conflicting rules in a single transaction. But as Paul Stephan (2000) pointed out, regulatory competition can also exist in a cooperative framework that permits different regimes to coexist. Such systems encourage potential subjects of regulation to choose which regime they intend to follow. These choices in turn encourage states or other rule-making bodies to offer regulatory packages that will attract transactions from which they can derive economic and other benefits. The issue then becomes whether competition among regulatory authorities leads to races to the bottom or to races to the top, in the sense of regulations more closely tailored to the specific needs of different parties. This issue will be examined analytically in the next sections. In the immediately following pages I suggest, by way of introduction, that cooperative competition, far from being a new phenomenon, is one of the most characteristic features of European history in the centuries that preceded the rise of nationalism. Unfortunately, such precedents are too often ignored by those who assume that ‘ever closer union’ can be achieved, not through cooperative competition but only through top-down harmonization of the laws and policies of the member states of the EU.

David Landes, the distinguished economic historian, has even seen in the political fragmentation of the Old Continent one of the roots of its later global dominance. By decentralizing authority, fragmentation made Europe safe from single-stroke conquest – the fate of many empires of the past, from Persia after Issus (333 BC) and Rome after the sack of Alaric (410 AD) to Aztec Mexico and Inca Peru. The American historian concludes his argument with a citation from Patricia Crone’s Pre-Industrial Societies: ‘Far from being stultified by imperial government, Europe was to be propelled forward by constant competition between its component parts’ (Landes 1998: 528). These and other scholars stressing the importance of inter-state competition in European history have been inspired by the arguments advanced by Eric Jones in his well-known book The European Miracle.