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  • Print publication year: 2006
  • Online publication date: July 2009

1 - Embedded liberalism: the original constitutional compromise and its crisis

Summary

A preliminary review of the historical background

Two fundamental processes, at once simultaneous and symbiotic, mark the history of Western Europe from the immediate post-war period onwards and more particularly the years during which the European Community was formed: first, what has been called the ‘rescue’, the genuine rebirth, on democratic foundations, of the nation-state as a welfare state; and second, (participation in) the reconstruction, conclusively overcoming the blinkered nationalistic attitudes that had cast a pall over the inter-war years, of the international economic order. The two processes come together, or perhaps rather find their moment of synthesis, in the establishment of first the European Coal and Steel Community (ECSC) and later the European Economic Community (EEC).

They are identifiable as two separate ‘movements’ only by virtue of the apparent contrasts and contradictions between them; they actually, at least in the extraordinary and probably unique and unrepeatable phase in European economic history coinciding with the hectic thirty-year period of economic recovery in the aftermath of the Second World War known as the Trente Glorieuses, followed a mutually complementary course of development, with each supporting and reinforcing the other.

‘At the end of the period of reconstruction of the national economies shattered by the war’ – as one author has tellingly put it – ‘income redistribution and discretionary macroeconomic management emerged as the top policy priorities of most Western European governments.