How can the EU single market break out of its historical straitjacket?

The single market is making a comeback at the top of the EU’s political agenda. This Wednesday, for example, the item was debated during the tripartite Social Summit. 

Yet, we cannot afford to let the reopened discussions get stranded in incremental proposals. Instead, the debate on the single market’s revision, rightly put forward by Belgium and Spain, must open up to new, future-proof, ideas.

The single market has led to the expansion of cross-border trade, increased competition and revived labour markets in the EU. 

But while integration towards one, EU-wide, economy steadily advanced, so grew the widespread understanding that that process has been all but even across sectors, member states and regions.

This is no more than a logical result of the single market’s asymmetric nature, built with a deep focus on markets, and a much shallower socially — let alone environmentally — sustainable vision. 

Its key selling point, the promise of a “social market economy”, a European, more social form of capitalism, was thereby left unmet, ultimately hitting rock bottom with the EU’s hawkish, and far from unified, responses to the economic crisis of 2008. 

Unavoidably, many citizens across Europe were rendered increasingly disillusioned.

The ‘Alibaba’ model simply doesn’t work

With the pandemic, the single market took another hit. The COVID-19 crisis exposed flaws in its most important pillar, the freedom of people, services and goods to move. 

Moreover, it highlighted just how fragile and unreliable the free-market European supply chains are. Today, an extremely unstable geopolitical playing field is painfully confirming these weaknesses.

And things get worse for our European crown jewel. Indeed, we haven’t even talked about the climate emergency and its massive socio-economic impacts yet.

The single market, on which the EU’s economic — but also social and political — integration depends, isn’t equipped with answers to current social and environmental challenges. 

The “Alibaba” model, perhaps the best analogy of the way the internal market developed after 1992, providing consumers with ever cheaper products from further and further away without any real regard for social and environmental concerns, was never sustainable. 

Today, it is simply incompatible with the EU’s just transition objectives.

Trying to achieve the current internal market project at all costs (and they are high), as many are vocally asking, is inherently flawed, as it would further build on a foundation that exists of quicksand. But what does the alternative look like?

A shift in focus, a shift in governance

For one, it comes with a clear shift in focus. We must move towards quality, away from price. 

High standards, it should be noted, was one of the explicit, albeit unfulfilled, objectives of the 1992 internal market. 

Today, these standards have to sit at the core of the single market’s revival, both from a social and an environmental perspective.

In practice, this means the application of conditionalities to industrial policy and choices and the introduction of a truly circular economy, based on reducing, reusing and recycling. It also implies establishing and guaranteeing good, well-paid, safe and unionised jobs.

Best practices can be found even in Germany, for example with the Mittelstand, which consists of small and medium-sized enterprises, producing quality goods with good working conditions and worker participation.

To be fully implementable, this new focus on a socially and environmentally sustainable quality must be combined with a governance shift. 

We need to move beyond the traditional monetary approach to wealth, often solely measured via GDP, towards a perspective of holistic well-being, based on alternative indicators.

All this combined is no less than a radical turn from the one-size-fits-all global capitalism we’ve gotten used to. It requires a new paradigm, which is not that different from how the introduction of the internal market in the 1980s and 90s was conceived. 

Groundbreaking at the time, the concept was carried by a wide range of actors from different sides of the political spectrum — across countries — and based on a common political understanding to answer challenges and move the EU forward.

It’s time to drop the outdated ways

Today, we need a new coalition of the willing, able to develop a common vision for the future and consequently deliver a different set of transformative priorities. 

This coalition must be developed around a new social and environmental pact, bringing together consumers and employers interested in quality products, workers and trade unions concerned with the quality of work, and citizens advocating for a better quality of life and a safe climate.

The current European zeitgeist is not only ready but also urgently in need of such a pact. 

Path dependency and a reflex towards the status quo have left Europe for too long with a single market that doesn’t fulfil its citizens’ needs.

It is now time to commonly look forward instead of backwards — and escape the grip of a once-promising, but now outdated way of structuring the EU’s economy and society at large.

Philippe Pochet is a Green European Foundation fellow, Affiliate Professor at Sant’Anna College in Pisa, and former General Director of the European Trade Union Institute (ETUI), and Taube Van Melkebeke is Policy Manager at the Green European Foundation.

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