Has Neofunctionalism Been Superseded By A New 'Liberal Intergovernmentalism" As Currently The Most Convincing Theoretical Explanation of European Political Integration?

Has Neofunctionalism Been Superseded By A New ‘Liberal Intergovernmentalism” As Currently The Most Convincing Theoretical Explanation of European Political Integration?

From an ambitious project originally envisaged to remove the catastrophe of war from such a war-torn continent, the European project has proceeded in ‘fits and starts’. Since its inception, there has been much debate regarding what forces drive the integration process forward. Why now, when interstate war in Europe seems impossible, do member states continue to ‘pool’ their sovereignty in so many areas? Two theories have dominated previous attempts to answer the question of “how and why states cease to be wholly sovereign, how and why they voluntarily mingle, merge and mix with their neighbours, so as to lose the factual attributes of sovereignty.”

Neofunctionalism, the idea that the integration process, once started, develops its own momentum for further integration, saw the height of popularity in the 1960s, following the initial success of the ECSC/EEC and the hugely influential theoretical explanation by Ernst Haas. The second theory, Liberal Intergovernmentalism, surfaced in the 1990s and was championed by Andrew Moravcsik. It saw flaws in neofunctionalist thinking and instead offered an alternative account in which the integrative process was always, and remains, in the hands of national governments; supranational institutions were only marginally influential. This Supranational-Intergovernmental dichotomy has remained the defining theoretical debate surrounding European integration. This essay attempts to affirm that, while neither theory adequately explains every instance of integration, to suggest that neofunctionalism has been superseded is folly.

This essay shall begin with some definitions and discussions of the two main theories. It shall be seen how neofunctionalism utilises the concept of ‘spillover’ in numerous forms to explain how initial cooperation in areas of ‘low’ politics will engage a self-reinforcing process that includes the creation of supranational political institutions, the transfer of loyalties to a new ‘European’ centre and culminates in the establishment of a ‘European’ political community. Following from this, a discussion of Liberal Intergovernmentalism (LI) will be made. It will be seen that Moravcsik’s theory stresses the importance of national governments at the expense of supranational institutions. According to LI, states are rational actors in international affairs, bargaining with other states and establishing institutions only when in their national interests. Supranational Institutions are seen to be agents of the states, which remain in firm control of both the pace and direction of the integration process. The second part of this essay concerns the Single European Act (SEA). Being the Act that brought about Moravcsik’s theory, it will be seen how Liberal Intergovernmental principles are clearly visible. However, this essay will also show that neofunctionalist factors heavily influenced the SEA and even precipitated its outcomes. This will show how, even in analysing a purely intergovernmental bargain, neofunctionalism remains a hugely relevant theory. Subsequent analysis shall regard the Treaty on European Union (TEU). Once again it will be shown that, while intergovernmental bargains are clearly important to the integrative process, particularly in the establishment of new areas of cooperation (CFSP and JHA), cultivated spillover plays an important role in the practice of the European Commission and the agreement on EMU. The final section of this essay shall briefly examine the PHARE programme, which facilitated the expansion of the EU to include ex-Soviet Bloc states. It will be seen how neofunctionalism rather than LI best explains this programme, and the spillover effects that have clearly influenced its operation. This essay shall conclude that, though Liberal Intergovernmentalism is key to explain the processes and bargains struck at IGCs, it cannot account for all variables and, by ignoring the ‘everyday grind’ of European policy formulation, misses a crucial factor in explaining the integrative process. Nevertheless, it does offer a different account of integration, which taken together with neofunctionalism help to explain “the brute fact…that integration has proceeded unevenly.”

Neofunctionalism’s attempt to explain how and why the process of integration has occurred in Europe is rooted in the functionalism of David Mitrany. However, whereas functionalism saw little room for political institutions to govern and administrate functional linkages between states, Neofunctionalism found this to be indispensable. It is through the interaction of political forces (e.g. bureaucracies, governments, pressure groups, etc), rather than functional pressures, that integration proceeds. Neofunctionalism begins as a theoretical response to the developments of the European experiment in the 1950s and draws its inspiration from Jean Monnet’s policies in Europe:

[T]he new method of action developed in Europe replaces the efforts at domination of nation states by a constant process of collective adaptation to new conditions, a chain reaction, a ferment where one change induces another.”

John van Oudenaren summarises this as “taking practical steps in the economic field to advance the grand vision of a European political union.” In practice, the formation of the European Coal and Steel Community (ECSC) is seen as the cornerstone, which set the process of integration in motion. However, once such a cornerstone is laid, neofunctionalism suggests that more and more steps of integration will need to be taken. This is where the concept of ‘Spillover’ plays an important role.

One of the key assumptions of neofunctionalist theory correctly affirms that states are interdependent, both between national economies and between sectors within economies. It is this assumption that leads to the idea of spillover, as problems rising in one area or sector, inevitably lead to problems in other areas/sectors and where problems exist, solutions are sought. Thus, once a step in integration is made (in the case of Europe the formation of the ECSC), the complexity of cooperation would mean that the existing policies are unable to meet the increasing need for efficiency. The formation of a common market, for instance, requires common, or at least coordinated, economic policies, which then have an influence on foreign economic policies and trade relations. The process of spillover into different economic sectors is known as ‘functional’ spillover. As Ernst Haas stated in the most significant work on neofunctionalism, The Uniting of Europe, sectoral integration “begets its own impetus toward extension of the entire economy.” This has been seen with the spillover from the ‘1992 project’ to Economic and Monetary Union (EMU) and from the single market to the establishment of social policy. This process will continue with the establishment of political institutions at the supranational level, charged with ensuring the operation and efficacy of previous economic integration. The creation of supranational institutions, such as the High Authority of the ECSC and the Commission and Assembly/Parliament of the EC/EU, leads to two further types of spillover; political and cultivated.

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Political spillover tends to be exerted by political elites. Through realization that national solutions are insufficient to solve substantial problems, elites shift their activities and expectation to the supranational institutions. This leads to an increase in pressure for further integration. Cultivated spillover describes the pressure for integration exerted by the central institutions themselves. Once a supranational organization is in place, it will lead to a “self reinforcing process of institution-building.” Leon Lindberg argues that the European institutions develop their separate political will once they are created. Taking their own initiative, these institutions such as the European Commission can help further integration with their considerable political advantage. According to Lindberg, the cultivation of contacts and coalitions that are formed by the commission across national boundaries create an “informal co-optation” of member states’ officials, used to promote the ‘European’ ideas and further integration. Many other scholarly works have shown the integrative effects of the Commission in the fields of telecommunications, energy policy, and the 1992 project that led to the Maastricht Treaty and the creation of the European Union. Moreover, the participants in these institutions will help perpetuate the commitment to integration. The political elite in Brussels, Luxembourg and Strasbourg forms a complex network of interactions, which may lead to different perspectives and personal camaraderie, thus influencing future policies initiated by these individuals within their national governments. This self-reinforcement process is cultivated or political spillover. Neofunctionalists tend to believe that a combination of these types of spillover will eventually propel integration into areas of high politics and culminate in the creation of a supranational state.

The expectation is that as the tasks and powers of the central institutions are increased through the operation of the spillover process, integration will gradually encroach on that politically sensitive are where vital interests are at stake. So, an embryonic political community will emerge and grow.

It is the idea that the spillover process will continue into the domain of ‘high’ politics, which draws such serious criticism from Liberal Intergovernmentalism and its chief proponent, Andrew Moravcsik. This essay shall now turn to give a description of the liberal intergovernmentalist approach to European integration, which will allow the necessary comparison to see which best explains the phenomenon

The differential between low and high politics is a source of great contention between the neofunctionalism and the intergovernmentalism. Contrary to neofunctionalism, the intergovernmentalist school argues that high politics will remain outside of the integration process, because international politics is essentially state-centric. Intergovernmentalism questions the basis of neofunctionalism; that technocratic concerns will create the pressure for integration even in the political arena. Instead, intergovernmentalists believe that political elite in each state will continue to place emphasis on issues of high politics. In this aspect, the intergovernmentalists draw from the International Relations school of thought known as Realism. Intergovernmental bargains determine the scope of the EC/EU and it is these decisions that are important. Moravcsik sharply differentiates the ‘grand bargains’ from the ‘day-to-day’ processes of EU policy, which in Liberal Intergovernmentalism, are of little consequence and constantly constrained by the bargains reached amongst national governments.

According to Liberal Intergovernmentalism, it is possible to see the formation of the EU as the process of nation states in Europe surrendering ‘slices of sovereignty’ in order to ensure peace. Given that sovereignty remains the central concern of the state, states will only cooperate in areas of common interest and allow for integration in these areas. They will not, however, surrender control over matters of greater importance, such as foreign policy direction or state police.

Moravcsik suggests the EC/EU decision-making process is split into three stages; the formation of national preferences; intergovernmental bargaining; and the delegation of sovereignty. National preferences are formed by member states through an internal conflict of interests, but once formed, these form the basis of intergovernmental bargaining. This bargaining reflects the decisions made internally, and are constrained by the most recalcitrant states, and produces the delegation of sovereignty in certain areas, in which the states believe their national interests are best served by such delegation.

The Intergovernmentalists are thus sceptical of integration extending to the political sphere and disagree with the neofunctionalist proposition that spillover will occur from socio-economic sphere into the political. Andrew Moravcsik suggests that the process of “integration” in Europe is nothing more than a series of negotiations among governments, and the outcomes are dependent on the stated preferences of these states. The binding constraints on member states are determined via the lowest common denominator, therefore appealing even to the least accommodating member state. Moravcsik argues that the national governments will only accede to a supranational institution, “only insofar as it strengthens, rather than weakens, their control over domestic affairs, permitting them to attain goals otherwise unachievable.”

Liberal Intergovernmentalism employs a ‘principle-agent’ approach to the institutions of the EU, with the ‘principle’ states establishing the ‘agent’ institutions to facilitate more efficient bargaining and pooling sovereignty within these institutions only when in the perceived interests of state governments. In ‘principle-agent’ terms, there exists, according to liberal intergovernmentalists, a ‘tight’ relationship between the two; the supranational institutions having little autonomy. Thus, according to Moravcsik, such institutions are “passive” who have little substantive impact on either policy or the integration process itself. This clearly rejects the neofunctionalist premise of spillover, particularly cultivated spillover. In addition, though it was stated earlier that the Commission has played a crucial role in several areas, others have disagreed, suggesting that commission proposals are rarely “pure, spontaneous” actions, but ones made at the behest of national governments. Moravcsik re-iterates the liberal intergovernmentalist approach to integration in The Choice for Europe:

European Integration resulted from a series of rational choices made by national leader who consistently pursued economic interests…When such interests converged [between states], integration advanced.

The two main theories of European integration clearly disagree on fundamental issues concerning the relative importance of supranational institutions, but to evaluate whether neofunctionalism has been superseded by liberal intergovernmentalism as the most convincing explanation, it is now necessary to look at four areas of EU integration. This shall begin with two key treaties, where one would expect the intergovernmentalist approach to be of more explanatory value; the Single European Act (SEA) of 1987 and Treaty on European Union (TEU) of 1992 (Maastricht Treaty). Following from this, an area of ‘low’ politics will be examined, which one may expect to see neofunctionalist arguments more relevant. This shall be done with a brief investigation of the PHARE Programme. How each theory adequately explains for the events surrounding these areas and relevant predictions have been borne out will surely indicate which is most convincing.

The Single European Act was signed by the twelve member states of the EEC (which subsequently became the European Community (EC)) in Luxembourg in February 1986. It laid out the timetable for the completion of the single market in Europe by 1992; the removal of barriers to free trade and free movement of labour/capital. In addition, the SEA the extension of Qualified Majority Voting (QMV) in the Council of Minister for all policy areas relating to the single market.

Given that t was through his analysis of the negotiations and functions of this treaty that led Moravcsik to his theory of Liberal Intergovernmentalism, one would expect this to be a simple case of intergovernmental bargaining and ‘lowest common denominator’ policies:

The negotiating history of the SEA…suggests that the factors encouraging a greater commitment to European unity are essentially: the convergence of national interests, the pro-European idealism of heads of governments and the decisive role of the large member states.

Moravcsik’s argument can be summarised as follows; it was the national preferences of individual governments that dictated the content of the SEA, and any influence from supranational bodies, particularly the European Commission was marginal at best. Moravcsik concludes that the SEA was a classic case of liberal intergovernmentalism rather than neofunctionalism. ‘Lowest Common denominator’ bargaining was seen through the removal of substantive references to EMU, due to opposition from Britain and Denmark. Thatcher’s apparent delight at the outcome of the IGC also suggests the ‘lowest’ position regarding further integration was achieved, and the economic liberalisation process, which she supported, was achieved without too much power and influence being transferred to supranational institutions. Moravcsik also attributes much of the success of the bargaining at the IGC due to a convergence of national preferences, with the neo-liberal government of Thatcher in Britain supported by a more liberal Mitterand government in France, and Kohl’s Chancellorship in Germany. Therefore, is it the Liberal Intergovernmentalist approach that best explains the SEA? Moravcsik’s impressive analysis of the bargaining procedures and the reflections of national preferences suggest this, but the arguments of neofunctionalism cannot be overlooked here for they too have an important role to play. With regards to Moravcsik’s analysis, Stone Sweet and Sandholtz stress the point that; “the research results are quite predictable when one looks to intergovernmental bargains for evidence of intergovernmental bargaining.” Through looking at the other stages of the SEA, not simply the IGC, neofunctionalist principles are identified.

Daniel Wincott has challenged the idea that the SEA was the instrument that created the finalisation of the single market programme. Wincott contests that “the origins of the Single European Act are sought in the everyday grind of the community.” Such “everyday grind” tends to be dismissed by liberal intergovernmentalism in favour of the ‘grand bargains’ of IGCs, but where the foundations of such ‘grand bargains’ are found in the ‘everyday grind’ the former can be perceived as merely a codification of existing practice that developed from neofunctional principles. The completion of the internal single market is seen as the most crucial aspect of the SEA, yet the EU, through European Court of Justice (ECJ) decisions and subsequent Commission initiatives, already adopted policies implementing this. Through the principle of ‘mutual recognition’, established by the ECJ in the Cassis de Dijon case, member states were forced to recognise goods produced in other states, thus facilitating an increase in the free movement of goods, a key aspect of the single market. It is at this point that Commission initiative facilitated a neofunctionalist spillover process, from the free movement of goods to the mutual recognition of educational qualifications. This process was both functional and cultivated spillover, the former describing the extension of ‘mutual recognition’ from its original sector, the latter in the way it was the Commission which initiated such a process. Though this point does not deny the influence of the bargains struck for the SEA and the impact that Act had, it shows that neofunctionalist principles were at work alongside liberal intergovernmental ones.

Neofunctionalist principles were also present in the formulation of the SEA in other ways. Moravcsik’s analysis pays little attention to the “policy entrepreneurship” of the Commission under the leadership of Jacques Delors. Previously, the Commission had been perceived as weak and ineffectual, but under the leadership of Delors, it was able to cultivate transnational links, particularly with business leaders. This in turn may have led to such businesses pressuring their respective national governments to adopt Commission proposals regarding the single market. This too, has neofunctional principles at heart, allowing commission influence to be exerted in the stage Moravcsik would deem as purely internal.

It can thus be seen that thought the bargaining processes seen at the IGC relating to the SEA may reflect Moravcsik’s intergovernmentalism, there were certainly neofunctional elements to the creation of the treaty. In this sense, liberal intergovernmentalism may have added a missing dimension to traditional neofunctionalism, but has not superseded it per se. This essay shall now turn attention to the ‘Maastricht’ Treaty of 1992 to evaluate the adequacy of explanations offered by liberal intergovernmentalism and neofunctionalism.

The TEU, signed in February 1991, contained perhaps the most extensive changes to the European project since its inception in 1957. It created the European Union (EU) from the EC, made firm commitments to EMU (included in the EC - 1st Pillar), established the Common Foreign and Security Policy (CFSP - 2nd Pillar) and common Justice and Home Affairs (JHA n- 3rd Pillar).

The TEU certainly conforms to Liberal Intergovernmentalism in many ways, again not surprising for an intergovernmental treaty. Certainly, it is generally accepted that the second and third pillars of the EU (CFSP and JHA) established at Maastricht remained firmly in the hands of member states. In addition, it was resistance from France and Britain that established the ‘pillar’ model rather than the ‘unitary tree’ approach that the commission favoured; another example of ‘lowest common denominator’ bargaining. However, it is worth noting that the TEU was the first substantive introduction of CFSP and JHA and since then, particularly with the signing of the Treaty Establishing a Constitution for Europe (Constitution) in 2004, cultivated spillover has occurred, with the Commission gaining more power in each of these pillars. At the IGC itself, although Jacques Delors was present, his (representing his Commission’s) influence was heavily restricted. Attempts at removing the Commissions monopoly on policy initiation were proposed, but Delors narrowly avoided the transformation of the Commission into what he termed “a sort of Secretariat-General.” Therefore, the power of supranational institutions at IGCs remained limited, but this is little proof that Liberal Intergovernmentalism has superseded neofunctionalism. As stated previously, IGCs are the domain of national governments and thus their ‘preferences and power’ in these arenas are obviously prevalent. Like the SEA five years earlier, neofunctionalist factors remained within the TEU and continued to influence the integration of Europe.

Neofunctionalism can be seen in operation with the formation of EMU. The process itself was mentioned in the SEA and it was Delors who championed the cause of monetary union throughout his tenure as president of the Commission. In addition, EMU can be seen as a continuation of the Werner report from 1970. Though this does not necessarily indicate the presence of neofunctionalist forces, the gradual development of policy over considerable lengths of time does not reflect well on the ‘grand bargains’ that Liberal Intergovernmentalism depicts as single events. The process of cultivated spillover can be seen with the considerable expansion of the Commission’s powers in the TEU. These included EMU, but also increased influence in health policy, transport, and education.

To this point, only major treaties, the SEA and TEU, have been examined. It is no surprise to find Moravcsik’s theory relevant to these. Our attention now turns to the PHARE (Poland-Hungary: Aid for Restructuring of the Economies) programme. This was not a ‘grand bargain’ but paved the way for the accession of Poland and Hungary (and other states) to the EU; a huge case of integration. This, according to Anne Niemann, clearly demonstrates the neofunctional nature of European integration. In analysing the PHARE programme, Niemann identifies induced spillover, not previously utilised widely, to explain the decision by the heads of the G7 states to transfer control of aid distribution to the European Commission. Induced spillover can be summarised as follows:

Member states of a successful integration project may find themselves obliged to work out a common external position vis-à-vis third countries and increasingly rely on the central institutions to do it.

In this sense, pressure from outside the EU, including the USA and the speed of developments in Eastern Europe, acted to induce the decision to integrate this policy area. Functional spillover could be seen at work in the PHARE programme. Functional pressure caused the expansion of PHARE as initial aid in the form of food and money expanded to include transport, agriculture, and energy. Liberal intergovernmentalism fails to explain such processes at all. Outside the ‘grand bargains’ of Treaties, looking at the crucial ‘day-to-day’ evolution of the PHARE programme, neofunctionalism seems the only theory available for sufficient analysis.

This essay has seen has examined the main differences between the two competing theories of European integration. It was seen how the concept of spillover (political, functional, cultivated and induced) is core the neofunctionalist understanding of integration. Neofunctionalism also predicts the emergence of a new ‘European’ centre to which loyalties are shifted, and establishes a ‘European’ political community. It has not fallen within the scope of this essay to fully examine the potential for a substantial shift in loyalties. At present, such a shift seems unlikely, and perhaps one of the flaws of neofunctionalism is that it underestimates the enduring nature of national identification. Following from the discussion of neofunctionalism, it was seen how liberal intergovernmentalism emerged as a direct challenge in the early 1990s. It was seen that Moravcsik’s theory stresses the importance of national governments at the expense of supranational institutions. According to LI, states are rational actors in international affairs, bargaining with other states and establishing institutions only when in their national interests. Supranational Institutions are seen to be agents of the states, which remain in firm control of both the pace and direction of the integration process. Having discussed the theories themselves, this essay looked at three distinct areas; the SEA, the TEU and the PHARE programme. It was seen how Liberal Intergovernmental principles are clearly visible in the IGCs and negotiations that led to both the SEA and the TEU. However, it was concluded that this was no surprise given that they were intergovernmental treaties. Neofunctionalism was seen to have been at the heart of many of the products of the SEA, even before it was signed. Through the idea of ‘mutual recognition’, developed in the ‘everyday grind’ of policy formulation, the single market that the SEA purports to establish was well under way. It was seen how neofunctionalist spillover was at the heart of this process. A similar story was seen with the TEU. Though intergovernmental factors were largely behind the Act itself, the content of the act can be viewed as having developed along neofunctional lines. The PHARE programme of the 1990s again showed how neofunctionalist forces remain at work within the EU, despite Moravcsik’s claims. The premise of this essay was that, while liberal intergovernmentalism is a useful tool for analysing the bargaining processes of IGCs and is wise not to overstate the effects of central institutions, the fact remains that these institutions do have an effect. Conversely, while neofunctionalism helps explain the ‘behind-the-scenes’ process of integration, it does not fully realise the power of member states and the pervasiveness of national sensitivities. Seen together, the two theories are a powerful tool for analysing the European project, but to suggest that neofunctionalism has been superseded vastly over-simplifies a topic deserving of complexity.

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