Embeddedness and Regional Integration: Waiting for Polanyi in a Hayekian Setting

Abstract

This article analyzes the social potential of regional integration processes by using the example of European integration+ Recent case law from the European Court of Justice has led some observers to argue that judicial decisions increasingly provide European politics with a " Polanyian" drive+ We test this claim by distinguishing three dimensions to European economic and social integration: market-restricting integration, market-enforcing integration, and the creation of a European area of nondiscrimination+ We also identify two forms of integration that have different speeds, scopes, and potentials: political integration and judicial integration+ The evidence shows that the EU has come closer to Hayek's vision of "interstate federalism" than is usually warranted because market-enforcing integration and European nondiscrimination policies have asymmetrically profited from "integration through law+" The opportunities for international courts to push ahead marketenforcing integration increase as the participants of regional integration processes become more diverse+ In such "Hayekian" constellations, individual rights are increasingly relocated to the central level, at the cost of subordinating the decentralized capacity for solidarity and interpersonal redistribution+ Above all, The Great Transformation tells of the conflict between the imperatives of a capitalist world economy and the pursuit of social welfare within nation-states+ Polanyi's account of the 1920s and 1930s analyzes the incompatibility of international capitalist arrangements with both democracy and the social reforms that had been won by the European working classes+ -Fred Block and Margaret R+ Somers, "Beyond the Economistic Fallacy"

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