Dragging the EU into the digital century

I wish to focus on the EU’s fundamentals. Doing so, in my view, is the priority that stands above all the detailed reform measures and comes before any ‘shopping list’ of changes that are currently circulating. Detailed steps for a stronger Union will follow on from having the right strategy to fit the world of today, and that is not currently in place.

There are those who say that while reform of the EU is badly needed, its so-called fundamental principles must not be touched. But Jean Monnet built up his vision of European unity through deep and fundamental assessments of the world as it was, and the same approach should be fearlessly adopted now if Europe’s future is to be anchored in global realities rather than in 20^th century nostalgia. That was an age of mass and size, of economies of scale and of standardisation and managerial centralism. But the digital 21^st century slices through these dominating concepts like a sharp knife. The microchip and microprocessor not only permit but demand a far more varied structure of economic activity. What could previously only be efficiently co-ordinated by hierarchies and central control now insist upon flexibility and decentralised patterns of digital co-ordination. This reality was scarcely conceivable even two decades ago.

Innovation, and the injection of rapidly-accumulating information into every aspect of economic and social life, has become necessary for the survival of healthy modern societies. The raw liberal economics of 20th century production and central direction simply cannot accommodate the immense technological pressure for constant and continuous adaptation. In the digital age, sustainable market capitalism has to be understood as an unfolding process and not as a fixed system, as many economists still seem to assume. In short, a digital single market is entirely different to the single market concepts of the past, and requires quite different policies and approaches from the centre.

The philosophy of more integration clashes against the stark realities of unstoppable technological advance and interconnectivity. Ahead of us is a world in which the bulk of international trade is going to be in information and services rather than physical products, and in which products themselves are loaded with knowledge-intensive content. Manufacturing and services, categories so beloved by convention-bound statisticians, are therefore being blurred. This creates conditions in which trade rules, tariffs, quotas and centrally-ordained non-tariff demands for even treatment and conformity lose their relevance and become increasingly hard to apply. The economic logic of the past has been reversed, demanding more diversity and variety, not more integration.

This is a message that does not seem to have reached the European Commission, which is still toying with ideas of a more integrated and uniform economic and social order across Europe, and is still empowered to do so by the “completion” of the European project – or indeed finding a solution to the EU‘s present ills. It is the path to nowhere. Whether one is dealing with industry, trade and business, social conditions, environmental and climate challenges, energy supply, health, scientific research or our so-erroneously misnamed labour markets, imposed uniformity is now the enemy of progress.

The absolutist acquis communautaire doctrine and associated regulations and attitudes, repeatedly reinforced by integrationist law, stand out like iron-studded portals against a world utterly changed. In the digital age, the old distribution of competences and powers by local, national, European and global levels is itself a lock on continued prosperity and advance. A redistribution of the European Union’s time-worn competences is long overdue. The governance of newly-emerged spaces such as cyberspace, or the transmission of energy across the European region, may need a much firmer EU-level grasp, while social and employment powers, or regulations governing industrial processes, should long have been dispersed and re-localised.

Networks are evolving with incredible speed. Completely new routes of trade and commerce, as well as new and intensely-complex supply chains and exchange patterns, are emerging everywhere. Consumers have become producers, with revolutionary applications scattering old monopolies, individualising finance, fragmenting transport services, busting open the hotel industry, cutting out wholesalers and distributors, by-passing traditional engineering processes, invalidating publishing and printing – the list is endless, and flexibility towards all is essential.

Asia is racing ahead in this fundamentally-transformed global scene. The European Union must look to its fundamentals, as it cannot afford to be left behind on any front. Jean Monnet would have understood that, today’s EU leadership must too.