1. From Mercantilism to Neoliberalism and Back Again? Shifting Policy Paradigms in EU Industrial Policy Lars Niklasson, Associate Professor in Political Science, Linköping University

2. Contradictory policies?  A ”neoliberal” side: ”Creative destruction”, competition Deregulation/common regulation A common currency, restricted gov’t  A ”mercantilist” side: Competitiveness, collaboration Support for firms, regions, individuals Eurochampions?

3. Good or bad?  Interesting to a political scientist! Why this mix? Where are the political conflicts? What are the motives and ideas? Will this mix produce growth? Is diversity a problem or a strength? Will Europe survive globalization?  This overview is a first step

4. A clash of national traditions? National policies to support firms? YES/MORE National policies to support firms? NO/LESS European policies to support firms? YES/MORE France(CEE) European policies to support firms? NO/LESS GermanyUK

5. A triangular drama? LiberalsMercantilistsSocialdemocrats Pro-marketxx(x) Pro-SMEx Pro-MNCx(x) Nationalistx(x) Social agenda(x)x Collectivistxx Individualistx(x) COALITIONS: Center-Rightxx Center-Leftxx Northernxx

6. Oscillating compromises TimeKey issueDominant perspectives 50s-70sBuilding up industrial policies Mercantilism 80sThe Single market Competition Liberalism 90sEMU, SGP ”No industrial policy” ”No innovation policy” (?) Liberalism with some mercantilism Ca 1997-2007Employment Strategy Lisbon Strategy Mercantilism with some liberalism Ca 2008-Crisis EU 2020 Liberalism with some mercantilism

7. Explanations?  External events and crises  High level compromises (Thatcher, Mitterand, Kohl)  Shifting majorities  Business lobbying? (ERT?)  DG’s with different perspectives  Growing importance of the Parliament  Competing paradigms in Economics

8. The underlying conflict: Should diversity be maintained? Policy areaUKGermanyFrance Ownership and finance A market of shareholders Coordinated by the banks A dominant role of the state LaborA market for labour, little regulation Regulation and coordination by the social partners Regulated by the state. Unions not so strong R&DFinanced by firms and the state Coordinated through business associations etc By the state and the firms MODELLiberal market economy, LME Coordinated market economy, CME State- dominated CME Mediterranean?

9. A new European compromise? A more social market economy? Model 1Model 2 Proposed European Social Model The Social Investment State (In use by the EU) The Liberal Investment State FocusPublic spending Top-down By agencies Public spending Empowerment Personal accounts Possible coalitionsCenter-Left: Social democrats + Mercantilists Northern: Social democrats + Liberals Swedish role modelThe Myrdals on the welfare state 1930s Social partners: ”The comfort of the wings” 1960s

10. Summary and conclusions  An interesting contradiction of policies  Europe needs SMEs and MNCs  A risk that politics is short-sighted and supports existing firms too much  Europe needs instruments for skills development and flexibility  Better to support individuals than to support firms