The New Statesman's reaction to the creation of the European Economic Community from 30 March 1957
The New Statesman 30 March 1957
On 25 March 1957, six governments in western Europe signed the Treaty of Rome that gave birth to the European Economic Community. This bold and idealistic project for the eventual integration of the continent aroused little enthusiasm on the insular British left 50 years ago. The New Statesman's response to the historic event in Rome came from the Oxford economist Thomas Balogh. In a relentlessly hostile article, he rejected not only the formation of the EEC, but even the British government's counter-proposal to create a free trade area in Europe.
Selected by Robert Taylor
As the plans for an economic unification of western Europe gradually unfold, there is a growing, if unfocused, fear among Labour supporters that something is being hatched which may further push us back into the pre-war world of economic injustice and hardship. I do not personally think that there is any conscious conspiracy to enshrine the rules of the capitalist game in unbreakable international treaties. But I have little doubt, as at present conceived, the efforts of the "common marketers" are dangerous for the prosperity of both Britain and Europe as a whole.
They are unlikely to cure the terrible economic weakness of Europe before the growing power and the technological superiority of the U.S. and the U.S.S.R. Internally they may well lead to growing political dissension because of the problems set by German technical preponderance. They threaten to aggravate bad relations between East and West by freezing in a rigid economic mould the division of Germany. Last but not least, they would inevitably accelerate the trend towards the dissolution of the Sterling Area.
What then is the basis for the high hopes which have inspired this venture? The economic argument for both the Common Market and the Free Trade Area boils down to the old idea that all would benefit if each country concentrated on the production of what it produces best and obtained the rest of its needs by trade. Now this may not be a bad idea for the Common Market countries. These countries have decided to liberate from restriction the movement not merely of goods, but also of manpower.
Thus if one area becomes supreme in the most important or productive industries there is some sort of remedy – even if it is not a pleasant one. People who are in the less favoured area can move, as they moved before the war from South Wales and Tyneside to the midland industrial belt. But such migration, apart from the hardship it conflicts, may not be effective in solving the economic problems of the less favoured area. Prosperity returned to Britain after 1945 when the Labour government deliberately maintained full employment and control over the location of industry; while the south of Italy progressively decayed after its unification with the stronger north and, despite continuing emigration, remains wretchedly poor.
Thus, even when this safety valve exists, the prospects are disquieting. Specialisation could after all mean for large areas specialisation in hewing wood and drawing water. Only planning, technical education and the co-ordination of investment can provide a sure solution.
These are important, if inadequate, modifications of the purely negative concept of “freeing” movement. But they certainly add to the problems of those countries which, like Britain, wish to associate themselves with the Common Market only to the extent of freeing part of their trade from tariff protection. The problem here is further complicated by the fact these countries cannot rely on a shift of population for relief from the possibly harsh impact of freer trade. The advantages must be very carefully weighed; and I have little doubt that the outlook for Britain is far from favourable. If it is argued that we should join the new organisation simply because not to join would be worse, then we should at least be aware of the pitfalls.
It is clear that West Germany in the post-war years has achieved such technical superiority over the rest of Europe as to make nonsense of the textbook principles. Her average expansion is twice that which we have achieved in Britain in our best post-war year. Thus West Germany will be able to dictate the pace and Britain would be likely to run quickly into balance of payments difficulties and so be compelled to restrict investment and further increase her inferiority.
It can be argued these are short-term considerations and the advantages of freer trade lie in the long run. But in the long run we are all dead. The advocates of freer trade admit, at least in the bigger countries, an increase in the size of markets would not lead to any sudden new methods of production. The long run advantage in fact remains questionable.
No doubt discrimination against the Sterling Area will happen whether Britain joins the Free Trade Area or not. Nevertheless the effect on the cohesion of the Commonwealth, if Britain does join, is bound to be damaging. Some Sterling Area countries might be induced by special dispensations to join the system; but the Asian countries – above all India, committed as she is to Socialist planning - could not accept even a deferred obligation to abide by these rules .
All these considerations suggest the New Utopia is unlikely to benefit economically any country in Europe except West Germany. Britain’s position, in particular would be unenviable. In the political field, on the other hand, it is West Germany which would be the principal victim. For Russia will never allow the reunification of Germany if West Germany is bound economically, as well as militarily, to western Europe. Is it really to be expected that such a conflict of interest will lead to the emergence of a strong and united Europe? In these circumstances one is bound to ask why all these plans are being pursued when they are so full of danger and so empty of promise.
Post this article to
We want to encourage people to comment on our content and to exchange views with other readers and hope this will be done on a courteous basis. However, if you encounter posts which are offensive please let us know by emailing comments@newstatesman.co.uk and we will take swift action where necessary.
