Economic policy before World War II, except for a few attempts in the 1930s, was based on a limited role for the public, allowing markets to do their thing and believing that all of these could be allocated efficiently. Resources and income. Not in vain, the United Kingdom, a champion of free trade, emerged as a world power in the last century by harnessing (and exploiting) this belief in free trade.
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Economic policy before World War II, except for a few attempts in the 1930s, was based on a limited role for the public, allowing markets to do their thing and believing that all of these could be allocated efficiently. Resources and income. Not in vain, the United Kingdom, a champion of free trade, emerged as a world power by harnessing (and using) this belief in free trade while dominating a quarter of the world in the previous century.
The United States, which had already overtaken a good portion of the former Western economic powers in the exchange of the 19th and 20th centuries, was one of the countries to graduate from the United Kingdom’s apprentices. Political economy, born in the light of those events, leaves no room for doubt. Theory confirmed what practice taught us: worship Let it happen, let it go An oracle that guides political decisions, not just economics.
However, the Europe that emerged after World War II experienced and continues to experience the effects of significant economic planning. Without reaching the scale of Stalin’s Soviet Union’s five-year plans, the United Kingdom, the United States, and other countries had to create a war economy, while realizing that attempts at state planning did not yield bad results; While the common purpose, the war effort, is highly coordinated. This test explains why the British rejected their war hero Winston Churchill, however, in favor of a fool Clement Attlee who represented the idea that policies in the new peacetime could not be the same as before the war.
In addition to this paradigm shift, postwar European reconstruction was based on different pillars. One of them is the belief that quitting is for all or no one. They thus departed from the renaissance that fostered peace treaties after the Great War. Second, given the extreme living conditions of 1947 and 1948, the fear of the advance of communism in Western Europe forced Europe to get out of the hole as quickly as possible before it rested on its hands and claws. Soviet dictator. Third, the United States, without expecting much in return, understood that it had at least given the deal, or lost its European allies. The Marshall Plan was the most exemplary vision of this shift from an economy that worshiped markets before 1929 and had the public in charge of defining who was in charge of an economy.
But, as if it were a natural continuation of this whole process, the planning of nations cannot be understood without coordination between each nation. The Marshall Plan required such coordination as it required coordination of actions under the same umbrella. With the need to get out of the hole or all or nothing, the highly interventionist paradigm led to the creation of a common space that began with a common market for coal and steel and led us to a creation decades later. plurinational entity, European Union.
Thus, crises change the paradigms of how to do politics. And especially the economy. It happened in the seventies, a moment in which the silliness between Keynesianism and politics broke down, and it happened again in the last years after the Great Depression and the post-pandemic period.
Marking the differences with the 40s of the last century, it is clear that in these first two decades of the 21st century we have never experienced such a traumatic historical episode. However, the Great Depression, with its enormous lessons, included strong government intervention during pandemics that supported a good portion of many countries’ incomes for a few months, including the health response and, in particular, the response to militarism. Following the neoliberal dream that prevailed after the failure of Keynesianism in the 1970s, Russian efforts in their invasion of Ukraine have once again swung the pendulum toward greater intervention in Western economies.
Because of the above, and especially because of profound changes in international geopolitics, the European Union itself, born in the shadow of intervention, has awakened from its naive dream that markets and trade fix everything. That it would transform neighboring theocracies into liberal democracies and adopt Western European values. Therefore, the EU considers changing its paradigm and becoming more involved in taking control of its destiny, betting on strategies that should be directed towards the objective of maintaining its relevance on the world stage. , economic and geopolitical factors, as well as internal factors.
This shift is taking shape in new debates about the need for greater industrial and productive autonomy – a discourse for more radical industrial policy and selective protectionism – that reduces dependence on certain economies. This strategy is linked to already defined energy and technological challenges (three independent?) that go beyond mere economics and force us to rethink the entire paradigm that has been naive or romantic for decades. A European Union dedicated to a model that has a good part of its faith in trade and markets.
So, with other powers aiding and abetting, sometimes blatantly, their careers, the EU must build its new policy on those rails. However, if you not only help your industry and avoid the single market, but still have relevant economic nationalisms, favoring some with asymmetric support, the task is not easy. The enormous task facing the new European institutions that emerged from the recent elections.
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