But after the Second World War, the leaders of the West managed to learn a few lessons from the grim experiences of history. Initiated with the strong support and nurture of the United States, the post-war reconstruction of Europe was aimed at bringing back democracy and economic development, and creating the conditions for peaceful cooperation between European states. This purpose was served by breaking protectionist tendencies and developing international trade, as well as working toward overcoming historical Franco-German enmity and bringing the new, democratic German state into the Western economic and political system, and eventually the Western military alliance.
At the initiative of French economic planning commissioner Jean Monnet, Foreign Minister Robert Schuman on 9 May 1950 made his famous declaration, presenting a plan to create a common market for coal and steel, comprising France, Germany and any other European countries that wanted to join. As a result, on the basis of the Treaty of Paris, signed in 1951, the European Coal and Steel Community (ECSC) was created by six countries. Monnet, who became the first head of the ECSC’s executive organ, recalled:
Six months after we had begun work, as the Treaty required, I was able to announce over the radio: “Since this morning, February 10, 1953, there has no longer been Belgian, Dutch, French, German, Italian, or Luxembourg coal, but only European coal, flowing freely among our six countries as if they were one.” The fact that everyone could now obtain coal from the supplier of his choice and at the best price, throughout the Community, marked the end of an epoch in which everything had been organized otherwise, to restrict consumers’ free choice and discriminate among them according to their nationality or their membership of this or that group.1
In 1958, the European Economic Community (EEC) was created, and it was decided to create a customs union, which in practice was introduced in 1968. In 1993 the European Union became the successor of the EEC. In place of customs barriers and autarchy, which had suffocated Europe’s economy in the inter-war period, the common European market arose. The data in Table 1.1, concerning the five leading countries of Western Europe that took part in both world wars, show that the level of GDP per capita in 1939, or 21 years after the end of the First World War, stood at an average of 134% of the pre-war level. Meanwhile, 21 years after the end of the Second World War, in 1966, GDP per capita in those countries averaged 185% of the pre-war level. Thus, the economic development of Western Europe after the Second World War turned out to be significantly more successful than after the First. Table 1.1 also shows that successive decades over the 60 years since the end of the Second World War were a period of rapid economic growth.
Table 1.1 Economic performance after the Second World War compared to performance after the First World War in selected European countries: GDP per capita compared with the pre-war level
Source: Authors’ calculations based on Maddison Historical GDP Data, www.worldeconomics.com (accessed 17 February 2016)
A testimony to the success of the common market was the change in the position of Great Britain, which in 1950 declined to take part in the negotiations that led to the creation of the ECSC, thus remaining outside the main European integration process. In 1961, the UK decided it wanted to join the EEC, but membership negotiations were broken off in 1963 as a result of opposition from French President Charles de Gaulle. The UK applied again in 1967, and was once again blocked by a French veto. It was only on the third attempt, undertaken after De Gaulle had left office, that the effort was successful, and in 1973 the United Kingdom became a member of the EEC.
The success of the common market became a practical illustration of the thesis put forward by economists since the time of David Ricardo: that international trade is, as we would say today, a positive-sum game, one in which all participants can benefit simultaneously.2
The European Union and the common market gave Europe peace and economic development. The European Union became an oasis of stability, democracy, respect for human rights, and human welfare. It pulled in new members like a magnet. After the collapse of the Soviet bloc, the aspirations of particular countries to membership in the European Union and easier access to the common European market were some of the key factors that contributed to the success of the political and economic transformation of former Socialist countries.
In 2016 the European Union numbered 28 states, home to more than half a billion people. The EU’s total GDP was comparable to that of the US and significantly higher than China’s, while GDP at purchasing power parity was of similar size in these economies.3
The size of the common market and access to it are also key factors in the development of the EU’s member states. Europe’s future economic success depends on maintaining the European Union and the common market.
Notes
1 Jean Monnet, Memoirs, Third Millennium Publishing, London 2015, pp. 386–387.
2 In his 1817 work On the Principles of Political Economy and Taxation, the British economist David Ricardo demonstrated that an exchange of trade between two countries can be beneficial for both partners, even if one of them is able to create all the products with a lower outlay of labour than the other partner. We can illustrate this with a simple example. Let’s imagine that in Country A, producing a bale of cloth requires 20 hours of labour, and making a pair of shoes requires ten hours, while in Country B making either a bale of cloth or a pair of shoes takes up 25 hours of labour. In this state of affairs, in Country A both cloth and shoes are produced with a smaller input of labour than in Country B. But what’s significant is that the relationship of the amounts of labour needed to produce both products are different in the two countries: in Country A, the input to create a bale of cloth is twice as high as needed to create a pair of shoes, and in Country B making each of these products takes up the same amount of labour.
In this situation, both countries are able to increase their production and ...