Journal of World-Systems Research, Volume 1, Number 5, 1995
                   http://jwsr.ucr.edu/
                      ISSN 1076-156X

       Hegemonic Decline, West European Unification
           and the Future Structure of the Core*

                     Volker Bornschier

                   Sociological Institute
                    University of Zurich
                       Ramistrasse 69
                       CH-8001 Zurich
                        Switzerland
               Copyright (c) 1995 Volker Bornschier

                           Abstract

This paper queries the applicability of hegemonic cycle
theories to the emerging structure in the core of the world
political economy and argues that we are likely, following
this period of relative decline in American hegemony, to
witness the emergence of hegemonic social practices in the
absence, however, of a hegemonic state. Contrasting new
beginnings with past patterns, we will suggest arguments why
history will not be repeated.

Drawing on our research on the Single European Act (SEA), we
argue that the bargain struck between the Commission of the
European Union and West European transnational corporations,
which culminated in the SEA, represents more than a decisive
step towards economic and political union. We see it, more
significantly, as embodying Europe's response to its
declining position through an attempt to articulate a new
societal model capable of successfully replacing the
disarticulated post-WWII Keynesian social-welfare model, and
of competing with the Japanese and American societal models.

In the future, it is very unlikely that power among the
actors in the Triad will be so unevenly distributed as to
permit the rise of a new hegemonic state. While it would
seem, judging from historical experience, that the presence
of a hegemonic state was functionally necessary for the
establishment of hegemonic social practices in the core, we
argue that another mechanism has now moved to the forefront.
Due to pressures generated through increasing economic
globalization, linked to demands associated with the quest
for legitimacy on the part of democratic governments, we
foresee, following a period of increased economic
competition, the convergence of social practices around a
single societal model.

*We wish to thank Simon Parker for his help on drafts of this
paper. An earlier version was present at the World Congress of
Sociology, Bielefeld, Germany, July 18, 1994

Contents

Introduction

1 Societal models as hegemonic social practice

   -- About societal models and the meaning of hegemonic
         transition

2 Structures and mechanisms generating social processes

    -- The world market for protection

    -- The relative strength of states, transnational
          business and citizens

    -- The difference between a hegemonic social practice
          (hegemony) and a hegemonial state (hegemon)

3 Explaining the Single European Act (SEA)

     -- The triggers for the relaunch and the actors
           involved

     -- Evidence from our empirical studies

     -- The elite bargain and the quest for legitimacy

     -- The EU on its way to a new societal model

4 An emerging hegemony without a hegemon

     -- Systemic change: six arguments why history will not
           be repeated

     -- Competition in the core and future prospects for
           convergence





Introduction

The 1970s and 1980s witnessed the decline of social
practices embodied in what we term the Keynesian societal
model in core countries. This crisis of the last societal
model went together with a relative decline in US hegemony.
The coincidence of these two processes notwithstanding, we
should not confound the sequence of societal models --
hegemonic social practices -- with the rise and decline of
hegemons along the lines suggested by hegemonic cycle
theories. Our main thesis in this paper is that we are
moving toward a new societal model in the core countries
but without a corresponding hegemon.

In section 1 we spell out our notion of hegemonic transition
in the sequence of societal models which we have studied in
detail elsewhere. In section 2 we outline structures and
mechanisms that generate social processes. The concept of
the world market for protection (WMfP), which regulates
behavior, is briefly sketched and variables are introduced
which affect the functioning of this central mechanism of
the world system. These variables are the relative strength
of states, the relative strength of transnational business
and the relative strength of citizens. Since these are
variables they may lead to a systemic change and thus affect
the functioning of core structure and competition. We will
use these considerations to underpin our forecast of the
                         [Page 1]
beginning of a new hegemonic social practice without a
hegemon.

At the end of this section we come to a clarification of the
difference we propose between the notion of hegemonic social
practice in the core (or a common societal model) and a
hegemonial core state (hegemon). It is true that in the past
two centuries hegemons have been decisive for the emergence
of new societal models and Britain and the USA are two cases
in point. These two historic examples of hegemons, however,
were exceptions due to the very unequal relative state
strength at the core and the functioning of the WMfP in
their respective epochs. Our conclusion is that similar
conditions, and therefore a new hegemon, are unlikely to
reoccur.

In section 3 we summarize some of our studies on the
qualitative change in West European unification as initiated
by the Single European Act through which the European
Community embarked on its way to political union, i.e. the
European Union. Why do we spend a whole section on this
issue? The relaunch of the Community which resulted in
deepening political union is, as our research suggests, the
response to the crisis of the former hegemonic social
practice (Keynesian model), of the relative decline of US
                         [Page 2]
hegemony and of the emergence of a new player in the core -
Japan. At the same time, the Community's response of moving
towards political union changed the very distribution of
relative state strength in the core and resulted in a much
more balanced power structure compared to that of the pre
mid-1980s.

Whereas theories of hegemony or world leadership suggest
that concentration and deconcentration of resources in the
core fluctuate in a regular and cyclycal way, we suggest
that this is not a timeless mechanism. Since the regulating
framework has, as we argue, fundamentally changed, the
present deconcentration of resources in the core is not an
intermediate step in the cycle towards new concentration and
thus the structural basis for a new hegemonic state or group
of states.

In section 4 we then summarize six arguments on the basis of
our considerations which suggest that a new hegemon is
unlikely to emerge again. At the end of that concluding
section we briefly address competition within the Triad and
suggest that it is likely to eventually result in a
convergence towards a common new societal model. No new
hegemon will be responsible for this but it will occur
rather as a result of the new way in which the world market
for protection functions.
                        [Page 3]


                        Part 1

        Societal Models as Hegemonic Social Practice



In order to approach the question of hegemonic transition,
we need first to specify our meaning of hegemony, which in
our view entails a consideration of societal models and of
those mechanisms that govern and generate social processes.
In the evolutionary conflict theory outlined and applied
elsewhere (Bornschier 1988) the focus is on _societal models_,
these being the central units of social transformation. At a
general level, societal models comprise the predominant
basic consensus at a certain point in time as well as the
institutional arrangements created to settle conflicts
between leading values representing human aspirations
(equality, security and efficiency, which is understood as
self-determination and economic progress), and demands that
arise from vested power. However, once established, a
societal model does not persist forever without undergoing
change as contradictions arise within it and its coherence,
or problem-solving capacity, begins to decrease. Rather, it
runs through a particular career with the following stages:
formation, unfolding, repletion, dissolution and eventually
decay and displacement by a new societal model. It is in
this sense that we use the term 'transition' of societal
models.
                       [Page 4]

Evolution is a feature of this process of transition. Yet,
rather than being a continuous linear phenomenon, evolution
must be understood in terms of long cyclical waves of
structural construction and destruction. In each single wave
another, new societal model is spelt out. This model
interlaces interpreted leading values, that is _normative
theories_, with two encompassing institutional complexes that
differ in their functional logic: the _technological style_
and the _politico-economic regime_. Technological style refers
to the type of productive and administrative organization.
The politico-economic regime refers to that cluster of
institutions which regulate social behaviour, build
consensus, implement compromises and manage conflict. This
notion therefore encompasses the shaping of the nation state
and the world market.

The central institutions of the modern times -- the market,
the firm, the nation state and the educational system -- are
shaped by a societal model, related to each other and
"wrapped into a package". The social frame of reference of
these processes is taken to be the world system rather than
particular, territorily bounded societies. This is because
these social processes are embedded in the capitalist
system, a system understood as a world-encompassing arena of
market and inter-state competition. An important point to
note is that it is not only firms that engage in market
                         [Page 5]
competition. In addition, governments of states can also be
said to be competing in a market for optimal location in the
world economy -- an economic competition outside the narrower
realm of that classical form of interstate conflict,
politico-military rivalry. A 'world market for protection'
regulates the interlacing of the political and economic
sphere (of which more below).

In this theory, societal models are evolutionary stages in
the development of the core societal type which spread to
other societies in the last century. In spite of the
considerable success of the early proponents of the
capitalist project (Venice in the 14th and 15th, and North
Holland in the 16th and 17th centuries), it remained
confined for centuries to certain adjoining regions in what
was still a very differentiated European social system. Only
in the 18th century, when leadership shifted to England, did
the breakthrough of the Industrial Revolution result in
substantial adaptive pressure upon other societal models.
This meant that other European societies were forced to
incorporate the economically and politically superior
institutions if they did not want to risk being outdone in
the competition for core position. Thus, the French
Revolution of 1789, and even more so the liberal uprisings
of 1830 and 1848, resulted in the constitution of a group of
societies that promoted the project of a single Western
societal type.

In an evolutionary perspective, the historical success of
this type of societal model is linked to its constitution as
                          [Page 6]
a market society, and to the decentralization of political
power into the hands of differentiated and competing
centers. The key strength of market society is its ability
to delegate a large part of the ever-present calls for
distributional fairness and justice to the 'impersonal'
market. The result is that the separation of political
power, and its control, can exist without a rigid pattern of
enforced 'truth'. In short, we consider the institution of
market society and this separation of political power to be
the two defining elements of the Western societal type.
Together with the constitutional state, they represent the
underlying social contract which has been renegotiated
at various times since 1830. These different societal models,
each the product of the evolutionary transformation of the
core type, can be outlined as follows:

(1) The liberal societal model of the founding era was
formed after the liberal uprisings of 1830-48 and began to
dissolve in the 1860s.

(2) The class-polarized model of the imperialist era
originated following the widening of political participation
and the extension of compulsory education in the 1880s, and
dissolved after the turn of the century.

(3) The societal model of the re-allocative market economy
and welfare state era, which integrated quasi-corporatist
and Keynesian elements in varying degrees, originated among
                         [Page 7]
pioneering states (Sweden, USA, Switzerland) in the early
1930s and began to spread after WW11. Since the late 1960s,
it has begun to dissolve and has, since the early 1980s,
actually entered a phase of decay in certain countries (in
particular the United Kingdom and the USA).



Before going on to examine the ways in which the theoretical
construct of societal models can aid us in coming to a
clearer understanding of hegemony, there remain a few words
to be said about sociatel models. We mentioned that societal
models encompass three spheres; normative theories,
politico-economic regime and technological style. What
remains is to clarify this point further by describing each
of these spheres in turn which, for heuristic purposes, we
will do in relation to the last societal model.



_Normative theories_. The swing in doctrines relating to
economic policy was very important in the shift from the
previous societal model. The emerging normative theory at
the time, which sought to solve perceived existing economic
and social problems, may be summarized in the following
manner: The state could be regarded as the solution to the
pressing problems that were seen to be the result of both a
world economic crisis and the advent of a new technological
style. However, state intervention was not only constructed
as the solution to undercomsumption through the stimulation
of growth. At the same time, normatively fixed state
                       [Page 8]
intervention also permitted the integration of reformist
socialism into the new societal model through the stated
policy goal of redistribution. So constructed, solidarity
and redistribution, two socialist demands, were no longer in
fundamental conflict with a liberal position. In other
words, the new guiding principles of state economic policy
in the welfare state era legitimized solidarity and
redistribution as virtues, the pursuit of which would
stimulate economic growth.



However, the neoliberal and monetarist uprisings of the
1970s undermined this basic consensus regarding the role of
the state, and therefore by definition the normative
theories upon which this role had been based. A new motto
was introduced: less state intervention - more freedom.



_Politico-economic regime_. The dominant normative theory of
the neocorporatist-Keynesian societal model with its
interventionist guiding principles created the possibility
for a class pact to ensure economic stability, social
pacification and growth, thus promising a "democratization"
of wealth. This societal model was therefore characterized
by two new linkages within the politico-economic regime:
first, a new linkage between the economy and the state and
second, a new linkage between capital and labor. In a
comparative perspective, the extent of cooperation and
                          [Page 9]
linkage of interests has differed among core countries,
but the basic model was the same. One thus finds different
degrees of neocorporatist policy-making, i.e. of
intermediation of organized interests coordinated by the
state, within different countries.



_Technological style_. Procedural changes (in manufacturing
and organizational processes) in the chemical industry were
originally the key element of the technological style of the
neocorporatist-Keynesian model. Using new production
processes it became possible to produce the key industrial
factor of energy (in the form of oil) at diminishing
relative prices over a long period. In addition, there were
significant innovations in the shaping of formal
organization. Mention should be made here of "scientific
management", the division of labor and the reorganisation of
large corporations. Here, the growth of the enterprise was
conditional upon a far-reaching separation of ownership and
control which in turn led to changes in the composition of
the economic elite. By redistributing income and positions
in favor of the distinctly enlarged middle classes, the new
organization created mass demand which reinforced mass
production and the diffusion of the technological style.
Finally, the new style offered a new mix of consumer and
industrial goods.
                         [Page 10]


The 1970s heralded the advent of a new technological style
integrating and linking new productive, distributive and
administrative elements. This style was articulated during
the 1980s by successively substituting the material and
energy intensity of the former style by information
intensity. The resulting advance in productivity was a
consequence of cheap (and ever cheaper) micro-electronics
and digital telecommunications. Computers became the new key
product and chips the new raw materials. By changing the
shape of organisations, the structure of jobs and the
patterns of consumption, the new style will go on to alter
the appearance of social life - the end result being changes
possibly even more dramatic than those having resulted from
the former technological style.





                            Part 2

    Structures and Mechanisms Generating Social Processes

An important question is of course 'what regulates behavior
in the structure so far described'? Social order and the
ensuing institutional structure are in fact a lot less
discretionary than it may appear at first sight. The
principles postulated by this theory -- liberty, equality,
security, and power -- are partially incompatible and it is
therefore possible to imagine a large number of potential
social constructions which could link these conflicting
                          [Page 11]
principles to one another. Indeed, as a consequence of this
fact very different new projects are often experimented with
after the decay of a hegemonic societal model. However, the
theoretical perspective put forward here considers that
success in global competition will accrue to societal models
that optimize legitimacy in comparison to their competitors
and challengers, and therefore will limit the range of
societal models possible at any given time. The mechanism
constituting this disciplinary force is addressed by the
theory of the world market for protection.



The World market for protection (WMfP)

The basic concept underlying the WMfP argument is that
social order -- what we term protection -- is a collective
good, albeit a territorially bounded one. Along these lines,
we argue that governments, understood as political
undertakings (Hintze 1929), produce and sell this utility
(protection) to capitalist enterprises as well as to the
citizens under their rule. A given state has to compete for
the mobile capital, capital which in turn dictates the
conditions under which it is willing to help state power to
develop (Weber 1923: 288f). The theorem of protection rent
(Lane 1979) in its original form can therefore be approached
from either the point of view of states or of capitalist
enterprises:

 (i) a state will be the strongest if it can combine
moderate taxing with effective support favorable to
innovation and investment; and,
                          [Page 12]
 (ii) a capitalist enterprise will prosper most if it
can choose to be, or if it is fortunate enough to be
situated in, a network of economic transactions effectively
protected at cost.

Advantages thus accrue to both sides: higher returns due to
protection at cost provide rents for capitalists and enhance
their accumulation capacities, and for the state successful
accumulation and higher returns provide a larger resource
basis for its strength. We add to this the further point
that

 (iii) it is not the capitalist state _per se_ which is
most favorable to economic success, but rather the one that
best reconciles the capitalist profit logic with the claims
for legitimacy that arise from citizens, based on demands
for security, equality and efficiency. This is what we term
the 'extended protection rent theorem' which forms the core
of the world market for protection theory (cf. Bornschier
1988, 1989; forthcoming, chapter 3).

To summarize this point, positions in the world system are
not rigidly and lastingly fixed, and the world market for
protection functions as a selective mechanism determining
the relative position of competing states. In order for a
state to preserve or attain core status it has been, during
the evolutionary process of Western society, necessary for
governments to respond to legitimatory demands, or at least
to perform better in this respect than other competitors and
challengers have.

                           [Page 13]

Relative strength of states

Returning to the point raised earlier that the frame of
reference for social processes is the world-system, we note
that a structural feature relevant to these processes is the
distribution of power capabilities among states. By 'power'
we mean here a state's ability to collect economic resources
and thus enhance its own resource base. A very unequal
distribution of that relative strength means that military
capability, as well as the ability to affect the world
market for protection, is unequally distributed.

This structural constellation may translate into the
possibility of leadership by a hegemon. However, such a
hegemonial position is not generated alone by coercion, but
also by consent. This because hegemons perform certain tasks
or services, in particular the provision of security and the
regulation of the world political economy.

An important point to note, especially in terms of
theorizing about future possibilities, is that in the past a
dominant position of a state in the capitalist process was
not necessarily linked to that state fulfilling the role of
a hegemon. Venice, North Holland, and Britain - at least
before the Georgian transition (Modelski 1990) - were
dominant in the emerging world economy and were the
defenders of the principles of Western society. But, they
had no leadership role as did Britain in the 19th or the USA
in the 20th century. The reason for this is that competitors
and challengers were not of the same type of societies.
                         [Page 14]
The fact that in the second half of our century only
democratic market economies compete in the core makes the
reaction to the forces of the WMfP much more immediate and
direct than it was in the past. This point needs
reiterating. Recall that the world market for protection
rewards those states that best serve the capitalist profit
logic while at the same time successfully responding to the
legitimatory demands placed upon them by citizens. In a
democracy therefore, the speed at which a state's inability
to respond positively to such legitimatory demands is
registered increases significantly.

As well, in this age of highly mobile capital, failure to
serve the capitalist profit logic is also quickly punished,
not simply via the traditional effects of a depressed
economy, but also often by significant capital outflows and
therefore longer term threats to the stability of the
national economy. As well, a worsening economy in turn
compounds a state's perceived and real inability to respond
to legitimatory demands. Thus, in a democracy the
disciplinary nature of the world market for protection
functions much more directly than in the past.

And in the case where all the competitors for core positions
are democratic, this means that the core of the world
political economy is much more responsive to the influence
of the world market for protection than was previously the
case.


Relative strength of transnational business

Another aspect of structure which affects the mechanism of
the WMfP is the relative strength of business vis-a-vis
                           [Page 15]
states, as mentioned above. Here we focus on transnational
corporations and their strength relative to states in general
(i.e., to public power). Since transnationals have the opportunity
to shift business from one state to another, they in fact have
more power to affect state behavior than local business
normally has. By looking at the relative proportion of
business controlled by transnationals in the world economy,
we get an indication of the relative strength of business
vis-a-vis states in general.

Of course, transnationals differ across sectors and time in
the degree to which they rely directly on state-generated
business opportunities. For example, transnationals in the
knowledge and organization-based industries are less depen-
dent on direct state intervention than transnational banks
or finance firms, thus increasing their power in the world
market for protection vis-a-vis states.

Since transnationals in knowledge and organization-based
businesses are dominant in the world economy, we can speak
of economic globalization. In historical perspective,
economic globalization at the end of this century is quite a
new feature which (i) strengthens big business vis-a-vis
states and which (ii) produces much more direct and
immediate reactions of the WMfP, as well as tipping the
balance in favor of transnational business at the expense of
national business.

Relative strength of citizens

As another aspect of structure we would like to introduce
the relative strength of populations vis-a-vis states and
                         [Page 16]
firms. The strength of people depends upon the degree to
which they have a say in politics (i.e., the extent of
democracy) and the degree to which unions are free to
articulate the interests of their members. The higher the
relative strength of people, the less delayed will be
government's and business' reaction to people's demands.
Again, this has the effect of speeding up the mechanism of
the WMfP. Note however, that the mechanism still works, only
with much greater delay, if people are only able to express
their preferences indirectly.

In addition to formal democracy and unionization, education
(universal values) and networks of civil society strengthen
the cause of the people, although these opportunities may be
unequally distributed. Even under such conditions, the power
of states and firms vis-a-vis the citizenry is always
substantial, since they distribute the means of subsistance
--  pay as well as welfare provisions.

In a transnationalized or even globalized world, people
would appear to be handicapped in pressing their claims
since they lack the resources for organizing effectively at
a transnational level. While there is certainly much truth
in this observation, this should not lead us to discard the
impact people can and do have. Because people normally act
by means of influencing state behavior, it follows that,
under conditions of democracy, they must also directly
affect the parameters of the world market for protection as
well.
                           [Page 17]

The arguments sketched so far imply that the WMfP at the end
of this century functions much more directly than it did at
any other time in the history of the capitalist system. We
will use these arguments later to underpin our thesis of a
new beginning without a hegemon. In the next step we
introduce the conceptual differences between hegomonic
social practice and a hegemonial state, differences upon
which our thesis relies.


The difference between hegemonic social practice (hegemony)
    and a hegemonial state (hegemon)


The theoretical point we would like to establish here is the
distinction between hegemony described in terms of a set of
social practices which are dominant, and a hegemon, i.e. an
actor, (in this case a state) which dominates within this
structure.

Historically, a hegemon has been functionally necessary to
create an hegemonic order. It is our thesis however that the
role of 'hegemon' today has been replaced by the WMfP so
that an hegemonial state is no longer necessary to enforce
the normative, technological and politico-economic regimes
of a hegemony. This function is, and will increasingly be,
carried out by the WMfP itself.

According to Cox (cited after Parker 1992: 33), hegemony can
be described as;
                          [Page 18]

"an order within the world economy with a dominant mode of
production which penetrates into all countries and links
into other subordinate modes of production. It is also a
complex of social relationships which connect the social
classes of different countries. World hegemony is
describeable as a social structure, an economic structure
and a political structure; and it cannot be simply one of
these things but must be all three" (Cox 1983, 171f.)

In our view it is the order embedded within these
structures, the combination of which we term a societal
model, which is hegemonic. Of course, hegemonic practices
and the role of a hegemon can go together, but we argue they
do not necessarily have to.

The Keynesian societal model is a case in point for a
hegemony which is inextricably linked to a hegemon - to the
USA, which installed this order world-wide after it had
arisen domestically during the New Deal era. After two world
wars the two challengers for economic leadership, Germany
and Japan, were virtually destroyed, and the USA's allies
exceptionally weakened. In addition, the USA was the only
power able to contain the counter-core project of the USSR.
In this constellation it became possible for the USA to take
over the role of a Western "Schutzmacht" and produce,
immediately following the war, half of the world product.
Therefore, the new societal model of the Keynesian era did
not spread by imitation but rather was, throughout the core, a
creation of the USA.
                          [Page 19]
In a similar manner, Britain's hegemonial position, which
peaked in the mid-19th century, was also the result of the
previous military defeat of its main contender, France. As
well, Britain's superior industrial performance triggered
the liberal revolutions on the Continent. Germany, the
emergent challenger, was not yet united and Russia had been
defeated in the Crimean war. The power structure was
therefore highly skewed in favor of Britain, and as a result
its position as the hegemon remained unchallenged for
decades.

Both the British and the American examples demonstrate that
these hegemonic positions were exceptional, and they
therefore only provide a poor guide for assessing the future
structure of the core. Our theory holds that strong
hegemonies may arise in the absence of a hegemon if the WMfP
operates more directly. Since globalization and
democratization have altered structural conditions
significantly, this can be predicted for the future. Of
course, the continued thrust of globalization and
democratization is not to be taken for granted. In our
theory they are variables, not constants , which affect the
functioning of the WMfP (see "The relative strength of
business" and "The relative strength of citizens"), and
therefore changes in their trajectories will necessarily
alter the outcome predicted here. Before discussing our
prediction more extensively, we address West European
unification.
                       [Page 20]

                        Part 3

           Explaining the Single European Act (SEA)

In this third part of our paper, we shall argue that both
the decay of the Keynesian societal model as well as the
decline of the US position as hegemon triggered West
European unification. By this very process a new actor was
created, from that moment on participating on more equal
terms with others in core competition. Our research on the
Single European Act (SEA), through which the EC embarked on
its way to political union, will be reported in detail
elsewhere (Bornschier 1994; Bornschier forthcoming,
Bornschier and Fielder forthcoming). Here we summarize only
the major findings and arguments of our research.



We believe that the impetus for the relaunching of the
European integration process came from transformations at
the level of the world political economy, in particular the
fact that for decades Europe has no longer been the center
of the world political economy.[1] Following the First World
War, the European powers were forced to relinquish this role
to the United States (which, however, only assumed this role
from the Second World War onwards). Thus, the European
powers took their place behind the US as number two and were
startled when, due to the hegemonic decline of the USA, the
usual stability of the world economic structure was no
longer guaranteed. Furthermore, the impressive rise of Japan
resulted in even the most powerful of European states being
relegated to number three position in the world political
economy.
                         [Page 21]

The triggers for the relaunch of the European intergraton
    project and the actors involved


Among the previous work on the new European Community which
was created by the SEA (Sandholtz and Zysman 1989, Hoffmann
1989, Moravcsik 1991, Keohane and Hoffmann 1991, Cameron
1991, George 1993) only few authors have stressed the
influence of transnational forces in the institutional
rebuilding of the EC.

Sandholtz and Zysman (1989) have pointed to the
transformation of the world economy as a necessary condition
for the revival of the European project. We hold that a
second necessary condition concerns the cyclical career of
societal models. As we argued earlier, the Western societal
model began to disintegrate towards the end of the 1970s.
Former hegemonic societal doctrines like Keynesianism were
replaced by monetarist and supply-side oriented ones after
the World Summit Conference in Bonn in 1978. In 1982, the
new doctrine was anchored in the OECD paradigm for a new
economic policy for the Western World. The old technological
style, characterized by the Fordist mass production
paradigm, had reached its limits already in the early 1970s.
Furthermore, the political shifts in the USA, Great Britain
and Germany at the beginning of the 1980s destroyed the
unquestioned position of the former politico-economic
regimes of the post-war era. The concept of the transition
of societal models - in hegemonic social practices - offers
us the possibility of explaining the recasting of the EC as a
move towards a vision of a renewed social contract in
Western Europe, and therefore the beginning of the
articulation of a new societal model.
                      [Page 22]
In brief then, the disintegration of the Keynesian societal
model and the decline of the position of the USA as hegemon
operated together. In combination they offer an explanation
of the integrational momentum of the EC.

At another level, the relaunch of the EC must also be seen
as an answer to contradictions inherent in the
interventionist role of the state - which was an ideological
and concrete cornerstone of the neocorporatist-Keynesian
societal model. State economic intervention can only be free
of major interstate conflict if it is embedded in, and
curbed by, international regimes. One important pillar of
this coordination was the dollar-gold exchange regime of
Bretton Woods. However, in 1971 the United States, which had
at one time established this system, was no longer in a
position to defend the dollar.

From an institutional viewpoint, this means that the hegemon
abdicated the moment President Nixon gave up the exchange
system by "suspending" the obligation to maintain the US
dollar-gold parity. By 1973, when the European countries
were forced to switch to floating, the system of fixed
exchange rates broke apart completely and the disciplinary
pillar of coordinating economic policies no longer existed.
The important, even irrevocable, clasp had broken, because
the USA was no longer willing to guarantee the international
exchange system.

The process of European integration which is linked to these
developments can be explained, we believe, through the
theory of the world market for protection. It suggests that
the motives of the leading European corporations and
political entrepreneurs for a new deal hinged upon their
desire to improve their competitive position relative to the
United States and Japan.
                          [Page 23]
The competitive disadvantages of Europe as an industrial
site were first felt directly by European transnational
corporations. After the economic crisis of the 1970s, the
United States as well as Japan recovered with greater ease
than Europe. The USA, despite its loss of competitiveness,
was able to take advantage of its huge and rather
homogeneous internal market; and Japan enjoyed the advantage
of elaborated strategic planning, which had already been an
essential factor in Japan's extraordinary post-war rise.
Interestingly, it was the "planned economy" (albeit a mild
and very flexible version), tied to capitalistically
inspired business and an orientation to long-term strategic
goals, that made Japan big. It was not laissez-faire.

The argument from the theory of the world market for
protection then in this case reads as follows: the European
transnational corporations directly [2] and indirectly [3]
demanded that the political entrepreneurs in Europe provide
them with the combined advantages their rivals were enjoying
in the United States and Japan. This demand created the
start of a new state project along the following lines: a
large homogeneous market combined with strategic planning,
particularly with regard to the ever more important
production factor of technology.

The WMfP mechanism emphasizes also a "demand-side" oriented
explanation for the starting point of the relaunch of
integration, one that overcomes the shortcomings of a mere
"supply-side" explanation which stresses the relative
autonomy of the EC Commission as a supranational political
entrepreneur.

Our explanation so far developed is schematically
represented in Figure 1.

Click to View Figure 1 (19k gif)

Such a transnational and
                           [Page 24]
supranational institutionalism argument in explaining the
recast of the EC has been challenged by Moravcsik (1991) who
advocates a neorealist or intergovernmental institutionalist
explanation. He claims that the SEA can be best explained by
simply considering the national interest of the three big
member states, Germany, France and Britain. These three are
said to have converged upon the lowest common denomination
of their national preferences in producing the integration
project. Furthermore, Moravcsik stresses that it was the
heads of governments who took the lead in the negotiations
and produced the break-through that is manifested in the
SEA.



Evidence from our empirical investigations

Our analysis of documents has clearly revealed that the
Commission was the institution making the proposals and
fomulating initiatives, not the governements and not the
European Council, even though the Council is the (legal)
decision-maker in the Community. Furthermore, evidence
gathered through interviews conducted with witnesses, with
members of the Commission and the European Roundtable of
Industrialists point to the fact that the negotiations were
not shaped by the threat of expulsion of Britain by France
and Germany, as claimed by Moravcsik. Nor was evidence found
which suggests that the agreement was the result of lowest-
common denominator bargaining (indeed, in this case the
lowest-common denominator would have been to do nothing,
which was obviously not the result of the negotiations).
                       [Page 25]
Rather, all the evidence points to support for the thesis
that the 1992 project was originated by the EC Commission in
cooperation with European transnational business. European
industry, particularly through the European Roundtable of
Industrialists, gave vital support to the work of the
Commission and also contributed to the proposals made by the
Commission by making sure that the needs and interests of
European business were known. Why should governments have
gone through with the creation of a single market if it was
needed by no one? Transnational European big business needed
it, as industrialists were fully aware of the fact that they
had no hope of remaining competitive with the United States
and Japan without it.

Documentary analysis as well as our elite interviews
strongly support our hypothesis (see Figure 1) and
at the same time cast serious doubt upon the explanation offered by
Moravcsik.


The elite bargain and the quest for legitimacy

Let us recap the explanation so far developed. At the
beginning of the 1980s the following constellations were
apparent. The Western societal model had decayed during the
1970s. Europe was confronted with Japan's success in
mastering the world economic crisis and it was challenged by
America's experiment under President Reagan to rescue its
world economic position -- at that time the experiment
appeared viable for large parts of business. At this moment
the "demand" of transnational European business and the
                            [Page 26]
"supply" of the supranational EC Commission met and provided
the preconditions for a relaunch with a new politico-
economic regime.

For Western Europe the elite bargain between the
transnational corporations and the EC Commission as a
supranational political entrepreneur combines the idea of
the liberalization of the European market with new kinds of
state services at the West European level -- the two
strategic advantages enjoyed by the EC's two main rivals --
in order to prepare for the post-hegemonial competition
within the Triad.

The EC project is, however, in no way a late offspring of
"Reaganomics". The emerging EC-state strengthens not only
the supply side of the economy, but also the demand side,
insofar as the diffusion of the new technologies receive
specific attention in order to support the increasing group
of users and to offer socially created flanking measures to
train and re-train workers and users beside supporting
research. This is also proclaimed by Pandolfi's
reorganization of the European Research Promotion policy
which is seen as moving away from supply side measures to
the demand side. Furthermore, the emerging EC-state is
sensitive to social cohesion, unlike Reagan's reconstruction
attempt which reminded many of Victorian-like capitalism.
Social networks in the EC -- despite several growing holes --
have in no way been folded up over the last dozen years or
so.

Indeed, a core element of the impetus represented by the SEA
is the strengthening of solidarity on an EC scale. Core
                            [Page 27]
elements of the normative theory of the Community are
cohesion and convergence. This points to an expansion of the
welfare state on an EC scale.

The European model of the welfare state has been a specific
strength of the West European states during the post-war
era. How then can the disintegration of this old model
explain the transfer of this specific strength to the EU
level? Neither the West European states nor the EU are
following the socially regressive American deregulation
model of Reagan and Bush.

We have argued that the Commisssion took up the demand by
transnationals for a larger market and greater strategic
planning. Our previous arguements may give rise to a false
impression, namely that the Commission is therefore only
acting as "Gesamtkapitalist" for the European transnationals
(the agent of the transnational European capitalist class)
and has no self-interest.


The additional hypothesis

Political actors and their representatives must legitimize
themselves. The situation of the EU Commission concerning
this need is very precarious. Even if the European
Parliament is to be somewhat strengthened by the SEA,
classic democratic legitimization is still only achieved
indirectly through the democratically appointed and
controlled representatives of the member states in the
Council.
                            [Page 28]
This situation, even before the SEA, weakened the Commission
as it simultaneously strengthened the Council. As a result,
the political ambitions of the Commission are blocked.
However, at an earlier point the Commission began, through
the means of opinion polls (Eurobarometer), to make direct
contact with the citizens of the EC and find out what their
views on political questions were. Since 1972 under the
auspices of the Commission, a twice-yearly survey of the
opinions of EU citizens has been conducted.

This polling of opinions has a considerable political
function for the Commission insofar as the Commission
endeavours to legitimize its policies with reference to the
popular acceptance of the Community project. The results of
these polls are utilized politically on a daily basis.
According to a quotation in the Commission's brochure
"Citizen's Europe" [4]
      More than half (53%) of the citizens of the
      12 member states feel themselves to be at
      times or often Europeans. This comes from a
      1991 Eurobarometer survey. The feeling of
      not only belonging to one country, but also
      of being European, is increasing in all of
      the member states of the European Community.


However, at the end of the 1970s and beginning of the 1980s
support for the EC sank to a long term low and remained
there until 1984 (Niedermayer, 1991). At the same time,
differences between countries in the levels of support for
the EC decreased continuously, representing a
standardization of opinion across member states. These
trends are illustrated in Figure 2, which was
constructed by Felix Keller from our EC-project (Keller,
unpublished work).[5]

Technical Note on Data for Figure 2:
     Country Specific Index Values of Support for
     European Integration

     Die exakte Frage des Eurobarometers lautete
     wie folgt: "Ist allgemein gesehen die
     Mitgliedschaft (des Landes der Befragten)
     eine gute Sache - eine schlechte Sache -
     oder weder gut noch schlecht." Die Antworten
     wurden in vier Kategorien codiert: 1. eine
     gute Sache 2. weder gut noch schlecht 3. eine
     schlechte Sache und 0. weiss nicht, keine
     Antwort.

     Nach Niederrnayer (1991) empfiehlt es sich
     nicht, eine einzelne Kategorie der Frage
     isoliert zu betrachten, um die Unterstutzung
     in der Bevolkerung zu messen.  Nach seiner
     Anweisung wurde deshalb ein Index entwickelt,
     der alle Antwortkategorien berucksichtigt,
     wobei die Antwortverweigerung zur Kategorie 2
     (weder gut noch schlecht) codiert wurden.
     Die Indexwerte entstehen durch die Differenz
     der positiven und negativen Antworten uber
     der Anzahl moglichen Antworten ([Kategorie 1
     - Kategorie 3] / [Kategorie 1 + Kategorie 2 +
     Kategorie 3]).  Der Index hat eine maximale
     Spannbreite von - 1 bis zu + 1. Er nimmt den
     Wert von -1 ein, wenn alle Antworten negativ
     sind und den Wert von +1, wenn alle positiv
     ausfallen.  Der Wert 0 bedeutet Indifferenz.
     Dieser Indexwert wurde fur jedes Land zu
     jedem Zeitpunkt auf Basis der
     Eurobarometerbefragung errechnet und einer
     einfaktoriellen Varianzanalyse unterzogen,
     die den Index als abhdngige Variable und den
     Messzeitpunkt als Klassifikationsvariable
     besitzt.  Die daraus resultierenden Werte -
     Mittelwerte und Standardabweichung - lassen
     sich als Masse der zentralen Tendenz der
     Indexwerte, respective der Streuung
     (Homogenitat bezughch der
     Landerunterschiede) interpretieren.
     

                             [Page 29]


At the end of this period, in which the so-called
Eurosclerosis was reflected in the mood of the public, the
Commission began to make the pact more palatable to the citizens.
And indeed there are elements in the political package of the
Commission that cannot be explained solely in terms of the
interests of transnationals. Rather, they express the Commission's
need for legitimization. In June of 1984 the project "Citizen's
Europe" was launched through an ad-hoc commission (formally set up
by the Council), and already by 1985 an important symbol followed
-- the European Passport.

With the assumption of Jacques Delors, who was the socialist
Finance Minister under Mitterand, of the presidency of the
Commission, the social dimension had arrived. Since then,
Delors has made "Europe '92: The Social Community" his
political platform: "More social equality in Europe - a
lively and humane society, is what the EC is seeking for its
340 million members."[6]

After launching the political package, which not only
included the interests of the European transnationals but
also the legitimatory ones of the Commission and which was
then paragraphed in to the Single European Act, public support
among the citizens of the Community sharply increased, as
the poll results in Figure 2 illustrate.


The EC on its way to a new societal model

Single elements of the post-Keynesian policies -- which
together will form part of the emerging future politico-
economic regime of Western societies -- were pioneered in the
                           [Page 30]
USA (deregulation) and in Japan (strategic planning and
management of key productive factors, especially technology,
under the auspices of the state). But the EU seems to be
quite successful in adapting them and, more important, to
innovatively reshaping and extending them by a more
harmonious combination of supply with demand side policies
and by cushioning social side effects.

The Europe 92 target launched in the mid-l980s can be seen
as a sort of cleansing process to remove Europe's
neocorporatist crust without abandoning the strategic
European advantages of a legitimizing welfare state. While
Japan reaps strategic advantage from "lean production" (a term
populized by Womack et al, 1990), similar future advantages
of the EU may stem from a "lean state" project  -- a
cornerstone of the emerging new politico-economic regime
(Bornschier 1994). In the case of the EU, the weak but
nevertheless emerging future policy is much more likely to
recombine cultural and institutional traditions with new
challenges in its policies than the competitors across the
Atlantic and Pacific. The particularity of this lean state
is related to the absence of much of a polity in the EC's
past.


                           Part 4

            An Emerging Hegemony Without a Hegemon

The hegemonic transition of which the EC's relaunch is part
will not produce a new hegemon similar to those
we know from the British and American examples. Why not? When
we maintain that a future hegemonic state or even group of
states within the core is unlikely, we base our arguments on
                            [Page 31]
systemic change being brought about through the new way in
which the world market for protection functions. This
mechanism was introduced above in our brief discussion of
the structures and mechanisms generating social processes.

Systemic Change

A necessary condition of hegemony or leadership is,
according to "hegemonic stability theory," a very unequal
distribution of resources among the actors within the WMfP.
This structural condition is converted into hegemony when
accompanied by the agreement of the other powers who
authorize the hegemon to provide collective security and to
regulate the world political economy.

Two examples are commonly referred to when discussing
hegemony, and we will have cause to refer to them as well
below. The first is that of Britain, which reached its peak
in 1850, and that of America, which reached its peak in
1950. Both these examples illustrate the exceptional
character of hegemonic positions within the last two hundred
years, and therefore speak against any mechanistic
extrapolation of the theory of the rise and fall of
hegemonic core powers into the future. Indeed, we will argue
that a similar configuration is unlikely to reoccur in the
foreseeable future. The following considerations lead us to
this conclusion:

(1) One can, on the basis of previous experience, argue
that the global war cycle is a mechanism which, by producing
victors and vanquished, could lead to a significant
inequality in power between core powers in the future. Such
a consideration, however, represents a failure to appreciate
                             [Page 32]
the fact that systemic conditions have fundamentally changed
-- today, all competing core powers are democratic. This is,
in the first place, a completely different circumstance in
which to initiate a new societal model. What follows from
this? A regularity, or one could even say a law, in the
social sciences states that democracies do not wage war with
one another. This point has recently been further
substantiated by Bruce Russett (1993, 1994).

(2) In the past, economic advantages could accumulate as a
result of a superior social order in a particular society,
and over time give rise to a considerable imbalance in
economic power. In the future this will only reoccur with
great difficulty due to globalization and the
democratization of the core as referred to above. Societies
today learn much more quickly from one another because the
effects of the mechanism of competition for a superior
social order have grown so much stronger.

(3) The balance of power has long been a powerful
mechanism in checking the ambition of one power seeking to
dominate others. In the future however, this mechanism will
be even more effective. Western Europe's innovation in
competition among the core powers is that since the SEA of
1986, the European Union has, so to speak, increased state
power through the fusion of different national states in the
same way as companies increase their market power through
merger. The result of this course of action will be that
Western Europe is destined to become a serious player in the
Triad. At the same time, this will also have the effect of,
to some degree, balancing the division of power in the core.

(4) In the heyday of British and American hegemony, their
respective solid militarily-underpinned leadership role was
functionally important in the defence of the principles of
Western society. This was the case because the most
                         [Page 33]
important challenger to their power was, more or less,
hostile to these principles. In contrast to these historical
constellations, the principles of Western society are today
firmly anchored in nearly two dozen societies.

(5) A substitute for the services of a hegemon in the
creation and maintenance of collective goods (in particular
international regimes) has for some time now been in sight.
The social basis for this replacement is a globally-oriented
civil society along the lines of the Trilateral Commission
(Gill 1990). Trilateralism as a method of conflict
resolution was practised under both Presidents Ford and
Carter, and world economic summits have, since the mid-
1970s, been instruments for conflict settlement through the
mutual personal exchange of information and negotiation
(Putman and Bayne 1985). The unexpected breakthrough in the
effort to regulate world trade, and the creation of the
World Trade Organisation in December 1993, are indications
that, even in a multi-polar world, cooperation and the
settlement of disputes is possible in the abscence of a
hegemon to guarantee the order. This is clearly in contrast
to the position which, falsely, is put forward in other
theories of hegemonic stability.

(6) Lastly, since the victory of the market over its
historical adversary the command economy, the provision of
security by a hegemon is no longer as necessary as it once
was. Threats from a new potential counter-core (Islamic
Fundamentalism with increasing state power and oil as a
weapon), or from the remains of the one-time socialist
counter-core states (possibly China, or also Russia
following a successful coup) will be confronted under the
leadership of America acting as a sort of world sheriff
supported by all the other core powers and the UN. America's
                           [Page 34]
continuing impressive military might will be transformed
into a specialized security role for the whole core. This is
however different from what is understood by the term
hegemon - a state that possesses clearly superior power in
all realms.

In sum, although we are on the way to a new hegemonic
societal model in the core it is very unlikely that a
hegemon will reoccur. We experience a hegemonic transition
without a new future hegemon.



Competition in the core and future prospects for convergence

The revitalization of capitalism after the decay of the
former Soviet Empire will lead to a global hegemony of
capital backed by powerful transnationally oriented actors --
firms, professional as well as administrative elites. In
this structure ordinary people act only indirectly and
express their preferences via state regulation. This may
seem today to be an insignificant consideration. But one
should not forget that paying attention also to the
interests of ordinary people was the King's road of
capitalist development. All societies once leading in that
sequence, starting with Venice, offered more opportunities
for their people (see Bornschier 1988; Modelski 1990). This
will continue in the future because legitimacy is a
productive factor.
                          [Page 35]
For the immediate future three competing submodels will
continue to coexist at the core. This means that the new
hegemonic social practice starts in a weak form. We conclude
the paper by discussing the prospects for convergence in the
more remote future.

The emphasis on deregulation in the case of the USA is
coupled with a weak welfare state and the problems of
military overhead. But beside its excellent innovative
record, the USA has a rich democratic tradition and a
remarkable record in integrating many cultures. It is, as
Modelski (1990: 251) coins it, a "most active workshop of
political practice, itself a microcosm of world society." In
this respect, Japan performs less well, and the EC can
compete only in terms of multiculturality. In any case, the
speculation about a "bigemony" (Bergsten 1987) between Japan
and the USA as a kind of "Pax Amerippon" fails to recognize
that the two systems that would have to pull together
represent in many respects two extremes as regards societal
organization.

Japan's mercantilist path combines market forces with
strategic planning of the state through which visions
(information society) are created, however, only for their own
society and hardly for world society as a whole. Japan
shares with Western Europe the emphasis on social
"Ausgleich", consensus and neocorporatist practices which
are -- except for the short New Deal intermezzo -- absent in
America. Furthermore, Japan is leading with respect to "lean
production", the management philosophy of the new
technological style.

However, Japan's success in this respect cannot simply be
projected into the future. In a world in which software is
becoming more and more important, the current high
                         [Page 36]
performance is only of limited value. What is needed is
cultural opening as an instrument for the next round of
competition. Otherwise this competitor will become merely the
best technician who, however, never shows the way.

Despite the present weakness of the EU economy both vis-a-vis
Japan and the USA, Western Europe is not entering a lost
race. Except for its precarious position with regard to
future key industries (see Bornschier, 1994), EU-Europe
combines most of the advantages of its competitors. Its
project is to combine a large single market with strategic
planning and social "Ausgleich" and to establish a truly
multicultural society with a lean state at the federal
level. EU Europe has made the move, and the conditions
regarding the combination of market with strategic planning
and social "Ausgleich" are better than in the United States
for historical reasons.

It is always difficult to foresee the future, but it seems
reasonable to predict that core competition will, in the
longer run, translate into convergence towards the West
European model. Such a convergence would also imply that
North America and Japan-centered South East Asia will imitate
regional projects of the EC-type -- a process that is
already under way (e.g. the North American Free Trade
Association/NAFTA, Asean Free Trade Area/AFTA, Asia-Pacific
Economic Cooperation/APEC)

Such a convergence would not only strengthen the future
hegemony, but it could also provide a vision for the vast
rest of world society. But even then EU-Europe would not act
as a hegemon in that structure. Times have changed and
history does not reoccur in a mechanistic way.
                          [Page 37]
                          Notes

1. "Relaunching" is used here to refer to the renewed efforts
taken towards the widening and, in particular, the deeping
of the European Community which resulted in the Single
European Act.

2. Directly, i.e. towards the Commission via the European
Round Table of Industrialists.

3. Indirectly, i.e. via their national governments.

4. Commission 1992, Luxembourg, Amt fur amtliche
Veroffentlichungen der Europaischen Gemeinschaften, ISSN 03
79-3141, Kat.-Nr. CC-74-92-281-DE-C.

5. The basis of this analysis corresponds to the conception of
"diffuse" support for a political system developed by Easton
(1965). Such support is established in all
Eurobarometers, see Technical Note on Data in Figure 2.

6. From Kommission (Hg.): Europa '92. Die Soziale
Gemeinschaft. Informationen uber sozialpolitische Programme
und Initiativen. Fur Arbeitnehmer und Verbraucher. November
1990, p. 2.



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