The History of the EU-2

October 18, 2005

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[Some Important EU Institutions]

The Epoch of Nations: 1854-1914

The nations of Europe stood up after the Crimean War put a permanent end to the congress of emperors. The UK had always recoiled from the repressions of continental mini-states, whether Wallachia or Poland, and now France's 2nd Empire did also. Franz Jozef's close collusion with Nicholas I in the liquidation of Hungary did not led to the former's support in Nicholas' scheme to seize the Holy Land as a protectorate; Napoleon III and the British PM Aberdeen schemed to use this as a pretext for effectively ejecting Russia from the affairs of Europe. With Russia out of the picture, the Balkans now a cluster of "independent" monarchies, Italy presently united under Piedmont-Sardinia, and Holland fractured, there was nothing to stop Prussia from "finishing off" Austrian constraints on its conquest of Northern Germany.

This began with a minor squabble with Denmark over the territory of Schleswig-Holstein, then between the victors Austria and Prussia (1866). While the war was over a small matter, the Prussian regime utterly smashed Austrian influence north of the Maine River, contributing to Austria's administrative disintegration. Then, as Prussia ingested much of north Germany, Bismarck manuvered Napoleon III into the Franco-Prussian War (1870).

The Prussian Conquest of Germany

It's difficult to explain how so many diverse and complex events led to the singular result of the nation-state on top. Prussia emerged as the core state of Germany, while Piedmont-Sardinia achieved mastery of Italy; neither involved difficulties associated with assimilating a resentful subject population. Austria[-Hungary], the old-fashioned princely state, disintegrated. Russia and Austria became the seats of pan-movements (pan-Germanism in Austria, pan-Slavism in Russia); in Russia and Prussia/Germany, the pan-movements were friendly to the regime, yet the Prussian monarchy spurned the pan-Germanic movement and the Russian monarchy had its secret service build up the pan-Slavic movement. In fact, the Russian movement was no conservative movement at all; frankly speaking, it was a totalitarian movement in vitro. The pan-Slavic movement sought to eradicate rival nationalisms, and make them a pro-Czarist force in neighboring states. It also sought to embed hatred of liberalism in Russian society, and transform autocracy into a religion.

In France, defeat in the Franco-Prussian War did not discredit the state; if anything, the sentiment of revenge cut across all political classifications and became the source of political authenticity. Curiously, as a result of this, France became one of the most anarcho-libertarian societies of the developed world, with almost unlimited free enterprise. It was, along with Vienna, the font of "libertarian" ideas.¹ Yet, this did not impede the development of nationalism (or national narcissism) in France, either.

The development of nationalism was stimulated by the need for national governments to provide for the common defense and the general welfare; both required massive public works expenditures, taxes, and capital markets. Likewise, the emergence of the nation meant the expectation that all of the people of a particular nation were to be tied together under a single state. In the case of Germany, this was attempted repeatedly in the early 19th century through a pan-German congress; in the 1860's, however, it was accomplished from the top down by the heretofore reluctant Hohenzollerns. Why did the Hohenzollern regime suddenly develop an enthusiasm for German unity? One obvious answer is that Friedrich Wilhelm IV died in 1858 and was succeeded by Wilhelm I (1858-1888); Wilhelm, in turn, appointed the brilliant Otto von Bismarck as chancellor. Bismarck, a junker, had no sentimentality for Austria and regarded it as so feeble as to be, in effect, a revolutionary vector. Bismarck, in other words, had the insight that Austria's "conservativism" and Catholicism were, far from preventing nationalist revolution, enabling it and provoking it. His mission was to prevent the political emancipation of the bourgeoisie, ideally by erecting an administrative barrier to Austria. Hereafter, Prussia would not "join" a German confederation (in which the bourgeoisie were the actors and the monarch an adornment); rather, this was to be a dictatorship of the junker, with the bourgeoisie treated as a lovely teenaged daughter whose aspirations were to be regarded as mere silliness.

Yet, Bismarck forged the stronghold of European bourgeoisie, and it ran away with him. Conservative to the marrow, he sought to eliminate all revolutionary nationalist challenges to the junker landlord caste; this meant idealistic Schuberts and Schillers in Frankfurt, the petit bourgeois in France, and the peasants in East Prussia (now Poland). Blood and iron meant a martial caste consciously mimicking the junkers themselves, and an industrial machine to ensure the junkers would win every battle. It did not mean a state enslaved to the expansionism of the bourgeoisie, or the vagueries of the market. With such clear, minimalist objectives, and the utter ruthlessness of junker arrogance to guide him, it was natural that he should crush his opponents like so many snails under a hobnailed boot. But he did not understand that an industrialist;'s scion, whipped into fighting toughness and modeling himself after a junker, would quite inevitably look for battles and opportunities for expansion. Like a siamese twin to the junker caste he imitated, the new class of martial bourgeoisie organized industrial expansion exactly as the junkers prepared the order of battle, yet remained utterly devoted to the junker "ideal." This was, natually, the deadliest enemy Bismarck could have encountered, and when he joined battle it was Bismarck who lost.

(Part 3)

NOTES: 1 The notion that France has always been a nation of dirigisme is both incorrect and not especially germane. In fact, there have been several periods in French history when French economic policies were far more liberal than those of the UK, to say nothing of protectionist USA & absolutely digiste Prussia/Germany. In his excellent and highly controversial "Kicking Away the Ladder: the 'Real' History of Free Trade" (PDF-Dec '03), Ha-Joon Chang demonstrates (table 1, p.2) that for all sampled years, US tariff rates far exceeded those of France (except during the construction years of 1950; in 1950, UK tariff rates exceeded those of France). Likewise, Austria[-Hungary]'s tariff rates generally were the same level as France's during much of the 19th century, when the Austrian school of economics was led by luminaries like Carl Menger. Pre-war Japan, of course, adopted medium tariff rates as soon as it could; these at once exceeded France's 20% in 1913.

Especially revealing is the chart on p.8, in which UK and French tariff rates are compared over consecutive 5-year periods. Although the UK is world-reknown for its embrace of laissez-faire policies, between 1821 and 1875, France had lower tariffs than the UK. For the rest of the century, tariff rates were only slightly higher. Moreover, the administration and technology of dirigisme evolved. In France, the small populations and low incomes of its subjects (2nd Empire, early 3rd Rep.) meant the country largely subsisted on large projects and bursts of armament spending. The UK, in contrast, had a steady stream of weapon spending, military campaigns, and convoluted schemes to build up its financial sector. We might characterize 3rd Republican industrial policy as mainly hard-money, but here and there a gigantic state scheme such as the canals or the reconstruction of Paris; in Germany, to a thicket of massive, professionally-administered projects for export and internal improvement; and in UK, a rather perverse dread of German-style industrial policy, which provoked spending instead on navies, colonial armies, and ports.