Do ideas explain how European integration came about while interests and

institutions explain why it survives? Answer with reference to a concrete

instance of European integration like the Single Market or the ECB

Ideas, as analytical concepts, have been used rarely and with great discretion
in the study of European integration. Their role is contested due to their omnipotent
nature; almost everything must be explained based on the ideas underlying it, yet
these explanations tend to be in principle indeterminate or vague statements
(Moravcsik 1999). In this essay, I claim that under certain circumstances, Ideas
provide an interpretational framework for European Integration, although the
limitations are evident. These circumstances arise in periods of great uncertainty,
when the interests held by agents can no longer provide a roadmap clear enough to
overcome the current predicament.
The theories that dominate the field of European integration, i.e. the rational
and the institutional approaches, posit that ideas are merely epiphenomenal to
underlying causes, such as incumbent interests, institutional path dependency or the
distribution of power resources. Their role is auxiliary in explaining the dynamics.
Yet, rational choice and institutional theories struggle to explain agents preferences
as they are expressed for instance, in cases where cross-cutting coalitions appear, or
when there are no explicit material incentives. Ideas, as subjective factors, are
unveiled when they generate different preferences in actors that are experiencing the
same objective stimuli (Parsons 2002).

Ideas under Knightian Uncertainty

Uncertainty is the field where ideas have significant explanatory powers. The
relevant literature identifies two distinct types of uncertainty; the first is rational
uncertainty, which arises when the agents are unable to compute their interests due to
the environmental complexity (Blyth 2002). In this case institutions are employed to
reduce uncertainty and facilitate rational decision making. The second type of
uncertainty is what Blyth calls Knightian Uncertainty (ibid.) which arises when the
predicament is convoluted and the distribution of risk is impossible to be calculated.
In this case, agents are not aware either of the existing alternatives or their related
costs. The situation they are facing is in some way unique and they cannot either,
place themselves within the current institutional framework in a way that will reduce
their uncertainty, or rely on their current interests and strategic exchange to guide
them. Knightian Uncertainty has been associated with times of institutional crises,
meaning times when policies and institutions are not generating the appropriate
outcomes or are perceived as not doing so (Moravcsik 1999).
As Ideation theories assert, in situations of persistent Knightian Uncertainty,
ideas are no longer constrained by material incentives and actors are now able to
make interpretations based solely on their subjective beliefs of the ongoing causal
relations. Given that the Knightian Uncertainty was a result of an institutional failure,
there is now a gap in the institutional framework, where agents are free to reduce
uncertainty by interpreting the nature of the crisis around them as a first step to
constructing new institutions (Blyth 2002). Hence, ideas provide agents with a
roadmap that they could use to determine the nature of the new institutions. In
addition to that, Ideation approaches further promote institution building by
facilitating collective action which serves as the basis of cross-cutting political
coalitions (ibid, Parsons 2002). Finally, as Blyth argues, ideas determine the form of
the new institutions and provide the necessary stability by generating conventions
around them (Blyth 2002). This last assertion is in my opinion rather dubious and I
will return to it later.
Nevertheless, it would be simplistic to claim that all agents have the same
ideas simultaneously, and hence a singular idea serves as a unifying platform that
substitutes material interests for as long as it is needed. Contrarily, different agents
have different ideas and consequently under the lack of material constraints, there will
arise competitive relations between these ideas. Constructivist Theories have stressed
the role of leaders, namely agents placed in pivotal positions, as the bearers of
competitive ideational alternatives (Parsons 2002). Leaders can utilize their agenda-
setting powers, especially in these cases where the Knightian Uncertainty is a result of
stalemate due to Condorcets Paradox, in order to promote their own ideas.

Ideation and the formation of the Economic and Monetary Union

The European Project was plagued by a series of setbacks during the 1980s.
On the one hand, low growth and stagflation were diminishing the political capital of
the member states governments, while simultaneously undercutting their future
prospects for growth and competitiveness. On the other hand, there was a divergence
of opinion internalized within the Community over the direction of the project. The
climax of the institutional component of the crisis was reached in 1983, when the
whole fabric of the EU threatened to fall apart (Fligstein and Mara-Drita 1996). At
the time, political leaders seemed to be caught in a bargaining trap while the states
were losing control over their political economies (ibid.). Both political and economic
institutions were in a state of disequilibrium and actors could not assign probabilities
to the different risks they were facing. Hence an institutional gap developed. This
multidimensional crisis is an episode of Knightian Uncertainty.
At this critical moment, the European Commission played the role of the
institutional entrepreneur (ibid.). The idea behind this entrepreneurial endeavor was
that the resolution of the crisis would come from unification of the common market
accompanied by a modest deregulation of the rules of exchange. No matter how
commonsensical this course of action seems now, the way it was implemented at the
time was radical. As Fligstein and Mara-Drita mention, it was an overarching idea
that contained few specifics and could be read as broadly consistent with everyone's
interest (ibid.). This idea mustered support from a cross-cutting coalition of
businessmen, public servants, and academics. The main advantage of the new
initiative, or its ideational distinction as one could claim, was that the directives
produced by the EU Institutions were focused mostly on the altering of the rules of
exchange and facilitating the opening of the markets (negative integration), while at
the same time leaving intact most of the sovereign powers of member states and the
interests of the national elites. This modest form of integration was recognized as a
successful step in the European Project and gave great impetus to the integration
process. The preceding analysis indicates that it is possible for an Idea, under the right
framing, to cause spillovers that will result in more integration. In this instance, a
particular idea was able to discard incumbent interests that stood against it and give
rise to new interests that supported its implementation. Leaders like Jacques Delors
used their agenda settings powers to achieve that.
Nevertheless, the ideational approach also posits that Ideas determine the form
and provide stability to the institutions. It is claimed that ideas were also the catalyst
behind the formation of the EMU with all its subsequent institutions, and not just the
Single Market (McNamara 1999). The problem with this approach is that it discards
the notion of Knightian Uncertainty. As it was discussed before, not every crisis is
categorized as a Knightian crisis and ideas find space to evolve only under these
particular circumstances. Only then are the material interests neutralized and
institutional path-dependency is no longer a constraint. As soon as Knightian
Uncertainty ceases to exist, the actors begin to re-evaluate their interests under the
new framework and resort to strategic bargaining. After the crystallization of the
common market and the market deregulation as new signposts, all actors and
organized interests re-aligned their strategic interactions to this new reality.
It has been indicated by scholars (Walsh 2001) that the effects of Idea-
Diffusion during the late 1980s had started to diminish and contrarily member-states
had started to resort to two-level games and strategic exchange in order to calculate
their strategies. In short, although stable exchange rates were a necessary pre-
condition for the furthering of integration, nation-states had different preferences for
the ways that this would happen. Countries with higher inflation were pushing for a
politicized supervision of the monetary system while countries with lower inflation
were opting for technocratic institutions. The Idea-Diffusion pattern would indicate
that there would be convergence in the technocratic institutions, on the basis of best
practices. Member Nations were unwilling to carry the task of deflation and the
subsequent contraction of their domestic economies. Therefore, only after structural
changes* in the European Economies forced a convergence in the rate of inflation was
it possible to agree upon the next steps of European Integration. Apparently, domestic
policies were durable in the face of Ideational Diffusion.
 Conclusions

The aforementioned analysis attempted to prove that ideas had an unremitting

role in the European Integration, yet their influence was more conspicuous in times
when an institutional gap was in effect. At those moments, ideas facilitate collective
action and give pivotal agents power to redefine the framework of the whole project.
The effectiveness of ideas tend to be minimal as the new framework consolidates.
Multinational corporations were the main beneficiaries of the European Single Market
and were thus prepared to defend it against new ideational attempts to revert to the
previous status quo. Hence, it is valid to claim that ideas explain how European
Integration came about and interests and path-dependency explain why it survives.

*It has been argued that the structural changes that took place at the time were the result of
an ideational shift that favored Monetarist over Keynesian economic policies (McNamara
1999) and which had subsequently resulted in the weakening of the organized labor. Thus, the
upward wage-price spiral was stopped. However, this point returns us to the previous notion,
that ideas are epiphenomenal. The shift to monetary policies can be interpreted as a change
to the relative power between groups, originating from strategic interaction between
advocative organized interests.
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