The European Union and the Erosion of State Capacity

The broad assumption in Europe is that member states of the European Union inherently have the capacity to implement EU legislation. This proceeds from the general understanding of Weber’s definition of the modern state as having a monopoly of legal violence within its territory. To this can be added the capacity of the state to “read” the population, to know through censuses, registers data bases who the inhabitants of the state are and, for that matter, where they are; the ability to impose taxes; and the capacity to sustain the uniform distribution of authority.

Globalisation, it will argued here, has made serious inroads into state capacity and that factor, in turn, erodes the ability of the EU to perform what it sets out to do. Not least, the gap between form and content – always a problem – is likely to intensify rather than diminish, thereby potentially strengthening Euroscepticism. Indeed, at least a part of the dissatisfaction with the EU and the demands to claw back powers from Brussels can be attributed to this erosion. In this connection, the conferral of powers to the EU and implementing legislation that may follow acquire a particular significance. The perception of lack of control over political outcomes is thus attributed to the EU, whereas they are more to do with a set of interacting structural factors.

The first of these is the role of tax havens. Despite whistleblowing, demands for transparency, dramatic revelations (LuxLeaks, Panama Papers), the reality is that tax havens are not a deviant, marginal feature of the relationship between the state and its ability to extract money through taxation, but an inescapable part of the contemporary world-wide business model. States connive at these dispositions notably through setting up low tax regimes in order to attract custom ...

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