Sticks and carrots in the making of integration: European economic governance between changes and continuities

The European Union’s expansionary policies as a response to the COVID-19 crisis have brought scholars once again to debate the ‘return of the state’ because of the adoption of a different crisis management strategy compared to the austerity measures associated with the global financial crisis. While acknowledging such differences, in this short piece we rather highlight the continuities in European economic governance. We build on critical political economy scholarship to reiterate that the debate on the ‘return of the state’ should rather focus on what kind of state is there; in other words, go beyond the form of EU integration, to interrogate its content. We make this argument through the vantage point of local public services that underwent commodification throughout decades of crises; and through the Draghi report on EU competitiveness, marking the shift from a ‘Green Deal’ to a ‘Clean Industrial Deal’. The findings point to a specific role of the state of market creation and private sector subsidising. We identify the red thread that runs through a changing landscape: while methods change (‘carrots’ rather than ‘sticks’), the continuities point to neoliberalisation – as a political project, and as a set of policies reconfiguring the relation between state and market. In short, in this piece we highlight the continuities in European economic governance across ‘sticks’ and ‘carrots’, shaping the neoliberal content of the integration process.