Thorsten Block and John Grahl INTRODUCTION 6.1 This chapter looks at some of the studies of financial integration sponsored by the European Commission. It is argued that most of the claims they put forward on the benefits of financial integration are, to say the least, exaggerated. The plan of the chapter is as follows: there is firstly a brief characterization of the general position of the Commission on markets and integration; then a look at the viewpoint taken by European leaderships on financial integration in particular; next there is a discussion of market liberalization in general; this discussion is then related to the financial sphere; there is then a critical assessment of three economic studies which make the case for financial market integration. It is not denied that a certain consolidation of European financial systems may be necessary as a response to the ongoing process of financial globalization; this latter argument for integration, however, which is developed throughout this book, depends on market integration being combined with effective measures for social control over the financial sphere. It is concluded that the use of technically sophisticated but in fact quite unrealistic studies to suggest that major economic gains can be achieved without such control amounts to a distortion of democratic debate. 6.2 THE COSTS OF ‘NON-EUROPE’ It is well known that, in recent decades, the integration strategy adopted by the leadership of the EU has been strongly biased towards ‘market creation’ rather than ‘market correction’ (see Scharpf, 1999). For this reason,...
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