[D]espite the relevance of dependency theories to European problems, they have made little headway in our universities. There are other reasons, apart from our parochialism and […] linguistic weaknesses […]. First, an explicitly interdisciplinary school does not fit readily into the typical unidisciplinary syllabi and research programmes. Perhaps more important, its style runs counter to prevailing academic fashions. An economist, in particular, who picks up a book by a dependency theorist is likely to notice the lack of algebra. […] The fashionable models are mathematical, and to the greatest extent possible, quantifiable. This is understandable. It would be very convenient if only social problems could be reduced to algebraic functions: the solutions would then be straightforward. […] Many of the propositions of dependency theory cannot easily be cast in mathematical terms, still less are they readily quantifiable. The theory is in large part about hierarchies, institutions and attitudes. (Seers 1981: 15)

Dudley Seers, the eminent representative of a group of researchers I subsume as ‘European Dependency School’ (EDS) in this book, emphasized the importance of core–periphery relations in Europe and for the Western European integration process in as early as the 1970s. Core–periphery relations in development studies reflect uneven socio-spatial developments. Behind the appearance of spatial hierarchy between regions and states in ‘late’ or ‘monopoly’ or ‘transnational’ capitalism, there lies a matrix of actors’ relations with unevenly distributed political, economic, and military power such as governments, classes, and transnational companies (TNC). These uneven power relations make core–periphery relations a complex issue. Core–periphery relations run through all countries and produce dependency relations within core and periphery countries alike.

This book inquires into core–periphery relations in the European Union from the perspective of the dependency paradigm. Uneven development, manifested in core–periphery relations in Europe and the integration model that would become the EU, has never disappeared. The way these core–periphery relations are being discussed, however, has changed distinctively. Crisis of Keynesian capitalism in the 1970s brought to the fore that despite the postwar boom with substantial economic growth structural uneven development had not been eliminated. EDS authors would talk of ‘growth without development’. EDS did show that structural problems of global uneven development were also visible on European soil but EDS did not prevail in establishing a lasting dependency paradigm of European research and alternative policy-making. Instead, the radical liberal paradigm of neoliberalism succeeded Keynesianism. The first enlargements of the Western European integration project happened during this paradigmatic change in the midst of the global crisis of the 1970s and 1980s. We will encounter the doubts in Southern European countries concerning the integration into the EC before they became member states (Greece in 1981, Portugal and Spain in 1986). These Southern enlargements were paralleled in their accession by austerity programs. However, the hope of leaving fascist dictatorship behind and joining a common prosperous and democratic future seems to have pushed hopes in integration high for many. When Central and Eastern European countries from the former Council of Mutual Economic Assistance (COMECON) entered the union, the integration model was in the tight grip of the neoliberal doctrine, which pictured a future of convergence if the forces of competition that now included territories (regions and states) could prevail. For the Southern periphery, a pseudo boom, made possible by low-interest capital import, appeared to make up for the austerity programs to meet the conditions of the currency union.

In the 1990s, the fact faded that behind the narrative of convergence there was still structural uneven development between core and periphery. With the defeat of the dependency paradigm, core–periphery relations were marginalized as analytical categories. Only recently, with the global economic crisis, that had started in the United States in 2007 and reached Europe in 2008, core–periphery relations have reentered discussions on uneven development in Europe, and the EU, respectively. However, the influence of core countries, governments, and companies have largely remained absent from discussions as if there was a periphery without a core.

This book focuses on core–periphery relations in Europe by readopting the notion of the dependency paradigm that relations between core and periphery form an analytical whole. It revisits the early analysis of core–periphery relations in the uneven development of Europe and the Western European integration project from the perspective of the dependency paradigm (history of theory). It will furthermore unfold, why such an approach is still important for an analysis of contemporary Europe, and will consequently estimate the current core–periphery relations in the EU empirically in order to offer a core–periphery typology. As a conclusion, it will consider the impasse of current European capitalism and perspectives of socio-ecological transformation.

Whether one uses the terms ‘center’ or ‘core’ depends pretty much on the linguistic frame of reference. Based on the literature in English that I mostly refer to, I will use the term ‘core’ in this book. Historically, Werner Sombart used distinctions between core and periphery in capitalism early in the twentieth century. He did not provide, however, a theoretical explanation of such relations. It was theory building from the periphery, namely Latin American structuralism (above all Raúl Prebisch and Celso Furtado), beginning in the 1940s, which started constructing such a theoretical framework. About the same time, however, in the ‘global north’, ‘polarization theory’ began deliberating on core–periphery relations: François Perroux in the 1940s, and Gunnar Myrdal and Albert Hirschman in the 1950s. In Latin America, the dependency paradigm gained momentum in the 1960s, when optimistic expectations on peripheral capitalism by Latin American structuralists (e.g. that import substitution would counter polarizing effects of international trade) were disappointed.

I am using the terms dependency paradigm or school, because some of the dependency authors explicitly denied the significance of working on a dependency theory. In the past, discussions of this heterogeneous group of authors used terms like school, conceptual framework, analysis, or perspective. Referring to Thomas Kuhn, Ronald Chilcote (1978: 56) suggested the use of dependency model, in the sense of the paradigm of a scientific community. The dependency paradigm has never become, however, a hegemonic ‘normal science’. If a predominant paradigm generally shows persistent resistance against change, in social science, things are more complicated and resistance against a new paradigm is fiercer. As Paul Sweezy pointed out, a paradigm can break down not only due to internal factors but also if the society which is reflected in a paradigm changes. Other than with (natural) science, societal reality as a matter of social science is produced by interests of individuals, groups, classes, and nations. Thus revolutions in social sciences seem to correspond to changes in the social and political sphere (cf. Hurtienne 1984: 8f.).

Building on Latin American structuralist thinking, authors of the Latin American dependency school continued inquiries into the nature of core and periphery relations in the 1960s. They did so, however, without the structuralists’ vision of a catching-up development. Industrial development and even convergence was and may be possible for peripheral countries but ‘development’ of societies in a broad sense was seen unlikely: the role models of modernization theories themselves, capitalist core countries, kept facing ongoing social conflicts and contradictions. One global capitalist system, they argued, was reproducing social and spatial relations of dependence with different socio-spatial consequences or situations.

TNC have become the most powerful global players, therefore I will use the term TNC capitalism. Companies have developed certain features of core and periphery in global commodity chains. This did not happen in a void. Such commodity chains run through core and (semi-)peripheral countries and regions, an argument elaborated by world-systems theorists (in this book above all Giovanni Arrighi) who followed dependency thinking. Core companies came into existence in symbiosis with core states, modeling a core–periphery scheme that made climbing the ‘development’ ladder from periphery to core difficult and unlikely. After World War II, a time when many peripheral countries gained formal independence, a new quality of core–periphery relations left a direct colonial rule behind. In Latin America, where most countries had reached independence during the nineteenth century already, dependency authors observed the ability of TNC to integrate and control economic sectors globally. We will see how they described the functional integration of peripheral countries into TNC capitalism with the penetrating and disintegrative effects that went along with this process of asymmetrical power. Osvaldo Sunkel called the ongoing symbiosis between TNC and core states neo-mercantilist. As we will see, he suggested a socio-spatial concept of ‘structural heterogeneity’. Uneven socio-spatial development thereby runs through both, core and peripheral states, which produces core and peripheral regions and privileges or marginalizes respective social classes. Johan Galtung called the core in the periphery a ‘bridgehead in the Periphery nation’ for the core in the core state. He observed a ‘harmony of interest’ between the core of a core state, and the core of a peripheral state. Vice versa he observed a ‘disharmony of interest’ between the periphery in core states and the periphery of peripheral states. Putting concisely the relations between space and class issues between core and periphery, Edward Soja used the terms vertical and horizontal class struggle.

The EDS worked on formulating an alternative paradigm as well. If it was disappointment with Latin American structuralist ideas and policies that opened the way to the more radical criticism of the Latin American dependency school, it was the crisis of Keynesian capitalism and disillusion with mainstream development models that stimulated criticism by the EDS. The crisis of global capitalism had reached the core countries in Europe, and similar to the dependency school in Latin America, the EDS challenged the prevailing paradigm from the left. From the end of the 1970s to the mid-1980s, these research networks inquired into uneven development in Europe. Similar to the dependency school in Latin America, they observed (and challenged) uneven patterns of integration into the capitalist system. I pool a very heterogeneous group of authors into a ‘school’. Their common characteristics are that they apply—some more, some less explicitly—aspects and theoretical findings of the Latin American dependency paradigm to the situation in Europe. Scholars of the EDS were influenced by both, Latin American structuralists and dependency school, plus polarization theory (see Fig. 2.1). Their analysis of uneven development in Europe and the European integration process seems very topical in today’s polarized EU. Moreover, the starting conditions of enlargement were considered an integration of unequal partners. The suggestions EDS scholars made for a more balanced mode of European integration were never taken up by policy-makers. Moreover, they themselves did not put much hope into a different mode of integration within the prevailing framework, because in a union of asymmetrical political and economic power, solidarity would end where competition begins. Consequently, drawing policy conclusions from the EDS for today does not offer reason to believe that the existing integration model EU can be reformed. The structural inequalities in Europe would require a complete remodeling. Moreover, there is also no reason to believe that a simple return to Keynesian economic policy can sustain remedy. The social and environmental problems the EDS scholars observed in the 1970s and 1980s—as observed by a variety of researchers at that time, e.g. in the first report for the Club of Rome (Meadows 1972) and the Cocoyoc Declaration of 1974, adopted by the United Nations Development Program jointly with the Environmental Program—were a result of postwar Keynesian type capitalism. The crisis that began 2007/8 was one of financialized capitalism (cf. Chapter 9). Since the 1970s, moreover, the capitalist mode of production evoked climate change with its ever more visible consequences (melting polar caps and glaciers, rising temperature, capricious weather conditions bringing droughts and floods).

For the peripheral European countries, dealing with the recent crisis, and the resulting increases in public debt, was much harder to digest than for the countries of the core. The financial/bank crisis turned into state crises in many countries of the periphery and then again into a currency crisis of the Euro zone. Even if Greece was an especially extreme case, it was no exception to the vulnerability of peripheral countries in an EU constructed by core countries. The neoliberal paradigm (see Chapter 9) succeeded also to the 1960s’ modernization theory. The way to prevail was alleged as the saving national economy which in realty spelled austerity programs. A paradigmatic picture suggested Germany as role model personified as the saving Swabian housewife, and proposed mechanisms of private households for national accounts. In that way, everybody could become export champion with a positive trade balance. In reality, somebody has to import these exports, and somebody has to pay for them. In the case of the EU, the Southern periphery very much belonged to both of these somebodies until their debt situation slowed the process. German banks were among the important creditors that offered loans that again stimulated imports from German companies. In a broader picture, the Economic and Monetary Union (EMU) with a common currency first brought low interest rates to the Euro zone which poured ‘cheap’ money into the periphery: capital import and commodity import to the periphery.

The EU remains a union of nation states, even under the current structure of deeper integration that has given the EU parliament more rights. EU governments are still most powerful players in the EU legislative process. They form the Council of the European Union, the powerful chamber of the EU de facto bicameral legislative system. Within the Council, the Federal Republic of Germany has a powerful stance in addition to its already substantial politico-economic power: It represents 16.10% of the EU28 population. The standard voting procedure in the Council requires a qualified majority for approval, which means 55% of governments or 16 governments, representing 65% of the EU population. A blocking minority consists of at least 4 Council members representing more than 35% of the EU population. Having said that, decision-making processes are often of informal nature, particularly within the informally organized Euro-zone group.

So far, only rarely governments have openly challenged the underlying neoliberal integration consensus. The government of pressured Greece may count as an example, with the well-known result of defeating the attempt of a left political alternative. The other example is the right-wing government of Italy elected in 2018. The government of Lega (formerly Lega Nord per l’Indipendenza della Padania) and Movimento Cinque Stelle defied the declining role of the Italian economy in European capitalism and therefore challenged the established neoliberal EU model. It had no intention of changing or socio-ecologically transforming the overall capitalist mode of production. As we will see in the course of this book, however, the neoliberalism following Friedrich Hayek is in no variance with authoritarian liberals, neo-nationalists, right-wing populists, and fascists.

Being the fourth largest economy of the EU28, Italy has more stamina to challenge EU regulations than Greece does. It belongs to the original rich club of six members of Western postwar integration, but it also brought the first larger peripheral area to the integration model: its Southern part Mezzogiorno. Spatial polarization between core and periphery does not stop at national borders but runs through countries, dividing core and peripheral countries into core and peripheral regions. While the postwar boom phase combined with a policy of state capitalism enabled Italy to enter the club of core countries, recent developments suggest a decline of Italy to the EU semiperiphery.

The case of an exit from the EU by the United Kingdom, originally expected on March 28, 2019 (Brexit), is not the result of the British government (of David Cameron) challenging the EU, because it did not have any intention to leave the EU when it decided to hold a referendum on British EU membership. Brexit seems to belong to the frequent popular opposition against the EU regime. However, the British situation, like the Italian, reflects a declining position in the European core-periphery system. While the decision by British voters would lead to a partial EU disintegration, other popular votes in the past had only postponing effects on integrative policies. As we will see in Chapter 5, European integration was historically an issue of European governments never put to popular vote. When there were popular votes in recent times, they were held in few member countries only. Adverse decisions, however, had only lasting effects when countries were able to negotiate special treatment for themselves. The popular votes against the introduction of an EU constitution in France and the Netherlands in 2005 opened the way to the Lisbon Treaty (a government treaty signed 2007, and put into force 2009). Much of the rejected constitution’s content was integrated into existing integration provisions via amendments. Only in Ireland was the Lisbon Treaty put to popular vote (instead of the planned referendum on the constitution, which was never held, because French and Dutch voters had rejected the constitution). The referendum on the Lisbon Treaty in Ireland was granted a second round in 2009, after the treaty had been first rejected in 2008.

In other quarters, popular vote opened the way to special country treatment or even early disintegration: in 1973, the citizens of Norway decided against membership in the European Community (EC), which their government had negotiated earlier; the population of Greenland voted against membership in the Danish popular vote on EC membership, entered the EC with Denmark in 1973 but left the EC in 1985 (again by referendum decision); a Danish popular vote rejected the Maastricht treaty in 1992, opening the way for a special treatment (opt-out) in the second referendum in 1993. In 2000, again by popular vote, Denmark decided against membership in the European EMU.

With the exception of Greenland (that has—as part of the Danish state—a special relationship with the EU), Brexit would be the first incidence of a state leaving the Western integration process that had turned into the EU. In the UK and Italy, there seems considerable self-consciousness among decision-makers that these countries can challenge EU regulations and their economies can do well even if they resigned from EU membership. The story is different for peripheral countries, especially if they need to act alone.

The story told in this book is one of uneven and dependent development in Europe, especially the Western European integration model that turned into the EU. It is about the chances for the periphery that never were, because they never materialized in the integration context. The view presented here is critical of the notion that the EU started as a ‘good’—often alleged as solidary and peaceful—project aiming at socio-spatial equality that took a wrong turn toward neoliberalism. The thesis presented here indicates that this integration was neoliberal from the start, even if one might call it ordoliberal after a German subbranch of the ideological movement. Western European integration started as club of core countries plus Southern Italy. Liberal integration arrangements treated development of peripheral regions as a matter of market processes without conscious development policies. The reason why Southern Italy seemed to stand a chance of ‘developing’ was due to the fact that Italian state capitalism did ignore liberal policy demands by the commission, and consciously applied development policies. What made the lack of European development strategies bearable for postwar Italy, and brought partial and temporary success, was the combination of postwar boom and the strength of the nation states. This enabled Italy to ignore liberal visions by the commission in variance with Italian state capitalist development.

The original agreements of (Western) European integration were result of postwar power relations:

  1. 1.

    The end of realpolitik by the United States against the world war ally Soviet Union brought a beginning of the cold war after the death of US president Franklin Delano Roosevelt in 1945.

  2. 2.

    In order to strengthen its cold war ally, the United States granted or accepted a privileged position of Western Germany despite the fact that Nazi Germany had invaded and left destruction in most parts of Europe, employing industrial mass extermination.

  3. 3.

    Part of this privileged position was a benign treatment of elites from fascist Germany in Western Germany (‘continuity’) and sheltering Western Germany from demands of repayment of war destruction and forced wartime credits on part of the invaded countries.

  4. 4.

    In order to pacify the Western capitalist block against the Soviet Union, some kind of common structure deemed necessary.

  5. 5.

    Germany succeeded, however, in the negotiations on the common structure as far as economic policy is concerned. Accordingly, Western European integration would receive regulations inspired by economic liberalism suiting the strong economic position, Germany was soon able to recover with US support. The structures aimed at freezing the capitalist mode of production, making it difficult for future governments of member states to leave that path.

  6. 6.

    France aimed at securing common political structures that were supposed to ‘control’ Western Germany institutionally.

In the founding years, peripheral Europe remained outside the political arrangements of Western European integration. The countries were first economically ‘integrated’ (via TNC) before they were able to participate in the integration model. When the political integration occurred, it was already after the postwar boom had ended, and in the era of the first global economic crises after World War II. The economic and geopolitical landscape first in the cold war and then within victorious capitalism did not seem to leave many other options. We will see that Dudley Seers (1979) called the integration of peripheral countries one of ‘unequal partners’ which was ‘impossible: yet it simultaneously appears inevitable’. He, particularly among the EDS, dared prognoses on European integration without policies toward ‘true integration’.

From the viewpoint of the periphery, and with a dependency perspective, respectively, questions regarding integration problems of the European Union today need to be posed differently. Socio-spatial polarization within the EU may not be caused by the inaptness of peripheral countries and regions to ‘develop’. It may not be as much the periphery which causes problems for the EU. The structure and mode, the EU is organized as an integration model, seems to be the problem, and the reason behind continuing difficulty of peripheral countries and regions. This is not to say that peripheral countries outside the integration process could easily withdraw from polarizing developments of European and global capitalism—even if governments were elected that are able to challenge the EU consensus and the mode of production. Authors of the Latin American and EDS did emphasize exactly such dynamics. Within an integration project, borders that might offer some options to resist against penetration do not exist any longer. Even more so, a common currency union will lead to polarization if countervailing policies fail to appear. Such traditional economic means, in the sense that they would build on a flexibility of demand on global markets and downplay the role of the prevailing mode of production for global warming, would be the ability to devaluate the currency (which would counter productivity differentials and may reduce imports), conscious (balancing) industrial policies, or an adequate sort of remuneration of the periphery by the core. It is difficult to see, however, how a country with a small productive base can build up an industry capable of earning via exports in order to repay the accumulated debt. At one point, such a scenario might backfire to export-oriented core countries. For a while, exports may be shifted to other importers, especially outside the EU (as it happened in the case of Germany). Such a system, however, cannot be sustaining for the EU, even if austerity can squeeze debt from the periphery for a while.

Without ‘real integration’ policies, scholars from the European dependence school expected ‘neocolonial scenarios’, e.g. in Greece. They were not optimistic as far as the remedies were concerned they suggested for a more balanced integration. Similarly, they even perceived development policies like those Italy had applied for convergence of its Mezzogiorno as insufficient. The historical pattern of Southern Italian integration into the Italian state, and the world market, was seen beneficial for the Northern, in recent history more industrialized and ‘developed’, part of the country. For the Italian South, being part of the Italian state could be seen as similarly problematic as the membership in the EU for the EU periphery (cf. Chapter 3.6).

In the second chapter of this book, I am revisiting the main arguments by the Latin American dependency school. Who are important authors? How do they explain core–periphery relations? How does this affect peripheral societies? How do they explain global capitalism and the consequences of uneven socio-spatial development? Who are the actors of global capitalism? What is the role of the state? And: What are the options for a transformation?

Networks of authors I summarize as EDS feature in Chapter 3. Influenced by Latin American structuralism and dependency paradigm, and polarization theory, they apply aspects of the dependency paradigm on the European framework of core–periphery relations. I delineate research networks from the 1970s and 1980s and their concept of core and periphery states and regions. All of these networks had a critical attitude toward the old development paradigm. Some called it development ‘from above’ or ‘to the outside’. A new paradigm was to include strategic elements of a ‘selective spatial closure’ and ‘self-reliance’. For many, the European integration process played an important role in their estimates of current and future developments. They observed the integration critically and much of this analysis still seems relevant and topical today. What was formulated as an alternative to modernization theory and economic liberal theories (neoclassical, neoliberal, and Keynesian), however, was engulfed by the wave of neoliberalism and the globalization decade of the 1990s.

While Chapter 4 is dedicated to the critical analysis in these networks of the old development paradigm (‘from above’), Chapter 5 focuses on a critical view on the history of European integration from a dependency perspective. Some myths of integration are critically questioned. In the framework of these core–periphery relations, the alleged German economic virtue is much related to the privileges originating with its Cold War position. Also in this chapter, alternatives are being presented that authors from the EDS suggested for a ‘true integration’. Having said that, they themselves did not have much hope of such policies being implemented. Rather, they saw a ‘neocolonial scenario’ lurking around the corner. The principle alternative strategies by authors from the EDS (e.g. ‘development from below’, ‘self-reliance’) are being presented in Chapter 6, while Chapter 7 tells the story how the dependency paradigm ‘was lost’ in the globalization decade of the 1990s.

Chapter 8 inquires into the nature of core–periphery relations in the European Union today.

I will argue in this chapter that even if one considers industrial development as a proxy for development or leading to development in a broad sense, the prospects for ‘progress’ in contemporary capitalism are very limited. I will adapt the theory, method, and proxies for ‘development’ and ‘industrial development’ by Arrighi and Drangel (1986) and Arrighi et al. (2003) as I will present them in Chapter 3. I will adapt their approach for a core–periphery typology in the EU, and use it in order to estimate industrial convergence compared with convergence in ‘development’ (in EU language: convergence and cohesion). Furthermore, I will suggest additional proxies to estimate (spatial) politico-economic power in the hierarchy of core–periphery relations in TNC capitalism.

In the final Chapter 9, I will summarize the main arguments by the dependency paradigm relating to Europe and capitalism as a crisis-prone mode of production and organization of society, in the periphery as well as the core. After the first global crisis after World War II, ‘development from above’ as criticized by the EDS was not succeeded by any transformative movement that could have led to a post-capitalist formation of society. I will describe by the example of the most prominent and effective ideologue, Friedrich Hayek, the restoration of the development from above by a more radical liberal paradigm than Keynesianism, neoliberalism, the ideology of financialized capitalism. I will, furthermore, explain the change of forms of the capitalist mode of production using the model of transformation by Giovanni Arrighi, from what he calls ‘signal crisis’ to the ‘terminal crisis’. Finally, I shall try to use elements of EDS suggestions to sketch an alternative political economy in the wake of recent developments.