David Calleo: 'free trade is the last great religion of the West'

Article published on Jan. 27, 2007
Article published on Jan. 27, 2007
On the eve of the global Davos Economic Forum, North American intellectual David Calleo describes his vision of the role Europe plays in globalisation

David Calleo looks like an old-fashioned professor. I can´t spot a computer in his office, although there is something resembling a crystal radio beneath a sprawling portrait of Napoleon I. The director of the European Studies program in Washington’s John Hopkins University is a great admirer of the notorious French emperor. He is known to whisk his family and best students away to his summer residence in Elba Island, Tuscany, where Napoleon I was famously exiled.

From French emperors to Polish plumbers

Calleo envisages a multilateral world in which Europe would act as a friendly counterweight to the U.S. Worldwide economic dilemmas – such as delocalisation, capital flows and environment - are also reflected within Europe itself.

And what about the divide between Eastern and Western Europe, as illustrated by the myth of the Polish plumber, willing to pressure Western European salaries so that they fall? Calleo doesn’t see a problem here like with China or India.

It’s true that in principle, Eastern European countries attract investments because of their low salaries. But EU membership (as is the case with their per capita income) means that these investments will soon converge with those of Western European countries.

However, Calleo is somewhat critical of the 2004 and 2007 enlargement processes, which, in his opinion, have been too hasty. The real problem is the big difference between East and West Europe with respect to institutional questions, such as the management of transatlantic relations, European foreign and security policies, and political integration into the continent.

Pessimism, Eurosclerosis

Calleo appears critical of the worldwide vogue for a free market. International trade should be regulated so that it doesn’t cause unacceptable deterioration in the quality of life of European workers due to excessive competition form cheap labour. Size matters: China and India are large countries with huge home markets, so they can’t carry on pretending to be economies totally dedicated to exportation, as can be justified in the case of smaller states such as Hong Kong or South Korea. Free trade in the extreme, without any type of social consideration, is the last great religion of the West.

Without simplifying comparisons between economic growth in Europe and the United States, Calleo admits it is true that for many years Europe has suffered from higher rates of unemployment than the United States. However, for the most part of the post-war period it has been growing at a quicker rate than the United States, with lower levels of poverty and inequality.

Obviously, this statement does not apply to some European countries such as France, Germany or Italy, where there has been a situation of economic stagnation since the nineties. In reaction to this, Calleo accepts that neither policies which increase salaries and public investment by stimulating demand, nor policies to balance the budget and reduce inflation, are enough. The situation has got to the point where protecting European industrial employment from outside abusive competition is an impossible task.