The ACELG guest lecture of Tuesday 10th March, “EU Economic Law in the Process of Embedding Markets” was held by Jotte Mulder, an external PhD candidate at the Amsterdam Centre for European Law and Governance. Jotte presented the design of his doctoral research, whose starting point is the recognition of a duality in the Treaties between supranational interests such as free trade and competition, and concerns “other” than purely market ones. This duality is particularly evident in European competition law, an area of law where Jotte has an extensive experience as a practitioner, and where the ECJ is frequently called upon to mediate and draw a line between market values and societal concerns. Jotte’s research aims at studying this complex interplay and the parallel management of market and non-market values in an increasingly complex society by employing the conceptual framework provided by Karl Polanyi (1886-1964), and in particular the concepts of embedded markets, fictitious commodification and the double-movement.

Jotte’s presentation started from the assumption that the main objective of the Treaties is the promotion of the freedoms of circulation and the equality of competition opportunities for the achievement of welfare and prosperity. At the same time, the importance of a dynamic list of non-market values deriving from national social, cultural and environmental peculiarities is also recognized.

To identify what constitutes a non-market value is not an easy task because of the existence of a broad “grey area” that complicates a clear-cut distinction between market and non-market. This is the result of the pervasiveness of the economic discourse, which has the tendency to describe everything in economic terms. Jotte notes that we talk about “market failures” when markets are unable to allocate resources efficiently, and the intervention of the state is requested to remedy the situation. However, a purely economic perspective solely based on efficiency fails to guarantee that equity concerns are successfully pursued. For this reason, the approach of EU institutions, and specially of the Commission, is to include redistributive equity concerns within the market efficiency rationale of market failures.

The concept of non-market value is further complicated by its dynamic nature. What can be classified as state intervention in a country may not be considered as such in another. This is also the case in the European Union, where the diversities among Member States’ social policies prevent their emergence at the European level. Furthermore, the asymmetry between the protection of market values - regulated at the EU level - and non-market values - addressed by each single Member State - requires a difficult mediation by the ECJ. The Court appeared to give preference to market integration, and the result is a controversial and debated line of case law (for instance Viking and Laval) that seems to allow a race to the bottom in some fundamental fields.

Some non-market values, on the other hand, are incorporated in the Treaties. This is the case for environmental protection, seen in an economic perspective as a necessary condition for free trade to take place at all. Nevertheless tensions remain, and market and non-market values rarely meet eye-to-eye at the EU level.

Against this backdrop, in order to critically assess the mechanisms and rationale of the EU legal infrastructure and case law governing the interplay between market and non-market values, Jotte introduced the work of Karl Polanyi, who posited that internalizing non-market values within an efficiency rationale has potential negative consequences for societies. In his acclaimed book “The Great Transformation: the political and economic origins of our time” (1944), Polanyi observed a separation between society and the market under the almost utopian claim of self-regulation, and defined it as “disembedding”. Polanyi proved that societies are more based on mechanisms of reciprocity and solidarity. However, the rise of the market corresponds to the identification of the “Economic Man” that aims at the maximization of profits. Under the market logic, instead of the economy being embedded in social relations, social relations are embedded in the economic system. This has led to the commodification of important societal and human conditions such as labour and land. Markets are an essential element according to Polanyi, but they should always be merely a function of the social order.

When society “becomes an accessory of the economic system”, the self-regulating force of the market simply becomes unsustainable. For this reason market idealism is normally accompanied by measures designed to mitigate the impact of the market on the fictitious commodities. Moreover, Polanyi noted that in modern history, period of free trade and laissez-faire were followed by a period of anti-liberal legislation designed to protect public health, working conditions, public utilities and trade associations; moreover, social movements aiming at re-embedding the market arise as well. Polanyi defined this universal reaction against the expansion of a market economy as “double-movement”. He described it as the ultimate proof of “the peril to society inherent in the utopian principle of a self-regulating market” that can lead to societal instability and, eventually, collapse.

Jotte notes that elements of Polanyi’s work are present in the way EU institutions regulate the interplay between market and non-market values, as the inclusion of social objectives in the commodity logic of “market failure” can be considered as disembedding society from the market. At the same time, phenomena of commodity fiction and double-movement are present as well. As Jotte explained, in the EU context, a “deliberative supranational approach” was chosen to mediate the market/non-market interplay.

His research, with the use of selected case studies, will attempt at casting some light on the possible outcomes of a Polanyian interpretation of this interplay, by starting with a critical assessment on whether the EU legal infrastructure and jurisprudence favor a market embedded in social relations or social relations embedded in a market mechanism. Subsequently, Jotte will investigate the potential of an alternative application of the EU economic rules on the basis of a “horizontal mediation through law” approach. Finally, he will assess whether this is feasible within the current legal framework.

Jotte’s presentation stirred a stimulating debate during which ACELG professors and PhDs expressed their views on his research and gave meaningful suggestions on how to further develop it. The originality of his approach and the timeless topicality of Polanyi’s work have captured the audience’s attention. Many of us are now looking forward to seeing in which direction Jotte’s research will be heading.