European integration over the past decade has been a polity-creating as well as a market-deepening process. First, and most obviously, the Single European Act (1986) and the Maastricht Treaty (1993) are part of a process of market integration in which a wide variety of nontariff barriers have been reduced or eliminated. Second, perhaps less obviously, these institutional reforms have led to a single, though diverse, polity – a system of multilevel governance that encompasses a variety of authoritative institutions at supranational, national, and subnational levels of decision making.

Our point of departure is that economic developments during the past two decades – internationalization of markets for goods and especially capital, decline of traditional industry and industrial employment, pressures toward flexible specialized production, decentralization of industrial relations, declining international competitiveness, and high levels of long-term unemployment – have led to fundamental reorganization of political authority in western Europe.

The failure of Keynesian economic policy over the past two decades was not simply the failure of a particular set of macroeconomic policies, but the failure of a mode of policy making that was distinctly national. Neocorporatist class compromises and consensual incomes policies that underpinned Keynesian economic policy in many advanced capitalist societies in the postwar decades involved national bargains among interests aggregated at the national level. The perceived failures of those policies led to a debate about the efficacy of the national state.