How do law and politics interact in shaping the relationship between the state and markets? To what extent can the law break free from the political and ideological beliefs which brought it about, and be repurposed to adjust to evolving assumptions and a new political-economic Zeitgeist?
This paper explores how the dynamics between law and politics play out in the context of the European Union as a multi-level polity, where economic powers and prerogatives are distributed across different levels of government and where the central government enjoys limited, conferred powers. Drawing on the “Integration through Law” literature and institutional change theories, the paper investigates the evolution of EU industrial policy and its legal architecture.
It lays out the legal rules and conditions under which industrial policy has traditionally operated in the EU. It further discusses how this framework is shifting following changing economic and political priorities that favor more activist forms of economic and industrial policy. The paper argues that the law can both act as a constraining, limiting factor, or as an enabler of EU industrial policy initiatives. On the one hand primary law principles and competences fundamentally inhibit the pursuit of activist industrial policies in Europe. On the other hand, a number of second-order resources can be mobilized and “converted” to bring about an EU industrial policy.
The paper finally reflects on the risks and challenges of repurposing legal rules for political ends, highlighting issues of consistency, efficiency and legitimacy.
Authors: Paul Dermine, Maria Patrin