Citation:
Eric Engle
A Viking We Will Go! Neo-Corporatism and Social
Europe 11 German L.J. 633 (June
1, 2010).
Change Font Face | Change Font Size | Change
Background
Color color | Change
Text
Color color | Change
Link
Color | Change
Visited
Link Color |
Abstract
In Viking and
Laval, the European Court of Justice (ECJ) adjudicated
the rights of labor and capital mobility under E.U. law. Both
cases strengthen the single European market through economic
liberalization to generate greater prosperity for all Europeans
as part of the process of European economic and political
integration. Labor and capital mobility create greater
prosperity for all through more rational market exchanges. Free
trade is good for goods and is even better for labor. A
liberalized and fully mobilized labor market results in more
productivity and greater wealth in the European polity, as well
as interdependence, and thereby deeper integration resulting in
greater understanding and less conflict. The decisions, wrongly
criticized by some as "bad for workers" are justified by the
fact that they will benefit workers in Eastern Europe, consumers
in Western Europe, and the Community as a whole by deepening
integration. A key challenge for the European Union is to
economically anchor and deepen the political restructuring of
Eastern Europe by enabling the natural labor and capital
movements which an open marketplace generates. Europe does this
not with the failed neo-liberal model which has ravaged the
wealth of the United States and squandered it in illusory booms
based on consumer borrowing and deficit spending to fund war for
oil. Rather, Europe is developing a neo-corporatist social
model. This article uses the Viking and Laval
cases as examples of this development.
A. Introduction
In the cases of Viking
1
and Laval, 2
the European Court of Justice (ECJ) adjudicated the rights of
labor and capital mobility under E.U. law. There is a vast
literature on Viking and Laval. 3
*634
After all, the stakes - people's livelihoods
and social peace - are very high. 4
Viking and Laval have been considered from a
variety of perspectives. One viewpoint is globalization: Viking
and Laval are just instances of the globalization, the
deterritorialization of states and markets 5
transforming and modernizing the transnational economy. 6
Another focal point has been the conflict between the highly
compensated workers in Western Europe and the less protected
workers of the East. 7
And, inevitably, any discussion of the cases comes back to the
interpretation and application of the general principle of
proportionality in E.U. law. 8
Viking
and Laval are rightly considered together because they
determine parallel issues and represent the future of political
economy in the E.U. In Viking, the legitimacy of capital
outsourcing within Europe was questioned and upheld: the E.U.
guaranteed the right of capital to relocate anywhere in the
Union. Laval is the opposite side of the same coin:
in-sourcing of labor. Yet, the result is similar: the E.U.
guaranteed economic mobility, this time of labor. The results of
the cases are coherent with each other in this light. Both cases
aim at the same goal: the strengthening of the single European
market through economic liberalization aiming to generate
greater prosperity for all Europeans as part of the process of
European economic and political integration. 9
Viking
and Laval might appear to favor the wealthy and to
disfavor the poor from a classical left of center labor
aristocracy perspective. 10
That view, however, is erroneous. Labor and capital mobility
alike create greater prosperity for all through more rational
market exchanges. Free trade is good for goods 11
and is even better for labor; a liberalized *635
and fully mobilized labor market results in
more productivity and greater wealth in the European polity as
well as creating interdependence and thereby deeper integration
resulting in greater understanding and less conflict. The apparently
incompatible decisions, wrongly criticized by some as "bad for
workers" 12
and as "social dumping", 13
are justified by the fact they will benefit workers in Eastern
Europe, consumers in Western Europe, and the E.U. as a whole by
deepening integration.
Laval
and Viking are not merely mirrors of each other in a
theoretical juridical sense. They are also mirrors of structural
economic reality. The reality is that there is a capital surplus
in Western Europe and a labor surplus in Eastern Europe. The
demographics are just as clear. Western Europe is aging. Eastern
Europe is young. Western Europe needs workers. Eastern Europe
has them. The key challenge for the European Union is to
economically anchor and deepen the political restructuring of
Eastern Europe by enabling the natural labor and capital
movements which an open marketplace generates. Europe does this
not with the failed neo-liberal model which has ravaged the
wealth of the United States and squandered it in illusory booms
based on consumer borrowing and deficit spending. Rather, Europe
is developing a neo-corporatist social model. 14
This article uses the Viking and Laval cases as
foils with which to highlight that model.
B. The Political Framework
I. Social Democracy
The (neo-)corporatist
overtones of European social policy are evident in the texts of
the Union itself. 15
The ECJ underscored these treaty commitments in Viking 16
and Laval. 17
Laval made it clear: *636
"the Community has ... not only an economic
but also a social purpose, the rights under the provisions of
the EC Treaty on the free movement of goods, persons, services
and capital must be balanced against the objectives pursued by
social policy, which include ... improved living and working
conditions, so as to make possible their harmonisation while
improvement is being maintained, proper social protection and
dialogue between management and labour." 18
That is, the
objective of the Union is to create prosperity for all with a
labor-management partnership which further deepens the economic
and political integration of the European Union. 19
With this in mind,
rather than seeing Viking and Laval in terms of
the existence and extent of the right to strike, 20
we should look at them as decisions about European social
democracy. 21
The proper question when looking at the cases is not "was this a
decision for labor or capital?" Instead, one should look to the
effects of Viking and Laval and their
implications for the European body corporate and politic.
Viking
and Laval are controversial because they are highly
political, and touch one of the most fundamental of people's
concerns - their jobs. American authors sometimes argue that
these decisions are evidence of a "recalibration" of European
social policy 22
in a *637
European version of rigid anti-labor
Lochnerism. 23
That is not the case. European neo-corporatism is not merely a
simplistic laissez-faire robber baron version of
capitalism gone wild, riding acrest (neo-)formalism. Yes, Viking
and Laval indicate a reorientation of the means the
European Union uses to attain the ends of economic and political
integration in order to obtain the good life for all Europeans
and ultimately the world. These decisions reflect a change of
course which the European ship of state can take as a
result of the new geographic realities the Union faces, which it
should take because of the better economic climate the
world has enjoyed since the end of the Cold War, and indeed,
which it must take due to demographics. Rather than
harbingers of class-war, a permanent underclass, or some other
dystopian apocalyptic American nightmare, these cases follow the
teleology of the Union as a whole: the attainment of the good
life for all Europeans.
II. Corporatism
A key problem and
opportunity facing Europe since the end of the Cold War has been
the economic restructuring of Eastern Europe and its integration
into the European Union. 24
I argue that Viking, Laval, and related cases,
represent the rise of neo-corporatism. 25
This position is presented below.
Historically,
first generation corporatism was predicated on neo-mercantilist
closed national markets - autarchic national economies. 26
Corporatism was often (not always) linked to small-c
catholicism, 27
and thus concepts such as 'subsidiarity'. 28
Subsidiarity is the idea that local rule is best whenever
possible, that the central authority must act only when no other
better regional or local means could be found. 29
Corporatism sought to end labor-capital strife by creating a
more secure economic system for all. 30
*638
Neo-corporatism should be distinguished from
traditional corporatism. 31
Neo-corporatists recognize that we now live in an interdependent
world, and that interdependence creates conditions of peace and
prosperity for all. 32
Thus, neo-corporatists, unlike first generation corporatists, do
not seek to build national economies or consider themselves as
functioning within national economies. 33
Autarchic national economies have not existed for decades
because autarchic national economies are fare worse than
networked, interdependent, specialized trading economies. The
increased productivity resulting from trade and specialization
explain why economic interdependence leads to prosperity.
Further, economic interdependence discourages war. 34
Europe has been linked together in trade, making all Europeans
wealthier and happier, for 60 years. As a consequence of
interdependence through trade, Europe no longer suffers from
recurrent wars for market share and territory. Territory has
become irrelevant due to changes in production and because
market share is no longer linked to a national (monopolistic and
territorial) economic order.
What,
then, is the role of neo-corporatism in the European
construction? First generation corporatism 35
was defensive, inward looking, focused on a domestic autarchic
national economy and trapped in a world of zero-sum conflict. In
short, first generation corporatism was too influenced by
international relations realism. Of course, the hopeful idea of
the early corporatists, to end class conflict, to create a more
prosperous and happier world for all, was the correct teleology,
a good goal. The end of class war is social peace. However, the
early corporatists' intellectual framework was too limited by
the borders of the then-*639 current economic and political realities, to
prevail. Thus, liberalism triumphantly emerged from the Second
World War and presented a view of social democracy 36
different than corporatism. However, the liberal-pluralist view
of social democracy ultimately broke down into neo-liberalism,
the social Darwinist world where the winner takes all. Europe
rightly rejected neo-liberalism's dark promise of a glorious
future for the winners, and forget about the losers. Because of
the post-war success of liberalism, the myth of the
inevitability of class conflict continued for at least a few
decades, in part due to Marxism and in part reactions against
Marxism.
Class conflict is
a reality, but is not inevitable. In the post-war world, the
liberal vision of free movement of goods, later of capital, and
finally of labor triumphed. Emergent neo-liberalism argued for
the idea of total capital mobility with no labor guarantees. 37
And it was justified by the prosperity that freer trade and
greater labor mobility led to. However, at least the U.S.
variant of neo-liberalism sacrificed entirely the idea of basic
security and guarantees for the first world working class - to
say nothing of the third world industrial workers who are the
productive base of the first world service economies.
Neo-liberalism robbed first world workers of their pensions and
sacrificed third world workers to oil wars, sweatshops and the
sorts of inhumanities which first world labor movements seem to
think we are all beyond. We are not. Sweatshops or starvation
are still the reality on most of the planet. Labor exploitation
in the Third world by the first world remains a reality and only
if that reality can be overcome through labor mobility, fair
trade and green economics can backlash like 9/11 be avoided in
the future - and that is true whether we are looking at backlash
as neo-fascism, national bolshevism, or religious fundamentalism
- all of which are mobilizing ideologies aiming to resist
exploitation. If you want less terrorism, work to end poverty.
III. Neo-liberalism
Neo-liberalism,
ascendant since 1980 in North America and since 1990 in parts of
Europe, appeared to be the death knell of social democracy.
However, neo-liberalism created a world of corruption
characterized by pension-looting and fraud, and which marked the
maladministration by the Bush regime. The result? Poverty where
there could have been prosperity and hatred where there could
have been friendship. In sum, neo-liberalism provokes
backlash whether neo-fascist, national-bolshevist, or
fundamentalist. Neocorporatism*640 seeks to avoid such backlash by integrating the
desperate into a world which has generally used and abused them.
IV. "Social Dumping"?
Rather than seeing
the Viking and Laval cases as examples of social
dumping 38
- the unfair use of lower labor conditions abroad to undermine
labor conditions at home - we should understand that they are
decisions about creating better conditions of labor for all
European workers, 39
creating greater wealth by applying the natural free market
forces of supply and demand to the labor market.
V. Labor and Capital Mobility are Means to Attain the End of
Social Europe
Aspects of the
reorientation of Europe toward a neo-corporatist model seem
neo-liberal but are not. Laval and Rueffert 40
alike appear to condemn the national model of Northern European
social democracy centered on local consensus, labor-government
cooperation, and the Member State's social security system. 41
The apparent subversion of these strong social democracy models
generates uncertainty and feelings of fear, 42
leading to accusations of neo-liberalism. In reality these
transformations are decidedly not neo-liberal, rather
they are neo-corporatist. They seek to generate a European
rather than a national social model, which will become more and
more democratic as the European polity matures.
One
key aspect of this neo-corporatism is the place of social rights
such as the right to shelter, the right to food, and the right
to work. 43
Individualist neo-liberalism has *641 constantly rejected such claims as "rights" because
they are supposedly non-justiciable and affirmative/substantive
rather than negative/procedural 44
The Anglo-American individualism which rejects collective/social
rights is the minority position within the E.U. - and the one
that has been shown to have failed so badly in the U.S. as even
a cursory examination of statistics on poverty, imprisonment,
and other quality of life indicators reveals. The
neo-corporatist objective is not merely to form a social Europe;
it is to form a single market, a united polity wherein the
worker in any European country enjoys a good quality of life
with adequate housing, shelter, and health care so that they can
be as productive as possible. A European social
democracy. 45
Social rights assure economic productivity - and are a very
productive investment. Free public education and socialized
medicine make labor more productive. Such programs enabled the
U.S.S.R. under Lenin and Stalin, and Maoist China, to double
national average life expectancy in one generation despite war,
waste and corruption. Social rights are a profitable investment
because healthy, educated workers are more productive. In short,
social democracy is also in the interests of capitalists.
Of
course, wage differentials are one of the economic facts driving
worker mobility within Europe. That is the law of the
marketplace, the law of supply and demand, playing out in labor
markets as it does in markets for capital and goods. Allowing
labor markets to clear freely, as the Viking and Laval
cases do, creates a more prosperous Europe for all Europeans.
Furthermore, labor mobility increases the tax base. Labor
movements generate tax revenues because of value-added taxes
which are the main form of state financing in Europe; social
security pay-ins are also augmented by permitting labor
movements. The simple reality is that the tax structure of
value-added taxes and pay-as-you-earn social security systems
means that migrant labor is more than self-financing: which is
one of the reasons there has been such labor mobility from North
Africa and South Asia during the *642 last forty years: it has benefited the Third World
and Europe alike. Now it is Eastern Europe's turn.
C. The Legal Struggles
We have reviewed at
political economy in detail because the political goals justify
and explain the Viking and Laval decisions. We
could not understand those decisions otherwise. When we examine
the rules set out in Viking and Laval we note
two things: First, the rules that are developed and used are
clear enough to indicate the direction of European social
policy. Second, the rules are arrived at in an operational
method determined by the realities of the world as it is and the
objectives to be attained within that world. 46
I. The Facts
Viking and Laval
were cases of deep divisive conflicts between labor and
management - the sort of conflicts a rational economic policy
seeks to avoid and resolve so that the business of production
can go forward to the benefit of all.
In
Viking the Finnish ship Rosella was operating at
a loss due to competition from Estonian vessels on the
Tallinn-Helsinki route. Finnish crews were better paid than
Estonian crews and thus Estonian shipping had a competitive
advantage. Consequently, Viking wished to register the Rosella
as an Estonian or Norwegian ship 47
to become more competitive.
The
facts in Laval were similar. Migrant Latvian workers
were to perform construction on a school in Vaxholm, Sweden.
However, the Swedish labor union blockaded the Vaxholm building
site, picketing the site and blocking workers and vehicles from
entering. 48
Sympathy strikes from other labor unions followed. 49
As a result, the Latvian workers went home and did not return. 50
Sympathy strikes and boycotts spread throughout Sweden; *643
ultimately the town of Vaxholm terminated the
construction contract and Baltic went bankrupt. 51
In
Viking and Laval, the action taken was very
effective. The Rosella was not reflagged; Laval's
Swedish subsidiary ultimately became insolvent. 52
In both cases, labor union activity resulted in lost
productivity and raised the specter of violence. Neo-corporatism
argues that lost productivity and low standards of living for
Eastern Europe are not the way forward.
Having laid out the
facts we now turn our attention to legal analysis. First, we
examine the black letter doctrinal issues which are clearly
resolved, however artificially. Then we examine the aspects of
the cases which were determined by realist legal reasoning. We
conclude that the legal reasoning in the cases can only be
understood correctly in terms of political economy which
verifies the hypothesis that these cases are evidence of
neo-corporatist thinking at the ECJ. 53
II. Formal Doctrinal Analysis ("Black Letter Law")
The tension between
formalism and legal realism plays out quietly but clearly in
both cases. First we analyze the black letter neo-formalist
rules, then the apparent manipulations through legal realism.
1. Jurisdiction
In black letter
terms, the courts could have, but did not, divest itself of
decisional authority, either via the doctrine of subsidiarity or
by Article 153 TFEU (ex Article 137(5) ECT). Article 153(5)
facially divests the application of Article 153 (which
implements Article 151 on social Europe (ex Article 136)) to
strikes and lock-outs. The court rejected the argument 54
that it lacked jurisdiction despite the plain meaning argument
based on the treaty text and the doctrine of subsidiarity. This
is the first of several examples where the court has acted like
policy-oriented legal realists.
*644
2. Flags Of Convenience
One of the black
letter rules reached can be disposed with quickly and clearly -
flags of convenience. Europe is unifying and creating a single
market with uniform standards. Thus, there is to be no flag of
convenience within Europe. Each European Member State's vessels
are and should be recognized as legitimate by all Member States.
Article 1(1) of Council Regulation (EEC) No 4055/86 55
provides:
"Freedom
to provide maritime transport services between Member States and
between Member States and third countries shall apply in respect
of nationals of Member States who are established in a Member
State other than that of the person for whom the services are
intended." Although
the International Transport Workers' Federation has long opposed
the use of flags of convenience, 56
the ECJ could not see the Viking case as one of a "flag
of convenience".
The remaining issues,
however, were not settled by a simple black letter literalist
interpretation of existing E.U. legislation.
3. The Right to Collective (Industrial) Action
It is unsurprising
that the court found the existence of a right to collective
action. It identified the existence of this right not only in
E.U. law but also in the European Social Charter (referenced in
Article 151 TFEU, ex Article 136 ECT), the ILO
Convention No 87 (9/VII/1948), the Community Charter of
the Fundamental Social Rights of Workers (9/X/1989) and the
Charter of Fundamental Rights of the European Union (OJ 2000 C
364, p. 1). 57
However,
in keeping with the contemporary view, the right to take
collective action is not an absolute right and cannot be
understood in isolation. Rather, the fundamental right must be
understood in context of other fundamental rights including
"Community law and national law and practices." 58
Thus, as is typical for contemporary law, the court found the
existence of a fundamental right, the right to collective labor,
and then pointed out that *645 this fundamental right does not exist in isolation
but must be contextualized by competing (fundamental) rights
such as the right of establishment and the free movement of
labor. The court determines the extent and limitations of these
conflicting rights in the way designed to attain maximum
production and well-being for Europe as a whole, not for
workers, nor management. It is in that sense that these
decisions could be seen as neo-corporatist. In my opinion, that
is the best way to understand both decisions and resolve their
apparent incompatibility.
4. The Right of Establishment
Just as labor unions
have a right to collective action guaranteed by the EC Treaty,
so too do enterprises have a fundamental right to establish
themselves anywhere in the territory of the E.U. 59
In black letter terms, the court in Viking found that
the right of establishment includes the right to delocalize. 60
The
more interesting question is whether the labor union, exercising
its right to strike, could thereby interfere with the right of
the enterprise to establish itself anywhere in the E.U. The
court determined the two abstract rights could conflict. To
resolve that conflict the court had to determine whether the
right in fact applied to the labor union. This raised the issues
of whether a labor union is a private person or an institution
of state power, and whether the prohibition of hindrances of the
right to establishment applies only to institutions of state
power or also to private actors.
5. Horizontal Direct Effect of the EC Treaty to Labor Unions
The labor union was not
taken as an instance of state power even though de facto
it functioned as such. The functionalist policy arguments appear
to have been defeated by the formalist literal argument.
However, the provisions prohibiting the E.U. from interfering
with the right to establishment 61
were nonetheless held to apply not only to the Member States and
the organs of the Member States but also to private persons.
That is, the prohibition against interfering with the right to
establishment is directly effective - a case of horizontal
direct (negative) effect, even though the literal text of the
treaty does not seem to directly address private persons. This
tension of formalism versus teleology is *646
characteristic of contemporary legal thought.
62
The court justified its determination of the direct
applicability of the prohibition of interference with the right
to establishment by a results-orient effects analysis: 63
the effect of allowing private actors, like labor unions, to
interfere with the right of establishment would frustrate the
purpose of the EC Treaty. 64
Fundamental
rights were found to exist in both Viking and Laval
and were found to be in conflict. The two norms in conflict were
the right to establishment and the right to strike. To determine
their relationship, the court used the proportionality test. 65
6. Proportionality: Restrictions on the right of
establishment
Having found the
existence of a right to strike and a right to establishment, the
court then found that the right to take collective action can
interfere with the right to establishment (Art. 165 TFEU, ex
Article 49 ECT). 66
So the court had to determine how those two fundamental rights
interact - and it did so using the general principle of
proportionality.
In Laval the
court ruled that a restriction on fundamental freedoms such as
the right of establishment "is warranted only if [1 it pursues a
legitimate objective compatible with the Treaty [legitimate
ends] and is justified by [2 overriding reasons of public
interest [justifiable mean]; if that is the case, [3 it must be
suitable for securing the attainment of the objective which it
pursues and [4 not go beyond what is necessary in order to
attain it". 67
Just
as proportionality was used to determine the relationship of the
competing fundamental rights in Laval, so too was it
used in Viking. The court in Viking reiterated
the test for proportionality:
*647
"[A] restriction on freedom of establishment
can be accepted only if [1 it pursues a legitimate aim
compatible with the Treaty and [2 is justified by overriding
reasons of public interest. But even if that were the case, it
would [3 still have to be suitable for securing the attainment
of the objective pursued and [4 must not go beyond what is
necessary in order to attain it" 68
One view is that the
proportionality analysis goes not just to the determination of
the relationship of the competing fundamental rights but also to
the extent of the labor union's activity with respect to
management's actions. To that view, labor unions have the
fundamental right to strike, but must exercise that right
proportionally to the threat they face. 69
Critics have argued
that the Viking decision disfavors the labor movement
because effective industrial action provokes economic
dislocation. 70
That is true. It is also exactly why industrial action is
treated with caution - disruptions of production flows
ultimately disfavor workers.
7. Conclusion: Prohibition of blockades
The court concludes
from its examination of the competing interests - the
fundamental right to collective industrial action versus the
fundamental right to establishment - that blockades of
work-sites were a violation of the EC Treaty because of their
interference with the right of establishment. 71
This result can best be explained and justified by the
neo-corporatist analysis of Social Europe presented in Part I.
It seems neo-liberal, but is not; trade unions are no state
organ, but still enjoy fundamental rights, rights which can
serve to stem neo-liberal excesses.
We now turn our
attention from those aspects of the decisions which were
plausible within a black-letter literalist formal analysis to
those aspects of the decision which can only be comprehended by
a teleological analysis going beyond text to context, history
and structure to consider the finalities of law and policy
goals. 72
*648
III. Legal Realist Doctrinal Maneuvers
1. Illusory Distinctions Justified by Teleology/Policy
Much of the court's
decision can be criticized as being not "law" but "policy". That
is, just as parts of the decision were clear "black letter law"
neo-formalism, other parts were just as clearly "manipulative"
neo-realism. The play of this tension can really only be
explained in terms of political-economy, the idea that the
decisions will generate peace and prosperity, universally
desired goals. The "manipulative" (or, manipulated?)
distinctions follow.
a) Law/Not Law
In terms of legal
theory the interesting points about Viking and Laval
are the permutations of legal terms intended to reach the
desired result. Much of the case could be described as skirting
around the issue of private action versus state action, i.e.
direct horizontal effect of fundamental rights to individuals inter-se.
The public-private distinction has been long described as
illusory. 73
Similarly, at times, the court treats public law provisions as
'not laws'. 74
These manipulations seem driven not by detached neutral ex-post
judgment but by activist intense ex-ante planning which
looks to the result of the judicial decision and then
rationalizes that decision. The error, if any, is whether the
results desired are in fact desirable and are attained - not the
epistemology, at least not in a contemporary view of judicial
activism which has failed to sharply distinguish between
judging, which is always ex-post from legislating, which
is ex-ante.
b) The Public/Private Distinction
Similarly, the
court could have treated the labor unions as "public" and
"regulatory" or as "private" "market participants". The court
ignored a functionalist analysis of the role of labor unions and
did not see the labor unions as part of the public regulatory
structure - even though in Germany and Sweden unions do in fact
serve as quasi-public institutions. The court regarded the labor
unions as "private" and thus unable to invoke public policy in
order to maintain that collective action complies with E.U. law.
75
However, even though *649 the union could not invoke public policy on its own
behalf, prohibitions directed to the public authority were
applied to the unions for "limiting application of the
prohibitions [of interference with the right to establishment]
laid down by these articles to acts of a public authority would
risk creating inequality in its application" 76
That is, the court presents us with inconsistent formal
manipulations of terminology. Those terminological manipulations
and inconsistencies can be explained as results-oriented
determinations. They can only be justified by policy goals.
c) Are rights held by individuals, corporations or
unincorporated associations?
Like the formal
"public/private" distinction, the questions whether the
fundamental right applies directly (a) to natural as well as (b)
legal persons in their dealings inter-se can also best
be understood in terms of the finalities of law and policy.
Under the EC
Treaty, the freedom of establishment is a fundamental right. 77
The provisions of the Treaty guaranteeing it are directly
applicable not only to individuals but also to companies. 78
Thus, lurking in the background is the question, again
answerable only by a results-oriented effects analysis, 79
whether the fundamental right applies only to natural persons
(human beings), to artificial persons (e.g. public
limited companies), or also even to unincorporated association
(trade unions). This is one more level where the court is free
to develop the law more or less as it sees fit absent an
explicit regulation by the E.U. The court found the rights
directly effective and applicable to private parties inter-se
(horizontal direct effect) because to find otherwise would
essentially frustrate the purpose of the EC Treaty goal to
create a single integrated European market.
2. Unconvincing Formal Arguments Based on (Policy)
Contingency Rather than Deductive Necessity
Just as the
public/private, law/not law distinctions were argued
unconvincingly (because the distinction itself is either overly
rigid or unprincipled), so too were unconvincing arguments made
that wage protections via sectoral arrangements do not protect
workers *650
or their right to organize and negotiate
collectively 80--apparently
because they protect only some workers. That looks terrible for
labor at first glance. However, what this amounts to is the
breaking of national sectoral arrangements in order to
create a continental labor market wherein the well being
of workers in western Europe remains at least as high as it is,
and the well being of workers in Eastern Europe rises. That is,
the compromise benefits Western European consumers and
businesses (more goods at lower prices) just as it benefits
Eastern European workers (higher wages and more goods) resulting
in an integrated continental labor and capital market, a win-win
situation generated through increased productivity. Thus,
transformations of industrial and labor relations throughout
Europe are necessary - however, they are along neo-corporatist
and not neo-liberal lines, fortunately.
Another legal
realist move the court makes concerns the text and intent of
Art. 49 TFEU, ex Art. 43 ECT. Art. 49 TFEU prohibits
interference with the right to establishment and applies to
trade unions 81
- even though the text of the Treaty only addressed the Member
States - because: "the
fact that certain provisions of the Treaty are formally
addressed to the Member States does not prevent rights from
being conferred at the same time on any individual who has an
interest in compliance with the obligations thus laid down" 82
While this argument
is accepted today, it was controversial when first made.
3. Judicial neutrality in service of the dominant class.
83
The conclusion from
these cases is perhaps already inevitable in the facts of social
power. Decisions and actions of those who hold state power serve
the interests of those who hold state power in a sort of
self-justifying and self-reproducing cycle. 84
The (neo-) Marxist critique is that Judicial "neutrality" is an
illusion and that the illusion serves the interests of the
dominant class 85
- law as the mask of power. That is true, however the objective
of *651
neo-corporatism is to create a society in
which all persons have common interests such that the benefit of
any individual or class always works to the benefit of the
entire society. One can question and critique whether such is
possible, but the alternatives - neo-liberalism or Marxism - are
vicious and have failed. Can capitalism create neo-corporatist
structures that bring all social sectors, even those in the
Third World, into the sphere of ever greater prosperity for all?
That is the challenge globalization faces.
D. Alternative Perspectives (Other Literature)
This paper
presented a neo-corporatist perspective on Viking and Laval.
Other perspectives have been presented in the vast literature on
these cases. For example, Aravind R. Ganesh criticizes the
decisions as being bad for governance of labor and management
relations due to a "total lack of transparancy" in adjudication,
i.e. an impoverished conception of transparancy. 86
Daniel Komo and Charlotte Villiers similarly argue that "the
failure to establish at European level a coherent policy that
draws on the inherent links between corporate law, labour law
and corporate social responsibility puts at risk existing
arrangements for codetermination and employee participation" 87
Just as alternative perspectives are possible, so are other
solutions. In a similar vein to Joerges comprehensive and cogent
(historical) analysis and conflict of laws approach, Elina
Paunio regards the problems of E.U. governance from the
perspective of legal certainty, i.e. of formal
rationality (predictability) and substantive justification. She
directs our attention particularly to Aulis Aarnio, Peczenik and
Habermas. Thereto I note: by creating procedures which are both
formally predictive and substantively justifiable we reach a
form of legal certainty which is neither teleologically blind
nor fully unpredictable. 88
Also complementary to Joerges conflict of laws approach,
Katherine Apps considers the issue from the perspective of
private law liabilities (i.e. in tort, perhaps also
contract) under E.U. for violations of the E.C. Treaty by labor.
89
Another proposed innovative solution to the problems of
balancing social rights of labor against market rights of
capital is to answer the questions with an E.U. Civil Code. 90
There is no shortage of issues and answers.
*652
E. Conclusion: The Rules of the New
Game
Corporatism
originated in a world where labor and capital movements were
limited and restricted. Liberalism succeeded in creating a world
where free movement of goods is the rule, tariffs the exception,
and even could liberalize capital movements. But it was the
neo-corporatist European Union which was the first transnational
trading bloc to take the next step forward to the free movement
of workers. Viking and Laval are not about
neo-liberal union busting in a quest to enrich the wealthiest 1%
of the population. Rather, the objective is to obtain flexible,
rapid movements of labor and capital so that market exchanges
clear as quickly as possible and at minimal costs in order to
generate the greatest possible wealth for all. Under the new
rules of the game, firms can de-localize capital and in-source
labor. Stability is maintained through the social security
mechanisms funded via the self-financing value added tax and
pay-as-you-earn style contributions. The objective of Viking
and Laval was not to end any and all union protest or
negotiation. Rather, it was to restrain violent actions and to
limit sector-wide/transnational collective actions. 91
Non-violent collective actions are not barred, nor are actions
which do not dislocate the entire economy because highly
disruptive collective action generates a vicious downward spiral
leading to a lower standard of living for all. After Laval
it is clear: labor unions can strike but cannot blockade or
otherwise physically interfere with the targets of their
protests.
Neo-corporatism
is very different from old school corporatism. Old school
corporatism saw social stability and certainty as key to well
being in a world divided into hostile, warring camps.
Thankfully, we no longer live in a world of autarchic national
economies locked in a mutual death struggle of destructive
zero-sum competition for resources and market share. Today, we
live in an intensively networked world of open borders and
disaggregated sovereignty. Neo-corporatism and classical
corporatism alike recognize that the basis of all human rights
is ultimately economic - that the level of human rights
protection is dependent on the level of social wealth. Just as a
vicious race to the bottom is possible and to be avoided, so
also is a virtuous spiral of greater productivity through
protection of basic rights possible and to be sought after. The
decisions of the ECJ are steered by the pole star of greater
worker protection through wealth creation.
Neo-corporatism and
corporatism alike seek to share prosperity between formerly
conflicting classes. However, the early corporatists were
limited to a nationalist-mercantilist perspective which was
inevitably geared toward wars for market share and thus doomed
to failure. Neo-corporatism in contrast is unbounded, globalist,
and seeks to create stability and prosperity not for any one
nation state but for the entire global society. That is the
guiding vision of social Europe - and the real message of Viking
and Laval.
Notes:
11.
See: Adam Smith, An
Inquiry Into The Nature And Causes Of The Wealth Of Nations
461 (Edwin Cannan ed., 1937) (trade as positive sum in cases of
absolute advantage); David Ricardo, On The Principles Of
Political Economy And Taxation (3d ed.) 132-34 (1821),
reprinted in The Works
And Correspondence Of David Ricardo, 132-34 (Piero
Sraffa ed., 1953) (trade as positive sum even in cases of
comparative advantage).
12.
Ronnie Eklund argues that the cases reach contradictory results;
such appears to be true, however the cases are
compatible from a teleological perspective as exposed here. See
Ronnie
Eklund, A Swedish Perspective On Laval, 29 Comp. Lab. L. & Pol'y
J. 551, 565-570 (2008). This fact, that the
characterization of rights is - to some extent - malleable is
seen in the anti-social dumping literature.
15.
See, e.g., TFEU Articles 4(2)(b), (c); 5(3); 9; 14 inter
alia.
16.
Viking, note 1, para. 78.
17.
Laval, note 2, para. 104.
20.
The Court speaks of the right to collectively organize labor,
though in the cases it was in fact not merely labor organization
but the collective actions of labor which were litigated. I use
"right to strike" as a convenient shortcut for the right to
collectively organize labor.
22.
While unlikely a conscious attempt to avoid the pitfalls of
American Lochnerism, in the last fifteen years the EC has
reflexively taken a number of steps to recalibrate the
relationship between social and economic rights, even as the
Community continues to expand and consolidate its program of
market integration. A central question looming over EC legal
discourse is whether these developments have satisfactorily
rebalanced the dynamics of Community law to accord proper
deference to both social and economic considerations. In short,
has the European Community experienced its own version of a
"switch in time"? Ian H. Eliasoph, A "Switch In Time" for
the European Community? Lochner Discourse and the
Recalibration of Economic and Social Rights in Europe, 14
Colum. J. Eur. L.
467, 493 (2008).
24.
See, e.g., Norbert Reich, Free Movement v. Social
Rights in an Enlarged Union--the Laval and Viking Cases before
the ECJ, 2 GLJ, 125, 125-161 (2008).
25.
See, generally, Schfer, Armin and Simone Leiber, The double
voluntarism in EU social dialogue and employment policy. In:
Krger, Sandra (ed.): What we have learnt: Advances, pitfalls
and remaining questions in OMC research, 13 European Integration
online Papers (EIoP) (2009), available at: http://eiop.or.at/eiop/texte/2009-009a.htm
36.
"[T]he economic constitution of the EC was the conscious
expression of the post-war institutional compromise of 'embedded
liberalism.' The compromise entailed the view that the wealth
generating effects stemming from reductions or eliminations of
trade barriers between modern welfare states served to enhance
the redistributive capabilities and functions of such member
states vis-Ã -vis the states' own citizens. Thus would
emerge a 'virtuous
cycle' in which international free trade benefited the regulated
welfare state and the welfare state, by protecting the losers of
a free trade regime, made transnational free trade politically
palatable." Eliasoph (note 22), 479.
41.
Davies (note 8), 145.
42.
Id., 148: "there is a deep uncertainty within the EU
about the role of the trade union movement. As the ECJ itself
recognized, the Community has a social agenda as well as an
economic one."
43.
Eliasoph (note 22), 502-503: "[T]he Court has developed the
principles of Community citizenship and intra-Community
solidarity to require host states to extend national benefits to
migrants from other Member States. While this is likely to be a
very consequential development, the ECJ's recent social rights
activism is perhaps best demonstrated by the controversial
decision of Mangold, which has been described as "the most
startling employment law decision of that Court for the past
thirty years."
45.
Article 151 TFEU (ex Article 136 ECT) states in its entirety:
"The Union and the Member States, having in mind fundamental
social rights such as those set out in the European Social
Charter signed at Turin on 18 October 1961 and in the 1989
Community Charter of the Fundamental Social Rights of Workers,
shall have as their objectives the promotion of employment,
improved living and working conditions, so as to make possible
their harmonization while the improvement is being maintained,
proper social protection, dialogue between management and
labour, the development of human resources with a view to
lasting high employment and the combating of exclusion. To this
end the Union and the Member States shall implement measures
which take account of the diverse forms of national practices,
in particular in the field of contractual relations, and the
need to maintain the competitiveness of the Union economy. They
believe that such a development will ensue not only from the
functioning of the internal market, which will favour the
harmonisation of social systems, but also from the procedures
provided for in the Treaties and from the approximation of
provisions laid down by law, regulation or administrative
action."
46.
Naturally, much of the scholarship about Viking and Laval
centers on the interpretation and application of the general
principle of proportionality in E.U. law. See, e.g.,
Alicia Hinarejos, Laval and Viking: The Right to Collective
Action Versus Eu Fundamental Freedoms, 8 Hum. Rts. L. Rev.
714 (2008).
47.
Viking (note 1), para. 9.
48.
Laval (note 2), para. 34.
52.
Davies (note 8), 136-137.
53.
Davies (note 8) provides the best "pro-labor" perspective on the
cases.
55.
22 December 1986, applying the principle of freedom to provide
services to maritime transport between Member States and between
Member States and third countries.
56.
Davies (note 8), 133.
57.
Laval (note 2), para. 90.
58.
Laval (note 2), para. 91; Viking (note 1), para.
44.
59.
Laval (note 2), para. 101.
60.
Viking (note 1), para. 69.
61.
Davies (note 8), 126: "Treaty provisions can have horizontal
direct effect".
63.
Viking (note 1), para 57: "the abolition, as between
Member States, of obstacles to freedom of movement for persons
and freedom to provide services would be compromised if the
abolition of State barriers could be neutralised by obstacles
resulting from the exercise, by associations or organisations
not governed by public law, of their legal autonomy".
64.
Davies (note 8), 136.
65.
Viking (note 1), para. 46.
66.
Laval (note 2), para. 99.
69.
Davies (note 8), 126.
71.
Laval (note 2), para. 111.
74.
For example "legislative measure such as the
Landesvergabegesetz, which does not itself fix any minimum rates
of pay, [instead relying on voluntary compliance sanctioned with
threat of fine for non-cooperation] cannot be considered to be a
law, within the meaning of the first indent of the first
subparagraph of Article 3(1) of Directive 96/71, which fixed a
minimum rate of pay, as provided in Article 3(1)(c) of that
directive. Case
C-346/06, Dirk Rueffert, in his capacity as liquidator of
the assets of Objekt und Bauregie GmbH & Co. KG,
para. 24.
75.
Laval (note 2), para. 84.
76.
Viking (note 1), para. 34.
78.
Viking (note 1), para. 68.
80.
Case C-346/06, Dirk Rueffert, in his capacity as liquidator of
the assets of Objekt und Bauregie GmbH & Co. KG,
para. 38-41.
81.
Viking (note 1), para. 55.
83.
Eliasoph (note 22), 467, 477.
85.
Eliasoph (note 22), 477.
91.
Laval (note 2), para. 111.