Embeddedness and Regional Integration: Waiting for Polanyi in a Hayekian Setting

This article analyzes the social potential of regional integration processes by using the example of European integration. Recent case law from the European Court of Justice has led some observers to argue that judicial decisions increasingly provide European politics with a Polanyian drive. We test this claim by distinguishing three dimensions to European economic and social integration: market-restricting integration, market-enforcing integration, and the creation of a European area of nondiscrimination. We also identify two forms of integration that have different speeds, scopes, and potentials: political integration and judicial integration. The evidence shows that the EU has come closer to Hayek's vision of inter-state federalism than is usually warranted because market-enforcing integration and European nondiscrimination policies have asymmetrically profited from integration through law. The opportunities for international courts to push ahead market-enforcing integration increase as the participants of regional integration processes become more diverse. In such Hayekian constellations, individual rights are increasingly relocated to the central level, at the cost of subordinating the decentralized capacity for solidarity and interpersonal redistribution.