This volume sets out to provide a concise and accessible overview of the history of today’s European Union. A brief account of such a sprawling topic obviously cannot be comprehensive. Instead, I hope to lay out the broad sweep of developments, without getting bogged down in the details. These days all the EU’s significant moves are documented online, including all its treaties, major decisions, national positions, specific policies, and other technicalities. The institutions themselves provide deep insights into their ongoing work, often also supplying snapshots of historical developments. Even more importantly, there are entire libraries of books on specific policies and the roles of institutional actors such as the European Commission, the Parliament, the Council, and the various member states. Amidst such a wealth of information, it is all too easy to get tangled up in the details. In response, this book seeks to provide a coherent survey of the EU’s history for the general reader.

The media tends to portray a European Union lurching from one crisis to the next. And in this brief history I have had plenty to say about problems, dangers, risks, and threats in the decades-long process of European integration. The founders were well aware of this aspect. Jean Monnet always believed that ‘Europe would be built through crisis, and that it would be the sum of their solutions’. Indeed, the European Union – as the European Communities before it – does seem to have a knack for turning crises to its advantage. Rather than leading to any kind of reversal, challenges have tended to reorient and expand the European project. So, we should not get carried away by excitable headlines, which often fail to do justice to the EU’s complex and sometimes contradictory trajectory.

Chapter 4 examines the changes from 1992 to 2009, a period that was characterised by the end of the Cold War. The focus is on examining how the EU became a politicised actor with increasing public visibility. The study analyses the most important developments of this period chronologically, including the introduction of the euro, the Schengen Agreement, several rounds of enlargement, and the Common Foreign and Security Policy. Both the institutional reforms and their social and political effects are considered. While considerable successes were achieved in economic integration and geographical enlargement, fundamental problems remained unresolved: incomplete institutional structures (especially in monetary and political union), growing social inequalities due to the neoliberal agenda, and a growing democratic deficit. These developments laid the foundations for the crises that were to shake the EU in the following decades. The period exemplifies the tensions between economic integration and political legitimacy, between enlargement and deepening, and between national sovereignty and supranational governance that still characterise European integration today.

Chapter 4 analyses processes of making climate mitigation into a policy area during the 1970s to mid 1990s. It explores the ideas, frames, and interests that informed United Nations climate change debates, how mitigation came to be defined as a policy area, and, ultimately, the specific compromises that were necessary to agree emissions reduction targets for Annex 1 countries. The role of political compromise in processes of reaching agreements and on governing bodies is foregrounded. Particular attention is also paid to questions of how pro-mitigation groups articulated the need for change, the role of climate science within this, how anti-mitigation coalitions narrated their contestations, and how these debates informed compromises reached. Although negotiated outcomes were unsatisfactory in many ways, there is a sense that all parties did, to greater or lesser extents, compromise to engender these first stages in the politicisation of climate mitigation.

The study of European capitalism since 1945 has revealed three key findings. First, Europe’s governance of capitalism has been marked by four main periods: : 1) embedded liberalism (1945–73); 2) global attempts at mixed capitalism (1973–92); 3) high neoliberalism (1992–2016); and 4) the return of community capitalism since 2016. Second, Europeans have invented an original system to reach compromise between both states and the three types of capitalist governance, thereby offering choice, far from the image of a neoliberal technocratic dictatorship. The European Union is a mix between the influence of many countries, including Germany, France, and Britain, in addition to Italy and many others. Third, the trinity points to three alternatives that were – and still are – present: the neoliberal free-trade area, the socio-environmental alternative and the challenge of the return of community capitalism, between protectionist tensions, Fortress Europe and the possible hollowing out of the European Union from the pressure of growing nationalism.

Which form of capitalist governance best fosters peace, prosperity, social cohesion, and environmental protection? I argue that making sense of this complexity calls for revisiting the three different principles of capitalist governance: liberty (freeing the market to unleash growth), solidarity (reining in the free market to protect the weak and the environment), and community (safeguarding the group through protectionism and military might). I contend that studying the European Union helps provide insight into how a compromise between liberty, solidarity, and community capitalisms is struck, as the Union is in a constant process of negotiation among bickering members. Dealing with community capitalism, in particular with protectionism and nationalism, has been the most pressing challenge for Europe in the past, not just today. This book will focus on the interaction between capitalism and European integration between 1945 and 2025, drawing on studies from areas of scholarship that rarely enter into dialogue with one other (history, political science, comparative political economy, international relations), as well as through new archival research.

What is the best form of governance for capitalism? It is a balance between three types of capitalist governance, namely liberty capitalism, solidarity capitalism, and community capitalism, i.e. a trinity. In any given society, leaders emphasise liberty if they believe that freeing markets will unleash plenty; solidarity if they prioritise protecting the weak (the poor, minorities, nature); and community if they emphasise the power of the group to which they belong (through protectionism and military might). Each of these three types has a radical variant, such as neoliberalism for liberty capitalism, or Nazi Germany for community capitalism. This trinity is useful in making comparisons across time and space. Capitalism is not solely based on a compromise between liberty and solidarity. Community capitalism must also be taken into consideration. Community capitalism emphasises protectionism, restrictive migration policy, cartelisation and unilateral foreign policies. The chapter examines these three types of capitalist governance one by one (including the question of neoliberalism, of ordoliberalism, of neomercantilism, of the Commons), and then explores how they have applied to various countries.

The Greek tragedy that unfolded during the eurozone crisis (2010–15) was the height of a period of ‘high neoliberalism’ that has been particularly prevalent since 1992. This dynamic has been visible in Europe in four specific areas, namely 1) the global rise of neoliberalism (including in internet regulation), 2) the Single Market (with the liberalisation of the football market, the Bolkestein directive, the role of the Court of Justice, and legislative Darwinism), 3) competition policy (with merger control, state aid control, and the liberalisation of new sectors), and 4) the monetary union, from its miraculous beginnings to the Greek tragedy of the eurozone crisis. However, neoliberalism was not exclusive. The epic debates surrounding the Bolkestein directive led to the protection of services of general interest. The eurozone crisis triggered a belated redistribution. In competition policy as well, the older approach of ‘public interest’(which struck a balance between liberty, solidarity and community) has made a comeback in a new guise under Commissioner Vestager, in what could be called an ‘excess of market power’ approach.

The EU is more than a traditional international organisation such as the UN, because it has its own budget, currency, and directly applicable law. Yet it is not a state, for it lacks a police force, army, and criminal justice system. Its member states conserve a right of veto for all major decisions. It is therefore illuminating to explore the EU’s unique political and institutional features in order to understand how it has played such a large role in organising European capitalism, and to determine its compatibility with the three forms of capitalist governance (liberty, solidarity and community). The European Union’s dominant role in regulating capitalism emerged quite late, after the failure of numerous alternatives in both European and international organisations. As Brexit has shown, it is perfectly possible for the Union to shrivel, potentially due to nationalistic pressures. The European institutional system, while being easier to combine with the liberty aspect of capitalism, is also conducive to solidarity and community. The role of European institutions was to facilitate the combination of various national forms of solidarity and community capitalism in Europe.

Despite the neoliberal wave solidarity capitalism has remained important in Europe. Since it was impossible to tame capitalism globally, promoters of solidarity turned to the European Union, and strove to strengthen its ‘flanking’ welfare state. The early 1990s brought a first peak of international awareness regarding environmental protection and interest in social Europe, but that was shattered by a neoliberal reaction from the mid-1990s to the mid-2010s. Since then, social and environmental policies have been on the rise again, only to be challenged by the Russo-Ukrainian War. Three expressions of solidarity will be examined. The first deals with the legal regulation of globalisation through social legislation and trade regulation. The second involves financial redistribution towards the neediest, with transfers to poor regions (cohesion policy), and later with specific measures during the Covid-19 crisis (2020–21). The third addresses the rising importance of environmental regulation in general (air and water pollution, biodiversity, etc.), especially with regard to climate change (Kyoto Protocol, 2015 Paris Agreement), despite the lobbying of the ‘Merchants of Doubts’.

The rise of community capitalism since the mid-2010s is reflected in the return of protectionism, authoritarianism, nativism, and violent conflict. European capitalism was forced to adapt by being more assertive. Europeans have embraced solutions that were previously refused as too protectionist, such as European preference, free trade contingent on adhering to social and environmental norms, subsidies to industry for strategic reasons, and competition policy decisions based on reciprocity. Some of these ideas were long defended by France. Germany previously criticised them, but has embraced some in trade since 2016, and others in foreign policy since 2022. The management of Brexit has reaffirmed the basis of European soft power, which depends on the unity of the Single Market. The Covid-19 pandemic (2020–21) forced the Union to adopt protectionist and interventionist measures. The Russo-Ukrainian War has led to very strong sanctions packages, as well as the Union’s foray into military matters. But the Europeans still remain heavily dependent on the US for defence. Donald Trump’s return to power in 2025 has forced Europe to think harder about organising community capitalism.

Vicarious identification, or ‘living through another’, refers to the way actors appropriate the achievements and experiences of others to gain a sense of purpose, identity and self-esteem. This chapter proposes that vicarious identification with ‘Europe’ has been constitutive for Estonia’s pooling of important aspects of its sovereign power with the European Union (EU) while retaining a strong nominal commitment to absolute sovereignty in its national constitution. Accordingly, the sharing of the sovereign authority of the state in essential aspects with the EU emerges as a generally accepted trade-off for a sense of ontological security attained through membership in the European polity. The chapter conceptualizes vicarious sovereignty and illustrates the reconciliation attempts of ideal-typical sovereign state subjectivity with the evolving empirical reality of the EU on the example of Estonia’s post-Soviet ‘home-coming’ in Europe. This is done via tapping into the visions of Europe, as articulated by the defining Estonian constitutional ‘map-makers’ at the time of the Convention on the Future of Europe in the early 2000s: namely, Lennart Meri and Toomas Hendrik Ilves.