The Political Economy of the European Union : An Exploration of EU Institutions and Governance from the Perspective of Polycentrism

The analytical framework of polycentrism—extensively developed by Elinor and Vincent Ostrom—is one of the most prominent theoretical approaches in political economy. According to this theory, social systems with multiple layers of decision-making and a mix of shared and individual responsibilities among subunits often have advantages in the provision of public goods and other aspects of governance. This chapter explores the extent to which the European Union (EU) can be described, categorized, and analyzed as a polycentric governance system. The EU consists of a large number of individual states that retain a certain degree of autonomy, yet operate under an overarching institutional superstructure with a common set of rules. The superstructure itself is characterized by a high degree of decentralization in decision-making authority. Furthermore, many responsibilities for the provision of public goods and services remain in the hands of regional and local governments. Therefore, the division of power within the EU largely mirrors the ideals of polycentricity. In addition to an analysis of the EU's institutional framework, I investigate polycentric governance “in action” by analyzing (1) the sovereign debt crisis and (2) the international refugee crisis. When facing these major political-economic challenges, the EU's response consisted of a mix of centralized and decentralized initiatives. As we would expect from a polycentric system of governance, only the combination of policies initiated at both levels successfully addressed the consequences of the crises. Finally, I consider theoretical and practical aspects of “leaving a polycentric system,” with a focus on Brexit