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 ECJ has led some observers to argue that judicial decisions increasingly provide European politics with a ôPolanyianö 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 ôinterstate federalismö than is usually warranted because market-enforcing integration and European nondiscrimination policies have asymmetrically profited from ôintegration through lawö.