Unravelling paradigm shifts in European macroeconomic policy; the institutional turn of the European Commission

This paper delves into policy paradigms within European institutions, illuminating their elusive nature and the challenges posed by empirical research. Drawing inspiration from the seminal work of Peter Hall (1993), I investigate learning processes within bureaucracies and broader sociopolitical transformations that have challenged established economic wisdom, particularly within the macroeconomic policy framework of the European Union over the tumultuous past fifteen years. Adopting a first-person perspective and integrating elements from sociology, my focus centres on the influential Directorate-General for Economic and Financial Affairs (DG ECFIN) of the European Commission. This empirical examination spans from macro-concepts to micro-dynamics, revealing the contingent and dynamic transformation of policy paradigms. Leveraging insights gained from extensive fieldwork within elite circles of economic policymaking, I provide nuanced observations on the evolving exercise of fiscal policy, the impact of unorthodox monetary policy on inter-institutional equilibria, and the intricate role of civil servants in backstage politics and policy innovation. A central thesis underpinning this research project posits that policy paradigm shifts in multi-level, negotiated polities such as the EU are inherently incremental and non-linear, challenging conventional notions of revolutionary transformations within institutions. Unlike scientific paradigms, policy paradigms follow a different logic within epistemic communities. Participants in elite circles of economic policymaking, including policy experts, academics, civil servants, and politicians, often transition roles during their careers, utilizing their expertise and status to access revolving doors. This enables them to gatekeep institutions, reproduce conventional policy prescriptions, and set priorities. When exogenous shocks and fierce politicization challenge their established beliefs, they demonstrate the capacity to adjust and renew their discourse. Macroeconomic policy serves as an exemplar case of gradual transformation resulting from disciplinary disagreement over the role of the state and its relationship with the economy, as well as political realignments within the European Council that gradually endorsed a set of previously heretic ideas. Commencing the examination from the macroeconomic policy consensus post-2008, dominated by austerity in the policy debate, I trace the trajectory all the way to 2023. This showcases how DG ECFIN and its staff adapt to a new reality, assume new responsibilities, and gradually embrace a new understanding of the economy with fundamentally different assumptions, practices, and objectives.