"At first glance, the social purpose and the democratic potential of the EU have made progress in the last 15 years. However, this impression is misleading. We argue instead that the social and democratic potentials of the EU are crucially shaped by the heterogeneity of European varieties of capitalism. First, we locate our argument in the integration literature and argue that political-economic heterogeneity shapes not only intergovernmental bargains but also the opportunities for judicial integration. Second, we document the heterogeneity among European varieties of capitalism and how it has increased with each round of enlargement. Third, we show how the heterogeneity of political-economic interests has led governments to opt for autonomy-protecting solutions whenever European initiatives have targeted highly sensitive institutions that constitute their different political-economic regimes. Fourth, we also show that, despite this, the European Court of Justice (ECJ) has often overruled such autonomy-protecting measures by extending the reach and scope of the European fundamental freedoms. We conclude, fifth, that the asymmetry between market-enforcing and market-restricting integration is not likely to disappear in the near future, and that the heterogeneity of European varieties of capitalism limits not only the social but also the democratic potential of the EU."

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