Abstract
The article applies the contested concept of hegemony to the euro and the eurozone crisis of 2009–12 to critically scrutinise the parameters and limits of the euro reform process. Conceptualising the euro as a ‘public good’ designed to help stabilise and legitimise the EU’s regional market order is a useful ideational starting point for critical inquiry, one that is in line with hegemonic stability theory. However, drawing on neo-Gramscian theory, the article contends that, in practice, the euro has been self-limited through its ‘external’ and ‘internal’ embedding in a neoliberal form of ‘minimal hegemony’. While the reform process has achieved some notable stabilising changes to the support structures and governance of the euro, nevertheless, reform has largely failed to tackle fundamental problems at the heart of the euro’s tendency towards crisis: the single currency’s subordination to a global financial regime dominated by neoliberalism, Germany’s neo-mercantilist dominance of the eurozone economy and fundamental differences of macroeconomic conceptualisation and preferences between the eurozone’s core states, France and Germany. The article critically scrutinises developments in eurozone monetary policy in the wake of the crisis to demonstratively argue that the euro remains locked in to a form of minimal hegemony that constrains the development of the euro as a ‘deep and genuine’ public good.
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Notes
As Alan Milward (1992) argued, France conceived monetary union as a Europeanised ‘rescue of the nation state’.
This notion of monetary union as a long-run game can be seen to involve a dialectic of ‘depoliticisation’ and ‘repoliticisation’ (Dyson 2008: 3), or ‘permanent renegotiation’ (Henning 2007: 336). As such it has been a crucial aspect of the preferred ‘French model’ of decision making in EMU based on ‘economic government’ (Strange 2012).
From the start, the Bundesbank and the German government were strongly opposed to EFSF, and the ESM, the legality of which was challenged by the German Federal Constitutional Court (FCC). For an excellent review of the FCC’s longstanding and increasing role as a constraint on Germany’s European policy, see Bulmer and Paterson (2013: 1397-1400). Thompson (2015: 4-13) argues strongly that Germany’s decision to accept and help finance the rescue mechanisms and support their operationalisation by the ECB, was largely dictated by the heavy exposure of German banks to sovereign debt in Spain and Italy alongside evidence that the debt crisis was spreading to these states, thereby putting the banks and German tax payers at risk. With the German government acceding to ECB interventions, the German banks were able to systematically draw down their exposure to debt on heavily discounted terms, with the net result that Germany became possibly a net beneficiary eurozone counter-crisis official financing. While Germany has subsequently continued to support the ESM, future changes to its financing and terms of operation, following FCC rulings in 2012 and 2014, are subject to authorisation by the Bundestag, an effective national veto.
I have discussed the influence of ordoliberal principles, particularly rule-based macroeconomic governance, on the British Labour Party and its period in government from 1997 to 2010. New Labour in power successfully pursued an innovative form of ‘constrained Keynesianism’ or ‘Ordo-Keynesianism’, adapted to ordoliberal principles. Ironically, this both aligned and distanced New Labour from Maastricht EMU, which was rejected by New Labour as unduly constraining and politically destabilising (see Strange 2014a 2014b).
As Henning (2015) notes, the ECB’s self-imposed and asymmetrical inflation target of ‘below, but close to, 2%’ has remained fixed at its pre-crisis level. It conflicts with more flexible and symmetrical inflation-targeting regimes elsewhere in the non-eurozone EU, notably the UK.
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Strange, G. The euro crisis, euro reform, and the problem of hegemony. Asia Eur J 16, 125–139 (2018). https://doi.org/10.1007/s10308-018-0501-1
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DOI: https://doi.org/10.1007/s10308-018-0501-1