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2021 | Buch

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The Liberal Heart of Europe

Essays in Memory of Alberto Giovannini

herausgegeben von: Francesco Giavazzi, Francesco Lefebvre D'Ovidio, Alberto Mingardi

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Was the European Union ever a liberal dream? How did the common market impact the liberalization in its member states? Has the EU fostered more or less economic freedom in the Old Continent?

This book explores the intellectual and political genesis of the European Union, focusing especially on its relationship to classical liberalism. It explains how the new enthusiasm for liberalization associated with Reagan and Thatcher helped revive the European project in the 1980s, while providing some insights on the current challenges Europe is facing as a result of the financial crisis and the Covid-19 pandemic.

The contributors highlight the role of liberal, pro-market ideas played in shaping the EU, the single market and the euro, and how these should be coming into play again if the European project is to be reanimated.

This volume originates from a conference the Italian think tank Istituto Bruno Leoni hosted in 2019 and is dedicated to Alberto Giovannini (1955-2019). Giovannini was an influential macroeconomist and financial economist. His vast legacy of studies and ideas prompted this book in his honor, on the occasion of his untimely passing away.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

Within the European project, there were always two sensibilities: a more liberal, market-oriented one, and one openly pursuing a political unification of the continent. The two clashed, struggled, and coexisted, at times one became the dominant narrative, at times the same happened with the other.

The contributions in this book aim to investigate the intellectual roots of the liberal part of the European project. Overcoming trade barriers and the making of a common market were ideas that resonated both with US advice, during the Cold War, and with economic reasoning. Not by chance, this liberal approach was rejuvenated in the 1980s, after Thatcher’s reforms in the United Kingdom. The intellectual climate helped in crafting a European consensus that focused on monetary stability and free competition.

This book is the beginning of an inquiry on the true nature of European integration, in the context of the ongoing evolution of European institutions.

Francesco Giavazzi, Francesco Lefebvre D’Ovidio, Alberto Mingardi

Chapter 2. Some Introductory Thoughts

Abstract

The public debates are dominated by economic concepts with no precise meaning. Hence politicians are seldom capable to deal with the consequences of decisions taken by such faulty reasoning, by learning the right lesson.

The process of European integration presents us with a veritable clash of economic ideas. The roots of such clash may be found by defining the interaction between politics and economics in the context of some of its distinctive phenomena: the history of economic and political reforms; the debate on the size of government; the origin of the monetary union; the European Central Bank’s need to find a balance between the inflation objective and financial stability; the subject of fiscal policy; and the consequences of the ever-growing reach of programs which are constantly developed to counter new challenges arising from economic reforms.

Alberto Giovannini

The European “Postwar Consensus” and the European Project

Frontmatter

Chapter 3. The Origins of the Idea of European Integration: A German Perspective

Abstract

Local identity and cultural heterogeneity are generally neglected by economists when they study the process of European integration, even though both are crucial for understanding its progress and each member’s perception of its benefits and costs. I examine the unique benefits and challenges Germany has faced in its role in Europe, and how these influence its current role in the future integration path of the EU. Perceptions of globalization in Europe and national sentiments toward the consequences of the “four freedoms” today will play an important role in a future inflection point of the European integration process. Strategies for overcoming these barriers will ultimately require taking the EU’s motto seriously: In varietate concordia.

Michael C. Burda

Chapter 4. The European “Postwar Consensus” and the Birth of the EEC

Abstract

Ideas are at least as important as facts, and indeed ideas often shape or even create facts. I say this not only because of the title of our conference. Partly it is my deformation professionelle as an academic, partly my current macroprudential policy role, where I do see academic thinking strongly influencing policy. But I believe you will see it too in the remarks that follow on the background to the birth of the EEC. One theme here is the intellectual background of federalism. Some say now that European federalist ideas have fallen by the wayside. But I believe that even a Europe of concentric circles would not discard federalist notions—especially with the eurozone at its center.

Richard Portes

Chapter 5. “Large Switzerland” or “Large France”? The Ordoliberals and Early European Integration

Abstract

This chapter reconstructs the formative decades of European integration from the perspective of three German political economists: the ordoliberals Wilhelm Röpke, Ludwig Erhard, and Alfred Müller-Armack. In their multiple roles of theorists, public intellectuals, and policymakers, the ordoliberals shaped the incipient integration process from the immediate postwar years to the mid-1960s. They outlined two potential trajectories for the European project. While both imply a common market, the “large Switzerland” trajectory stands for political decentralization and non-protectionism, while the “large France” trajectory leads to political centralization and protectionism. The ordoliberals openly preferred the former, especially its emphasis on subsidiarity and federalism. The chapter concludes by identifying a movement toward a “large France” since the mid-1980s and discusses the reformability of today’s European Union toward a “large Switzerland.”

Stefan Kolev

Chapter 6. Hayek’s Europe: The Austrian School and European Federalism

Abstract

This chapter explores, through the writings of Friedrich Hayek, Luigi Einaudi, and Ludwig von Mises, the reasons that led classical liberals to converge on the idea of international federalism and the goals that such federation would accomplish, as well as the practical attributes of its functioning. The choice of these three classical liberal thinkers is not accidental. In spite of different career trajectories and political sensibilities, the three shared the lived experience of a European continent tormented by the demons of nationalism, witnessing the undoing of the extraordinary achievements of the “first age of globalization,” which was brought to an end in 1914.

Dalibor Rohac, Alberto Mingardi

Chapter 7. The Monnet Method and the Obsolescence of the EU

Abstract

The inception of “European integration” will forever be associated with the personage of Jean Monnet, but the obsolescence of the European Union (EU) has long been evident and no new design for it has been forthcoming since the foundation of the European Coal and Steel Community of 1952 and the European Economic Community of 1958. I will therefore examine how his lasting legacy subsequently developed into a rigid, centralizing mindset that now obstructs discussion not only of alternatives to the present EU (and European Monetary Union (EMU)) but of ways to reform it. By focusing on the 1956 British proposal for a nonpolitical Free Trade Area, I wish to retrieve the underlying original principles of the EU, from which a response to the challenges of the present and future can be drawn.

John R. Gillingham III

The Evolution of the European Project in the 1980s: How Liberalization Affected Europe

Frontmatter

Chapter 8. The Re-launching of European Integration in the 1980s, Ideas and Policies

Abstract

Two major developments have deeply affected the European Economic Community (EEC) in the 1980s: the global move toward deregulation, which is in part the result of Thatcher and Reagan’s policies, and the breakdown of the Soviet Empire in 1989. I will examine how deregulation established itself as a factor of European integration, and identify the turning points in the development of the EEC that are now affecting the current functioning of the EU. By pointing out what still needs to be improved on convergence in Single Market regulations and economic policy, as well as in the European Monetary Union (EMU) solidarity mechanisms, I hope to provide some insights on how to avoid frictions among member states, as they often ultimately stem from different interpretations of the EU’s “common view.”

Jacques de Larosière

Chapter 9. Evaluating Mrs. Thatcher’s Reforms: Britain’s 1980s Economic Reform Program

Abstract

I discuss the reform programs of the Thatcher governments, starting with UK monetarism, then the labor market reforms, and finally the reshaping of taxes and government spending to help the rebirth of an entrepreneurial economy. I also consider the political question of how was Margaret Thatcher able to assemble the support for this ambitious agenda to succeed politically against many opposing interests. I suggest the answer lay in the ability of the Conservative party to unite its traditional middle-class constituency with the newly emerging aspiring skilled working-class constituency, which had a strong interest in these reforms.

Patrick Minford

Chapter 10. The Rocky Road to European Monetary Union: A German Perspective

Abstract

To understand the German attitude toward European integration, two aspects are essential. One is the collapse of the German economy and the annihilation of any sense of national and moral identity following WWII. The second are the emerging tensions between the Allies and the Soviet Union, which created an interest in her recovery. I will examine how the implementation of a market-friendly economic order transformed Germany into a leader in European integration up to the fall of the Berlin Wall. The focus is on the pivotal role of the Deutsche Mark and the Bundesbank in setting the course for monetary policy in Europe through the European Monetary System that eventually led to the establishment of the European Monetary Union.

Otmar Issing

Our Current Predicament

Frontmatter

Chapter 11. The Euro in Perspective

Abstract

Looking at the euro from a 20-year perspective, one sees many successes that are consistent with the principles of economic freedom: the emphasis on transparency, the goal of price stability, endorsement of market-based reforms, encouragement of sound budget policy, open capital markets, and improved communication. However, recent deviations from rules-based strategies may have delayed more classical liberal policies. One reason for the deviations may be special circumstances such as the lower bound on interest rates, but in this chapter, international influences are emphasized. While these have provided incentives to adopt policies conducive to economic freedom, they may have led to less rules-based policies and less classical liberalism. This is a reason for a rules-based reform of the international monetary system.

John B. Taylor

Chapter 12. Dealing with the Covid Debt Overhang

Abstract

As the global response to the Covid-19 pandemic undoubtedly complicates economic forecasting for the eurozone, it is all the more important to try and predict the pace for its recovery: placing the bet right on a v-shaped or a swoosh-shaped recovery will have huge implications for businesses and economic policy actors alike, as well as on companies’ resilience building in the long run. Nevertheless, one specific outcome is bound to emerge as the legacy of the present crisis: a surge in sovereign debt, thus a threat to financial stability. In this chapter, we therefore examine the different policy outcomes and their aftermath, especially concerning risks, opportunities and means for dealing with the Covid-19 legacy within the existing monetary institutions and mechanisms of the European Union.

Agnès Bénassy-Quéré, Francesco Giavazzi

Chapter 13. Globalization and Its Critics

Abstract

There is a massive literature on globalization (e.g. see Bordo, The Second Era of Globalization Is Not Yet Over: An Historical Perspective, 2017). Therefore, I limit my comments on this fundamentally important process to a bare minimum (Sect. 13.1). Instead, I focus on the criticisms of globalization. Section 13.2 distinguishes three points of view of this process: economic, political economy, and moral. In Sect. 13.3 I briefly discuss crude anti-globalism of the nationalistic and utopian variety. Then I move to more sophisticated versions of the discussions of globalizations focusing on what I perceive to be lack of clarity, misconceptions, or outright fallacies. Section 13.4 deals with trade globalization and Sect. 13.5 with financial globalization. In Sect. 13.6 I formulate some final observations and recommendations.

Leszek H. Balcerowicz

Chapter 14. The Great Recession and the Future of the EU

Abstract

While the euro acted as a catalyst for convergence between member states during the first decade of the European currency, the eurozone cannot be considered an optimum currency area. The burst of the great financial crisis revealed its built-in weaknesses. The ongoing course of events displayed the asymmetry of the shock’s impacts between countries, not only in their economic and social dimensions but also in terms of confidence which played a key role as appeared on the financial markets. Despite the rise of Euroskeptic sentiment in the aftermath of the euro crisis, all countries remained on board, and as Jean Monnet famously predicted, the euro crisis led to a new step in the Economic and Monetary Union which, instead of being weakened, ended up less fragile.

Edmond Alphandéry

Backmatter

Titel: The Liberal Heart of Europe
herausgegeben von: Francesco Giavazzi
Francesco Lefebvre D'Ovidio
Alberto Mingardi
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-60368-7
Print ISBN: 978-3-030-60367-0
DOI: https://doi.org/10.1007/978-3-030-60368-7