Journal Article

Building faith in a common currency: can the eurozone get beyond the Common Market logic?

Pascal Petit

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 36, issue 1, pages 271-281
Published in print January 2012 | ISSN: 0309-166X
Published online January 2012 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/ber039

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  • International Relations and International Political Economy
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Building faith in a common future, which is at the core of the making of a common currency, has been declining since the turn of the 1980s. The economic neoliberalism that diffused worldwide after the collapse of the Gold Exchange Standard and the economic crisis of the mid 1970s challenged the European project. Could a specific European model of social market economy help to forge the solidarity and discipline required to meet this challenge? It turned out that members had different understandings of the European model, especially regarding the role of central government. Meanwhile, in all forced adjustments of the European Union (EU) to a more open and competitive world, be it enlargements, new treaties or new institutions, the German conception of social market economy prevailed, mainly because Germany was in a better position than its partners in most cases. A rising discontent progressively eroded the faith in the EU project, even in Germany where a difficult reunification became a major national source of worries. By the end of the 1990s when the euro was finally created, the EU project had lost its momentum. The relative success of the euro in the early 2000s was much linked with the weakness of the dollar. Answers to the 2008 financial then economic crisis that rest on harsh austerity plans can only worsen the situation. A reconstruction of the EU project clearly needs a new pact of solidarity measures. Integration of the youths in all member countries stands as a good rallying common objective.

Keywords: Social market economy; European integration; Economic neoliberalism; Diversity of capitalism; E02; E61; F53; H77

Journal Article.  5935 words. 

Subjects: International Relations and International Political Economy ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; Public Economics ; Macroeconomics and Monetary Economics