Università degli Studi di Parma – m.baldassari@collegioeuropeo.it
“Five Presidents’ Report – “Completing Europe’s Economic and Monetary Union”. The Ordoliberal Framework of a Post-Democratic Society.”
The relationship between national law and “external constraint” is a field of analysis that allows to consider the growing distance between popular sovereignty and supranational institutional representation, as well as, the legal and political implications that a “stateless currency” entailed for the Italian Constitution (i.e. a stronger macroeconomic imbalance procedure, budget surveillance and introduction of the “balanced budget” clause in the Italian Constitution). If, on the one hand, Governor Mario Draghi called the Euro as a “hornet”, something that should not fly, but it succeeds in doing so, on the other, the Euro system does not seem to meet Mundell’s requirements of an “optimum currency area”. Indeed, it seems to exacerbate its macro-economic imbalances between countries that have adopted the single currency (trade surplus and wage deflation in Germany, growing indebtedness and stagnant Euro-Mediterranean countries).The analysis of the Five Presidents’ Strategic report “Completing Europe’s Economic and Monetary Union”, represents a good example on this regard. From one side, it is a step forward along the road of the most advanced and contradictory European project. On the other it clearly shows the guidelines as well as the pillars of the ordoliberal framework inherent to the so called “EU integration process”, through the functional progresses that should accompany Monetary Union (i.e. the functional stages of the Financial Union, Fiscal Union and Political Union). The emphasis on the words “resilience” , “competition” linked with “cohesion” (Alfred Müller-Armack ‘s idea of “social market economy”) and “convergence” (alongside the economic coordination reached through a combination of austerity measures and “benchmarking” competition between Member States) will set, for a longer term vision (2025), the basis of a post-democratic new governance.
Background Readings:
European Commission (2015). Completing Europe’s Economic and Monetary Union Read here
Università di Siena – sergio.cesaratto@unisi.it
“Is a Progressive and Federal Union Possible for Europe?”
A number of economists warned that political and fiscal union was a necessary premise for a viable European monetary union. Inspired by Goodhart I name this the Chartalist view. Political support to a much-feared ‘transfer union’ is, however, minimal in core- European countries. Moreover, New Classical Macroeconomics and ordoliberalism exercised a decisive influence, backing separation of monetary and fiscal policy and legitimizing a Stateless currency. I call this the Metallist view. This distinction is particularly relevant for assessing two alternative perspectives of the nature of the Euro area crisis. On one hand, there are those who argue that the crisis is akin to a traditional balance of payment crisis. On the other, there are those who attribute the crisis to obstacles to more resolute intervention by the European Central Bank. I argue that a balance of payments crisis is conceivable in a stateless monetary union like the euro zone, possibly concealed by Target 2. In this regard, I also show that, while timely ECB intervention would have been appropriate, in the absence of federal institutions, once this intervention finally took place, austerity measures necessarily accompanied it to check moral hazard by peripheral member countries. German neo-mercantilism and the influence of the mainstream credo that monetary policy should be detached from politics and fiscal policy are obstacles to a viable federal union. Moreover, the Parliament of such a union would be divided according to national rather than ideological/class interests. Virtue out of necessity, Hayek pointed out that a currency union among heterogeneous nation-States could only survive with a minimalist federal State.
Background Readings:
Cesaratto, S. 2015. Alternative interpretations of a stateless currency crisis, Asimmetrie WP 2015/08, Read here
Cesaratto, S. 2015. Balance of Payments or Monetary Sovereignty? In Search of the EMU’s Original Sin – a Reply to Lavoie, International Journal of Political Economy, vol. 44, no. 2, available at: Asimmetrie, WP 2014/06 (December), Read here
Critical European Thinking 