An introduction to our special feature on The Crises of European Integration.
Moments of crisis count as focal points at which policymakers re-think frameworks for decision-making where previously marginalized ideas, institutions, and actors may gain ground. By the same token, crisis diagnoses hold an opportunity for academics and policy advisers while some would say an obligation to critically reflect upon the ability of their cognitive models to explain social phenomena. In a complex social world such reflexivity is a political exercise in the struggle over the “right” institutions and the “most relevant” expertise (from different angles: Blyth, 2013; Hall, 2014; Mügge, 2011; Schmidt and Thatcher, 2013; Sum and Jessop, 2013). The inescapable politics of knowledge production about and for a Europe in crisis demands, we believe, scholarly transparency about value positions alongside technical discussions of disciplinary expertise. We embark on such explicit navel-gazing in this edition by sharing how scholars from the Council for European Studies research network European integration and the Global Political Economy, consider the value and limits of their disciplinary perspectives in explaining the recent crises of European Integration. We nail our colors to the mast by arguing that a political economy approach is valuable – and ought to be cherished – for seeing more than just economics vs. politics at play in explaining crisis and navigating Europe’s future.
During the recent financial and sovereign debt crises, we heard a lot about “the fact” that the Euro was actually a political project and not an economic one. That lack of pure dedication to economic rationales, so the argument runs, is “the problem.” It is a familiar refrain. Europe is too much about economics or it is too much about politics. Integration is all money and no heart. Or maybe it is the other way around. The implication is that either one or the other would be a preferred alternative to the Europe we have and the integration project that Europeans are pursuing. As political economists, of course, we like to claim that this is not the case. Europe is about both economics and politics — and a lot of other things as well. So are Europeans (indeed, surveys of motivations for youngsters to become mobile on the Continent often depict love and friendship as drivers in addition to work opportunities). Alas, the real-world synthesis of economics and politics is inconvenient for analysis from a disciplinary perspective. The idea is that if we can just hold enough of Europe constant (politics or economics, respectively), we can figure out what is not working and find suitable cures.
The purpose of this collection is to challenge that perspective. The argument is that looking at Europe either in terms of economics or politics misses more than just the other side of the debate. A mono-disciplinary perspective misses the extra value that comes from the synthesis of economics and politics — both analytically and in the real world. Obviously, every analyst faces limits in terms of expertise or availability of data. Every argument must have boundaries to make it manageable. Nevertheless, this should not be an excuse for relying exclusively on established disciplines – even where their analytical mileage has been doubted. Our argument is that if we shift the boundaries even slightly into the overlap, we can gain a disproportionate amount of perspective.
Before we get lost in the metaphor, let’s dive into the contributions of this edition to show you what we mean. For our Campus piece, Briitta van Staalduinen  interviewed two leading professors of European Studies in the United States. Cathie Jo Martin and Vivien Schmidt from Boston University explain how they started out studying Europe, how some of the conventional approaches to studying International Relations and regional collaboration did not quite make sense in their observation of the European integration project, and how their teaching changed over the years to account for real world developments. Much of their debate is about how to teach the intrinsic interaction between economic and political decision-making in producing – and potentially resolving – crises. The syllabi accompanying the interview will provide hands-on material and inspiration for scholars in the field.
Such intellectual puzzling about what’s going on with Europe’s crises is a continuous theme in our research section. Gregory W. Fuller  argues that economists misunderstood the recent crisis because they failed to consider the importance of country-specific idiosyncrasy. The traditional view from economics is that different countries should not share a common currency. There may be some truth to that argument. But that truth may be irrelevant to the crisis as it unfolded. The reason is two-fold. First, the crisis unfolded in financial markets before it hit the real economy and the critique of diversity is primarily centered on the real economy. Second, real economic diversity is essential to the maintenance of those national models that are viewed as most successful. In other words, not every country could be like Germany or Germany couldn’t exist.
If Fuller’s analysis is correct, then the challenge is to manage diversity. That challenge has both technical and political dimensions. Waltraud Schelkle  explores the technical side further by focusing on the Target2 arrangement for real-time gross settlement of financial transfers within the euro area. She argues that this transfer arrangement should be viewed as a form of insurance that ensures liquidity is available from whatever part of the monetary union is in surplus for whatever part is in deficit. Target2 helps to dampen the crisis in that respect. Unfortunately, many economists saw that arrangement differently and so sought ways to block the flow of liquidity across the monetary union. Schelkle’s contribution highlights that, if a purely economic view had succeeded, economists would have brought about the very disaster they sought to avoid.
The political dimension is tackled by Alexandros Kyriakidis . He takes the fact of the crisis as given. When bad things happen, and they did, the pressing question often becomes how these problems can be addressed. The European solution has been to place stricken countries into conditional support programs and to dictate responses based on standard diagnoses based on orthodox economics ideas about how the Euro works (or should work). This solution downplays the reasons for national idiosyncrasies and ignores much of the deliberation that is required for national governments to assert ownership over the reform process. By depriving the program countries of political voice and authority in responding to the crisis, the European solution has not only fostered resentment but also lowered effectiveness.
Taken together, these three papers suggest a different take both on the crisis and on appropriate responses. The value-added of the political economy approach – which examines economics and politics not as analytically distinct spheres but exposes their interaction effects – is measured in whether this alternative response would really have led Europe to a more stable situation or, at least, to a politically more acceptable way of dealing with crisis effects. Alas, the financial crisis is largely passed and the opportunities to re-run that “experiment” are hopefully not going to arise soon. Therefore, the test of political economy accounts is going to have to take place elsewhere.
Our fourth paper by Peo Hansen  suggests how we might use the same kind of analysis to forge a response to the growing challenge of migration. He shows how the aspiration of a humanitarian refugee policy in Germany and Sweden, the two largest receiving countries of the EU, “as well as a real acting on the demographic “refugee dividend,” proved incompatible with fiscal austerity and so made for a rare and unintended Keynesian laboratory environment.” Even the EU Commission applauded Sweden for the expected economic growth effects of the massive investments in public services to accommodate new residents. Yet, Hansen argues, under conditions of an ideological attachment to austerity and – one might add – growing discontent with liberal refugee admissions, there is simply no political appetite in Europe to learn from the economic triumph of mutual refugee integration and socio-economic growth.
In an interview conducted by Sherman Teichman, Nikos Passas  argues that Greece actually spent less than other Eurozone countries, but that questionable and inaccurate accounting paved the way to the financial crisis in 2009. Imposed austerity measures resulted in drastic public health and education cuts as well as the reduction of minimum wages for workers under 25. In 2015, 15 percent of the population earned below the extreme poverty threshold. Therefore, the crisis should be analyzed “in terms of violations of human rights, and through the prism of the role of institutional corruption.”
Our obligation to thoughtfully reflect upon social phenomena is also addressed in “Managed Futures,”  an art show curated by Nicole Shea. Here, renowned British artist, Mat Collishaw, addresses a range of issues from the illusion that wealth provides happiness and saturation, to insights into the peculiar greed and shortsightedness of human nature as part of an “excessive binge culture.” Nelson Saiers, a former investment guru, who has been referred to as the “Warhol of Wall Street,” reveals with his work the deep relationships and interconnectedness between diverse sets of financial products and even economies. Both artists address extreme events and wrestle with the impact that financial illusions have on the human psyche, a vicious cycle which Blain|Southern art gallery rightfully named with THIS IS NOT AN EXIT.
Regine Paul is John F. Kennedy Memorial Fellow at the Minda de Gunzburg Center for European Studies at Harvard University and a post-doc political scientist in the Law & Society Unit at Bielefeld University.
Erik Jones is Professor of European Studies and International Political Economy at the Johns Hopkins University SAIS. He is also Senior Research Fellow at Nuffield College, Oxford.
Nicole Shea is the Director of the Council for European Studies at Columbia University and the Executive Editor of EuropeNow.
Photo: Men toasting beer, Eugene Ivanov | Shutterstock
Published on November 2, 2017.
Blyth, M., 2013. Paradigms and Paradox: The Politics of Economic Ideas in Two Moments of Crisis. Governance 26, 197–215.
Hall, P.A., 2014. Varieties of Capitalism and the Euro Crisis. West European Politics. 37, 1223–1243.
Mügge, D., 2011. From Pragmatism to Dogmatism: European Union Governance, Policy Paradigms and Financial Meltdown. New Political Economy. 16, 185–206.
Schmidt, V.A., Thatcher, M. (Eds.), 2013. Resilient Liberalism in Europe’s Political Economy. Cambridge University Press, Cambridge.
Sum, N.-L., Jessop, B., 2013. Towards a Cultural Political Economy. Putting Culture in its Place in Political Economy. Edward Elgar Publishing, Cheltenham.