The European Project: the past of the EU

[innonimatu]

I found three recent, and quite lengthy, studies about the economic and political history of western Europe after 1945 that are very much worth spending a few hours reading. Those interested can go here for a summary.

The first of this set of working papers on the political economy of Europe outlines the differences between the prewar and the immediate postwar features of the European economies. The paper then analyzes the marginalization of Britain through the balance of payments constraint and the refocusing by the United States on Germany, especially through the actions of John McCloy, whose companies were deemed best capable of creating synergies with the European affiliates of US multinationals in a de facto oligopolistic alliance. The essay argues that the US strategy towards West Germany required a particular policy towards France’s imperial interests, epitomized by the American financing of France’s expenses in the Indochinese war. Because of its determination to retain its status as a great power, France became the major factor of instability in Western Europe throughout the nineteen fifties and early sixties.

With the return to currency convertibility in 1959 the balance of payments of each individual country became paramount. As argued in the second paper, the prevailing policy framework in Europe excluded addressing the question in terms of the just disbanded European Payments Union. This was a creation of the Marshall Plan which helped a great deal to ease balance of payments constraints, especially in relation to the European countries’ deficit with the Federal Republic of Germany. Thus Western Europe as a whole instead of moving forward towards a Keynesian type management of the external balances, moved backward, with the respective countries taking non-cooperative stances on the issue.
The stop-go policies that Western European countries implemented 1960s were in fact a form of beggar thy neighbor policies under conditions of a fixed exchange rate regime.

The third and last essay covers the period stretching some 40 years from the formation of the EMS to just after the 2008 financial crisis. The EMS, which the Bundesbank did not quite fancy, proved to be an excellent arrangement for the protection of the external position of Germany, which had ceased to be the locomotive of Europe already during the 1970s. By inducing real revaluations of currencies such as the Italian lira and by strengthening the vent for the D-Mark provided by French economic and institutional elites, the EMS set the stage for the the formal creation of an austerian Europe. In truth deflationary policy ideas were always present at the very top levels of the leadership of many European countries. Perhaps the most significant case, thoroughly dissected by Alain Parguez in his 2016 article, is that of France.

Especially interesting is the history of choices made by the french governments along all this time. Mitterrand in particular as the evil twin of Thatcher in setting the stage for the EU we have today. Evil as in even more evil than Thatcher. It's no secret that he betrayed everything he claimed to campaign for and utterly failed to deliver on any of his promises. But the institutional wrecking that was his legacy, the creation of international debt markets that now allegedly constrain public policy in Europe, that was done by his government and pushed on the rest of Europe by France. The EU was and remains very much France's imperial project...

It's impossible to understand the situation we have today in Europe, and the real choices for the future of Europe, without knowing the history of its recent past, after WW2. How we got here.

I believe that some people here, if they read this, will be somewhat shocked or confused. And think of other possible futures that previously were not even thinkable?