One initial European response to the 2008 shock was to blame Anglo-American free market ideology for infecting a traditionally social-democratic continent. This was always a weak alibi at a purely material level: as Adam Tooze has recounted, Europe’s overgrown banking sector played a key role in causing the global finance crisis. The impression of European innocence is equally untenable in the realm of ideology; scholars like Quinn Slobodian have recovered the Central European origins of many key neoliberal thinkers over the last decade. Some historians of neoliberalism have thought in terms of a “road from Mont Pèlerin,” the Swiss town where the most influential network of laissez-faire economists and lawyers originated in 1947. Analytically, this argument presupposes a pattern of influence that runs outward from a single center: market-friendly ideas may have been adapted to local contexts, but they essentially derived from a single concentrated template.
But there is a difference between the concentrated point of origin of neoliberal ideas and the diffuse successes of neoliberalism as an electoral program and policy agenda. After World War II, West Germany was an outlier in that it never adhered to the kind of strongly interventionist economic policy that characterized postwar growth elsewhere. For this reason, the country plays a major role in most narratives of how the EU became neoliberal, with the reunification of Germany as a key turning point. Left-wing critics of the EU often reason backwards: if the Eurozone and EU budget treaties have disproportionately benefited Germany, then those institutions must have been German ideas to begin with. Following that logic, the entire common currency and the structure of budget discipline get cast as instruments of German power over the continent. The implication is that reclaiming national sovereignty by leaving the euro or the Union will allow member states such as France, Italy, and Spain to return to their natural inclination for big-spending statist welfare regimes.
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The political trajectories of the five non-German EEC countries in the 1980s and early 1990s show a different picture. Elites in these countries pursued their own agendas, for their own reasons. François Mitterrand, elected as President of France in 1981 on hopes of a socialist transformation, pursued left-wing economics for less than two years before capitulating in his infamous “turn to rigor” in March 1983, after which he transformed into the most avid privatizer in French history. Mitterrand’s liberalization agenda was run by a group of influential Socialist Party members, who eventually led a global campaign to abolish capital controls: Jacques Delors, first Mitterrand’s finance minister and later president of the European Commission; Michel Camdessus, Bank of France governor and IMF chairman from 1987 to 2000; and Henri Chavranski, who ran capital movements at the OECD. Far from victims of German hegemony, these policymakers were self-consciously trying to transform their political economies to adjust to the new world created by the end of fixed exchange rates and the onset of worldwide financialization. They wanted leaner and meaner states that would be able to preserve social provisions in a much tougher international environment.
A similar national makeover with an eye to global competition occurred in the Netherlands, where the Christian democrat Ruud Lubbers (1982-1994) forced his country’s labor unions into a new wage-suppressing compact. This allowed the Dutch to shadow the export-driven growth trajectory and hard money policies of Germany, but it was in no way done at the behest of the Germans. In the south, Italy temporarily overtook Britain in GDP in 1987 to become the world’s fourth-largest economy—the sorpasso or “overtaking”—but the unequal gains of this growth were further compounded by an enormous expansion in public debt. Following the implosion of the entire postwar Italian political system in 1992, Silvio Berlusconi and his successors began to pursue privatization and deregulation in earnest. A similar slash-and-burn procedure in Belgium under prime minister Wilfried Martens (1981-1992), who lowered taxes and nearly doubled the government debt, set the stage for his successors to cut back entitlements.
Yet it may be the Duchy of Luxembourg, the smallest of the founding six, that best illustrates the conversion of Europe’s national elites to neoliberalism. A hilly territory with a population under 400,000 people, Luxembourg’s steel-making economy supported a Christian Democratic welfare state for much of the postwar period. The duchy’s interstitial position and its middle-of-the-road politics also made it a reliable source of European Commission presidents: prime minister Pierre Werner proposed a common currency as a strategy to gain independence from American hegemony as early as 1970. But as free market ideas swept European capitals in the 1980s, the meaning of further economic and financial integration changed. Under prime minister Jacques Santer (1984–1995), the duchy reinvented itself as a global corporate tax haven and a sanctuary for money market funds from around the world. Santer’s agenda was executed by his right-hand man, the affable and self-effacing lawyer Jean-Claude Juncker.