Economic integration is widely considered to be the driving force of the European project and is by today much further developed than the political integration of the EU member states. Starting with the European Coal and Steel Community (ECSC) economic integration developed by deepening and widening its scope; including up to date 27 member states which share a common internal market, among them 17 nations which also share the euro as a common currency. This so-called euro zone entered a phase of crisis from 2010 onwards and the joint policy response was a “muddling-through tactic” comprising of step-by-step financial assistance and cautious further economic integration.
This paper is situated in the outlined context and is concerned with the interaction of ideas and the economic integration process up to today’s euro crisis management. Thus the analysis will set out to answer a two-fold research question: “To what extent did ideas construct the European Economic and Monetary Union (EMU) and how does this determine the current crisis policy patterns?”
The theoretical framework is based on the theory of the ideational life-cycle which aims at explaining the role and transformative power of ideas among macro-economic policy elites in constructing social realities. It seems promising because European integration has been an elite-led project and policy implementation was merely top-down, especially in the field of economic integration.
The paper subsequently reconstructs and analyzes the changing nature of ideas in determining national and European level economic thinking from the ECSC to the revised Stability and Growth Pact within the EMU. Building on these insights the patterns of current policies dealing with the euro crisis are examined.
The paper argues that the German ordo-liberal economic understanding has been implemented also on the European level during the 1970s/80s period of economic downturn and uncertainty within the political elite. It then became firmly institutionalized with a more monetarist stance and continues to influence the policy decisions of today’s European elite. This explains the fixation on ‘sound’ money and finances as expressed in the crisis therapies that can currently been witnessed in Europe. Emphasizing this theoretical perspective helps to uncover path-dependencies which will determine future policies and the scope for changes.
Table of Contents
1. Introduction
2. The changing nature of ideas during the ideational life-cycle
3. Constructing the EMU: The impact of ideas from ECSC to common currency
4. The euro crisis management and the prevailing role of internalized ideas
5. Conclusion and Implications
6. References
Research Objectives and Themes
This paper examines the influence of ideas on the European economic integration process, investigating how ideational frameworks construct social realities and policy patterns. It focuses on the historical development from the European Coal and Steel Community (ECSC) to the current management of the euro crisis, specifically analyzing how ordo-liberal and monetarist ideas have become institutionalized within the European elite.
- The ideational life-cycle theory as a framework for policy analysis.
- The influence of German economic understanding on European integration.
- The institutionalization of 'sound' money and fiscal discipline within the EMU.
- The responses of political elites to the euro zone crisis from 2010 onwards.
- Path-dependency and the persistence of mainstream economic policies.
Excerpt from the Book
3. Constructing the EMU: The impact of ideas from ECSC to common currency
European economic integration started by establishing a mutual interdependency between the heavy industries of West-Germany, France, Italy and the BeNeLux countries within the European Coal and Steel Community (ECSC) of 1951 with first supranational powers, but clear German set limits to interventions into their economy (Tilly et al., 2007). In order to fully understand the ESCS countries’ subsequent position regarding economic integration it is inevitable to look closer at the ideas which under lied the construction of their economies.
In the post-war years, West-Germany adopted a distinct economic policy model, known as “social market economy”, which builds on the thoughts of ordo-liberalism, an economic school of thought which, contrary to laissez-faire liberalism, stresses the importance of a strong state for the functioning of market forces and free trade. The state is required to enforce a set of competition rules, to guarantee low external tariffs and sound currency, but otherwise not interfere with the economy. To pacify the society it should also provide a comprehensive set of welfare services with income redistributive character. Subsequently the West-German government, dominated by the Christian Democratic Party during the 1950s and 60s, passed several competition laws, set up an antitrust agency, gave the Bundesbank an independent status with the objective to price stability and developed the welfare state (Allen, 2005).
Summary of Chapters
1. Introduction: This chapter outlines the research goal of analyzing how ideas construct the European Economic and Monetary Union and influence contemporary crisis policy patterns.
2. The changing nature of ideas during the ideational life-cycle: This chapter introduces the theoretical framework of the ideational life-cycle, explaining how specific knowledge structures among policy elites become institutionalized.
3. Constructing the EMU: The impact of ideas from ECSC to common currency: This chapter analyzes the historical transition from the ECSC to the EMU, focusing on the spread of ordo-liberal and monetarist ideas.
4. The euro crisis management and the prevailing role of internalized ideas: This chapter discusses how the established ideational framework dictated the political responses to the debt crisis starting in 2010.
5. Conclusion and Implications: This chapter summarizes findings, suggesting that elite-led integration remains path-dependent on monetarist beliefs despite the pressures of recent economic crises.
6. References: This section provides the academic bibliography and source material used throughout the paper.
Keywords
European integration, Economic and Monetary Union, EMU, ideational life-cycle, ordo-liberalism, monetarism, euro crisis, policy elites, path-dependency, fiscal compact, austerity, sound money, European Coal and Steel Community, economic governance, social constructivism
Frequently Asked Questions
What is the primary focus of this paper?
The paper investigates the role of ideas in shaping the European economic integration process, specifically looking at how certain economic beliefs have been institutionalized by policy elites over time.
What are the central thematic areas covered?
The core themes include the theory of the ideational life-cycle, the historical development of European economic institutions, the influence of German ordo-liberalism, and the political management of the post-2010 euro zone crisis.
What is the main research question?
The research asks to what extent ideas constructed the European Economic and Monetary Union (EMU) and how these ideas determine the patterns of current crisis management policies.
Which scientific methodology is employed?
The paper uses the social constructivist theory of the 'ideational life-cycle' as presented by Marcussen to reconstruct and analyze the evolution of economic thinking from the ECSC era to the present day.
What does the main body of the work address?
The main body examines the historical transition of economic ideas, the coercive and mimetic mechanisms of ideational transfer, the establishment of the EMU, and the specific responses to the euro crisis, such as austerity measures and the Fiscal Compact.
How would you characterize this work using keywords?
The work is best characterized by terms such as European integration, EMU, ideational life-cycle, ordo-liberalism, and path-dependency, reflecting its focus on the intellectual foundations of EU policy.
How did German economic ideas influence the European level?
According to the author, German ordo-liberal and monetarist ideas became the hegemonic model during the economic downturns of the 1970s and 80s, eventually becoming institutionalized in the Maastricht Treaty and the EMU.
Why does the author argue that austerity policies were the inevitable result of current crisis management?
The author argues that because the European political elite has been socialized within a stable ideational equilibrium that prioritizes 'sound money' and low deficits, they lack alternative policy paradigms, making austerity the default response to the crisis.
- Arbeit zitieren
- Marius Eckert (Autor:in), 2013, Macro-economic policy-making from European Coal and Steel Community to euro crisis, München, GRIN Verlag, https://www.hausarbeiten.de/document/209811
