Three Essays on the Limits and Possibilities of Economic Sovereignty in the Eurozone
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There is no disputing Germany’s dominant economic role within the eurozone (EZ) and the broader European Union. Economic leadership, however, entails responsibilities, especially in a world system of monetary production economies that compete according to political and economic interests. The first paper looks at the historical context of the US’s undisputed leadership among monetary production economies following the end of World War II to help frame the broader discussion on the financial requirements of the leading economy in the new system of states after the war. It goes on to discuss how certain constraints regarding the external balance do not apply to the leader of the monetary production economies, the United States. In addition, the paper presents Hyman P. Minsky’s proposal for a shared burden between the hegemon and other core industrial economies in maintaining the stability of the international financial system as a multilateral financial framework to alleviate the burden of hegemonic responsibility in stabilizing the international economy. The second paper makes use of European economic traditions reliant on statecraft to revisit the region's integration under the leitmotiv of economic sovereignty as a continental project. Specifically, it looks at the work of List, Keynes, and the Chartalists. The work of F. List sets European economic unification in its historic place as a strategy founded in large part on exploiting economies of scale (demand and supply-side) by political and economic aggregation of smaller non-self-sustaining economies into one market. Keynes’s international economics serves as the most useful orienting blueprint to begin to address the particularity of economic unification among sovereigns absent political unity. Chartalist insights into the political nature of central banks can assist in framing the European Central Bank's often clumsy attempts to hold together the Union. The third paper explores how the Great Financial Crisis overturned the equilibrium between debtor and creditor members in the EU. Violators of Maastricht Treaty quantitative limits (for instance, Germany was in breach of the limit on government deficits from 2001-2005) were not paraded as irresponsible freeloaders. The ‘macroeconomic imbalances’ within Europe and the world were not overly concerning, as financial sector participants chased yields in the periphery and the non-traded sectors absorbed capital. Nonetheless, ever since the sovereign debt crisis in Europe tested the political and financial infrastructure of the currency union, the coexistence between the different growth regimes has faltered as creditor nations have become increasingly hostile towards those carrying a trade deficit. The paper looks at how trade tendencies within the EZ and the broader EU have in fact consolidated Germany’s grip on the economic destiny of the continent. It goes on to critically assess the potential for sovereign solvency within a currency union built over a highly competitive industrial infrastructure.
Table of Contents
German economic dominance within the Eurozone and Minsky's proposal for a shared burden -- The odd fiscal "implicit bargain" in the Eurozone, a continental view of sovereignty: List, Chartalism, and Keynes' international economics -- NTRA-EU trade trends and demand-side economies of scale: the new coexistence between growth regimes in Europe
Ph.D. (Doctor of Philosophy)