Sunday, November 23, 2014

Why Europe?

PRINCETON – What is the point of Europe? The threat of an explosive disintegration of the eurozone – and with it of the European Union – is receding. But the confused outcome of Italy’s recent parliamentary election, with an upper house dominated by a party that campaigned on an anti-EU platform and a pro-European majority in the Chamber of Deputies, has revived the fundamental debate about the purpose of European integration.

Europeans find it hard to find a positive way of describing the exercise in which they have been engaged for the past six decades. One common interpretation is that integration makes people better off. Unity is supposed to be a foundation of prosperity. The Common Market was defended at the outset in terms of the gains that would follow from increased trade. The case for capital-market integration, and then for a single currency, was similar.

All of this recalls some powerful arguments that were made in the nineteenth century about national integration and unification. In particular, the two countries whose problems drove much of the need for twentieth-century European integration – Germany and Italy – were culturally and politically highly diverse. In both countries, early-nineteenth-century romantic nationalism gave way to a sober obsession with economic forces after the failed revolutions of 1848.

The influential German journalist Ludwig von Rochau, who coined the term Realpolitik, described the new German mood on the eve of Otto von Bismarck’s last war of unification. German unity was not a question of the heart’s desire; it was “a mundane business transaction, in which no one should lose, but everyone should grab as much as they could for themselves.”

Italians shared the same belief after the disillusion of 1848. Patriotism could generate business opportunities. The great Florentine liberal statesman, Bettino Ricasoli, concluded that Tuscany was simply financially unviable on its own.

This sort of economic nationalism in Germany and Italy briefly produced coalitions of interests that supported the drive to national unification under Bismarck and Cavour. But the credibility of the national project seemed to crumble when growth faltered, leading to the emergence of movements that championed the aggressive, confrontational, and violent assertion of cultural identity.

Mario Monti is the twenty-first-century descendant of those nineteenth-century patriots who argued for the economic necessity of national unity. Now it is European unity that is needed for economic reasons. This vision of Europe is not idealistic; it is simply concerned with how Europeanization can benefit Italians. And, like its nineteenth-century precursor, it is vulnerable to severe backlashes, especially when it appears to bring only pain and suffering.

Indeed, when today’s Europeans peer into the future, they see only prolonged recession and austerity. Europe means nothing but sacrifice: northern Europeans paying for southern Europe’s woes through large transfers, or southern Europeans repaying onerous – and maybe impossible – levels of debt.

A variant of the economic argument for European unity is the claim that enhanced integration makes it easier to finance debt, because interest rates are lower. A reduction in borrowing costs constituted a powerful motive in the 1990’s for southern European governments to join the monetary union. But the costs of moving into a non-defaulting environment are high.

Here, another historical parallel is helpful. France in the ancien régime repeatedly imposed semi-default on its creditors by reducing interest rates and extending maturities. In the 1780’s, a new consensus against such measures emerged. But the impossibility of raising revenue then triggered the French Revolution, with the revolutionaries demanding confiscatory taxes and impositions on the wealthy elite.

The alternative to thinking about European integration simply as a way of generating wealth and prosperity frequently analogizes it to a marriage. In the late 1980’s, for example, then-European Commission President Jacques Delors, raising the prospect of a two-speed Europe, suggested that one or two countries might need a “different kind of marriage contract.”

The marriage analogy was used initially to signal that the European relationship was an exclusive one. Europeans had a unique relationship with which no one – especially the United States – should interfere. As Dominique Strauss-Kahn, then France’s finance minister, put it in 1997, “People who are married do not want others in the bedroom.”

But marriage can be a fraught institution (as Strauss-Kahn may know better than most). The British economic journalist Martin Wolf thinks of Europe as a marriage kept together only by the high cost of divorce. Others see it as a sham marriage.

Traditional marriage vows entail a commitment that binds the partners through changing circumstances: for richer and for poorer, in sickness and in health. Even if the marriage does not make the partners better off, they still need to stick with it. So neighbors who have a quarrelsome or violent past are not always well advised to reconcile by marrying.

The problem was that the Europeans did not understand what marriage really meant and why they should want to get married. Enthralled by promises of material well-being and security, they had exaggerated expectations of romantic wedded bliss.

The unhappy marriage analogy for Europe’s current malaise, while depressing, is helpful. At least it tells Europeans that they are not stuck together only for material reasons. But, until that lesson is really learned, Europe must brace itself for more setbacks and backlashes, which means that it must still answer the fundamental question: Why stick it out together, especially at a time when more and more Europeans are choosing not to get married at all?

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    1. CommentedJoulie benoit

      Pourquoi l'Europe ?
      Parce que les raisons historiques sont fortes : nous ne
      Voulons plus de guerres mondiales, elles se sont multipliées
      au 19è et 20è siècle.

      Puis pour des raisons d'efficacité économique :
      L'Europe c'est l'euro, donc un moyen puissant
      d'amener de la concurrence dans une région
      qui en manquait cruellement.
      Et fondamentalement les problèmes économiques
      et la croissance ne peuvent pas s'améliorer avec
      des manipulations monétaires et des dévaluations,
      comme avant mais avec la confrontation des seuls produits et services entre eux. Les américains ont du mal à comprendre cela : ils vivent dans un pays avec une langue unique, une monnaie unique, un État fédéral, ils ne voient pas la cacophonie Européen qui freine la croissance'

      Bien cordialement,

    2. CommentedMarco Cattaneo

      Reintroduce monetary autonomy on a country basis, otherwise the whole european monetary system will collapse soon.

    3. CommentedMichele Turati

      To answer the question "Why Europe?" doesn't really matter now: it's done and the marriage (btw, great analogy) is sealed indeed by the high costs of divorce.
      Still there is the possibility to make it work, to raise some passion driven from ideals and not only from economic interests. Or am I the only optimist here?

    4. CommentedEdward Ponderer

      Professor James's reference to the marriage analogy seems particularly telling.

      An ideal marriage, one that will survive the test of time, is one where the purpose of what can be given to the spouse, not what one can take from them. Such love could rarely happen at the beginning of a marriage -- but over time with maturity. Big divorce settlements have their advantage here -- keeping hard shell nuts together in a burlap bag.

      But it will be integral education and the formation of more global value system that will be required to reach a mature marriage.

      Can Europe, or other areas of the world ever become good internal marriages towards and eventual global marriage of marriages? Will the French and Germans ever see themselves as primarily parts of a greater whole European system, and on upwards to the global level?

      Yes, I think they will, because in our evermore global world, the options for singles are rapidly growing bleak.

    5. CommentedZsolt Hermann

      When a human being needs to make fundamental changes the key is always motivation.
      And besides motivation a change is only successful and sustainable when it came by free choice, by the person voluntarily agreeing to those changes seeing he would be better off by the change.
      The problem today in the case of Europe, or any other parts of the world, is that when people start to talk about integration, unity, they do not explain why it is necessary, how people would be better off, they simply fail to motivate, in most of the cases treating the public as children, or do not treat them at all.
      Unfortunately this is the attitude of the politicians and "experts" towards the public these days.
      And of course this gives the opportunity to populist, nationalistic political forces to exploit this vacuum and incite people against any kind of integration, unity.
      The truth is we simply have no other choice. The world, the whole global humanity has evolved into a very tightly interconnected network, where each individual and nation depends on the other, and any action causes a global reaction as if we were all tied into the same spider web.
      Today we have vast amount of evidence of this interconnected network, and additionally every passing day of the crisis, contagion serves newer and newer examples. Every election result, unexpected incident at any part of the world causes havoc and sudden changes everywhere else.
      If politicians and present day leaders truly understand this and truly hope to achieve deeper integration, and mutual cooperation in Europe and later in other part of the world, first they need to educate the public in an open, honest and transparent way, using the available information, so the public could understand that it is actually in everybody's best interest to complement each other mutually instead of the futile and destructive competition, domination that is destroying, wasting resources and driving everybody deeper into crisis.
      In fact even today we live in the global world and our lives depend on factors that are outside of our localities, most of us work for "bosses" that live at the other end of the world and get our daily necessities through multi-national networks, but at the moment we still use this network in a negative, self centered way, trying to grab as much as we can for ourselves.
      Each and every one of us have to learn how to adapt to his new closed, mutual, global system that is not going to change. Only we can change, using it optimally and by that truly progressing onto a new level of life quality, becoming a healthy organism.

    6. CommentedHeidi Maurer

      very interesting reflections and historical comparisons;

      Especially, this one section has more to it than just putting it as a statement: "when today’s Europeans peer into the future, they see only prolonged recession and austerity."

      Why do they? Because neither national politicians nor hardly any commentators provide valuable alternative discourse; There is no deliberation about alternatives (really? would we all be better off if Greece would have left? of course not!) and no discussion about possible ways ahead - just blaming and short-term thinking until the next elections;

      And unfortunately there are no signs that this will change considerably in the near future. Perhaps we should hold our politicians more to account: not for making wrong decisions, but for not providing alternatives at all.