The Euro and the Battle of Ideas

Authors: Markus Brunnermeier, Princeton Edwards S. Sanford Professor of Economics; Harold James, Princeton Claude and Lore Kelly Professor in European Studies; and Jean-Pierre Landau, associate professor of economics at SciencesPo, Paris

Publisher: Princeton University Press, 2016

Why is Europe’s great monetary endeavor, the euro, in trouble? A string of economic difficulties in Greece, Ireland, Spain, Italy and other eurozone nations has left observers wondering whether the currency union can survive. In this book, Markus Brunnermeier, Harold James and Jean-Pierre Landau argue that the core problem with the euro lies in the philosophical differences between the founding countries of the eurozone, particularly Germany and France. But the authors also show how these seemingly incompatible differences can be reconciled to ensure Europe’s survival.

As the authors demonstrate, Germany, a federal state with strong regional governments, saw the Maastricht Treaty, the framework for the euro, as a set of rules. France, on the other hand, with a more centralized system of government, saw the framework as flexible, to be overseen by governments. The authors discuss how the troubles faced by the euro have led its member states to focus on national, as opposed to collective, responses, a reaction explained by the resurgence of the battle of economic ideas: rules vs. discretion, liability vs. solidarity, solvency vs. liquidity, austerity vs. stimulus.

Weaving together economic analysis and historical reflection, The Euro and the Battle of Ideas provides a forensic investigation and a road map for Europe’s future.