Is the euro history?

By Edward Hadas
November 16, 2011

“The Owl of Minerva takes flight only as the dusk begins to fall.” Or, to speak more directly than G W F Hegel, we can only become wise about the direction of history late in the day. The aphorism is pertinent to the euro crisis. Is this the twilight hour for the single currency or are the clouds over the euro no more than an early morning mist in pan-European history? The euro’s fate will look inevitable in retrospect (that is Hegel’s point), but for now the balance of historical forces is far from clear.

The technicalities of the euro crisis are bewildering, even to financial professionals. There are rescue funds constructed with baroque techniques of financial engineering, arcane details of labor market reforms and political feuds that have festered for decades. But something much bigger is at stake – whether or not there should be, in the words of Angela Merkel, “more Europe.” If so, the crisis can be resolved relatively simply: lenders would accept the losses caused by their past mistakes and errant governments would promise to play by the fiscal rules henceforth.

But should there be more Europe? Most British politicians think not and most mainstream continental politicians are in favor, if only warily. The reasons on both sides are fundamentally Hegelian. It is a question of which historical forces should prevail.

The anti-euro case is based on one of the strongest forces of the last few centuries – nationalism. The sentiment is sometimes expressed in economic terms, as when the previous British government rejected membership of the monetary union. A multinational currency always goes directly against the nationalist flow, even where the economic case for it is strong. In order for the euro to succeed, Germans must abandon hopes of duplicating their super-strong national currency and Greeks and Italians must either abandon longstanding traditions of loose fiscal behavior or learn to tolerate interference from EU authorities.

On the pro-euro side, two grand historical forces have provided most of the support for both the European Union and its currency. Both are faltering.

The first is a peculiarly modern force, the fear of war (Hegel thought war was a major spur of historical progress). While Europeans still dread another conflagration, nearly seven decades of peace, including the non-violent fall of the Communist bloc, have been enough to render the threat of war largely theoretical, and irrelevant to the European monetary system.

The second force is the desire for ever greater prosperity. This force, which has come into prominence during the last two centuries, influenced the European leaders who wanted to bring Europe together after the Second World War. They thought the economy was the most promising domain for cooperation, and they were right. European politicians and voters alike have proved willing to sacrifice national traditions and rivalries for the sake of European prosperity. The EU now has free trade, standardized regulation and almost unconstrained mobility across borders. The single currency was supposed to be the culmination of economic integration.

The bitterness surrounding the euro crisis shows that the lure of prosperity is now, at best, barely enough to inspire European governments to change their ways. While most politicians still believe that the euro will eventually bring their nations more wealth and economic stability, they and their voters are seriously in doubt whether those goods are worth more than national self-determination.

Philosophers of history might speculate that the desire for prosperity is a waning force today because it no longer has the same power to inspire the comfortable citizens of the EU as it once inspired the impoverished men and women scraping a living amidst the rubble of post-war Europe. Whatever the reason, the euro will not survive the next crisis (even if it scrapes though this one) unless European leaders make a stronger effort to identify their project with historical forces more politically compelling than ever more material gain.

The stakes are high. If the member nations retreat on the euro, further disintegration is likely. That owl of wisdom will probably look down on the movement towards European unity as no more than a wrong turn on history’s path.

But the euro and indeed the entire European project could draw on stronger forces. You don’t have to be a Hegelian to see that Europe as a whole, rather than individual jurisdictions, has been shaped and guided by such great ideas as Christianity and the philosophies of Greece and the Enlightenment. More recently, the entire region has striven to realise the dreams of democracy, honest government, economic security and educational opportunity.

Supporters of the euro and of “more Europe” might look to the French revolutionary call for liberty, equality and fraternity. These are ideals which erase neither national borders nor local customs, and so they can co-exist peacefully, if somewhat delicately, with nationalism. But the euro does indeed have the power to enhance the liberty that comes with effective economic management: the equality of citizens protected by fiscally sound governments and the fraternity that binds the strong and weak.

PHOTO: German Chancellor and leader of Germany’s conservative Christian Democratic Union (CDU), Angela Merkel gives her closing speech of the party convention at the fairground in Leipzig, November 15, 2011. REUTERS/Tobias Schwarz

18 comments

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May just be! Germany is tired of working overtime for the lazy, France is a bankrupt muslim country now, Great Britain can’t pay for it’s ego trip/class sytem any longer and Southern Europe would rather drink than work under the table! Anyone still think socialism is the answer? Thanks for your honesty!

Posted by DrJJJJ | Report as abusive

How can different peoples with different languages, cultures, values, economies, governments, living habits and ethics expect to contribute to a common currency and not have any problems?

Just because you border each other doesn’t mean it can work. It will only work if there were no borders at all and a central government/economy controlled it all.

Yes, the Euro is history unless it’s a prelude to some future United States of Europe government.

Let conspiracy theories fly.

Posted by HAL.9000 | Report as abusive

Good article. An European government would be far away from the voter. And as politicians are opportunistic everywhere, they should be controlled at arms length. Otherwise it is exit the Merkels and introducing the Cains, Bachmann and Perry’s of the world. A horrible prospect. ?Like the US doesn’t have a debt problem. LOL. So lets hurry up cutting deficits and we’re fine again in the EU.

Posted by FBreughel1 | Report as abusive

Hegel was right about war. But it’s a bloody business so just cut taxes and let the bureaucracy bleed away instead.

Posted by ppink | Report as abusive

Maggie Thatcher had it right many years ago. If all countries have the same currency, how do you control bad choices made by some Governments. The World has been overspending since the 2nd WW and just now the credit cards are getting full and everyone is asking the same question “why would I lend my hard earned money to Governments that have little or NO intregratey and their main concern is getting re elected. No matter what the cost in the long run. VERY SAD THAT THE GREED GETS THEM

Posted by EUneedsrepair | Report as abusive

I was studying at the Jagellonian University in Krakow in 1994 and the Maastricht Treaty had been adopted creating the Euro just a year or so prior. We had many discussions led by the professor as to the likelihood of it’s success and opinions were about split between the students pro and con. What has always remained in my mind from the discussions was that in sum the only thing that the proposed union had in common was American pop culture. The cultural differences were discussed and we had developed papers that discussed the historical tax evasion in Italy and Greece, the differences in the length of the actual work weeks, national debts etc. The overwhelming conclusion that we came to was a question that asked “what information were the advocates of the Euro looking at when they thought that it would be successful.” Going forward I wish them luck and that they will “Go ahead” and “Make my day”

Posted by markafrancis1 | Report as abusive

Your closing statement:
“Supporters of the euro and of “more Europe” might look to the French revolutionary call for liberty, equality and fraternity.” – etc.

…assumes all EU citizens are equally productive, equally altruistic and none exhibit selfishness.

What we are seeing is a realization that this experiment cannot succeed without political integration of EU states. This will of course result in the disintegration of a major strength that independent European nations have as compared to USA – that is a homogeneous population that agrees on many principles of gov’t and lifestyle. For instance, acceptance of a certain (higher) level of taxation to subsidize social welfare of themselves and their neighbors.

Perhaps the USA example may provide insight as to what to expect from melding disparate populations. Can an EU Super-Nanny-State really survive and which peoples are willing to adapt first or most?

Posted by swips88 | Report as abusive

Your closing statement:
“Supporters of the euro and of “more Europe” might look to the French revolutionary call for liberty, equality and fraternity.” – etc.

…assumes all EU citizens are equally productive, equally altruistic and none exhibit selfishness.

What we are seeing is a realization that this experiment cannot succeed without political integration of EU states. This will of course result in the disintegration of a major strength that independent European nations have as compared to USA – that is a homogeneous population that agrees on many principles of gov’t and lifestyle. For instance, acceptance of a certain (higher) level of taxation to subsidize social welfare of themselves and their neighbors.

Perhaps the USA example may provide insight as to what to expect from melding disparate populations. Can an EU Super-Nanny-State really survive and which peoples are willing to adapt first or most?

Posted by swips88 | Report as abusive

our closing statement:
“Supporters of the euro and of “more Europe” might look to the French revolutionary call for liberty, equality and fraternity.” – etc.

…assumes all EU citizens are equally productive, equally altruistic and none exhibit selfishness.

What we are seeing is a realization that this experiment cannot succeed without political integration of EU states. This will of course result in the disintegration of a major strength that independent European nations have as compared to USA – that is a homogeneous population that agrees on many principles of gov’t and lifestyle. For instance, acceptance of a certain (higher) level of taxation to subsidize social welfare of themselves and their neighbors.

Perhaps the USA example may provide insight as to what to expect from melding disparate populations. Can an EU Super-Nanny-State really survive and which peoples are willing to adapt first or most?

Posted by swips88 | Report as abusive

[...] Is the euro history? — Reuters [...]

The Euro Currency is on it’s way down to earth. The approach of one currency fits all was and is not sustainable in terms of Sovereign Domain . Another words if Italy and its GDP were the same as France no major problems would publicly exist. But to say that Italy’s future is as bright as France is a stretch, hence not one currency fits all.

Posted by Intriped | Report as abusive

[...] comună a Europei. Zona Euro: regrupare, state izolate, sau declin. Este Euro de domeniul trecutului [...]

It’s tempting to speak of ideas like Europe in absolute terms. But the intensely personal human experience is necessarily subject to context. Europe can only be a place in a very limited sense. In Dutch, the United States (Verenigde Staten) takes a plural verb, whereas the United Kingdom (Verenigd Koninkrijk) does not. Nevertheless, both ideas sound unified. But we are too small to identify with such large entities, if indeed that’s what they are. We can claim to identify ourselves with and feel pride and loyalty for an entire country or indeed a confederation like Europe, but only under highly specific circumstances. For example, at a sporting event. Otherwise, a citizen of the United States may only ever identify thus when abroad. Within a country we tend to identify with one State and within that State we orient ourselves on our home town, down to the neighbourhood, a club or church, our street and finally the extended family and household. But even within a club or family there is ample opportunity for fierce rivalries. So what is place? Context is everything. This chair is a place, but only as long as I sit in it. Without my incumbency it becomes just another piece of furniture. To me. But not to another person sitting in it. I cannot live in all of Europe – but only a tiny piece of it. So what does the European Union mean to all those so-called united ‘Europeans’? And precisely how is that different for the rest of us?

Posted by Harderwijk | Report as abusive

Intriped, it’s interesting that you see Italy and France so different, as looking from Finland they are rather similar. Sure, Italy’s debt is bigger, and it has poor south.

I think emerging of euro was received like a new magical toy, a present to get into German standards of living, to poorer countries. Low interest rates, so why not taking more debt? We see today how huge mistake that was.

One more obstacle to euro: Wall Street and London City – Anglo’s in general – “the markets” are playing against euro all the time. They want it to brake, as they see it as a threat to their dominance of financial markets.

I’d like Finland to get out of euro, if it could be done in orderly fashion – (economy is so sound that there would not be bank runs, no devaluation of new currency etc.) but I realize it looks impossible. We should not have to pay for that lunacy of mediterranean borrowing from German, French, UK, Austrian, etc. banks, but the logic seems to be that we have to pay what ever Germany agrees to pay. It’s not a good feeling for Finnish tax payers paying for mistakes of others.

Braking up eurozone looks like something even more drastic has to happen to brake EZ down, what has happened this far. Political will is so strong.

Posted by MarkHutt | Report as abusive

Intriped, it’s interesting that you see Italy and France so different, as looking from Finland they are rather similar. Sure, Italy’s debt is bigger, and it has poor south.

I think emerging of euro was received like a new magical toy, a present to get into German standards of living, to poorer countries. Low interest rates, so why not taking more debt? We see today how huge mistake that was.

One more obstacle to euro: Wall Street and London City – Anglo’s in general – “the markets” are playing against euro all the time. They want it to brake, as they see it as a threat to their dominance of financial markets.

I’d like Finland to get out of euro, if it could be done in orderly fashion – (economy is so sound that there would not be bank runs, no devaluation of new currency etc.) but I realize it looks impossible. We should not have to pay for that lunacy of mediterranean borrowing from German, French, UK, Austrian, etc. banks, but the logic seems to be that we have to pay what ever Germany agrees to pay. It’s not a good feeling for Finnish tax payers paying for mistakes of others.

Braking up eurozone looks like something even more drastic has to happen to brake EZ down, what has happened this far. Political will is so strong.

Posted by MarkHutt | Report as abusive

Nice job Europe. You were warned as far back as ’93 that imposing one currency on so many disparate political entities without a central bank was a prescription for disaster. Like so many warnings before great European blunders, you ignored it. Now you are dragging the world economy down with you for no other reason than sheer fecklessness. Yet you think to look down your noses at the rest of the world.

What exactly have any European governments contributed to the well being of the world? You have slashed your defense budgets, content to force the US to protect you while you shower your citizens with benefits and funnel money to corruption. You stood by and watched (literally) as the worst genocide since WW2 broke out in Europe and didn’t act until the US intervened. You ran out of missiles a few weeks into a limited air campaign against a rag-tag Libyan mercenary army. And you expect to be taken seriously?

Posted by BajaArizona | Report as abusive

Is there an owner of Euro?

Posted by True_Value | Report as abusive

In the article the statement: “The anti-euro case is based on one of the strongest forces of the last few centuries – nationalism. The sentiment is sometimes expressed in economic terms,” is made. I would claim that this statements has got things backwards. Economics is the prime mover and Nationalism is but a result.

Nations joined the euro for one reason and one only: they figured one way or another there would be economic gain. Now that that gain is threatened the euro no longer looks good. Ergo, the euro may collapse.

Nationalism is just a trumped up excuse to make it seem reasonable to leave the euro. However sophisticated or simplistic it is economics that drive our lives. It is roof over the head, food on the table and a car in the garage that count.

Personally, I think the euro should stay and be made to work. Some of the euro’s rules need to be reworked to combat threats of financial irresponsibility.

Posted by seaking | Report as abusive

Highly sharp, If so, the crisis can be resolved relatively simply: lenders would accept the losses caused by their past mistakes and errant governments would promise to play by the fiscal rules henceforth.

Posted by Darmesh | Report as abusive

Any economic union is only as strong as its weakest link (read . . . all the economically failing nations). Many of the above comments cite the US as a successful example of “E Plurubus Unum”, even as the US’s current politics show themselves as more extreme and bitter than anything in recent memory. The liberal northeast US has little in common with the conservatives in Texas. Like the industrious Germans have little in common with the socialist Greeks. The US does have an edge on Europe in one fashion however . . . that of time. They have had two centuries of learning how to get along with each other. It wasn’t that long ago that Europe was ablaze over cultural and national differences. I’m not sure how this will play out, but I think the deck is stacked against Europe, and the US is running a recent series of bad hands.

Good luck to us all.

Posted by Reyalf | Report as abusive