European Monetary Union: A Neo-liberal Trojan Horse?

Abstract

It will be argued that the neo-liberal policies of disinflation, which have governed the evolution of European monetary union, have contributed to the onset of 'Eurosclerosis' over the past two decades. These monetarist-inspired policies have set in motion the cumulative and self-reinforcing logic of competitive disinflation and have left a legacy of high unemployment and economic stagnation. The basic contention is that Germany constitutes the core, hegemonic state and that its trade and investment relations with its EMU partners are essentially asymmetrical. Consequently, the process of competitive disinflation between member states in order to qualify for the Euro-zone has been driven by the ideological preferences of the Bundesbank and the imperatives of German oligopolistic accumulation. Furthermore, the anti-Keynesian bias of the Maastricht Treaty and the Stability Pact has merely reinforced this process of severe disinflation and austerity, the social costs of which are ultimately borne by the European working class. Copyright 2004, Oxford University Press.