Rational Idiosyncrasy and Monetary Integration

Abstract

Erik Jones’s The Politics of Economic and Monetary Union is a tightly written book that provides a dense analytical overview of the issues surrounding economic and monetary integration within the European Union (EU). The jacket describes Jones’s book as a textbook, which seems apt given its basic structure and comprehensiveness. Indeed, the scope is impressive for such a short work. Jones begins at the basic theoretical technology of money and moves stepwise through the design of monetary institutions, legitimacy in monetary unions, economic adjustment, the relative weight of domestic and international goals in monetary union, the changing Franco‐German relationship, and the role of economic and monetary union in the symbolic politics of Europe. Unlike most textbooks, however, The Politics of Economic and Monetary Union also makes explicit arguments. The core claim is that the politics of monetary integration are highly idiosyncratic, with Europeans’ support for or opposition to the monetary union and to particular policies within it reflecting a variety of national or local concerns. This hyperpluralism explains why economic and monetary union has been hard to achieve, but it also suggests that it will be quite stable because no coherent opposition to integration is likely to arise. Two other arguments bolster this optimism. First, despite tensions resulting from the sharing of power across regional, national, and local governments, economic and monetary union in Europe is democratically legitimate. Second, ‘‘contrary to conventional wisdom, [economic and monetary union] helps to increase the range of policy combinations that are available to member state governments,’’ (p. 13) which actually enhances macroeconomic flexibility. Overall, therefore, economic and monetary union should and likely will gradually settle into the background of European politics as a ‘‘minor technological improvement’’ (p. 191). Jones’s contribution to the literatures on regional integration and the European Union lies in his effort to build a careful theoretical analysis that punctures several more systematic accounts. Jones’s analysis may also deflate many common fears about the European Union’s long-term viability. Working from simple principles about rational actors and their concern for distributional outcomes, Jones cogently constructs his argument: (1) that preferences over monetary policy are fragmented and unpredictable, even in arenas simpler than the European Union; (2) that voters tend to have absolute (not relative) preferences for macroeconomic outcomes, always wanting low unemployment and low inflation, and will thus rationally and legitimately delegate power to whatever mechanisms promise to deliver these goals best; and (3) that economic and monetary union may help mitigate global pressures for economic adjustment because it leaves national governments a wide array of possible responses. Each of these points is made in concise, even dense, prose that makes few leaps along the way. Jones also moves cleanly back and forth between analytic and normative questions, and between economics and politics, without