The Euro Crisis’ Theory Effect: Northern Saints, Southern Sinners, and the Demise of the Eurobond

Abstract

Of the multiple narratives EU policymakers could have chosen at the onset of the euro crisis, why did austerity and structural reform win out over other plausible cures for member states’ problems? Arguably, sovereign debt pooling or more federalized economic governance would have been a solution to member states’ national deficits and competitiveness woes. To understand this puzzle, we draw on the sociology of knowledge literature. We argue that the response to the euro crisis was heavily informed by broader social logics that constructed the problem and the solution heavily toward ordoliberal and neoliberal ideas. Mapping the fate of the Eurobond proposals allows us to trace the complex entanglement of economic policy-making and parse out the ways in which social realities are shaped to make particular policy choices seem inevitable, even as they are themselves the product of social processes.

Key Words:

• Euro crisis
• Eurobonds
• Germany
• ideas
• neoliberalism
• ordoliberalism

Acknowledgments

The authors thank Björn Bremer and Brian Fox for helpful research assistance, as well as the two anonymous reviewers for their constructive comments.

Notes

1. Even Polish Foreign Minister Radoslaw Sikorski, in a speech in 2011, referred to Germany as Europe’s ‘indispensable nation,’ adding that he feared German inaction less than German power (Sikorski 2011).