Common Currencies, Disparate Solidarities: The Crisis of the Eurozone in Comparative Perspective

We engage with a literature that has in recent years increasingly described the EU as essentially “Hayekian” in its design but de facto “Polanyian” in its operation. This literature has shown why the “frivolous experiment of a single currency for a heterogeneous multinational society” (Streeck 2014) has – in the absence of accompanying fiscal union – gotten “a bunch of putative lefties [to squeeze] the life out of their welfare states” (Blyth 2013). And, as Peter Hall (2014) observes, it has forced European leaders to either (i) somehow mobilize the political support to turn Europe into a real “common community of fate in which more generous support for the south is intrinsic to the well-being of the north”; or (ii) accept that they are capable of no more than the minimum of “transnational coordination that can occur without redistribution,” leaving them therefore to face the likelihood of a “decade of deflation across the south and political effects analagous to those that followed efforts to sustain the gold standard.”

Such studies have made great progress in clarifying the parallels and disparallels between the Euro and the gold standard with reference (veiled or unveiled) to Polanyi’s theory of the “double movement.” However, we think extant analyses have yet to adequately translate the agentic underpinnings of Polanyi’s theory to the contemporary era. We use this insight in a comparison of the run-up and reaction to the contemporary crisis in four countries – Germany, the Netherlands, Italy and Spain. We focus in each on the shifting and varied composition of the different aggregations of “definite social forces” mobilized in support – at varying times and in varying ways – either (i) for the “establishment of a self-regulating market” not just in goods but also in the “fictitious commodities” of land, labor and capital; or, (ii) alternatively, for the principle of “social protection aiming at the conservation of man and nature as well as productive organization” (Polanyi 1944).

We give centrality in the analysis to the ways in which “social protection” in one sphere has been compensated by “market-making” reforms in another (or vice versa). We clarify the nature of the consequent: (i) linkage between labor market reforms and the regulation of investment, housing, property and industry; and (ii) constitution in the modern welfare state of a host of new groups – which we will refer to as “wards” – with strong and, increasingly, culturally sustained quasi-property claims on a range of public and para-public institutions (these are often, but not only, pensioners of various sorts). Our findings problematize the easy categorization between the north and the south by clarifying the salience of, and differences between, cross-force coalitions and policies in the Netherlands and Spain (where a liberalization of real estate investment was used to buffer labor market “flexibilization”); and Germany and Italy (where within-country pressures for fiscal transfer interact with policies toward investment in the industrial core).