La moneta unica europea

In a text completed in 2005 but left unpublished,the author set out to offer a conceptual frameworkaffording insight into the reasons for the differenttrends, over the long period, in the rates ofincrease in production and employment in theEuropean and American economies. He stressesthe continuity in Europe between the low growthrate dictated by the functioning of the Europeanmonetary system in the 1980s and the economicstagnation in the following phase, subsequent tothe formation of the monetary Union. Contrastingwith this protracted European slowdown was theprolonged American expansion. The author arguesthat in the United States all the available tools,from fiscal and monetary policy and exchangerates to industrial policy, were brought into theservice of economic growth and maintenance ofa high level of employment. Why, the author asks,was Europe so lacking in any such commitment?The answer is to be sought both at the level ofthe choices made in the course of the processof monetary unification (considered separatelyfrom the process of political unification), and atthe level of the economic theory that constitutedthe support for those choices. On the one hand,the elimination of control over movementsof capital and abandonment of the system offixed but adjustable exchange rates to makeway for a fixed rate system limited the scope ofmonetary and currency policy while at the sametime granting international finance unlimitedfreedom of action. The consequences are to beseen in financial crises and sacrifices in terms ofincome and employment. On the other hand, theprinciples and rules entailed in the functioningof the economic and monetary Union have setlimits to the freedom enjoyed by governments in fiscal matters, even in the case of prolongedslowdowns in growth. Moreover, industrialpolicies have been subjected to a whole series ofrestrictions. The restrictive approach shown inEuropean macroeconomic policy is consistent withpromotion of a process of industrial restructurebased on abandonment of the "mature" segmentsof the productive value chain, reduced welfareand the progressive dismantling is of the labourmarket institutions. The very same theory that hadcome up with arguments in favour of freedom formovements of capital and restrictive approachesin macroeconomic policies is once again claimingthat, as in the 1930s, unemployment is due notto lack of effective demand but to labour market"rigidities". In the 1930s Keynes had defined suchapproaches as «deceptive and disastrous if we tryto apply them to the real facts».