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Eurozone Groupthink and Denial on a Grand Scale

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  • William Mitchell

    (University of Newcastle, Australia)

Abstract

This paper is drawn from Mitchell (2015), which traced the origins of the Eurozone back to the desire in the immediate post-World War II period to end the destructive Franco-German rivalry that had caused several major military conflicts, which culminated in German aggression in 1939. Against this background, Mitchell (2015) also examines the way in which the discussions of European economic integration, which had initially begun with the general context of a Keynesian approach to economic policymaking, were transformed by the emergence of Monetarism in the 1970s. The flawed design of the Economic and Monetary Union (EMU) that was finally agreed on and formulated in the Maastricht Treaty in 1991 reflected both these elements. The dysfunctional response to the Global Financial Crisis (GFC) is a direct result of the mistakes made in the lead up to Maastricht and reflect the dominance of what we might call neo-liberal Groupthink over sound macroeconomic management.

Suggested Citation

  • William Mitchell, 2016. "Eurozone Groupthink and Denial on a Grand Scale," World Economic Review, World Economics Association, vol. 2016(7), pages 43-55, July.
    • Handle: RePEc:wea:worler:v:2016:y:2016:i:7:p:43
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    References listed on IDEAS

    as
    1. Jörg Bibow, 2013. "At the crossroads: the euro and its central bank guardian (and saviour?)," Cambridge Journal of Economics, Oxford University Press, vol. 37(3), pages 609-626.
    2. Barry Eichengreen, 2000. "Saving Europe’s Automatic Stabilizers," Palgrave Macmillan Books, in: Mark Baimbridge & Brian Burkitt & Philip Whyman (ed.), The Impact of the Euro, chapter 6, pages 87-99, Palgrave Macmillan.
    3. Jonathan D Ostry & Atish R Ghosh & Marcos Chamon & Mahvash S Qureshi, 2011. "Capital Controls: When and Why?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 59(3), pages 562-580, August.
    4. Ivo Maes, 2002. "On the origins of the Franco-German EMU controversies," Working Paper Research 34, National Bank of Belgium.
    5. Jakob von Weizsäcker & Jacques Delpla, 2010. "The Blue Bond Proposal," Policy Briefs 403, Bruegel.
    6. William Mitchell & Joan Muysken, 2008. "Full Employment Abandoned," Books, Edward Elgar Publishing, number 1188.
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