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The following article appeared in Left Business Observer #127, June 2010. Copyright 2010, Left Business Observer.
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Old world, new crisis
A bit of horn-tooting to start. In a 1998 article on the imminent creation of the euro, LBO noted several intensely serious problems with the project. In the economic realm, the architects of monetary union seemed not to have appreciated the risk of yoking together countries as disparate as Portugal and Spain with France and Germany; the first pair had average incomes about half that of the second pair, with technology gaps to match, into a single currency zone. And in the political realm, there was the problem of a lack of any common politics—each country had its own fiscal policy, there was no common foreign policy, internal labor mobility was modest, citizens voted mainly in national rather than continental elections, and there was little popular support for or even understanding of the whole project of economic unification. The outcome could be, as the article said, “financial chaos.” We are now living through that chaos.