“A modest proposal”: I love this title. The proposal is indeed modest. It is modest in that it requires the modification of no treaty t. It is also modest in that it never directly attacks the sovereign position of a major state, notably Germany.
Finally, the proposal is modest in the way that it presents itself as nothing more than a little financial tinkering, without launching a noisy debate over fundamental but controversial proposals. Yet it is modest neither in in its ambition, nor in its intelligence, nor even less in its significance. Its ambition is indicated in the title: it seeks nothing less than to “solve the Eurozone crisis.” We have been immersed in this crisis for five or six years. Each of the makeshift solutions imposed on the euro’s mechanisms, procedures, and communal institutions has provoked new tremors and led to a new status quo which, for many involved, is far from offering lasting reassurance.
Even if the crisis seems less imminent than it once did, the fact that governments went into debt to limit the risks caused by the enormous financial crash of 2006-2008 still leaves a permanent threat hovering the eighteen countries that use the currency, whose public debt is denominated in euros, thus threatening the euro itself. This threat is only aimed at a currency, it is also aimed at eighteen countries’ societal endeavor to give themselves with a collective force that is worthy of their past. The threat is thus geopolitical and global, as is the aspiration to overcome it.
The proposal’s intelligence is worthy of its ambition. Combining different domains of knowledge (including macroeconomics, financial science, or public finance law) that are rarely summoned to integrate their most sophisticated lessons, the proposal depends on a subtle use of the narrow elbow room that some actors retain from treaties that are entirely inspired by the mutual suspicion between signatory states, as well as between states and the institutions they created, while also drawing on the most important intuitions of economics, which for decades have been disregarded by monetary authorities.
This proposal thus asserts the improbable: that there may well be a solution.
I will leave it to the reader to experience the surprise and pleasure of reading this book. As for myself, I found no insurmountable objection that would make its claims impossible.
As for significance, the book could not be more serious. What is at stake is quite simply whether Europe is condemned to a recession the pitiless effects of which leave it with no choice other than decline, or whether a different vision of economic mechanisms and their rules can lead to less alarming alternatives. This is the challenge that the states to whom this “Modest Proposal” is addressed must answer. The price of the much-needed positive answer is the destruction of the dangerous Malthusian taboos that are now sealing our fate.
Modeste proposition pour résoudre la crise de la zone euro (A Modest Proposal for Solving the Eurozone Crisis), by James K. Galbraith, Stuart Holland, and Yanis Varoufakis, with a preface by Michel Rocard, Les Petits Matins/Institut Veblen, January 2014.