Democracy or Euro: Who will Surrender?

Abstract

This article offers insights into the eurozone, one of the most challenging experiments toward market and political integration through a single monetary unit — namely, the euro. However, whereas markets might be fully integrated even without a common European currency, the euro and its functional institutions are shrinking sovereignty within member states. Today, the eurozone records the lowest percentage of growth in the world; it is an island of stagnation, deflation, and high unemployment rate. Six years after the beginning of the crisis, most of the European countries have not yet recovered the value of gross domestic product (GDP) recorded in 2008. Dani Rodrik's trilemma states that democracy, national sovereignty, and global economic integration are mutually incompatible. Yet the European Union is even shrinking both democracy and national sovereignty toward a global economic integration. Consequently, either democracy shall raise and abort such political project or euro will shrink democracy to village governance level only. © 2015 Wiley Periodicals, Inc.

Keywords: Eurozone, financial crisis, democracy

JEL Classification: A12, F02, G18, H77