Europe 1957 to 1979: From the Common Market to the European Monetary System

36 Pages Posted: 8 Nov 2019

See all articles by Joseph Halevi

Joseph Halevi

The University of Sydney - Department of Political Economy; International University College (IUC) of Turin

Date Written: June 1, 2019

Abstract

This essay deals with the contradictory dynamics that engulfed Europe from 1959 to 1979, the year of the launching of the European Monetary System. It focuses on how the macroeconomic frame-work of stop-go policies in the 1960s ended up privileging external – intra-European – exports at the expense of domestic demand. The paper offers a very tentative explanation as to why stop-go policies, by weakening domestic demand, did not put an end to the to the ‘long boom’ earlier as they should have. The French crisis of 1968-69 leading to the demise of De Gaulle is discussed at length, as is the renewal of the German export drive in the wake of a nominal revaluation of the D-Mark in 1969. Finally, the revival of labor struggles in Italy in the same year is put in the context of the structural weaknesses of the Italian economy as analyzed by the late Marcello de Cecco. The conclusion is that European countries had neither the political culture nor the institutional mechanisms to coordinate mutually advantageous policies. Their so-called cooperation was an exercise in establishing hegemony while defending the interests specific to the dominant economic groups of each country. The essay then deals with the formation of the EMS as an expression of efforts to establish and enforce economic dominance.

Keywords: European Monetary System, Common Market, France, Germany, Italy, Netherlands, currency depreciation, European Monetary Union

JEL Classification: E02, F02, F5, N14, N24

Suggested Citation

Halevi, Joseph, Europe 1957 to 1979: From the Common Market to the European Monetary System (June 1, 2019). Institute for New Economic Thinking Working Paper Series No. 101, June 2019; DOI: 10.36687/inetwp101, Available at SSRN: https://ssrn.com/abstract=3482147

Joseph Halevi (Contact Author)

The University of Sydney - Department of Political Economy ( email )

Merewether Building (H04)
Sydney, 2006
Australia

International University College (IUC) of Turin ( email )

Piazza Carlo Felice, 18
Torino, 10121
Italy

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