Eurozone in Crisis: Socialist and Liberal Critiques

Postwar European federalist efforts to encourage cooperation between traditionally hostile countries ultimately gave birth to the European Union and its single currency. Today, the political and economic institutions and structures that emerged from the process of European integration confront the challenges posed by the recent Eurozone crisis. Europe’s survival demonstrates resilience but does not evidence a transformation in the politically contested nature of European economic and political union. This thesis asks why the thick regulatory framework and rules-based nature of the Eurozone produced a suboptimal currency union. To answer this question, this thesis draws on the two major theories of political economy, liberalism and socialism. An analysis of these theories yields a better understanding of how the political and economic factors plaguing the Eurozone interrelate. The absence of a state to accompany the Eurozone creates a fundamental structural shortcoming responsible for the poor economic and political performance of the currency union. However, both liberal and socialist critiques fall short in offering viable solutions to ameliorate the persisting challenges plaguing the Eurozone. The employment of the two major theories of political economy to interpret the threats facing the currency union reveals the utopian ideals and political tasks accompanying liberal and socialist critiques. Understanding the political and economic elements of the Eurozone crisis and how both theories grapple with the challenges they present will prepare scholars of European political economy to offer appropriate solutions to strengthen the political support for the currency union.