European Affairs

Hollande-Merkel: An Ideological Battle About Europe     Print
By Jean-Pierre Robin, Editorialist for "Le Figaro"

The German Chancellor has a neoliberal and federalist view. The French President is dirigist on the economy and a statist on politics. 

What does François Hollande propose to save the eurozone: greater financial solidarity among member states and a collective economic revival.

On the financial front he proposes what he relentlessly calls “Eurobonds,” while the overwhelming majority of French journalists speak of “euro-obligations.” The joint release of debt titles on the markets by the 17 member nations of the Eurozone would certainly allow the weaker member states of the EU to finance more debt at a less expensive rate. Overall, the French President emphasizes the necessity to encourage growth.

 

Who would disagree with the notion that encouraging growth is desirable at a moment when unemployment is severely high? Descartes himself, the philosopher of rationalism, would say in the language of the XVIIth century that it is common sense and hopefully “the best shared thing in the world.” Long live French rationalism! But Angela Merkel also expresses herself according to her genealogical tree, which is that of German idealism. One must admit that the model which the Chancellor would like to spread throughout the whole of Europe is based on a powerful body of doctrine. And there are several trophies garnered since the post war reconstruction to reunification in 1990 that are testaments in her favor.

“The social market economy,” to which Germany has ascribed since 1945, is often presented in France as an oxymoron:  a pleasing synthesis of Anglo-Saxon liberalism and social solidarity. The guiding principles date back to 1929. Academics from Fribourg, the economist Walter Eucken and the jurist Hans Grossmann-Doerth among others, then sought a response to the global financial crisis by inventing a new economic order:  “ordoliberalism.”

A German doctrine hostile to the politics of cyclical adjustments

This body of thought, overshadowed by Nazism, had its heyday in the postwar era. Ludwig Erhard, the father of the German economic miracle, was freely inspired by it, summing it up in a founding speech in 1948: “We must liberate the economy from the constraints of state control…We must avoid anarchy and a termite State… For only a State that simultaneously establishes freedom and the responsibility of citizens can legitimately speak in the name of the people.” “Orderly liberalism” constituted a seductive approach for a Germany traumatized by totalitarianism, at a moment when it wanted, at all costs, to circumscribe the maleficent power of public authorities. Contrary to Keynes theories of the time, this approach makes the state a guarantor of rules of the economic game, and definitively prohibits it from intervening directly.

It is “a doctrine hostile to the politics of cyclical adjustments,” analyzes Professor Christophe Strassel, in an assessment done for the study group “En temps reel.”

From there comes the primacy of the Bundesbank’s independence in setting monetary policy, as well as the preponderant  role entrusted to the "Federal Cartel Office," both of which were created in the same year (1957). We find this regulatory philosophy again in the obsession for “structural policies” that Germany permanently imposes on itself in order to be competitive and that it would like to instill in its neighbors.

Obsession with “structural policies”

Ordoliberalism, which fascinated the philosopher Michel Foucault, the icon of the French intellectual scene from 1960 to 1980, has molded the German landscape. It has equally influenced Europe’s construction. It echoes in the competition policies that have become the basis of the European single market, and likewise supports the European Central Bank in its absolute independence from political interference.

Of the two inspirational forces that have influenced Europe since the Treaty of Rome in 1957, it is clear that the German pillar has already taken precedence over the French pillar and the state interventionism that is at the heart of the French national model.  What prevails is the German concept of “submitting economic policies to rules rather than to political deliberation,” asserts Christophe Strassel.

The openly ideological battle between François Hollande and Angela Merkel resembles the struggle between “an earthen jar and a metal jar.” The first is reduced to call on Anglo-Saxon allies: from President Obama to the cohort of Keynesian economists, such as Paul Krugman and Joseph Stiglitz, all of whom support France’s Head of State in his calls for an economic revival, in the name of urgency and catastrophes conjured up here and now. Because, according to Keynes, in the long term, we all die.

But the support of such powerful allies does not necessarily mean that the French camp will win over the German steamroller as it is equipped with impeccable logic to articulate its rationale for the monetary union and the imperatives of competitivity and structural reforms. Beyond “ordoliberalism” Berlin rightly cites federalism, inscribed in its Constitution, according to which each territorial entity, such as the Länder or the Federal State, is entirely responsible for its own budget at its own level. It means that only a Federal European State, still to be created and necessarily involving the transfer of national sovereignties to its benefit, could issue euro-obligations.

“The United Kingdom is an island, Germany a people and France a State,” André Siegfried, used to say when he was teaching at Institut d’Etudes Politiques de Paris. Today one wonders: Will the Europeans finally see themselves as a community and get organized into a federation?

This article was translated from Jean-Pierre Robin’s editorial published in "Le Figaro" on June 6, 2012.