A Question of Identity
by Prof. Dennis J. Snower, Ph.D.
The current crisis in the Eurozone has led to a massive outpouring of pent-up emotions. Everyone participating in this passionate debate realizes that since we can’t go on like this, the time has come to decide the future of the European Union. The real challenge is not just to work out the most efficient economic solution or the most persuasive political one, but to find a new narrative for the European Union, one that will give its inhabitants a new sense of identity and purpose.
Understanding the identity formation calls for a transcultural perspective. It requires recognition that there are no values and norms applicable to all societies, but that circumstances can be created in which people come to see the world in a sufficiently common light to affiliate with one another and envision a common destiny. As an American who leads one of the major German economic research institutes for over a decade, I had the chance of understanding various European and American cultures from within, and I can surmise for example why American and German economists tend to diagnose the Eurozone crisis so differently.
Americans have a strong sense of their own identity and assume that Europeans must experience something along these lines. Thus many American commentators are more tolerant of fiscal transfers among states than their European counterparts. The Americans are outraged at the suggestion that Greece might be asked to leave the Eurozone, since they cannot imagine treating an American state in this way. They don’t realize that many EU citizens still view the inhabitants of other countries in the same way as the Americans view the Canadians and Mexicans. Americans would not tolerate fiscal transfers to Canada and Mexico, and many may not find it inconceivable that Canada or Mexico might leave NAFTA under some circumstances. American commentators are incredulous of the political stalemate that imposes austerity on impoverished Greeks, but they show more understanding for the political stalemate among Democrats and Republicans that perpetuate inequalities among Americans. The former is betrayal, whereas the latter is a family quarrel.
What makes the debate so bitter is that many observers don’t understand that the fundamental problem facing the European Union is not economic or political, but social. Europe’s economic and political problems are merely symptoms of a deeper challenge, namely, the challenge of establishing a common sense of purpose.
On their own, the EU’s economic and political problems are all manageable. The American economists are undoubtedly right when they claim that the austerity policy in Greece has made the Greek depression worse. The German economists are undoubtedly right when they retort that if Greek national debts were written off without conditions requiring fiscal prudence and structural reforms to encourage competitiveness, then Greece’s corruption and inefficiency could continue to be bankrolled indefinitely by its creditors. All these issues are easily addressed by a combination of countercyclical fiscal policy, structural reforms, and financial regulation, linked to a partial write-off of legacy debt.
But such proposals have not been implemented. The Greeks insisted on relief from austerity, while remaining inattentive to the structural and financial reforms required for a prosperous future. The creditor countries of the Eurozone, led by Germany, consist on fiscal rectitude and the above reforms, while remaining inattentive to prompt relief from austerity. The result is the political stalemate, in which increasingly intrusive reform policies are imposed on Greece, whose implementation lies in the hands of Greek policymakers. Everyone is left worse off.
How could all parties to this agreement have fallen into this gratuitous trap? The reason is that EU member states do not share common identity. Citizens’ current sense of social belonging is defined more by the national boundaries than by European institutions. Consequently it is understandable that the creditor countries are not willing to contemplate indefinite fiscal transfers to Greece, while many Greeks view Germany as a malevolent hegemon.
The debtor and creditor countries don’t trust one another. Mistrust generally leads to failures of cooperation, and sometimes also to confrontation and conflict. One major reason for the creation of the European Union was to make such conflict unthinkable. It would be a tragedy indeed if the current economic difficulties would lead to renewed antagonisms.
The only way out is to take seriously the challenge of European identity formation. The European Union must offer its member states a more inspiring and forward-looking vision than the promise of possible prosperity, conditional on fiscal rectitude, free markets and international competitiveness. Identity is not created alone through free trade in a single market. Society is more than the marketplace.
There are many ways of doing this, none of which have received much public and political attention so far. One example would be the promotion of a European “civic year,” as an option available for all children leaving school. Each person would be required to live in another European country, among people in a different culture, religion and social class from their own, working on a project that is of vital interest to all parties.
The creation of a single European labor market – without legal and regulatory constraints, though with competition among labor market systems and support for overcoming language and other cultural barriers – would provide a significant impetus for the social integration of Europe.
Common European tax authority and government procurement authorities, staffed by officials from EU institutions and implementing fiscal rules that have been designed by the government of each member state, would help make these rules automatically implementable while simultaneously promoting a common European identity.
Needless to say, the building of a common European identity will take time. But if Europeans start taking such initiatives now, they will gain a sense of direction which will propel them towards a very different future from the one they are now trapped in. Glimmerings of such a future may be sufficient to induce European voters to take a more tolerant and supportive stance towards one another. It would give the European project a new lease of life. There is no better time to start than now.