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Economy of Europe

economy of the continent

The economy of Europe comprises about 748 million people in 50 countries. The formation of the European Union (EU) and in 1999 the introduction of a unified currency, the Euro, brought participating European countries closer through the convenience of a shared currency. The European Union is a unique global organisation, an entity forming one of the largest economies in the world.

Quotes

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  • Unless we act, events that we Europeans will be unable to influence will overtake us. I believe we Europeans feel far too safe. Europe’s political and economic leadership in the world, which was still unchallenged at the beginning of the century, has long since ceased to exist. Will the dominant cultural influence of Europe be maintained? I think not, unless we defend it and adjust ourselves to new conditions; history has shown that civilisations are all too perishable.
  • Our Union is more than an association of states. It is a new legal order, which is not based on the balance of power between nations but on the free consent of states to share sovereignty. From pooling coal and steel, to abolishing internal borders, from six countries to soon twenty-eight with Croatia joining the family this has been a remarkable European journey which is leading us to an “ever closer Union”. And today one of the most visible symbols of our unity is in everyone’s hands. It is the Euro, the currency of our European Union. We will stand by it.
  • The European Union implies the notion of the ‘Minimal State’, the abandonment of mixed economy and of economic planning, the redefinition of the ways the expenses are arranged, a redistribution of responsibilities that reduces the power of parliamentary assemblies and increases that of governments, fiscal autonomy for local authorities, the rejection of the principle of widespread gratuitousness of services (and the ensuing reform of healthcare and of social security), the abolition of the wage indexation scale, the dramatic reduction of pockets of privilege, the mobility of the factors of production, the reduction of the State’s presence in the credit system and in industry, the abandonment of inflationary behaviour not only by workers, but also by the producers of services, the abolition of the norms that fixed administered prices and tariffs. In a word: a new pact between States and citizens, to the latter’s advantage.
    • Guido Carli, Minister of the Treasury of the Italian government, 8 February 1992 (the day after the signing of the Maastricht Treaty)[1]
  • It is impossible to build Europe on only deregulation...1992 is much more than the creation of an internal market abolishing barriers to the free movement of goods services and investment...The internal market should be designed to benefit each and every citizen of the Community. It is therefore necessary to improve workers' living and working conditions, and to provide better protection for their health and safety at work...Europe needs you.
  • We have preserved social security and the welfare state, but at the expense of employment. Neo-liberalism, which put the emphasis on the market, manifested itself in Europe by the policies led by Margaret Thatcher, who sometimes had good reasons to prise off the shackles which were condemning British society to decline. But [Thatcherite policies] fell into an excess of laissez faire.
    • Jacques Delors, L'Unité d'un Homme (November 1994), quoted in The Times (21 November 1994), p. 11
  • [The European Union must be a] federal union with a common currency, a tightly co-ordinated economic policy and a foreign policy capable of common diplomatic and military action. ... Britain is refusing to face reality. Does England have a future outside Europe? No. But it is difficult for a great nation to bid farewell to its golden age.
    • Jacques Delors, Interview with Der Spiegel (27 November 1994), quoted in The Times (28 November 1994), p. 12
  • The rise of socialism in the East inspired socialist movements in the West (most famously in Germany, which came to the brink of a socialist revolution during the Spartacist and Ruhr uprisings of 1919–20). These revolutionary movements posed a real threat to capitalism in the core. Capitalism survived in part by crushing these movements—quite often violently, but also by making concessions to working-class demands, including wage improvements and some public services, although never conceding to the core demands for decommodification and economic democracy. Thus, the rise of the social democratic welfare state. Capital accumulation requires cheap labor, however, and these concessions would have brought capitalism in the core to its knees were it not for the fact that capitalists were able to obtain cheap labor instead in the periphery, through colonial and neocolonial forms of appropriation, which continue to this day.
  • [The effect of the Suez Crisis on the French was quite different.] We turned across the Atlantic. They turned across the Rhine, and Europe was built without us. There is room for argument about the causes of what followed. There is no doubt about what happened. Over the first 13 years of the [European] Community's life national income per head increased by 72 per cent in the Six and by 35 per cent in Britain. The result was that from being almost the richest country in Western Europe we became one of the poorest. France for the first time since the industrial revolution surpassed us in economic strength. The German economy achieved nearly twice our weight.
  • The post-1945 European welfare states varied considerably in the resources they provided and the way they financed them. But certain general points can be made. The provision of social services chiefly concerned education, housing and medical care, as well as urban recreation areas, subsidized public transport, publicly-funded art and culture and other indirect benefits of the interventionary state. Social security consisted chiefly of the state provision of insurance—against illness, unemployment, accident and the perils of old age. Every European state in the post-war years provided or financed most of these resources, some more than others.
    • Tony Judt, Postwar: A History of Europe Since 1945 (2005), p. 73
  • The Washington doctrine was everywhere greeted by ideological cheerleaders: from the profiteers of the ‘Irish miracle’ (the property-bubble boom of the ‘Celtic tiger’) to the doctrinaire ultra-capitalists of former Communist Europe. Even ‘old Europeans’ were swept up in the wake. The EU’s free-market project—the so-called ‘Lisbon agenda’; the enthusiastic privatization plans of the French and German governments: all bore witness to what its French critics described as the new ‘pensée unique’. Today there has been a partial awakening. To avert national bankruptcies and wholesale banking collapse, governments and central bankers have performed remarkable policy reversals, liberally dispersing public money in pursuit of economic stability and taking failed companies into public control without a second thought. A striking number of free market economists, worshippers at the feet of Milton Friedman and his Chicago colleagues, have lined up to don sackcloth and ashes and swear allegiance to the memory of John Maynard Keynes. This is all very gratifying. But it hardly constitutes an intellectual revolution. Quite the contrary: as the response of the Obama administration suggests, the reversion to Keynesian economics is but a tactical retreat. Much the same may be said of New Labour, as committed as ever to the private sector in general and the London financial markets in particular. To be sure, one effect of the crisis has been to dampen the ardor of continental Europeans for the ‘Anglo-American model’; but the chief beneficiaries have been those same center-right parties once so keen to emulate Washington.
    • Tony Judt, Ill Fares the Land (2010), Introduction
  • The sharp down-turn in the European economy in the 1870s had produced in most advanced economies save Britain a 'return to protection', marked especially by Bismarck's split with the Liberals, his imposition of protective tariffs in 1879, and the development in the Second Reich of a political economy of cartelization married to harrying the trade unions and suppressing the S.P.D. For those who wished an alternative to the British liberal state, here was one, with all its implications and consequences. Few, of course, advocated out-and-out Germanization, but increasingly Germany was coming to be regarded as the alternative model, the seed-bed for the future.
  • Around the same time, communism in Central and Eastern Europe finally fell, but its economic rivalry with capitalism had, of course, long since been decided. It’s easy to think that these countries were never close to the market economies, but in 1950 countries such as the Soviet Union, Poland, Czechoslovakia and Hungary had a GDP per capita about a quarter higher than poor Western countries such as Spain, Portugal and Greece. In 1989, the eastern states were nowhere close. The eastern part of Germany was richer than West Germany before World War II. When the Berlin Wall fell on 9 November 1989, East Germany’s GDP per capita was not even half that of West Germany’s. Of these countries, those that liberalized the most have on average developed the fastest and established the strongest democracies. An analysis of twenty-six post-communist countries showed that a 10 per cent increase in economic freedom was associated with a 2.7 per cent faster annual growth. Political and economic institutions have improved the most in the Central and Eastern European countries that are now members of the EU, not least the Baltic countries, Estonia, Latvia and Lithuania. Today, they are some of the freest countries in the world and have more than tripled average incomes since independence. But one can also observe a recent reformer like Georgia. It was seen as an economic basket case, but after the Rose Revolution in 2003 it increased per capita incomes almost threefold and cut extreme poverty rates by almost two-thirds.
    • Johan Norberg, The Capitalist Manifesto: Why the Global Free Market Will Save the World (2023)
  • Europe changed more rapidly and more radically during the nineteenth century than during any prior period. Perhaps most fundamentally, its population more than doubled, from 205 million in 1800 to 414 million in 1900, not counting the 38 million who emigrated to others parts of the world in the course of the century. The economy grew even faster, as the per capita Gross National Product (GNP - i.e. the total economic output for every European) increased by 120 per cent between 1830 and 1913. More visible to the contemporaries than the apparently modest rates of annual growth that underlay this secular figure was the communications revolutions. In 1800 the wealthy travelled by horse-drawn carriage and the poor walked; in 1900 the wealthly travelled first class on the railway or were driven in their own automobiles, while the poor travelled third class on the railway and by omnibus, train or underground railway.
  • The massive costs of running the war on terror, in conjunction with the seemingly inexorable turn to a non-state-based credit rather than a savings-based economy, were among the factors that led to the second major challenge of the new millennium: the financial crisis, and its long corrosive aftermath of the Great Recession. Society was no riven by a biting austerity on one hand and an anti-immigrant backlash on the other.  Governments used up what remaining reserves of popular trust they had in fighting the fires of a seemingly unquenchable crisis.  Fatefully, this was also the moment when Europe was confronted by the largest refugee crisis since the Second World War (many of them fleeing the havoc unleashed by the global war on terror).  The social tensions sparked by some of these developments began to raise the specter of more desperate solutions drawn from the past.  Alarmed by such developments, one ninety-year old survivor of the Warsaw ghetto took a plea of remembrance to the international press. Fear and lies are terrible things, he warned: “do not ever imagine that your world cannot collapse, as ours did.” Was anyone listening?  In Europe, the solidarity that had underpinned the European Union’s expansion for half a century entered its gravest crisis yet. In the US, the political atmosphere grew more, not less, tense under the nation’s first black president.  With public trust in the workings of Congress at its lowest ebb, and popular discontents soaring amid an illiberal surge, the conditions favored an outsider in the presidential elections of 2016.  What that outsider might then do only time, and power, would tell.
    • Simon Reid-Henry, Empire of Democracy: The Remaking of the West Since the Cold War, 1971-2017 (2019), pp. 7-8
  • Most of the people who write about underdevelopment and who are read in the continents of Africa, Asia, and Latin America are spokesmen for the capitalist or bourgeois world. They seek to justify capitalist exploitation both inside and outside their own countries. One of the things which they do to confuse the issue is to place all underdeveloped countries in one camp and all developed countries in another camp irrespective of different social systems; so that the terms capitalist and socialist never enter the discussion. Instead, one is faced with a simple division between the industrialized nations and those that are not industrialized. It is true that both the United States and the Soviet Union are industrialized and it is true that when one looks at the statistics, countries such as France, Norway, Czechoslovakia, and Rumania are much closer together than any one of them is to an African country. But it is absolutely necessary to determine whether the standard of living in a given industrialized country is a product of its own internal resources or whether it stems from exploiting other countries. The United States has a small proportion of the world’s population and exploitable natural wealth but it enjoys a huge percentage of the wealth which comes from exploiting the labor and natural resources of the whole world.
  • Development and underdevelopment are not only comparative terms, but that they also have a dialectical relationship one to the other: that is to say, the two help produce each other by interaction. Western Europe and Africa had a relationship which insured the transfer of wealth from Africa to Europe. The transfer was possible only after trade became truly international; and that takes one back to the late fifteenth century when Africa and Europe were drawn into common relations for the first time—along with Asia and the Americas. The developed and underdeveloped parts of the present capitalist section of the world have been in continuous contact for four and a half centuries. The contention here is that over that period Africa helped to develop Western Europe in the same proportion as Western Europe helped to underdevelop Africa.
  • In 1933, the Soviet and Nazi governments shared the appearance of a capacity to respond to the world economic collapse. Both radiated dynamism at a time when liberal democracy seemed unable to rescue people from poverty. Most governments in Europe, including the German government before 1933, had believed that they had few means at their disposal to address the economic collapse. The predominant view was that budgets should be balanced and money supplies tightened. This, as we know today, only made matters worse. The Great Depression seemed to discredit the political response to the end of the First World War: free markets, parliaments, nation-states. The market had brought disaster, no parliament had an answer, and nation-states seemingly lacked the instruments to protect their citizens from immiseration. The Nazis and Soviets both had a powerful story about who was to blame for the Great Depression (Jewish capitalists or just capitalists) and authentically radical approaches to political economy. The Nazis and Soviets not only rejected the legal and political form of the postwar order but also questioned its economic and social basis. They reached back to the economic and social roots of postwar Europe, and reconsidered the lives and roles of the men and women who worked the land. In the Europe of the 1930s, peasants were still the majority in most countries, and arable soil was a precious natural resource, bringing energy for economies still powered by animals and humans. Calories were counted, but for rather different reasons than they are counted now: economic planners had to make sure that populations could be kept fed, alive, and productive. Most of the states of Europe had no prospect of social transformation, and thus little ability to rival or counter the Nazis and the Soviets. Poland and other new east European states had tried land reform in the 1920s, but their efforts had proven insufficient. Landlords lobbied to keep their property, and banks and states were miserly with credit to peasants. The end of democracy across the region (except in Czechoslovakia) at first brought little new thinking on economic matters. Authoritarian regimes in Poland, Hungary, and Romania had less hesitation about jailing opponents and better recourse to fine phrases about the nation. But none seemed to have much to offer in the way of a new economic policy during the Great Depression.
  • But there is no point in indulging in wishful thinking about the past. The changes were brought about by the World War and its repercussions. The war tore Europe from its previous position and transformed it into a continent bleeding from many wounds and left impoverished – not only in Germany – valuable segments of the population. “Where iron grows in the mountain shafts, the masters of the Earth arise." Europe is no longer the main source of the world’s raw materials, and we can no longer delude ourselves that Europe is the leader of the world. For this reason the peoples of Europe are drawing closer together to protect themselves against conquest and inundation. And inasmuch as economics has an effect on politics, this drawing together, even though it might be questionable from the standpoint of economics, does constitute progress toward international understanding and peace. Even though the psychology of this process, which involves billions, causes sociologists to have reason for misgiving, the process is still an asset to mutual understanding among the nations.
  • Static inequality is a snapshot view of inequality; it does not reflect what will happen to you in the course of your life. Consider that about 10 percent of Americans will spend at least a year in the top 1 percent, and more than half of all Americans will spent a year in the top 10 percent. This is visibly not the same for the more static—but nominally more equal—Europe. For instance, only 10 percent of the wealthiest five hundred American people or dynasties were so thirty years ago; more than 60 percent on the French list are heirs and a third of the richest Europeans were the richest centuries ago. In Florence, it was just revealed that things are even worse: the same handful of families have kept the wealth for five centuries.
  • The contention of this book is that to view the 2008 crisis and its aftermath chiefly through its impact on America is to fundamentally misunderstand and underestimate its economic and historical significance. Ground zero was America’s housing market, for sure. Millions of American households were among those hit earliest and hardest. But that disaster was not the crisis that had been widely anticipated before 2008, namely, a crisis of the American state and its public finances. The risk of the Chinese-American meltdown, which so many feared, was contained. Instead, it was a financial crisis triggered by the humdrum market for American real estate that threatened the world economy. The crisis spilled far beyond America. It shook the financial systems of some of the most advanced economies in the world—the City of London, East Asia, Eastern Europe and Russia. And it went on doing so. Contrary to the narrative popular on both sides of the Atlantic, the eurozone crisis is not a separate and distinct event, but follows directly from the shock of 2008. The redescription of the crisis as one internal to the eurozone and centered on the politics of public debt was itself an act of politics. In the years after 2010, it would become the object of something akin to a transatlantic culture war in economic policy, a minefield that any history of the epoch must carefully navigate.
    • Adam Tooze Crashed: How a Decade of Financial Crises Changed the World (2018)
  • And the EU—the colossus that “does not do geopolitics”—“sleepwalked” into conflict with Russia over Ukraine. Meanwhile, in the wake of the botched handling of the eurozone crisis, Europe witnessed a dramatic mobilization on both Left and Right. But rather than being taken as an expression of the vitality of European democracy in the face of deplorable governmental failure, however disagreeable that expression may in some cases be, the new politics of the postcrisis period were demonized as “populism,” tarred with the brush of the 1930s or attributed to the malign influence of Russia. The forces of the status quo gathered in the Eurogroup set out to contain and then to neutralize the left-wing governments elected in Greece and Portugal in 2015. Backed up by the newly enhanced powers of the fully activated ECB, this left no doubt about the robustness of the eurozone. All the more pressing were the questions about the limits of democracy in the EU and its lopsidedness. Against the Left, preying on its reasonableness, the brutal tactics of containment did their job. Against the Right they did not, as Brexit, Poland and Hungary were to prove.
    • Adam Tooze Crashed: How a Decade of Financial Crises Changed the World (2018)
  • Europeans may wish to opt out of the global battle for corporate domination. They may even hope that they may thus achieve a greater degree of freedom for democratic politics. But the risk is that their growing reliance on other people’s technology, the relative stagnation of the eurozone and the consequent dependence of Europe’s growth model on exports to other people’s markets will render those pretensions to autonomy quite empty. Rather than an autonomous actor, Europe risks becoming the object of other people’s capitalist corporatism. Indeed, as far as international finance is concerned, the die has already been cast. In the wake of the double crisis, Europe is out of the race. The future will be decided between the survivors of the crisis in the United States and the newcomers of Asia. They may choose to locate in the City of London, but after Brexit even that cannot be taken for granted. Wall Street, Hong Kong and Shanghai may simply bypass Europe.
    • Adam Tooze Crashed: How a Decade of Financial Crises Changed the World (2018)
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  1. ↑ Eley, Geoff; Paggi Leonardo; Streeck, Wolfgang: Spagnolo, Carlo (9 November 2017). ROUNDTABLE-DEBATE “THE EU CRISIS AND EUROPE’S DIVIDED MEMORIES”. Ricerche Storiche.
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