In his persuasive new book, Jonathon Moses examines how the monetary policies of Iceland, Latvia, Hungary and Ireland responded to the financial crisis.
Contrary to popular perception, he finds that the monetary autonomy of small non-eurozone states (Iceland, Hungary) helped prioritise the needs of domestic constituents over those of international markets.
Eurozone members Latvia and Ireland, by contrast, prioritised the long-term needs of international lenders and European institutions, at the short-term expense of their own citizens.
Showing clearly how monetary policy autonomy still helps cushion economic shocks, Eurobondage documents the major sacrifices that eurozone states have made in joining a suboptimum currency area.
These are the political costs of monetary union in Europe.
'The economic costs to member states of monetary union and economic austerity policies have been discussed exhaustively. But what about the political costs? Moses' lucidly articulated analysis shows how the Eurozone monetary policy regime trumps states' policy sovereignty and democratic voice by restricting their ability to manage their own economies. Given the enormous distributive consequences of monetary policy, should its management not be determined by the preferences of citizens and national governments? Moses' comparative small‑state case analysis – Ireland, a Eurozone member, Latvia, a candidate member, and Iceland, a non‑member – demonstrates how national policy autonomy varies with degree of participation in the European common currency. Most importantly, Moses shows the enormous positive consequences of enhanced independence for the countries' relative success in managing their economies during and following the economic crisis of 2008. By explaining and exhaustively illustrating the relationship between democratic voice and economic policy regimes, Eurobondage is a pristine example of political economy at its most illuminating, relevant and accessible.
In the end, Moses persuasively shows how domestic control over monetary policy is essential not only for national sovereignty in the management of the domestic economy, and for generating better performance in economic growth and unemployment, but also for allowing voice for citizens in the face of the regressive distributive consequences of the inflation‑obsessed Eurozone austerity regime. Eurobondage straddles the disciplines of international political economy, institutional design and democracy studies, setting a new standard for balancing rigour and accessibility. It will prove a valuable resource for initiating university students at all levels (not to mention policymakers) into the exciting discipline of political economy.'
Michael Alvarez, University of Bergen
'Jonathon Moses offers us qualitative insights into four European states (Hungary, Iceland, Ireland and Latvia), and demonstrates through a rigorous comparative study how the capacity to adopt a flexible currency policy is feasible; and that there is greater freedom of mobility in monetary policies than has previously been argued. Once again, Moses has provided a deeper understanding of the costs of adjustments to fiscal hardship, in and outside the Eurozone.'
Christine Ingebritsen, University of Washington
'Participation in Europe constrains national policy autonomy and so limits options for crisis response. This is the central theme of Jonathon Moses’ provocative volume. Moses focuses his criticism on the euro but the implications are much wider. The ensemble of cases makes for essential reading. Pro-Europeans may not like this argument, but they will have to engage with it.'
Erik Jones, Johns Hopkins University