Now comes hydrangea.
Keynes and the Case for Europe
Keynes
entered the world stage at Versailles, at a time that saw the world endeavouring
to restore the ‘Pax Britannica’ which had collapsed with the First World War. But
this endeavour came to grief. Instead, as confusion and conflict deepened, the
world was engulfed by the Second World War. It was during the closing days of
that war that Keynes emerged as the figure exerting the greatest influence as
economist, economic policymaker, and, most of all, international system
planner.
From Versailles
to Bretton Woods, Keynes worked both for the rescue and relief of a Europe
ruined by war, and also for the rehabilitation and reconstruction of a new and
more solid Europe on the foundations of the
old. In this latter respect, Keynes can be seen as a visionary precursor of the
modern European Union, a project that today is facing its greatest challenge
since inception. Were Keynes alive today, there is no question he would be at
the very centre of things, once again urging proposals both for rescue from the
errors of the past and reconstruction for the possibilities that lie yet in the
future.
But Keynes is not alive today. All
we have of him is the record of his response to previous crises. The central purpose
of this paper is to bring that record up to light, as a lens through which to
examine the current crisis in Europe . Keynes
is not himself alive, but his ideas are, and his way of approaching problems. We
can therefore legitimately ask, What would Keynes have said?
Second, Keynes’s relief and
reconstruction plan for ruined Europe after the
Second World War is examined. Third, we come to Keynes’s response to the UNRRA
advocated by the US for ruined Europe, and finally we go on to deal with what
moved ahead thereafter for Europe.
Keynes’s Relief Plans for Ruined Europe
Immediately after resigning as Treasury
representative for the Versailles Germany
After
proposing to cancel out all the war debts (including abandonment of 2 billion
pounds for the USA and 0.9 billion pounds for the UK), Keynes put forward the
following grand design for ruined Europe, proposing: (i) to reorganize the Coal Commission into a sort of cooperative system
for supplying and allocating coal and iron ore throughout Europe; (ii) to set up
a ‘Free Trade Union’ for Europe, including the UK; (iii) to make an ‘international
loan’ for the rebirth of Europe, consisting of loans to be used to obtain food
and materials from the USA, plus a ‘Guarantee Fund’. The latter was to be set
up by the contributions (either in cash or kind) of the member countries of the
League of Nations . Keynes considered the Guarantee Fund to be the foundation for the general reorganization of currency. [1]
The ‘cooperative system’ for coal
is a prototype of the European Coal and Steel Community (ECSC, 1952); the Free
Trade Union is a prototype of the European Community (EC, 1967) and the
Guarantee Fund is a sort of international monetary organization—a project could be even said to belong to the same
sphere as the Euro system.
But Keynes was too early. Instead,
the attention of statesmen was distracted by problems of reparations and war
debts, legacies both of the War that was past rather than the future that could
be. The result was the Second World War, which Keynes seized as a second chance
to do what should have been done after the First World War.
In July 1940 Keynes was appointed
member of the Chancellor of the Exchequer’s Consultative Council which was set
up ‘to help and advise the Chancellor on special problems arising from war
conditions’ (Moggridge 1992, p. 636). Thereafter he was to be engaged on a
range of important assignments. Two fields are relevant here.
The first field concerns external
war finance and the balance of payments crisis; Keynes played a key role in the
negotiations with the United States over the Lend-Lease arrangements, and
indeed in the Anglo–American Financial Agreement[ 2] (1945) for support in the
UK’s balance of payments crisis.
The second field, which is
relevant to this paper, concerns the shaping of the post-war world economic
order. Here Keynes’s unexcelled ability in designing international systems
emerged in all evidence. Viewing a problem in the worldwide context, he was
able to devise excellent plans for dealing with it. Three plans in particular
are worth considering here—(i ) an international buffer stock plan, (ii) an
international relief and reconstruction plan named Central Relief and
Reconstruction Fund (CRRF), and (iii) an international monetary system. Keynes
himself negotiated with the United States as chief British representative for
these issues, which were closely connected in Keynes’s mind.
Let us take the three cases in
order.
i) The
Commodity Problem. [3]
Keynes designed international organizations named ‘Commod Control’ and ‘General
Council for Commod Controls’ for buffer stock operations, with the purpose of
stabilizing the short-term prices, while allowing for gradual changes in the
long-term prices, of various primary commodities, and of ensuring due income to
the producers concerned. The fundamental principle on which the buffer stock plan
is based is his view of the market economy as emerges clearly in The End of Laissez-Faire (Keynes, 1926a) —if left to the law
of supply and demand, the market economy cannot attain an optimum allocation of
resources. Because a competitive market system abhors buffer stock, violent
fluctuations in prices are caused, so in order to avoid them some sort of
international organization for buffer stocks is required. This idea can be
traced back to ‘The Control of Raw Materials by Governments’ (Keynes, 1926b).
ii) The
Relief and Reconstruction Problem. Keynes designed the Central Relief and
Reconstruction Fund (CRRF) for the management of a joint fund comprised of
money donations or contributions in kind from various countries. The basic
principle here was to create an ideal international organization for the
efficient distribution of goods with humanitarian criteria among countries in
need of relief. It was predominantly Europe which preoccupied Keynes here, for
he believed that without the rebirth and reconstruction of Europe
there would be no hope for the future of the world.
Although we
will examine the CRRF in more
detail below, it should be noted in advance that the CRRF could
be taken in relation to the Organization for European Economic
Cooperation (OEEC) in the Marshall Plan, which aimed at relieving and reconstructing Europe in
crisis through central institutions.
iii) International
Monetary System. Keynes proposed an ‘International Clearing Union ’—a multilateral clearing system among the central
banks to which all the foreign exchange transactions were to be transferred.
For this purpose an international organization named Clearing Union
would be set up with each central
bank opening its account. Every international
transaction was to be recorded in the account of the nation concerned in terms
of ‘bancors’ as an international currency used only among the central banks.
The Clearing Union would be endowed with
credit creation facility (each nation should fix its exchange rate in terms of
bancor ). The bancor was to stand as international currency, gold giving way to
it while the existing currencies such as the dollar and pound sterling remained
as local currencies; The foreign exchange markets’ function would dwindle and
credit could be created in accordance with the growth of the world economy. International financial transactions would be
concentrated on the Clearing Union, while international transactions of goods
and services were to be left to the free activities of firms and individuals.
Keynes stated that the Clearing Union plan could be said to be an international
version of a domestic banking system. The basic principle upon which the
Clearing Union plan is founded is an international monetary system which, if needed,
could increase or decrease the amount of bancors so that either deflationary or
inflationary trends in the world economy could be adjusted, and world trade
could grow accordingly. He expressed the view that each government should
pursue prosperity and stability for its own economy by means of economic
policy, criticizing the Gold Standard because it could deprive governments of
scope for economic policy, as is clearly seen in A Tract on Monetary Reform (1923) and The General
Theory (1936).
Having explained how Keynes worked
out international institutions in the context of the world order during the
interwar period, we would concentrate on the relief and reconstruction phase
for Europe, for the main purpose of this paper is to examine Keynes’s involvement
in both the past and present Europe in crisis. (Table 6.1 shows the relation
between Keynes’s vision and Europe in
reconstruction and crisis. Readers should preferably refer to it throughout the
paper.)
Table
6.1: Keynes’s vision and Europe in reconstruction and crisis
|
|
Coal Corporation*
|
|
|
EuropeanCoal and Steel Community
(1952)
|
→European Economic
Community
(1957)
EuropeanCommunity
(1967)
|
→EU
(1993
|
|
Free Trade Union*
|
|
|
|
|||
|
International Loan*
|
|
Central Relief and
Reconstruction Fund *
→United Nations
Relief and Rehabilitation Administration
|
Marshall Plan
(1948 OEEC)
|
|||
|
|
|
Criticism of the Gold
Standard*
|
International Clearing
White Plan
|
EuropeanPayments Union
(1950–58)
EuropeanMonetary Agreement
(1958–72)
|
EuropeanMonetary System
(1979–98)
|
→EURO
(ECB)
|
|
Time
|
After WWI
|
Reparation
and war debt problems in the 1920s
|
During WWII
|
1950s
|
1960s–1990s
|
1990s
|
* Keynes’s proposal or involvement .
Keynes’s Relief and Reconstruction Plan for Europe
after the Second World War
At
the outbreak of the Second World War, Britain UK needed to buy up
large quantities of primary commodities, as a result of which the UK Britain [ 4]
was appointed to represent Britain US
On a visit to Washington [ 5]) and that
of an ‘ever-normal granary’ as a comprehensive plan for
the unification of primary commodity prices throughout the world.
Keynes believed that the
accumulation of commodity surpluses which was developing throughout the world
could be turned to advantage in the task of putting Europe
back on its feet once the war was over. In other words, the solution to the
commodity problem could help solve the relief problem. Evidently, then, in
mid-1941 there was acknowledged agreement between Keynes and the US
The plan for Europe
Keynes had sketched out to Acheson was succeeded by a proposal to carry out
relief and reconstruction
operations through the establishment of a Central
Relief and Reconstruction Fund[ 6]
(CRRF). This was set out in the ‘Treasury Memorandum on Financial Framework of
Post-War European Relief’ (24 October 1941: Keynes 1980: 46–51; hereafter the CRRF Plan or
the ‘Keynes Plan’, for Keynes was its chief author).
The central idea of the Keynes
Plan was that the CRRF should operate a joint fund comprised of money donations or
contributions in kind from many countries. The basic principles of the CRRF
were that it should be responsible for collecting and distributing all required
relief materials (it should be authorized to buy the commodities required at
fair prices from any country); moreover it should determine, on the basis of
some appropriate principle yet to be established, the proportion of the relief
materials which a country should receive gratis or should be liable to pay. All
the transactions were to be booked in the joint fund. To allow the CRRF to
estimate the scale of transactions, the CRRF should request allied governments
to produce lists of their requirements, while at the same time taking the enemy
countries, as well as France
and China prerequisite for
equitably determining the proportions in which assistance should be granted
free of charge or made payable.
Keynes considered the CRRF,
conceived as above, greatly superior to the idea of having various countries giving relief in kind
separately, and sincerely wished to see it set up. He argued that establishing
the CRRF would obviate the need to make separate financial arrangements for
each commodity, whilst the alternative idea would result in the distribution of
commodities becoming a messy affair, due to the absence of any necessary correspondence
between the commodity quantities available and an appropriate financial burden.
Keynes put forward the buffer
stock plan, the CRRF plan together with the International Clearing Union plan as representing his vision for the
post–world war system. However, none of them were adopted, partly because of
the changed circumstances of the British economy and partly because of the
predominance of the US
Keynes’s Response to the UNRRA
After
the CRRF plan, in fact, the relief problem went through a long, zigzag process
(Hirai 2011). We will not go into its details here but move on to the problem of the UNRRA which entailed that
initiative in the relief problem was shifted to the US , [7]
Assistant Secretary of the Treasury, as a leader.
The UNRRA was established in
November 1943 at a 44-nation conference at the White House. The task was to
provide economic relief to Europe after the
War, and to rescue the refugees. More than 70 per cent of the UNRRA’s fund was
provided by the US
Keynes’s response to the UNRRA
changed over time, tracing a convoluted contour. Although he went on calling it
a ‘chimera’, around September 1943 he began to approach the idea more
favourably . He commented on the ‘White Plan’ in a memorandum of 17 September to
Ronald Campbell and R. Law entitled ‘Finance of European Relief’ (CWK XXVII,
pp. 90–2), referring to several tenets of the plan.
(1) Irrespective of
whether free or payable, all supplies should be given to recipient countries
along with invoices expressed in value, and should be dealt with on a
commercial basis as soon as possible. In the case of gifts, supplying countries
should withdraw the amount involved from the contributions to relief
finance . —Keynes agreed to this.
(2) Prices should be inclusive of freight
charges, for which supplying countries should pay. —Keynes judged that,
financially speaking, this would be advantageous to Britain
(3) The plan aims at establishing the
principle that loans made by a given country should be used by the recipient
country only for the commodities of the donor country (i.e., all loans should
be tied aid). —Keynes remarked that the US Administration would, in this way, be
able to use their funds to provide for cash purchases outside the United
States.
(4) The standard of contributing 1 per cent
of national income to UNRRA should be established. —Keynes comments that if this
were agreed to, the US
Here we see Keynes displaying a
positive attitude towards the White Plan which laid the groundwork for the
UNRRA. At the beginning of 1945, however, he was highly critical of it. He
thought the best option for the UK
To
carry on with the present military basis in the very small number of non-paying
non-enemy countries and persuade the U.S.A. to revise the terms of this to
UNRRA proportions, which, if UNRRA appropriation was to be released would be
very easy for them. Through the disappointment with UNRRA we have been led
along a path of nonsense. The sooner we take any opportunity to retrace our
steps... the better (Keynes
1980: 95).
The words ‘present military
basis... non-enemy countries’ appear to indicate the Lend-Lease. [8]
Keynes suggests that Britain should seek to return to the status quo ante through the dissolution of the UNRRA, try to get
the Lend-Lease continued in certain countries, and make efforts to get the US
to improve the terms of the Lend-Lease by making use of contributions which had
so far gone to the UNRRA. The UNRRA’s liquidation was determined in August 1946
(it was, in fact, made in 1949).
After the Second World War
Keynes
died in 1946 before seeing the developments in the relief and reconstruction
problem for Europe . However, as emerges in all
evidence from the above, Keynes would surely have been involved and interested
in it if he could have seen it. It was, in the end, under the Marshall Plan
(the ‘European Recovery Program’), which took effect in 1948, that relief and reconstruction
for Europe was carried out. Loans were
systematically allocated, by the Economic Cooperation Administration (ECA) of
the US . [9]
Roused from complacency by the onset of the Cold War, the US, which even in the
immediate post-war period had been extremely reluctant to get involved in
European affairs, became—well aware of the role it was taking on—the leader of
the West in the new international order from 1949 on. The world in which
Britain, now suffering from a hugely adverse balance of payments and massive
war debts, had been able to assume leadership had gone (it was, in fact,
Britain that was to receive the largest share of the Marshall Plan).
The ECA and the OEEC could be said
to correspond to the CRRF as a central organization allocating resources among
the countries in Europe in order to, as first
stage , relieve, and then reconstruct them. The main difference lies in the fact
that in the former it was the US
How would Keynes have acted if he
had lived long enough to see the development of the Marshall Plan? In a word,
the Marshall Plan, which made a great contribution to the path leading up to
the EU, [10]
might be related to Keynes’s three ideas expressed in his Economic Consequences of the Peace and the CRRF plan. [11]
He would probably have endorsed the Marshall Plan (the principal architects of
which were Clayton and Acheson, who were on good terms with Keynes), and might
have led the planning and management of the OEEC (remember that it was Bevin,
Foreign Secretary of the Attlee Government, UK . [12]
Before
trying to answer this question
let us take a look at the integration project Europe
had successfully carried out over the years. Although the details are
different, in effect the European integration project has followed the broad
lines anticipated by Keynes.
The
movement for European integration, which initially aimed at the formation of an
economic community as typified by the EEC (1958), proceeded towards setting up
a more comprehensive community inclusive of monetary integration, common
foreign security and so forth, as represented by the Maastricht zone which
could be equal to the US
The Euro Crisis
It was with the Lehman Shock (2008) that
the danger and fragility embedded in the Euro system came to light. Through the
shockwave of the Lehman bankruptcy, one year later, in the fall of 2009, the
Euro crisis started with the fiscal crisis in Greece . [13]
The
bailouts to Greece
(twice, May 2009 and July 2011), Ireland
(November 2010) and Portugal flightily , the Euro system ruled the so-called
‘Stability and Growth Pact’. However, it was no more than a gentlemen’s
agreement, for it entails no sanctions any countries breaking the pact. This
turned out to be a fatal drawback for the system when the shockwave of the
Lehman Shock hit Europe .
When the Lehman Shock came to Europe , the member countries experienced a sharp economic
downturn. In order to tackle this state of affairs each member country resorted
to stimulus measures—the only economic policy tool at its disposal. However,
the bubble burst and the budgetary situations grew progressively worse and
worse.
Investors who were worried about
the bond markets of the countries concerned (Greece ,
Ireland , Portugal bailout ,
which resulted in the above-mentioned rescue packages by the Troika. In return
these countries were called upon to implement austerity measures, implying a
sharply deflationary policy. These economies are plunging into a deflationary
spiral.
The measures implemented by the
Troika to quell the Euro crisis are, in a nutshell, mere stopgaps, far from
offering a fundamental solution to the crisis. The Troika provided the ailing
members with bailout money on condition that they pledge the austerity
measures, which, the Troika believes, is the only way to get over the crisis.
The proposal for EFSF enlargement is also a stopgap in preparation for similar
emergencies.
The main objective of these
bailouts is, of course, to prevent contagion from spreading throughout Europe and to defend the Euro system. The German and
French banks, among others, have been deeply involved in these financial
matters as the big holders of the sovereign debts of the ailing member
countries as well as lenders to the private sectors there. Thus once a
contagion spread there would be catastrophic consequences not only on the Euro
system but also on the world economy—a second Lehman Shock. This type of
contagion reminds us of the contagion seen in Europe
in the 1930s, which was finally to bring about blocked economy throughout the
world.
Keynes’s Likely Response to the Euro Crisis
Now
we come to the last question. How would Keynes have evaluated the Euro system
and responded to the Euro Crisis? Here are our some considerations.
Keynes would have supported the EPU
(the European Payments Union , 1950–58), which
had operated in the 1950s and drew great inspiration from Keynes’s ICU plan. [14]
In the case of the EPU, Keynes
would have said that inasmuch as each central bank’s independence is maintained, it can
implement its own monetary policy and foreign exchange rate policy. The EPU is,
moreover, a kind of clearing union so that it can prevent chronic imbalance. To
be correct, the EPU, created by OEEC, was a clearing system with credit
facilities, but had not something like bancor . The EPU was succeeded by the European Monetary Agreement (EMA. 1958–72).
Secondly, Keynes would have
endorsed the EC as a free trade zone (or a customs union) and he would have believed
it could contribute to economic growth there.
It is likely that Keynes would
have been against the Euro System and its inflexibility; [15]
he would have questioned the shift from the EPU to the Euro system and would
not have regarded it as an evolution in the right direction. The reason is, as is now well known, that the Euro system is burdened with a fatal drawback—a member country has ceded monetary
policy and foreign exchange policy to the ECB. Although the only policy at its disposal is fiscal policy, this
cannot be implemented in defence of the Euro system, but rather the country is
forced to take austerity measures which constitute, by their very nature, a
deflationary policy. This could lead up to the collapse of the Euro system per
se . [16]
Keynes would have opposed the
austerity measures. They are not so much a proposition dictated by economics as
a kind of ‘belief’. The system should be constructed in such a way that any
member country could achieve economic growth without falling into liquidity shortage.
The Euro system, which makes any such state of affairs impossible, incorporates fundamental
defects.
Keynes would have opposed the
phenomenon that sees the financial markets and commodity markets turning into a
great casino. That is, he would have been against the financial globalization
backed by Neo-Liberalism over the last two decades, if not against milder
financial liberalization. Keynes championed the ICU plan, which is so
structured that, by means of the international clearing system rather than a
single currency system, the liquidity required for the growth of each economy
is secured, while international imbalance (especially a tendency of a certain
country’s constantly having a surplus) could be prevented. Keynes would have
been critical of the present dollar system, of course.
This
paper tried to clarify what kind of planning Keynes proposed and would have
proposed for Europe in crisis. To this end two
aspects were examined. These are, of course, no more than conjectures, and yet
not mere fruits of the imagination, for we may with a fair degree of certainty
consider them to be the kind of remarks that would have emerged through his own
vision and planning for Europe in crisis in the interwar period and during the Second
World War.
References
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G. 2007. The Most Noble Adventure: The
Marshall Plan and the Time When America
Helped Save Europe . New York
Hirai,
T. 2011. ‘International Design and the British Empire .
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Istanbul, 19-22 May, Bogazici
University
Imamura, T.
1948. Takahashi Korekiyo. Tokyo
Keynes,
J. M. 1919. The Economic Consequences of
the Peace. London
Keynes,
J. M. 1923. A Tract on Monetary Reform.
London
Keynes,
J. M. 1926a. The End of Laissez-Faire.
London
Keynes, J. M.
1926b. ‘The Control of Raw Materials by Governments’, The Nation and Athenaeum, 12 June.
Keynes,
J. M. 1936. The General Theory of
Employment, Interest and Money. London
Keynes,
J. M. 1979. The Collected Writings of
John Maynard Keynes, ed . D. E. Moggridge, vol. XXIV, Activities 1944–6: The Transition to Peace. London
Keynes,
J. M. 1980. The Collected Writings of
John Maynard Keynes, ed . D. E. Moggridge , vol.
XXVII, Activities 1940–6: Shaping the
Post-War World: Employment and Commodities. London
Laidler,
D., and R. Sandilands. 2002. ‘An Early Harvard Memorandum on Anti-Depression
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D. 2006. John Maynard Keynes and
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NOTES
* The author would like to express his deep gratitude for
invaluable suggestions and comments by Professors M.C. Marcuzzo , P. Mehrling ,
F. Ranchetti (University of Pisa , Italy ), S. Nisticò (University
of Cassino , Italy ),
and J. Obata (Rissho University ,
Japan
[1]. Earlier Keynes had
advocated an international monetary system at Amsterdam
(and at the same time at Cambridge
[2]. President Truman
announced the immediate termination of Lend-Lease on 17 August 1945. The
principal negotiator leading up to the Anglo–American Financial Agreement was
William Clayton, for which see Keynes (1979: Chapter
4). Clayton, who was to be the ‘intellectual
architect of the [Marshall In March 1946, Clayton insisted that ‘[we] must go all out in this world
game…. Assistance should take the form not only of financial aid, but of
technical and administrative assistance’ (from Behrman 2007, p. 54).
[3]. This idea was often
to be referred to, as seen in Common Fund (1989). At present, however, the
prices of commodities have been violently fluctuated by Index Speculation
enabled by Commodities Futures Modernization Act (2000).
[4]. Leith-Ross visited Japan in 1935 in order to bring the Japanese
government round to an aid program for China
[5]. It should be noted
that Acheson together with Clayton was to be a major architect of the Marshall
Plan, as can be seen in his famous address of 1947 insisting that ‘a
coordinated European economy… was a fundamental objective’ (from Behrman, 2007,
p. 58).
[6]. The term ‘relief’ is
used to cover a period of six months to one year immediately after the end of
the war, while ‘reconstruction’ refers to a longer period of three to five
years.
[7]. White is also famous
for the main architect of IMF . For his activities in the 1930s, see Laidler and
Sandilands (2002).
[8]. According to the
Lend-Lease Act, the US In the negotiations, it was Acheson who
represented the American side. Article VII of the Agreement which includes
‘discrimination’ became a hot issue.
[9]. The law concerned is
the Foreign Assistance Act of 1948. The total sum of aid to the OEEC composed
of 15 countries amounted to $13 billion (see
‘Marshall Plan’ on Wikipedia). Although the
Marshall Plan ended in 1951, it was the starting point of
the long road toward the European Union.
[10]. It seems unfair to
regard the Marshall Plan as the victory of capitalism over communism, for the
Marshall Plan itself was based on elaborate planning.
[11]. For an interesting
reference to the relation between the Marshall
[12]. What remains uncertain
is how he would have dealt with the position of the UK UK
in terms of the British Empire ? Taking the
subsequent developments—the deteriorating situation of the UK, the emergence of
the two hegemons (the USA and the USSR) and the Suez Crisis—into account, he
could not have done anything to prevent the British Empire from disintegrating,
as it finally came to disintegrate with the Macmillan Government.
[13]. A rough sketch for
this runs as follows. May 2009: spread to the PIGS (Portugal,
Ireland, Greece and Spain), leading up to the Euro
crisis; November 2010: the bailout to Ireland; May 2011: the bailout plan to
Portugal; July 2011: the second-round bailout plan to Greece, and enlargement
of the EFSF (European Financial Stability Facility); on 26 October 2011: the EU summit; on 11
December 2011: the EU summits the main
theme of which was to establish the ‘Fiscal Union’. Standard &
Poor’s (S&P) arguably remarked that the EU summit determined only a long term
matter (Fiscal Union), without considering the short term one; on 21 December
2011: the ECB announced a drastically easy monetary
policy (‘Long Term Refinancing Operation’) which contributed to keep the
financial market calm; at the beginning of 2012: there emerged Euro crisis in various countries; on 25 January 2012: Merkel clearly referred to ‘Political Union’; on 30 January and 2
March 2012: the EU summit the main theme
of which was, again, the ‘fiscal compact’; as of mid-March 2012: Greek hair cut negotiation (debt swap deal) was finally agreed.
However, it does not mean that Greece difficulties of
the PIIGS (Italy
[14]. For this, see Amato
and Fantacci (2011); Fantacci (Chapter 9 in this volume).
[15]. Concerning the
relation between the EMU (the Economic and Monetary Union of the European
Union) and Keynes’s ICU plan, see Trautwein (2010). For a critical view of the
Euro system from Keynes’s ICU point of view, see Paus and Troost (2011).
[16]. Merkel and the Troika
believe that collapse of the system can be prevented by going further with
‘Fiscal Union’ or ‘Economic Government’, reaching a higher level of
integration. But this would ultimately prove pie in the sky. Above all, the
political divide is so acute, not only among the Euro member countries but also
within each member country, that there is no room for such a view.
