Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

The project of fiscal consolidation imposed on Europe under German leadership was certainly political. But it was not only that. It was a vision of a long-term reordering of Europe’s society and economy. Merkel was fond of shocking unsuspecting visitors with the remark that unless Europe reformed it would go the way of Inca civilization.23 In pursuit of its goal, to be realized over the course of a decade, Berlin did not flinch from imposing heavy short-term costs. That is what reform of a failing social and economic model entailed. That was the lesson of the collapse of communism, the economic project of German unification and the incorporation of Eastern Europe into the EU. In pursuing that project one could make concessions neither to the short-term time horizons of markets nor to Syriza-style protest politics. To ensure that Europe stayed the course, it was essential to contain “political contagion.” It would be disastrous to make concessions to the Far Left government in Greece, concessions that during the crisis had been denied to the governments of Eastern Europe, Ireland, Spain and Portugal. Whatever the misery of the Greek population, it hardly mattered in the wider economic balance of the eurozone. The battle was about the wider questions of political discipline and authority, which, as the conservative globalists in Berlin saw it, were the foundations for long-term economic success.