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The Politics of the Eurozone Crisis: Two Puzzles behind the German Consensus

Wade Jacoby

Keywords: COMPARATIVE POLITICAL ECONOMY; EUROCRISIS; EUROZONE; ORDOLIBERALISM; PARTIES; POLITICAL

Abstract

This article offers a corrective to the notion that German ordoliberal ideology is the key to understanding German policy behavior during the Eurocrisis and, by extension, to the contours of the electoral debate in fall 2013. First, it shows that ordoliberal thought underdetermines policy choices. That is, different actors clearly influenced by ordoliberal thinking and often stressing different aspects of the broader ordoliberal cannon are arguing for more or less diametrically opposed policy solutions. Second, the article provides evidence that this deep divide inside the ordoliberal policy community has contributed additional incentives to the tentative and inconclusive policy choices of the government throughout much of the Eurocrisis. Third, the article extends the analysis of this very cautious policymaking into the campaign phase and the subsequent coalition agreement. It explains why the two major German parties—including an SPD with a much thinner attachment than the CDU to ordoliberalism—sought to play down the Eurocrisis in their campaigns and in their subsequent coalition agreement. One implication is the low probability of German policy change despite ideological differences.

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