The Euro, The Gold Standard, and German Power
A Cautionary Tale
Kindleberger’s theory of hegemonic stability states that fixed exchange rate regimes require a leader that will provide it with disproportionate resources to ensure stability. Applying his theory to European monetary cooperation, we argue that, like the tools of Goethe’s “Sorcerer’s Apprentice,” European Monetary Union was constructed as a “self-regulating system,” and it threatens to run amok without a hegemonic leader. Germany has exercised “soft hegemony” in Europe, providing the European Union with disproportionate resources to stabilize the single market. It has the capability to be the Eurozone’s leader. But, by 2017, blinded by its ordoliberal ideology, i t refused to do so, instead placing the burden of cooperation on the weak. If Germany continues to refuse to play the role of the hegemonic leader, European Monetary Union faces collapse.
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