Disorder: Hard Times in the 21st Century by Helen Thompson - review by Howard Davies

Howard Davies

Whither the Eurozone?

Disorder: Hard Times in the 21st Century


Oxford University Press 367pp £20 order from our bookshop

Helen Thompson appears quite frequently in the public prints, notably the New Statesman, and co-presents the Talking Politics podcast, where she comments sensibly and objectively on the passing scene. By which I mean, of course, that I tend to agree with her. Her day job is at Cambridge, where she is a professor of political economy. In the academic world she has made her name with a series of books and articles on the politics of oil, on which she is undoubtedly an expert. More recently, she has turned her attention to financial markets.

Disorder is an ambitious undertaking. In it, Thompson attempts to pull together three strands of argument in a way that is accessible to the general reader. The first, where she is sure-footed, focuses on the geopolitics of energy, and especially of oil. Her discussion of US policy in the Middle East, of the way that it has changed as a result of the exploitation of shale gas in the United States, and of the Russian stranglehold on European gas supplies, which has been facilitated by short-sighted German policies, is most illuminating. If you struggle to distinguish your Nord Streams from your Nabuccos, this is the book for you.

The second strand is financial, examining the evolution of the world economy from the collapse of the Bretton Woods settlement through the global financial crisis and the subsequent travails of the European economic and monetary union. The third strand is more straightforwardly political. Here, she relates the changing political landscape in Europe, in particular, to developments in the energy market and the impact of the financial and Eurozone crises on political parties. In most EU countries, the centre ground of politics has splintered and new forces on the far left and far right now play a much more significant role than they did two decades ago. The presidential campaign in France provides a perfect illustration. The Socialist Party has more or less disappeared, and the traditional Gaullists have at times been in fourth position, behind Macron, Marine Le Pen and the far-right Eric Zemmour.

Thompson warns the reader at the outset that she aims to privilege ‘the schematic over forensic detail’. She does not warn, but I must, that her prose is dotted with words like ‘constitutionalized’ and ‘delegitimating’, and that other words are used in a Red Queen sort of way (‘words mean what I say they mean’): ‘Britain joined most of its fellow EC members in eschewing American support for Israel’, for example.

But the most difficult sections deal with the Eurozone and the impact of its problematic construction on European unity, especially where Britain is concerned. She argues that ‘the Eurozone crisis set in motion the path [sic] that led Britain out of the EU. Of course, the crisis did not determine Brexit.’ Well, I hear you ask, did it or didn’t it? Essentially her view is that it did. ‘The Eurozone crisis destabilized the relationship between the EU and the Eurozone, unravelling British membership of the EU.’ How so? Because the European Central Bank (ECB) chose to prioritise the fight against inflation, slowing the European recovery from the financial crisis, and increasing unemployment in the southern countries in particular.

As a result, labour migrated away from those countries towards the UK, which became the ‘employer of last resort for the Eurozone’s southern members’ in the years after 2011. She likes that ‘employer of last resort’ formulation and uses it three times. But that does not mean it bears weight. Of course, immigration from Europe was a major factor in the referendum on EU membership, but the largest numbers, by far, came from Poland, Romania and other eastern European countries. Tony Blair chose to open the UK’s borders to their citizens as soon as they joined the EU, while all other member states aside from Sweden adopted a phased approach. In the five years after 2011 the number of Italians in the UK rose by about fifty thousand, Spaniards by perhaps seventy thousand and Greeks by twenty thousand. The total labour force in those countries is about fifty million, so we mopped up about a third of a per cent of workers from southern European states. The phrase ‘employer of last resort’ is a curious one anyway. Most of these people were looking for better, more highly skilled jobs than were available to them at home. Thompson’s warning that we should not be looking for ‘forensic detail’ in the broad sweep of her argument should be borne in mind. But I do not think it excuses an error on that scale.

She has a fundamental problem with the ECB, one that we should take seriously. Essentially, she thinks that taking monetary policy out of the political sphere is a mistake and produces a kind of alienation among the population. The ECB was constructed on the Bundesbank model, with a high degree of independence. Central bank independence is the model that most democracies have embraced in recent decades, with few regrets in the United States, United Kingdom, Canada or Japan, but arguably the Eurozone model is more problematic. The EU, unlike nation-states, has no central fiscal policy, a point well made by Thompson, and the ECB has sometimes instructed member states to cut spending or raise taxes, which many see as well in excess of its brief.

But here again Thompson’s argument is overplayed and unsustainable. She thinks that the ECB has ‘lost the anti-inflationary rationale’ on which it was founded and that the German economy no longer operates ‘in an economic world where policymakers [have] to protect it from inflationary pressures coming from elsewhere’. This is a very odd conclusion. The retail price index in Germany rose by 5.3 per cent in the year to December 2021, and the Germans are anxious. Of course, publishers’ deadlines and delays are the bane of authors everywhere, but the notion that inflation is dead and buried forever was a heroic view even a year ago.

There are other heavy-handed judgements littering the text. Can one really say that the Hartz reforms of 2003–5 put ‘an end to the old German welfare state’? There was a shift from passive to active interventions in the labour market, but social protection in Germany remains very high. And the argument that ‘the single market effectively ended national labour markets’ is remarkable. Labour mobility in Europe remains highly constrained for many reasons, not least linguistic barriers and inflexible housing markets. The European Commission monitors the trends. Mobility continues to grow, but more slowly than before, and two of every three workers who cross borders eventually go back to their country of origin. That is part of the problem with which the ECB must wrestle.

Nonetheless, Disorder is a stimulating read, and not only because one is pulled up short by some odd assertions. The first hundred pages on geopolitics are worth a couple of hours of anyone’s time. And the concluding chapters on democratic politics provide much food for thought. At a time when domestic politics is mainly about expensive wallpaper, it is good to be reminded that there are bigger issues at stake.

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