The Euro Crisis’ Theory Effect: Northern Saints, Southern Sinners, and the Demise of the Eurobond

Of the multiple competing crisis narratives that EU policymakers could have chosen from at the onset of the euro crisis in the spring of 2010, why did austerity and structural reform as respective cures for member states’ mainly ‘national’ problems of fiscal profligacy and lack of competitiveness win out over other plausible, and more ‘systemic’ solutions, like a pooling of sovereign debt or the formation of an economic government? To understand this puzzle, this article draws on the emerging literature on the sociology of knowledge to argue that the response to the euro crisis was heavily informed by broader social logics. These social logics constructed the problem and the solution heavily towards ordoliberal (austerity and the adherence to strict fiscal rules) and neoliberal (importance of structural reform) ideas. Our empirical evaluation takes up the special issue’s call for analytic symmetry by examining why the alternative solution of a Eurobond failed to take hold, with its advocates unable to change minds in Berlin. Mapping the fate of the Eurobond proposals in Germany allows us to trace the complex entanglement of economic policymaking and parse out the ways in which social realities are shaped to make particular policy choices seem inevitable when they in fact were the product of social processes.