Bretton Woods, Brussels and Beyond: Redesigning the Institutions of Europe

One can no longer be sure whether Europe is just at a crossroads or on the brink. The multi-faceted economic crisis has deepened. It has also become a widespread political crisis. There is little disagreement that the European integration project needs to be reformed and that this needs to be done now, before the next economic downturn. The costs of doing nothing are large and rising, and we must think of innovative ways to make reform happen in a democratic, efficient and sustainable manner.

Economists have debated what to do and how, but have been mostly silent on who and when. Which institutions and agencies are needed? Not even asking the question, “Which institutions should be redesigned or even created from scratch to carry out reform in Europe?”, goes a long way towards explaining why reforms have not been implemented.

An eBook as a starting point for the discussion

In their new eBook, which collects reform ideas from 18 distinguished researchers, external pageCampos and Sturm (2018)call_made make the case that addressing such institutional questions is of fundamental importance for the future of European integration.

The individual chapters of this eBook distil the lessons from the Bretton Woods institutional framework and from the globalisation wave that followed it. The overarching questions that motivate the eBook are: Is a European Monetary Fund (EMF) sufficient? Are other institutions needed? How should these other institutions be designed and implemented? And how should they fit into the existing institutional framework?

The eBook is organised into five parts. The first examines the Bretton Woods system and European integration. The second looks at prominent European institutions (the European Parliament, the Structural Funds, and the ESM). The third focuses on financial institutions and on labour mobility. The fourth discusses key institutional aspects of monetary union. The fifth and final part highlights strategies for, and obstacles to, redesigning European institutions.

A serious omission in the future of Europe debate, in the view of Campos and Sturm (2018), is that the institutional question has not been raised. Compromises are necessary in terms of 'what' can be done 'when' and 'who' can solve the current difficulties.The eBook studies a few selected institutions. However, this list was not exhaustive and there are many that the eBook has not touched upon, such as labour market institutions (Blanchard 2018).  An institutional map of Europe should be a priority for future research.

Reforms are needed now

How does the ‘institutional approach’ compare with others in the future of Europe the debate about the future of Europe? The main difficulty in answering this lies in the multitude of different proposals, suggestions and policies that have emerged in the last five years or so. Indeed, the European Parliament created a website that tracks such proposals and prepared a report comparing them (European Parliament 2018a, 2018b). Yet the most important proposal in the view of Campos and Sturm (2018) is that from the ‘7+7’ French and German economists (Bénassy-Quéré et al. 2018), many of which contributed to the eBook. Their proposal encompasses reforms of the financial, fiscal, and institutional architectures. In their opinion, the reform of the institutional architecture should receive greater priority and greater weight, and should have been fleshed out more ambitiously.

The European integration project needs reform and it needs it now. The next economic downturn may have severe political and economic consequences if it finds Europe unprepared. The costs of doing nothing are enormous. We must be creative, determined and able to implement the needed reforms in a democratic, efficient and sustainable manner.

Although this eBook cannot fully address the many issues surrounding the institutional question of how to design a new framework for the European integration project. The authors are convinced, however, that if it succeeds in raising and adding these issues to the current debate on the future of Europe, their task has been accomplished.