Master Thesis
M.A. European Policy
Faculty of Humanities
The Impact of Economic Culture on the French and
German Positions towards Eurobonds
Student:
Bodo von Haumeder
Student ID:
5976650
Telephone:
+49 (0)1577 0602638
E-‐Mail:
Bodomoritz@web.de
Supervisor:
P.W. Zuidhof
Table of Contents
1. Introduction
3
2. Conceptualizing Economic Cultures: A Sisyphean Challenge 6
2.1. Every Society Creates its Own Economists 6 2.2. One Direction but Different Pathways 12
2.3. Exploring Economic Cultures in Tandem with Fourcade and Schmidt 16
3. Portraying Economic Cultures: French State-‐Directed Projecting
20
and German Rule-‐Based Marketism
3.1. French Economic Culture as Raison d’Etat 21 3.1.1. The French Enarchie: A Statist Elite 21 3.1.2. Towards More Market-‐Orientation Following Statist Patterns 36 3.1.3. French Economic Culture: State-‐Guided Capitalism 47 3.2. German Economic Culture as Ordnungspolitik 49 3.2.1. The Historical Roots: From Cameralism to Ordo-‐Liberalism 50 3.2.2. Towards More Market-‐Orientation Along Ordo-‐Liberal Paths 63 3.2.3. German Economic Culture: Rule-‐Oriented Capitalism 76
4. Eurobonds: French Demands for more Economic Discretion
79
Versus German Focus on Economic Stability
4.1. A Variety of Proposals 79 4.2. France and Germany at Loggerheads over Eurobonds 82 4.3. French and German Attitudes Towards Eurobonds From an Economic 84
CultureiPerspective
5. Conclusion
88
6. Bibliography
91
1.) Introduction
The on-‐going euro crisis once again confirmed the understanding that European econo-‐ mies differ fundamentally in organisational structure and intervention methods. Like never before Europeans were induced to realize how different their home countries be-‐ have when it comes to regulating and managing the economy. While northern Member States like the Netherlands, Austria and Germany advocate measures to combat the cri-‐ sis based on austerity, stability and long-‐term growth, southern countries like Greece, Italy and Spain prefer a more growth-‐focused strategy, which gives monetary and fiscal incentives to improve the economic situation in a more direct manner. It became appar-‐ ent that each Member State inherited characteristic economic principals and practices from it´s distinct national background leading to a great European variety of national forms of capitalism. In the course of the euro crisis it became fairly evident that some national economic paradigms allowed a few Member States to perform better during the crisis then others. Increasingly, comparisons were made between different national modes of organizing and navigating the economy within the EU. In the most general of terms, the differentiation is carried out between struggling and crisis-‐ridden southern European economies and progressive and crisis-‐managing northern European econo-‐ mies. However, distinctions of economic approaches are not just being made between geographical regions but every European nation is believed to have its own peculiar way of managing economic activities. Each European Member State has constructed an eco-‐ nomic system designed to properly fit its society´s pluralistic character. The total sum of ideas, institutions, values, practices, convictions and techniques concerning the govern-‐ ance of the domestic economy of a European Member State will hereafter be referred to as "economic culture". The influence originating from economic cultures plays an ex-‐ tremely important role in economic decision-‐making and has considerably shaped the EU crisis management during the euro crisis. As this topic remains insufficiently investi-‐ gated this thesis analyses the impact of economic culture on European economic gov-‐ ernance.
In particular, this thesis focuses on the economic cultures of France and Germany. By no means this is simply due to the fact that France and German are the two largest economies of the Eurozone but can be ascribed to the significance of both countries for European economic governance making. Historically, the Franco-‐German tandem has been a vital driver of European integration. However, very frequently Franco-‐German leadership has not proven successful due to a common economic approach. It turned out that since France and Germany are departing from different economic positions they are likely to achieve a beneficent European compromise, which can be accepted by all Mem-‐ ber States. Generally, both countries go first into discussion with like-‐minded countries before they talk to each other. Given that France has much in common with southern Member States and Germany shares an approach with northern Member States Franco-‐ German cooperation usually stands a good chance of reaching a compromise acceptable to all Member States. Thus, the economic cultures of France an Germany are at the fore-‐ front of attention in this master thesis because of their importance for the European in-‐ tegration process in general and the European crisis management of recent years in spe-‐ cific.
The study of economic culture has become highly relevant over the recent years due to a growing geographical divide between southern and northern European econo-‐ mies, both in performance and ideology. Currently, southern European economies ap-‐ pear to operate rigidly and dis-‐functionally with low growth rates and high unemploy-‐ ment while northern European economies seem to perform more flexible and competi-‐
tive with higher growth rates and less unemployment. Overall, GDP growth rates in the euro zone were very disappointing over the past years (2012: -‐0,7%, 2013: -‐0,4%1) and unemployment even reached an all-‐time high since the introduction of the euro (2013: 12%2). Therefore, the need for a common European growth strategy arises to revive employment and growth in Europe. This broad-‐based approach should be led by France and Germany due to their historical important role for European integration and their great diversity in economic culture, which makes a Franco-‐German compromise most likely to turn out agreeable to the entire EU. In this respect, the study of the economic cultures of France and Germany is of great significance for European economic govern-‐ ance in terms of joint liabilities, fiscal integration, financial regulation and social cooper-‐ ation, which could help to overcome the euro crisis and to lead the EU back to economic prosperity and growth.
Over the course of the last years the EU introduced several measures to combat the euro crisis as the "European Stability Mechanism" or the ECB interventions. Howev-‐ er, one stability measure has only been vehemently discussed due to it´s great contro-‐ versy amongst Member States, Eurobonds. Overall, bonds jointly issued by all Eurozone Member States are supported by many southern Member States as France, Spain and Italy and opposed by most northern Member States as Germany, the Netherlands and Finland. The on-‐going discussion on Eurobonds clearly illustrates the differences in eco-‐ nomic culture between France and Germany and in a broader sense the contrast be-‐ tween southern and northern European economic cultures. This becomes especially clear in the light of the continuing dispute on Eurobonds. In this respect, the question arises to what extent economic culture influence the international positioning of Mem-‐ ber States in economic issues?
The issue of Eurobonds was chosen to demonstrate the dissimilarities of French and German economic culture and depict the impact economic culture can exert on Eu-‐ ropean economic decision-‐making. This thesis deals with the question how the French and German economic culture shaped their country´s position towards Eurobonds. This thesis argues that Member State´s attitudes towards EU economic governance issues are not only motivated by the pursuit of their material interests but also, whereas to a lesser extent, by ideational forces namely their economic cultures. That is to say that France and Germany did not only represent their material interests throughout the euro crisis but at the same time promoted their economic visions for solving the euro crisis. Ulti-‐ mately, the EU crisis management of the last years was not just a distribution of financial aid burdens amongst crisis-‐managing states and an imposition of conditions for assis-‐ tance for crisis-‐ridden states, but also a battle of different economic approaches. With this in mind, the central statement of this thesis is that the French and German economic cultures considerably contributed to the positions of these countries towards the issue of Eurobonds.
To tackle the issue, this thesis provides two thorough accounts of the French and German economic cultures. In an attempt to categorize national economic peculiarities a multitude of approaches has been developed since the early nineties, collectively known as "Variety of Capitalism” literature. This thesis uses two "Variety of Capitalism” ap-‐ proaches in particular to outline the French and German economic cultures; Marion Fourcade´s "Economists and Societies" and Vivien Schmidt´s "The Future of European
1 Eurostat. (2013 April 30). ‘Real GDP Growth Rate EU Member States’. Retrieved from: <http://epp.-‐
eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&plugin=1&language=en&pcode=tec00115>.
2 Eurostat. (2014 April 28). ‘Unemployment Rate (Annual %)’. Retrieved from: <http://appsso.eurostat.-‐
ec.europa.eu/nui/show.do?dataset=une_rt_a&lang=en>.
Capitalism". These approaches were chosen because used complementary they provide a comprehensive documentation of the French and German economic cultures. After the conceptualization of economic cultures this thesis describes the idea of Eurobonds, the debate on their implementation and the positions France and Germany towards the is-‐ sue. Subsequently, this thesis illustrates how the economic cultures of France and Ger-‐ many correspond with their stances on the introduction of Eurobonds. Finally, this the-‐ sis addresses the central statement and reveals how economic cultures contributed to the strategic positioning of France and Germany during the Eurobonds debate.
Following up on this introduction, chapter two conceptualizes the term "econom-‐ ic culture". The first two sections address the contentual scope, methodical procedures, attracted criticisms and main conclusions of the theoretical approaches of Fourcade and Schmidt. The third section displays how both approaches en bloc provide a comprehen-‐ sive account of the notion "economic culture". Subsequently, chapter three factually por-‐ trays the French and German economic cultures. To outline economic cultures this chap-‐ ter makes use of the theoretical approaches of Fourcade and Schmidt. In conclusion, this chapter provides overviews of all characteristic features of the French and German eco-‐ nomic cultures. Next, chapter four discusses the issue of Eurobonds. To begin with, this chapter outlines five suggested proposals for Eurobonds. Secondly, the arguments em-‐ ployed by the French and German governments to justify their positions will be illus-‐ trated. Lastly, this chapter illuminates the stance of France and Germany towards Euro-‐ bonds linking their official positions to the characteristic of their economic cultures. In final consideration, the main question will be addressed in form of a conclusion, which describes the impact of French and German economic cultures on their position with regard to the implementation of Eurobonds.
2.) Conceptualizing Economic Cultures: A Sisyphean Challenge
To illuminate how the economic cultures of France and Germany have shaped their country´s positions towards the issue of Eurobonds it is necessary to clarify what is be-‐ ing understood under this notion. Outlining the concept of economic culture is without doubts a high mountain to climb. In current language, the term is being used to describe a wide diversity of cultural features like institutional structures, social interactions, business etiquettes, patterns of thought and policy measures. All these cultural peculiar-‐ ities have in common that they affect the way of practicing economics. In the course of this chapter two authors will be discussed, who offer different approaches of theorizing economic cultures. First of all, Marion Fourcade´s book Economists and Societies will be reviewed. Fourcade adopts a socio-‐historical approach to the concept of economic cul-‐ tures and particularly addresses the role of economists within national societies. Then, Vivien Schmidt´s book The Futures of European Capitalism will be examined. Schmidt follows a political-‐economic approach and characterizes economic cultures primarily in terms of intra-‐societal relations. Both authors provide vivid accounts of how the notion of economic culture could be interpreted. In essence, this chapter lays the theoretical groundwork for the second chapter, which will conduct a descriptive analysis of the economic cultures of France and Germany applying Fourcade´s and Schmidt´s ap-‐ proaches. The third section will elaborate how economic cultures effectively influence the decision-‐making regarding significant economic issues using the example of Euro-‐ bonds.
This chapter starts with exhibiting the comparative models of Marion Fourcade and Vivien Schmidt one after another. To start with, the contentual scope, methodical procedures and the most important conclusions of both authors will be delineated in a comparative fashion. In addition, the most frequently expressed criticisms of both ap-‐ proaches will be displayed. Essentially, the first two sections demonstrate how both au-‐ thors deliver valuable contributions to the conceptualization of economic cultures. Sub-‐ sequently, the third section illustrates why the approaches of Fourcade and Schmidt as a synthetic entity constitute a solid point of departure for discovering the meaning of eco-‐ nomic cultures. To begin with, this section determines the adequacy of both approaches for theorizing economic culture and depicts how they complement each other. Next, it will be outlined why both approaches are suitable for establishing the argument of this thesis. Finally, the third section elucidates which elements of economic cultures are not dealt with sufficiently or at all by Fourcade and Schmidt. At the end of this chapter the concluding section provides a comprising overview of why these approaches were cho-‐ sen and which components of their approaches will be used to describe the economic cultures of France and Germany.
2.1) Every Society Creates its Own Economists
As the first step of this exploration of national economic varieties this section discusses how Marion Fourcade´s book Economists and Societies contributes to exemplifying eco-‐ nomic cultures. In other words, this section assesses to what extent her approach can be of assistance for defining economic cultures. This section starts off by illustrating Four-‐ cade´s findings, methodology and contentual scope. Following this, it will be portrayed how Fourcade´s book has been critiqued by the academic world. As a last point, this sec-‐ tion provides an account of the methodical strongpoints and weaknesses of Fourcade and explains why this approach has been picked to conceptualize economic cultures.
Marion Fourcade is a comparative sociologist, who is mainly interested in varia-‐ tions in economic and political knowledge and practice across nations. The aim of her book is to demonstrate that national societies create different kinds of economists. Even though Fourcade agrees that the disciplinary field of economics has been highly interna-‐ tionalized and standardised she nonetheless puts forward the view that economic knowledge maintains a strong and constant national component. As already mentioned above, Fourcade adopts a socio-‐historical approach to illustrate that the role of econo-‐ mists within different societies has been shaped significantly by national culture. Ac-‐ cording to Fourcade, the nature of economics is highly dependent on the institutional structures of different countries and therefore nationally specific. To prove her point, Fourcade studies the historical development of the economic profession in France, Brit-‐ ain and the United States since the late 19th century. She concludes that every country produces distinctive kinds of economists with different skillsets, places of operation and social positions. In her opinion, the economic profession has been significantly shaped by statism in France, by public-‐minded elites in Britain and by market institutions in the US. To support this conclusion, Fourcade displays profoundly how the cultural peculiari-‐ ties of French, British and American societies have led to different understandings of the profession of economists and the practise of economics. On the whole, she identifies three distinctive trajectories of economic knowledge: a “statist division” in France, a public-‐minded in the UK and a “merchant professional” in the US. In sum, Fourcade comes to the result that while the French economic profession derives from a political culture based on the administrative exercise of power, British economists refer their identity to a political culture centred on small, tightly knit societies of economic knowledge, which are closely affiliated with elite academic institutions in Oxbridge or London and, lastly, American commercial and scientific professionalism gains their legit-‐ imacy solely from academic qualifications and produces market-‐oriented knowledge.3 To capture the national specificities of the economic profession in an illustrative way Fourcade created a comprehensive comparative model. This model was developed to investigate how economists have been influenced by the social architecture of the French, British and American nation states over the course of time. In broad terms, Fourcade scrutinizes how the variegated cultural, institutional and political contexts of different national societies have originated distinctive economic pathways through the history of economics. Departing from the basic assumption of her book that “different societies create different individuals” Fourcade outlines how being an economist varies significantly among nations. Her description of distinctive economic cultures is based on the premise that the economic mind-‐set of a nation is determined largely by it´s national culture. Although international developments like the post-‐war rise of scientism, formal-‐ ism and the statistical revolution retained strong influence over the economic profession Fourcade argues that these international tendencies manifested themselves in ways pe-‐ culiar to the respective national culture.4 Put in short terms, Fourcade´s comparative model was fabricated to demonstrate how the understanding of economics is strongly determined in each nation by the underlying elements of its social setting.5
Fourcade´s comparative analysis consists of two stages. During the first stage Fourcade illustrates how the evolution of the political order has influenced the under-‐
3 Marion Fourcade. 2009. Economists and Societies: Discipline and Profession in the United States, Britain,
and France, 1890s to 1990s. Princeton: Princeton University Press, pp. 8 – 12.
4 Wade Hands. ‘National Context and Modern Economics: Three Case Studies’. Journal of Economic Meth-‐
odology, Volume 19, Number 4 (2012), p. 442.
5 Marion Fourcade. 2009. Economists and Societies: Discipline and Profession in the United States, Britain,
standing of economics. In the second stage she outlines how economic knowledge is be-‐ ing produced and reproduced within the national institutional frameworks. In what fol-‐ lows, both stages of Fourcade´s model will be thoroughly elucidated.
In the first stage of her theoretical model Fourcade points out that the political and institutional landscapes of societies lay the groundwork and create the framework conditions for the development of national economic thought. Basically, the fundamental political structures set the direction for the development of economic knowledge and continue to impact it´s course. Correspondingly, Fourcade holds the opinion that the national political system has a major impact on the development of economic knowledge within a given society. To support this statement she gives the example that democratic societies generally lead to a pragmatic and broad-‐based approach towards economic knowledge while aristocratic societies give rise to a more intellectual and elitist orienta-‐ tion towards economic scholarship.6 Fourcade is convinced that the socio-‐political basic structure constitutes the fundamental basis for the development of economic knowledge of a nation. During the first stage of her model Fourcade analyses the relationship be-‐ tween political culture and economic thinking by spotlighting three channels of influ-‐ ence.
Firstly, Fourcade argues that economic knowledge derives from political organi-‐ zation. The economic architecture of a nation is adjusted to the political system in power and is created to safeguards it´s interests. For instance, the mercantilist system in the early stages of the nation-‐state was constructed to bolster the power of the king´s lead-‐ ership. Through the promotion of exports and the discouragement of imports the mer-‐ cantilist ideology intended to boost the national money supply and thereby increase tax revenues.7 As the practise of politics became more liberal over the course of time so did the management of the economy. This historical connection between politics and eco-‐ nomics laid the foundation for the modern study of political economy. According to Fourcade, the contemporary setup of the economy can at all times be derived from the structure and interests of the present political system.
Secondly, Fourcade indicates that political governance practises have affected the understanding of economics throughout history. In Fourcade`s opinion the economic discourse of a nation is the product of political ideas and actions, which emerged before. To underpin her claim that economic governance precedes economic discourse she gives examples from different periods of history. For one thing, Fourcade argues that free-‐trade theory has been a result of the institutions of the British Commonwealth and for another thing she submits that laissez-‐faire economics emerged from the “rationali-‐ zation of the free market society which matured after the reform of the Poor Laws in 1834”.8 Hence, the argument of this section is that political governance practices forego
and shape the national mode of economic thinking.
Thirdly, Fourcade holds the view that a self-‐conscious and introversive economic discourse of states has emerged during the eighteenth and nineteenth centuries as a re-‐ sult of the upcoming model of the nation-‐state as the main actor in public administration and international relations. The emergence of the nation-‐state as a political unit has led to cohesive economic territories, which became to a high degree self-‐sustainable and operated predominately independent from each other. This economic model corre-‐ sponded with the prevailing nationalistic mind-‐set that states should be absolutely sov-‐ ereign and self-‐sustainable. The nation-‐states used for a long period of time a variety of protective measures like monetary policy, tariffs and quotas to block off their national
6 Idem. p. 18. 7 Ibidem. 8 Idem. p. 19
economic space. For this reason, the political agenda of nation states has had great influ-‐ ence on the economy by creating what Benedict Anderson describes as imagined eco-‐ nomic communities.9 While Fourcade concedes that European nation states have since long stopped to close off their national economic space she asserts at the same time that the way of thinking about economics is still very much influenced by nationalistic eco-‐ nomic discourses.
Thus, Fourcade expresses the view that the economic profession is being shaped by political framework conditions like political organization, political governance prac-‐ tices and nationalistic economic discourses. However, this political dimension of eco-‐ nomic knowledge constitutes for Fourcade merely a suitable starting point for the anal-‐ ysis of national economic professions. In the second stage Fourcade moves from investi-‐ gating vast institutional structures to analysing how economists concretely interact with different national institutions.
In the second stage of her comparative analysis Fourcade focuses on the influence of national culture on the understanding of economics. Culture is here being defined as the individual practice of all actors operating within the national institutional structure. The focus of this section lies on how these “cultural agents” or cultural institutions influ-‐ ence the upbringing of economists. Fourcade asserts that the national path of economic scholarship originates from socio-‐political fundaments, which were being discussed in the first stage of her model, but that cultural agents continuously determine it´s course. Against this background, especially the second stage is very significant for delineating national economic fields because the actual relationship between institutions and econ-‐ omists is being outlines. Fourcade understands cultural actors as all kinds of institu-‐ tions, which exercise influence on a society like companies, media, religions and most importantly governments.10 She describes the impact of culture on economics as “the practical involvement of actors within institutions”.11 According to Fourcade, institutions play a major role in the development of economic knowledge by producing and repro-‐ ducing economic knowledge. In doing so cultural institutions push nations to continue to follow their peculiar economic path. Fourcade regards the most striking cultural influ-‐ ences on economics to be educational institutions, administrative institution and the status of economists within the national system of professions. For this reason, Four-‐ cade distinguishes between three significant institutional processes of how cultural ac-‐ tors shape economic knowledge.
The first process defined by Fourcade is The Order of Learning. Basically, this pro-‐ cess comprises the incorporation of economic knowledge into educational, academic and scientific organisations. The structure of national knowledge systems influences the way economics are understood by legitimating certain economic approaches and no-‐ tions while rejecting others. Essentially, educative institutions contribute to establishing an “economic episteme” in a national context through creating clear boundaries and providing impulses for the development of economic thought. Fourcade points out that the academic fields of the US, the UK and France organize economic knowledge in com-‐ pletely different ways. For example does the market represent in the US not only the main construction for comprehending the economy but also for organizing the educa-‐ tion system while in the UK the academic system is strongly dominated by “centres of
9 See: Anderson, Benedict. 1991. Imagined Communities: Reflections on the Origin and Spread of National-‐
ism. London: Verso.
10 Marion Fourcade. 2009. Economists and Societies: Discipline and Profession in the United States, Britain,
and France, 1890s to 1990s. Princeton: Princeton University Press. p. 20
intellectual authority”.12 In this light Fourcade assigns great importance to the influence of the institutions of knowledge on shaping economics.
In the second process identified by Fourcade, The Administrative Order, economic knowledge is incorporated into society by public administrations and policy makers. Public institutions in different nations interact in various ways with the economy. As already mentioned above public institutions coordinate their economic policy with a wider political agenda. Following this line administrative institutions develop a certain perceptions of how the economy should be managed, which Fourcade calls an “economic policy paradigm”.13 Fourcade argues that public institutions shape national economics according to their vision of economic management. Consequently, they influence the development of economic though in a way that suits their political beliefs.
The third process depicted by Fourcade is The Economic Order. This process de-‐ scribes the shaping of economic knowledge by focusing on how the profession of econ-‐ omists is perceived in different nations.14 So this approach concentrates on the place of economists within the national system of professions. 15 The role that economists play in a society certainly impacts the way they are able to exert influence on economics. Hence, the process of The Economic Order focuses on the social status of economists and their interrelation with other profession. Fourcade holds the view that the social status of economists shapes the development of economic knowledge significantly within an ex-‐ isting society.
Hence, the second stage of Fourcade´s model she maintain that the economic pro-‐ fession is being influenced by national culture through three different channels: The Or-‐ der of Learning, The Administrative Order and The Economic Order. Furthermore, Four-‐ cade demonstrates how national culture, above all, shapes economic knowledge through powerful institutions. These three institutional process combined can be considered the cultural dimension of Fourcade´s approach.
Of course every approach dealing with such an abstract construct as economic cultures will evoke plenty of criticism. Frequently, critics argue that Fourcade is much better in explaining how societies shape individuals then the other way around.1617 Thus, most critics agree that Fourcade succeeds in illustrating how national institutional frameworks influence the vocation of economist but falls short in depicting how excep-‐ tional individuals manage to reshape political institutions with their economic vision. In this context, Margaret Thatcher and Ronald Reagan are often mentioned, who both launched extensive economic reforms, which were at the time not compatible with mainstream economic thought. That is why, Fourcade depicts in a very vivid fashion un-‐ der which institutional and intellectual conditions economic knowledge was established, but she does not address how economists deployed their knowledge to alter the face and fabric of society. Besides, critics contend that Fourcade focuses a lot on the national as-‐ pect of the economic profession but does not sufficiently indicate which elements of this
12 Marion Fourcade. 2009. Economists and Societies: Discipline and Profession in the United States, Britain,
and France, 1890s to 1990s. Princeton: Princeton University Press. p. 24.
13Idem. p. 25. 14Idem. p. 26. 15Idem. p. 27.
16 John Campbell. ‘Book Review: Economists and Societies: Discipline and Profession in the United States,
Britain, and France, 1890s to 1990s’. American Journal of Sociology, Volume 115, Number 5 (2010), p. 1610.
17 Martin Carstensen. ‘Book Review: Economists and Societies: Discipline and Profession in the United
occupation became more internationalized.18 Especially with her argument being that core aspects of the economic metier remained national it would be most interesting to hear about which parts became more international to gain an accurate overall picture. Generally, critics point out that the establishment of economic knowledge is not just about institutional influences but also about economic events, economic discourses and economic history, which all remain underdeveloped in Fourcade´s book. Moreover, Fourcade is also criticised for not having included economic policy measures as a prod-‐ uct of national culture. It would have been very interesting to hear about how national economic expertise leads to different economic policies as for example distinct mone-‐ tary policy operations.19 In particular in the case of France and Germany both countries have pursued very different monetary policies in the post-‐war period. Finally, Fourcade did not mention the grand ideological conflict of the 20th century, the Cold War. As to that, many critics agree that a historical analysis of the development of economic knowledge should definitely include the long global struggle between market-‐oriented economies and centrally planned economies, which lasted circa 40 years throughout the 20th century.20 Nonetheless, the vast majority of these points of criticism do not restrict the suitability of Fourcade´s approach for conceptualizing economic cultures. Many fea-‐ tures of great importance for the delineation of economic cultures like concrete policy measures, the ideological struggle of the Cold War and the internalization of economics are included in Vivien Schmidt´s approach, which will be discussed in the next section. At the same time, it is very regrettable, that Fourcade does not focus on how outstanding individuals have managed to reform the economic system comprehensively like for ex-‐ ample François Mitterrand in France or Ludwig Erhard in Germany. In the end, Four-‐ cade´s analysis has some shortcomings still constitutes extremely valuable approach for outlining economic cultures.
After having outlined the theoretical approach of Fourcade and the criticisms it evoked it will now be displayed how Fourcade´s book will be utilized in this thesis. As a preliminary point, Fourcade´s approach covers the cases of the UK, the US and France. However, this thesis investigates the economic cultures of France and Germany, which is why Fourcade’s methodology will not be applied to the case of Germany. While Four-‐ cade´s analysis includes the case of France additional literature will be used to portray the historical development of the economic order of Germany. Within the framework of this thesis her approach will be employed to describe the historical development of na-‐ tional institutional settings, which shaped the upbringing of economists and thereby also the establishment of economic knowledge. Fourcade´s book was chosen because she manages to illustrate very clearly under which historical conditions economic knowledge evolved. In this regard, her approach is very useful to comprehend the ori-‐ gins of economic cultures by studying the historical development of national contexts. Fourcade outlines vividly for what reasons and under which circumstances distinct eco-‐ nomic cultures emerged. Furthermore, Fourcade´s analysis will be used to describe French and German economists. In order to understand the disparities between eco-‐ nomic cultures it is vital to learn about the differences in background, social position,
18 Bernard Gazier. ‘Book Review: Economists and Societies: Discipline and Profession in the United States,
Britain, and France, 1890s to 1990s’. Socio-‐Economic Review, Volume 8, Number 4 (2010), p. 763.
19 Bruce Carruthers. ‘Book Review: Economists and Societies: Discipline and Profession in the United
States, Britain, and France, 1890s to 1990s’. Sociological Forum, Volume 27, Number 2 (2012), p. 537.
20 Bernard Gazier. ‘Book Review: Economists and Societies: Discipline and Profession in the United States,
Britain, and France, 1890s to 1990s’. Socio-‐Economic Review, Volume 8, Number 4 (2010), p 754.
fields of competence and mentality of economists from different nations. After all, na-‐ tional economic cultures are substantially marked by the people, who practice econom-‐ ics in the field. Thus, Fourcade was also chosen because she clearly displays how differ-‐ ent national contexts generate distinctive economists. To sum up, Fourcade was picked in this thesis because she manages to illustrate how political and cultural settings shape the way economists work, think and are being perceived. Both, the development of na-‐ tional contexts and the modes of operation of economists lay a solid groundwork to un-‐ derstand better concrete features of economic cultures like policies, practices and poli-‐ tics, which will be addressed in the next section.
2.2) One Direction but Different Pathways
After having elaborated how Fourcade´s analysis contributes to the conceptualization of economic cultures it will now be elucidated how Vivien Schmidt´s approach brings for-‐ ward the theorization of economic varieties. Even though, both authors share many basic assumptions about the meaning and implications of economic cultures Schmidt offers a very different way of conceptualizing the idea of national economic cultures. To begin with, this section illustrates the temporal and contentual scope, the methodical approach and the main conclusions of Vivien Schmidt. Subsequently, it will be discussed how Schmidt´s approach has been reviewed by the academic community. At the end, this section outlines on what grounds Schmidt´s approach has been chosen to contribute to theorizing the notion of economic cultures.
In her book The Futures of European Capitalism Vivien A. Schmidt distinguishes between three different types of capitalism: British market capitalism, French state capi-‐ talism and German managed capitalism. According to Schmidt these three models of capitalism represent the three ideal-‐typical economic systems in Europe. Nota bene: France, Britain and Germany were not picked by Schmidt because they embody the pur-‐ est form of these different models of European capitalism but because they are the larg-‐ est and most influential EU-‐Member States and thereby the most representative for the three forms of post-‐war European capitalism. For example, the Netherlands, Austria and the Scandinavian countries can also be ascribed to the group of managed capitalism, while Italy and Japan can be attributed to the camp of state capitalism.21 Hence, differen-‐ tiating between British liberal economics, French statist governance and German corpo-‐ rate structures Schmidt comes to the conclusion that three varieties of European capital-‐ ism can be identified.
Furthermore, Schmidt points out that whereas national economic cultures have been subject to strong adaptational pressures of international forces like globalisation and Europeanization they have not converted towards one economic model. However, Schmidt recognises that all European models of capitalism have moved generally to-‐ wards greater market-‐orientation as a consequence of neoliberal tendencies. Nonethe-‐ less, Schmidt argues that, after all, the key features of the three models of European capi-‐ talism continue to exist. In a few words, Schmidt asserts that Britain, France and Germa-‐ ny departed from different post-‐war economic foundations, consequently followed dif-‐ ferent economic pathways and will ultimately adopt inherent approaches to deal with economic issues in the future.22 Most importantly, the essential approach of organizing the national economy will remain in existence. Schmidt portrays the three models of European capitalism, their defining differences and path dependencies as well as their
21 Vivien Ann Schmidt. The Futures of European Capitalism. Oxford: Oxford UP, 2002, pp. 108-‐109. 22 Vivien Ann Schmidt. The Futures of European Capitalism. Oxford: Oxford UP, 2002, p. 7.
responses to international pressures in three chapters covering the diversity of different national policies, practices and politics.
The first chapter discusses the economic, institutional and ideational forces of globalisation and Europeanization and describes how Britain, France and Germany re-‐ sponded to this. Schmidt admits that globalisation has led to a loss of national sovereign-‐ ty, an increase in power of supranational economic governance institutions and an over-‐ all liberalization of international economic policies. Nevertheless, she contends that na-‐ tion-‐states have managed to stay in control by strengthening national regulations and obtaining shared supranational authority and control. Regarding Europeanization the losses of national sovereignty and the gains of shared supranational control take on an even greater dimension. Yet, Europeanization does not solely amplify the forces of glob-‐ alization but can also act as a shield against them, for instance by means of monetary integration and Internal Market.23 At the same time, Europeanization has achieved an exceptional degree of market integration, policy coordination and legislative conver-‐ gence. Schmidt holds the view that Europeanization, just as globalisation, rather bolsters the capabilities of nation-‐states then deprives them of the ability to exercise influence.
Furthermore, Schmidt illustrates in this chapter how globalisation and European-‐ ization impacted national policies of Britain, France and Germany. She asserts that the dynamics of policy adjustment can for one thing be explained by "mediating factors" like economic vulnerability to external pressures, the institutional capacity to adjust to out-‐ side pressures the extent to which international policy initiatives comply with national policy legacies and preferences and the discourses that enhance or neglect economic reforms.24 For another thing, Schmidt argues that the nature of adjustment pressures influence extensively the national response. For example, the coerciveness of EU legisla-‐ tion, the degree of EU specification and the constraints for national governance might result in inert, resistant, approving or radical policy changes. With the aid of "mediating factors" and adjustment pressures consistencies Schmidt elucidates how external influ-‐ ences of globalisation or Europeanization affected different policy areas of Britain, France and Germany.
The second chapter delineates how the capitalist models of Britain, France and Germany have altered in response to globalisation and Europeanization. To begin with, Schmidt outlines the three capitalist models in great detail, describing the characteristic economic practices of each country. To differentiate between the different capitalist models Schmidt analyses the structure of business relation, the structure of government relations and the structure of industrial relations. In broad terms she distinguishes be-‐ tween: market capitalism, where the liberal state animates economic actors to operate independently and take economic decisions autonomously; managed capitalism, where the enabling state encourages economic actors to cooperate with each other and intends to coordinate economic decision and finally state capitalism, where the state interven-‐ tionist state systematically organized cooperation between economic actors and at-‐ tempts to navigate economic activities. Principally, Schmidt agrees with the notion that the three post-‐war model of European capitalism have changed considerably as a reac-‐ tion to external pressure but she also claims that at the core they remained clearly dis-‐ tinctive.
In the second part of chapter two Schmidt addresses the "variety of capitalism” literature25 and argues that a distinction between two capitalist models is not sufficient
23 Idem. p. 14. 24 Idem. p. 61.
25 See: Peter A. Hall and David W. Soskice. 2001. Varieties of Capitalism: The Institutional Foundations of
