Working Paper No. 913 | August 2018
German Economic Dominance within the Eurozone and Minsky’s Proposal for a Shared Burden between the Hegemon and Core Economic Powers
There is no disputing Germany’s dominant economic role within the eurozone (EZ) and the broader European Union. Economic leadership, however, entails responsibilities, especially in a world system of monetary production economies that compete with each other according to political and economic interests. In the first section of this paper, historical context is given to the United States’ undisputed leadership of monetary production economies following the end of World War II to help frame the broader discussion developed in the second section on the requirements of the leading nation-state in the new system of states after the war. The second section goes on further to discuss how certain constraints regarding the external balance do not apply to the leader of the monetary production economies. The third section looks at Hyman P. Minsky’s proposal for a shared burden between the hegemon and other core industrial economies in maintaining the stability of the international financial system. Section four looks at Germany’s leadership role within the EZ and how it must emulate some of the United States’ trade policies in order to make the EZ a viable economic bloc. The break up scenario is considered in the fifth section. The last section summarizes and concludes.
Ignacio Ramirez Cisneros