The aim of this book is to fill a gap in the discipline, i.e., the lack of a history of economic thought specifically devoted to Europe, in which the European community is considered as a whole, with distinctive features. The distinctive features that Antonio Magliulo sees as the constitutive values of Europe are freedom, labor, and community, and he tries to track them down throughout European history, even during the stages in which they were ignored or “profoundly deformed” (p. 102).
In order to write a history of European economic thought, the author uses a comparative method highlighting the economic theories, cultures, and policies that characterize the European identity. In particular, he investigates the way the economic ideas elaborated in Europe, starting from its origins, have influenced its process of formation and development. In this book, two histories intertwine: the history of economic thought and the political history of Europe.
The book is difficult to summarize: the journey from the Ancient Greeks to the COVID-19 pandemic is very long, and the narration runs very quickly through the centuries, in only 167 pages, though the typeface used is small. In this review we will concentrate on the effects of economic theories on European economic culture and policies, as reconstructed by Magliulo, following the eight stages in which he structured the book.
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1. After a long gestation, Europe was born at the collapse of the Roman empire as an area of Christian nations. At its birth, the medieval economic thought, both Scholastic and Byzantine, “focusing on the role of economic justice, achieved a new view of individual freedom, human labour and intermediate communities” (p. 17), which, according to the author, are the three foundational values of Europe already mentioned.
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2. From 1517 mercantilist economic ideas contributed to the transformation of Europe from a Christian community to a system characterized by absolute despots who controlled the economy. Then, on “the eve of the French Revolution, Europe presented itself as a republic of letters governed by enlightened rulers who seemed to have absorbed the lesson of physiocracy” (p. 34).
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3. In the classical period (1776 to 1870), “we witnessed the epochal transition from a Europe of absolute monarchies to a Europe of liberal nation-states, from Absolutism to Liberalism” (p. 36). Adam Smith, Jean-Baptiste Say, David Ricardo, and John Stuart Mill developed the idea of a spontaneous order in which individual and collective interests are in harmony. They promoted free trade and the gold standard as the economic strategies that could achieve international cooperation among the liberal nation-states.
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4. In the years from 1871 to 1918, liberal Europe became a region of empires at war. Neoclassical economics reproposed classical liberalism; at the same time Marxist socialism theorized etatism, while historicism promoted state interventionism. In the policies adopted by the European countries in this period, the latter prevailed, with “protectionism, the formation of trusts, the creation of … self-sufficient economic areas” (p. 75).
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5. The interwar period (1919 to 1943) saw “the transition from a Europe of sovereign nations, eager to cooperate in an order of peace and democracy, to a Europe struggling for freedom threatened by totalitarian states” (p. 79). The international order based on free trade and the gold exchange standard was broken down by the Great Depression. A dispute between three interpreters of classical liberalism (Friedrich Hayek, John Maynard Keynes, and Wilhelm Röpke) took place, while the corporatist ideology spread from Italy to the rest of Europe. In these years the “spirit of cooperation was replaced by a nationalism that led to war” (p. 102).
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6. After the Second World War, a process of “separate unification” of Europe took place. “In Eastern Europe, Marxism-Leninism became the official doctrine. … In Western Europe … various models of mixed economy [were] adopted by some countries” (p. 106). The functionalist idea that a political European union could only be preceded by its economic integration prevailed over the different currents of federalism, as well as over the internationalist approach to European unity. For the first time the three founding values of Europe (freedom, labor, and community) found “their ‘constitutional’ recognition in the Treaties of Rome” (p. 133).
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7. During the years from 1974 to 2007, Keynesianism declined and Marxism collapsed. Europe, under the influence of German ordoliberalism, followed “a model of social market economy that saw monetary and financial stability as an indispensable condition for pursuing the social goal of full or maximum employment” (p. 147).
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8. Globalization made Europe part of a single market, and the choice was between a minimal or an active government. After the 2008 recession the European unification process is still unfinished and the author of the book supports “an innovative model of sovranational democracy capable not only of protecting but also of orienting the market” (p. 167).
Obviously, this is just an extremely concise summary of the book. The author’s analysis goes into details of both the history of economic thought and the European political history; it illustrates the economists’ theories and the main historical events that have shaped Europe as we know it today. As we have seen, the aim of the book is to show how economic theory influenced the European cultural and political context. The methodological tool adopted is that of the history of economic thought, seen as “a three-dimensional tale based on the relationship between theories, cultures and economic policies” (p. xi). This framework is complicated by the fact that economists’ theories seem often to be stimulated by economic history, as seen, for example, in the economic crises of 1873, of 1929, and of 2008. Magliulo doesn’t illustrate in depth the many ways ideas are transmitted from economists to policy-makers, with or without the intermediation of the economic culture. Sometimes the book gives the impression that the paths followed by the history of economic thought and the political history of Europe run in parallel, and it is hard to find their points of contact. But at the end of each chapter there are sections that, despite the minimal but misleading title of “In short,” do not sum up the chapter but instead explicitly answer the crucial question of how economic ideas influenced the European cultural and political context dealt with in the chapter.
The advancement of knowledge that this book wants to bring to the discipline is twofold. On the historical level, the identification and the continuity of the three constitutive values (freedom, labor, and community) in the history of Europe can potentially open a debate among historians of economic ideas. On the methodological level, the attempt to intertwine the two European histories (economic and political) can inaugurate a new vein of studies in the history of economic thought. The idea of looking into the writings of the European economists in order to find their contributions to the construction of a European identity is certainly original. For all these reasons, we think that this volume is important reading for students and scholars of the history of economic thought.
