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Book Reviews
McKay applies an adapted version of Riker’s realist–rational choice theory of federalism to analyse the origins and viability of the European Union as a quasi-federal entity created through EMU. His central argument is that the decision to move to EMU ‘represented a federal bargain between those proposing the ceding of macroeconomic power to a central authority, and national politicians who calculated that the costs of doing so were outweighed by the benefits’ (p. 183). According to Riker, national politicians need a major perceived threat in order to move to a federal state. In the case of the EU/EMU, the perceived threat was economic; any policy other than low inflation in the context of open national and international markets was believed to be untenable, and would lead to serious and potentially regime-threatening political consequences. McKay argues that, as with other federal bargains, the original agreement on EMU will be constantly renegotiated. He refers to the work of economists who generally agree that, because the Euro-zone is not an optimal currency zone, some degree of greater economic centralization is necessary in order to provide for adequate compensation for uneven internal shocks. McKay goes on to explain that the political conditions necessary to allow this – notably a centralized EU party system and a strong enough sense of European identity – are largely absent, which places European monetary union at risk.
This is an ambitious book that logically and quite successfully argues its case. Within the framework of his federalist analysis, McKay moves effectively from the historical literature on European integration, to the economic on EMU and the political science on matters of legitimacy and identity. He provides an alternative explanation of the move to EMU that is most welcome given the failure of more traditional European integration theories – including liberal intergovernmentalism – to do so convincingly. One of the book’s weaknesses stems from an excessive generalization of the objectives of the different Member States in pursuing EMU. A ‘sound money’ bias and convergence towards the German macroeconomic standard were necessary to move to EMU. However, were the economic and political threats created by high inflation and the political difficulties in several countries of maintaining low inflation the crucial factors that led national politicians to support EMU? McKay reaches this conclusion on the basis of very little evidence and a selective reading of the literature on EMU. He glosses over the ‘voice opportunities’ thesis forwarded by several scholars who place less emphasis on perceived threats. Nonetheless, McKay’s remains a useful approach to EMU and European integration: applying the tools of comparative political science to understand the development and the nature of the beast and the problems that it will face.
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