by Pascal McDougall*
ABSTRACT
During the past fifteen years, many EU member states have been subject to “runs” whereby investors massively sell a country’s financial assets and trigger interest rate spikes that make the country’s debt explode. The European Central Bank (ECB) and the other EU institutions have done little to counter these debt crisis dynamics and, when they have helped indebted states, they have imposed gigantic fiscal contraction as a condition for aid. Unemployment has skyrocketed and left deep scars in the EU’s periphery.
Defenders of the EU institutions’ crisis management have used arguments that are thoroughly legalized. They have argued for example that EU assistance to indebted states would have been prohibited by the treaties had it not been accompanied by austerity. Conversely, critics of the EU institutions’ actions have used much less legalized arguments. For instance, they have often proposed the modification of the treaties to create broader EU fiscal authority as a way out of the crisis. This foregoing of formal legal argument regarding what the EU institutions should have done differently under the existing institutional framework is unfortunate; it contributes to leaving unchallenged the notion that irresponsible national policies, not poor EU institutional choices, caused the crises.
This Article shows that monetary institutionalism, a well-established scholarly approach that is however still marginal in EU law scholarship, can help us flesh out the claim that the EU institutions were legally bound to prevent the unemployment that has ravaged the EU’s periphery and must now remedy its effects. Monetary institutionalism emphasizes that money is fundamentally public in nature and that monetary institutions affect real outcomes like output and employment even in the long run. Monetary institutionalism therefore challenges the paradigm of money neutrality underpinning the ECB’s crisis management approach. It also foregrounds the impact of the EU institutions’ decisions on the unfolding of the crises.
In using monetary institutionalism to develop arguments assigning to EU institutions and member states the legal duty to act to reduce unemployment, this Article relies on the right to work, which figures in most European rights instruments. This Article defines the right to work as an unconditional right to a job. Relatedly, it embraces the job guarantee proposal, consisting in the unlimited provision by the government of public-good-oriented and relatively low-paid work.
Foregrounding the possibility of a public guarantee of jobs at the bottom of the wage ladder helps better delineate the respective legal duties of member states which are constrained but never completely powerless during crises and EU institutions which can be required under the right to work to provide support to enable member states to protect jobs. The job guarantee proposal also reveals new possibilities for local resistance to austerity that should be of interest across the EU as we prepare for the next economic crisis certain to come sooner or later.
* Associate Professor of Law, University of Ottawa, Canada.
