Frank Vandenbroucke¹ has argued that European monetary union now needs to be completed by moves towards a European social union. This is a fine example of the Polanyian process described at the outset: moves to extend markets need to be accompanied by moves in social policy, partly to help the victims of markets and partly to provide certain resources that the market itself needs for its own efficient operation. Today damage to the environment needs to be added to the list of harms markets impose on society, while the coronavirus pandemic, not to mention other natural disasters, reminds us that markets are helpless in the face of events that affect human life from way outside the sphere of economics.

Considerable damage was done to European prosperity by the ECB’s imposition of strict budget-surplus requirements in the wake of the financial crisis. During subsequent years the bank’s policy has loosened considerably but this has been done in an ad hoc way, adjusting to crises. What is now needed is a principled re-evaluation of its strategy. Strictness and a virtually exclusive focus on containing inflation were probably necessary in the early years to establish and stabilise the new currency in the dangerous, turbulent waters of speculative international money markets. The ECB’s critics do not give enough recognition to this difficult task; nor do they acknowledge the gains that have come to all economies in and beyond the eurozone through ending the erratic rises and falls of individual national currencies which would otherwise have occurred. But the euro is now established.

It is time for the ECB formally to recognise, as does the US Federal Reserve Bank, a wider range of policy goals than the containment of inflation. This must however come with a quid pro quo. The original deal between the single-currency regime and its member states was that the ECB would maintain a tough monetary-policy stance to contain inflation but individual governments would retain complete fiscal autonomy. Monetary policy alone, it was believed, would ensure that governments could not behave irresponsibly. This reckoned without the global banking system being just as willing to take on bad government debt as it was to accept insecure private debt. A more sophisticated European monetary regime must include an element of fiscal federalism—direct framework restraints on national budgetary policies—in exchange for a less severe overall monetary stance.

A principal aim of fiscal federalism must be to pursue a European social union, exempting public spending that can be regarded as investment from the constraints of the Stability and Growth Pact. This already happens for investment in physical infrastructure but, as Vandenbrouke and Hemerijck argue, it needs to be extended to cover the SIWS agenda. The same must be true for investments that reduce carbon emissions, damage to biodiversity, other requirements of policies to avert climate change and the restoration of life in the wake of the coronavirus.

The policy directions indicated in this manifesto clearly require collective action, public spending and taxation to fund that expenditure and costs of other kinds. An agenda for co-operation and inclusion necessarily includes those ingredients.

Extreme neoliberals who believe in keeping the scope for collective action and, in particular, taxation as low as possible will not want to participate in the coalitions that will be necessary if we are to protect the planet, create a world where consumers and workers are protected from shareholder-value capitalism, ensure that both material and cultural inequalities are reduced and include as many geographical areas as possible in optimistic futures. Xenophobic nationalists who reject international co-operation and seek to protect chosen constituencies by excluding large groups of outsiders will similarly exclude themselves from such coalitions. This appeal is therefore to all others, who do not stand within these two ranks.

The gains from co-operation are considerably greater than those from insisting on going it alone—whether in confronting climate change, easing the disruptions caused by globalisation and disease and other sources of major economic change and natural disasters, maintaining quality standards of products and processes, enabling the maximum number of people and places to benefit from opportunities in the future economy or sustaining any other activities where the market’s own forms of co-ordination are inadequate or harmful. This is true for co-operation at many levels within societies but for European countries it is particularly important to work together at the level of the union itself.

The gains from trying to solve problems through inclusiveness rather than through exclusion are also great. Exclusion generates mutual resentment, hatred and eventually violence, while inclusiveness avoids these evils and brings benign, constructive relationships. The appeals of selfishness and exclusion are simple and easy but they lead only to dark, mean destinations. Calls to co-operation and inclusiveness are more demanding but they bring immeasurably greater ultimate rewards.