Freedom as Non-Domination in the Eurozone: A Republican Assesment of the Eurozone Sudden-Stop Crisis

  • Abstract:

    By bringing together macroeconomics and republican political theory, the paper explores the possibility that the conception of freedom as non-domination can be meaningfully applied to evaluate, from the point of view of justice, the Eurozone sovereign debt crisis. The analysis will highlight how member States’ capacity to autonomously determine how to weather the impact of the crisis has been unjustly curtailed by the dominating power of financial markets. The coexistence of national frameworks for banking resolution, the no-bailout rule and the prohibition of monetary financing has led investors to question the capacity of member states to finance their debts. The self-fulfilling sudden-stop crisis that ensued as a consequence of such uncertainty has unjustly reduced the capacity of Eurozone states to exercise effective sovereignty. In line with the republican idea that people are truly free only if they live in a state that is not dominated by external institutions and forces, it is then argued that Eurozone members have an obligations to establish institutions that increase private and public channels of risk-sharing.