How to Make a Euro

Start with two! But seriously...

A FEW MONTHS ago, writes Tim Price on his blog, The Price of Everything, a publisher and bookseller kindly sent us "a little gem of a book" – The Making Of The €uro by Claudio Hils.

This somewhat humourless coffee table hardback is redeemed by one or two beautiful photographs of printing presses and hologram foil security patches. But recounting, as it does, the literal making of the Euro, the book already feels somewhat ossified, frozen in and by history.

That time has marched on can be seen from the rather hubristic foreword by Dr. Jürgen Linden, Lord Mayor of the City of Aachen:

"The Euro is being awarded the International Charlemagne Prize of Aachen for 2002. At first sight, this seems wholly inexplicable. A currency is to be awarded a prize intended to honour an individual's contribution to the unification of a continent? In actual fact – and this is something we have already noticed after only a few weeks – the unifying effects of the common currency in, for the time being, 12 countries have proved to be highly significant. The degree of acceptance of the Euro has been surprisingly good wherever we look."

To get the full irony from the vantage point of the European economy in 2012, you probably have to read the original German (which is printed alongside the English translation throughout). Our bookseller friend adds this:

"There are very few illustrated books in the history of Economics. The first book was a Dutch satirical work consisting of plates and poems on John Law and the South Sea Bubble published in 1720. Many similarities there."

Roughly a year ago we first wrote about Leopold Kohr. As a reminder, Kohr was an Austrian Jew who only narrowly escaped Hitler's Germany just before the outbreak of the Second World War. He had been born in Oberndorf in central Austria, a village of just 2,000 or so. Oberndorf's lack of size came to play a crucial role in Kohr's thinking. Kohr graduated in 1928 and went off to study at the London School of Economics with the likes of fellow Austrian Friedrich von Hayek.

In September 1941, Kohr began writing what would become his masterwork, The Breakdown of Nations. In it he argued that Europe, far from expanding, should be "cantonized" back into the sort of small political regions that had existed in the past and which still existed in places like Switzerland, with a commitment to private property rights and local democracy. "We have ridiculed the many little states," wrote Kohr sadly, "now we are terrorised by their few successors."

Kohr showed that there were unavoidable limits to the growth of societies, not least to the complexity that is a natural part of larger systems:

"Social problems have the unfortunate tendency to grow at a geometric ratio with the growth of an organism of which they are a part, while the ability of man to cope with them, if it can be extended at all, grows only at an arithmetic ratio."

But as the European Union and its common currency bloc grow ever larger, it collides horribly with Kohr's thesis. Take José Manuel Barroso's 2012 State of the Union address as President of the European Commission:

"Globalisation demands more European unity. More unity demands more integration. More integration demands more democracy."

But the words he smears together – unity, integration, democracy – have no meaning in this perfunctory Orwellian doublespeak. Democracy demands the primacy of the individual over the unelected Brussels bureaucrat.

There must be something in the water in Austria (where we happened to enjoy a late summer holiday). Not just Leopold Kohr but Carl Menger and Ludwig von Mises and Friedrich Hayek. Each in their way warning of the dangers of central planning and the unchecked power of the state. And not just Austrians but Czechs – see Václav Klaus' interview with The Sunday Telegraph where he warns that statehood and sovereignty are impossible in the sort of federation that Europe's bureaucrats aspire to.

The financial crisis is not limited to the Eurozone, being in essence a largely intractable global problem of debt. But Europe is as good an example of any to illustrate the dangers of allowing political and banking interests to predominate, especially given that both groups are almost entirely dependent on the perpetuation of unsound money. Speaking of which...

"I bought the last 200 remaining copies for one Euro each," writes our bookseller friend of 'The Making Of The €uro' – "not surprisingly it was remaindered. The difference is that books which don't sell find their way onto the remainder tables very quickly in the UK. In Europe it takes a little longer to own up to mistakes...especially state-sponsored events."

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