policies within the Eurozone played an important role in the swelling of the crisis, and
in particular in producing asymmetric—state specific—shocks, leading to a deep and
protracted economic stagnation. On the other hand, the way in which the reforms have
been actually implemented reveals the enduring attachment to the goal of keeping eco-
nomic policies in the hands of the political actors enjoying the broadest democratic le-
gitimacy, that is national parliaments and governments. This is so because economic
policies are ‘socially embedded’, and thus lead to what may be characterised as ‘endog-
enously’shaped different varieties of capitalism.
Furthermore, economic policies result
from collective choices ranging from employment and training policies to industrial and
entrepreneurship policies to educational and innovation policies to social policy and
other welfare policies to tax policy. Even in a homogenous polity, reforming any of
them, not to mention all of them, is an uncertain and contestable process, as all the pol-
icies are highly redistributive and hence divisive.
Formal ‘centralisation’coming hand in hand with a constitutional practice in which
power remains ﬁrmly in national hands can thus be regarded as an attempt to square
the circle of European economic governance. But can a circle be squared? Can the
powers of supranational institutions (as enshrined in Articles 120 to 126 and 136
TFEU) be reinforced in an effective manner without actually denting national eco-
nomic sovereignty? In other words, can European economic coordination be a positive
sum game, in which powers of EU institutions grow without undermining national eco-
Or are we bound to conclude that the European economic coordi-
nation game is a non-positive sum game (i.e. a zero sum game or a negative sum
in which consolidating powers at one level (supranational) of government in-
eluctably results in a loss for the other level (national) of government?
The kind of game Eurozone economic coordination turns out to be is momentous,
both practically and theoretically. Only if the game is a positive-sum one does the pres-
ent Eurozone settlement stand a chance. If the game produces non-positive sums, the
present Eurozone settlement is doomed, as it leads to a paramount dilemma. If national
economic sovereignty remains whole, the Eurozone will collapse because national eco-
nomic policies will be too divergent. If national economic sovereignty is relinquished,
the Eurozone will most probably be doomed for political reasons, because developing
a consistent economic policy for a polity as diversiﬁed (and divided) as the Eurozone
stands next to impossibility.
In addressing these issues, this paper ﬁrst reconstructs the original paradigm of European
economic policy coordination and explains why it was considered to imply a positive sum
game (The Positive Sum Game Paradigm section). Then it describes how the Eurozone crisis
reframed the approach to European economic governance (European Institutions Enter the
Zero Sum Game section), how it has shaped the resulting ‘strengthened coordination’of
P. Hall and D. Soskice (eds.), Varieties of Capitalism. The Institutional Foundations of Comparative
Advantage (Oxford University Press, 2001); G. Jackson and R. Deeg, ‘The Long-term Trajectories of
Institutional Change in European Capitalism’, (2012) 19 Journal of European Public Policy, 1109–1125.
It is of particular importance in this context that economic policies have evolved in each Member State over
a long period and have been shaped by different historical contexts, beliefs, values and priorities. In addi-
tion, economic policies have formed the very nest of national identity, which in turn has embedded them
even more deeply in the collective consciousness of individual European nations.
In positive sum games the sum of winnings and losses is greater than zero. In other words, the aggregate of
beneﬁts distributed between the parties to the game is greater than is the aggregate of their losses.
In a zero sum game one party cannot advance its position without the other party suffering a corresponding
loss. In negative sum games the loss of one party outweighs gains of the other.
European Law Journal Volume 22
© 2016 John Wiley & Sons Ltd 181