Secular stagnation in the EU? The weakening of the European engine of growth

The three decades following WWII saw sustained growth in the industrial world, favoured by a stable international economic environment. The two engines of investment and exports represented a powerful combination fuelling post-war growth. This mechanism broke down in the early 1970s, leaving only exports as the main driver. This paper explores the factors that interrupted the golden age of post-war capitalist development in the late 1960s and early 1970s. We argue that the great inflation of the 1970s, associated with political and social tensions, opened the way to three fundamental, intertwined discontinuities in the modus operandi of western capitalist countries: depolicitization, financialization and the slow-down in capital accumulation. Europeanization was the specific way the globalization process, which originated in the US, was translated into Europe through the formation of the European Union and the Monetary Union. We argue that the US neo-liberal model, intermediated by European construction, institutions and norms designed in conformity with the German model, has modelled the structure and affected the functioning of the peripheral economies, substantially weakening their resilience.