Self-fulfilling crises in the Eurozone and the institutional preconditions of republican sovereignty

Abstract

The normative vocabulary of republican political theory can be fruitfully applied to evaluate the phases of market turbulence in sovereign debt markets witnessed during the Eurozone crisis. A view of justice that requires the minimisation of dominating relationships between agents highlights how the institutional preconditions of undominated sovereignty were lacking in the Eurozone. The agreed-upon structure within which countries operated fuelled self-fulfilling market movements in sovereign bond markets, which bear the hallmark of unjust domination as weaker Member States formed a social relationship with investors over which they did not have meaningful control. In motivating the thesis, the paper touches upon the recent debates on the sources and site of domination and on the stance, republican scholars should take toward competitive markets. Given this diagnosis, Eurozone countries have an obligation to establish supranational institutions that increase private and public channels of risk-sharing.