The euro area crisis and alternations in global economic governance: Applying Foucauldian concepts to identify changes in the perception of the role of the market mechanism

Abstract

This thesis investigates global collective policy responses devised in the aftermath of the recent crisis, to promote global economic stability, especially as the European Union and euro area in particular became affected by the economic circumstances. Using Foucault’s concepts of ‘governmentality’ and ‘disciplinary power’ as core analytical tools, the thesis will attempt to inquire whether global economic governance has changed its perception of the market mechanism with the occurrence of the euro area crisis. It has been argued that global economic governance regimes in the post-war years have predominantly been practicing a liberal governmentality exercised with ‘exceptional’ discipline, in which economies could use the market as a site of verification/falsification. The launch of the ‘international financial architecture’ initiative and the application of generalized discipline, concerned with getting ‘institutions’ right, seemed to indicate a shift in governance regime, albeit it could not constitute a transformation in governmentality. The failure of the installed governance regimes to circumvent the recent financial and euro area crisis prompted the creation of new initiatives, which soon revolved around safeguarding the euro area. Markets became increasingly occupied with verifying/falsifying governmental operations according to new priorities and economic conditions. These were arguably incorporated into global governance agendas through the G20, International Monetary Fund and the European Union amongst others, and seemed to claim that getting ‘economies’ and ‘institutions’ right were equally necessary. The market was no longer the judge of practices, but also the dominant facilitator of discipline and regulator of states. This would possibly indicate a transformation towards neoliberal governmentality in which global economic governance might favour constant intervention on the states, and by the states, on the conditions of the market. Given that the course of action and implementation of policies addressing the financial and euro area crisis in global economic governance remains ongoing, the findings are preliminary, but seem to abide by Foucauldian insightfulness.