The Eurotower Strikes Back

• DOI: 10.1177/0010414015626444
• Published date: 01 June 2016
• Author: Gerald Schneider,Federica Genovese,Pia Wassmann
• Date: 01 June 2016
• Subject Matter: Articles

Comparative Political Studies

2016, Vol. 49(7) 939 –967

© The Author(s) 2016

Reprints and permissions:

sagepub.com/journalsPermissions.nav

DOI: 10.1177/0010414015626444

cps.sagepub.com

Article

The Eurotower

Strikes Back: Crises,

Adjustments, and

Europe’s Austerity

Protests

Federica Genovese1, Gerald Schneider2,

and Pia Wassmann3

Abstract

The 2008 global financial crisis came with fears—and, for some, hopes—that

a new wave of public mobilization would emerge in industrialized countries.

Especially throughout the European Union (EU), the epicenter of the crisis,

large protests were expected. Yet, the energy with which social groups

mobilized against the proposed austerity measures quickly fizzled. This

article provides new evidence for why this was the case. In line with Neo-

Keynesian theory, we argue that the interest rate adjustments and political

announcements of the European Central Bank (ECB) limited the potential

for mass unrest in the member states of the Economic and Monetary Union

(EMU) affected by the crisis. We provide evidence for our argument with

yearly panel data and a new original data set of monthly political protests

between 2001 and 2013. Our analyses support the hypothesis that the

ECB was able to successfully assuage dissatisfaction with the limited reform

options of the Eurozone member states in the wake of the Eurocrisis.

1University of Essex, Colchester, UK

2University of Konstanz, Germany

3Leibniz University Hannover, Germany

Corresponding Author:

Federica Genovese, University of Essex, Wivenhoe Park, Colchester CO4 3SQ, UK.

Email: fgenov@essex.ac.uk

626444CPSXXX10.1177/0010414015626444Comparative Political StudiesGenovese et al.

research-article2016

940 Comparative Political Studies 49(7)

Keywords

economic policy, European Central Bank, EU politics, financial crisis, political

economy, social movements

Introduction

In 2010, at the height of the Eurozone crisis, the retired French diplomat

Stéphane Hessel published Indignez-Vous!, a 32-page-long pamphlet that

called on the people of Europe to revolt against the injustices of the capitalist

world. The former Résistance fighter and concentration camp survivor

bemoaned, among other things, the “international dictatorship of financial

markets that threatens peace and democracy” (p. 11, authors’ translation).

The booklet became an unexpected international bestseller and inspired sev-

eral protest groups, including the Occupy movement and the Spanish

Movimiento 15-M, which tried to counter the planned measures imposed by

debt-ridden governments following the global financial crisis through dem-

onstrations, sit-ins, and other forms of political opposition.

Despite the global scale of attention these protesters have received, the

new social movements largely failed to galvanize long-term support and stop

the contested fiscal adjustments. This article examines why the mass protests

staged by trade unions and other stakeholders quickly faded. Whereas politi-

cal protests in Greece and Spain at a point became more frequent and led to

the formation of new parties with distinctive anti-austerity platforms, most

crisis-ridden Eurozone members, including states such as Italy or Ireland,

experienced far less overt indignation regarding the failures of the financial

industry than the media and intellectual leaders had predicted.

This article proposes a theory for the ephemeral nature of mass protests

during the early stages of the Eurocrisis. Our theory focuses on the role of

monetary institutions in shaping social discontent when a crisis hits. We pre-

dict that if public debt is low or fiscal institutions are flexible, social forces

have difficulties mobilizing the masses, as the potential losers of reforms can

count on plausible compensatory measures. However, if public debt is too

high or fiscal policy is constrained, the potential losers are much more willing

to take their fears to the streets as they know that they cannot count on any

compensation. The anticipation of financial pain should therefore increase

the occurrence of mass protests unless monetary institutions take over the

pain-reducing role national governments have traditionally played in times of

crises. We expect that mass protests in the Eurozone would have increased

unless European Union (EU) institutions had not forcefully introduced a new

line of crisis management.