The Foundation for European Progressive Studies - Rewriting the Rules of the European Economy: An Agenda for Growth and Shared Prosperity

Also by Joseph E. Stiglitz

People, Power, and Profits:
Progressive Capitalism for an Age of Discontent

The Euro:
How a Common Currency Threatens the Future of Europe

Rewriting the Rules of the American Economy:
An Agenda for Growth and Shared Prosperity

The Great Divide:
Unequal Societies and What We Can Do about Them

Creating a Learning Society:
A New Approach to Growth, Development, and Social Progress
(with Bruce C. Greenwald)

The Price of Inequality:
How Todays Divided Society Endangers Our Future

Freefall:
America, Free Markets, and the Sinking of the World Economy

The Three Trillion Dollar War:
The True Cost of the Iraq Conflict (with Linda J. Bilmes)

Making Globalization Work

Fair Trade for All:
How Trade Can Promote Development (with Andrew Charlton)

The Roaring Nineties:
A New History of the Worlds Most Prosperous Decade

Globalization and Its Discontents

Rewriting the
Rules of
the European
Economy

AN AGENDA FOR GROWTH
AND SHARED PROSPERITY

JOSEPH E. STIGLITZ

In Collaboration with Carter Dougherty
and the Foundation for European Progressive Studies

W.W.NORTON & COMPANY

Independent Publishers Since 1923

To the progressives of Europe, who defend European values each and every day.

This report was written by

Joseph E. Stiglitz,

Chief Economist and Senior Fellow,

Roosevelt Institute

With coauthors

Ernst Stetter, Secretary General, FEPS, Belgium

Carter Dougherty, Americans for Financial Reform, USA

Stephany Griffith-Jones, Professor, IPD Columbia University, USA

Isabel Ortiz, Director, Global Social Justice Program, IPD Columbia University, USA

Jeronim Capaldo, Research Fellow, Global Development and Environment Institute, Tufts University, USA

Daniela Gabor, Professor, University of the West of England, UK

Margit Schratzenstaller-Altzinger, Deputy Director, Austrian Institute of Economic Research (WIFO), Austria

We would also like to acknowledge the following individuals for their various contributions that helped inform this work:

Nell Abernathy, Vice-President, Strategy and Policy, Roosevelt Institute, USA

Lars Andersen, Managing Director, Economic Council of the Labour Movement, Denmark

Bilian Balev, Deputy Chairman and Executive Director, Bulgarian Development Bank

Eva Belabed, Economist, former Counsellor, Austrian Representation to the OECD, Austria

Peter Bofinger, Professor, University of Wrzburg, former Member of the German Council of Economic Experts, Germany

Tams Boros, Director, Policy Solutions, Hungary

Elva Bova, former Senior Economic Policy Advisor, FEPS, Belgium

Udo Bullmann, Member of the European Parliament, President of the S&D Group, Germany

Massimo DAlema, President, Fondazione ItalianiEuropei, former Prime Minister of Italy

Anna Diamantopoulou, President, DIKTIO, former Minister of Education of Greece

Catalin Dragomirescu-Gaina, former Senior Economic Policy Advisor, FEPS, Belgium

Karl Duffek, former Director, Karl-Renner-Institut, former International Secretary of SP (RIP), Austria

Annabel Garnier, Deputy Secretary General, S&D Group, European Parliament, France

Debarati Ghosh, Managing Director, Think Tank, Roosevelt Institute, USA

Naman Garg, Research Assistant, Office of Joseph E. Stiglitz, Columbia University, USA

Paolo Guerrieri, Professor, Sapienza University, College of Europe, former Member of Italian Senate

Andrea Gurwitt, Editor and Publications Manager, Office of Joseph E. Stiglitz, Columbia University, USA

Anton Hemerijck, Professor, European University Institute, Italy

Gustav A. Horn, former Research Director, Macroeconomic Policy Institute, Germany

Peter Hunt, Managing Partner, Mutuo, UK

Andrs Inotai, Professor, College of Europe, Belgium

Maria Jepsen, Director, Research Department, European Trade Union Institute, Belgium

Lisa Kastner, former Policy Advisor, FEPS, Belgium

Inge Kaul, Professor, Hertie School of Governance, Germany

Aleksander Kwaniewski, Chair, Amicus Europae Foundation, former President of Poland

Gerhard Marchl, Head, European Affairs, Karl-Renner-Institut, Austria

Marcel Mersch, Head of Unit, S&D Group, European Parliament, Belgium

Vassilis Ntousas, Senior International Relations Policy Advisor, FEPS, Belgium

Jos Antonio Ocampo, Professor, IPD Columbia University, USA

zlem Onaran, Professor, Director, Greenwich Political Economy Research Centre, University of Greenwich, UK

Paulo Trigo Pereira, Member of Parliament, Professor, Lisbon School of Economics & Management, Portugal

Poul Nyrup Rasmussen, former Prime Minister of Denmark, former President of the Party of European Socialists

David Rinaldi, Senior Economic Policy Advisor, FEPS, Belgium

Maria-Joo Rodrigues, President, FEPS, Belgium

Rocio Sampere, Director, Felipe Gonzlez Foundation, Spain

Vivien Schmidt, Jean-Monnet Professor, Boston University, USA

Jan-Erik Ststad, Secretary General, SAMA, Norway

Ania Skrzypek, Senior Research Fellow, FEPS, Belgium

Dimitris Tsarouhas, Jean-Monnet Chair, Assistant Professor, Bilkent University

Matthieu Teachout, Research Assistant, Office of Joseph E. Stiglitz, USA

Frank Vandenbroucke, Professor, Free University of Amsterdam, Netherlands

Andrew Salomone Viteritti, Managing Editor, The Economist Intelligence Unit, USA

Kristian Weise, Director, CEVEA, Denmark

Stuart Wood, Member of the House of Lords, UK

Europe today is in a state of crisis, having experienced stagnation and sluggish economic growth over the past decade. Some countries, like Greece, Spain, Portugal, and Italy, have grappled with depression or recession for years. Those countries hit hardest after the 2008 financial crisis still suffer from unacceptably high unemployment, especially among young people.

To be sure, what became the European Union has achieved enormous progress since its founding in 1957. The founders of the European Union intended to establish a prosperous and peaceful Europe built on a set of common fundamental values, in particular freedom, solidarity, democracy, equality, respect for human dignity, the rule of law, and human rights. Peace has been and remains to this day the main objective of the European Union.

But the European project will be successful only if it ensures the well-being of European citizens, and a place for Europe in a harmonious, globalized world. Every day, both seem to slip further out of reach. Economic underperformance brought political and social uncertainty, threatening the integrity of the European Union as a whole, causing frustration among citizens, and encouraging populist movements around Europe. The prosperity the EU promised was supposed to foster solidarity, enabling in turn further European integration; economic failures have undermined the willingness to work together. Momentum toward broader and deeper integration has stopped or even reversed, as the 2016 Brexit vote so vividly demonstrated.