Nr indeksu w numerze m.in. Real Convergence as the Way to Heal the Eurozone

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1 PRZEGL D USTAWODAWSTWA GOSPODARCZEGO Rok LXVII Nr 4 (790) Warszawa Kwiecieñ 2014 PL ISSN Nr indeksu w numerze m.in. Real Convergence as the Way to Heal the Eurozone Prawne aspekty zarz¹dzania ryzykiem w dzia³alnoœci geologicznej i górniczej (wybrane zagadnienia) Zakres ujawnienia, a bezstronnoœæ i niezale noœæ arbitra w postêpowaniu arbitra owym Kryteria kwalifikacji op³aty za przejazd odcinkiem p³atnej autostrady jako ceny nieuczciwej glosa do wyroku SN z dnia 13 lipca 2013 r. III SK 44/11 POLSKIE WYDAWNICTWO EKONOMICZNE

2 PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO NR 4 KWIECIEŃ PL ISSN MIESIE CZNIK Redaktor naczelny: Prof. UŁ dr hab. Kazimierz Strzyczkowski (Uniwersytet Łódzki) Sekretarz redakcji: Mariusz Gorzka Rada naukowa: Prof. dr hab. Jan Błeszyński (Uniwersytet Warszawski) Prof. dr nauk prawnych Oleg Gorodow (Państwowy Uniwersytet w Sankt Petersburgu, Rosja) Prof. Heibert Hirte (Uniwersytet w Hamburgu, Niemcy) Dr hab. Robert Jastrzębski (Uniwersytet Warszawski) Prof. dr hab. Peter-Christian Müller-Graff (Uniwersytet w Heidelbergu, Niemcy) Doc. Oleg P. Lichichan (Dyrektor Instytutu Prawa Państwowego Uniwersytetu w Irkucku, Rosja) Prof. dr hab. Karol Sobczak (Szkoła Główna Handlowa) Prof. dr hab. Elżbieta Skowrońska-Bocian (Uniwersytet Warszawski) Dr hab. Marek Szydło (Uniwersytet Wrocławski) Prof. Ruth Taplin (University of Laicester, Wielka Brytania) Dr Ryszard Tupin (Uniwersytet Warszawski) Adres Redakcji Warszawa, ul. Canaletta 4, III piętro, pokój 301 tel. (22) wewn. 352, fax (22) pug@pwe.com.pl Wydawca Polskie Wydawnictwo Ekonomiczne SA Warszawa 84, skr. poczt pwe@pwe.com.pl WARUNKI PUBLIKACJI: PRENUMERATA na 2014 r.:,,ruch,, SA infolinia dla tel. komórkowych +48 (22) prenumerata@ruch.com.pl zagraniczna: +48 (22) Garmond Press SA Dział Prenumeraty tel. (22) Kolporter SA Departament Dystrybucji Prasy tel. (22) do 75 GLM Sp. z o.o. Dział Dystrybucji Prasy tel. (22) prenumerata@glm.pl As Press tel. (22) , (22) Poczta Polska SA infolinia Sigma-Not Zakład Kolportażu tel. (22) bok kol@sigma-not.pl Terminy prenumeraty: do 30 listopada dla prenumeraty realizowanej od 1 stycznia następnego roku; do końca lutego dla prenumeraty realizowanej od II kwartału bieżącego roku; do końca maja dla prenumeraty realizowanej od III kwartału bieżącego roku; do końca sierpnia dla prenumeraty realizowanej od IV kwartału bieżącego roku. Cena prenumeraty: Roczna 624,00 zł Półroczna 312,00 zł Prenumerata u Wydawcy: Polskie Wydawnictwo Ekonomiczne SA Warszawa, ul. Canaletta 4 bialek@pwe.com.pl Prenumerata roczna 20% rabatu: 499,21 zł Prenumerata półroczna 10% rabatu: 280,79 zł Cena 1 egz. 52,00 zł (w tym 5% VAT) Skład i łamanie: Zdzisław Wasilewski, Warszawa, ul. Resorowa 28, tel Druk: Grafland Andrzej Chmielewski, Warszawa, ul. Olesińska 6/20, tel TREŚĆ NUMERU ARTYKUŁY Alojzy Z. Nowak, University of Warsaw Kazimierz Ryc, University of Warsaw Yochanan Shachmurove, Professor of Economics and Business, The City College, The Graduate School and University Center of the City University of New York Real Convergence as the Way to Heal the Eurozone Realna konwergencja jako sposób leczenia strefy Euro 2 Grzegorz J. Wa siewski, radca prawny Prawne aspekty zarza dzania ryzykiem w działalności geologicznej i górniczej (wybrane zagadnienia) Legal aspects of risk management in geological and mining activity (selected issues) 13 ARBITRAŻ GOSPODARCZY Marcin Asłanowicz, Dział Procesowy i Arbitrażowy, Baker & McKenzie Zakres ujawnienia, a bezstronność i niezależność arbitra w postępowaniu arbitrażowym Extent of disclosure in the light of an arbitrator s impartiality and independence in arbitration 22 GLOSA Małgorzata Sieradzka, Uczelnia Łazarskiego w Warszawie Kryteria kwalifikacji opłaty za przejazd odcinkiem płatnej autostrady jako ceny nieuczciwej glosa do wyroku SN z dnia 13 lipca 2013 r. III SK 44/11 Criteria for assessing tolls, charged on certain sections of a motorway, as an unfair price a gloss on the judgement of the Supreme Court of 13 July 2013, III SK 44/11 33 Szanowni Czytelnicy i Autorzy Archiwalne artykuły z 2013 r. już dostępne na stronie internetowej naszego pisma. Co miesiąc wraz z nowym numerem PUG-u kolejny numer archiwalny: W najbliższych numerach: Szczególne przypadki odpowiedzialności wspólników za zobowiązania spółki jawnej w prawie niemieckim i rosyjskim na tle regulacji polskiej Nowa Dyrektywa w sprawie efektywności energetycznej,,przegląd Ustawodawstwa Gospodarczego jest czasopismem naukowym punktowanym przez Ministerstwo Nauki i Szkolnictwa Wyższego (7 punktów)

3 Real Convergence as the Way to Heal the Eurozone Realna konwergencja jako sposób leczenia strefy Euro prof. dr hab. Alojzy Z. Nowak, prof. dr hab. Kazimierz Ryc, prof. Yochanan Shachmurove Summary The article discusses the real convergence mechanism of the free market and the challenges and dilemmas of labor market conditions in the EU, as well as sectoral policy issues. The authors propose a deep diagnosis of the EU to ensure its survival, which is desirable and present demands of fundamental changes in Eurozone economic policy. They also point to the role of sectoral policy, including industrial policy. They represent concepts of repair in the EU monetary system operation as well as the issue of economic competitiveness and productivity. In one of the chapters is also formulated the concept of the proper shape of the European community and its priorities. The article also touched on Polish accession to the Eurozone. In conclusion, the authors present the idea of the EU as an implementation strategy to improve competitiveness and accelerate the socio-economic elements. Key words: euro, economic competitiveness, economic policy of Eurozone, sectoral policy, monetary system. Streszczenie Artykuł omawia mechanizm konwergencji i wolnego rynku, wyzwania i dylematy dotyczące warunków na rynku pracy w UE, a także zagadnienia polityki sektorowej. Autorzy postulują głęboką diagnozę uwarunkowań UE, aby zagwarantować jej przetrwanie, które jest pożądane oraz przedstawiają postulaty fundamentalnych zmian w polityce gospodarczej strefy Euro. Wskazują także na rolę polityki sektorowej, w tym polityki przemysłowej. Przedstawiają koncepcje naprawy działania systemu monetarnego Unii a także zagadnienie konkurencyjności w gospodarce i jej wydajności. W jednym z rozdziałów sformułowana jest także koncepcja właściwego kształtu wspólnoty europejskiej i jej priorytetów. W artykule poruszony jest również temat przystąpienia Polski do strefy Euro. W podsumowaniu autorzy przedstawiają pomysł na UE w postaci wdrożenia strategii poprawy konkurencyjności i zwiększenia elementów socjalno-ekonomicznych. Słowa kluczowe: euro, konkurencyjność gospodarki, polityka gospodarcza strefy Euro, polityka sektorowa, system monetarny. 1. Introduction In early October 2013, in France, we witnessed an event of both economic and social nature which has become an object of analyses reaching far beyond the country and affected the entire Eurozone. The President of France, Franois Hollande, came to Florange in Lorraine a town famous for one of the largest steelworks in the world, a place where rich deposits of iron ore and coal create it seems perfect conditions for development of heavy industry. When the company owner, well-known metallurgy mogul Lakshami Mittal, announced two years ago the shutdown of two furnaces of the steelworks, it shocked almost all of political France. The French President responded by nationalizing the industry. Moreover, Hollande and his ministers began to criticize many aspects of globalization and complain about the inefficiency of governments in the Eurozone facing these challenges. The statement expressed by the President did not surprise the French society since the country has a longstanding tradition of state intervention. According to some critics, the active role of state in the economy plays an important role in the creation of nuclear energy, armaments industry, aviation industry, excellent infrastructure or health service. This time, however, the French government lost the battle with the powerful Indian industrialist. When Hollande arrived to Florange, he did admit to the plant employees that Mittal decided to close the plant and nothing could be done about it. Other economists agree that that production in France becomes less and less profitable in many sectors of the economy, mainly due to the higher costs, inflexible labor force, and higher fiscal burdens. Additionally, statistical data reveals that in only five years, the previous regimen lost as many as 350,000 jobs. In fact, the industry shrank so much contributing only 12.5% to French gross domestic product, which is the lowest share among all the Eurozone states (Le Monde, 2013). President Hollande admitted that even a wealthy country such as France that is stumbling under the burden of constantly increasing public debt, was no longer able to proceed with nationalization of a steel plant; an act perceived as critical by foreign investors, including those from the Eurozone. France could not afford the option to indemnify the Indian entrepreneur in case of nationalization. A secret investor who intended to purchase the steelworks for 400 million euros did keep his promise. Several questions and lessons emerged from the Florange case. It is known that Mittal demanded lower salaries and longer working hours. Trade unions rejected these conditions. Regardless which side is right or wrong, it is worthwhile, in the long run, to answer some fundamental questions such as: Is it at all possible to build a healthy base for an economy mainly relying upon a dynamically expanding the service sector? These problems form part of many concerns of the Eurozone states. 2 NR PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO

4 REAL CONVERGENCE AS THE WAY TO HEAL THE EUROZONE 1. Mechanism of convergence and free market The establishment of a common currency in the Eurozone surged to foster economic growth of less developed countries, mainly those situated in the southern part of Europe. The implementation of the convergence mechanism, on the other hand, emerged from free market. Less developed countries had comparative advantages in the form of lower wages, larger labor force, resources, and lower capitalization. This summed up to quite a beneficial situation: Cheap and unused resources of production factors from the South; Abundance of capital from the northern Eurozone countries; Low interest rates and readily available credit. These factors accelerated the rate of economic growth in less developed countries and, over time, one hope, will lead to equalization of GDP levels throughout the zone. Of course, countries of the wealthy North were also expected to benefit from faster growth of the South. Unfortunately, these hopes have not occurred. The invisible hand of free market has mismanaged investments as additional streams of capital flow has surged. Instead of much desirable convergence, what followed was actually divergence (which still goes on). The economies of the southern states have become uncompetitive in comparison with the northern Europe member states and their global trade partners. This is due in part to higher Euro exchange rates, shaped by the economically sound North, but being too high for them). Several problems affect the shortfall in real convergence: Abundant capital inflow from the North, accompanied by scarce inflow of foreign direct investments; Relatively meager increase of direct trade exchange within the Eurozone; Many investments missing the mark, financed with credit originating from capital inflow, thus causing speculative bubbles, such as in Spain and Ireland; Financing of public debt increase, for example, Greece, Portugal, and Italy; Increasing labor costs in terms of goods and nontradable services, which resulted in the Balassa-Samuelson effect growth of inflation in some cases; The Euro exchange rate became less competitive compared to other trade partners; Open global economy, which is beneficial for the wealthy northern part of the Eurozone, proved disastrous for the South; Southern part of the zone suffered from deindustrialization. The last point above is due to investment, which has been financed by capital inflow from the North, ended up in the South in the non-tradable sector, while the tradable good sector could not compete with the leading manufacturers from the North and the cheap producers from Eastern Europe. Economic problems caused by the process of divergence were disguised under the scope of generally good business practice. However, the recent global crisis unraveled the real scale of the effects on the southern economies. The crisis, which hit in the years of , has shown no recovery despite some symptoms of rebound. The need to bail out the banking system using government funds clearly evidenced the weakness of economy in the southern countries. Public debt has soared, as did the level of indebtedness to creditors from the northern countries. George Soros described the situation that emerged quite brutally, but aptly all the same 1. In his opinion, at the beginning, the European Union was meant to be a voluntary association of equal states, which sacrificed some of their sovereignty for the sake of a common benefit. However, he argues that the crisis of the Eurozone turned into a union of unequal states divided into debtors and creditors where the latter countries have the power to dictate economics policies. The relationship between debtors and creditors reflects the essence of dependence between weak and strong economies. Additionally, high public debt undermines debtors position and lead to cuts is government expenditures. Strong economies like Germany are able to maintain their economies growth by increasing their exports, which compensates for decreased domestic demand in the slowdown period. In addition, debtors suffer from low GDP, increased unemployment, and of debt increase (inter alia in effect of higher interest rates paid in the bond market). 2. Labor market condition in the EU dilemmas and challenges The process of divergence of the Eurozone economies has already happened. However, this may proceed even further, considering that temporary competitive advantages of the northern countries are augmented by high credit cost for governments, businesses, and households alike. The hindrance presented by increasing costs of credit, higher than in the North of the EU, diminished the chances of Southern countries to compete in the Single Market. For how long will debtors remain trapped in this pitfall? Is the economy enlivening, which is probably altering the present situation? It is difficult and troublesome to alleviate tensions occurring nowadays in the labor markets of these countries. Such tensions not only lead to social conflicts and unrest, but also undermine confidence in the sense of hitherto-applied model of European integration. In this context, the analysis of reasons explaining changes in the labor market is an important element in the dispute over the advisability of state intervention in the areas of employment and unemployment. Andrzej Wojtyna believes that... where no immediate labor market compensation occurs, a room opens up for active macroeconomic policy (Wojtyna, 2000, p. 214). This author argues that limited wages flexibility prevents the private sector to react in an appropriate way. Where a government is able to adapt its policy sooner and react to a shock more effectively, then, a room appears for traditional Keynesian stimulation of demand (Wojtyna, 2000, p ). These two opinions aptly reflect the essence of circumstances concerning the present high level of unemployment in Eurozone. PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO NR

5 REALNA KONWERGENCJA JAKO SPOSÓB LECZENIA STREFY EURO Experts like Janusz Heller and Kamil Kotliński provide interesting studies about the relationship between public finance and the unemployment level (Heller, Kotliński, 2012). They examined 15 Eurozone countries over the period and conclude the following: Firstly, the application of mistaken fiscal policy leading to excessive state indebtedness during the financial distress of resulted in negative consequences for individual Eurozone states. For instance, a group of countries with relatively stable public finance, such as Netherlands, Denmark, Finland and Sweden, which remains beyond the Eurozone, recorded increased unemployment rate in the years The Authors emphasized that public finance stabilization never precludes some forms of fiscal expansion, mainly those focus on retaining low levels of unemployment. However, these countries need enough budgetary reserves to dampen the effects of negative crisis. This enabled them to reduce the scale of increased unemployment. The Authors stated that countries with destabilized public finance reacted in various ways to the crisis. Greece and Portugal could not contain the accelerated increase in their unemployment rate. At the same time, these countries also recorded further deterioration of their destabilized public finance due to the costs of debt incurred. Greece and Portugal suffered from external shocks that show their weaknesses. They could not counteract the negative consequences of the cited externalities. to lend a helping hand in the form of debt cuts or further credit facilitations. 3. The need for a new vision in the area of economic policy A deep diagnosis of the condition of the European Union is necessary in order to guarantee its survival (which is very desirable). Members of the Eurozone need fundamental changes in their economic policy. First, a more pronounced role is needed for sectoral policy, including the industrial policy. In fact, it is only through active sectoral policy, implemented at both the level of the European Commission and the individual national countries, that the process of real convergence in the EU can generate a new stimulus. Instead of being modeled upon old industrial policy, this sectorial policy has to be a brand new sectoral policy relevant to times of integration. Such broadly understood policy is nothing unfamiliar in the Economic and Monetary Union. After all, it concerns the support, given thereby in various forms to such sectors as: Agriculture; Small and medium-sized enterprises start-ups; Infrastructure development; Education and human capital development; Support for a variety of initiatives in the areas of environment protection, culture, art, etc. Table 1. Displays the unemployment rate in the years for some selected EU member states Country Denmark Finland Netherlans Sweden Greece Portugal Belgium Italy S o u r c e: J. Heller, K. Kotliński, Trwała destabilizacja finansów publicznych a stopa bezrobocia w wybranych krajach Unii Europejskiej (Permanent destabilization of public finance and the rate of unemployment in selected European Union states), after: The conclusions from these studies lead to further analyses about the background of unemployment in the Eurozone. According to Grzegorz Tchorek, the factors improving the ability to react and alleviate external shocks include the mobility of production factors and flexibility of prices and wages, although the government fiscal policy nevertheless plays a crucial role (Tchorek, 2011). In his opinion, by applying an overly expansive fiscal policy over the period of relative stabilization, some countries of southern Europe and the Baltic regions depleted their ability to use fiscal policy instruments right at the time when the first external shocks emerged. Some of the answers to the problematic described includes: serious and socially hurtful public expenditure savings, pressure upon the EU partners All these efforts, perhaps, except for the first and the last categories, aimed at supporting or correcting market-based mechanisms. Sectoral policy should fine-trim the operation of market mechanism in individual economy sectors to increase employment rate, foster economy growth, foster specialization and collaboration, and encourage higher equality. Such a policy should also protect the economy from the emergence of speculative bubbles. We do not think these are idealistic utopian solutions. It is possible, indeed necessary, to implement them. Sectoral policy, understood this way, is meant to direct the invisible hand of the market, using the visible hand of the government and with the collaborative hand of other EU member states. The target is real convergence. This can 4 NR PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO

6 REAL CONVERGENCE AS THE WAY TO HEAL THE EUROZONE be done by targeting these areas which are necessary to stimulate the process of real convergence. Indeed, in the postulate of reverting the hitherto prevailing trend of divergence that we see an essential opportunity for development of the European Union and Eurozone. This, we realize is not going to be an easy task. The crisis in Europe reveals that one has to deal with a serious and aggravating crisis of trust in the European Union, mistrust in both the individual politicians as well as currently existing institutions. This is accompanied by decreasing trust in the idea of European solidarity which has been developed since the end of World War 2 and has provided a milestone for European integration. What looms and strengthens are national egoisms in Eurozone members, hindering further integration. We assert however that there is an opportunity for the European Union to create a new vision based on a sectoral policy in which the visible hand replaces the invisible one. As mentioned above, we know many examples of effective sectoral policy, often under a simple name of industrial policy. The problem is the conditions provided by prevailing neoliberalism and the institutionalization of pre-conditions imposed by the Economic and Monetary Union (EMU) and the World Trade Organization (WTO). According to typical variants of this ideology, the government usually has a dreadful reputation. State authorities are seen as lazy, cynical bureaucrats, afraid of doing anything non-schematic. Sometimes they are corrupt as well. Meanwhile, the opposite side is perceived as hardworking, dedicated entrepreneurs or private employers, and risks takers. The black, evil image of the former ones is false and simplified opposite to the white and innocent image of the latter ones. There are highly competent and reliable officers as well as greedy, egoistic, shortsighted executives, quick to commit fraud, and with the attitude of grab the money and run. First, the Eurozone countries should build quality institutions and fair competition. Second, there is not a single universal or best pattern for capitalism and the role of the government therein. The one regarded as universal is only the model preferred by the International Monetary Fund and by the financial markets. One needs to be aware that it would not be easy to implement a proper sectoral policy within the present institutional system of the Economic and Monetary Union. However, this is crucial, if one advocates for the continuous development of the Eurozone. One must not overlook the trap in which some debtor countries fall into. Resolving only the sovereign government debt, although necessary, is not going to restore or bring about these countries competitiveness. At the same time, long-term unemployment is a social drama, especially for young individuals because it entails fatal consequences like hysteresis, migration, economic instability conditions and cavities in the nation s substance. 4. What is a sectoral policy? In order to improve competitiveness and economic growth, the following conditions are necessary: Promote the small and medium-sized (SME) enterprise sector. A particular emphasis should be given to promote SME market discoveries ; Develop the sector of businesses with prospects to generate high added value, innovative production or enjoying higher probabilities of increasing export; Create new jobs, mainly in the areas of goods and non-traded services, such as health service, child and elderly care, education, etc. These proposals reveal some ideas of indicative planning which rejects strict neoliberal doctrines. To rebuilt their competitiveness, countries of southern Europe need to develop instruments and measures used by emerging markets. This kind of postulate is not easy to implement in light of obligations resulting from membership in the EMU and agreements made under the WTO. Some methods that proved successful for emerging markets simply cannot be duplicated. Instead, this is rather directions, indeed the philosophy for actions which are dictated by the seriousness of the current situation. One needs to be aware that free market-based mechanisms are ineffective in overcoming these problems, at least within a time frame acceptable to the present generation. Today is the time to start testing the European Union institutions, agencies, and the banking system before implementing new sectoral (industrial) policies. It should be remembered that affluent countries do not need to talk about industrial policies. 5. The financial perspective of the present crisis The common currency of the European Union members intended to prevent negative consequences of dissolution of the Bretton Woods system. The common market tolerates the system of liquid exchange rates to improve competitiveness. Countries are eager to adjust their monetary policies to achieve depreciation of their domestic currency and enjoy positive current accounts balance. The system of Bretton Woods and the gold standard became popular thanks to their control of monetary policies. The gold standard excluded the exchange rate-related policies. A country s economy depended upon external balances, which were necessary to retain fixed rates. Difficulties with maintenance of the fixed exchange rates necessitate the implementation of deflation policy whenever a deficit in current counts emerged. Harsh consequences of such a policy unequally affected different social groups. Financial support for countries in the process of adaptation and implementation of monetary policies enabled them to apply solutions for emerging social problems. The relation between money and gold, known as socially rooted liberalism, allows experts to identify hegemony in some countries. Financial support for countries in the process of adaptation and implementation of monetary policies enabled them to apply solutions for emerging social problems. The relation between money and gold, known as socially rooted liberalism, allows experts to identify hegemony in some countries. PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO NR

7 REALNA KONWERGENCJA JAKO SPOSÓB LECZENIA STREFY EURO The Bretton Woods system did the job in practice. However, it was politically costly. Devaluation was not praiseworthy according to some economists. Additionally, turbulence in the global economy in the 1970 s and the dissolution of the Bretton Woods system brought a gradual revival of flexible exchange rates. In fact, flexible exchange rates seemed attractive options for politicians allowing them to conduct independent national monetary policy. Flexible exchange rates allow politicians to avoid unpopular decisions. Where depreciation of domestic currency occurred, entailing consequences related with inflation, it was easy to blame financial markets and remain clean. Governments influence currency exchange rates by using monetary policies. This intervention creates disagreements between conservatives and liberals who are against the application of monetary policies. What came to the rescue was a theory of rational expectations that justified and decreases the effectiveness of governments intervention in the economy. The fully independent central banks in many developed countries targeted inflation rates and strived for price stability As a consequence, exchange rate policies and external trade balance were as entrusted to marketbased mechanisms. In short, central banks were entrusted to maintain price stability while market mechanism was expected to do the rest. In theory, the system of flexible exchange rates combined with central banks inflation target policy should ensure smooth operation of markets. Reality however, proved otherwise. Neither currencies exchange rates fit the economy fundaments nor did the achievement of inflation target ensure a balance in the economy. The financial crisis of reveals the latter problem. Actually, the flawed nature of flexible exchange rate systems under conditions of globalization and financialization appear earlier. Flexible exchange rates became a barrier to further integration in the European Union and a serious reason to give up national currencies and create the common currency the Euro. Obviously, there were other reasons. They notably included political considerations. Additionally, the strongest currency in the EU the Deutschmark could not have played the beneficial hegemony role in the potential European variant of the Bretton Woods system. In debates held during the stage of deepening globalization, proponents of the introduction of the Euro pointed out many expected benefits to be enjoyed by the entire global economy. The Euro fits perfectly within the concepts of trade liberalization and international cooperation. It also influences the operations of individual national economies. It was not only liberals that could expect the common currency to render more flexible prices and wages. The hope was that adopting the Euro will lead to improved competitiveness achieved through real adaptations of sound economic policies rather than through monetary manipulation undertaken in order to achieve lower exchange rate for domestic currency or through official devaluation. This in fact signified the return to the idea of gold standard and final divorce with socially rooted liberalism to the benefit of pure liberalism. Liberalism of solutions adopted in the EU took the form of the Brussels consensus and fit within liberal ideas of globalization. Free movement of goods, services, and capital, along with benefits brought the rule of financial markets. Financial markets, in line with the liberal doctrine ideology, also enabled these markets to control a number of governments non-rational decisions. The most significant example is the abandonment by many governments instruments of industrial policy and disregard for the role of industry in GDP in favour of services. Today, this error (mainly in Spain, Greece) means millions of people out of work. Now, many governments in the EU understands better the need to rebuild or innovate some neglected sectors of the real economy. All the above-mentioned circumstances have to be recognized as one analyzes the possibility of restoring debtor countries competitive edge. In this context, for the return to sectoral policy to be feasible, a return to Rooseveltian socially-rooted liberalism needs to be possible. 6. Concepts for repairing the Monetary Union s operation One might distinguish two interpretations of the reasons for the crisis of the Monetary Union. First, some governments are irresponsible for allowing an excessive growth of public and/or private sectors indebtedness. Consequences of this indebtedness were painfully exposed by the crisis. As a result, countries ruled by irresponsible politicians lost the confidence of the financial markets. Second, the Euro system has several flaws in its structure and implementation. These flaws remained partly hidden over the period of good business outlooks. This reason lends supportive arguments raised by many skeptics of implementing the Eurozone project in the first place. Many American economists and academic circles in Europe share this opinion (Dornbusch, 2000). Germans and other economists representing the neoliberal economy uphold the interpretation above. The Belgian economist Paul De Grauwe points out that less developed Eurozone countries have no real control over the currency in which they become indebted. This exposes them to uncontrolled inflows or outflows of capital streams, depending on the changing confidence that financial markets regard them. Under such conditions, they are unable to manage their liquidity since they do not control the money supply. This threatens to provoke a financial crisis even where no fundamental reasons are present (De Grauwe, 2005). According to the German interpretation, the remedy to heal the system is to restore trust in the indebted countries through reduction (some may go as far as elimination) of its budgetary deficit, gradual decrease of its public debt, and improvement of competitiveness through reduced production costs. This strategy requires stricter EU surveillance over economic and budgetary policy under the Stability and Growth Pact as well as upon new instruments counteracting macroeconomic disproportions. Germans firmly emphasize introduction of the principle of fiscal discipline, which learning from the past experience should 6 NR PRZEGLA D USTAWODAWSTWA GOSPODARCZEGO