The ostrich dies for nothing

In 1806 Pfhul had been one of those responsible for the plan of campaign that culminated in Jena and Austerstadt; but in the outcome of that war he did not see the slightest evidence of the fallibility of his theory. On, the contrary, to his mind the disaster was entirely due to the deviations that were made from his theory ... Pfhul was one of those theoreticians who are so fond of their theory that they lose sight of the object of that theory - its application in practice. His passion for theory made him hate all practical considerations, and he would not hear of them. He even rejoiced in failure, for failures resulting from departures in practice from abstract theory only proved to him the accuracy of his theory.

Leo Tolstoy, War and Peace.

And so to the Eurozone. Will Hutton writes:

... last Wednesday was a watershed moment – when the euro's future looked more certain and the Europeans began to reshape their continent, in particular the financial and political architecture in which their economies will function. They are leaving the 19th-century nation state behind and creating something new. It is a political construct that operates as a self-help club so that each member is stronger and has more freedom of action than it would outside, but for which membership is going to require tough and well-policed terms.

Tough and well-policed eh? I rather think that Hutton's enthusiasm gets the better of him, mistaking centralisation of power for federal integration. The view from much of Greece is of an economic dictat that will impose endless austerity. Maybe this is overstated and the debt write down certainly gives some breathing space. But what this deal does not seem to do is to reform the structural problems of monetary union and redistribute trade imbalances (as Yanis Varoufakis argues here). Instead it still suggests that the cause of the crisis lies in the moral failures of the peripheral states, requiring the constant supervision of the enlightened technocrats at the centre, whatever their previous record.

Even that would be acceptable if it were not for one thing. The theory - austerity and orthodoxy. Faced with the incontrovertible evidence of failure, they are insisting on implementing their plan with a renewed intensity, even as the social fabric of the indebted nations tears apart. A sustained recovery in Europe requires more than wishful thinking that this time the plan must surely work, especially if properly enforced. The elite economic consensus is running on to the rocks of reality. Will they change course?