Moral hazard and the politics of European economic governance: an investigation of the concept's relation to power in the post-2007 period (2007-2022)

This dissertation aims to explain the political influence of the concept of moral hazard on European economic governance. To do so, it investigates the relation of moral hazard to power. This dissertation proposes a novel way to study the relationships between power and ideas (power in, over, and through ideas) empirically. The analysis of the relation of moral hazard to power is based on the assessment of the extent of contestation and variability of conceptions and moral hazard-based arguments among actors with arguably different policy goals and authority, using discourse analysis and interviewing. The analysis is conducted with reference to four case studies: Germany, Italy, the European Central Bank, and the European Commission. Based on the findings of minor contestation and major variability of conceptions and arguments, this dissertation argues that the usefulness attached to moral hazard – more than ideational consensus or the power of authoritative voices – is the main factor explaining the political influence of the concept in relation to European economic governance after 2007. The thesis defended in this dissertation is that the political power of moral hazard lies in the minor contestation of moral hazard-based arguments in EU policy debates; this lack of contestation is not the result of internalized and/or shared beliefs but of the capacity of different actors to exploit moral hazard to their own advantage. The moral hazard case provides two main insights to the more general question of why certain ideas influence policy more than others. First, it draws attention to the role of non-authoritative actors – and their need to establish credibility – in the dominance of ideas that should be subject to more contestation. Second, the moral hazard case shows the leadership role of economic experts in creating, diffusing, contesting, and eventually changing the conventional wisdom.