The Currency of Identity: Ireland 1978 to 1992

Abstract

Following 10 years in operation, the European Monetary Union (EMU) has been shaken by the global financial crisis and some peripheral states have experienced significant economic shock. The pitfalls of currency unions have been well documented in the literature of International Political Economy (IPE), so the situation that these states find themselves in cannot come as a surprise to any member country. Without highly synchronised economies, some states will suffer significantly in the event of an exogenous shock. This begs the question why a country would make an "irrational" choice to join the monetary union to begin with. The predominant IPE theories on how the EMU was formed are explained using rational choice with material interests as the focus for interstate bargaining. By arguing that they really have no choice to begin with, rational choice theory renders small states impotent. Unsatisfied with this reductionist answer, this body of work explores the participation of one of the states currently in trouble by introducing a constructivist theory of economic identity politics. Exploring the historical record of Ireland in the period of 1978 and 1992, this work reveals that Ireland in fact had choices, and the "irrational" choices it made were significantly influenced by Irish identity politics. However Ireland's "irrational" motivation can only be understood by including economic identity politics into the analysis. It will reveal that the supranational institutions of the European Union can serve as economic instruments to further nationalist goals. In the process the institution can become embedded in the nation such a country like Ireland is now a hybrid - highly European monetarily while it still remains distinctively Irish. As small states now make up the majority of the European Union this thesis adds to our understanding of small state participation in its most ambitious institution thus far.