The E.U. created a single currency without the institutions that could sustain it. Illustration by David Plunkert

It seems unlikely that anyone will ever write a rap musical about the foundation of the European Union, but until “Hamilton” it seemed unlikely that anyone would write one about the fiscal infrastructure of the nascent United States. If anyone does try to bust some rhymes about the creation of the E.U., he could find a protagonist in Jean Monnet, a Frenchman who had one of those extraordinary twentieth-century lives, not as an artist or a warrior or a leader or a mystic but as that less celebrated but equally distinctive human type the fixer. Monnet, who was born in 1888, spent his whole life in behind-the-scenes advocacy and deal-making, mainly in the sphere of international coöperation. Just after the First World War, he was appointed deputy secretary-general of the League of Nations, at the age of thirty-one. In 1923, he became an international banker; in 1933, he moved to Shanghai, at the invitation of the Chinese finance ministry, and helped fund the expansion of China’s railroads; in 1939, he moved to London to work on melding the French and English war industries; in 1940, he moved to the United States, on behalf of the British government, and added President Roosevelt to a list of friends and acquaintances that already included Winston Churchill, Charles de Gaulle, Walter Lippmann, John Foster Dulles, and Chiang Kai-shek. In Washington, Monnet worked on the Victory Program, a joint development of arms production, to such effect that, in the opinion of John Maynard Keynes, he “shortened the war by a whole year.”

All this was a preamble to Monnet’s greatest achievement. In retrospect, it is easy to see Europe’s recovery from the Second World War as inevitable. It didn’t seem so at the time, when Europe was broken, poor, riven by social divisions, and mired in severe problems left over from the war and the simultaneous onset of the Cold War. Europe as a whole needed the German economy to recover, but everyone, especially the French, feared a recrudescence of German power. This was not an abstract issue: Germany required coal and steel, and France didn’t want it to have them. The resource heartlands in question were, as Monnet put it, “distributed unevenly but in complementary fashion over a triangular area artificially divided by historical frontiers.” Wars had been fought over these resources for centuries.

Monnet’s idea was simple: the countries should share. If France and Germany pooled the production of coal and steel, two things would happen: the level of production would go up, because economies of scale would bring efficiency; and, more important, it would be impossible for the two countries to go to war. Neither country could get a jump on the other if their essential industries were inseparably interlinked. The resulting institution, the European Coal and Steel Community, was the first of the entities that coalesced into what is today the European Union. That would not have surprised Monnet: his draft coal-and-steel treaty was summed up in the prophecy, or the wish, that “this proposal will lay the first concrete foundations of the European Federation which is indispensable for the maintenance of peace.” In his memoirs, he wrote, “The last word was the most important.” The treaty would insure that Europe, a charnel house for the first half of the twentieth century, would in the second half become a place of guaranteed peace.

Origin stories tend to be complicated, and the European Union’s is no exception. Monnet was a pragmatist, as fixers must be, but he also had a visionary streak. He thought that Europe’s destiny was for its nations to grow closer together—that was his visionary side—but he didn’t think they would do so in a simple, linear manner. “I have always believed that Europe would be built through crises, and that it would be the sum of their solutions,” he said. “But the solutions had to be proposed and applied.” The inevitable crises would be opportunities to make countries grow closer together, to give up gradually larger pieces of their sovereignty and move toward a federal Europe.

This was a clever strategy, and very much the plan of a realist, but it left two huge questions unanswered. The first was: Why? Anyone could see the necessity of avoiding another European war, but it’s not obvious why that automatically involves a federal Europe. Even the most incurious tourist who visits, say, Bulgaria and Finland will have noticed that the countries don’t just have different languages, they have different alphabets. Stay a little longer, and you might notice that they also have different cultures, religions, climates, histories, educational and legal and political systems, economies, food cultures, and national temperaments. Why is it a law of history that they must grow closer together? To insiders such as Monnet, this seems to have been a question that never needed answering, or even asking. It was a European version of Manifest Destiny.

The second question was linked to the first: Who wanted a united Europe? Who were the people who saw this process as both inevitable and something to be schemed and strived for? The answer was the pan-European political élite of people like Jean Monnet and his peers. There has never been a popular appetite for the idea of Europe: it was always an élite project. Monnet hadn’t ever stood for political office. “Ever closer union,” the phrase in the foundational document of the E.U., the 1957 Treaty of Rome, is just stated as a goal, without any explanation either of what it means or of why it would be a good thing for most Europeans. It was an end in itself.

For about four decades, the flaws implicit in the project didn’t seem important. Europe grew through institutions and agreements that, in the medium term, were immediately and practically beneficial to ordinary citizens. The result was a boom in trade, years of fairly consistent economic growth across the continent, and an unbeautiful but functional patchwork of arrangements in which some countries belonged in the European Free Trade Association but not in the E.U. (Switzerland, Norway, Iceland, Liechtenstein), some countries were in the E.U. but not in the Schengen zone of passport-free borders (the U.K., Ireland), some countries were in the Schengen zone but not in the E.U. (Switzerland, Norway, Iceland), and one country wasn’t in the E.U. (Greenland) but was part of a state that is (Denmark). There was a pan-European but non-E.U. court, the European Court of Human Rights, whose rulings often caused mortification among rebuked governments. This might not have looked like anyone’s model of a union, but peace and prosperity have a lot to be said for them, especially for a continent that had done such a thorough job of testing the alternatives.

In 1992, the European Union made what the Nobel Prize-winning economist Joseph Stiglitz calls “a fatal decision”: the choice “to adopt a single currency, without providing for the institutions that would make it work.” In “The Euro: How a Common Currency Threatens the Future of Europe” (Norton), Stiglitz lucidly and forcefully argues that this was an economic experiment of unprecedented magnitude: “No one had ever tried a monetary union on such a scale, among so many countries that were so disparate.” The idea was to force Europe closer together politically by forcing it closer together monetarily—in effect, to engineer one of Monnet’s crises, the ones that would build Europe. The nineteen countries in the eurozone (out of twenty-eight in the E.U.) would adopt a single currency but would not have a parallel system to raise tax. There would be monetary union without fiscal union. A European Central Bank (E.C.B.) would run the currency and set interest rates, but there would be no pan-European finance ministry to run the economy. If you pitched this idea to a class in Economics 101, there would be an embarrassed pause, and eventually a hand would go up and someone would ask, “Is that even possible?” The answer: “Nobody knows.” The E.U. went ahead with its experiment anyway. To raise the stakes even further, there was no exit mechanism for the single currency: monetary union was, by design, irreversible.