John Taylor On The Parallels Between The European Union And The Congress Of Vienna
Some historical parallels on where the current state of disintegration of the latest artificial European Union construct falls in historical terms from FX Concepts' John Taylor.
The Congress of Vienna and the European Union
By John R. Taylor, Jr.
Chief Investment Officer
As supporters of the hypothesis that historical events display cyclicality that if studied and understood can improve decisions about the future, we are always trying to place current events in a historical context. Our goal is always to develop a strategy that can anticipate the twists that current historical actors will take. The recent crumbling of the Eurozone has been a perfect example. As an eventual collapse of the common currency will be a very significant strategic defeat for the countries involved, Europe as a whole, and the Western world powers in general, getting a handle on this macro event is critical. Long-term cycles are not exact as they are a function of human lifespan and generational changes. In a world where everything seems to move faster, these cycles are actually moving more slowly – because we live longer and have children at a later age. Eighty years has been a good guess for the long generational cycle, but now it could be stretching towards ninety. Looking back from here, the world Depression through WWII, the unsettled period between 1848 and 1871, and the revolutionary upheavals and wars starting around 1789 and running through Napoleon to 1814 are likely matches for the troubled period we are entering now.
Finding a way to examine these events, we compared the situation leading up to the troublesome periods. We found a very interesting parallel between the 34 years following the Congress of Vienna in 1814-1815 which ended with the tumultuous 23 year span of revolutions and nation-building in Europe, and the time that followed WWII until the millennium, a 55 year span. This period ended with the founding of the euro. The parallel between 1815 and 1945 is interesting as both years marked the defeat of a tyrant whose armies had totally destroyed the societies and countries of Europe, rewriting laws, relationships, and creating a new society. The goal of the Congress of Vienna was the complete removal of any trace of Napoleon’s activities – putting Europe back to where it was before the French revolution. Not only were the Germans defeated in 1945 but the Allies reestablished all the old boundaries and governments. It took many years before the event that we would consider equivalent to the Congress of Vienna occurred. The Treaty of Rome created the Common Market in 1956 to make it impossible for another war to occur in Western Europe. Both major treaties were reactionary events as they put things back to where they were before the periods of war and both were extremely
successful for a long time.
Going back to the way things worked before might be a good idea for a while if the underlying situation fits the old structure. In both these cases things did fit, but then they didn’t. In 1815 there were no railroads, no telegraph, and manufacturing was on a very small scale, but 30 years later all these things changed. By the mid-19th century, crossing Germany from Hamburg to Munich on a train would have involved crossing as many as 7 borders. Business was difficult. Cities grew rapidly and workers rushed in. In 1848, revolutions across Europe signaled the collapse of the Congress’s structure and the beginning of the Italian and German nation building, processes that were completed in 1871, under the leadership of two great statesmen. From 1871 to 1914 Europe was at equilibrium again. Today, Europeans have enjoyed 54 years of EU dominated peace and prosperity, but the customs union has been padded with more and more responsibility, ending with the euro. The Eurozone has faced two crises this year, papering them over and hoping for better times in a few years. Trade is no longer the critical issue for Europe, it is equality and transferability of education, capital, professions across the continent. True unification will take decades – just like 160 years ago, an uncertain but vital voyage.