On the five, the window of an ancient Roman edifice. On the ten, a medieval Romanesque portal. On the twenty, two slender Gothic windows, one taller than the other. On the fifty, a detail from a Renaissance building. On the hundred, the ornate entrance of a Baroque palace. On the two hundred, a section of a late-nineteenth-century public building, perhaps a train station. On the five hundred – but who has ever seen one of those? – the front of a contemporary commercial or governmental headquarter in glass and steel. And on the versos, bridges of the same era as the buildings depicted on the other side: a Roman aqueduct on the five, a massive medieval bridge on the ten, and so forth.

These are the designs on the euro banknotes: detailed yet generic, plausible yet fictitious structures, a primer of continental architecture that aims to be of no place. The exemplars could exist in any of the countries in the monetary union, the great region state that in this, its nineteenth year, may well cease to exist, at least in the form that we know today. And so the buildings and the bridges – all of them in pristine conditions, no matter how old they are – look like ruins, and the eerie absence of human forms on any of the banknotes becomes symbolic of the failure of the policy-makers to see people in the European picture. The moment it came into being, the eurozone dispensed with key mechanisms and institutions designed to safeguard living conditions in an economic crisis and replaced them with nothing at all, with the devastating results that we see today.

It is ostensibly a drama without people, but it plays out in some quarters like a morality piece, pitting the profligate south versus the hard-working, virtuous, nose-to-the-grindstone north. The German press infamously ran this line in 2010, when the crisis deflagrated in Greece, but it remains the dominant explanation of the root causes and current unfolding of the eurozone troubles in publications with a global reach such as Time and Newsweek, as well as in the majority of Europe’s own mainstream commentary.

If the play is a morality, then its victims are deserving, and the brutal austerity measures enacted in Portugal, Greece and Ireland (and, to a lesser extent so far, Spain and Italy) are a fitting punishment. The sin of profligacy, of living beyond one’s means, needs to be castigated: if the ant had given freely to the grasshopper, then the grasshopper would have not learnt its lesson. This is what is known in policy circles as the moral hazard of bailing out a country like Greece: if the country were relieved painlessly of its debt, then other economies in similar strife would have no incentive to cut expenditure and improve their fiscal position.

This misleading narrative works on public opinion because it makes intuitive, even comforting sense, whereas the reality – which even the odd right-wing economist, if prodded, will obligingly describe – is counterintuitive and awkward. It is hard to wrap one’s head around the fact that the lending by the rich European economies was at least as reckless as the borrowing by the poor ones, that the German surplus was at least as damaging – and every bit as politically determined and avoidable – as the deficit of Greece and the other countries offensively labelled as PIGS.

The loose monetary policy run by the European Central Bank to the benefit of its sluggish core economies left the more dynamic but capital-poor economies of the periphery to choke on cheap credit. The doctrine of the ‘moral hazard’ did the rest: once the interest on Greece’s debt spiralled out of control, instead of bailing the country out – which would have carried a comparatively small price tag, since its economy accounts for a mere 2 per cent of the eurozone’s GDP – the core countries chose the cautionary approach, forcing Greece to adopt draconian measures that increased unemployment while benefits, services and public sector salaries were slashed in exchange for some relief for its creditors.

More in-depth analyses, such as those by Vivien Schmidt, and Sergio Cesaratto and Antonella Stirati, point to the hegemonic role of Germany – in the context of the very weak or non-existent governance of cross-border economic policy – and its refusal to deviate from the approach that made possible its post-war miracle: namely, a conservative fiscal and monetary policy (competitive deflation) coupled with a reliance on more expansionary policies on the part of its trading partners. Such discipline lends itself well to the moral argument: if every country were as industrious and hard-working as Germany, the entire system could sustain itself indefinitely along a virtuous path.

But this, as Cesaratto and Stirati argue, conveniently overlooks the imbalances that this conduct causes elsewhere in the system, as well as that the strategy works – to a point – precisely because of these imbalances. If everyone behaved like Germany, overall economic activity would grind to a halt.

Yet enforcing a ‘northern’ brand of fiscal conservatism is precisely the path chosen by the institutions that are governing the crisis – namely the troika formed by the European Central Bank, the IMF and the European Commission – whose conduct recalls again the euro banknotes, eliding regional specificities, cultural, historic and economic differences. There is a profound deficit, long predating the eurozone crisis, in our capacity to imagine a unified Europe other than in the normalisation and modernisation of the areas that lag behind economically, and this is reflected in the injunction to the southern nations to be more like the prosperous north, even if it should cost them their house.

I hail from one of these southern nations. My mother turned eighty early last year, and until then I might have told you that she could not speak a word of English. Recently, there is one word that she has been hearing and practising a lot: spread, by which she and everybody else back home mean the differential between the interest rates paid by the market on newly sold Italian government bonds and the rate paid on German bonds purchased on the same day. It has become part of the everyday vocabulary, used in conversations in which that single financial indicator becomes the measure of the state of the entire economy, and of our chances of making it through. Insofar as the proximal cause of the crisis is the dramatic increase in the cost of servicing sovereign debt, the spread is not an implausible measure of those very things, but that we are able to quantify and track our woes so precisely is both symptomatic and troubling.

There are two aspects of the eurozone framework relevant here: one, as is well known, is that the nations that signed up to the euro gave up the ability to set their own interest rates and to devalue their currency, both key instruments in dealing with high levels of indebtedness. But the lack of automatic internal balancing mechanisms within the economic and monetary union has even stronger social repercussions. As economist Michael Burke, and others, have noted, a region undergoing economic problems within a nation state, even a federated one, would automatically pay less tax on its reduced income and receive a larger slice of the overall state revenue in the form of increased social services and benefits. But the eurozone has no such facilities, leaving governments hit by the crisis powerless and their populations exposed to the repercussions. What has arisen instead – and this is the second aspect – is a market for gambling on which country will be the next to get into trouble.

That is actually what is measured by the spread. Within three weeks of Mario Monti’s government being sworn in, the spread between the Italian BTP and the German Bund fell a whopping 207 points, and for a time the pressure shifted onto Spanish and French debt. On the Italian side, there was no change in the economic fundamentals other than a known and respected Eurocrat inspiring confidence in the markets. But the concomitant rise in the French and Spanish yields suggests that in the eurozone, like in that old joke, you do not have to run faster than the lion to save yourself: you just have to run faster than your companions.

In the absence of common rules of fiscal governance, the core economies possessing the money for a bailout are free to dictate its conditions without being subject to a union-wide democratic process (indeed, the EU went as far as to suspend Greece’s voting rights in the early stages of its crisis). But the real enforcers of the draconian measures that policy-makers advocate are the markets. Without the speculative pressure on the price of its bonds, Italy would continue muddling on, as it has for the last twenty-plus years, and the case for the cuts pushed through by Monti would be much harder to make.

We must note a by now familiar paradox. Surveys indicate public confidence in the Monti government in spite of the massive unpopularity of almost every measure it has adopted – a paradox only explained by a belief that these hated and in some cases grotesque reforms are seen as a necessity. In the short term, these reforms are necessary (or at least something is): having to pay 7 per cent interest on its bonds put Italy on the brink of bankruptcy. This we know, this we understand – but we are not nearly as cognisant of how things got this far and this bad.

In the introduction of a recent symposium at the London School of Economics on the sovereign debt crisis, Professor Charles Goodhart made a very candid observation: the architects of the monetary union, aware that no governance provisions had been made to enable the centralised political control of fiscal policy necessary in a crisis, rested their hopes on an expectation that such provisions would be created in response to a crisis. In case you think this a reasonable proposition – Goodhart seemed to think it was – I invite you to consider its implications in light of the present situation. Did the technocrats who designed the union know that things would play out the way they have, and did they figure that a traumatic event would create the conditions for the political unification that no member state seemed to have an appetite for? Or, to put it another way, did they build a shock doctrine clause into the eurozone pact in order to bring about their desired reforms? Is the misery of the people of Ireland, Greece and Portugal the cautionary tale designed to bring about this goal?

It may well turn out this way, although if such a framework were created, it is difficult to be optimistic about its democratic quotient. Will the arrangement simply enshrine the hegemonic role currently played by France and Germany, or will the core nations be forced by circumstances to accept the introduction of Eurobonds and a spreading of the risk associated with sovereign debt in order to preserve the union on which their own economic fortunes largely rest (a full 40 per cent of German exports is within the eurozone)? Some answers may come in the course of this year, but in the meantime several countries and their citizens remain over the barrel. At the time of writing, six weeks into the government of the technocrats in Italy, and in spite of their bowing to the troika’s demands, spreads have climbed back towards the calamitous levels reached at the time of the fall of Silvio Berlusconi, with a pivotal sale of €30 billion worth of bonds due at the end of the month. The shock may not have long to wait for its doctrine.

However, the fact that the problems awaiting resolution seem, and indeed are, so technical points to a much larger issue that has to do again with the Europe we have consistently failed to imagine. To a significant extent, the monetary union has made a virtue of not being counterbalanced by a political union; by depoliticising, or appearing to depoliticise, monetary mechanisms – a well-tested neoliberal move – the technocrats who designed the system ensured that politicians would be powerless to react in a crisis. We may rightly bristle at the acquiescence of the social democratic parties of George Papandreou, Pier Luigi Bersani and José Zapatero to the technocrats’ demands, or lament the lack of forceful answers to the crisis from more radical sectors of the European Left, but we must concede that under a set of rules that effectively prohibits expansionary fiscal policy, there may be no alternative option than blowing up the system, a move whose consequences are terrifyingly difficult to predict, and for which no political force seems prepared. Could Greece default on its debt and exit the euro without facing the complete collapse of what is left of its economy? And what would its prospects of embracing a radically different and progressively oriented economic system look like at that point?

Italy’s prospects are a little different, and include the option of holding a gun to its own head, which would almost certainly force France and Germany to take extreme measures in order to save the monetary union (again, for the simple reason that the alternative is too frightening to contemplate). But could they, even if they wanted to, even if they resolved to in time? Italy may well be too big to fail, but it could also prove too big to rescue. At any rate, in the absence of political forces – outside of the secessionist, racist Northern League – prepared to stare down the troika, the country seems to have every intention of falling into line and adopting the familiar slew of recession-causing, growth-destroying measures. And to reform, to modernise, to become something other than itself, more like them.

I asked rhetorically in the introduction who might even come across a €500 note, but we do in fact know the answer: this is the denomination used to smuggle large sums of money outside of the eurozone borders, where it can be sheltered from taxation and the risk of an impending collapse of the union’s banks. A spike in the circulation of €500 notes was recently detected for instance by the Italian tax authorities in the provinces of Como and Rimini, near the border of Switzerland and San Marino respectively.

Fittingly, the building depicted on this banknote may well be the headquarters of a bank or other financial institution, its large opaque windows reflecting what is on the outside. There are, as usual, no people in the picture, and nobody, not even a single car, is depicted on the large suspension bridge on the reverse side. Yet this is the highest denomination, the end point of the story told by the suite of banknotes. This is Europe today, as seen by its architects: modern buildings that hide the elite workforce of the new economy behind a mirror curtain, and large, cathedral-like pieces of transport infrastructure. But no civic spaces, nothing you could inhabit or occupy.

There is another Europe, outside of these pictures: a Europe whose diversity mirrors its inequalities, a Europe that is crossed by sometimes desperate flows of peoples, not just of capital, to which it constantly labours to adjust, its social tensions erupting into manifestations of the worst kind of xenophobia and the best kinds of defiance. The protest movements, the aganaktismenoi, the indignados and the others, are where the hope lies that a different kind of global collective might be imagined , one that is constructed out of a sheer refusal to countenance the proposition that there is no alternative to the disastrous policies pursued or prescribed by our governments. But there is another kind of anger, too, turning more and more often into cowardly street violence towards immigrants and minorities, or institutional indifference for the hundreds who drown every year trying to reach our ailing shores.

As always, it is the present that hangs in the balance, just as much as the future; it is who we are. Perhaps Europe already lies in ruins – those perfect, intact ruins printed on our money – and we do not even know it. Either way, the task ahead ought to be thought of as a reconstruction. It is the only way to escape the perverse logic of conservation and austerity, the only way to reclaim our collective social imagination and put it at the service of what can and must be done.

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