THE FIRST ECU was a French coin minted by Louis IX seven centuries ago. By the kind of happy coincidence that occurs to the minds of ingenious politicians, ECU is also the acronym for the European currency unit, which goes into effect the beginning of next year. With this bow to French sensibilities, six nations of Western Europe are now attempting another long step toward unification. The French will keep their franc, the Germans their mark and so forth, but these currencies will all be tightly tied to the ecu. If it works, it means that the six countries will eventually have one currency among them -- although it will have a different name in each of those countries.
The implications for policy are extraordinary. The six governments will have to come much closer in their views on inflation, employment and growth than they have ever been. They have been pushed into this experiment by a judgment that the U.S. dollar will never again provide their economies with the kind of firm base that it offered until the beginning of this decade. They are trying to insulate themselves from the swings in the dollar's value.
In the past the French, and particularly the Gaullists, resisted this kind of a commitment on grounds that it inevitably meant a significant sacrifice of national sovereignty.But Gaullist ideas are in decline in France and other goals -- above all, the control of inflation -- have become much mor urgent. There is a widespread conviction in Western Europe that no parliamentary democracy can withstand the political pressures and temptations to keep providing public benefits that are popular but inflationary. One remedy is to find a tamper-proof mechanism, beyond a government's reach, that enforces anti-inflationary discipline automatically. That's what the gold standard used to do, periodically pitching countries into recessions and worse. For a generation after World War II, the dollar standard was a milder and more in telligent substitute. But now the world has outgrown the dollar standard. To the six European governments -- France, Germany, Denmark and the three in Benelux -- the most sensible solution seems a collective regional system, dominated by no one country but influenced by all of them.
But of the nine members of the Common Market, three have refused to join. Those three -- Britain, Ireland and Italy -- are the poor countries among the nine. There is a king of class struggle now going on within the Common Market. Italy and Britain have been complaining bitterly that the market's present financial structure, dominated by the gigantic fund for farm price supports, constitutes a highly efficient device for transferring wealth from the poor to the rich. Italy and Britain are both bog losers in the agricultural plan; the principal beneficiary is wealthy France. The three poor members want subsidies built into the new currency system to redistribute wealth the other way. So far they haven't been able to strike a bargain. The British evidently intend to defer the whole issue of participation until after their parliamentary elections next year.
But the crucial question for the new system is whether Germany and France can hold together. France has dropped out of less formal European currency alliances twice before, because it couldn't get its inflation rate down anywhere near the Germans'. At the beginning of this decade, the Common Market had been talking about a unified currency by 1980. Then the oil crisis, and the tremendous wave of inflations, seemed to destroy that hope completely.But now, unexpectedly, the idea of a currency union is moving again.
The reasons for it are not happy ones. The Europeans are drawing together only in the face of a future that seems increasingly uncertain and threatening to their prosperity. But it is never the good times and the easy prospects that generate political will.