Wolfgang Schäuble (The Guardian, July 19th) claims that the idea that Europe should be – or can be – led by a single country is wide of the mark; that Germany’s ‘restraint’ reflects the burden of its history, and that the ‘unique’ political structure that is Europe does not lend itself to a leader–follower dynamic.  This calls not only for scepticism concerning his view of German history but also lessons from Gestalt psychology.

Gestalt stresses that what is perceived depends on the values, dispositions and beliefs of the perceiver. Thus Herr Schäuble sees the Eurozone crisis as one of public debt. This is not unrelated to the German for debt – Schuld – meaning guilt.  In stressing this in his Genealogy of Morals Nietzsche also observed that there was a tendency in Germany among strong creditors to demand penitence from weak debtors for their debt-guilt and to punish them if they did not seek redemption.

Yet Herr Schäuble’s Gestalt also displaces that only one EU member state until the financial crisis of 2008 had a significant public debt problem – Greece. The public debt of the others was sustainable and lower in Spain and Ireland than in Germany, until it soared to salvage the folly of banks which had bought toxic financial derivatives.

Rather than Germany proving a reluctant leader, threats to the single currency which Helmut Kohl had presumed would lock Germany into a democratic Europe instead proved to be the template for German hegemony, with debt distressed member states succumbing to the claims of Herr Schäuble and Angela Merkel that there was no alternative to saving them other than an austerity which denied the very principles of achieving rising standards on which the Rome Treaty, founding a European Community, had been based.

The outcome, by 2012, was Germany’s insistence on a ‘finite solution’ in a Stability Treaty to ‘encourage and, if necessary, compel’ member states to reduce deficits, to which Herr Schäuble now adds his ‘optimal scenario’ of a European finance minister who could veto national budgets. The Treaty also has insisted on balanced budgets, despite this being as progressive a response to the Eurozone crisis as a return to the gold standard.

The path towards this override of national democracy had been laid by the earlier attempt to impose a European Constitution which was rejected by the electorates of every member state to which it was put for ratification, yet then recycled as a Lisbon Treaty, and endorsed in Ireland in a second referendum only on the basis that it was an offer, backed by Germany, that voters reckoned they could not afford to refuse. Behind this has been a misreading of German history, including the perception that it was deficit spending and hyper inflation in the Weimar republic that brought Hitler to power.

This displaces that it was austerity by the Brüning government in the early thirties that enabled the rise of Hitler. Until 1929, support for the Nazi Party had not been a threat to democracy. But Brüning responded to the crash of 1929 by tightening credit and freezing wage and salary increases. He also prioritised repayment of reparations under the Versailles Treaty despite there being no imminent need for this since US and other banks already were offering Germany credit without making this conditional on such repayment. Both policies lost him support with the public, and in the Reichstag, and resort to government by decree. Whereas, with austerity and rising unemployment, support for Hitler and the Nazis soared from 1930 to 1933 after dipping in 1932 when unemployment temporarily fell.

Yet little has been learned from this in the policies demanded by Germany in response to the Eurozone crisis. The austerity being imposed since its onset by the Troikas of the IMF, European Central Bank and European Commission replicate the decrees of Brüning by insisting on repayment of debt, credit restrictions and public sector investment and salary cuts. This has been matched by claims from Herr Schäuble that the rest of Europe should work harder to be more competitive which have regrettable echoes of the slogan Arbeit Macht Frei, as well as by a rise of the extreme Right in several EU member states.

Joschka Fischer, the former German foreign minister, has been closer to the mark as an historian than Wolfgang Schäuble in claiming that it would be a tragedy if Germany, which twice destroyed Europe in the 20th century, now were to do the same again through punitive solutions rather than resolve the Eurozone crisis by solidarity. While claims for ‘finite solutions’ to redeem debt and guilt through the imposition of austerity on national governments risk that Europe, which had been the cradle of democracy, under a new German hegemony, shortly could prove to be its grave.

* Stuart Holland is co-author with Yanis Varoufakis and James K. Galbraith of A Modest Proposal for Resolving the Eurozone Crisis