The key point to understanding this book is that Prof. Eichengreen is a pretty convincing example of a market fundamentalist: he's a free market parody of an Evangelical Christian minister, especially preaching on the text of *II Chronicles* (1). Just as fundamentalist theology sees the vicissitudes of the Divided Kingdom as arising from the Israelites deviating from the revealed word of God (thereby bringing down the wrath of Israel's neighbors), Eichengreen sees Europe's problems arising from its departure from the revealed word of market fundamentalism. If this appeals to you, then please stop reading; you will like his approach and my negative review will only annoy you.
For those of you not 100% motivated by more polemics to support your notions, let me summarize my problems with this book. It's not merely that the author has a strong point of view I disagree with: it's that he has nothing to say about the countervailing evidence. If you are only interested in the narrow metric of average per capita GDP, and don't care about living standards, financial sustainability, environmental issues, social justice, appropriate technology, and mental health, then I suppose Eichengreen's compulsive smugness about the US model of economic governance makes sense. If you care about the other issues listed above, then it doesn't.
To be fair, he's merely touting the same theodicy as nearly all economists nowadays. Still, it's exasperating: a capitalist economy dominated by global oligopolies, whose managers are insulated from the consequences of poor judgment is not a market economy. It will excel chiefly in finding opportunities for its managers to plunder. That's consistent with the most orthodox neoclassical economics one could ask for, but mainstream economics has made a talisman of private ownership: agency problems, perverse incentives, and rentseeking monopolies are supposed to vanish as long as the shares are owned by unregulated, for-profit-only investors.
As a source of information about Europe--my motivation for reading it--this is damaging not because Eichengreen bullhorns his biblical commentary on every page; it's that he completely truncates the scope of his narrative to avoid any piece of data that might undermine his dogma. For example, when France is stuck in the doldrums he blames the inability of the labor unions there to be sufficiently centralized to impose on their own membership a wage giveaway that would stimulate French exports (pp.104-105). Elsewhere (pp.122-124) he thunders at the horrid English workers, who utilized their superior bargaining position after the War to get higher wages--the curs!--thereby exposing the British to all manner of pear-shapédness. He grudgingly hints at the (far more consequential) problem of financing vital capital imports under a fixed exchange rate regime. This allows him to explain why Britain, which really had the most "free market" economy in postwar Europe, was actually a hotbed of radicalism, whereas Scandinavian countries were actually paragons of laissez-faire.
The problem becomes more pronounced as the book wears on. Chapter five, on the Warsaw Pact economies, is curiously free of actual sources: most of the footnotes are actually just explanatory remarks and Eichengreen otherwise just regurgitates anti-Communist polemics. Policy makers in the Communist countries often faced dilemmas similar to those faced by severely underdeveloped countries everywhere; these dilemmas have no satisfactory solution, and capitalist policies have usually come to grief as well as socialist ones. Apparently he thinks under private ownership, these dilemmas magically vanish, and they don't (2).
While he mercifully spends little time on Warsaw Pact countries, Eichengreen turns his fulminations to the falling away of the Europeans from the true path--how else to explain the 1970's decline in growth rates? He passes over the 1968 radicalism in silence, despite the fact this was mainly a revolt against the technocratic policies that had prevailed before (i.e., the ones of which he approves). The CAP(3) arouses his ire, despite the environmental and regional issues it was created to address; he never acknowledges these.
In the final chapter, his discussion of Europe's overall conditions is stunningly out of touch. Ignoring the superior quality of life (reflected in nearly every social indicator), quality of outputs (reflected in the prestige of European products in world markets), and sustainability (reflected both in the Eurozone's superior environmental protection, its higher labor force participation rates, and its trade surplus), he speaks of the Eurozone as if it is stuck permanently in Dante's Purgatory, unable to reach the US-ish Paradise. This is more befitting the pages of The Onion than a non-satirical book about economic performance.
UPDATE: Per objections of Mr. Martinez (see comments) I am changing the review because it had falsely implied that Eichengreen was actually a member of Rothbard's and Say's economic schools. The offending sentence was mis-aimed sarcasm.
(1) *II Chronicles* is a book of the Old Testament that covers the period following the division of Israel into Judah and the Northern Kingdom. Sunday school teachers often claim the book illustrates how kings who ignored the good prophets' advice were punished by Jehovah, while the righteous kings flourished; but in fact, no such correlation is to be found in the book.
(2) Often conservative economists will argue that bad outcomes in capitalist countries, such as massive informal sectors and disastrous farm policies, are actually caused by government policies. This is special pleading; in a capitalist country, the government mainly legislates to serve the business managerial class, whether its members admit it or not. Eichengreen seems naïvely proud of the Marshall Plan's ability to shape legislation in defiance of democratic procedures; he fails to understand that this further undermines the legitimacy of his overall thesis.
(3) Common Agricultural Policy (of the European Union); established in 1963 and provides the basis for
Europe's food and agricultural programs. See Céline Delayen, "The Common Agricultural Policy: a Brief Introduction" (PDF), Institute for Agriculture and Trade Policy (2007).