This essay was written by Hamza Dastagir during his time at the Johns Hopkins University School of Advanced International Studies, for the International Political Economy course taught by Professor Eric Jones, Director of the European University Institute.
Policymakers use ideas to figure out what to do: they analyse a problem, define goals, and formulate effective alternative policy strategies. Ideas are shared beliefs and experiences that arise from domestic and international interactions among political actors and shape policy responses. Policymakers use these ideational factors to lay the groundwork for analysing policy failures. The same factors establish a framework for cost–benefit analysis and goal-setting for future policies. Based on this converging set of beliefs, they propose alternative solutions. A policy then occupies a dominant space in the political arena as long as it aligns with the shared consensus. In this way, ideas are crucial in providing direction throughout the policymaking process.
Analysis of policy failure is the stepping-stone of policymaking. Ideas and shared beliefs play a key role in defining the criteria for identifying problems. After the first oil crisis, European governments’ common experience led them to view traditional Keynesian demand-management as the main cause of macroeconomic failure, which weakened post-war political and social arrangements. That shared belief created demand for an entirely different approach—and ultimately paved the way for the European Monetary Union years later. It is therefore essential for policymakers to rely on this ideational framework to analyze past mistakes and to define shared goals for future policies.
Political actors then draw on those same ideational factors to set objectives for alternative solutions. Goals are shaped by shared beliefs, since only politically resonant and dominant objectives survive implementation. Between the “Snake” exchange-rate mechanism (1972) and the European Monetary System (1979), monetarist ideas tilted the priority from full employment toward anti-inflation credibility. Because low-inflation policies fit the prevailing neoliberal consensus, they gained traction and dictated Europe’s monetary blueprint. Ideas that dominate the consensus shape policy, while those that deviate are sidelined—so dominant ideas drive the adoption of alternatives.
Once a policy is implemented, policymakers must demonstrate its effectiveness. A policy remains valid only as long as it aligns with the shared beliefs and goals of political actors. The European neoliberal consensus, which elevated low inflation over growth or employment, proved its worth by converging inflation rates downward—marking a clear break from the diverse priorities of the Bretton Woods era. Thus, ideational factors guide the choice of policy alternatives that stay politically dominant so long as they deliver on their promises.
In short, policymakers draw on ideas and shared beliefs to diagnose policy failures, set goals, and devise alternative solutions. Ideas solidify a policy’s dominance in the political arena. The same principle explains other historical shifts—for example, the fall of the League of Nations and the rise of the United Nations. Therefore, understanding ideational factors is essential for policymakers to know what to do next.
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