Cozzi, Giovanni (2013) Winning for Real: The Eurozone and the need for a paradigm shift: 10 Fundamental Challenges. [Working Paper]

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Abstract

The crises (economic, financial, ecological, institutional and political) affecting the Eurozone have sparkled the debate on the need for a new deal on European economic and social policies. Words such as “responsibility”, “solidarity”, and “coordination” have entered the policy debate at European and national level among progressive political circles. To this end, it has been argued that the way out from the crises should combine budget consolidation and debt control with stronger growth, employment and social cohesion. In other words, fiscal responsibility should be combined with economic effectiveness and social fairness (Rasmussen and Schulz, 2010).

However, whilst highlighting the need to shift away from an exclusive focus on public deficit and debt reduction, it is questionable that the current progressive policy proposals are setting the foundations for a different model of development, let alone representing a real paradox shift from the current austerity policies.

This paper argues that in order to provide a concrete and real economic alternative for Europe it is important to gain a better understanding of the causes of the crises and their historical roots which can be traced back to the beginning of the neoliberal counter-revolution of the 1970s. Indeed, too often economic and financial crises have only been seen as a temporary displacement which requires emergency measures rather than being embedded in the structural development of the economic system.

The disregard of the systemic dimension of the crisis has limited the scope of alternative policy recommendations predominantly to “preventive” and “reactive” measures and has led to a neglect of those policies essential for building the institutional and economic foundations that would put Europe onto a different and more equitable developmental trajectory where solidarity (at least in terms of job creation and equitable growth) takes centre stage. Indeed, so far the ongoing crises has often been seen as a ‘crass exception that makes extraordinary measures necessary, only to return to normal once the crisis seems to have evaporated’ (Arestis and Sawyer, 2010 :331). In other words, most of the political decisions and discussions have amounted to the perpetuation of business as usual (Harvey, 2010), which translated into support of the current institutional and capitalist settings.

This paper begins by presenting a critical review of the causes and origins of the economic crisis and recession with a particular angle on Europe. This will be followed by a discussion of alternative economic and institutional policy proposals which could put Europe on a more sustainable economic trajectory.

Item Type:	Working Paper
Uncontrolled Keywords:	Eurozone crisis, fiscal policy, financial crisis, Europe
Faculty / School / Research Centre / Research Group:	Faculty of Business > Department of International Business & Economics
Related URLs:	Publisher
Last Modified:	14 Oct 2016 09:37
URI:	http://gala.gre.ac.uk/id/eprint/14738

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