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Europe in Crisis

A Structural Analysis

herausgegeben von: Leila Simona Talani

Verlag: Palgrave Macmillan UK

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

With contributions from a range of expert scholars in European economics, politics and social policy, this edited collection analyses the crisis in Europe by exploring the structural asymmetries of the Economic and Monetary Union (EMU) and European monetary integration. Structured in two parts, the chapters in this book discuss the impact of the global financial crisis on the Euro area; the failed implementation of the Lisbon Strategy; wage imbalances in the European labour market; the development of EU financial regulation; the Greek debt crisis; and the relationship between Italy and the EMU. The conclusion to the book puts forward a potential way out of the European crisis and argues that the correct measures, thus far, have not been taken to bolster financial stability.
In Europe in Crisis, Talani and her contributors aim to identify the impact of the crisis on the future of the EMU and the EU project as a whole.

Inhaltsverzeichnis

Frontmatter

1. Introduction: Europe in Crisis: A Structural Analysis

Abstract

This chapter presents a new approach to measuring competitiveness in the Euro Area by focussing on the profitability of investment instead of on tradable goods and current account imbalances. Taking the average return on capital in the Euro Area, the equilibrium wage level is calculated and competitiveness measured as the gap between actual and this equilibrium level.

Leila Simona Talani

The Structural Dimension

Frontmatter

2. The Eurozone Crisis: Between the Global Financial Crisis and the Structural Imbalances of the EMU

Abstract

This chapter places the run on the sovereign debt of the so called ‘PIIGS’ group of EU member states (made up of Portugal, Ireland, Italy, Greece and Spain) within the context of the structural imbalances characterising the Economic and Monetary Union (EMU) from the onset.

It is argued that the global financial crisis, given the structural differences of the different Euro Area members states, acted as an asymmetric shock which exacerbated a structural problem of competitiveness embedded in the way in which the EMU was originally devised and implemented. By no means was the crisis only the result of an unsustainable fiscal position in the PIIGS member states. If anything, it confirmed the lack of sustainability of a structurally asymmetric monetary union in the wake of an extremely serious economic shock. This has meant bringing the PIIGS group to the verge of the abyss, despite many voices having warned at the onset of EMU about the need for more symmetric arrangements in Europe and the development of more fiscal and political integration.

This chapter addresses these issues, starting with the unfolding of the Eurozone crisis. It will then identify the structural imbalances of the EMU. Finally, it will assess the solutions that have seemingly been found to the crisis and their impact on the future of the EMU and of the PIIGS within it.

Leila Simona Talani

3. EMU and Structural Reform

Abstract

This chapter considers the role of economic and structural reform in EMU, starting with the uneven governance of EMU’s economic and monetary parts set out in the Maastricht blueprint. It examines how soft coordination under the heading of the Lisbon Strategy fared before the sovereign debt crisis. It proceeds with analysing the changes that the eruption of the sovereign debt crisis in 2010 brought about, looking into the Europe 2020 Strategy, the Euro Plus Pact, and the implications of the emergence of market pressure and conditionality. In this context the special case of Greece is considered. Adopting a forward-looking perspective, the chapter also sheds light on structural reform needs from the point of view of a durable crisis exit.

Annette Bongardt, Francisco Torres

4. Wage Imbalances in the European Labour Market

Abstract

Stefan Collignon

5. The Institutional Architecture of EU Financial Regulation: The Case of the European Supervisory Authorities in the Aftermath of the European Crisis

Abstract

The chapter discusses the new regulatory tools for the European Banking Authority and will argue that such tools, while increasing the efficiency of the financial market regulation, pose a risk to the constitutional and institutional foundations of the EU. The Union’s constitutional and institutional framework provides normatively important limitations to the conferral of powers to agencies resulting from the principles of conferral (legal basis constraint), institutional balance (delegation constraint) and democratic legitimacy (process constraints). It is argued that the drive for greater efficiency in the regulation of financial services undermines these important constraints. This view has obvious implications for the interpretation of the legal provisions providing for such tools.

Gianni Lo Schiavo, Alexander Türk

A View from the Periphery

Frontmatter

6. Class and Politics in the Greek Debt Crisis

Abstract

The mainstream view on the causes of the Eurozone crisis is that it is a fiscal crisis that emanated partly from the incompetence of the peripheral EU states to collect taxes, partly from their own states’ profligacy with a huge and uneconomic public sector, and partly from the ‘fact’ that these societies are not working as hard as their northern neighbours. This mainstream view has been defeated by original work carried out in the past few years not only by Marxisant scholars and heterodox economists, but also by important financial commentators and journalists, such as Martin Wolf of the Financial Times. The Eurozone crisis, this winning approach argued, is a balance of payments crisis that is bound up with Germany’s anti-inflationary, low wage, export-led growth creating permanent surpluses for itself and permanent deficits for the periphery. This chapter aims at going a step further. Following a ‘global fault-lines’ approach1, it produces a historical reading of the Greek social and political economy, bringing into context not just economic indicators but also geopolitical and security ones. Thus, readers will become aware that periphery social formations, especially Greece, are connected with some inextricable historical and structural contradictions and fault-lines that go well beyond the country’s entry into the EMU in 2001 and refer to the country’s geostrategic and geopolitical location in the Eastern Mediterranean and the Balkans

Vassilis K. Fouskas, Constantine Dimoulas

7. Assessing the Italian Experience in the Eurozone

Abstract

The neo-functionalist case automatically linking the establishment of the EMU to the flexibility of labour markets seems to conceal a number of power struggles amongst the different socioeconomic groups at both the national and the transnational levels.

Indeed, the implementation of an EU employment strategy relying significantly on labour market flexibility, the rationale of which is often neo-functionally linked to the establishment of the EMU, is certainly not the only possible approach to growth and employment especially in the context of globalisation. On the contrary, it is interpreted here as the outcome of a series of political decisions taken by the member states within the context of the EU institutions and procedures. Furthermore, the implementation of flexible labour market policies was itself made possible by the strengthening of the bargaining power of employers’ organisations which was reflected in the institutionalisation at the European level of the neo-liberal economic paradigm focusing on the implementation of strict monetary and fiscal policies.

Whereas the chapter clearly demonstrates that in the Italian case this power battle was certainly won by the leading socioeconomic actors, and this is reflected in the demise of the Unions’ bargaining position, what the Italian capitalist elite failed to realise is that winning this battle against organised labour at the national level was not a solution to the problem of competitiveness in the globalisation era.

If it is true that the process of globalisation has modified the role of the nation state from the welfare model to the Anglo-Saxon model or ‘competition state’ (Cerny 1999), it might be argued that the Italian capitalist elite failed to realise its project of transnationalisation and succumbed to the more powerful capitalist elites from outside Italy, those financial markets actively operating for the liberalization of the Italian ‘Salotto Buono’.

Of course the Global financial crisis on one side, and the asymmetries of the EMU on the other, acted as catalysts for the weaknesses of the Italian capitalist system to appear clearly to financial markets and therefore unleash speculation.

Indeed, whereas the Italian capitalist elite only relied on ‘Internal devaluation’ and labour market flexibility to boost its competitiveness in a totally fixed exchange rate environment, this did not prove a successful strategy and produced a progressive peripherisation not only of the country as a whole, but also, in particular, of its capitalist class.

Leila Simona Talani

8. The Pros and Cons of ‘de facto’ Polish Opting-Out of the EMU

Abstract

The World Bank economist Marcin Piatkowski concluded in a recent report that Poland ‘has just had probably the best 20 years in more than one thousand years of its history’. Within the EU, the country has shown itself to be the most resilient to the 2008 global financial crisis. While the limited connections to international and European financial markets is part of this explanation, one cannot overlook the role of sound macroeconomic policies set up over the years in reducing the likelihood of transmission effects based on free trade, fiscal discipline and more integration at the European level. Despite its extraordinary economic performance, Poland has not yet entered the EMU. Polish leadership has mostly calibrated its economic policies following this aim, but the goal is still very controversial in the country both from a political (public opinion and the opposition are contrary) and a legal point of view (Euro accession would require constitutional changes). This chapter seeks to understand the motivations behind the Polish postponement of the accession to the EMU and the pros and cons (economic, political, social) of this delay. Is this limbo situation going to be a permanent one establishing a ‘de-facto’ opting-out from the EMU?

Serena Giusti, Lucia Tajoli

9. Conclusion: Out of the Present European Crisis: Questions and Alternatives

Abstract

Economic stagnation is now endemic in Europe in the aftermath of the recession that followed the 2008 financial crisis. Responses to the crisis have thus far focussed on financial issues. European leaders averted the collapse of banks and bankruptcy of member governments by organising emergency financial support. New frameworks for regulation of banks and other financial institutions were introduced in parallel with efforts in the USA and other high income countries. But measures to bolster financial stability have not been adequate to launch a general recovery of growth and investment in Europe. Unemployment remains high while government services and social benefits are being cut in most countries. Budget cuts have depressed spending without achieving long-term reforms in public finances. Nor have they been effective thus far in reducing government debt relative to GDP. Debt ratios can be expected to fall gradually but the adjustment will be a long painful process and countries in Europe will share the cost directly via depression of their trade and investment.

Pascal Petit

Backmatter

Titel: Europe in Crisis
herausgegeben von: Leila Simona Talani
Verlag: Palgrave Macmillan UK
Electronic ISBN: 978-1-137-57707-8
Print ISBN: 978-1-137-57706-1
DOI: https://doi.org/10.1057/978-1-137-57707-8