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This contributed volume explores the political economy and socioeconomic aspects of the Greek Financial Crisis both within the country's borders and as part of the global economy. With chapters authored by international experts, this book examines and explicitly deals with specific and important issues that have been ignored by the dominant socioeconomic theory and practice, which have largely focused on the causes and broad economic consequences of the crisis. Discussions include the efficacy of new EU institutions created to address the crisis, the rise of unregistered economic activity, and comparisons with financial crises in countries beyond Europe. This diverse collection argues that the Greek Financial Crisis was not just an economic crisis, but a political and social crisis as well, one with repercussions beyond Europe.



Chapter 1. Introduction

This chapter lays the foundation for what is to come in this book. The chapters that follow examine and explicitly deal with issues that have been ignored by the dominant socio-economic theory and practice. The authors aim to use alternative perspectives in ways that go beyond traditional dominant socio-economic theories. The chapters examine and question the prevailing consensus and as such illustrate alternative responses to the crisis for the benefit of the people. The methodology adopted is holistic, historical, dynamic and comparative in nature.

John Marangos

Chapter 2. The ‘Greek Crisis’ and the Austerity Controversy in Europe

The authors maintain that shortly after the outbreak of the 2008 global economic crisis, Greece functioned as a ‘guinea pig’ for shaping the second phase of the project of European Unification. The strategic target of European economic and political elites is to deepen and render irreversible the neoliberal policy framework all over Europe. European authorities argue that this policy framework will promote ‘competitiveness’, which shall reflect in a positive current account balance and a process of export-oriented growth. However, the authors argue that many prominent economists see austerity-led European current account surpluses as the main mechanism creating global imbalances and retarding growth. Nevertheless, these criticisms can hardly explain why neoliberal strategies persist despite ‘failures’. In this chapter, the authors attempt to formulate an answer to this discrepancy on the basis of a Marxist analysis.

John G. Milios, Spyros Lapatsioras, Dimitris P. Sotiropoulos

Chapter 3. Troika’s Economic Adjustment Programmes for Greece: Why Do They Systematically Fail?

The current Greek crisis—together with crises of the other euro-periphery economies—is at the epicentre of European Union’s (EU) structural problems. In order to overcome this crisis, the EU in agreement with successive Greek governments has applied three Economic Adjustment Programmes (EAPs), entailing successive loans to Greece in order to avoid default and linked to conditionality delineating the recipient’s obligations. These Programmes, despite their successive reviews and modifications, failed dismally to overcome the Greek crisis and achieve their own milestones. This chapter explores the causes of this blatant failure. The first part presents the historical timeline of the Greek EAPs and pinpoints their failures. The next part analyses the origins of these programmes and the peculiarities of the Greek EAPs. The last part explains the political and economic reasons of the systematic failures.

Stavros Mavroudeas

Chapter 4. The ECB’s Non-standard Monetary Policy Measures and the Greek Financial Crisis

This chapter examines and assesses the relation between the European Central Bank’s (ECB) non-standard monetary policy measures and the Greek financial crisis. The initial non-standard monetary policy measures were taken in the context of the Greek financial crisis. However, Greece has been excluded from the renewed versions of the ECB’s non-standard measures on non-monetary grounds. The Greek experience points to the inadequacies and weaknesses of ECB monetary policy, which limit its role as a lender-of-last-resort and its potential for crisis resolution.

Marica Frangakis

Chapter 5. Social Dialogue in Post-crisis Greece: A Sisyphus Syndrome for Greek Social Partners’ Expectations

This chapter argues that due to a large public debt, Greece has been obliged to ask for external financing and to implement measures of reform (Memoranda). The evidence of the years 2010–2016 indicates (a) higher flexibility in the labour market, (b) reduction of minimum wages at the national and the sectoral levels, (c) decentralization of the collective bargaining procedures and (d) abandonment or extreme limitation of the arbitration procedure for several years. The aim of this chapter is to assess the impact of joint EC-ECB-IMF (European Union–European Central Bank–International Monetary Fund) Programmes on the Greek industrial relation system, using an analysis of the institutional changes in labour market and social dialogue. In the years to come, a new response to the crisis is likely to appear, an “organized decentralization” shift in which higher-level agreements set the parameters and the procedures for collective bargaining at the company level. This process allows for adaptation to firm-specific circumstances but puts a limit on the labour flexibility avoiding extreme solutions.

Theodore Koutroukis

Chapter 6. Unregistered Economic Activities During the Greek Multidimensional Crisis

The authors state that the political, economic and social dimensions of the Greek multifaceted (economic, banking, social and sovereign debt) crisis have turned attention to the size and impact of the unofficial to the official economy. The relation between corruption and the unofficial economy in Greece and their role in the Greek crisis have stimulated discussion at an international level about the potential of unregistered economic activities to provide economic succor in times of crisis. This chapter builds on this discussion and explores whether the unofficial economy is a substitute for the official economy in economic downturns and by what means there can be a transfer of a part of the unofficial to the official economy (i.e. to register unregistered economic activities which deliver lawful goods and/or services). The exploration is based on data from an EU THALES research project about the size, causes and impact of the shadow economy in Greece. The focus of the research is on the least explored aspect of tax compliance in Greece, namely tax morale. The findings on the level of tax morale amid the crisis contribute to the ongoing international debate on enforced versus voluntary tax compliance (slippery slope framework) and highlight the factors favoring the transfer of unregistered economic activities to the official economy in Greece.

Aristidis Bitzenis, Vasileios Vlachos

Chapter 7. The Impact of the Financial Crisis on Greece’s Defense Diplomacy

This chapter explores the implications of the Greek financial crisis on the country’s defense diplomacy. Although defense budgets have been reduced in recent years almost in all European governments, Greece’s defense expenditures have experienced a dramatic reduction, prompting Athens to reconsider its defense priorities, including its defense diplomacy. For this reason, Greece has started to fashion the triptych of rationalization, optimization and prioritization in filtering its policies related to defense diplomacy, including its participation in peace support operations or other cooperative military initiatives. Emphasis is given to augmenting its training and operational military cooperation in the context of the evolving commitments as a member of NATO and the EU. Yet, the recent strategic regional environment including the need for managing the migration crisis has revealed the importance of defense diplomacy and its credentials which were previously not fully appreciated.

Fotini Bellou

Chapter 8. Hierarchies, Civilization, and the Eurozone Crisis: The Greek Financial Crisis

This chapter asserts that one of the most important aspects of the European Union has been the complex and often ambiguous power politics of conditionality. However, less attention has been paid to the ways in which the management of the Eurozone crisis, especially with regard to the case of Greece, has been embedded in practices that construct distinctions between insiders and outsiders within the Eurozone. Drawing on the concept of the ‘standard of civilization’ and postcolonial approaches to the study of the European Union, the aim of this chapter is to examine the transformation of Greece into a negative signifier and to illustrate the relevance of civilizational practices and narratives to the Greek Financial Crisis. In this respect, the chapter provides a reflective critique to exclusionary practices engrained in the management of the crisis. It also highlights the enduring importance of hierarchy and civilization within the Eurozone.

Kyriakos Mikelis, Dimitrios Stroikos

Chapter 9. Greece in the Aftermath of the Economic Crisis Needs to Change Its Strategy in the International System: Choosing Between Melians and David

The author provides a new narrative about Greece’s inefficiency to respond effectively to challenges and pressures posed by the international system. It considers the hypothesis that had Greece followed a “small but smart” state strategy during the economic crisis, it would have avoided costly miscalculations. It focuses on the way that Greece dealt with its partners and creditors in the negotiations from January 2015 to July 2015 and examines a series of factors such as the Greek government’s ability to estimate the state of the international system, the arguments and mind-set of the Greek side, its level of preparation, experience and understanding of the negotiations’ context, existence of allies and other resources such as reputation, unity, geography and leadership. It concludes that Greece should abandon its victimhood mind-set and “Melians’ narrative” and understand that the international system is first and foremost a self-help system.

Revecca Pedi

Chapter 10. A Comparative Analysis of the Greek Financial Crisis and the IMF’s Bailout Programs: An East Asian View

This chapter examines the current financial and economic crisis in Greece from a perspective of the East Asian Financial Crisis. It traces some of the distinctive features of the ongoing economic crisis in Greece, comparing them with those of the financial crisis in East Asia in the late 1990s. This comparative analysis of the two crises shows that the aggravation in the Greek economic situation is primarily due to the International Monetary Fund (IMF) and the Troika’s misguided bailout conditionality, just as the IMF’s failed bailout programs in East Asia severely damaged many East Asian economies. Drawing upon this observation, the chapter proposes a series of reform agendas in the domain of regional and international financial arrangement.

Hee-Young Shin

Chapter 11. Commonalities Between the ‘Bookends’ Financial Crises of Mexico 1994 and Greece 2007

This chapter is a historical and theoretical investigation on the theme of ‘modern’ financial crises focused on contrasting the ‘bookends’ cases of Mexico 1994 and of Greece 2007 for improving the understanding of these two cases. The central idea of the chapter is based on the comparison of financial crises models: Orthodox, Heterodox (Minskyan) and a complex system framework, advocating heterodox models as the best explication for the case in point. Then, some guidelines for mitigating the impact of crises are proposed and thereafter some general conclusions are offered, both of them considering the selected cases on the basis of a pragmatic selection of parts of these explications including the historical perspective.

Jesús Muñoz

Chapter 12. Restructuring Accounting Education: The Key to Avoiding Another Financial Crisis in Greece

This final chapter contends that accounting education is strongly related to the recent financial crisis in Greece, since some of the main root causes of the crisis were accounting omissions and manipulations in financial statements all embraced by unethical actions. The global financial crisis in Greece, epitomized by the recession of 2009, raised the question of whether and how should accounting educators respond. The purpose of this chapter is to understand the role of accounting education in the efforts made to prevent another financial crisis in Greece.

Dimitrios Siskos, John Marangos


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