Debt crisis and austerity in the Eurozone: social and political impacts

The Debt Crisis in the Eurozone Social ImpactsDuring the past six years, the countries of the European periphery – Portugal, Ireland, Italy, Greece and Spain – have been experiencing severe economic-financial crises. In the shadow of these drastic events, the EU institutions and the IMF initiated “bailout programs” for these countries on conditions of austerity and structural reforms.
This interesting volume The Debt Crisis in the Eurozone: Social Impacts, edited by Nicholas P. Petropoulos and George O. Tsobanoglou, encompasses articles of 20 scholars – sociologists, political economists and scientists, social demographers – which delve into the causes and the social impacts of this crisis. Using both theoretical and empirical tools,  the volume also provides an excellent background for a better comprehension of the dynamics of structural and political changes now taking place within the European Union.
The social impacts cover a range of consequences, including poverty, unemployment, anti-migrant attitudes, a decline of welfare and health indicators, post-traumatic stress disorders, national humiliation, political alienation and social protest. The authors analyse the “international” and the “domestic” causes of the crisis, while some of them underline the importance of both factors.
In the 1st chapter, for example, Brigitte Young discusses the role of German Ordoliberalism and politics in the crisis (open access). In the 2nd chapter, J. Magnus Ryner analyzes Eurozone crisis management in the context of European Monetary Union (open access, partly). In the concluding chapter, the editors undertake a synthesis of the previous chapters, and extract a number of policy recommendations that – if adopted – could transform the current financial crisis into a growth-opportunity for the European Union and its member states.

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4 comments

  1. I think that the idea of the imposition of a monetary Union by a group of financiers political elites in the 1990’s is now paying its consequences in Southern European and Central European nations, all
    of them unfortunately without scape to solve their fiscal and financial troubles. The original idea of
    a Common Market or Single Market still is valid to tackle also the World Economic Crisis of today
    world trade and international financial relations.

  2. […] The recent Eurozone crisis is widely discussed topic in academic literature, conferences ans forums. Most political economy analyses of the Eurozone crisis and its handling have focused on political leaders and dynamics, the role of the EU institutions and the global governance, clashes between creditor and debtor member states and public opinion. But private actors and the business community have been given an insufficient attention in this respect. An interesting (open access) article “The Eurozone Crisis and the European Corporate Elite: Bringing Corporate Actors into Focus” by Christakis Georgiou (University of Montpellier) greatly contributes to mend this scholarly lacune. Highlighting the relation between the setting up of the EMU and the gradual emergence of pan-European corporations, the paper uses a framework referred to as the ‘corporate reconstruction of European capitalism theory of integration’ to understand the European Union’s response to the Eurozone crisis. Georgiou argues that  both the foundation of the European Monetary Union (the independence of the ECB and the Maastricht convergence criteria) and the handling of the recent crisis were congenial to corporate preferences. Europe’s nascent corporate elite was concerned with eliminating currency risk stemming from the traditional pattern of macroeconomic imbalances in Europe when the EMU was set up and therefore did not push for fiscal federalism. When the flawed architecture of the Eurozone transformed that currency risk into sovereign credit risk, corporate preferences adapted and now favoured fiscal liability pooling and ultimately the setting up of a fiscal union. European corporate elites also unanimously supported the policy of adjustment through internal devaluation in the deficit economies. However, their differential exposure to credit risk led them to support diverse institutional forms entailing a lesser or greater degree of fiscal liability centralization. Those most exposed to sovereign credit risk – mostly domiciled in deficit member states – supported more extensive forms of fiscal liability pooling such as Eurobonds, whereas their counterparts domiciled in surplus member states were less favourable. This empirically rich paper shows that there is a crucial link between powerful pan-European corporations, the setting up of the Eurozone and the (mis)management of its recent crisis. In the longer term, this analysis suggests that European corporations will also be a key constituency in favour of permanent forms of fiscal union such as a Eurozone treasury and budget. Researchers (as well as citizens and journalists) must pay attention to which extant special interest groups lobby and penetrate state and EU bureaucracies to promote their needs. Because finance and industrial capital preferences may contradict building the economy working for all and undermine the public wellbeing. […]

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