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The Euro crisis and contradictions of Neoliberalism in Europe

Author

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  • Engelbert Stockhammer
Abstract
Neoliberalism has not given rise to a sustained profit-led growth process, but to a finance-dominated accumulation regime in which growth relies either on financial bubbles and rising household debt (‘debt-driven growth’) or on net exports (‘export-driven growth’). The financial crisis that began in the market for derivatives on the US subprime mortgage market has translated into the worst recession since the 1930s. In Europe the crisis has been amplified by an economic policy architecture (the Stability and Growth Pact) that aimed at restricting the role of fiscal policy and insulating monetary policy and central banks from national governments. The crisis has thus led to a sharp economic divergence between core and peripheral countries. Contrary to the situation in the (export-driven) Germanic core of Europe, the crisis is escalating in the (debt-driven) southern countries of Europe. The paper interprets the policy regime as the outcome of national elites’ attempt to use European integration as a means to constrain nation states. The result is a policy regime that has fatally weakened nation states as regards their fiscal and monetary capacities without creating a European state.

Suggested Citation

  • Engelbert Stockhammer, 2014. "The Euro crisis and contradictions of Neoliberalism in Europe," Working Papers PKWP1401, Post Keynesian Economics Society (PKES).
    • Handle: RePEc:pke:wpaper:pkwp1401
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    References listed on IDEAS

    as
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    Cited by:

    1. Daniele Girardi & Riccardo Pariboni, 2015. "Autonomous demand and economic growth:some empirical evidence," Department of Economics University of Siena 714, Department of Economics, University of Siena.
    2. Phillip Anthony O’Hara, 2021. "Objectives of the Review of Evolutionary Political Economy’s ‘Manifesto’ and editorial proposals on world problems, complex systems, historico-institutional and corruption issues," Review of Evolutionary Political Economy, Springer, vol. 2(2), pages 359-387, July.
    3. Engelbert Stockhammer & Collin Constantine & Severin Reissl, 2020. "Explaining the Euro crisis: current account imbalances, credit booms and economic policy in different economic paradigms," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 43(2), pages 231-266, April.
    4. Missos, Vlassis & Domenikos, Charalampos & Pontis, Nikos, 2024. "Hardening the EU core-periphery lines, 2009–2019: Dependency, neoliberalism, welfare reformation and poverty in Greece," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 171-182.
    5. Stockhammer, Engelbert, 2013. "The Euro crisis and contradictions of Neoliberalism in Europe," Economics Discussion Papers 2013-2, School of Economics, Kingston University London.
    6. Vlassis Missos & Nikolaos Rodousakis & George Soklis, 2022. "On Measuring the Impact of Internal Devaluation in Greece: Poverty, Flexibility, Migration and Growthless Employment," World, MDPI, vol. 3(2), pages 1-14, May.
    7. Ruf, Julia Anna, 2017. "A policy analysis of the EU Emissions Trading System and its crisis," IPE Working Papers 82/2017, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    More about this item

    Keywords

    Euro crisis; neoliberalism; European economic policy; European integration; financial crisis; sovereign debt crisis;
    All these keywords.

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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