How Party Linkages Shape Austerity Politics: Clientelism and Fiscal Adjustment in Greece and Portugal during the Eurozone Crisis

Drawing on an analysis of austerity reforms in Greece and Portugal during the sovereign debt crisis from 2009 onwards, we show how the nature of the linkages between parties and citizens shapes party strategies of fiscal retrenchment. We argue that parties which rely to a greater extent on the selective distribution of state resources to mobilize electoral support (clientelistic linkages) are more reluctant to agree to fiscal retrenchment because their own electoral survival depends on their ability to control state budgets to reward clients. In Greece, where parties relied extensively on these clientelistic linkages, austerity reforms have been characterized by recurring conflicts and disagreements between the main parties, as well as a fundamental transformation of the party system. By contrast, in Portugal, where parties relied less on clientelistic strategies, austerity reforms have been more consensual because fiscal retrenchment challenged to a lesser extent the electoral base of the mainstream parties.

A Historical Materialist Approach to the Eurozone Crisis: Fictitious Capital, States, and Capital Accumulation

This dissertation examines the ongoing European sovereign debt crises that began with Greece in 2009, in the wake of the US subprime mortgage crisis. Through the application of a historical materialist approach, I attempt to understand the on-going crisis in the European Monetary Union (EMU) by investigating root causes of sovereign debt crises, relations of power, and main beneficiaries of the policy responses. My theoretical framework hinges on three contradictions in capitalism: the tendency towards overaccumulation, the tension between fictitious capital and the productive base, and the contradiction inherent in capitalist states between their role as a national state and as a class state. In contrast to the dominant positions that locate the cause of the crisis within either: debtor states; creditor states; or the framework at the EMU, I argue that these sovereign debt crises are actually a broader crisis of crisis of capitalism within the EMU itself. In order to do so, I trace the evolution of the political economy of the Eurozone in the post-Bretton woods era, with a particularly focus on the credit system. More specifically, I argue that these crises are the result of an interaction between three meso-level contradictions that have developed within the EMU region: 1) Germany’s postwar accumulation regime, which has produced a deep crisis of overaccumulation; 2) the contradictory processes associated with the neoliberal logic of the EMU, by which I mean the rush to lower barriers to credit and finance at the expense of all else; and 3) credit-fueled, consumption-based EMU integration in the periphery; and. These three contradictions came together in the wake of the 2007-2008 US subprime crisis to form an overall crisis of capitalism in the Eurozone, expressed, as I suggest, as a crisis of fictitious capital. This dissertation aims to contribute to the ongoing project among critical political economists to de-naturalize and re-politicize money, while challenging the hegemony of monetarism within neoliberalism. Second, there has yet to be a comprehensive study that examines the EMU, Germany, and the crises in the periphery from a holistic, historical materialist analysis.

The State of the Union(s): The Eurozone Crisis, Comparative Regional Integration and the EU Model

No abstract.

The Eurozone crisis and the erosion of democratic legitimacy: Lessons from the gold standard. ACES Cases No. 2013.3

This paper makes four propositions. First, it argues that the euro’s institutional design makes it function like the interwar gold exchange standard during periods of stress. Just like the gold exchange standard during the 1930s, the euro created a ‘core’ of surplus countries and a ‘periphery’ of deficit countries. The latter have to sacrifice their internal domestic economic equilibrium in order to restore their external equilibrium, and therefore have no choice but to respond to balance of payments crises by a series of deflationary spending, price and wage cuts. The paper’s second claim is that the euro’s institutional design and the EU’s response to its ‘sovereign debt crisis’ during 2010-13 deepened the recession in the Eurozone periphery, as EMU leaders focused almost exclusively on austerity measures and structural reforms and paid only lip service to the need to rebalance growth between North and South. As Barry Eichengreen argued in Golden Fetters, the rigidity of the gold standard contributed to the length and depth of the Great Depression during the 1930s, but also underscored the incompatibility of the system with legitimate national democratic government in places like Italy, Germany, and Spain, which is the basis for the paper’s third proposition: the euro crisis instigated a crisis of democratic government in Southern Europe underlining that democratic legitimacy still mainly resides within the borders of nation states. By adopting the euro, EMU member states gave up their ability to control major economic policy decisions, thereby damaging their domestic political legitimacy, which in turn dogged attempts to enact structural reforms. Evidence of the erosion of national democracy in the Eurozone periphery can be seen in the rise of anti-establishment parties, and the inability of traditional center-left and center-right parties to form stable governments and implement reforms. The paper’s fourth proposition is that the euro’s original design and the Eurozone sovereign debt crisis further widened the existing democratic deficit in the European Union, as manifested in rising anti-EU and anti-euro sentiment, as well as openly Eurosceptic political movements, not just in the euro periphery, but also increasingly in the euro core.

What caused the eurozone crisis? CEPS Commentary, 27 November 2015

After five years of crisis there are now signs that the eurozone economy is recovering, but it is far from being back to normal. The authors of this CEPS Commentary sound a note of caution: although progress has been made with the banking union and new institutions like the European Stability Mechanism (ESM), more needs to be done. The eurozone crisis may be in remission now but when interest rates start to rise, or if confidence evaporates again due to global shock, the systemic cracks could reappear at an alarming rate.

Hungary and the eurozone crisis: a comedy of errors?

The spill-over of the global fi nancial crisis has uncovered the weaknesses in the governance of the EMU. As one of the most open economies in Europe, Hungary has suff ered from the ups and downs of the global and European crisis and its mismanagement. Domestic policy blunders have complicated the situation. This paper examines how Hungary has withstood the ups and downs of the eurozone crisis. It also addresses the questions of whether the country has converged with or diverged from the EMU membership, whether joining the EMU is still a good idea for Hungary, and whether the measures to ward off the crisis have actually helped to face the challenge of growth.

[Kirja-arvostelu]

Kirjallisuusarvostelu

Estonia in the eurozone - a strategic success. OSW Commentary No. 53, 2011-06-20

The adoption of the euro in January 2011 topped off Estonia’s integration policy. In the opinion of Estonian politicians, this country has never been so secure and stable in its history. Tallinn sees the introduction of the euro primarily in the political context as an entrenchment of the Estonian presence in Europe. The process of establishing increasingly close relations with Western European countries, which the country has consistently implemented since it restored independence in 1991, has been aimed at severing itself its Soviet past and at a gradual reduction of the gap existing between Estonia and the best-developed European economies. The Estonian government also prioritises the enhancement of co-operation as part of the EU and NATO as well as its principled fulfilment of the country’s undertakings. It sees these as important elements for building the country’s international prestige. The meeting of the Maastricht criteria at the time of an economic slump and the adoption of the euro during the eurozone crisis proved the determination and efficiency of the government in Tallinn. Its success has been based on strong support from the Estonian public for the pro-European (integrationist) policy of Estonia: according to public opinion polls, approximately 80% of the country’s residents declare their satisfaction with EU membership, while support for the euro ranges between 50% and 60%. Since Estonia joined the OECD in 2010 and adopted the euro at the beginning of 2011, it has become the leader of integration processes among the Baltic states. The introduction of the euro has reinforced Estonia’s international image and made it more attractive to foreign investors. The positive example of this country may be used as a strong argument by the governments in Lithuania and Latvia when they take action to meet the Maastricht criteria. Vilnius and Riga claim they want to adopt the euro in 2014. The improving economic situation in the Baltic states will contribute to the achievement of this goal, while an excessively high inflation rate, as in 2007, may be the main impediment1.

Eurozone Crisis and Social Models: What We Can Learn from Italy and Spain. CES Papers - Open Forum #20, 2013-2014

This paper considers the role of social model features in the economic performance of Italy and Spain during the run-up to the Eurozone crisis, as well as the consequences of that crisis, in turn, for the two countries social models. It takes issue with the prevailing view - what I refer to as the “competitiveness thesis” - which attributes the debtor status of the two countries to a lack of competitive capacity rooted in social model features. This competitiveness thesis has been key in justifying the “liberalization plus austerity” measures that European institutions have demanded in return for financial support for Italy and Spain at critical points during the crisis. The paper challenges this prevailing wisdom. First, it reviews the characteristics of the Italian and Spanish social models and their evolution in the period prior to the crisis, revealing a far more complex, dynamic and differentiated picture than is given in the political economy literature. Second, the paper considers various ways in which social model characteristics are said to have contributed to the Eurozone crisis, finding such explanations wanting. Italy and Spain ́s debtor status was primarily the result of much broader dynamics in the Euro- zone, including capital flows from richer to poorer countries that affected economic demand, with social model features playing, at most, an ancillary role. More aggressive reforms responding to EU demands in Spain may have increased the long term social and economic costs of the crisis, whereas the political stalemate that slowed such reforms in Italy may have paradoxically mitigated these costs. The comparison of the two countries thus suggests that, in the absence of broader macro-institutional reform of the Eurozone, compliance with EU dictates may have had perverse effects.

Germany at a crossroads:the gathering crisis sharpens

In our book, The Gathering Crisis: The 2005 Federal Election and the Grand Coalition (Miskimmon et al, 2009), we argued that the German political and economic systems faced a number of serious challenges. The resource crunch in public finances has been particularly problematic in a country used to consensus politics- money had previously been used to oil the wheels of German federalism (and European integration). In the light of recent events- the global financial crisis, the Eurozone crisis, the 2009 federal election- we claim that the crisis in the German political economy has sharpened. The task of Angela Merkel and subsequent chancellors will be to navigate the new era, ensuring that Germany remains a leading political and economic power in the European Union and beyond. © 2010 Macmillan Publishers Ltd.

Update analysis on the international crisis and its impact on the Mexican economy

The aim of this study is to analyze the current state of the Mexican economy in the face of the international crisis. Two questions are asked: Is the international crisis over? Is the Mexican economy strong and resilient enough to face the crisis in the eurozone? The first of these questions is answered in the first part. The answer to the second question is discussed in the second part of this study. Also examined are the large number of short, medium and long term problems that the Mexican economy will have to face in 2012 and perhaps 2013.

Factors Contributing to Reading Performance: An In-Depth Analysis of the “Boy Crisis”

This research used a quantitative study approach to investigate the “boy crisis” in Canada. Boy crisis advocates suggest that boys are being surpassed by girls on reading assessments and promote strategies to assist male students. A feminist framework was used in this study that allowed for an investigation and discussion of the factors that mediate between gender and success at reading comprehension, interpretation, and response to text without ignoring female students. Reading scores and questionnaire data compiled by the Pan-Canadian Assessment Program were used in this research, specifically the PCAP-13 2007 assessment of approximately 30,000 13-year-old students from all Canadian provinces and Yukon Territory (CMEC, 2008). Approximately 20,000 participants wrote the reading assessment, while 30,000 students completed the questionnaire responses. Predictor variables were tested using parametric tests such as independent samples t-test, one-way ANOVA, chi-square analysis, and Pearson r. Findings from this study indicate that although boys scored lower than girls on the PCAP-13 2007 reading assessment, factors were found to influence the reading scores of both male and female students to varying degrees. Socioeconomic status, perceptions of the reading material used in language arts classrooms, reading preference, reading interest, parental involvement, parental encouragement for reading, and self-efficacy were all found to affect the reading performance of boys and girls. Relationships between variables were also found and are discussed in this research. The analysis presented in this study allows parents, educators, and policy makers to begin to critically examine and re-evaluate boy crisis literature and offers suggestions on how to improve reading performance for all students of all socioeconomic backgrounds.

Shock Transmission Mechanism of the Economic Crisis in East Asia : An Application of International Input-Output Analysis

This paper investigates the impacts of the 2008 economic crisis on industries in East Asia. By using the updated Asian international input-output table for 2008, the paper attempts to identify the transmission mechanism and the magnitude of impact of the crisis on industries in East Asia. The analyses reveal that the crisis significantly affected industrial output of the nine East Asian countries. In particular, the countries which are deeply involved in production networks were affected most seriously. Moreover, the analyses show that the impact was transmitted to East Asian industries considerably through the “triangular trade”, in which China imports parts and components from neighboring East Asian countries and then exports final products to the U.S. and EU markets.

The future of the Eurozone and the role of the German Constitutional Court. Research Papers in Law, 05/2012

[Introduction.] Necessary reforms towards a deepened and increased European shaped economic, financial and budgetary policy, paraphrased with the term “fiscal union”, could possibly reach constitutional limits. In its EFSF judgment1, the German Constitutional Court, following the Lisbon judgment in which certain government tasks were determined as being part of the “constitutional identity”2, connected the budget right of the parliament via the principle of democracy to the eternity clause of Art. 79 para 3 Basic Law. A transfer of essential parts of the budget right of the German Bundestag, which would be in conflict with the German constitution, is said to exist when the determination of the nature and amount of the tax affecting the citizens is largely regulated on the supranational level and thereby deprived of the Bundestag’s right to disposition. A reform of the Economic and Monetary Union that touches the core of the budget right can, according to the German Federal Court, with regard to Art. 79 (3) of the Basic Law only be realized by way of Art. 146 of the Basic Law, thus with a new constitution given by the people that replaces the Basic Law.3

A New Deal for growth and jobs in the Eurozone revisited. EPC Commentary, 27 January 2014

At the EPC breakfast on 28 January, IMF Managing Director Christine Lagarde will launch a book on Jobs and Growth: Supporting the European Recovery, containing detailed policy analysis and recommendations. The book is a further sign that there is now wide-spread recognition that it is high time for Europe to take more action to deliver jobs and growth.