Crisis in the Eurozone Paperback – 5 Jun 2012
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"This book is indispensable for anyone trying to make sense of the European Union's implosion."--Alex Callinicos, Professor of European Studies, King's College London""Crisis in the Eurozone" combines the urgency of front-line reporting with insightful detail about the players involved and mechanisms at work"--Gary A. Dymski, Professor of Economics, University of California, Riverside"The most comprehensive, thoughtful, and insightful dissection of the Eurozone's problems. If you could only read one item on this momentous crisis, this book would be it."--Stergios Skaperdas, Professor of Economics, University of California, Irvine
About the Author
COSTAS LAPAVITSAS is a professor of economics at the School of Oriental and African Studies, University of London. He is a member of Research on Money and Finance (RMF). He is the lead author of the new RMF report 'Breaking Up? A Route Out of the Eurozone Crisis.' His previous publications include Social Foundations of Markets, Money and Credit and Political Economy of Money and Finance. He writes for the Guardian.
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Top Customer Reviews
The framework is that of examining the opposition of interests between the core countries of the Eurozone, the creditor states of France, the Netherlands, Finland, Austria, etc., and most importantly Germany, and on the other hand the intra-European periphery, Greece, Portugal, Spain, and Ireland (though Ireland is not the focus of this study due to its idiosyncrasies). As Lapavitsas et al.Read more ›
In 2001-07 a vast bubble grew, that popped in the crisis of 2007, starting the slump. The credit crunch morphed into the sovereign debt crisis. In response, the EU enforces `austerity', that is, it makes more people poor. Cuts in public spending cause a deeper, longer slump, with more debt, more jobs lost, lower wages and more poverty.
The authors show that "A policy of austerity would do very little to tackle the underlying problem of competitiveness. It might succeed in lowering nominal and real wages for a period, but it is apparent that this cannot be a long-term competitiveness strategy for countries that already have substantially lower wages than Germany. Given the flatness of German nominal remuneration, austerity would simply mean falling wages for years ahead. The answer would then have to be policies to raise productivity, and in this regard the ideas that typically accompany IMF-related packages are equally disastrous. The standard prescription, still touted after years of persistent failure, is liberalisation."
The euro is the focus of Europe's crisis. Stathis Kouvelakis writes in his introduction, "the euro should be understood ... as a ferocious class mechanism for disciplining labour costs - starting with the wages of German workers ..." Germany won the EU's race to the bottom by keeping wages down for 20 years.
Productivity growth needs investment, but across the eurozone investment was weak during the 2000s and collapsed in 2009.Read more ›
Lapavitsas et al are quite clear, and it's the great strength of this book, that there is a crisis in the so-called periphery of the Euro zone, the so-called PIGS of Portugal, Ireland, Greece and Spain, because of the impact in those countries of the global capitalist crisis starting in 2008. All the stories of lazy Greeks living a life of luxury on someone else's money are comprehensively destroyed by hard facts and figures.
Lapavitsas et al locate the particular problems of the Euro zone in the fact that the EMU applies to quite different states and where each state does not control monetary policy. Because governments were unable to alter exchange rates, competitvenes rested upon a 'race to the bottom' as capitalists sought to squeeze more from workers - a race that was won by Germany. The PIGS couldn't hope to compete, but they did get cheap credit because they were deemed as creditworthy as Germany. This credit financed corporations, private consumption as in Greece and Portugal or property bubbles as in Ireland and Spain and when the crisis hit, the deficit couldn't be paid.
Lapavitsas et al explore ways for societies, particularly Greece, to get out of the crisis and show that austerity is simply not working and why it can't do so. They explore various default and or Euro exit options in terms of the interests of capital or the Greek working class which are interesting.Read more ›
Most Recent Customer Reviews
Good panoramic study. However, his central thesis that unit labour costs are responsible for intra-European capital flows is very questionable.Published on 27 May 2014 by Robert Sweeney