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The Euro crisis and contradictions of Neoliberalism in Europe

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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.

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File URL: http://eprints.kingston.ac.uk/27724/1/Stockhammer-E-27724.pdf
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Bibliographic Info

Paper provided by School of Economics, Kingston University London in its series Economics Discussion Papers with number 2013-2.

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Length: 21 pages
Date of creation: 08 Dec 2013
Date of revision:
Handle: RePEc:ris:kngedp:2013_002

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Postal: Kingston University London, School of Economics, Penrhyn Road, Kingston upon Thames, Surrey, KT1 2EE, UK
Web page: http://fass.kingston.ac.uk/schools/economics/
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Keywords: Euro crisis; Neoliberalism; European economic policy; European integration; financial crisis; sovereign debt crisis.;

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  1. Arestis, Philip & McCauley, Kevin & Sawyer, Malcolm, 2001. "An Alternative Stability Pact for the European Union," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 25(1), pages 113-30, January.
  2. Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 32(3), pages 479-511, May.
  3. Eckhard Hein & Lena Vogel, 2007. "Distribution and growth reconsidered - empirical results for Austria, France, Germany, the Netherlands, the UK and the USA," IMK Working Paper 03-2007, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  4. Hein, Eckhard & Mundt, Matthias, 2012. "Financialisation and the requirements and potentials for wage-led recovery : a review focussing on the G20," ILO Working Papers, International Labour Organization 470932, International Labour Organization.
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