Diagnosis, treatment, and effects of the crisis in Greece: A 'special case' or a 'test case'?
This paper discusses the management of the crisis in Greece, arguing that it was based on a series of diagnoses that justified fiscal discipline by stigmatizing the Greek economy and society, and that it had a narrow understanding of the reasons for Greece's deteriorating competitiveness. I begin by critically examining a series of diagnoses that take a 'rent-seeking' approach as a common starting point. I then argue that the chosen treatment of 'internal devaluation' was based on questionable perceptions of labor costs and public expenditure during the pre-crisis period in Greece, a treatment which then aggravated recession. I follow up with an overview of the socio-political consequences of the crisis (unemployment, poverty, social deregulation, rise of neofascism). In conclusion, I point to the premises of methodological nationalism, both in neoliberal and neo-Keynesian understandings of the crisis. Such views disregard the fact that states have prioritized the strengthening of the global financial system and its rescue in times of crisis, as well as the process of a deepening neoliberalism within the EU - even at a constitutional level through the Fiscal Compact - in which management of the Greek crisis has been inscribed.
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- Michael Mitsopoulos & Theodore Pelagidis, 2011. "Understanding the Greek Crisis," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 12(1), pages 177-192, January.
- Angelopoulos, Konstantinos & Philippopoulos, Apostolis & Vassilatos, Vanghelis, 2009. "The social cost of rent seeking in Europe," European Journal of Political Economy, Elsevier, vol. 25(3), pages 280-299, September.
- Theodore Pelagidis, 2010.
"The Greek paradox of falling competitiveness and weak institutions in a high GDP growth rate context (1995-2008),"
LSE Research Online Documents on Economics
29098, London School of Economics and Political Science, LSE Library.
- Theodore Pelagidis, 2010. "The Greek Paradox of Falling Competitiveness and Weak Institutions in a High GDP Growth Rate Context (1995-2008)," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 38, Hellenic Observatory, LSE.
- Buchanan, James M, 1983. "Rent Seeking, Noncompensated Transfers, and Laws of Succession," Journal of Law and Economics, University of Chicago Press, vol. 26(1), pages 71-85, April.
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