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The Eurozone’s reaction to the economic crisis beginning in late 2008 involved both efforts to mitigate the arbitrarily destructive effects of markets and vigorous pursuit of policies aimed at austerity and deflation. To explain this paradoxical outcome, this paper builds on Karl Polanyi’s account of how politics reached a similar deadlock in the 1...
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This article outlines the main elements of rupture and continuity in the global political economy since the global economic crisis of 2008–2009. While the current calamity poses a more systemic challenge to neoliberal globalization than genetically similar turbulences in the semi-periphery during the 1990s, we find that evidence for its transformat...
The European Union (EU) has come a long way since its inception in late 1950s as the European Economic Community, now regarded as the most notable example of regional integration in the world. Yet, the union has witnessed several challenges — among them economic crisis, the dominance of large members within the Union and seemingly less favorable tr...
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... (Armingeon and Baccaro, 2012, 272). Germany's capacity to protect this model was made particularly credible by the embeddedness of so-called Ordoliberalism – a neoliberal doctrine calling for state intervention within constitutionally settled limits (Woodruff, 2014). All these changes have been stigmatized as challenging the very principles of legitimacy the EU relies upon. ...
Social movements in the wake of the financial crisis have shifted from the counter-summits and world social forums of the global justice movement to the camps of the anti-austerity mobilizations, and from a clear focus on building ‘another Europe’ to more domestically embedded issues. Among other reasons, this turn away from the EU can be linked to contracting political opportunities for social justice movements at the European level. This article addresses the closure of opportunities at the EU level for the work of social movement groups campaigning on specific EU policies. We reflect on the complexity of the EU’s political opportunity structure prior to the financial crisis, before examining changes to the EU’s architecture effected through responses to the crises and outlining arguments on how EU-level opportunities around socio-economic issues in particular have shrunk as a result. We then show how the perception of other political opportunities at the EU level is affected by the austerity response by drawing on campaigns that sought to exploit new opportunities included in the Lisbon Treaty and designed to increase citizens’ input. Opportunities introduced by changes made in the Lisbon Treaty are perceived through the prism of contracted opportunities flowing from power shifts caused by the response to the financial crisis.
... Notwithstanding the need for further clarification I will rely on the political economic theory of money as laid out in The Great Transformation to offer a structural theory of the tension between financial markets and democracy. In my article I join the recent scholarship on Polanyi that aims to bring his theory of money to understanding the politics of contemporary financial crises (Block, 2015; Harmes, 2001; Helleiner, 2006; Holmes, 2014; Kara, 2014; Polanyi-Levitt, 2005, 2013 Woodruff, 2016). This literature focuses on the core capitalist countries, mostly the eurozone. ...
... The double movement dynamics of the political trilemma Democracy, state autonomy and deep international economic integration are incompatible goals, and imposition of the fiction of free markets leads to social protective mechanisms. Similar political tensions have surfaced with the crisis of the eurozone (Holmes, 2014; Kara, 2014; Woodruff, 2016). Yet, it does not require a fully fledged currency union or a fixed exchange rate for the tensions of fictitious commodification to surface. ...
With the contemporary crisis of liberal democracy and the rise of illiberalism in the aftermath of the global financial crisis we are witnessing a renewed interest in structuralist theories that conceptualize the inherent tensions of modernization, crises and democracy. In my paper I attempt to show that Polanyi’s thinking represents such a framework that can be updated to fit contemporary
realities both in core and peripheral countries. After the introduction I reconstruct Polanyi’s political stance regarding democracy, socialism and the market based on a reading of his political speeches as well as
other non-academic texts. Next I will bring to the fore his often neglected views regarding the commodification of money and the tensions between international finance and democracy. In the fourth
section of the paper I introduce the notion of dependent financialization to make Polanyi’s theory of money compatible with non-core capitalist economies. The Polanyian theory of money allows
us to formulate hypotheses about political dynamics in different varieties of core and peripheral capitalisms as well. In the final section of my paper I conclude that Polanyi’s theory of the double movement
and fictitious commodification can only be understood and applied to empirical analysis once we bring it into dialogue with his political views. Polanyi urges us to preserve the market by protecting the
economy and society from the damages of excessive commodification: markets need to be protected from themselves.
The European Union (EU) studies literature has not engaged much with instances in which the European Commission exhibited dysfunctional and pathological behaviour. The paper employs a least likely case to suggest that the Commission might adopt such behaviour even under adverse circumstances. It examines the Commission's public opposition to a private sector involvement scheme for Greece in 2011, despite member states and investors favouring such an option. This stance exacerbated financial instability, proving detrimental for the Commission's stated crisis‐management goals. By using qualitative material, including 10 elite interviews, the paper attributes this behaviour to the Commission's pro‐integration culture as historically interpreted in the context of financial crises. This led the Commission to universalise inefficient policies whilst being insulated from external feedback. The study offers insights on when the Commission adopts dysfunctional behaviour whilst providing a novel angle on its role in EU integration.
Over the last decade especially, European authorities have successively invoked exceptional measures in the name of exceptional circumstances. This improvised mode of emergency response raises problems for EU legitimacy. After a brief analysis of the core patterns, the article examines the scope for reform. It considers the case for pre‐emptively strengthening the EU's emergency powers in the form of an ‘emergency constitution’. It goes on to argue for more radical EU constitutional change, focused not on regulating the exceptional moment but simplifying and democratizing executive power, such that when hard times arrive it is better tied to a critical public. A concluding section discusses what can be achieved by retrospective contestation, as an interim solution in advance of constitutional change.
It is well documented that the EU and IMF bailout programmes led the crisis-hit Eurozone countries to a weak economic recovery. However, the existing theories have so far failed to provide comprehensive explanations of the post-crisis economic performance in the periphery of the Eurozone. This thesis’ starting point is to identify what policies were introduced in Greece and Portugal and how effective they were at addressing the causes of the crisis. To answer this question, it draws on qualitative primary data, documents, archives, and elite interviews. In contrast to the neoclassical explanation that stresses the ‘backwardness’ of the countries in the periphery, as well as more critical Keynesian/‘victimisation’ approaches that understand the crisis-hit countries as ‘victims’ of the creditors, this thesis -by building upon Comparative Political Economy literature- provides a Growth Model explanation of the crisis and the post-crisis economic performance of Greece and Portugal. It shows why the EU and IMF internal devaluation policies failed to boost export-led growth in both countries and brings to light the much overlooked ways in which Greece and Portugal have been through a productive transformation in recent decades. The Growth Model perspective goes beyond the VoC literature, showing how the historical capital formation (i.e. the difficulty of creating economies of scale, and low-added value production), the fiscal policies, and the European and international economic developments (i.e. EU Eastern Enlargement, and the rise of the large-scale emerging economies in Asia) led Greece and Portugal into an ‘intermediate’ trap. The ‘politics’ of the crisis management -based on the neoclassical versus ‘victimisation’ narratives- reinforced the ‘intermediate’ status of Greece and Portugal after the crisis. Although the existing literature tends to focus on the creditor’s role in the management of the crisis, this thesis brings evidence from the EU-IMF bailout negotiations showing that both the creditors and the anti-austerity governments in the debtor countries kept the structural aspects of the crisis out of the negotiations to maintain the status quo in the Eurozone. Overall, this thesis brings the Growth Model perspective and VoC into a productive dialogue, contributing the concept of the ‘intermediate’ economies to the European Political Economy.
The crisis in Greece in the last decade has led to a wide economic transition, raising the question of whether Greece can be understood as a kind of a ‘post-growth’ society. The article has two aims. First, it examines how the Greek crisis has been discussed within the post-growth debate and focuses on three views: Greece as a post-growth anti-paradigm, Greece as an opportunity for democratic post-growth and austerity in Greece as a path for anti-Keynesian degrowth. Second, the article examines how ideas and projects with a post-growth orientation have influenced specific social initiatives born out of the crisis period in Greece. Some of these initiatives are reviewed (self-organized social and economic collectives, grassroots initiatives for solidarity, solidarity economy actions, etc.). As further discussed in the article, these initiatives were part of a broader ‘countermovement’ (Polanyi), and they faded together with other forms of labour and social protest, in accordance with events at the central political scene, and especially SYRIZA’s adoption of Memoranda politics. It is observed that in the post-Memoranda era in Greece, although past strategies of social reproduction are either unavailable (the pre-crisis finance-led growth model) or no longer equally effective (the familistic social model) and fiscal discipline remains, the search for other alternatives, including social initiatives with a post-growth orientation, did not actually extend as was expected, due to some new growth opportunities, e.g. in the field of tourism. It is finally concluded that, although they constituted an important part of the Greek countermovement, born as responses to the crisis, these social initiatives did not manage to consolidate more permanent structures of social action that could successfully challenge the neoliberal agenda.
This article scrutinizes the impact of foreign bond ownership on market discipline, that is the mutual responsiveness of financial markets and sovereign borrowers. The empirical investigation covers 12 advanced economies during the Great Moderation (1981–2008). This article finds no evidence that foreign bond investors affect the sensitivity of bond spreads to fiscal policy. Reversely, results show that government responsiveness to market pressure is contingent on the make-up of its investor base. Bond spreads spur on fiscal consolidation. The larger the share of foreign bond investors, the bigger this effect.
Europe has seen increasing steps taken to try to insulate economic decision-making from democratic influence. However, this trend, while in line with the foundation charters of ordoliberalism, is by no means confined to Europe or to ordoliberalism. Significant and ongoing attempts to preclude the population from influencing economic policy are global in nature and are characteristic of all forms of neoliberalism and of capitalist governance more generally. Structural adjustment in the Global South in the 1980s and 1990s provides a more helpful model for how the crisis has been responded to in Europe than the often Eurocentric conceptions of (and specious claims made for) ordoliberalism.
Europe’s Economic and Monetary Union (EMU) was founded on a peculiar policy consensus that revolves around two core beliefs: ‘stable money’ and ‘sound public finances’. Sebastian Diessner studies, through the lens of Peter Hall’s (1993) policy paradigms and the three orders of policy change, how this consensus has evolved throughout the eurozone crisis. Previous scholars have either attested a complete ‘lock-in’ of the eurozone’s paradigm or a ‘breakdown’ of the very same. In contrast, the author argues that, despite apparent modifications and transformations, the eurozone’s dominant policy paradigm has ultimately remained robust. This raises questions about the future viability of eurozone macroeconomic governance.
