Crisis in the Eurozone

Crisis in the Eurozone

by Costas Lapavitsas


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Product Details

ISBN-13: 9781844679690
Publisher: Verso Books
Publication date: 09/11/2012
Pages: 268
Product dimensions: 8.10(w) x 5.50(h) x 0.90(d)

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.

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Crisis in the Eurozone 3.5 out of 5 based on 0 ratings. 2 reviews.
Anonymous More than 1 year ago
Well written but what you would expect from a public sector employee - college prof. and sympathizer with those who are not required to compete and feel the solution is always to take more from the taxpayers and default on the bondholders who lent you the money to begin with.  Expecting labour to come up with a strategic plan to compete is and never has been viable.  Learning to compete starts with learning to honor your debts.   
willyvan More than 1 year ago
Costas Lapavitsas is a Professor of Economics at London University’s School of Oriental and African Studies. He is the lead author of this brilliant collective effort by members of SOAS’s Research on Money and Finance group. 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. The EU’s rulers want us all to blame Greece, rather than the EU. But, as Lapavitsas et al write, “The current account deficits had little to do with the public sector of peripheral countries, which did not generate systematic financial deficits, even though it has often been described as profligate and inefficient. Rather, the current account deficits were associated with private sector financial deficits.” The authors point out, “Far from promoting convergence among member states, the European Monetary Union has been a source of unrelenting pressure on workers that has produced systematic disparities between core and periphery resulting in vast accumulation of debt in the latter.” Even the EU, in a leaked document, conceded that if Greece stayed in the euro it would suffer stagnation for 20 years. In fact it would do far worse. Its economy would shrink; there would be ever fewer jobs, lower wages, loss of national independence and greater threats to its democracy. But fortunately there is always an alternative. Greece can and should default, devalue and exit the EU. In 1998 Russia defaulted and devalued. It restricted capital movements and nationalised bank deposits. Bondholders lost 53 per cent. The economy grew by 6.3 per cent in 1999, 10 per cent in 2000, and by 4 per cent a year or more until the world slump in 2008. In 2001 Argentina defaulted on almost all its public debt, then grew by between 8 and 9 per cent every year from 2003 to 2007. In a final chapter Lapavitsas et al explain what the Greek people should do people should do - create an industrial policy to advance the interests of labour and so of the vast majority of the people, develop a strategic plan to rebuild industry, and carry them out.