First, there was the credit crunch, and governments around the world stepped in to bail out the banks. The sequel to that debacle is the sovereign debt crisis, which has hit the eurozone hard. The hour has come to pay the piper, and ordinary citizens across Europe are growing to realize that socialism for the wealthy means punching a few new holes in their already-tightened belts.
Building on his work as a leading member of the renowned Research on Money and Finance group, Costas Lapavitsas argues that European austerity is counterproductive. Cutbacks in public spending will mean a longer, deeper recession, worsen the burden of debt, further imperil banks, and may soon spell the end of monetary union itself.
Crisis in the Eurozone charts a cautious path between political economy and radical economics to envisage a restructuring reliant on the forces of organized labour and civil society. The clear-headed rationalism at the heart of this book conveys a controversial message, unwelcome in many quarters but soon to be echoed across the continent: impoverished states have to quit the euro and cut their losses or worse hardship will ensue.
Syriza coming to power in Greece at the end of January has finally disproven the argument that it is possible to implement an alternative to neoliberalism within the framework of the European Union. The EU treaties are neoliberal, in their very DNA. Since the 1986 Single European Act, or even before then, we have seen constant proof of the EU’s neoliberal DNA, and even its hardening. Up till now, the untrammeled hegemony of neoliberalism could have been blamed on this or that government coming into office: in this view, the reason why austerity policies reigned across Europe was that a François Hollande, a Matteo Renzi or some other social-liberal lacked courage or betrayed their campaign commitments to reorient European policies.
But with Syriza, that argument has collapsed. After all, Alexis Tsipras and Yanis Varoufakis have clearly been working with some determination to try and bring about change at the continental level; but they have done so in vain. Since 4 February the European Central Bank has cut off the main source of financing for the Greek banking system, while the payments from Europe itself were broken off in summer of 2014. The noose is tightening, pushing the country toward a disorderly bankruptcy and chaos, unless of course it accepts the humiliating terms imposed by the EU.
The political economist and author of Buying Time argues that 'the unified capitalist economy is destroying European diversity' and that in order to save this ideal, 'the monster of monetary union must be unravelled'.
If everything goes well, then what has been happening before our eyes in the last few days is the beginning of the end of the European monetary union. ‘If the Euro collapses, then so does Europe,’ said Chancellor Merkel, when it was a question of selling to the electors one of the horrendous ‘rescue packages’ for the European banks. Now we have the very opposite. The Euro is in the process of destroying Europe. If the Euro collapses – and let it be soon! – it may be that Europe actually doesn’t collapse. The outcome is certainly not clear; the wounds that monetary union has inflicted are too deep.