Alternative Economic Paradigms to the Greek Financial Crisis

Abstract

The “battle of ideas” in the Greek Financial Crisis case, focuses on which paradigm is most realistic, feasible, desirable, and appropriate for the problem in question. The goal of the paper is to formulate different answers and policies based on different paradigms, as an “antidote” to the Greek Financial Crisis. To my knowledge, such a novel approach in examining the Greek Financial Crisis by contraposing the neoclassical and Keynesian-Institutional paradigms has not been attempted. Students of the Greek Financial Crisis and, in general, of the Global Financial Crisis, will benefit from this unique method of economic analysis in deriving, in contradistinction paradigm-based policies to tackle the crisis. The Keynesian-Institutionalist response to the Greek Financial Crisis, as revealed, does not have any commonalities either with the Washington Consensus or Troika’s EAPs. In contradiction, Keynesians-Institutionalists, call for active government intervention in the form of a substantial fiscal stimulus, increasing public expenditure, reducing taxes to the poor and increasing taxes to the rich, re-regulation of the labor market, and stopping privatization. In concert with an ECB that functions as the lender of last resort, creating a Eurobond to distribute risk throughout Europe and institutional arrangements that block adverse competitive dynamics.

Keywords:

• economic paradigms
• Greek Financial Crisis
• European Financial Crisis
• Global Financial Crisis
• Washington Consensus
• IMF

JEL Classification Codes:

• F53
• O11
• O52

Notes

1 The Keynesian paradigm used in this article is based on the writing of Keynesians and Post-Keynesians, as Post Keynesian analysis lies within the original Keynesian tradition (Stansbury and Summers 2019).

2 For an exhaustive response to the Washington Consensus from an Institutional perspective, please see Marangos (2018).

Additional information

Notes on contributors

John Marangos

John Marangos is a professor in the Department of Balkan, Slavic and Oriental Studies at the University of Macedonia, Thessaloniki, Greece. This work is part of a project that has received funding from the Research Committee of the University of Macedonia under the Basic Research 2020–21 funding program. The author would like to thank Themis Anthrakidis for providing the necessary research assistance.