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Abstract
This article considers the likely impact of the global crisis on the prospects for the European project. First, it considers the nature of the current crisis. It argues that it is comparable, in terms of its deep structural character, to the one in the 1930s. The crisis manifested itself first in the financial sector, but was caused by underlying problems of overaccumulation, which explains the succession of speculative booms and busts from the 1980s onward. The article then analyses how the financial crisis transmuted into the current sovereign debt crisis in Europe. It identifies a number of interdependent factors responsible for this: the bailouts of banks following the credit crisis; the stimulus programmes necessitated by the danger of a deep economic recession; the structural problems of the European Monetary Union leading to the accumulation of debt in the peripheral members; and finally the catalytic action of speculation in the financial markets. Finally, the article discusses responses to the debt crisis, outlining the contours of two alternatives (muddling through and Europeanisation), their implications, and some of the conditions for success. The conclusion is rather pessimistic: chances that an effective, timely and sustainable solution will be realised do not seem high.
Notes
This article is an abbreviated and adapted version of a chapter (“Global Capitalist Crisis and the Future of the European Project”) in Globalisation and European Integration, edited by Nousos, Overbeek and Tsolakis. The manuscript for the article was first submitted for review on 24 August 2011. The author is grateful to three anonymous reviewers as well as the editor of this special issue, Lorenzo Fioramonti, for very useful comments. The final version of the article was submitted on 6 December 2011. On the basis of the reviews, a number of changes were made to the original text. However, the author decided not to incorporate new events since August into the account. New developments were occurring almost on a daily basis and it would have been impossible to appreciate them correctly. Instead, a very brief Postscript has been added to reflect on the degree to which developments since August may or may not have made the analysis presented in the article redundant.
1 Hung, “Rise of China and Global Overaccumulation Crisis”, 152.
2 Cf. Harvey, The New Imperialism; Hung, Ibid.
3 In Ruggie, “International Regimes, Transactions, and Change”.
4 Harvey, The Condition of Postmodernity, and The New Imperialism; cf. also Duménil and Lévy, The Crisis of Neoliberalism, 19–22.
5 Wallerstein, The Modern World System Vol. I. and The Politics of the World-Economy.
6 Harvey, The New Imperialism, 145 ff.
7 Ibid., 145–82; also Van Apeldoorn and Horn, “The Marketisation of Corporate Control”.
8 Cf. Harvey, The New Imperialism.
9 Cox, “Global Perestroika”, 29.
10 Krippner, “Financialization of the American Economy”,174; after Arrighi, The Long Twentieth Century.
11 Ashman et al., “The Crisis in South Africa”, 175.
12 Fröbel et al., The New International Division of Labour.
13 Cf. Holman, Integrating Southern Europe.
14 Holman, “Integrating Eastern Europe”.
15 See Bohle, “Race to the Bottom?”.
16 Vliegenthart and Overbeek, “Corporate Governance Regulation in East Central Europe”.
17 See Vliegenthart and Overbeek, “Corporate Tax Reform in Neoliberal Europe”, for the original characterisation of this orientation.
18 Holman, “Transnational Class Strategy and the New Europe”.
19 Van Apeldoorn, Transnational Capitalism and European Integration.
20 Van der Pijl, Global Rivalries from Cold War to Iraq, 264.
21 See Van der Pijl et al., “The Resurgence of German Capital”, for data.
22 Cf. Overbeek, Global Capitalism and National Decline.
23 Also see Konings, “European Finance in the American Mirror”; Dünhaupt, Financialization and the Rentier Income Share.
24 See Van der Pijl, Global Rivalries from Cold War to Iraq, 264.
25 Quoted in Palma, “The Revenge of the Market”, 834.
26 Wade and Sigurgeirsdottir, “Lessons from Iceland”, 14.
27 Van Apeldoorn and Horn, “The Marketisation of Corporate Control”; see also Horn, Transformation of EU Corporate Governance Regulation.
28 “Houses Built on Sand”, The Economist, 13 September 2007, http://www.economist.com/node/9804125.
29 See Nesvetailova and Palan, “A Very North Atlantic Credit Crunch”, 166–7.
30 Ibid., 175.
31 In 1999, the eurozone was established by Austria, Belgium, Luxemburg, Germany, Spain, Finland, France, Ireland, Italy, the Netherlands and Portugal. Greece joined in 2001, Slovenia in 2007, Cyprus and Malta in 2008, Slovakia in 2009 and Estonia in 2011. Plans by other Central and East European member states to join the single currency have been postponed in response to the current crisis. “East European States Push Back Entry Dates”, Financial Times, 13 June 2011, 5.
32 De Haan et al., European Financial Markets and Institutions, 84.
33 Bellofiore et al., “The Global Crisis”, 130.
34 Cafruny and Talani, Economic and Geopolitical Dimensions, 13.
35 Ibid., 16.
36 Young and Semmler, “The European Sovereign Debt Crisis”, 10.
37 Ibid., 13.
38 Cafruny and Talani, Economic and Geopolitical Dimensions, 16.
39 EuroMemoGroup, “Confronting the Crisis”, 8.
40 “How Goldman Sachs Helped Greece Mask its True Debt”, Der Spiegel, 8 February 2010, http://www.spiegel.de/international/europe/0,1518,676634,00.html.
41 “Goldman Sachs plays Key Role in Rescue”, Financial Times, 29 January 2010, http://www.ft.com/intl/cms/s/0/fb84df2e-0c75-11df-a941-00144feabdc0.html#axzz1V6OWWN73.
42 N. Schwartz and E. Dash, “Banks bet Greece Defaults on Debt they Helped Hide”, New York Times, 25 February 2010.
43 The details of this possible scenario will not be examined here. Suffice it to say that a breakup of the euro area, although undoubtedly extremely costly, is not impossible. This was the conclusion of Barry Eichengreen, who added that because of the political obstacles it is most unlikely to happen “except under the most extreme circumstances” (Eichengreen, The Breakup of the Euro Area, 36).
44 Young and Semmler, “The European Sovereign Debt Crisis”, 14–15.
45 “Athens Must be Put Under the Gun”, Editorial Comment, Financial Times, 10 May 2011, 8; and “Spain Occupies the Eurozone Frontline”, Editorial Comment, Financial Times, 1 August 2011, 6, respectively.
46 Gill, “Globalization, Market Civilization”.
47 Quoted by M. Hudson, “The Financial Road to Serfdom. How Bankers Use the Debt Crisis to Roll Back the Progressive Era”, Global Research.ca, 13 June 2011, 2, http://www.globalresearch.ca/index.php?context=va&aid=25250.
48 As advocated, for instance, by G. Amato and G. Verhofstadt, “A Plan to Save the Euro, and Curb the Speculators”, Financial Times, 4 July 2011, 7; by M. Monti and S. Goulard, “Eurobonds are the Only Answer”, Financial Times, 21 July 2011, 11; and by J. Stiglitz, “Now the Central Bank Must Act”, Financial Times, 21 July 2011, 11.
49 P. De Grauwe, “Only the ECB can Halt Eurozone Contagion”, Financial Times, 4 August 2011, 9.
50 J. Sachs, “Greece can be Saved – Here is How to do it”, Financial Times, 1 July 2011, 9.
51 J. Stiglitz, “Now the Central Bank Must Act”, Financial Times, 21 July 2011, 11.
52 M. Hudson, “Drop Dead Economics: The Financial Crisis in Greece and the European Union. The Wealthy won’t Pay their Taxes, so Labor Must do so”, Global Research.ca, 11 May 2010, and “The Financial Road to Serfdom. How Bankers use the Debt Crisis to Roll Back the Progressive Era”, Global Research.ca, 13 June 2011; M. Hudson and J. Sommers, “The Spectre Haunting Europe: Debt Defaults, Austerity, and Death of the ‘Social Europe’ Model”, Global Research.ca, 18 January 2011, http://www.globalresearch.ca/PrintArticle.php?articleId=22846.
53 “Markets Rocked as Debt Crisis Deepens”, Financial Times, 12 July 2011, 1.
54 C. Lapavitsas, “Euro Exit Strategy Crucial for Greeks”, The Guardian, 21 June 2011.
55 “G7 Nations in $25 bn yen Sell-off”, Financial Times, 19–20 March 2011, 1.
56 Ibid.
57 Ivanova, “Can ‘It’ Happen Again”.