The fundamental problem of the Euro zone and an alternative (Marxian) approach to European economic policy context

Sotiropoulos, Dimitris P. (2012). The fundamental problem of the Euro zone and an alternative (Marxian) approach to European economic policy context. In: 9th Annual Historical Materialism Conference: Weighs Like a Nightmare, 8-11 Nov 2012, London, UK.

URL: http://www.historicalmaterialism.org/

Abstract

Despite the fact that the analysis of the contemporary crisis of the European edifice has many different aspects, this paper will limit its scope to the issue of economic policy. Mainstream discussions focus on the problem of moral hazard. They become critical of financial markets and question markets’ efficiency: since markets are unable to impose discipline on sovereign finances in the Euro zone, only an ad hoc political treatment can deal with the emerging systemic dangers. Hence, new supervisory institutions must be invented to correct markets’ mispricing. Surprisingly enough, the spirit of this reasoning converges with many radical approaches. This paper attempts to challenge this implicit consensus from a Marxian point of view. In contemporary developed capitalist economies financial markets play a crucial role in the organization of capitalist power, even in the presence of instability. This has been the big lesson from the history of Euro Area so far. In the absence of radical political changes in the social correlations of power, this will also be the case in the future.