Against the Troika: Crisis and Austerity in the Eurozone
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A radical anti-capitalist alternative to Eurozone austerity
On the 25th January 2015 the Greek people voted in an election of historic importance—not just for Greece but potentially all of Europe. The radical party Syriza was elected and austerity and the neoliberal agenda is being challenged. Suddenly it seems as if there is an alternative. But what?
The Eurozone is in a deep and prolonged crisis. It is now clear that monetary union is a historic failure, beyond repair—and certainly not in the interests of Europe’s working people.
Building on the economic analysis of two of Europe’s leading thinkers, Heiner Flassbeck and Costas Lapavitsas (a candidate standing for election on Syriza’s list), Against the Troika is the first book to propose a strategic left-wing plan for how peripheral countries could exit the euro. With a change in government in Greece, and looming political transformations in countries such as Spain, this major intervention lays out a radical, anti-capitalist programme at a critical juncture for Europe. The final three chapters offer a detailed postmortem of the Greek catastrophe, explain what can be learned from it—and provide a possible alternative.
Against the Troika is a practical blueprint for real change in a continent wracked by crisis and austerity.
had depreciated quite significantly, even though national currencies no longer existed within the EMU. The divergence in the growth of unit labour costs was naturally reflected in equivalent price divergences. Thus, the EMU as a whole achieved the inflation target of 2 percent almost perfectly, but national differences of inflation within the union were remarkable. Once again, France was by far the best performer since it succeeded in aligning its inflation rate perfectly to the EMU target.
short time period, and it would typically be the result of a forced and chaotic adjustment. The appreciating country would face a higher valuation of its stocks, but its flows would necessarily suffer as exports would become more expensive in international currency and imports would become cheaper in national currency. Thus, there would be considerable pain of adjustment for the surplus country too. The point is that, in a monetary union, the removal of a competitiveness gap through larger wage
informational content, it is necessary to identify the variables that determine the movements of each, saving, consumption and investment, and in consequence the national income of the country, along with the national incomes of all its trading partners. In a non-stationary environment, any increase in expenditure (increase in a net debt position of one sector) raises profits and any increase in saving (net creditor position) reduces profits. Whether saving or investment change here or there,
way of consolidating the existing economic imbalances and in order to avoid relying on the capital markets. Equivalently, Germany and other surplus countries already face enormous difficulties (objective and subjective) to persuade their citizens temporarily to finance presumably ‘lazy Southerners’, and right-wing parties are able to exploit the festering tensions. Institutionalising a system of fiscal transfers to deal with budget and/or current account imbalances in the EMU would be a recipe
basis. The most likely form of debt relief that might be offered by the EU would be to lower interest rates and to extend the maturity of debt, including perhaps a period of grace on debt servicing. It is also conceivable that a small write-off of the principal might be granted as a gesture of goodwill. Such measures, however, would be unlikely to have a significant impact on the economy. Greece needs a deep debt write-off that would probably run in the hundreds of billions of euros. To be sure,