Lost in Deflation: Why Italy’s woes are a warning to the whole Eurozone Servaas Storm

Using macroeconomic data for 1960-2018, this paper analyzes the origins of the crisis of the ‘post-Maastricht Treaty order of Italian capitalism’. After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform and real wage restraint—and the country was undeniably successful in bringing down inflation, moderating wages, running primary fiscal surpluses, reducing unemployment and raising the profit share. But its adherence to the EMU rulebook asphyxiated Italy’s domestic demand and exports—and resulted not just in economic stagnation and a generalized productivity slowdown, but in relative and absolute decline in…

Euroland: Will the Netherlands be the next domino to fall? Servaas Storm

The Dutch go the polls on March 15, a few weeks ahead of the French vote to choose the successor to Président François Hollande and well before Bundeskanzlerin Angela Merkel seeks a fourth term in September. The Dutch vote takes on a wider European significance, however, because Dutch voters — who rebelled against a EU ‘constitution’ in 2005 and last year rejected the association treaty between the EU and Ukraine in a referendum — have in the past proved to be a good gauge of European sentiment. Click to read the full article

Economic Integration and Free Mobility of Labour Prabhat Patnaik

There is a view that the discontent among the English workers that caused the Brexit vote was not because of European economic integration as such, but because of the policy of free internal migration that has accompanied this integration; that if Europe had not enacted free migration within the EU, then its economic integration would have been more successful. Its economic integration then would have remained confined to the free movement of goods and capital alone but not of labour, and that such free movement, i.e. of goods and capital alone, is beneficial for the countries being economically integrated. The…

World Recession Set to Worsen Prabhat Patnaik

More than seven years after the world capitalist crisis began, not only is there no sign of any recovery from it, but the prospects appear even bleaker today than ever before. In fact, while the advanced capitalist world continues to remain mired in crisis, it is now spreading across the globe, even to countries like India and China that had appeared initially to have escaped its impact. India’s GDP growth rate is slowing down; what is more, the manufacturing sector continues to witness almost absolute stagnation. The 2.3 percent growth rate in manufacturing in 2014-15, meagre though it was, had…

The Failed Project of Europe Jayati Ghosh

There is a stereotypical image of an abusive husband, who batters his wife and then beats her even more mercilessly if she dares to protest. It is self-evident that such violent behaviour reflects a failed relationship, one that is unlikely to be resolved through superficial bandaging of wounds. And it is usually stomach-churningly hard to watch such bullies in action, or even read about them. Much of the world has been watching the negotiations in Europe over the fate of Greece in the Eurozone with the same sickening sense of horror and disbelief, as leaders of Germany and some other…

A Greek Tragedy that could have been Avoided Jayati Ghosh

The endgame nears in Greece. The latest rejection by the Eurozone Finance Ministers of any extension of the proposed bailout plan was followed by the decision of the Greek Prime Minister Alexis Tsipras (subsequently supported by a majority vote in Parliament) to put the terms of the bailout to the Greek people in a referendum. Since that would put the country into technical default to the IMF by Tuesday 30 June, and a run on the banks was inevitable, by Monday 29 June Athens had been forced to impose a bank holiday and capital controls, at least until the proposed…

Averting a Greek Tragedy – For Now Jayati Ghosh

The citizens of Greece are not the only ones who have been watching the tense negotiations between the new government in Athens (led by the radical party Syriza) and the European Union (led de facto by the Germans).  Not just in Europe, but everywhere in the world, people are watching with bated breath this most recent skirmish, part of a battle in what may turn out to be a protracted war between democracy and finance. Because this current struggle is really about much more than whether Greece should  continue with its fiscal austerity programme or the contradictions of remaining within…

Bullying Cyprus to No End C.P. Chandrasekhar

After prolonged negotiations, the government in Cyprus and the troika running Europe from above—the European Union (led by Germany), The European Central Bank and the IMF—announced a “deal” late March to resolve the crisis in Europe. It involved a 10 billion euro bailout that is expected to prevent a collapse of the Cypriot banking system by drastically restructuring it and keep the government running. But in return for that 10 billion euro, the Cypriot government has been pressured into mobilising an additional 5.8 billion euro to finance the so-called bailout that can render the whole exercise infructuous. A chunk of…