The crisis of finance-dominated capitalism in the euro area, deficiencies in the economic policy architecture, and deflationary stagnation policies

摘要

In this paper, the euro crisis is interpreted as the latest episode of the crisis of finance-dominated capitalism. Against this background, the euro crisis and the economic policy reactions of European governments and institutions are examined. It is shown that deflationary stagnation policies have prevailed since 2010 and have meant massive real gross domestic product (GDP) losses and some improvements in price competitiveness of the crisis countries, but considerable and persistent current account imbalances, reductions in government deficit-GDP ratios with continuously rising trends in government gross debt-GDP ratios, a further recession for the euro area as a whole, the risk of deflationary stagnation in major parts of the euro area, and an increasing threat of a final collapse of the euro as a currency. Therefore, an alternative macroeconomic policy approach tackling the basic contradictions of finance-dominated capitalism and the deficiencies of European economic policy institutions and economic policy strategies, in particular, the lack of an institution convincingly guaranteeing public debt and the lack of a stable and sustainable financing mechanism for acceptable current account imbalances, is outlined.