Thursday, July 25, 2013

The gloomy European project

I don't know for how long, but if you go here now you can get for free the papers of the symposium at Contributions to Political Economy, by Pivetti, Sawyer, Palley, Varoufakis, Barba and De Vivo, Boyer, Bibow, and Singh and his co-authors. Pivetti notes in his introduction that:
"The austerity policies of the last five years can hardly be regarded as a true policy shift. They should rather be seen as a continuum with respect to the entire European Monetary Union (EMU) experience, to whose overall policy stance they just contribute a toughening up. Ever since the Treaty of Maastricht in 1992, and even more from the birth in 1999 of the European Central Bank (ECB) as a monet- ary authority, the average rate of growth of real income in the Euro area has been very low by historical standards, contributing to the persistence of the area high levels of unemployment, largely as a result of the inflation rate having been the ECB’s overriding policy objective."
Note that the austerity imposed on almost every European country is part of a larger project of dismantling the Welfare State. In fact, Pivetti refers to the Euro as: "the infernal machine: a machine born out of a deliberate continental project to undermine wage earners’ bargaining powers."

If you can, given the topic, enjoy these great and penetrating papers!


  1. I agree that the Euro has been USED to destroy the welfare system, that's undeniable. But I don't think it was DESIGNED, especially in the period between 1989 and 1992, to do so. The Euro was not created by Germany, it is a French and Italian request/imposition to Germany. Those who say the Euro was designed to destroy the welfare state, must explain this article: It says that the Bundesbank and the German Ministry of Finance did NOT want Italy in the Euro. Unless we understand the origins of the Euro, its supporters and its enemies (the Bundesbank has been the most anti-European institution since the end of WWII, and nowadays does not want the Euro in its current form, in my view, and nobody else seems to notice that except Riccardo Bellofiore), we will be condemned to a faulty diagnosis and faulty solutions. Again, I don't deny that the Euro leadership wants to destroy the welfare state in many countries, but that's not ALL they want to do. Some of them actually want to destroy the Euro itself. And for many countries (notably Greece), that wouldn't be too bad an option.

    1. Thanks for the input. I'm not sure I'm qualified to reply.

  2. I’m new to your blog and like it. And will visit in future.

    But don’t agree with your take on those “Contributions to Political Economy” articles.

    Exactly which of these papers are "penetrating" and why? I read the first couple of pages of Pivetti's contribution and gave up because it struck me as ridiculous. As to Malcolm Sawyer, I skimmed thru his paper to the end. He seems to advocate a lax monetary policy for the periphery so as to reduce austerity there. Whoopee. But then he advocates a strict fiscal policy so as to bring periphery costs down, i.e. effect an internal devaluation (exactly what is being tried at the moment with little success).

  3. Hi Ralph:
    We'll disagree on Pivetti. Sawyer actually suggests that his "proposals would require significant income transfers between countries through the development of a Federal tax system and social security system." That's a federal fiscal expansion. He has been saying that before the euro was created. They are particularly penetrating because they, contrary to most other papers on the subject, use non-neoclassical Keynesian economics. And thanks for the comments on the blog.


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