Is an exit from the euro possible? Is it desirable? We think that to deal with these questions, which may well not be the right ones just now, what is needed is a preliminary but thorough critique of the views on the European crisis that are most widespread. The heterodox approaches more and more underline a balance-of-payments problem, caused by cumulative differences in relative prices which have led to distinct growth strategies: export-led in the core, and debt-led in the periphery, focused on consumption and real-estate investment. This interpretation overlooks some defining features of current monetary economies, in general, and some specifics of currency areas. In a monetary union it's not possible to have a ‘normal’ balance-of-payments crisis, and a distinction must be made between financing and saving. Moreover, current accounts, based on net flows, exclude underlying changes in gross flows and their contribution to the existing stocks of debt. We also have to deal with the structural divergences in the European economy. To make sense of Europe today and its crisis, we have to take into account the geographical and technological composition of intra-European trade.

No abstract

This paper discusses the origins and institutional evolution of the European Monetary Union (EMU) in the light of two theoretical frameworks: the liberal federation proposed by Hayek and Robbins in the first half of the 20 th century and the still prevailing neoclassical macroeconomic consensus. It is argued that before existing as Euro, the common currency was already a neoliberal project, in the sense of an ideal space for elevating market rules to a unique and definitive form of social and economic order. This neoliberal construction was technically legitimized by a neoclassical economic theory founded on wrong epistemological principles, which prevented a correct understanding of the economic and social challenges faced by the Eurozone. The result is a crisis prone configuration that will keep endangering EMU's political and economic stability.

This chapter presents an analysis of the financial crisis by combining a Marxian and financial Keynesian perspective. Both are framed in a longrun, structural perspective of capitalist dynamics. We are experiencing the crisis not of a generic neoliberalism or a empty financialization, but of money manager capitalism, which was built upon centralization without concentration of capital, new forms of corporate governance, aggressive competition, capital market inflation, indebted consumption. A world able to gain from the same old exploitation in new forms, to provide internal demand and present itself as a stable Great Moderation. It can be characterized as financially privatized Keynesianism, based on a new monetary policy and a new autonomous demand driving the process, a configuration that is necessarily unsustainable. The crisis is evolving from a Great Recession to a Lesser Depression. The chapter is divided into seven sections. Section 1.2 first gives a general scenario of the global and European crises since 2007-2008. Sections 1.3 and 1.4 summarize the main approaches-mainstream and heterodox-on trade imbalances, and Section 1.5 offers a truly credit money view of external imbalances. Section 1.6 complements this analysis by looking into the new geography of the industrial and trade relations within the European Union (EU) and Section 1.7 applies the previous discussions to the concrete reality of the euro crisis. Finally, in Section 1.8 some preliminary conclusions are provided. Mainstream theory woke up relatively late to the euro crisis, and it is fair to say that it is still in denial regarding many aspects of the current global trend towards very unstable stagnation. The euro crisis was first posed as a fiscal problem, caused by the profligate behaviour of some peripheral countries, and then moved into a current accounts crisis, caused by

No abstract