The peripheralization of Southern European capitalism within the EMU

Abstract

The paper discusses the problem of the Southern European (SE) capitalism and its difficult path into the EMU (European Monetary Union), looking at the remote causes of the crisis that hit these economies. For this reason, we consider European countries as a set of asymmetrically integrated variety of capitalism. The institutional configuration chosen by Europe to aggregate the many varieties of capitalism not only reduced the political autonomy of the single states, but effectively hindered the specific coordination mechanism of Southern European (SE) capitalism which was importantly based on state intervention as a structural element and on inflationary policies. Despite the deep market-oriented reforms this change caused both structural and macroeconomic unbalances. The aim of the paper is to integrate some principles of the variety of capitalism and the dynamics of institutional change with some insights inspired by the work of Arrighi to supply a synthetic and ‘alternative’ perspective on the difficult role that Southern countries are experiencing in Europe

Economic causes of the Eurozone crisis: the analytical contribution of Comparative Capitalism

“…On the other side, some CCC scholars find their prime source of inspiration not in ( post-)VoC, but in the (institutionalist) Regulation perspective, Dependency theory and post-Kaleckian macroeconomics. Still they come to similar conclusions about the fragile interdependence between nationally distinct capitalisms within the EMU (Stockhammer, 2011(Stockhammer, , 2013Armingeon and Baccaro, 2012;Becker and Jäger, 2013;Regan, 2013Regan, , 2015Becker, 2014b;Gambarotto and Solari, 2015;Jessop, 2014;Stockhammer et al, 2014;Baccaro and Benassi, 2015;Baccaro and Pontusson, 2015;Johnston and Regan, 2015;Suau Arinci et al, 2015). Here, however, the focus is not only on supply-side institutions (and companies), but also on demand-side institutions such as collective bargaining and unemployment insurance (and household indebtedness), and these scholars often do not speak of CMEs, but of export-led or profit-led growth regimes (or models), in contrast to the demand-/ consumption-/debt-/wage-led growth regimes that typically can be found in LMEs and MMEs.…”

“…By taking this into account, the implications for overcoming the crisis in the European South are not getting better, since the thorough de-industrialization that went hand-in-hand with financialization in Southern Europe will inhibit any quick recovery, unless compensated by a new credit-based boom. In fact, Southern European capitalisms have been even more 'peripheralized' than before (Gambarotto and Solari, 2015). Germany, in turn, suffers from a highly problematic specialization in manufacturing exports that may not be stable in the years to come, particularly due to rising inequality, limited exports to Southern Europe as well as increasing competition from emerging markets moving up in the manufacturing value chain (Baccaro and Benassi, 2015;Baccaro and Pontusson, 2015;Bruff, 2015).…”

“…The basic idea is that the institutions of capitalism not only vary between countries, but also over time, a notion that has already been highlighted by post-VoC research, but is particularly central to Regulation perspectives and postKaleckian economics (Becker and Jäger, 2013;Stockhammer, 2013;Becker, 2014b;Gambarotto and Solari, 2015;Stockhammer et al, 2014). More specifically, we can distinguish different phases of capitalism, with financialization (roughly since the break-down of the Bretton Woods system) being the most recent one, affecting many fields of economy and society (van der Zwan, 2014).…”

“…Based on these considerations, the development of the Southern Eurozone economies can be qualified as 'dependent financialization' (Becker, 2014b, p. 25-32; see also Gambarotto and Solari, 2015). Similar to Central Eastern European economies, they are dependent on foreign capital (Bandelj, 2007;Nölke and Vliegenthart, 2009;Bohle and Greskovits, 2012), but with a stronger tendency towards de-industrialization than the latter.…”

Financialization without liquidity: in‐kind payments, forced credit, and authoritarianism at the periphery of Europe

“…The periphery, however, is not a stable entity – especially in Europe. In the aftermath of the global financial crisis, various authors (notably Gambarotto & Solari ; see also Vliegenthart ) observed that peripheralization dynamics common in post‐transition Eastern Europe are increasingly common in countries like Portugal, Italy, Ireland, Greece, and Spain (PIIGS). Despite this convergence, the PIIGS maintain an economic and political edge over their Eastern European neighbours (Belojevikj & Mattioli ).…”