A Critical-Realist Account of the Greek Crisis

Abstract

We try to explain the origins and the dynamics of the sovereign debt crisis in Greece, in the context of critical realist economics. The origins of the Greek crisis are discovered in the global credit crisis of 2007 and are rooted in the institutional design of the Eurozone and the fiscal and institutional weaknesses of the Greek economy. We explore the period from the outbreak of the crisis in late 2009 until the return of the Greek government to bond markets in April 2014. We discuss the dynamics of the crisis as outcomes of the choices made by Greek and European citizens, Greek and European political leaders, international policy makers and capital market participants. Our analysis demonstrates how important actors set the mechanism of the crisis in motion, either by reproducing or by transforming the structures which underlie Greek and European political economies.