From PIIGS and the Drive Towards Austerity: The Discursive Construction of the Eurozone Crisis & Its Impact on European Welfare States

Abstract

The financial crisis of 2007-09 soon morphed into a crisis of public debt. This paper argues that the way the Eurozone crisis was discursively constructed led to a large scale entrenchment of European welfare states. First of all, how the crisis was constructed did not reflect its actual causes but mirrored the domestic interests of certain political and economic elites in European countries, especially Germany. Therefore, the political and medial discourse that emerged portrayed the crisis as one of lazy Southern Europeans now punished for their profligate lives. I call this discourse the stories. In a second step, the spectre of public debt and the PIIGS experience (especially the Greek catastrophe) urged governments to pursue, but also enabled them to justify, fiscally sound policies and structural adjustments - resulting in a towards austerity. In order to prevent a Greek tragedy, the only crisis solution was for states to cut back public spending. These developments have important implications for the European project. First, through constituting political subjectivities in the stories - them and us (North and South) - resistance against austerity measures and structural adjustments was delegitimised. Second, the drive towards austerity led to a scaling back of state expenditures and, thus, to a further retrenchment of European welfare states. Thereby, the welfare state, the defining feature of European capitalisms, which had always represented a contrast to Anglo-Saxon free market capitalism, was diminished. The paper concludes that without addressing the actual causes of the crisis as part of its solution the Eurozone crisis will continue and even intensify.