European Political Economy Research Articles

The New Constitutionalism, Disciplinary Neoliberalism, and the 2015 Greek Election

This article is an effort to situate the conflict between the Syriza government, elected in 2015, and Greece’s creditors in the context of broader changes in the structure of European political economy over the past quarter of a century. It explains the dynamics by which the leftist government of Alexis Tsipras shed its commitment to ending austerity through the lens of Stephen Gill’s “new constitutionalism.” While sovereign power helps show why Tsipras was unable to negotiate a new deal for Greece, two mechanisms of disciplinary power clarify different aspects of crisis politics: market reification, which obscured the role of the European Central Bank, and the reconstitution of truth claims, which led to the attribution of responsibility for the crisis to Greece itself.

The Great Depression in the Eyes of Bulgaria's Inter-War Economists

This paper reconstructs the economic policy debates in Bulgaria during the Great Depression. The goal is twofold. First, it depicts the development of Bulgarian economic thought in the inter-war period and analyzes its intellectual relationships to the evolution of European (especially German-language) political economy. Second, due to significant analogies between the processes during the Great Depression and during the Great Recession, it tentatively derives recommendations from the economists' debates in the 1930s for handling the current crisis and for the post-crisis development of today's Bulgaria. The quantitative economic history of the 1930s is only of secondary interest to the paper: instead, its primary objective is to show in what ways history of economics as a discipline with its focus on past theoretical discourses can be inspiring for conducting economic policy today, so that hindsight on earlier economic thought in the context of its time presents both recommendations and warnings for crisis management today.

Ordoliberalism in European Competition Policy

Similar to the two North American countries — Canada and the United States — the European Union has a fairly long history with the adoption and administering of their competition law. The heterogeneity characterizing the European Union, however, meant that the European competition law had to be designed and delivered in a manner that was sensitive to the political economy demands of its constituent nations, the principles of market competition, and the intricacies of the ‘‘European project.’’ Conor Talbot’s article, ‘‘Ordoliberalism and Balancing Competition Goals in the Development of the European Union,’’ examines the role that the European competition policies played in the development of the European project and its associated economic, social, and political goals during the post–World War II period. The article focuses on how the European competition policies complemented the democratic and capitalistic ideals of the emerging European integration. In the process, the article contributes to our understanding of the evolving nexus between capitalism, democracy, and competition laws in the European political economy.

Fundamental Rights and Legal Wrongs: The Two Sides of the Same EU Coin

AbstractThis article argues that the relationship of EU fundamental rights to the rest of EU law can only be understood if the former are seen as an integral part of a general vision of what EU law is about. This vision conceives EU law as concerned to secure the government of a European political economy. In turn, it has come to shape the interpretation and incidence of EU fundamental rights with the latter conceived as a central tool for incorporating the individual into and asserting her place within the government of the European political economy. A paradox has therefore emerged. EU fundamental rights have become ever more pervasive in EU law, and it is couched more frequently in their terms, but these same fundamental rights seem ineffectual to deal with the suffering caused by events such as the crisis.

A Critical-Realist Account of the Greek Crisis

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.

Focus: Austerity and Resistance — Labour in the Eurozone crisis

health and education systems that are being rescued . It is the banks, who had organised the lending of super profits to peripheral countries, which had been exposed to private and national debt in these countries. Especially German and French banks were heavily exposed to Greek debt, British banks to Irish debt (Rogers 2011), with much of this exposure having now been socialised through bond purchases by the European Central Bank (ECB). The bailout packages came at a high price, making support dependent on austerity policies including: (1) cuts in funding of essential public services; (2) cuts in public sector employment; (3) push towards privatisation of state assets; and (4) undermining of industrial relations and trade union rights through enforced cuts in minimum wages and a further liberalisation of labour markets. Hence, imposed austerity went also beyond direct cuts. Greece ‘has been forced to introduce new legislation in labour markets and to engage in ambitious privatisation’ (Lapavitsas 2012: 120). Labour market deregulation and making wage-setting ‘more efficient’ are clearly directed against trade unions’ involvement in social and economic decision-making at the national level. As part of the bailout package for Portugal, the government agreed to stop extending collective agreements automatically to the whole industrial sector in 2011. Unsurprisingly collective bargaining coverage has fallen drastically. ‘In 2010 a total of 116 industry level agreements ... were extended by government to cover all employees in the industry concerned. However, in 2011 this fell to 17 and in 2012 to 12’ (ETUI 2013). Hence, while in 2010, 1,309,300 employees were covered by collective industry level agreements, in 2012 it was only 291,100 employees. There have also been amendments to the Labour Code with the aim of creating greater flexibility for firms, thereby allegedly enhancing competitiveness and wage moderation. These changes have included reduced ‘pay for overtime by 50 percent’; further flexibilisation of fixed-term contracts by extending the ‘probationary ’ period from six months to a maximum of three years; and the relaxing of rules for redundancy and dismissal, especially for reasons revolving around economic circumstances (Clauwaert and Schomann 2012: 9, 11-2). Whilst some reversals on this front have been achieved, through legislation having been deemed unconstitutional, officials from the ECB, European Commission, and International Monetary Fund (IMF) (collectively now popularly known as the The real conflict here is between workers and big business, which takes place across the EU INTERNATIONAL union rights Page 4 Volume 22 Issue 2 2015 I t is often argued in the media that citizens of richer countries would now have to pay for the ‘profligacy’ of citizens from indebted countries. Cultural arguments of apparently ‘lazy Greek’ workers as the cause of the crisis are put forward despite the fact that Greek workers are amongst those who work the most hours in Europe (McDonald 2012). Rather than the result of Greeks living above their means, however, the crisis is a reflection of the highly uneven European political economy. While Germany and other countries of the European core have pursued a growth strategy based on exports, countries in the European periphery including Greece followed a strategy of demand-led growth often financed with loans from abroad. Nevertheless, it would be wrong simply to blame the Greeks for this situation. The super profits resulting from German export success needed new points of investment to generate more profits and state bonds of peripheral countries seemed to be the ideal investment opportunity with guaranteed profits, backed by sovereign states. The introduction of the Euro and the related low interest rates in peripheral countries, thus, facilitated this financialisation of the European political economy in favour of transnational capital . In a way, Germany has recycled its profits in the form of lending to peripheral countries. In turn, these credits to the periphery were used to purchase more goods in the core ensuring a continuation of the German export success. Hence, the recurrent distinction between credit- and export-led economies is misleading. Firms in core countries would not have been able to pursue export-led growth strategies, if global aggregate demand had not been supported by the real estate and stock market bubbles that occurred in the periphery as a result of...

Effects of the European financial and economic crisis in Kosovo and the Balkans: modes of integration and transmission belts of crisis in the “super-periphery”

This paper examines the varied ways in which the Global Financial Crisis of 2008 and the eurozone crisis affected the economies of the Balkan “super-periphery”. This paper shows that economic shocks are transmitted differently based on how globalised or dependent the mode of integration of each Balkan state is with the wider European political economy. This paper finds export-dependent and investment-dependent states to have suffered the most as a result of the crisis, while remittance-dependent states such as Kosovo have suffered the impact of secondary consequences of global crisis such as rising global food prices.

Economic Crisis and Institutional Resilience: The Political Economy of Migrant Incorporation

This article focuses on the situation of migrants and their descendants in European labour markets. This important socioeconomic dimension of the current crisis illuminates the role of pre-existing policies and institutions and points the way to political solutions. The article begins with a comparative puzzle: how can one account for cross-national, cross-local, and cross-sectoral variation in the labour market outcomes of migrant-origin minority groups and explain migrant-origin and gender differences. This is followed by a critical examination of debates on the ‘integration’ of migrants and the ‘second generation’ reflecting political diatribes on the across-the-board poor performance of minorities and the role of ethnic or religious factors. An alternative explanation underscores the importance of policy paradigms and institutional hurdles focusing on three aspects of European political economies: welfare state arrangements, education, and sub-national labour market policies. The arguments put forth rely on comparative aggregate data and surveys in countries representative of ideal types according to the original version of the varieties of capitalism, worlds of welfare, and integration models literature, in particular France, Germany, Sweden, and the Netherlands.

Regulating Corporate Governance in the EU: Towards a Marketization of Corporate Control

Introduction Theoretical Framework Global Capitalist Restructuring and Corporate Governance Regulation in the European Political Economy Company Law in the European Union - From Industrial to Shareholder Democracy? Corporate Governance Regulation in the European Union - From Harmonisation to Marketisation The Marketisation of Corporate Control as a Political Project Corporate Governance in Crisis? Conclusion

Europeanisation in the ‘Southern Periphery’: Comparative Research Findings on the EU's Impact on Domestic Political Economies

This article presents the comparative findings of six case studies of continuity and change in Southern European political economies which make use of the Europeanisation research programme. It summarises the varied European Union (EU) level inputs, frameworks or agendas in the different policy areas that each case study focuses on. It gauges the magnitude and direction of domestic change at the level of policy and governance in each political economy. In order to show how the case studies unpack the relationship between the EU input and domestic change in public policies, the article explains how the prevalent ideas, dominant interests and structuring institutions co-determine the nature of domestic change in political economies.

Europeanisation and Dynamics of Continuity and Change: Domestic Political Economies in the ‘Southern Periphery’

This article provides the framework for some case studies on the dynamics of Europeanisation in South European political economies. It summarises the key features of the common template each case study adopts. Following a discussion on political economy as it is conceptualised in this volume titled ‘‘Europeanisation and the southern periphery’ in retrospect: another decade of dynamism, asymmetry, and fragmentation? Guest Editors: Canan Balkir, H. Tolga Bolukbasi and Ebru Ertugal’, the article elaborates the defining attributes of the Europeanisation research programme by focusing on its theoretical core, research design and method of conceptualising and operationalising domestic continuity and change centring on the troika of ‘ideas’, ‘interests’ and ‘institutions’ in unpacking the dynamics therein. It concludes by providing a summary of the contributions to this volume.

Rudderless in a Sea of Yellow: The European Political Economy Impasse for Renewable Transport Energy

Faced with the twin challenges of anthropogenic climate change and ‘peak oil’, the need for an urgent and radical transformation of transport energy has been widely recognised. Adopting a neo-Polanyian economic sociology approach, this article asks what conditions European governance capacity to respond to these challenges, at either national or regional levels, using biofuels as a case study. It asks if the complexity of its political institutions, and the heterogeneity of interests and economic organisations, present ‘the biggest obstacle of all’ (Cohen 2007) to reduce fossil fuel dependency. By examining the European Commission level and comparing five countries, evidence is produced for a political failure in terms of continued fossil fuel dependency. Incumbent interests in the agricultural sector and a distinctively European legacy of a transport fleet dependent on fossil diesel, have led to a marriage of convenience between rapeseed farmers and vehicle manufacturers. As a consequence, rather than escaping from the path dependency on fossil fuels (Unruh 2000), Europe has gone down a cul-de-sac of rapeseed biodiesel inherently limited in scope, and with the low levels of greenhouse gas emissions savings. Ironically this outcome is in part an unintended consequence of opposition to biofuels from environmentalist groups and politics.

Economic crisis and migrants' employment: a view from Greece in comparative perspective

This paper explains and evaluates the effects of the developing crisis on the mobility of third-country nationals in Greece and other South European political economies. In doing so it explores the mobility of these migrants within the context of the informal economic activity in which many such migrants have been involved. The paper exposes the distance separating the law and the actual enforcement of fundamental employment- and mobility-related rights of irregular migrants in Greece and other southern European countries. It identifies the significance of the familistic welfare regime of the European South in framing migrants' characteristics and their consequent mobility in the region. The article argues that the familistic welfare regime of the host country is inextricably linked to migrants' employment trajectories and fundamentally affects the strategies that migrants have developed in order to protect themselves in lieu of effective rights regulation.

The Mythology of European Monetary Union

The global economic crisis that began in 2008 with the failure of American financial institutions has appeared in Europe as a crisis of Economic and Monetary Union (EMU) which poses the most profound challenges the European Union (EU) has faced since its founding in 1958. People are asking: how did the EU get itself into this situation and why it is having so much trouble getting out of it? Although many factors converged to produce this perfect storm, at the heart of the crisis is a persistent failure to recognize that there are durable differences in the institutional structures of the European political economies, which cannot readily be erased and offer comparative institutional advantages that national governments often exploit (Hall and Soskice 2001; Amable 2003). Economic prosperity in Europe has long depended on the operation of these national varieties of capitalism (Hall 2001a). From its inception, however, EMU has been built on the assumption that such institutional differences are transient deviations from neo-classical economic models, which should be corrected rather than accommodated. Of course, officials engaged in day-to-day policy-making have a more nuanced understanding of how their economies operate, but the major policy initiatives associated with the Euro have been justified in terms of this view. As a result, the Euro operates on a distinctive mythology. Mythologies have their uses, especially in politics, as Machiavelli (1984) noted; and this one was instrumental to securing agreement to the establishment of a monetary union with a particular institutional form in 1992. This was the high water mark of a rational expectations economics whose doctrines left a distinctive imprint on the new union. In contrast to preceding Keynesian views, which saw active macroeconomic management as the key to stable growth, the new classical economics held that fiscal policy was rarely stabilizing and monetary policy largely without lasting effects on the real economy. Prosperity was said to depend, not on demand management, but on supply-side measures to make markets in labor and goods more competitive (Crystal 1979; Cuthbertson 1979). Since active fiscal policy was deemed counterproductive, no effort was made to give the new monetary union capacities for coordinating its member states’ fiscal policies over the medium term. A Stability and Growth Pact (SGP) placing crude limits on national deficits and debt was considered sufficient. Since monetary policy was said to be of value only for controlling inflation, and best done through monetary rules, the new union was endowed with a European central bank (ECB) entirely independent of political control, with circumscribed powers that kept it focused on inflation and unable to purchase sovereign debt directly. EMU acquired these features ultimately because this is what the member states, who were interested in EMU for political as well as economic reasons, could agree on; but images of the economy purveyed by

The Policy Consensus Ruling European Political Economy: The Political Attractions of Discredited Economics

Abstract Since the Great Recession in 2008 academic economics has come under heavy criticism. But a straightforward alternative is not in sight either. We analyse in this article how the major flaws of applied economics are the mirror image of its attractions to policymakers, mainstream political parties and reform-minded administrations. We first assess what the consensus until recently has been and how it could have been implicated in the crisis. Secondly, we argue, following Hall, that the policy consensus continues to persist because it is politically attractive. The article ends with observations of how the management of the Euro area crisis still shows the attractiveness of the consensus. Policy recommendations: • Introduce greater pluralism in advisory bodies on economic policy to include civil society organizations, such as trade unions, and consumer organizations as well as academic disciplines other than economics. • Review compensation policy for representatives on advisory committees to create a level playing field for experts from civil society organizations and independent consultants with financial sector lobbyists. • Support and back up critical voices in the financial industry and in regulatory bodies against those who defend regulatory neglect and the privilege of rent-seeking for the financial industry.

The Policy Consensus Ruling European Political Economy: Its Attractions, Flaws and Possible Departures

Since 2008, crises in financial markets have forced governments in OECD countries to unprecedented monetary and fiscal intervention. In previous such situations, namely the Great Depression and stagflation in the 1970s, the economic policy consensus of the time came under close scrutiny and eventually shifted. Today, criticism of academic economics is not in short supply but a straightforward alternative is not in sight either. This seems to be particularly troubling for governments in Europe, desperate for advice on how to stop contagion spreading from a small peripheral economy to the core of the European Union. But then, the lessons that especially European governments seem to draw from the crisis suggest that the economic policy consensus of the last two decades, with its heavy emphasis on structural reforms and inflation-targeting monetary policy, is less obsolete than the critics suggest. Our contribution first assesses what the consensus until recently has been and how it could have been implicated in the crisis. We identify as the elements of the consensus that are potentially flaws responsible for the crisis the notion of a fundamental equilibrium that is determined independently of financial markets, the focus on micro foundations that neglects issues of systemic stability and an obsession with structural reforms of labour markets. The incremental shift of economic theorizing towards selfregulation of markets and macro-stabilisation assigned to central banks left governments the task of restoring the role of the price mechanism in labour and product markets. A stronger role of price adjustments increased the flexibility of nominal prices but not necessarily real adjustment. Second, we argue that the policy consensus continues to persist because it is politically attractive. Following Hall (1989) who suggested that ‘the political power of economic ideas’ requires, at a minimum, their economic, administrative and political viability, we identify the attractions of the policy consensus as directly following from its theoretical flaws. In monetary policy, agencification of monetary policy - i.e. the creation of independent central banks - freed fiscal authorities from dealing with issues of macro-stabilisation for which they typically get more blame than praise. The assurance that there is a full-employment equilibrium determined by real economic factors enabled governments to turn a blind eye on overheating credit markets that allowed households to finance rising consumption while real incomes stagnated for most. Finally, the focus on labour markets and structural reforms suited particularly centre-left parties and governments targeting changing electoral constituencies, due to a decline in industrial employment and the inequality of employment conditions in services. We end the paper with observations of potential departures from the policy consensus that could indicate a significant shift for the political economy of Europe. The crucial question is whether political support can be mobilized for the shift from structural reforms of labour markets to the containment of risks in financial markets. Welfare state building in the 20th century depended on the active support of firms for welfare state expansion in the employment relationship. Similarly, robust re regulation of financial markets is likely to emerge as a response to political demand by ‘capitalists against markets’ (Swenson 2002). One cannot take this demand for granted. But we argue that there is a prospect for the formation of politically cross-cutting coalitions that aim at defending the real economy against financial havoc by protecting the financial system from itself.

EU enlargement, the clash of capitalisms and the European social model

European integration features a clash of capitalisms for the normative governance of the European political Economy between two loose coalitions: liberal and regulated capitalism. This article focuses on the impact of the 2004 European Union (EU) enlargement upon the EU's clash of capitalisms. It does so by analysing two EU policy negotiations which relate to the European Social Model (ESM) – the revision of the Working Time Directive and Services Directive. The two case studies reveal that the 2004 new member states consistently joined the liberal coalition. The 2004 enlargement has therefore strengthened the liberal coalition within the EU's clash of capitalisms. Within the ESM this has resulted in a political stalemate and is likely to prevent future policy initiatives in the social policy field.

‘Cognitive Closure’ in the Netherlands: Mortgage Securitization in a Hybrid European Political Economy

There is a strong case that mortgage-backed securities were at the root of the 2007–09 financial crisis. Even though geographers have convincingly demonstrated that loan origination is strongly locally rooted and that the fallout from the subprime mortgage crisis clearly had spatially circumscribed effects, securitization is still generally perceived as a universal, private, and purely market-based financial technique. In this paper we use a description of the securitization chain in the Netherlands to contest these perceptions. Building on and adding to Thomas Wainwright's analysis of securitization in the UK, we first argue that securitization in the Netherlands has taken a form which reflects Dutch corporatist institutional arrangements, implying that both geography and states do matter for the supposedly aspatial process of securitization. Second, we argue that the Dutch state has been very much implicated in the construction of the securitization market in the Netherlands. Third, we suggest that this can best be seen as an effect of ‘cognitive closure’ rather than of ‘regulatory capture’: that is, Dutch pro-banking regulation is not so much an effect of bankers hijacking regulators but, rather, more the result of bankers seducing regulators with their stories. This paper is a detailed case study of the workings of financialization and adds to the growing body of work which seeks to analyze the different ‘varieties of financialization’ and the variegated geographies of the financial crisis.

Institutional Change and the Financialisation of Pensions in Europe

Pension reform in European political economies has increased the institutional proximity of local pension arrangements and emerging retirement-income institutions with the prospects of global financial markets and conventional investment practice. Applying new institutional theory to case studies of pension reforms in Finland, Germany and France, we find that this increasing relational proximity is deeply embedded in existing institutional practices typical of each political economy, simultaneously supporting continuity and change. This suggests that the linearity inherent in debates over convergence and divergence in comparative capitalism needs to move to more multidimensional understandings of political–economic variety more sensitive to agency in order to grasp what is ultimately occurring as political economies transform and interact, particularly under conditions of financialisation.

European Political Economy: Labour Out, State Back In, Firm to the Fore

Much has changed in European political economy over the past 30 years, both in terms of the political economic realities and the scholarly explanations of those realities. National economic policies and policymaking have undergone major transformations, largely in response to the pressures of globalisation and Europeanisation. Such transformations have entailed significant alterations in the role of the state, the importance of business, and the power of labour. In light of these changes in the political economic realities, political economists have shifted their focus over time, first taking labour out of the equation, then bringing the state back in only to devalue it in light of globalisation and Europeanisation before putting the firm front and centre. Only recently has the state been brought back in yet again while labour has made a comeback.