Neoliberalism, Profitability, and the Crisis in the Eurozone

Abstract

This paper aims to analyze the roots of the sovereign debt crisis around the Eurozone countries. Furthermore, it seeks to deconstruct the orthodox argument which states the crisis is caused by fiscal indiscipline of some of its members. In doing so, the article bears on the political economy tradition, integrating the elements of hierarchy and asymmetry among the various actors, and poses the hypothesis that the crisis in the Eurozone is due to three highly correlated causes: (1) the unfolding of the 2007 crisis that originated in the United States, (2) the financialization of the global economy, and (3) the intra-Eurozone imbalances, a legacy of the neoliberal institutional framework of the last decades. To associate the Euro crisis with this neoliberal architecture, moreover, the main tendencies of contemporary capitalism are described, pointing to the theoretical contribution of Marx, particularly regarding his hypothesis of a tendential fall of the profit rate. Finally, some concluding remarks are considered, stressing alternatives to the budget austerity measures and to the necessary ruptures with this neoliberal institutional framework. JEL Classification: B51; P16; H63; N14