*** JOSEPH E. STIGLITZ: L’euro. Comment la monnaie unique menace l’avenir de l’Europe. Editions Les liens qui libèrent (2 impasse de Conti, F-75006 Paris. Internet: http://www.editionslesliensquiliberent.fr ). 2016, 504 pp. €25. ISBN 979-10-209-0406-5.
The 2001 Nobel prize-winning for economics, Joseph Stiglitz, is not universally appreciated in his profession and his most recent book is not likely to change the situation, At least not in Berlin and Frankfurt or even in the European quarter of Brussels. This former economist in chief at the World Bank is not exactly kind to those who created the Eurozone or less so towards those who have raised the bar even higher since the Eurozone entered the crisis in 2008. They have all made the mistake of believing that reducing budgetary deficits and public debt were indispensable and sufficient for getting the single currency functioning correctly. In Stiglitz’s view this mistake was made worse by the fact that persevering in this belief was ideological and that they created a diverging system that has considerably contributed to stagnation in the Eurozone and a continued weakness in political solidarity. This is why he poses the question of whether it really is reasonable to crucify the European project “On the cross of the euro”. No, it is not reasonable because the euro is not condemned to function on its current moribund basis. At least, if political leaders agree to change direction because if they do not, an amiable divorce would be far preferable to the current direction it is going in. This detailed analysis is obviously not going to be to liking of a number of commentators in certain areas!
Stiglitz’s analysis is far too extensive and detailed to be described and summed up in just a few paragraphs. Nonetheless, there are a few areas where we can identify the reasons for his anger at the euro and his claims that it was devised with a mixture of poor economic science and perverse ideology. The author is a former adviser to President Clinton and points out, for example, that the Troika very largely imposed a recipe on Greece that the International Monetary Fund usually provided to countries requiring its assistance or economic policies that were claimed to be “healthy” but which were really based on “false” theories that have very often created recessions and depressions. He also seeks to show that the persistent desire for economic integration has desynchronised political integration and can have a damaging impact in a huge number of areas, as the variety of trade and investment partnerships are demonstrating how they are used to bestow the power of globalisation on a small minority. Joseph Stiglitz particularly targets the effects of neoliberalism that have helped to derail the euro and, more broadly, the European Union. He claims that the neoliberal economic programme has perhaps failed to increase average growth levels but it has without a shadow of doubt increased levels of inequality. In this respect he points out to his fellow economists that GDP can increase in a situation where the majority of people are experiencing a worsening situation. Another negative effect resulting from the euro that has not been taken into account involves the fact that the markets left to themselves are not efficient and that the financial systems have not been regulated enough to prevent the boom slump merry-go-round. His indictment particularly focuses on the problem suffered by the Eurozone and too many of its citizens and he argues that they had not sought to organise the Eurozone as an area where strong countries were supposed to help those that had temporary problems and that this decision had a certain attraction to a selfish electorate but that without a minimum of risk-sharing, there is no chance that monetary union has any chance of working…
The significant areas of possible solutions are explored, contemplated and commented on in this book. Joseph Stiglitz subsequently comes up with a number of “sinister conclusions”, which, however, are tempered by his conviction that the “European project is too important to allow the euro to destroy it”. He also argues for a whole raft of changes, which, as part of the structure and policies of the Eurozone, should help it to function better, to the benefit of all. Nonetheless, it does not have too many illusions in this regard and he believes that the reforms he advocates are very likely to clash with the resistance of the leaders “who prefer the certainty of being a big fish in a small pond” rather than the prospect of playing an uncertain role in a European Union/Eurozone that is more politically important. If this proves to be the case, he warns that only three possible options will remain. Firstly, continuing the current course and doing the minimum to prevent the Eurozone imploding but not enough to make it prosperous. The second option would involve creating a flexible euro and the introduction of a system where countries or groups of different countries would each be able to have their own euro with the value of each floating within a certain band similar to the national currencies during the era of the European monetary system. This band could be reduced overtime and ultimately produce a single currency then finally achieve its objectives for promoting prosperity, European solidarity and political integration. The final option would involve “an amiable divorce”, which the author believes would involve leaving, together with certain countries from northern Europe and which would allow countries in the south to get their heads above water by adjusting their exchange rates in relation to these countries. It is not difficult to see why this Nobel Prize winner is not going to be perceived as a saint in certain corridors in Germany … Michel Theys
*** CONSTANTINOS COLMER: La sortie de l'euro. Stopper l’immigration clandestine. Editions Livanis (98 rue Solonos, GR-10680 Athens. Tel: (30-210) 3661200 – fax: 3617791 – Email: webmaster@livanis.gr – Internet: http://www.livanis.gr ). 2016, 320 pp. €16.50. ISBN 978-960-14-3109-3.
Even if it has failed, the policy of the memoranda is continuing for a third time and creating a contraction in Greek GDP, as well as a protracted major recession and another increase in unemployment. The author of this book is an economist and correspondent in Greece for a Swiss financial newspaper,"HandelsZeitung" and he argues that the country is insolvent and caught in the trap of stagnation and the promise of continued external debt. Added to which, is the instability of the banking system. Everything would suggest leaving the euro and the nationalisation of the Greek central bank and the forced creation of a “new drachma” which, by adjusting its rates and creating certain provisions in the lending system, would help create some liquidity on the market. The three quarters of the transition to the national currency have already been accomplished with “capital controls” and the only remaining factor is converting the external debt into the drachma. The author also explains that 95% of European loans granted over the last seven years have been used to refinance banks in the Union and help them avoid going under and that only 5% of this money has gone to Greece. The country, however, has been obliged to accept… 100% of the new debt! During all that time, more than 100,000 illegal immigrants entered Greece in 2016 and, despite the fact that the agreement between Turkey and the Union is in force. According to the author, Greece leaving the single currency would discourage illegal immigrants attracted by the euro. Nonetheless, following Brexit, it has become impossible not to see the European Union as a machine that creates a number of illusions. €86 billion lent to Greece on 23 May last is nothing other than an illusion even though the International Monetary Fund did not say anything and remained in the rescue programme as a consultant despite the total “colonisation” of the country. It was therefore impossible to avoid the “tsunami” of new taxes and the selling of public assets and for the Greek state to once again attack pensions and social benefits, notwithstanding the fact that Germany’s refusal for Greek debt to be reduced continues to prevent Greece from benefiting from a Greek economy with more flexible credit provided by the European Central Bank. Therefore, only a victory in Germany of those advocating a Grexit and who are leading the crusade against illegal immigrants and refugees would be capable of changing the situation. If this kind of Germany rallies Northern Europe to it under German influence, Constantinos Colmer envisages an unprecedented scenario of rupture with perhaps, “Italy being the first, followed by countries in the Iberian Peninsula and France and finally them following the British example and taking part in a free trade zone” which would reject European Union governance and “an uncontrollable Brussels elite”. Greece will therefore be the catalyst for this and it would cease to be a guinea pig that is only good for carrying out laboratory experiments… (AKa)
*** PANOS KAZAKOS: La drachme n’est pas la solution. Les implications économiques et politiques d’une sortie de la Grèce de la zone euro (Grexit). Editions Epikentro (9 rue Kamvounion, GR-54621 Thessaloniki. Tel: (30-231) 0256146 – fax: 0256148 – Internet: http://www.epikentro.gr ). 2016, 248 pp, €12. ISBN 978-960-458-710-0.
This study mainly focuses on the economic and political implications of a possible exit of Greece from the Eurozone and the political and economic structures and traditions of Greece. The threat of a Grexit is on the cards again following the results of the third memorandum. According to the author, a professor in European and international economic relations at the National University of Athens, this most recent economic recovery programme, similarly to the previous programmes, sought to provide a radical and essentially liberal plan for rectifying the failures of the Greek state and the widespread corruption. These memoranda, however, have clashed with a mixture of the selfishness of the elites, the different political traditions, powerful commercial interests, weak institutions, received ideas and the values of a bygone age. Professor Kazakos argues that these same factors will still be there if the country leaves the Eurozone. At an economic level, a return to the national currency will plunge the country into a new deep recession with no hope for growth in the near future. This could provoke a vicious circle of devaluation, inflation and debt, which would make it impossible to control public finances due to the dynamic of the politico-economic system. Leaving the Eurozone or even the Union would paralyse the country and at the same time spectacularly reduce possibilities for accessing Capital and public funds, primarily, those from the Union. Any prospect for economic recovery would be postponed indefinitely and this would further discredit the Greek political community. Finally, another sharp fall in income would result from a Grexit and increased unemployment and would undoubtedly lead to new strike waves, and even more social demands, as well as possible anti-constitutional practices that could plunge the country into a circle of violence and political instability. Political extremism would therefore be strengthened, as well as Bonapartist populism. The author concludes that instead of leaving Eurozone it would be preferable to implement the adjustment programme, whatever price there is to pay. (AKa)
*** ALBRECHT CORDES, MARGRIT SCHULTE BEERBÜHL (Editors): Dealing with Economic Failure. Between Norm and Practice (15th to 21st Century). Peter Lang (42-50 Eschborner Landstraße, D-60489 Frankfurt. Tel: (49-69) 780700 – fax: 78070550 – Email: frankfurt@peterlang.com – Internet: http://www.peterlang.com ). 2016, 267 pp. €53.20, £43, $69.95. ISBN 978-3-631-65825-3.
This book is an extension of a conference organised in February 2014 at the Max Planck Institute for European Legal History, which formed part of a research programme focusing on “extrajudicial and judicial conflict resolution”. It is edited by two historians (Albrecht Cordes teachers at the Goethe University in Frankfurt and is a specialist in pre-modern history of commercial law and the Hanseatic League), while Margrit Schulte Beerbühl, is a professor at the University of Düsseldorf and focuses on the question of German migration to the United Kingdom and the first modern transnational merchant networks. In what way have mediaeval and modern societies dealt with economic failures, particularly bankruptcies? Is a company failure a permanent defeat or even a crime that should be punished? Should it be considered as just another incident, an accident along the way that is likely to be transformed in the future into success? The subject matter particularly covers Antwerp, Stockholm, Venice, Paris, Lyon and Hamburg over periods ranging from the beginning of the 16th century until modern times and contemporary Germany. The authors of the 10 chapters shower how mentalities evolved on this issue. As Margrit Schulte Beerbühl revealed in her introduction, we no longer live in an epoch when an insolvent debtor in Great Britain before 1820 could be put to death for their crime. Insight is also provided on the different academic disciplines and specialisations, as well as different national perceptions reflecting a very diverse European situation. The different authors contributing to this publication provide a very useful clarification of the way in which mindsets have slowly evolved and created alternative approaches towards conflict resolution relating to and the inability to pay back debts. This is a very contemporary book that relates to both the situation as it previously stood and how it now stands because the percentage of firms that fail during the first five years remains much higher than those that succeed. (PBo)