Greece's (un) Competitive Capitalism and the Economic Crisis

How the Memoranda Changed Society, Politics and the Economy

Spyros Sakellaropoulos

• Publisher: Palgrave Macmillan
• Year: 2019
• Print ISBN: 9783030143183
• eBook ISBN: 9783030143190
• Topic: Economics
• Subtopic: International Business
• Index: Economics

This book reviews the profound transformation to the Greek political economy in recent years and considers the reasons that have led to this transformation. Further, the author explores the social experimentation and social diversity that evolved as a result of the Greek and international economic crises. By challenging various assumptions made about the crisis, the author sheds light on Greek social relations and the country's particular type of capitalist development.

This book will be of value to both economists and sociologists, linking discussions about social class with economic, political and institutional analyses.

© The Author(s) 2019

Spyros SakellaropoulosGreece’s (un) Competitive Capitalism and the Economic Crisishttps://doi.org/10.1007/978-3-030-14319-0_1

Begin Abstract

1. The International Economic Crisis

Spyros Sakellaropoulos¹

(1)

Department of Social Policy, Panteion University, Athens, Greece

Spyros Sakellaropoulos

End Abstract

Introduction

The basic thesis of this book is that the Greek crisis is not to be disconnected from the international financial crisis. In the first chapter, we propose to deal with the causes and the form of the global crisis that started in the United States due to the so-called real estate bubble and then expanded into Europe and the rest of the world. As we shall see at the end of this chapter and in the second chapter, the way the crisis was dealt with by the European economic elites was to afflict Greece in particular, this country for a number of internal reasons being destined to become the weak link of the European and the international economy.

Failure to Overcome the Crisis of 1973

The 2007–2008 housing bubble in the United States and its effects on the financial sphere are symptomatic of the fact that it was never possible completely to contain the consequences of the global economic crisis of 1973. This is shown by the steady decline in a series of indicators. As showing in the following two tables are characteristic (Tables 1.1 and 1.2):

Table 1.1

Rates of change of GDP per capita, developed economies, 1970–2011

	1970–1980	1980–1990	1990–2000	2001–2011	2005–2011
United States	2.35	2.66	2.48	0.63	−0.40
Japan	2.82	3.89	0.76	0.64	−0.41
United Kingdom	1.92	3.14	2.60	0.80	−0.51
France	2.98	1.65	1.45	0.52	−0.09
Germany	2.82	2.00	1.22	1.14	1.11
Italy	3.28	2.42	1.51	−0.52	−1.27
Greece	3.42	0.25	1.37	1.20	−1.36
Europe	2.66	2.15	1.85	0.96	0.11
Developed economies	2.58	2.61	1.97	0.83	−0.07

Source: Maniatis (2013: 44)

Table 1.2

Rates of change in private real nonresidential capital stock and in total economy labour productivity

Private real nonresidential capital stock (plant and equipment)
United States	3.9	3.7	3.0	2.9	1.8
Japan	12.5^a	9.4	6.1	2.9	1.1^b
Germany	6.7	5.2	3.3	2.4	1.2
Industrial	5.0	4.2	3.1	3.3	2.1
Total economy labour productivity (GDP/worker)
United States	2.3	1.2	1.3	1.7	1.7
Japan	8.6	3.7	3.0	1.1	1.8
Germany	4.2	2.5	1.3	2.5	1.5
Euro12	5.1	2.9	1.8	1.9	0.9
G7	4.8 (60–73)	2.8 (73–79)	2.6	1.9	1.0

Source: Brenner (2009: 7)

^aGross stock

^b2006

It is observed that in all three variables (gross domestic product [GDP] change, capital stock, productivity), the trajectory is one of steady decline in all countries, leading to the conclusion that a major problem is emerging in the modern capitalist organization of production. This problem does not seem to be solvable, either, by adoption of low wages or curbs on private consumption, as shown in Tables 1.3 and 1.4.

Table 1.3

Annual, per capita income growth rate, 1960–2004

Countries	Annual growth rate (%)
	1960–1979	1979–2004	1979–1989	1989–2000	2000–2004
United States	2.2	1.9	2.1	1.9	1.3
Japan	6.6	2.0	3.1	1.5	0.8
Germany^a	3.3	1.7	1.8	2.0	0.6
France	3.4	1.6	1.9	1.7	1.0
Italy	5.0	1.7	2.3	1.5	0.7
United Kingdom	1.7	2.1	2.2	2.0	2.1
Canada	3.0	1.6	1.7	1.6	1.4

Source: Melas (2011: 389)

^aWest Germany until 1991

Table 1.4

Real personal consumption expenditure

	1960–1969	1969–1979	1979–1990	1990–2000	2000–2007
United States	4.4	3.2	3.5	3.5	2.9
Japan	9.0	4.7	3.7	1.6	1.4
Germany	5.1	3.4	2.1	2.2	0.3
EU-12	5.6	3.7	2.3	2.1	1.6

Source: Brenner (2009: 7)

The figures in Tables 1.3 and 1.4 show that wages and private consumption are indeed steadily declining. This indicates that the problem of profitability that has created the crisis is not a matter of high wages, and if it continues to exist this is due to the fact that all the policies pursued in recent decades have failed to restore the profitability of strong capitalist formations to pre-1973 levels.

In particular, there have been a number of guidelines that have ultimately proven to be ineffective in solving the problem: (a) real wage increase at rates below the corresponding increase in labour productivity (intensification of exploitation), (b) liquidation of less competitive capitals, (c) increase of chronic and mass unemployment to reduce the bargaining power of labour, (d) increasing rates of concentration and centralization of capital, (e) a broad change in labour relations (part-time employment, flexible work relationships, fixed-term contracts, hiring out of workers) and (f) development of a parallel labour market (including mainly women, young people, immigrants) thus circumventing labour legislation (INEG SEE 2009: 100). The problem was not soluble either by reducing the cost of mechanical production systems, raw materials and energy, or by introducing so-called new technologies into the production process. All of the above is indicated in Table 1.5.

Table 1.5

Profit rates and the growth of compensation: United States, Germany, Japan (business cycle averages)

	1960–1969	1970–1979	1980–1990	1991–2000	2001–2007^a
Private business sector
US-non-financial corporate profit rate	0.146	0.105	0.098	0.108	0.100
Germany profit rate	0.177	0.132	0.128	0.094	0.095
Japan profit rate	0.190	0.126	0.119	0.035	0.086
Manufacturing sector
US profit rate	0.245	0.134	0.118	0.164	0.141
Germany profit rate	0.189	0.124	0.104	0.052	0.122
Japan profit rate	0.364	0.297	0.198	0.103	0.083

Germany-West Germany thru 1990

Source: Brenner (2009: 10)

^a2001–2006 for Japan

It is observed that in all three major capitalist countries in both sectors, profitability rates never reach the levels of the 1960s. A recovery is of course observable for some periods as...

Table of contents

• Cover
• Front Matter
• 1. The International Economic Crisis
• 2. The Greek Crisis
• 3. Addressing the Crisis Through Support Packages and Memoranda
• 4. Changes in the Economy
• 5. The Social Impact of the Crisis
• 6. Change in Social Stratification in the Greece of Crisis (2009–2017)
• 7. Transformations in the State
• 8. The Reaction of the Dominated Classes 2010–2015
• 9. The Crisis of the Party System
• 10. Assessing the Crisis and the Dynamics (?) of the Future
• 11. Conclusion
• Back Matter