Review of Radical Political Economics

In the wake of the recent European debt crisis, there have emerged serious payments imbalances between the core/surplus countries and the peripheral/deficit countries, which threaten the internal cohesion of the eurozone. In the absence of political union or fiscal federalism, these centrifugal dynamics appear to be irreversible. This article examines the role performed by the TARGET2 (Trans-European Automated Real Time Gross Settlement Express Transfer System) payments system and the very real possibility of default by the indebted, peripheral countries as a result of the imposition of austerity policies by the European Central Bank (ECB)/European Union (EU)/International Monetary Fund (IMF) (Troika). It is proposed that the current, neoliberal path toward austerity and wage repression (or internal devaluation) is ultimately unsustainable and, indeed, self-defeating.

JEL Classification: B5, B14, B16, B23

The strategy intended to resolve the Greek financial crisis is not a resolution strategy at all—it is more accurately conceptualized as a crisis management strategy, which is insufficient to reduce the public debt and instead fuels a deflationary spiral. Consequently, power is wielded by unelected, international political and financial institutions and actors, the crisis management regime, who have engendered a wave of discipline, surveillance, and control alongside a neoliberal restructuring of the Greek economy.

JEL Classification: G01, E62, P16

This paper seeks to present a proposal of reform of the TARGET2 (Trans-European Automated Real-Time Gross Settlement Express Transfer) system aimed to correct intra-European Union (EU) financial, trade, and productive imbalances. For this purpose, the proposal relies on the application of the Keynes Plan’s principles to a regional integration process. Previously, the origins of the EU imbalances are traced to the shortcomings of the European monetary integration. Finally, the reforms needed to make the TARGET2 a rebalancing system are discussed in depth.

JEL Classification: F32, F33, F36

The paper presents an interpretation of austerity that sheds light on the crisis in the Eurozone. It argues that austerity is a long-term policy rather than an ill-conceived short-term remedy. To go beyond the by now familiar criticisms of austerity, we need to examine the crisis in its totality. Especially important are the impediments to a strong recovery driven by market incentives. This might ultimately undermine the very existence of the common currency and the future of the European Union.

JEL Classification: E2, O4, B5.

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

This paper is structured into four different parts. In the first part the authors analyze the origins of banking and debt crisis in the EU. The state and the evolution of the EU banking sector before the crisis and in its immediate aftermath is analyzed in detail in order to dispel the myth of the existence of an exclusively debt-induced crisis. This part also introduces the notion of financialization into the analysis. The second part analyzes the crisis-related dynamics by using endogenous monetary theory and makes particular use of balance-sheet recession as a concept. The third part introduces political consequences of the banking and debt crisis in the EU by focusing on the political crisis of legitimacy and its impact upon the EU integration process. In order to deal with this topic the authors borrow several concepts from critical international political economy such as transnational elite, knowledge production, and hegemony. We posit a close link between actions of the European transnational elite, crisis origins, and their ramifications. The fourth part focuses on the two most-discussed policy solutions in tackling the crisis: the banking and the fiscal union as well as their feasibility. Additionally, it lays out some fundamental trillemas for creating a viable way out of the crisis which are unfortunately often neglected in public debate. The main argument refers to the growing impact of financialization in the EU and its detrimental effect on the potential for integrated, stable, and prosperous EU economies. The authors explain the changing social, political, and economic landscape and evaluate the main challenges and obstacles to economic and political governance in the EU. The paper is concluded with some heterodox policy recommendations for overcoming them.

JEL classification: B52, E51, E52, F34, F50, G01, G20, P48

In contemporary discourse, cooperatives are often considered as vehicles for post-capitalist social transformation. However, theorists affiliated with the first, second, and third Internationals groupings of socialist parties suggested that cooperative potential was circumscribed by market coercion, leaving co-ops with limited pedagogical value and subordinating them to political movements. Their experience suggests it is important to avoid conflating cooperatives’ demonstration of post-capitalist labor norms with the strategic problems of creating a post-capitalist society.

JEL classification: B14, J54

This article expands the Sraffian framework to address environmental sustainability by showing how to define and measure what ecological economists call “throughput” and increases in throughput efficiency. In the process it clarifies issues that are often muddled in the steady-state and de-growth literatures.

JEL classification: B51, Q55, Q56

Comparing Piketty’s inequality generating mechanism (r>g) to Marx’s circuits of capital underscores a central difference: Marx wanted to replace capitalism while Piketty merely wants to fix it by taxing the rich. Piketty’s discussion of slavery reifies human chattel’s role in economic history. The failure to exclude the income of supermanagers as a return to labor may lead to an understatement of the inequality Piketty describes. Similarly, a brief mention of the environment without analysis of the wealth obtained from its abuse also understates the growth of inequality.

JEL classification: D31, O15, P1, P3, Q51