The Eurozone crisis is much more than a sheer fiscal problem plaguing a number of countries in the South of the continent. It is rather a symptom of a diseased situation that has to be interpreted within the broader context of the world economy. Indeed, only superficially can the crisis be regarded as the product of the Eurozone’s deficient architecture. In reality, this crisis is only one manifestation of a global economic malaise and of the tectonic shifts in the international division of labour. As the much-rehearsed story goes, the last couple of decades -at least since the early ‘80s- witnessed the massive dematerialisation of Western economies. Essentially, most Western economies have undergone a process of de-industrialisation, whereby the manufacturing sector was replaced by financial corporations, investment banks and other service-based businesses. Not surprisingly, the production of material goods has moved eastwards. The idea was actually presented back then as the best deal ever: poor countries get polluting factories with miserable working conditions, yet emerge from their dire poverty; and Western workers are employed in high-tech, knowledge-based and knowledge-producing economies. Fashionable, clean, smart!
In reality, however, this has been true only for a relatively small segment of Western workers. Behind the façade of the ‘service economy’ millions of people who would have been happy to work in factories with a relatively guaranteed job, and who do not possess the educational background to be hired by high-tech companies, have found themselves discharged in a post-industrial world where steady jobs have been drying up quickly, temporary employment has become the norm, and an industrial economy has been replaced by an explosion in redundant retail, housing bubbles and every sort of anything-but-actually-productive activities. In order to dissimulate the erosion of the post-war welfare state and the gradual impoverishment of the vast majority of the middle-class Western population, the financial industry has been quite resourceful – under political pressure – in inventing ways to secure that a cheap-credit-fuelled economy could continue to produce unchecked prosperity as long as possible. This has been reflected in the hyper-relaxed US monetary policies of the post-2001 period, on the one hand, and in the unrealistically low interest-rates applied to every Euro-nation, regardless of the actual risk of their sovereign debt, for most of the decade before 2008. In an ironic twist of history, the ideologues of the free-market economy have mutated into the greatest manipulators of prices and market mechanisms, thus misdirecting entire societies on erroneous perceptions of risk and mispriced assets. This unprecedented work of manipulation has managed to delay perceptions of substantial Western myopia, while preserving the possibility of higher profits for multinational corporations operating in the East but still selling most of their products in the West. Continue reading