keynisian and euro zone crisis

Keynes and the Eurozone’s Crisis

Georgios Maris
Ph.D. Candidate
Dept. of Political Science & International Relations, University of Peloponnese,
Corinth, Greece
E-mail: [e-mail]
Tel.: [phone], fax: [phone]

Abstract
The majority of the peripheral member states of the Eurozone Portugal, Italy, Spain, and Greece have experienced financial crises. Until now, the European leaders attempted to solve the crises mainly through austerity measures. For them, either it is an ideological or a political matter; the answers have identified with the free market beliefs. In this paper, we will argue that until now all the solutions that have been agreed on the European level do not help to solve the root causes of the Greek financial problem. The national governments of the European Union do not follow any of the Keynesian ideas to overcome the crisis. The European leaders seem to have forgotten their role to act as a policy makers. Under these conditions, even if the
Greek financial problem can be moderated, it cannot be solved. The above observation is highly significant for the future of the European Union because every currency union in order to survive needs a mechanism of fiscal transfers. This mechanism does not exist in the Eurozone. Thus, this crisis will continue to affect the performance and function of the EU.

Key words: Political Economy, Greek Crisis, Eurozone, Keynes.

The European leaders attempted to solve the European crisis mainly through austerity measures. For them, either it is an ideological or a political matter; the answers have identified with the free market beliefs. This laissez faire approach has generated severe social, political, and economic phenomena within the member states. The effective demand in each peripheral economy shrunk, creating waves of pessimism, unemployment and misery. How has the European Union (EU) responded to the severe crisis? As the Greek case shows, the solutions to overcome

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