The Euro as a Monetarist, Neoliberal Project

Abstract

The prescriptions for dealing with the crisis in the eurozone are as varied as the analyses of the causes of the present crisis. A neoliberal might find government policy at fault, believing that economies are self-righting and policy only disrupts the process of returning to equilibrium. That world view would prescribe neoliberal policies to cure the crisis: the state should consolidate the fiscal position and then retire gracefully from the economic scene. I am deeply sceptical of that position. I do not expect economies to return to equilibrium or indeed ever to occupy a position of endogenous stability that is sustained until disrupted by some outside force. My evidence is the booms and busts of economic history and the failure of the neoliberal experiment, which gave us lower growth rates throughout the neoliberal era (1970s to the crisis) and culminated in the worst financial crisis in history.