Greece, Financialization, and the EU by Vassilis K. Fouskas, Constantine Dimoulas (review)

Although the Greek sovereign debt crisis has received considerable attention, it has nevertheless yielded little analytical insight. Despite the predictions of eager Cassandras of the coming “Grexit,” Greece has not defaulted and is unlikely to do so in the near future. Why? Where have the Cassandras gone wrong? Most analysts appear to agree with simplistic finger pointing: It’s all the lazy Greeks’ fault for not paying their taxes. Others seek answers in the external environment, blaming the bailout package and European Union leadership for the Greek predicament. Vassilis Fouskas and Constantine Dimoulas follow a different path in Greece, Financialization, and the EU. They take a more holistic, global approach to the crisis, placing it in historical perspective (which is sorely missing from academic dialogue) and analyzing it in interdisciplinary terms (the crisis has economic, geostrategic, and cultural roots). Despite their effort, however, the authors achieve limited success. The argument fails to capture the essence of agency, contains some logical inconsistencies, and ultimately yields problematic normative implications.

The book’s greatest asset is also its greatest liability. The authors, correctly in this reviewer’s opinion, argue that the crisis goes beyond fiscal consolidation and a massaging of the numbers. It reflects deeper, structural flaws that permeate the country’s developmental model. In addition, the crisis is the consequence of a broader shift of economic power away from Europe and toward the Asia-Pacific region, coupled with economic problems at the capitalist center of power, the United States. Finally, the crisis is embedded in problematic geostrategic and cultural imperatives woven in the fabric of Greek society and promulgated by global political and economic elites. Unfortunately, the argument does not leave much to chance or to alternative explanations. To take a counterfactual position, if global and domestic economic, political, geostrategic, and cultural factors explain Greece’s predicament, what does not? Can the argument be proven wrong?

The authors use a “Marxisant” perspective, which, unfortunately, they use as a label but never quite define. It is inspired by Marx’s theory of value and rests on the principle that crises ignite when there is imbalance between “the real values produced and exchanged within a given national economy and the amount of money in circulation within the same economy.” The authors label this an explanation of debt crises, but it clearly explains inflationary tendencies far better than debt. The argument is then used to soften the structural inevitability of Marxist thought by infusing it with two more points. The first develops a theory of crises, a very good development, one might add, that rests on the concept of financialization. The latter refers to global, uncommitted capital (emphasis in the original), the purpose of which is pure profit, as opposed to the purpose of finance capital, which is committed to material production and growth strategies. Leaving aside the question of demonstrating when global finance capital was wholly one or the other (it always aimed at both because profit is the purpose regardless of commitment, direction, or time horizon of global flows), the concept is used to explain neoliberal, political strategies of debt accumulation. Because capitalism encourages risk and innovation, it needs a constraint-free environment. Here the authors add the concept of agency, by which they refer to state policies designed to serve and facilitate global financial flows. Problems are then magnified by the crisis-generating tendencies of financialization, which in turn create a perennial division of states: creditors or exporters and debtors or importers.

The benefit of this analysis is that it allows one to place the crisis within an organic conceptualization of the EU. It is not just the lazy Greeks or the capitalist EU vultures, it’s both. The problem is its static logic. True, the EU evolved as a system containing both competitive and cooperative tendencies. In theory, countries compete economically and cooperate politically. But this is a fallacy, as competition (and cooperation) is highly uneven. The inability of...