Introduction

The Greek crisis and the memoranda

In 2009, Greece entered an unprecedented economic crisis, well beyond the scale that other countries faced during the same period, in terms of duration and productive decline. The cumulative loss of around 26% of GDP during the 2009–2016 period, the skyrocketing unemployment that reached 27% in 2014 (nearly three times the previous 10 years’ average) and the bankruptcy of 200,000 small and medium enterprises were just the tips of the iceberg.

The crisis in Greece was an integral part of a broader structural crisis that was described as a crisis of neoliberalism, perceived as the insistence on private enterprise and on the weakening of the broader public sector (Dumenil and Levy 2011). The crisis showcased the weaknesses and the frailty of an economic structure that depended on the excessive growth of fictitious capital (Harvey 2010). The increase of public and private debt, and the dependence of consumption on lending as a counterweight to the austerity policies, was not a Greek peculiarity. It became a common characteristic of all Western economies immediately after the structural crisis of the early 1970s. In the United States, the economy was shaken by the securitisation of structured bonds that included an unknown amount of high-risk loans of the mortgage market (Krugman 2012). In Ireland and Spain, the overdeveloped mortgage market was also at the heart of the financial crisis. In Cyprus, the banks themselves and in particular their risky investments led the state to emergency lending to prevent their collapse. Greece was led to the memorandum of understanding (MoU) (conditionalities) imposed by the IMF and the EU as a prerequisite for its lending, due to its inability to borrow and service the public debt, which was the trigger of its economic crisis. Thus, public debt proved to be the weak link in a long chain of structural imbalances (Bofinger 2012).

A common feature of all these different crises was the reproductive incapacitation, under its working terms, of an economic model based on two pillars. The first pillar was continuous austerity and low wages (Blyth 2013). The second pillar was borrowing by employees, households and businesses, which facilitated the expansion of commodity production, the realisation of surplus value and the expanded reproduction of capital (Streeck 2014).

In the euro area in particular, the distorted structure of the monetary union was made obvious (Lapavitsas et al. 2012).