The 2008 economic crisis and its outcomes for the Baltic states

Austerity as a global prescription and lessons from the neoliberal Baltic experiment

From The Economic and Labour Relations Review

This article analyses the 2008 economic crisis and its outcomes for the Baltic states. It then gives a genealogy of European economic policy responses to the crisis, tracing them from the emerging ‘freshwater’ school of economics (e.g. University of Chicago) that arose in opposition to Keynesian theory.  The Baltic austerity strategy was radical in its execution . Yet, it appeared to have succeeded beyond the expectations of its architects in terms of consolidating budgets and generating economic recovery.

Abstract

This article analyses the 2008 economic crisis and its outcomes for the Baltic states. It then gives a genealogy of European economic policy responses to the crisis, tracing them from the emerging ‘freshwater’ school of economics (e.g. University of Chicago) that arose in opposition to Keynesian theory. The more immediate cause of the 2008 crisis, long in the making, was its reliance on private debt to sustain economic demand in light of profit-enhancing wage suppression. Following the 2008 financial shock, European Union policymakers crafted policy that placed the burden of adjustment on labour. A programme of austerity was chosen in much of the European Union, at odds with the post-war European ‘social model’. This represented a retreat from the notion of a European project that encouraged liberalisation of economic policy but at the same time could be harmonised with a social dimension to create a distinctive ‘Social Europe’. Nowhere was this austerity more vigorously applied than in the Baltic states. Its effects are examined here, along with lessons to be derived from that experience.

 

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Article details
Keynote Articles: Jeffrey Sommers,  Charles Woolfson, and Arunas Juska
Austerity as a global prescription and lessons from the neoliberal Baltic experiment The Economic and Labour Relations Review September 2014 25: 397-416, first published on August 4, 2014 doi:10.1177/1035304614544091

 

 

 

     
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