A Crisis Beyond Law, or a Crisis of Law? Reflections on the European Economic Crisis

Abstract

This paper attempts to locate the place of law in debates on the economic crisis. It suggests that law is the meeting point of politics and economics, not simply the background to market operations. It is suggested therefore that the law should be seen as the conduit of popular will through political decision making onto economic systems and processes. The paper argues that the crisis can be seen as being the consequence of the dis-embedding of the political from the economic, and it is this distance that causes legal frameworks to operate in unsatisfactory ways. With this theoretical basis the paper examines the sovereign debt crisis in Europe. The European debt crisis in general and the plight of Greece in particular show why plasticity in policy making is necessary, and also reveal why current orthodox solutions to economic calamities fail. The inflexibility of the neoclassical understanding of the state-market relationship does not allow for avenues out of crisis that are both theoretically coherent and politically welcome. Such realizations form the basis of the examination of the rules framing the Eurozone. This paper after conducting an investigation of exit points from the Eurozone condemns the current institutional framework of the EU, and especially the EMU as inflexible and inadequate to deal with the stress being placed on Europe by the crisis.

Keywords: Eurozone, Europe, Economic Crisis, Greece, Debt, Grexit

JEL Classification: A12, P26, P48