The dramatic outcome calls into question conventional economic thinking about macroeconomic adjustment, debtor/creditor relations, debt restructuring, and the role banks and finance play in the economy and politics. It also, inevitably, casts a dark shadow over institutions previously regarded as almost sacrosanct, such as the European Central Bank, the European Union and the Eurozone. Given the importance of the issues and the centrality of economic theory to resolving them, the Institute for New Economic Thinking is making a special effort to display the range of views within our community on these matters.
None of the papers we post (or repost) here represent a formal position of the Institute. We are not drawing any conclusions, other than to observe the obvious: that some form of debt restructuring is going to have to happen in Greece, and perhaps eventually also in other countries, if the Eurozone is to continue in its present form. Greece and the other countries in what is rapidly becoming “peripheral Europe” need quickly to see a sustainable trajectory leading to a prosperous future for their people and ways to participate in Europe and the wider world that do not amount to indentured servitude.
The Institute also believes that the magnitude of the disaster that is now engulfing the Eurozone requires a careful analysis of how conventional economic thinking helped shape the failed European policies of the last five years. Regardless of anyone’s views about the reforms Greece has made or still needs to make, we need to understand why major institutions kept insisting on policies that plainly were not working as they were predicted to.
We are well aware of the intense passions these issues rouse; the differences concern not only theories, but facts and perceptions of events. We hope the discussions do justice to the diversity of views and stimulate new economic thinking in an area where it is urgently needed.
- Greece, the Sacrificial Lamb, by Joseph Stiglitz (7/26/15)