Crisis of the euro-zone: structural faults and contractionary policies

Abstract

The present paper has for objective to address the causes of the euro zone’s debt crisis and to dispute the austerity policies that are promoted as the only solution to the current turmoil. It emphasizes that the sovereign debt crisis should be explained as a consequence of the failures of the institutional conception of the European integration project and not, as is usually argued, as a consequence of an excessive indebtedness occasioned by a disproportionate public spending. It discusses the rationality behind the austerity policies and shows that, far of being a solution to the crisis, they only aggravate the problem. It concludes that the exit to the current euro zone´s crisis implies a different process of economic and political integration that should have for objective to conform a properly constituted European state