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Towards A Progressive Economy For Europe

Swoboda, Η.  and Hughes, S., (2013), “Towards A Progressive Economy For Europe”, Social Europe Journal, 11 November.

Europe’s current misfortune is not just that it was hit by the most severe financial crisis in decades. It has also come from the fact that this crisis occurred during a time in which economic thinking was, and still remains, dominated by old concepts and neoclassical models.

Back in 2008 and 2009, survival instincts initially pushed even the most neoclassical politicians to support recovery plans of Keynesian inspiration. Unfortunately for Europe, those first instincts were quickly undermined by flawed forecasting models and the economic dogma that inspired them. In 2010, coinciding with the recovery of employment and output in Europe, policymakers and economic experts switched gears, abandoned the policies that were working and made a dramatic shift of policy towards austerity. The world was told that this would not provoke a new plunge in economic activity and a continuing explosion of unemployment. Their economic models, they said, showed that big cuts in public spending would restore investor confidence and pull us out of recession. As we now know, just the opposite happened. Unsurprisingly, recession is still present, confidence is low and unemployment and uncertainty continue to increase. It’s the multiplier, stupid!

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