The quest for a panacea. A comparative varieties of capitalism analysis of the economic adjustment programmes in Greece and Ireland

Abstract

The economic crisis in the European Union has raised numerous policy questions. It has also raised many important questions for scholars. One of these is the question of why we have witnessed such radically divergent reform speeds in different countries under Economic Adjustment Programmes. Closer examination of these Programmes clearly shows their high degree of uniformity, so that the answer cannot be found in the nature of policy input. This thesis instead takes a Varieties of Capitalism approach. Looking in depth at the cases of Greece and Ireland, which represent polar opposites of the spectrum of economic models within the EU, this thesis argues that success of Economic Adjustment Programmes crucially depends on a country’s pre-existing economic model. This insight challenges the current approach to crisis resolution, which endorses a ‘one size fits all’ approach to structural reforms. An adapted version of Bruno Amable’s Varieties of Capitalism (VOC) approach is conducive to detailed analysis, as it permits disaggregating the structural reform agenda according to five institutional areas. Thus, reform patterns can be compared between countries as well as between institutional areas. The hypothesis put forward in this dissertation is that the reforms promoted in Greece and Ireland can be accurately described as a reform trajectory intended to take both countries closer to a market based variety of capitalism. The analysis, based on textual analysis of the Economic Adjustment Programmes, as well as interviews with Greek, Irish and European policy-makers, suggests that VOC predicts reform trajectories largely accurately. The application of Amable’s approach also revealed its weaknesses, particularly in underestimating the role of political decision making in times of crisis through a rather mechanistic conceptualisation of the EAP implementation process. This is addressed through the inclusion of Streeck and Thelen’s mapping of political responses to external change, adding an important component to the VOC literature and making it suitable to the analysis of reform in crisis conditions.