1) INSTITUTIONAL CHANGE IN THE CONTEXT OF THE ECONOMIC CRISIS:
The Role of Economics Imperialism
The current crisis underscores the fallibility and the fragility of capitalist institutions and institutional frameworks. The economic crisis in Greece and the attempts to address it by the implementation of a Structural and Economic Adjustment Policy (SEAP) have brought about drastic changes in institutions such as the labour market and the state.
This paper examines recent institutional change in Greece and attempts to elucidate the catalytic role of Economics Imperialism in the process. The institutional changes in question are radical as regards both their content as well as the manner of their implementation and consist of neoclassical economic policy coupled with a neoliberal narrative. Diminishing the size of the state as well as deregulating and flexibilising labour market institutions is the spearhead of the changes.
Institutions are pillars of societal organization and constitute a discerning social characteristic. As such, they are more than purely economic entities and have social, political and legal aspects that render difficult the isolation of their scientific study and examination in any single scientific field. It is argued here that the phenomenon of Economics Imperialism has been a necessary precondition for the abrupt and sharp institutional changes under examination. The claim will be examined and substantiated in the case of Greece while attempting to preserve generality. Economics Imperialism is defined as the expansion of the ‘economic approach’ to the other social sciences with the application of the neoclassical toolkit and the (re)appropriation of research questions from the subject matter of other scientific domains. By doing so mainstream economics claim the authority to provide valid answers to specific questions excluding the consideration of alternative views and research methods.
Under the light of Economics Imperialism and the neoclassical worldview, institutions are conceived simply as efficient solutions to economic problems and are stripped of their historical, social and political aspects. This conceptualization of institutions enables the application of the policies in question (SEAP) leading to a transformative shift towards neoliberalism and to the subsequent demise of institutions. The neoclassical theoretical toolkit of Economics Imperialism (rationality, utility maximization, methodological individualism, equilibration) underpins the content of the applied economic policy and defines the institutional changes under examination.
2) MAINSTREAM ECONOMICS AND THE ECONOMIC CRISIS IN GREECE: UNFIT FOR PURPOSE.
An argument that emerges currently under the light of the economic crisis is that mainstream economics is unfit for purpose, or incapable of tackling the task at hand. This argument is examined in conjunction with the specific case of the economic crisis in Greece. The key question driving this research is: from a methodological standpoint, how satisfyingly did mainstream economics cope with the economic crisis in Greece as a phenomenon and what are the contributing factors in this issue.
The types of expression used to contain the criticism regarding mainstream economics, which are examined in this paper, invariably imply a specificity of the notion. In the most simple of terms, it is meaningless to evaluate a fish by its climbing abilities. For this research to be meaningful, the following approach is used: a) an overview – examination of the “unfit for purpose” argument, and, b) a brief assessment of the Greek economic crisis situated within the perspective of mainstream economic science. An examination of the ‘unfit for purpose’ argument in the case of the Greek economic crisis will deduce initially whether and to what extent this argument is applicable. In other words, can we claim that in the case of the Greek economic crisis, mainstream economics was unfit for purpose? An attempt is made to determine the key components of this claim and its validity. Our findings are analysed from a methodological standpoint. This approach intends also to elucidate the specific reasons that contribute to the success or failure of mainstream economics in our case study. Shedding light on the specific reasons will hopefully provide insights that are essential in the effort to redirect economic science.