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The Greek Financial Crisis: Theoretical Implications

The world we live in is a product of the way we think. Our conception of reality determines what we see and what we achieve. The Greek crisis is not simply a case of high public debt, economic mismanagement or weak political will in Greece or the Eurozone. It is underpinned by economic premises, constructs and resulting practices that promote exactly the type of dilemma Greece faces today. Without addressing these conceptual issues, no lasting solution is possible. Rather it can be expected to repeat and spread to other countries and regions. This article is based on views presented by participants in a WAAS webinar examining the Greek financial crisis in the light of economic theory and practice. Wherever there are unmet social needs and underutilized social resources, such as high levels of unemployment, the potential exists to stimulate economic activity, enhance human welfare and promote resilience and sustainable entrepreneurship. Both conditions prevail in Greece today, but neither current nor anticipated policies are likely to result in near term benefits to the Greek people and the local economy nor for Europe and the world economy. It supports the view that a permanent and effective win-win solution can be found to the Greek crisis, compatible with the financial stability of the country and the welfare of its citizens within the framework of the Eurozone, but that such a solution will require a rethinking of fundamental theoretical issues and adoption of innovative policy instruments beyond those presently being contemplated. Read More