The Quest for a Panacea. a Comparative Varieties of Capitalism Analysis of the Economic Adjustment Progra
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The Quest for a Panacea. A Comparative Varieties of Capitalism Analysis of the Economic Adjustment Programmes in Greece and Ireland A thesis submitted for the degree of Doctor of Philosophy by Benjamin Klos Department of Politics, History and the Brunel Law School Brunel University September 2016 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. 1 Table of Contents List of Figures ………………………………………………………………………………………….4 List of Abbreviations …………………………………………………………………………………..5 Acknowledgements …………………………………………………………………………………….8 Chapter 1 - Introduction Introduction .............................................................................................................. 9 Chapter 2 - Explaining radical change in political economies Introduction ............................................................................................................. 17 Institutionalist Approaches ........................................................................................ 19 Varieties of Capitalism .............................................................................................. 19 Bringing the state back in: From Amable’s mechanistic predictions to a unified model. ................................................................................... 26 Punctuated Equilibrium ............................................................................................ 31 Transformation Literature Eastern Europe ................................................................. 36 Methodology ............................................................................................................ 39 Conclusion ............................................................................................................... 40 Chapter 3 - A qualitative data analysis of the Greek and Irish Economic Adjustment Programmes Introduction ............................................................................................................. 43 Summary Hypothesis ................................................................................................ 49 Analysis ................................................................................................................... 49 Conclusion ............................................................................................................... 60 Chapter 4 - Product markets in Greece and Ireland - Conditional Freedom from the top down Introduction ............................................................................................................. 62 The Irish Product Market .......................................................................................... 64 Pre-crisis ....................................................................................................... 64 The Economic Adjustment Programme in the Irish product market ................. 66 The Greek Product Market ........................................................................................ 73 Pre-crisis ....................................................................................................... 73 The Economic Adjustment Programme in Greece .......................................... 76 Conclusion ............................................................................................................... 86 Chapter 5 - Labour market reforms in Greece and Ireland. A ‘neoliberal solution to a neoliberal problem’ Introduction ............................................................................................................. 89 2 The Irish Labour Market ........................................................................................... 90 Employment protection in Ireland ................................................................. 92 Industrial relations in Ireland ......................................................................... 95 Employment Policies in Ireland ..................................................................... 99 The Greek Labour market ....................................................................................... 102 Employment protection in Greece ................................................................ 103 Wage Bargaining in Greece ......................................................................... 108 Employment policies in Greece .................................................................... 116 Conclusion ............................................................................................................. 118 Chapter 6 - Financial sector reforms in Greece and Ireland. Loose change or real change? Introduction ........................................................................................................... 121 The Greek Financial Sector ..................................................................................... 121 The Irish Financial Sector ....................................................................................... 133 Conclusion ............................................................................................................. 144 Chapter 7 - After the EAP reforms. Fare-well to the welfare state Introduction ........................................................................................................... 148 Social Protection in Ireland ..................................................................................... 149 Pre-crisis ..................................................................................................... 149 Social Protection in the Irish Economic Adjustment Programme ................... 154 Social Protection in Greece ..................................................................................... 161 Social Protection in the Greek Economic Adjustment Programmes ............... 164 Conclusion ............................................................................................................. 172 Chapter 8 - Education reform in the EAP. Missed opportunity or fatal flaw? Introduction ........................................................................................................... 175 The Irish Education Sector ...................................................................................... 176 Pre-crisis ..................................................................................................... 176 Education in the Economic Adjustment Programme of Ireland ..................... 178 The Greek Education Sector ................................................................................... 180 Pre-crisis ..................................................................................................... 180 Economic Adjustment Programme in the Greek Education sector ................. 182 Conclusion ............................................................................................................. 185 Chapter 9 – Conclusion Conclusion ............................................................................................................. 187 Bibliography ...................................................................................................................... 197 3 List of Figures Figure 1: Bruno Amable’s five VOCs ……………………………………………………13 Figure 2: Nvivo coding framework for supply side terminology……………………….44 Figure 3: Nvivo coding framework for demand side terminology……………………..44 Figure 4: Nvivo coding framework for neutral terminology……………………………45 Figure 5: