WORKING PAPER SERIES 06-2017 Germany and Greece: A mapping of their great divide and its EU implications George C. Bitros Πατησίων 76, 104 34 Αθήνα. Tηλ.: 210 8203303‐5 / Fax: 210 8238249 76, Patission Street, Athens 104 34 Greece. Tel.: (+30) 210 8203303‐5 / Fax: (+30) 210 8238249 E‐mail:
[email protected] / www.aueb.gr 1 Germany and Greece: A mapping of their great divide and its EU implications By George C. Bitros Emeritus Professor of Political Economy Athens University of Economics and Business Abstract The economic constitutions of Germany and Greece have resulted in the postwar period in two economies that are based on two vastly different philosophies. Germany has built a highly competitive, outward looking economy based essentially on the principles of the so-called “Social Market Economy”, whereas Greece has set up a “state-managed econ- omy” by drawing on the principles of central planning and administrative controls. This divide is equally stark, if assessed on the basis of the performance of the two economies. For, as it is known by now, Germany has become once again the powerhouse of Europe while Greece has gone bankrupt. As to the implications of this great divide for the future of the EU, its identification and mapping helps understand why convergence criteria on the basis of economic performance and living standards should be abandoned in favor of criteria based on the widening and deepening of the four European freedoms. A multi- speed Euroland enmeshed in these freedoms is going to be more democratic, more cohe- sive and a much happier union for the European citizens to call homeland.