ABSTRACT
This chapter examines the socio-economic crisis in the Southern European periphery in the light of the ongoing decline of the European Social Model (ESM). The first section of the chapter explores the dynamic between democracy and market economy as well as the concept of ESM in the traditional narratives of European integration. Beginning our analysis from the premise that the relationship between the European Union (EU) and Southern European political economies is mutually constitutive we critically review the historical development of the European Social Model and its premises. In doing so, we draw on the work of Streeck (2013) on the transformation of the European State System from a system of co-ordination based on ‘tax states’ to an international regime supporting ‘consolidation states’ integrated under a new mode of European politico-economic governance. Our chapter then discusses how recent institutional innovations in European economic governance effectively constitute wage-setting and collective bargaining institutions mainly as obstacles and adjustment variables for promoting or restoring member states’ competitiveness. More importantly, we demonstrate how EU institutions are for the first time involved in policy areas previously under the jurisdiction of national governments, severely limiting the ability of member states to decide on their own wage-setting and budget-making policy. Next, we summarise the key measures that have been adopted in line with EU recommendations in Southern European countries in order to restore ‘competitiveness’ and promote exports. Finally, based on secondary analysis of data on poverty, inequality, employment, taxation and available household disposable income we argue that the conditional austerity measures have had, so far, a negative asymmetrical impact upon the political economies and societies of Southern Europe.
