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PKSG Working Paper Series

Working Paper PKWP1508

European growth models and working class restructuring before the crisis

July 2015

Engelbert Stockhammer, Cédric Durand, Ludwig List

This paper builds on post-Keynesian macroeconomics, the Regulation Approach and a Neo-Gramscian International Political Economy approach to class analysis and offers an empirical analysis of European growth models and working class restructuring in Europe between 2000 and 2008. We will distinguish between the ‘East’, the ‘North’, and the ‘South’ and structure our analysis around industrial upgrading, financialisation and working class coherence. We find an export-driven growth model in the North, which came with wage suppression and outsourcing to the East. In the East the growth model can be characterised as dependent upgrading, which allowed for high real wage growth despite declining working class coherence. The South experienced a debt-driven growth model with a real estate bubble and high inflation rates resulting in large current account deficits. Our analysis shows that class restructuring forms an integral part in the economic process that resulted in European imbalances and the Euro crisis.

Keywords: European growth models, class analysis, labour relations, debt-driven growth, financialisation

JEL classification: B50: Current Heterodox Approaches: General P52: Comparative Studies of Particular Economies Z10: Cultural Economics; Economic Sociology; Economic Anthropology: General

Download: Working Paper PKWP1508