“Widening Core-Periphery Disparities in the new European Monetary Union: Forms of Institutional Exploitation in Southern European States”

The main objective of this research project is to address and respond to the question whether after the international financial crisis of the 2008, exploitation of peripheral Economic Monetary Union (EMU) countries by developed EMU core countries is further institutionalized and widened. This study is developed across three interrelated sections.
Firstly, the analysis of the Economic Monetary Union wide, post 2008 capitalist crisis architectural transformation in terms of the major economic governance reforms. The cited reforms included the newly enhanced Multilateral
Surveillance in the European Monetary Union, the TFEU, the European Semester, the Prevention and correction of macroeconomic imbalances, the European Stability Mechanism, the Euro Plus Pact, the Capital Markets Union and
the EU Banking Union. It has secondly identified the interconnection of structural fiscal, labour and product market reforms imposed under Economic Adjustment Programmes (EAPs) of “financial support” to the countries of the
periphery namely Ireland, Portugal, Greece and Cyprus. The third and last part of the study, after refining and applying criteria which originate in class based and dependency theory approaches, has compared results of structural reforms analysed, that is social repercussions on the level of wages and income; consumption; social protection; privatization; profits, and investment indicators of non-financial enterprises including foreign direct investment and assets of financial organizations to identical criteria for two core euro area countries, namely Germany and France.
Findings can be summarized as per the following. Firstly, each reform at the level of the EMU, despite its own merits is part of the holistic transformational power exerted by the new stage of the EMU. It was found that the institutional framework established, has widened uneven development between core advanced economies and the periphery in light of embedding the dogma of competitiveness. It appears that the new EMU context is conducive to creating conditions of attracting investments from capital surplus, increasing capital profits and widening exploitation and thus social disparities. The restructuring of the EMU took place as a continuation of the asymmetries and social gaps founded with the Maastricht Treaty and the 2008 systemic crisis. Second, new institutions and reforms capable of widening class-based disparities have appeared which despite some variations in each country, pave the way for securing an attractive to business and profits environment aimed at increasing competitiveness, restructuring the wage setting mechanisms in the periphery. Finally, structural reforms reviewed at the periphery level, have produced significant social disparities within the countries of the periphery and in comparison, to the core and euro area average performance. The country or the region with more accumulated capital, that is core countries within and outside the European Monetary Union (for instance USA Private Investment Funds), especially Germany -which generates one fourth of the euro area Gross Operational Surplus and where income from equity of corporations is almost three times the euro area average and FDI net position in euro has increased by three time since the eruption of the 2008 crisis have led the engine of capital surplus investment to produce “growth” to the periphery, a development pattern “reminiscent of Hobson-Lenin theory of imperialism”. As were the tremendous changes undergone by the world capitalist system (Pröbsting, 2016) such is the corresponding transformation in the EMU. The post capitalist crisis European Monetary Union institutional transformation (via establishing the new economic governance) created an environment more conducive to less regulation, less control of uneven development and thus increased exploitation.
National corporations in the periphery, appear at a more advantageous position in conditions where structural fiscal, labour and product market reforms -directed through the Economic Adjustment Programmes and post programmatic surveillance- have reallocated resources in favour of private capital, at the expense of the less protected labour. The working class, which is under a regulated pressure of controlled by business competitiveness nominal labour cost, is closer than ever in the post Maastricht-EMU inauguration era to mere subsistence whereas social protection is now less “generous” with the dignity of peoples’ lives.
Therefore, the EMU architectural redesign and imposed EAPs are found to exacerbate uneven development between the center and the periphery of “Southern” states in the euro area, increasing exploitation; despite country variations, a comprehensive rearrangement and deepening of social disparities within the periphery is identified; class structure and balance of power within peripheral societies does not remain intact. Profiteers in the face of corporations take advantage of new political and social conditions whilst the labor is severely affected. These tendencies, is suggested, reflect the main characteristics of the transformative structural changes intended at the nucleus of the EMU.