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Varieties of capitalism in light of the euro crisis

Peter A. Hall (Harvard University)

Fiscal austerity and structural reform in response to the euro crisis hit Southern European societies hard, while dwindling confidence in the euro had strained economic activity throughout the eurozone for years. With several European economies still grappling with the euro crisis’s effects and yet to fully recover from 2009’s shock, it is a crucial task for scholarship to take stock of the lessons learned from the crisis and to initiate debate on the way forward. In his article “Varieties of capitalism in light of the euro crisis” published in the Journal of European Public Policy, Peter A. Hall discusses how the literature on varieties of capitalism contributed to the understanding of the euro crisis, and in turn how the crisis itself has advanced our understanding of varieties of capitalism, including the literature’s limits. Peter argues that attempts to make sense of the euro crisis have led to efforts to complement the varieties of capitalism literature’s emphasis on the supply side of the economy with growth models focusing on the demand side. While such efforts have contributed to our understanding of the root causes of the crisis and help explain variation in responses to it, he warns that our vision on how to secure growth in Southern Europe remains clouded. With EU officials seeking ways to reinvigorate growth across Southern member states, Peter highlights that pursuing a single set of best practices seems ill-advised, as Europe’s history teaches that “there is more than one route to economic prosperity, and finding a successful national path requires adapting social and economic policies to the institutional conditions specific to each type of political economy”.