SPRU - Science Policy Research Unit

Greece and the EU

SPRU’S Mariana Mazzucato, Professor in the Economics of Innovation, has criticized this week’s Eurogroup ‘deal’ for Greece in a number of leading media outlets, including Channel 4 News, the Guardian and Italy’s La Repubblica.

Writing in the Guardian on whether the threat of Grexit had been averted by the bailout, she argued that, “More than anything now we need the kind of big thinking we saw after the second world war – not the hypocritical, short-termist and economically illiterate deal that has been forced on Greece. The tough financial discipline being meted out to Athens will not lead to growth. Grexit may have been averted but it is a short-term, and short-sighted solution.” In June, she wrote another piece for the Guardian as one of a panel of experts, alongside Vicky Pryce and former Bank of England Monetary Policy Committee member David Blanchflower. In the article, Professor Mazzucato emphasised the need for an investment strategy for Greece, using examples from Germany to argue that Greece should do what Germany does, not what it says it does. 

She also appeared on Channel 4 News on Monday 13th July, alongside Artur Fischer, Joint CEO of Borse Berlin, the Berlin Stock Exchange, to discuss the issue ('Austerity has won' - Eurozone bailout deal for Greece’).  Professor Mazzucato argued that not only was the bulk of the Greek bailout actually going straight to the banks to repay Greece’s debts but that without an investment package (like the Marshall Plan after the war) there was no opportunity for Greece to return to get back on its feet and return to growth. 

She set out her case in full in a blog, Greece and the EU: a micro and macro mess up, which has now had more than 10,000 unique views and been shared almost 2,500 times. An Italian version was published on the front page of La Repubblica on 13th July 2015. In both she argues that the crisis in Greece poses both a macro and a micro economic problem—yet the cut and paste ‘austerity’ solutions proposed by the creditors have not tackled the enormity of either problem.  She wrote, “A lack of aggregate demand in Greece (macro), and a lack of investments in areas that increase future productivity and innovation (micro), will only make Greece weaker and dangerous to the same lenders. Yes, major reforms are needed, but those that help on both these fronts. Not just cuts.”

Professor Mazzucato’s much lauded book ‘The Entrepreneurial State: debunking public vs. private sector myths, has recently been published in Greek. She has also recently been awarded two major grants from the EC’s Horizon 2020 programme for ‘DOLFINS- Distributed Global Financial Systems for Society’ and for a project on Innovation-fuelled, Sustainable, Inclusive Growth. DOLFINS aims to address the global challenge of improving the financial system to better serve society, placing scientific evidence and citizens participation at the centre of the policy process in finance. The project on Innovation-fuelled, Sustainable, Inclusive Growth aims to develop inclusive and sustainable policy scenarios, alternative to the current emphasis on austerity, and challenge the types of ‘financialization’ that many economies have faced over the last decades.