CL

The first question is in some ways easier to answer. Neo-Chartalism has got very little to do with what’s happening. We’re not talking about state money being created other than as IOUs to deal with the immediate needs of liquidity as we discussed previously. So-called modern monetary theory, this kind of neo-chartalism, is weak monetary theory; it has very little to offer to the understanding of the eurozone and modern capitalism generally.

The second question, I think, is much more difficult to deal with and more demanding in many ways. I understand what’s happening in Europe as an instance of financialization which took a particular form in Europe because of the common currency. It took a particularly pathological and diseased form, because of the common currency. Financialization of European countries was warped because of the common currency. Now, my own work over many years has actually been very helpful to me, and I think the results are fairly obvious over the course of the last few years.

If we approach the crisis of the eurozone purely as a monetary thing, from the perspective of monetary theory, it would take you five minutes to resolve it. It is perfect obvious, perfectly simple. It’s actually almost trivial. As a monetary theory problem, it’s trivial. And in fact, it didn’t take me longer than a weekend back in 2010, when I first began to deal with the numbers, for it to become obvious.

It’s a matter of a monetary union that is badly structured and that has evolved very badly in the course of its own lifetime and therefore is unsustainable. And that, to someone who is trained in monetary theory, and who understands money and finance, would be clearer and easier to see than to others who have worked in other areas of economics and of political economy.

My work has been beneficial to me in that regard. And when the crisis burst out in 2010, it was clear to me that, given the monetary system, (a) austerity was the most likely outcome, and that would have been disastrous, which we argued, I and the Research on Monetary and Finance people argued, and (b) exit would remain on the table permanently because of the structure of the monetary union. That is still what is happening. Five years on, exit is still what we’re talking about. And (c) the idea of a good euro is laughable, as indeed it has turned out to be. So in that sense, my own work in the past of many years has stood me in good stead.

There’s one more part that’s important, of the work that I’ve done over the years. This has to do with money as a broader social category. The non-economic social dimension of money and finance, which, as you know yourself, has always been something that concerns me profoundly.

This crisis demonstrates beyond dispute that money is much more than an economic phenomenon. Fundamentally, of course, it is an economic phenomenon. But it’s much more than that. It has a lot of social dimensions and one dimension it has, which is critical, is that of identity.

Money, for reasons that are not for this moment but which I develop in my work, is associated with beliefs, customs, outlook, ideology, and identity. Money becomes identity more than capitalism. And the euro has become identity for peripheral countries in an incredible way, and nowhere more so than in Greece.

The question of exit and the fear which it generates — or the concern which it generates — among Greeks is not simply to do with the economic implications, as severe as these might be. It also has to do with identity.

People have to appreciate that for Greeks, joining the monetary union and using the same money as the rest of Western Europe was also a leap in identity. In popular consciousness, and given the history of Greece, it allowed Greeks to think that they had become “real Europeans.” In a small country on the southern end of the Balkans, that had a very turbulent history, through the Ottoman period and what happened afterwards, this was a very, very important thing.

The importance of that has been manifested in the last few years. The deeper the crisis gets, the more absurd the membership in the monetary union becomes, the closer the attachment to the euro becomes among some sections of the population. And the reason is identity. People wish to maintain the contact with the idea of Europe, the idea of not being part of the Middle East, or the Near East.