(A) A broader circle can throw light from main lessons drawn from the 2008 and other past financial crises that provoked prolonged and serious real economy downturns, especially the ones triggered by mounting debt, private or public and both. A further distinguishing characteristic in the current crisis centres on the acknowledgement that aggregate demand-led implications affected by multiyear restrictive wage policies in the US, in Germany and in other industrially advanced countries were initially partly offset by higher risk (subprime) domestic private credit expansion and or targeted export promotion to deficit incurring countries covered by trans-border resource flows by financial intermediaries. At various aggregation levels such practices substituted debt for potential income capabilities, especially for lower income brackets or, equivalently, for weaker middle income countries. Thresholds of further debt intolerance can be critical especially in cases of weak institutional structures, clientelistic environments among public-private vested interests, absence of prudent regulatory practices and aggressive roles assumed by free-wheeling “shadow banks”. In order to invigorate the pace of recovery, the needed counter-cyclical policy instruments -monetary and mainly fiscal ones through the activation of public spending- can lead to the transformation of a private high-risk environment into a troublesome sovereign risk malaise.

(B) A middle circle of crisis-prone issues rests on longer-term antagonistic yet also partly converging shorter-term interests in the use of international reserve currencies, most notably of the euro versus that of the dollar, and with a lingering pound versus eurozone interests in shaping the European Union integration process. The case of Greece was explicitly chosen as a weak first link, followed by others, to test such broader and internationally antagonistic interests. The actors involved in shaping of relevant markets include destabilising speculators acting on the basis of private greed as “herds of wolves” as well as a small number of questionable evaluating institutions.

(C) The third core crisis circle expresses diverse categories of cascading deficits in the Greek economy (i.e. trust deficits in government practices and in misleading official reporting, accelerating fiscal deficits and mounting cumulative public debt over long periods, grave deficits in the real economy development capabilities, etc). In the context of the above referred two other crisis circles, the Greek case has been elevated to an international cause celebre. The activated interventions included special initiatives by major heads of state and their finance ministers, central bankers and novel initiatives in the E.U. institutional architecture. Their emergence was due to major interests in self protection within an environment prone to contagion of economic malfunctioning in an increasingly interdependent world economy.

The Greek state is also characterized by waste, inefficiency, corruption, and tax evasion with obvious results for the budget deficit and debt. But contrary to neo-liberal and modernizing accounts the line of causation does not go from an ineffective state to an inefficient economy unable to compete at the EU and world levels. Rather the weakness of a neo-liberal economy in a country like Greece to supply enough jobs, rising wages and a reasonable amount of social protection leads parties of the centre-left and centre-right to use the state in order to build alliances with the middle classes, the self-employed and other sections of society. A serious debate on a viable economic model that can gain legitimacy from its economic results is what is most needed in the current crisis.

This process of international specialization required internal financial stability, as the flows of foreign exchange in and out of the Greek economy expanded. This process could only be sustained through the policy of “hard currency”. The massive privatizations, the Olympic games, the mobilization of resources through the stock exchange market and other state initiatives came to support such a restructuring of the Greek economy.

Both the economic and social cost of such policy reforms were absorbed by the Greek budget, while tax reduction or tax evasion became a central part of the policies persued. In effect in the transtion period the fiscal deficit became a permanent feature of the Greek economy. The public debt was supposed to be contained by the continuing high rates of growth of the economy and the favorable low interest rates prevailing in the world markets.

The 2008 world economic crisis changed drastically such arrangements. In the Greek case, economic crisis was soon turned into fiscal crisis. The E.U. neoliberal policies on the management of the crisis made things even worse. In effect the Greek fiscal crisis was soon turned into a European crisis.

• The Greek fiscal problem and how it became european and global at the end of 2009 and during 2010
• The issue of solidarity within EMU: how it is totally absent from the Maastricht Treaty and the Growth and Stability pact but how, in practice, it may well prove to be indispensable not so much for altruistic but for the tangible political motive of presrving EMU cohesion.
• How, in practice, the Greek problem triggered a Franco-German tension which is related to two different approaches to ths EMU project
• The problem of assisting weak EMU members in the broader context of the EU but also of the global North-South divide.

During the recent economic crisis, the state, which was supposed to be ‘minimised’ and withdrawn from economy in accordance with the ‘hands off’ approach promulgated by the neoliberal agenda, was on duty for assuring the sustainability of the capitalist economy and for compensating/confiscating the loss of the capitalist class. Implementation of production incentives and tax exemptions for increasing comparative advantage of national industries were followed by financial measures for decreasing public expenditure and increasing public revenues. Labour market reforms were duly pursued in order to increase the exploitation of the working class with the execution of various restrictive measures regarding working conditions, wages and pensions, as well as the weakening of the social rights in health and education. In other words, economic crisis is instrumentalised for increasing the accumulated surplus value and decreasing the cost of production. In that respect, the economic crisis, which allows policy-makers to present the structural reforms as a ‘necessity’ for a successful recovery, indeed provides the capitalist class with an invaluable ‘opportunity’ to conclude publicly-opposed reforms that has long been delayed.

On the side of the working class, the confiscation/socialisation of the crisis of ‘capital’ism and the losses of capital deteriorate the working conditions as well as the living standards by decreasing wages and increasing taxes on consumption goods. Nonetheless, the ‘so-called’ recovery process of the capitalist economy that has actually been working at the expense of labour makes the inherent contradictions of capitalism more explicit and noticeable for the working class. That is why, as this paper will illustrate with the help of the Greek case, the economic crises have a potential to provide the working class with an ‘opportunity’ to struggle, or revitalize any form of resistance that might have already existed, against labour market deregulation reforms, collective dismissals and increasing rates of exploitation, by raising its awareness against the structural reform policies. The economic crisis, therefore, might enable the working class to comprehend its objective conditions and to resist exploitation.

The paper aims to employ the theory and methodology outlined above to explain the case of Greece, where the current economic crisis is regarded as an instrument for implementing structural reforms that have long been postponed due to high levels of working class resistance. No matter how those measures are presented as vital and indispensable to prevent the economy from a total collapse, the never-passive working class organisations have been successfully resisting them since the economic crisis has also equipped the working class with a unified agenda and a common front to defend. The paper will conclude that the serious troubles faced by the Greek economy are not a mere reflection of the current global economic crisis, but also a result of the inability of the Greek state to pursue the structural reforms.