THE GREEK CRISIS IN RETROSPECT: THE RATE OF PROFIT APPROACH

The Greek economy is in crisis since the fourth quarter of 2008. This paper explores the crisis and its severe intensity by decomposing and comparing the Greek, Dutch, and Portuguese profit rates. Specifically, profit rates are broken down into: 1) the capacity output ratio, 2) the profit share, and 3) the rate of capacity utilization. The comparison shows that the Greek crisis is part of the global crisis that began in 2008 and its intensity is the result of the degradation of the competitive position of Greek capitalism following 1970. The latter is reflected in massive de-industrialization, persistent current account deficits, and an increasing ratio of non-tradable to tradable commodities. These structural characteristics of the Greek economy reduce the effectiveness of "countervailing tendencies" like wage reductions in restoring profitability and growth. In the EU environment this means that the free trade -fiscal consolidation policies increase the gap between weak economies, like Greece's, and the economies of the EU "core" putting the whole project in jeopardy. © 2022 Universidad Nacional Autonoma de Mexico. All rights reserved