THE "GREAT STAGNATION" AND EUROZONE CRISIS
The paper is focused on the roots of the Eurozone crisis. It is treated as an integral part of the “Great Stagnation” of the world economy, which followed the global financial meltdown of the 2008-2010. The latter is explained as a result of the very way by which modern capitalism adjusted to Stagflation of the early 1970s. As it is known, in response to diminished profitability the developed capitalist initiated so-called ‘Global Shift’ of production from the global North to the global South to take advantage of the cheap labour of the latter. The ensuing shortage of aggregate demand at the world scale was the fundamental reason of the financial crisis of 2008-2009. The same relations were reproduced in EU. In the mid-1990s Germany decreased its costs of production through reallocation of labour-in-tensive production to the East European countries like Poland, where the workforce was cheap and relatively high skilled. On this basis expansion of German export to the South of Europe started. As a result, local industry in the latter countries was rendered uncompetitive and was largely ruined. At the expense of its growing export revenues Germany financed external borrowing by the Southern European governments. In conditions of the world fiunancial crisis of 2008 these governments found their obligations untenable. The way to overcome the crisis of Eurozone is seen by the present author in overcoming the fundamentally unequal relations between the old and new EU members.