The Neoclassical and Keynesian Perspectives and the Rebirth of Comparative Political Economy

This chapter outlines the theoretical assumptions that framed the economic response in the Eurozone during the global financial crisis in 2008. Based on the Comparative Political Economy principles, this chapter provides a critical review of the neoclassical economic perspective and the Keynesian approach and their assumptions about the crisis in the Eurozone. It provides a revisiting of the Varieties of Capitalism’s institutional framework and the new demand-side Growth Model approaches in explaining the gradual structural decline in Southern Europe and the macroeconomic imbalances in the Eurozone. It reconciles the Varieties of Capitalism and Growth Model perspectives to explain the emergence of different and diverging models of capitalism in Europe, opening up new avenues in the current Comparative Political Economy research. It introduces the concept of ‘intermediate’ economies to show the complex structural transformation in Greece and Portugal and their current role in the global economy.