Analysis: ‘Without a consensus, external forces cannot propose – never mind impose – a solution’

IT CAN be argued that the outcomes of the political discussions in Greece are but one part of a much bigger jigsaw.Getting all the local bits to fit together is essential but by no means sufficient to re-establish global stability and then growth.

The economics and politics of Greece are still unsettled, and this is only Greece. There are much bigger economies and populations waiting to develop their own paths through this minefield. Without a consensus across Greece, external forces cannot propose – never mind impose – a solution that will satisfy international funders.

So, one problem with the apparent deal the weekend before last was that it had not been discussed, sold or agreed with the Greek people.

As elsewhere, the anger over unfinished business in reforming the institutions and structures that created the economic and financial crises has not dissipated over time; perhaps the opposite.

And a lack of clear leadership in addressing the crises has prolonged the period of uncertainty and postponed reaching a new start.

The comparable economies and countries of Iceland and Ireland have been through such a process with some success and, while their respective strategies are neither optimal nor accepted by all, they have allowed growth to be re-established. Analysis of these different economies depends on an understanding of behaviour, confidence and trust in governments, institutions, the community and key international organisations and multinational enterprises.

Historically, economists have recognised the importance of these dimensions of life and society. Adam Smith, Karl Marx and John Maynard Keynes all wrote across the social sciences in such contexts of recession and crises.

For the past three decades, the economic modellers and analysts have forsaken such a political economy approach, following “economic science” instead. This renaming was not trivial but indicates why more is now required to understand and plan a way out of the crisis.

In an environment without growth, and with massive debts and, of course, credits, any large diverse national economy will struggle. So, the much more complex eurozone needs more powers and instruments to achieve balance and cohesion.

Until that is addressed politically and economically, the instability and crises will continue, regardless of local improvements.

• Professor Mike Danson is a specialist in regional economics at the University of the West of Scotland