European Sovereign Debt Crisis:an Marxist Perspective

Starting from the2007U.S."subprime crisis ".A new round of global economic crisis began to spread. This is the European sovereign debt crisis. The increasing treasury rates made some countries lose the refinancing conditions from the international finance market. Meanwhile,they must face the large current account deficit、a huge amount of maturing debt、terrible unemployment rate and the public protest about fiscal austerity. The governments may be face an embarrassing situation. In such a context, wet start the study of the European sovereign debt crisis.The main purpose of this paper is to use Marxist economic crisis theory explain the causes of the European sovereign debt crisis. Article will expand the analysis from the point to the face. The "point" is that the debt crisis why choose Greece, Ireland and other countries as a flashpoint. The "face" means that why the crisis will spread to the Europe zone, even to the Europe Union. We will use Marx’s interest theory and credit theory to explain it. The third part of the article focuses on the deep-seated reasons of European debt crisis. This section discusses the relationship between sovereign debt crisis and the credit expansion, the functions of the government, the financial capital. The following is the main content of the various parts.The first part of the article is a brief research background, meaning, purpose and methods.The second part of the article is the literature review for the European sovereign debt crisis and a review of the economic cycle theory of mainstream economics. From the analysis we think western economic theory of economic cycles get common shortcomings. They mainly reflected in the following aspects. The first is their methodology:equilibrium analysis. The second is, they always attempt to simulate the process of economic crisis. The third is, almost all of them think the reason of economic crisis is exogenous.The third part describes the main content of the Marxist theory of the economic crisis. This part is including the basic theory and the development of Marxist theory of economic crisis. The basic theory section introduces the theory of capitalism basic contradiction, the theory of capital accumulation, the credit theory and the interest theory. The article mainly from two aspects describes the development of the Marxist theory of the economic crisis. First part is the western Marxist contribution to the theory of economic crisis. This part mainly uses Simon Clark’s criteria for the classification. Include:insufficient consumption theory, imbalance theory, labor’s power strength theory, wage increase theory and reality failure theory. This part also contains the author’s evaluation of these theories. The next part is to introduce Marxist scholars’view of the European sovereign debt crisis. The last part is the conclusion. In this part, author points out two main problems about the methodology which were widely used by some western Marxist scholars.The fourth part includes the following contents。 The first, the contents are the analysis of the direct cause and structural causes of the European sovereign debt crisis. In this part, we mainly explain why the crisis originated in countries such as Greece, Ireland, Portugal, Spain and Italy. Data-based study found that in these countries there are imbalances in the aspects of government revenue and expenditure, trade, government investment. The second, we explain why outbreak of the European debt crisis will choose the time in2009.And we will use external shocks theory to explain it. This section we also discusses the problems of the international status of the euro and the U.S. dollar hegemony. The third, our task is to explain the reasons for the fall of the euro area. In this section, the article mainly discussed the institutional defects of the euro zone.The fifth part is to analyze the deep-seated reasons for the formation of the European sovereign debt crisis. The first section we focus on the changes in the debt. This part we mainly use Marx’s credit theory to explain the inevitability of credit expansion in the development of capitalist production process.Specifically, we will explain the inevitability transition from private credit to the government credit. At the same time, the article pointed out that the sovereign debt crisis is an advanced form of the capitalist economic crisis. This is also the new features demonstrated in this crisis. Below, we will explain the nature of the sovereign debt and the relationship between the sovereign debt and the effective demand. In this part, we will discuss the impact of Keynesian economic policies。 Keynes first established a belief. He believes that increase government spending can solve the lack of effective demand problem. The specific program is fiscal expansion. And in order to fiscal expansion, most possible method is borrowing or monetary expansion. But Keynes has been in doubt about monetary policy when the economic crisis coming. So borrowing will become a necessary means. Borrowing will expressed as government budget deficit. Next, the article explains why Keynesian economic policy can not fundamentally solve the problem of imbalance between consumption and capital accumulation. Keynesian fiscal expansion result in the crisis appeared in a more advanced form, which is sovereign debt.The sixth part is the warning of the European sovereign debt crisis. First, we should accelerate the transformation of economic structure. Meanwhile protection of basic agriculture is necessary. Second, increase foreign exchange reserves utilization is urgent.Third; we should strengthen financial regulation to reduce external shocks. Fourth, in the long term, increase people’s income to reduce the polarization is fundamental measure.