Working Paper 4/2021

Patomäki, H.

(2021). Beyond the Current EU Conception: Alternative Approaches to Structural Reform. Helsinki Centre for Global Political Economy Working Paper, 04/2021.

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For decades, the concept of “structural reform” has been dominant in the economic policy discourse of the EU and most of its member states, from Greece to Finland. The term gets its meaning mainly from neoclassical eco­nomic theory, though there are also Schumpeterian and other elements. An analysis of the theoretical underpinnings of the concept (which emerged in the 1980s and was spread through the Bretton Woods institutions and the OECD) reveals conceptual and theoretical ambiguities and factual weak­nesses. While many of these weaknesses are related to unrealistic assump­tions, I argue further that the realisticness of particular assumptions is dif­ferent from the realism of the approach and relevance of the problematic. Second, to explore the limitations of the concept in its current meaning, I outline a brief genealogy of the concept of structure in social sciences and then juxtapose the economistic concept of structure with that of realist social theory. Third, I explore the implications of this deeper ontological conception of structure to the meaning and nature of possible structural reforms. Fourth, I give a few examples of alternative structural reforms to make my points more concrete. The envisioned programme of structural changes would amount to reversing the current EU strategy for growth. In the end, I summarise the overall argument.

Keywords: Efficient market hypothesis, hope, normativity, open system, rationality, realism, scale economies, social ontology, structure, supply-side economics