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13 January 2010, Brussels

Conference: 'After the crisis - towards a sustainable growth model'

As the first decade of the 21st century comes to its term, most countries in Europe and the world still find themselves in the midst of the severest financial and economic crisis in 80 years. Prior to its collapse in 2008, the prevailing concept of laissez-faire financial capitalism implied that profits, in particular in the financial sector, could grow at double-digit rates while overall economic growth remained in the low single digit range. This led to a general shift in income distribution at the expense of employees and low-income groups, i.e. a shift of national income from labour to capital and/or within wage income to the wealthy. Beyond this there has been increased downward pressure on the terms of conditions of those at the bottom of the labour market.

The concentration of ever more capital in the hands of ever fewer people has resulted in a weakening of broad-based demand. Two opposite growth models emerged both based on the necessity to compensate increasing income inequality with other sources of demand: either increased household borrowing (e.g. US, UK, Spain) or export-led growth (Germany, Japan, China). Rising global economic imbalances were the result. Both growth models have proven economically unsustainable. Meanwhile the problems associated with the ecological unsustainability of the prevailing economic model remain largely unaddressed, limited to vague declarations of intent, as the failure of the Copenhagen summit at the end of last year testifies.

The revelation of the limitations of financial capitalism has opened up a window of opportunity to propose and implement progressive reforms that Europe needs to shift to an equitable and socially and ecologically sustainable growth model. On 13 January 2010, the ETUI brought together prominent academics and researchers to debate with representatives of Brussels-based policymaking institutions, think tanks, academia and civil society actors about the reforms Europe needs to shift to an equitable and socially and ecologically sustainable growth model. Titled ‘After the crisis - towards a sustainable growth model', the ETUI conference brought together over 170 people in the building of the European Economic and Social Committee.

15 experts, mainly from academia but also from banking and the International Labour Organization, discussed reregulation of finance and the labour market, as well as looking at ways of achieving a new sustainable growth model through changes in macroeconomic policy and/or institutions. Each has produced a short policy-oriented proposal in areas ranging from macroeconomic policy and financial market re-regulation, across labour market and social policies, to issues raised by the need for growth to be ecologically sustainable. The contributions of these experts, together with those from around 25 other economists who were unable to attend the conference, will be compiled into a book to be published in March. The opinions presented are those of the respective authors.

Presentations

Introduction to the ‘after the crisis’ conference
Andrew Watt

Reforming the EU budget to promote sustainable growth
Iain Begg

An employment-friendly policy-mix – product and construc
Henning Jørgensen

A Better Way to Regulate Financial Markets: Asset Based Reserve Requirements
Thomas I. Palley

A General Financial Transaction Tax – Motives, Effects, Revenues and Feasibility
Stephan Schulmeister

A European Minimum Wage Policy for a more sustainable wage-led growth model
Thorsten Schulten

'After the crisis - towards a sustainable growth model' ETUI conference
Concluding remarks by John Monks, ETUC General Secretary

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