# Competing Explanations and Strategies for the Greek Crisis and the Question of the Productive Model, by Stavros Mavroudeas
…all Mainstream interpretations are based on the Twin Deficit Hypothesis (TDH). TDH argues that an exorbitant fiscal deficit (FD) causes a current account deficit (CAD)….the responsibility of the crisis is attributed to the public sector and therefore fiscal austerity is justified. The next step is to attribute FD to wage increases. It is purported that, because of clientelism, excessive wage increases in the public sector that exacerbated FD and in the private sector reduced competitiveness (and therefore the trade deficit–TD). The combined effect was an acute CAD crisis as the country borrowed from abroad and after the 2008 crisis the sustainability of this debt was questioned. The typical Mainstream argument is that Greek nominal unit labor costs (NULCs) grew faster than that those of other EMU members.
(1) Stathakis (2010) argues that CAD is caused by FD, which is attributed to big capital’s tax avoidance and middle-classes’ tax evasion. (2) Argitis (2012) argues that CAD is caused by a Minskian financial instability mechanism. (3) Lapavitsas et al. (2010) argue that CAD is caused by the TD and not the FD. TD is attributed to German neo-mercantilist policies, the EMU’s problematic nature and the new global form of financialized capitalism.
–Marxist explanations: The root of the current crisis is in the long-term TRPF the 1973 crisis. Subsequent capitalist restructurings were unable to revive the profit rate. The problem then was aggravated further by the imperialist European integration and the austerity policies that resulting at under-consumption.